Section 318 Cheating of the Bharatiya Nyaya Sanhita (BNS)

Section 318 Cheating of the Bharatiya Nyaya Sanhita(BNS) outlines the offence of cheating, emphasizing the critical elements of deception, fraudulent intent, and inducement leading to harm. This provision is pivotal in distinguishing criminal cheating from mere civil breaches, especially in cases involving financial transactions and fiduciary relationships. As Indian law continues to evolve, understanding the nuances of Section 318 BNS is essential for everyone.

Legal Terms :

• Deception: The act of making someone believe something false.
• Dishonestly: Doing something with the intention of causing wrongful gain or loss.
• Inducement: Persuading or influencing someone to act in a certain way.
• Valuable Security: A document that has financial value, such as a cheque, promissory note, or title deed.
• Dishonest concealment: the act of intentionally hiding or withholding important information to deceive.

Section 318: Provision

318. (1) 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.

 Explanation.—A dishonest concealment of facts is a deception within the meaning of this section

Section 318 Cheating of the Bharatiya Nyaya Sanhita : Explained 

The provision defines the crime of cheating. It essentially states that if someone intentionally deceives another person, causing them to suffer harm or loss, it is considered cheating.

The key elements of this section:

1. Deception: This means tricking or misleading someone. It can be done through false statements, false promises, or even concealing information.
2. Fraudulent or Dishonest Inducement: The deception must lead the victim to do something they wouldn’t normally do, or to stop doing something they would normally do. This could involve giving away property(Transfer possession of any property to any person or) , consenting to someone keeping property (Agree that another person shall retain any property or), or doing something that causes harm.
3. Damage or Harm: The victim must suffer a loss or harm as a result of the deception. This could be physical harm, mental harm, damage to their reputation, or financial loss.

Example: If someone promises to sell a valuable item to another person at a very low price, but later refuses to sell it after receiving the payment, this could be considered cheating. The deception (false promise of sale) led the victim to part with their money, causing them financial harm.

Understanding Explanation:

Dishonest Concealment: If someone hides important facts on purpose to deceive another person, it’s also considered cheating.

Illustrations 

(a) A, by falsely pretending to be in the Civil Service, intentionally deceives Z, and thus dishonestly induces Z to let him have on credit goods for which he does not mean to pay. A cheats. 

Fake Identity: If someone pretends to be a government officer and convinces another person to give them goods on credit, knowing they won’t pay, it’s cheating.

(b) A, by putting a counterfeit mark on an article, intentionally deceives Z into a belief that this article was made by a certain celebrated manufacturer, and thus dishonestly induces Z to buy and pay for the article. A cheats.

Counterfeit Goods: Selling a product by falsely labelling it as a branded item is cheating.

(c) A, by exhibiting to Z a false sample of an article intentionally deceives Z into believing that the article corresponds with the sample, and thereby dishonestly induces Z to buy and pay for the article. A cheats. 

Bogus Samples: Showing a fake sample to get someone to buy a product based on it is cheating.

(d) A, by tendering in payment for an article a bill on a house with which A keeps no money, and by which A expects that the bill will be dishonoured, intentionally deceives Z, and thereby dishonestly induces Z to deliver the article, intending not to pay for it. A cheats.

False Payments: Using a cheque from an account with no funds to buy goods, knowing it will bounce, is cheating.

(e)A, by pledging as diamonds articles which he knows are not diamonds, intentionally deceives Z, and thereby dishonestly induces Z to lend money. A cheats. 

Fake security/ surety : Pledging fake diamonds as real ones to get a loan is cheating. 

(f) A intentionally deceives Z into a belief that A means to repay any money that Z may lend to him and thereby dishonestly induces Z to lend him money, A not intending to repay it. A cheats. 

False Promises: Borrowing money with a promise to repay, but with no intention of doing so, is cheating.

(g) A intentionally deceives Z into a belief that A means to deliver to Z a certain quantity of indigo plant which he does not intend to deliver, and thereby dishonestly induces Z to advance money upon the faith of such delivery. A cheats; but if A, at the time of obtaining the money, intends to deliver the indigo plant, and afterwards breaks his contract and does not deliver it, he does not cheat, but is liable only to a civil action for breach of contract. 

No Intention to Deliver: Taking advance money for goods with no intention to deliver them is cheating. However, if the intention to deliver was genuine initially and the goods were not delivered later, it’s a breach of contract, not cheating.

(h) A intentionally deceives Z into a belief that A has performed A’s part of a contract made with Z, which he has not performed, and thereby dishonestly induces Z to pay money. A cheats.

