Key Differences: Cheating and Criminal Breach of Trust

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In every society, trust is the bedrock upon which relationships, interactions, and transactions are built. However, when trust is shattered through deceit and breach of fiduciary obligations, it undermines the very fabric of social order. In India, laws pertaining to cheating and criminal breach of trust play a crucial role in addressing such offences, ensuring accountability, and upholding justice. The origins of laws related to cheating and criminal breach of trust can be traced back to the Indian Penal Code (IPC) of 1860, which was enacted to consolidate and codify criminal law in India, and it continues to serve as the cornerstone of criminal jurisprudence in the country. The amendments and judicial interpretations, over the years, have shaped the understanding and application of these offences. Courts have provided valuable guidance by clarifying the scope of cheating, the elements of criminal breach of trust, and the punishments associated with them. These offences strike at the heart of trust and integrity; therefore, the laws related to them serve as safeguards against fraudulent inducement, deceptive practices, and abuse of entrusted property. In India, these acts are specifically addressed and penalized under the IPC. In this article, we will discuss “What is cheating in Indian law?” and “What is a criminal breach of trust in Indian law?” Along with related case laws, we will also delve into certain other provisions, punishments, and key differences between cheating and criminal breach of trust. 

What is Cheating?

Cheating is a criminal offence under Section 415 of the Indian Penal Code, which is defined as “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’.” According to Merriam-Webster Dictionary, cheating is ‘to deprive of something valuable by the use of deceit or fraud,’ or ‘to violate rules dishonestly’. It can be demonstrated that cheating is done to gain profit from another person by using deceitful means, knowing the fact that the same would place another person in an unfair situation. 

Scope

The scope of Section 415 of the IPC is broad and covers situations where a person fraudulently induces another to deliver property or valuable security or to perform or omit an act of value. It includes dishonest inducement through false representations, concealment of facts, or any other deceptive means. Section 415 of the IPC is often coupled with other related sections of the IPC such as Sections 416, 417, and 420 that deal with cheating by personation, punishment for cheating, and cheating and dishonestly inducing delivery of property respectively. The specific circumstances and evidence presented in a case will determine the charges filed and the subsequent legal proceedings. 

What are the key essentials of cheating?

The key elements of cheating are mentioned as follows:

• The victim must be induced through dishonest means such as false representations, concealment of facts, or any other deceptive conduct.
• The offender must have a fraudulent intention to deceive the victim, thereby inducing them to act upon the false representation or concealment.
• The same should cause wrongful loss to the victim or gain an unfair advantage for oneself or another person.

Other provisions related to cheating

Section 416 of the IPC: This Section of the Indian Penal Code defines the term ‘cheating by personation’. It states that “A person is said to cheat by personation if he cheats by pretending to be some other person, or by knowingly substituting one person or another, or representing that he or any other person is a person other than he or such other person really is. Explanation: The offence is committed whether the individual personated is a real or imaginary person.” The punishment for the same is mentioned in Section 419 of the IPC, which is imprisonment for a term which may extend to 3 years, or with a fine, or with both.

Section 418 of the IPC: It deals with ‘cheating with the knowledge that wrongful loss may ensue to person whose interest offender is bound to protect’. If the offender cheats with the knowledge that he is likely to cause wrongful loss to a person whose interests he is bound to protect, he shall be punished with imprisonment for a term which may extend to three years, or with fine, or with both. 

Section 420 of the IPC: As per this Section, “Whoever cheats and thereby dishonestly induces the person deceived to deliver any property to any person, or to make, alter, or destroy the whole or any part of a valuable security, or anything which is signed or sealed, and which is capable of being converted into a valuable security, shall be punished with imprisonment of either description for a term which may extend to seven years, and shall also be liable to fine.” 

What is a Criminal Breach of Trust?

A criminal breach of trust occurs when a person who is entrusted with property or dominion over property dishonestly misappropriates or converts it for their own use. Under Section 405 of the IPC, a criminal breach of trust is defined as “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 wilfully suffers any other person so to do, commits ‘criminal breach of trust’.” In this Section of the IPC, the word ‘entrust’ holds significant importance. It signifies the act of conferring trust or responsibility upon a person regarding property or dominion over property. The use of the term "entrustment" implies that the property is placed under the care, custody, or control of the accused with an expectation of responsible handling. The element of entrustment distinguishes criminal breach of trust from ordinary theft or misappropriation. It emphasizes the violation of trust reposed in the accused, whether it is due to a fiduciary relationship, contractual obligation, or any other form of confidence, thereby making it a key component for establishing the offence. 

