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Proposed amendments in Sections 314, 315, 316 and 318 of BNS – Criminal
Misappropriation, Criminal Breach of Trust and Cheating.

Criminal Misappropriation – Sections 314 & 315 BNS:-

Under section 314 BNS, whoever dishonestly misappropriates or converts to his own use,
any movable property, shall be punished with imprisonment up to two years or with fine or
with both.

In cases of criminal misappropriation, the initial possession of the property in the hands of
the offender will not be an offence since it may to the hands of the offender innocently or
by chance. But the retention of the same becomes wrongful and fraudulent by a subsequent
change of intention or from the knowledge of some new fact. Even temporary
misappropriation is an offence.

Misappropriation of properties can be in many ways and forms. In some forms, we may not
feel it as an offence.

Example-1:-

A person who finds an unclaimed or unprotected property and takes it into his custody,
does not commit any offence. But, if he appropriates it, knowing, or having the means to
know who the owner is, he commits the offence. Here, the offence is trivial in nature.
Therefore, the punishment provided for the same at present under Section 314 may be
sufficient.

Example-2:-

When somebody pays some amount to a person by mistake and the receiver knows at that
time or subsequently that he is not entitled to it and yet determines to keep the money with
him, he is guilty of misappropriation.

Suppose somebody takes away a valuable property for his temporary use from another
person with his consent. Subsequently, he keeps the property for long with him or converts
the same for his own use without any authority. In the above two cases, the fraudulent acts
committed by the offender has more gravity. Hence it should be dealt with seriously and the
punishment provided in this provision is not sufficient in these types of cases.

As per Section 315 BNS, dishonest misappropriation of the property of a person at the time
of his death is punishable with imprisonment up to three years or with fine or with both.

If the misappropriation is committed by a clerk or servant appointed by the deceased

person, the imprisonment will be extended up to seven years.

Example-1:- Suppose a person happens to in an accident on the spot or on the way to

hospital. If somebody who reaches the spot immediately or carries the dead body to the
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hospital, or somebody in the hospital removes certain valuable properties from the body of
the dead person and appropriate the same for himself, offence of misappropriation under
Section 315 is committed.

Example-2:- When a land lord who had been living alone with plenty of wealth dies, if his
servant at that time removes certain valuable properties from the body of the dead person
and appropriate the same for himself, he is said to have committed offence of
misappropriation under Section 315.

The offences mentioned in both the above examples are graver than that we have seen in
Section 314. Therefore, punishment should be severe in both the above examples
irrespective of the position or nature of offender who committed the same.

On account of the above facts, in cases of misappropriation, amendment is needed by

grading offences with appropriate illustrations according to its gravity and awarding
punishments corresponding thereto is desirable. Another important thing is that, since
misappropriation is at present is non-cognizable offence, the police and law enforcement
officials are unable to book the offenders immediately upon receiving information regarding
the commission of the offence. Hence, amendment is also necessary to make it cognizable.

Criminal Breach of Trust – 316 BNS:

The offences of criminal breach of trust are defined in Section 316 BNS. According to it,
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 cases of criminal breach of trust, the grading of the offences is done, as of now, as
follows:

Section 316 (2):- Whoever commits criminal breach of trust shall be punished with
imprisonment of either description up to 5 years, or with fine or with both. This punishment
is intended for criminal breach of trust committed by an ordinary man.

Section 316 (3):- If criminal breach of trust is committed by a carrier, wharfinger or

warehouse-keeper, he shall be punished with imprisonment of either description up to 7
years and shall also be liable to fine.

Section 316 (4):- If criminal breach of trust is committed by a clerk or servant, he shall be
punished with imprisonment of either description up to 7 years and shall also be liable to
fine.
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Section 316 (5):- If criminal breach of trust is committed by public servant, banker,
merchant, factor, broker, attorney or agent, he shall be punished with imprisonment for life,
or with imprisonment of either description up to 10 years and shall also be liable to fine.

Here from the above four categories of the offence, we can see that the gravity of criminal
breach of trust is decided as per the position or capacity of the offender who commits the
offence. In none of the above four categories of criminal breach of trust, the quantum or
value of the property misappropriated or the number of victims who are affected by the
offence are given any significance. There are so many examples of organised criminal breach
of trust by individuals, private financial institutions, corporates, etc in which hundreds of
thousands of people were jeopardised in one go and properties worth crores of rupees
thereby misappropriated.