False Claims: Lying about fulfilling a contract to get money is cheating.

(i) A sells and conveys an estate to B. A, knowing that in consequence of such sale he has no right to the property, sells or mortgages the same to Z, without disclosing the fact of the previous sale and conveyance to B, and receives the purchase or mortgage money from Z. A cheats

Selling the Same Property Twice: Selling a property to one person and then selling or mortgaging it again to another without informing the first buyer is cheating.

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• (2) Whoever cheats shall be punished with imprisonment of either description for a term which may extend to three years, or with fine, or with both. 
• (3) Whoever cheats with the knowledge that he is likely thereby to cause wrongful loss to a person whose interest in the transaction to which the cheating relates, he was bound, either by law, or by a legal contract, to protect, shall be punished with imprisonment of either description for a term which may extend to five years, or with fine, or with both. 
• (4) 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.

Punishments:

1.Subsection 2 Cheating :  Punishment can be imprisonment for up to three years, a fine, or both.

2. Subsection 3 Cheating with Wrongful Loss : If cheating causes wrongful loss to someone whom the person was legally bound to protect, the punishment can be imprisonment for up to five years, a fine, or both.

3.Subsection 4 Cheating Involving Property or Valuable Security: If cheating leads to the delivery of property or alteration of valuable security, the punishment can extend to seven years of imprisonment and a fine.

Comparison with the Indian Penal Code (IPC):

1. Section 415 IPC vs. Section 318 BNS:

 Section 415 IPC defines cheating similarly but lacks the detailed illustrations provided in Section 318 BNS. The BNS has expanded the definition by including various specific scenarios and has increased the punishment for certain types of cheating.

2. Section 417 IPC vs. Section 318(2) BNS:

Section 417 IPC provides punishment for cheating with imprisonment up to one year or fine or both. In contrast, Section 318(2) BNS increases this punishment to three years, fine, or both, reflecting a stricter approach.

3. Section 418 IPC vs. Section 318(3) BNS:

Section 418 IPC deals with cheating by a person who is bound to protect another’s interest and prescribes imprisonment of up to three years, fine, or both. Section 318(3) BNS, however, extends the punishment to five years, fine, or both, indicating an emphasis on protecting vulnerable parties.

4. Section 420 IPC vs. Section 318(4) BNS:

Section 420 IPC deals with cheating that involves the delivery of property or alteration of valuable security, with a punishment of up to seven years and a fine. Section 318(4) BNS mirrors this but is more explicit in including acts such as making, altering, or destroying valuable securities, thereby ensuring comprehensive coverage.

Recent and important case laws from Supreme Court and High Courts that are relevant to the topic

1. Vikas Kanaujia v. Sarita (2024) – In this recent Supreme Court case, the Court discussed the significance of deception and inducement in the context of cheating. The judgment emphasized that a mere breach of contract does not amount to cheating unless there is a fraudulent intention at the outset.

2. Central Information Commission v. Delhi Development Authority (2024) – The Supreme Court highlighted the need for clear and convincing evidence when alleging cheating, particularly when it comes to the alteration of valuable securities or property. The Court reiterated that the accused’s intention at the time of the transaction is crucial in determining guilt.

3. Mohd. Abdul Samad v. State of Telangana (2024) – The Court examined a case involving the use of fraudulent documents to obtain financial benefits. The judgment reinforced the principles that constitute the offence of cheating, particularly in cases involving financial institutions.

4. Rohini Sudarshan Gangurde v. State of Maharashtra (2024) – This case involved the misuse of a position of authority to deceive others into parting with property. The Court upheld the conviction, underscoring the serious nature of such offences under the Bharatiya Nyaya Sanhita.

5. New Okhla Industrial Development Authority v. Darshan Lal Bohra (2024) – The Supreme Court addressed the issue of double sale of property, ruling that failing to disclose a prior sale while entering into a new agreement constitutes cheating. The judgment aligned with the provisions of Section 318 of the Bharatiya Nyaya Sanhita.

6 .Supreme Court in Dr. Vimla v. Delhi Administration (1963 AIR 1572): The Court explained the essence of cheating as involving two elements—deception and inducement.

7 .High Court in Nayak v. State of Maharashtra (2017 SCC OnLine Bom 2823): The Court elaborated on the aspect of dishonestly inducing someone, which is central to the offence of cheating.

8 . Supreme Court in Hira Lal Hari Lal Bhagwati v. CBI (2003 SCC OnLine SC 126): This case dealt with the seriousness of the offence under Section 420 IPC, particularly where the act involves public trust or large-scale financial dealings, drawing parallels to the extended punishment under BNS Section 318(4).

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