Essentials

The key elements of the criminal breach of trust are mentioned as follows:

• The property must be entrusted to the offender either by the victim or by someone on behalf of the victim.
• The offender must dishonestly misappropriate or convert the entrusted property for their own benefit or the benefit of someone else.
• The act of misappropriation or conversion must involve a breach of trust placed on the offender. This breach can be an abuse of the position of trust or a violation of the legal obligations associated with the entrusted property.

Other provisions related to criminal breach of trust

Section 407 of the IPC: This Section illustrates that anyone entrusted with property as a carrier, wharfinger, or warehouse-keeper, who commits a criminal breach of trust in respect of that property should be punished with imprisonment for a term extending to 7 years and should also be liable to a fine.

Section 408 of the IPC: It provides punishment for criminal breach of trust by a clerk or servant, stating that “Whoever, being a clerk or servant or employed as a clerk or servant, and being in any manner entrusted in such capacity with property, or with any dominion over property, commits criminal breach of trust in respect of that property, shall be punished with imprisonment of either description for a term which may extend to seven years, and shall also be liable to fine.”

Section 409 of the IPC: It deals with ‘criminal breach of trust by a public servant, or by banker, merchant or agent’. It states that “Whoever, being in any manner entrusted with property, or with any dominion over the property in his capacity of a public servant or in the way of his business as a banker, merchant, factor, broker, attorney or agent, commits criminal breach of trust in respect of that property, shall be punished with imprisonment for life or with imprisonment of either description for a term which may extend to ten years, and shall also be liable to fine.”

Key Differences Between Cheating and Criminal Breach of Trust

Some of the key differences between cheating and criminal Breach of Trust are mentioned as follows:

Provision under IPC

• Cheating: This offence is defined under Section 415 of the IPC.
• Criminal Breach of Trust: This offence is defined under Section 405 of the IPC.

Nature of Offence

• Cheating: It primarily involves fraudulent inducement or performing an act based on false representations or concealment of facts. It focuses on the act of inducing someone through dishonest means.
• Criminal Breach of Trust: It centers around the abuse of trust or breach of fiduciary obligations. It occurs when a person, who is entrusted with property or dominion over property, dishonestly misappropriates or converts it for their own use or the benefit of someone else.

Intent

• Cheating: It required fraudulent intent on the part of the offender. They must have the intention to deceive and induce the victim to act upon their false representations.
• Criminal Breach of Trust: In this case, the emphasis is on the dishonest misappropriation or conversion of entrusted property by a person who was in a position of trust. The intent is not necessarily focused on deception but rather on the violation of the entrusted property.

Consent

• Cheating: In the offence of cheating, the victim’s consent plays a crucial role which is obtained on the basis of fraudulent inducement. The victim's consent is obtained under false pretenses, as they are induced to act or deliver property based on the offender's dishonest conduct. Therefore, while the victim may have initially consented, it is consent that is vitiated by the fraudulent inducement.
• Criminal Breach of Trust: In the offence of criminal breach of trust, consent is not a defining factor as the focus is on the breach of trust and violation of fiduciary obligations. Herein, the offence is committed irrespective of whether the owner of the property has given their consent or not. 

Nature of Property

• Cheating: Played against immovable property only.
• Criminal Breach of Trust: Played against movable or immovable property.

Nature of Loss

• Cheating: It generally involves causing wrongful gain to the offender or others, or causing wrongful loss to the victim. The gain or loss is a direct result of the fraudulent inducement.
• Criminal Breach of Trust: It primarily entails the misappropriation or conversion of entrusted property, resulting in wrongful loss to the person to whom the property belongs or was entrusted. The focus is on the betrayal of trust and the resulting loss suffered by the victim.

Punishment

• Cheating: Under Section 417 of the IPC, anyone who cheats is punished with imprisonment for a term which may extend to one year, or with a fine, or with both.
• Criminal Breach of Trust: Under Section 406 of the IPC, anyone who commits a criminal breach of trust is punished with imprisonment for a term which may extend to three years, or with a fine, or with both.

Related Case Laws

• Jaswantlal Nathalal vs. State of Gujarat (November 23, 1967) 
• State of UP vs. Babu Ram Upadhya (April 11, 2000)
• Jaswant Rai Manilal Akhaney vs. State of Bombay (May 04, 1956)
• Rashmi Kumar vs. Mahesh Kumar Bhada ( December 18, 1996)