As far as the offence of criminal breach of trust is concerned, the value of property which is
misappropriated and the number of victims jointly affected by the offence must also be
considered as criteria, apart from the position or capacity of the offender who commits the
offence, for deciding the gravity of the offence.

Cheating – Section 318 BNS:

The offences of cheating are defined in Section 318 BNS. According to it, 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 to do, 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.

Cheating is the most heinous form of economic offences. Thieves may be committing theft
without the knowledge of the possessors of the property, while they may be absent from its
vicinity. But in the cases of cheating, the fraud is committed when the possessors are awake
and they are driven to deliver the property in their possession due to the calculated
deception employed on them by the offender. Naturally the desperation and mental agony
of the victims in cheating cases will be extremely higher than that of the victims in theft
cases. In theft cases, once the offence is committed, there may not be any chance for the
victim to identify or to get any clues about the thief, facilitating to forget and heal the
nightmarish hurt, whereas in cheating cases, the offenders will be happily living in front of
the victim at his expense and thereby insulting the victim’s injury and galling him
relentlessly.

In cases of cheating, the grading of the offence is done, as of now, as follows:

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Section 318 (2):- Whoever cheats shall be punished with imprisonment of either description
up to 3 years, or with fine or with both. This punishment is intended for simple form of
cheating. This offence is non-cognizable.

Section 318 (3):- If anybody cheats by causing wrongful loss to a person whose interest he
was bound to protect, either by law or by a legal contract, while doing a transaction to
which the cheating relates, he shall be punished with imprisonment of either description up
to 5 years, or with fine or with both.

Eg: 1. A lawyer cheats his client by giving impression that he has performed perfectly for
him.

2. A doctor cheats his patient by steeling vital organs in the pretext of emergency
surgery.

Ironically this offence is also non-cognizable.

Section 318 (4):- Whoever cheats and thereby dishonestly induces the person so 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 capable of being converted into a valuable security,
shall be punished with imprisonment of either description up to 7 years and shall also be
liable to fine.

In this version of the offence, delivery or making or alteration or destruction of any property
or valuable security is the criteria for the punishment.

It may be noted that the same fraudulent intention and deception of the offender is
involved in all the above three categories of cheating. In the 1 st category, there may not be
any material loss to the victim. The 2nd category is more serious an offence where the future
life of the victim will be at peril due to the deception employed by the offender. In the 3 rd
category monetary loss to the victim and illegal gain to the offender is palpable. In any of
the above three categories, no importance is given to the quantum of the offence in terms
of the value of the property cheated or the number of victims cheated. There are so many
examples of organised cheating by individuals, private financial institutions, corporates, etc
in which hundreds of thousands of people were cheated at single stretch and crores of
rupees thereby embezzled. In some of such cases, a large number of fraudulent incidents of
similar nature would be serially interwoven in furtherance of the common object evolved in
a criminal conspiracy.

As far as the offence of cheating is concerned, it is the value of property cheated or the
value of the loss sustained to the victim which shall be the 1 st criterion for deciding the
gravity of the offence apart from the position or capacity of the offender. Secondly, the size
of cheating in terms the number of persons cheated should also be counted for deciding the
gravity of cheating.
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On account of the facts and circumstances discussed above, there is a need for grading and
categorising the offences of criminal breach of trust and of cheating in terms of volume and
value of property misappropriated or embezzled and in terms of the number of victims
affected or cheated apart from the position or capacity of the offenders and the terms of
imprisonment and amount of fine shall be enhanced proportionately in accordance with the
gravity thus fixed. It is also proposed to bring amendment by making cognizable all the
categories of offences of cheating.

Intricacy in certain cases of cheating:

In certain cases, the so-called offender and the victim may reach in an agreement to
accomplish a thing which is illegal and against public policy. In such cases, the agreement
itself would be void. When, the so-called offender violates the promise in such cases, no
offence within the meaning of cheating or criminal breach of trust can be attributed on him,
since the agreement itself was void as the matter agreed upon was illegal.

