On Friday, August 23, the Supreme Court highlighted the need for nationwide training of police officers to ensure they fully understand the distinction between the offences of cheating and criminal breach of trust. The Court emphasised that these two offences, outlined in the Indian Penal Code (IPC), are distinct and cannot coexist within the same set of facts. The bench, comprising Justices JB Pardiwala and Manoj Misra, noted that confusion around these offences persists even after many years of judicial review.
The Court’s directive came while hearing an appeal against a High Court decision that upheld a magistrate’s order to prosecute a company and its officers under Sections 406, 420, and 120B of the IPC, now updated in the Bharatiya Nyaya Sanhita (BNS) 2023. The case involved allegations that the company failed to pay for horse grains and oats supplied by the complainant. However, the Supreme Court found that both the High Court and the magistrate had erred by conflating the offences of cheating and criminal breach of trust without properly distinguishing between them.
The Court explained that under Section 406 (now Section 316 BNS), criminal breach of trust requires proof of entrustment of property and its subsequent dishonest misappropriation. In contrast, Section 420 (now Section 318 BNS) for cheating necessitates criminal intent at the time of making a false representation. The Court clarified that these offences are mutually exclusive; a single set of facts cannot simultaneously support charges of both cheating and criminal breach of trust.
Expressing concern over the routine and mechanical registration of First Information Reports (FIRs) for both offences, the Supreme Court directed that police officers must thoroughly assess whether the allegations in a complaint fall under the category of cheating or criminal breach of trust before filing an FIR. The Court also urged magistrates to apply their minds meticulously when handling private complaints, ensuring that they carefully examine whether the allegations genuinely constitute either of these specific offences.
The bench criticised the casual approach often taken by magistrates in issuing summons for criminal cases, emphasising that such actions should not be taken lightly. The Court noted that the magistrate’s order must reflect a thoughtful consideration of the facts and applicable law, rather than merely setting criminal proceedings in motion as a matter of course.
In its judgement, the Court overturned the High Court’s decision and the magistrate’s order, concluding that the evidence presented did not meet the essential requirements for charges under Sections 406 and 420 of the IPC. The Court ruled that, in this case, the complainant’s claim was more appropriate for civil litigation over unpaid invoices, rather than criminal prosecution.
Furthermore, the Court highlighted that in cases involving companies, vicarious liability should not automatically be imposed on individual office bearers unless there is clear evidence of direct involvement in the alleged offence.
The Supreme Court’s judgement has been sent to the Principal Secretary of the Ministry of Law & Justice and the Home Department, Union of India, with a recommendation to implement training programs for police officers to prevent such legal misunderstandings in the future.
