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More often than not, we find the offences of Cheating and Criminal Breach of Trust charged together in FIRs and criminal complaints. In fact, now, as a course of practice, one adds these two charges together rather mechanically, without actually considering the intricacies of each section and their application to the facts of the case.
One fails to acknowledge and realize that both these offences have their own unique application and must not co-exist in the same set of facts. Both offences being cognizable and non-bailable in nature, it is the duty of the police officer to be more cautious and responsible while registering a case under these provisions.
In my humble opinion, I believe that both these offences, by their mere definition, are antithetical to each other and they must not be charged together. Before we dwell more into the issue of how exactly they are antithetical, it is imperative to define these offences and discuss their basic ingredients.
Criminal Breach of Trust
The offence is defined under Section 405 IPC as under:-
“405. Criminal breach of trust.—Whoever, being in any manner entrusted with property, or with any dominion over property, dishonestly misappropriates or converts to his own use that property, or dishonestly uses or disposes of that property in violation of any direction of law prescribing the mode in which such trust is to be discharged, or of any legal contract, express or implied, which he has made touching the discharge of such trust, or willfully suffers any other person so to do, commits “criminal breach of trust”.
The basic ingredients to constitute an offence of Criminal Breach of Trust are three-fold:
A person should have been entrusted with property, or entrusted with dominion over property.
That person should dishonestly misappropriate or convert to their own use that property, or dishonestly use or dispose of that property or willfully suffer any other person to do so.
That such misappropriation, conversion, use or disposal should be in violation of any direction of law prescribing the mode in which such trust is to be discharged, or of any legal contract which the person has made, touching the discharge of such trust.
The most essential ingredient, however, is that the accused person shall be voluntarily entrusted with some property by the victim.
An illustration (b) of Section 405 IPC to demonstrate an offence constituted under it is as under:-
(b) A is a warehouse-keeper. Z going on a journey entrusts his furniture to A, under a contract that it shall be returned on payment of a stipulated sum for warehouse room. A dishonestly sells the goods. A has committed criminal breach of trust.
Cheating is defined under Section 415 IPC as under:-
“415. Cheating.—Whoever, by deceiving any person, fraudulently or dishonestly induces the person so deceived to deliver any property to any person, or to consent that any person shall retain any property, or intentionally induces the person so deceived to do or omit to do anything which he would not do or omit if he were not so deceived, and which act or omission causes or is likely to cause damage or harm to that person in body, mind, reputation or property, is said to “cheat”.
The basic ingredients to constitute an offence of cheating are also three- fold:
There should be a fraudulent or dishonest inducement of a person by deceiving him.
(a) the person so induced should be intentionally induced to deliver any property to any person or to consent that any person shall retain any property, or
(b) the person so induced should be intentionally induced to do or to omit to do anything which he would not do or omit if he were not so deceived.
In cases covered by (2)(b) above, the act or omission should be one which caused or is likely to cause damage or harm to the person induced in body, mind, reputation or property.
The most essential ingredient here is that there must be a fraudulent or dishonest inducement to the victim.
An illustration (c) of Section 415 IPC to demonstrate an offence constituted under it is as under:-
(c) A, by exhibiting to Z a false sample of an article, intentionally deceives Z into believing that the article corresponds with the sample, and thereby, dishonestly induces Z to buy and pay for the article. A cheats.
It is therefore established that in the first scenario i.e in an offence of Criminal Breach of Trust, the accused person comes into possession and has dominion over the property with complete bonafides. He subsequently develops dishonest intentions to convert it into his own use in violation of any direction of law prescribing the mode in which such trust is to be discharged, or of any legal contract made with the victim.
In other words, the victim entrusts his property with the accused voluntarily and with free consent, and the offence is committed only after the accused person subsequently develops dishonest intentions to convert such entrusted property to his own use; and not when the property is so entrusted.
Whereas to constitute an offence of Cheating, the dishonest intention to induce the victim to part with his property must exist from the very inception. The crime is committed not when the victim parts with his property or does or omits to do anything, but when the accused person fraudulently induces the victim with dishonest intentions to cheat the victim before he could part with such property or do or omit to do anything. It is pertinent to note that the property so parted with is on a pretext of such deception by the accused and is not made voluntarily and with free consent.
In the case of Wolfgang Reim & Ors v. State & Anr, the Delhi High Court categorically held that “a person must not be charged with the offence of cheating and criminal breach of trust simultaneously for the same transaction because for the offence of cheating, it is a prerequisite that dishonest intention must exist at the inception of any transaction whereas in case of criminal breach of trust, there must exist a relationship between the parties whereby one party entrusts another with property as per law, therefore, for commission of criminal breach of trust, the dishonest intention comes later, i.e, after obtaining dominion over the property by the accused person whereas for commission of cheating, dishonest intention of the accused has to be present at the inception of the transaction.” (emphasis supplied)
The Gauhati High Court and the Punjab and Haryana High Court have taken similar views in the cases of Mahindra and Mahindra Financial Services Ltd. and Ors v. Delta Classic Pvt. Ltd. and Jalpa Parahad Aggarwal vs. State of Haryana and Ors. respectively. However, the Supreme Court is yet to comment on the same.
One might argue that there could be a situation where the victim has voluntarily entrusted his property with the accused and later realizes that he was dishonestly induced by him to do so. Can both these offences co-exist in such a situation?
The answer to this would be an emphatic NO, because although the victim has entrusted his property voluntarily, the same was not done with free consent, as he has been deceived or dishonestly induced to part with his property. Hence, in such a situation, the offence constituted would be that of cheating and not of criminal breach of trust, as the dishonest intention to cheat existed right at the inception.
However, if the intention of the accused was bonafide while he was being entrusted with the property and he thereafter developed a dishonest intention to convert the property into his own use, it would constitute an offence of breach of trust and not cheating. Thus, it is imperative to establish the intention of the accused, and moreover, the timing of such intention.
Hence, if in the facts of a particular case, there is an offence of breach of trust, one must not charge the person with an offence of cheating for the same set of facts or vice versa. When a property is so entrusted, the victim does it voluntarily and with free consent and the offence is committed only subsequently when the accused develops a dishonest intention to convert the entrusted property to his own use.
Whereas, when an offence of cheating is committed, the intention to cheat exists since the beginning and parting of the property by the victim takes place only as a result of such dishonest or fraudulent inducement thereof. In no set of facts can a situation arise to satisfy the ingredients of both the offences simultaneously. Therefore, the offences of Cheating and Breach of Trust must not co-exist in the same set of facts and are antithetical to each other.
The author is an Associate in the chambers of Senior Advocate Aabad H Ponda, Bombay High Court.