There are several decisions of various High Courts and the Supreme Court pinpointing the
above position. In Vijay Sharma & Ors Vs State of Bihar, MANU/BH/1310/2010-2011 (1)
PLJR 780 , the offence alleged was that the accused committed criminal breach of trust by
misappropriating huge amount from the victim after giving false promise to arrange job in
Bihar Police. The above case was taken cognisance of by the jurisdictional Judicial
Magistrate. When it was challenged in Patna High Court, the Final report was discharged by
the Court by holding as follows: “10. A bare perusal of the complaint reveals that even if the
allegations are (sic) the parties were in pari delicto to commit an offence. Employment in
the Government is available on advertisement and selection and not purchased by money.
Such appointment is outright illegal appointment. If two persons agreed to commit an act,
which is an offence under the Indian Penal Code and the agreement fails because the crime
could not be committed, can it be said that it constitutes an offence under Indian Penal
Code when under the Penal Code the agreement itself was an offence.

11. Section 23 of the Indian Contract Act declares void contract which is contrary to the law
or opposed to public policy. Therefore, even under the civil law, the agreement between the
parties was unlawful in its very inception. Both had agreed to do something which was
prohibited in law. The contract ex facie being unlawful, both parties can be said to have
intended to exploit the law for an illegal purpose. The reliance by the complaint on Section
65 of the Indian Contract Act may create a civil finding for the maintainability of any such
claim under an illegal contract which shall have to be decided on its own merits in an
appropriate civil proceeding. It can however never constitute a criminal offence.”

In Santhosh Kumar Trivedi Vs. State of Bihar, 2019 KHC 3701 , the offence alleged is that
the accused promised to arrange job for the victim in Railways and cheated him of Rs.
2,50,000/- without fulfilling the promise or giving the money back. In this case also, the
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Court took the same stand by referring to the above observation inVijay Sharma & Ors Vs
State of Bihar, MANU/BH/1310/2010-2011 (1) PLJR 780 and discharged the charge sheet.

In Bharat B. Kurbetti & Ors Vs. State of Karnataka, 2000 KHC 2760, it was alleged that the
complainant was a candidate in the election to the Director Board of a Bank. The accused
promised him money to withdraw from his candidature. Though the complainant withdrew
his candidature on the above promise, the accused cheated him by not keeping the
promise. The jurisdictional Magistrate took cognisance of the case under Sections 417, 120-
B r/w 34. Quashing the proceedings, the High Court of Karanataka observed as follows: “8.
As such, on the very allegation found in the complaint and speaking to the same in the
sworn statement and as the complainant has admitted in clear terms that he withdrew his
candidature from contest only after he entered into an agreement with the petitioners who
had promised him to pay certain amount for such withdrawal. The agreement in my view, is
not only an illegal agreement or contract, but also opposed to public policy. Such agreement
is illegal and unenforceable under the law. Even if the art of the agreement is realized by the
other side, the complainant cannot allege the offence of cheating by the other side. For
example, can a person be permitted to come before the Court or file complaint alleging that
he had entered into illegal contract with another for killing somebody on payment of money
or kidnapping certain person or for engaging a minor or a woman for prostitution and come
before the Court, file a crimnal complaint that the other party has not kept his promise by
non-payment and hence liable to be punished for cheating or breach of trust? In my view,
when a person enters into an illegal contract, he cannot complain of cheating against the
other party for not fulfilling the obligation. The penal provision is not meant for such
persons.”

In the context of the above decisions, in cases of cheating where the complainant
and the accused have together arrived at a void agreement for accomplishing some illegal
objects against the public policy, both of them will be equal participants in the offence.
Hence, the complainant will not have any legal right to raise a complaint in this regard,
because such complaints are legally untenable. But since the transactions in such cases are
illegal and against public policy and are looming threats over the society as a scam, the State
cannot leave it unnoticed also. In such contexts, the police and the law enforcement
agencies will be definitely in confusion as to how such cases can be carried forward safely.
Really, law should take its course by making both the parties accused in such cases. But if we
make it a normal practice to book both the parties, the victims in similar incidents will not
come forward to report such scams further before police and law enforcement agencies,
facilitating such unscrupulous elements to spread their wings boundlessly. Therefore, a
clarification regarding the prospect of such cases is needed to be brought in BNS in the form
of a potential amendment.