‘Criminal Breach of Trust’ and ‘Cheating’ Offences Cannot Co-Exist in Same Set of Facts, are Antithetical: Supreme Court
While hearing a property dispute, the Supreme Court (SC) of India, on September 24, 2025, said that the offences of criminal breach of trust and cheating cannot co-exist in the same set of facts. It said that the offence of criminal breach of trust under Section 406 of the Indian Penal Code (or Section 316 of the Bharatiya Nayaya Sanhita) and cheating under Section 420 of the Indian Penal Code (or Section 318 of the Bharatiya Nayaya Sanhita) are ‘antithetical’.
‘Section 406’ of IPC states, “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.” ‘Section 420’ of IPC states, “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.”
The SC bench of Justice BV Nagarathna and Justice R Mahadevan observed, “For cheating, criminal intention is necessary at the time of making false or misleading representation i.e. since inception. In criminal breach of trust, mere proof of entrustment is sufficient. Thus, in case of criminal breach of trust, the offender is lawfully entrusted with the property, and he dishonestly misappropriates the same. Whereas, in case of cheating, the offender fraudulently or dishonestly induces a person by deceiving him to deliver a property. In such a situation, both offences cannot co-exist simultaneously. Consequently, the complaint cannot contain both the offences that are independent and distinct. The said offences cannot co-exist simultaneously in the same set of facts as they are antithetical to each other.”
The bench presided over the case, which revolved around a straightforward property sale agreement in which the appellant-accused accepted an advance payment but neither completed the sale nor refunded the amount for a period of eight years. Further, a case was filed by the complainant alleging both criminal breach of trust and cheating. However, the Jharkhand High Court (HC) refused to quash the criminal proceedings; therefore, the matter was mentioned before the top court. After hearing the matter, the SC set aside the HC’s order and observed, “it is pertinent to mention that if it is the case of the complainant/respondent No.2 that the offence of criminal breach of trust as defined under Section 405 IPC, punishable under Section 406 IPC, is committed by the accused, then in the same breath it cannot be said that the accused has also committed the offence of cheating as defined in Section 415, punishable under Section 420 IPC.”
The bench also said, “...every act of breach of trust may not result in a penal offence unless there is evidence of a manipulating act of fraudulent misappropriation of property entrusted to him…In the present case, the complainant/respondent No.2 has failed to establish the ingredients essential to constitute an offence under Section 406 IPC. The complainant/respondent…has failed to place any material on record to show us as to how he had entrusted property to the appellant. Furthermore, the complaint also omits to aver as to how the property, so entrusted to the appellant, was dishonestly misappropriated or converted for his own use, thereby committing a breach of trust.” Lastly, the bench allowed the appeal and set aside the impugned order of the HC.
