Section 420 IPC is now Section 318 of the Bharatiya Nyaya Sanhita, 2023. Cheating and dishonestly inducing delivery of property is punishable with imprisonment up to seven years and fine. Criminal breach of trust, formerly Section 406 IPC, is now Section 316 BNS.
Read the sub-section, not just the section, because they are graded and they decide how serious the case is. Section 318 has a general offence of cheating, a separate and heavier limb where the accused cheated a person whose interest he was bound by law or contract to protect, and the limb that corresponds to the old Section 420, cheating and dishonestly inducing delivery of property or the making, alteration or destruction of a valuable security. Section 316 grades criminal breach of trust in the same way, with distinct provisions for a carrier, for a clerk or servant, and for a public servant, banker or agent. Where the FIR simply says "318 and 316 BNS" without identifying the limb, that is itself worth pinning down, since the answer changes the punishment, the compounding position and the bail conversation.
What the prosecution must establish
The critical ingredient is dishonest or fraudulent intention at the very inception of the transaction. It is not enough that a promise was later broken, or that money was not repaid, or that a business failed. The complainant must show that the accused never intended to perform when they made the representation.
That distinction is what separates cheating from criminal breach of trust, and the two are pleaded together far more often than the facts allow. Cheating requires that the property was parted with because of a deception practised at the outset. Criminal breach of trust requires that the property was entrusted lawfully and then dishonestly misappropriated or converted. The same transaction cannot ordinarily be both, because either the complainant was deceived into handing the property over or he entrusted it willingly. Making that point in the written objections, with the complainant's own documents, is frequently more effective than any argument on the merits.
A very large number of Section 318 FIRs are commercial disputes: an unpaid loan, a failed partnership, a supply contract gone wrong, a builder who ran out of money. The Supreme Court has repeatedly deprecated giving a civil dispute a criminal colour, and this is one of the recognised Bhajan Lal categories for quashing an FIR under Section 528 BNSS. If the complaint reads like a recovery suit, that is the defence to build.
Immediate steps if you are named
- Anticipatory bail under Section 482 BNSS. The offence is non-bailable.
- Assemble the transaction record: agreements, invoices, bank statements, delivery proof, correspondence. Documentary proof that you performed, or attempted to perform, defeats the allegation of initial dishonest intention.
- Evidence of part performance or part payment is particularly valuable, because it is inconsistent with an intention to cheat from the outset.
- Consider a quashing petition where the dispute is plainly contractual. It is a Crl.P. before the High Court of Karnataka, sitting at Bengaluru, Dharwad or Kalaburagi according to the district in which the FIR was registered, and it is materially easier before a chargesheet than after. What has to be annexed, and how the petition is built, is set out in our guide on how to quash an FIR.
Two practical points on the papers. Put the entire commercial file before the court, not the parts that help: the agreement, the invoices, the ledger, the emails in sequence, and any earlier civil proceeding between the same parties. A petition that shows the judge a contract, a running account and a demand notice, and only then the FIR, is doing the real work. And where you say the complaint is not merely weak but manufactured to extract a settlement, there are separate remedies against the complainant, and those are set out in our note on being falsely accused of a crime.
If you are the complainant
Be realistic about which remedy actually gets your money back. A criminal case may create pressure, but the court that orders repayment is the civil court, or the Magistrate under Section 138 NI Act if a cheque is involved. Many complainants spend years in a criminal case and never file the recovery suit, by which time it is time-barred. Run the civil remedy in parallel from the start.
Compounding
Cheating is compoundable with the permission of the court in appropriate cases, and where the parties settle, the High Court can quash the proceedings under Section 528 BNSS applying Gian Singh.
Section 359 BNSS sets out which offences may be compounded and by whom, in two tables. Plain cheating may be compounded by the person cheated without leave of the court. Cheating and dishonestly inducing delivery of property, cheating a person whose interest the accused was bound to protect, and criminal breach of trust all sit in the second table, so those require the permission of the court before which the prosecution is pending. Get the sequence right when a settlement is being negotiated: the money moves against a written compromise, the compromise is filed, and only then is the application made. Paying first and asking afterwards leaves you with no case and no money.