Police and judicial officers need training in law to understand distinction between criminal breach of trust and cheating: Supreme Court

In Delhi Race Club (1940) Ltd vs. State of Uttar Pradesh,  Supreme Court's Division bench of Justices J.B. Pardiwala and Manoj Misra pointed out the the fine distinction between the offence of cheating viz-a-viz criminal breach of trust. It observed: "Both offences are independent and distinct. The two offences cannot coexist simultaneously in the same set of facts. They are antithetical to each other. The two provisions of the IPC (now BNS, 2023) are not twins that they cannot survive without each other." The Court set aside orders of Allahabad High Court and the Additional Chief Judicial Magistrate, Khurja, Bulandshahar taking cognizance upon the complaint dated April 3, 2024 and February 28, 2023 respectively. Supreme Court's judgement was delivered on August 23, 2024. It was authored by Justice Pardiwala. 

The case in question pertained to one unpaid seller. It is the case of the complainant that he used to regularly supply consignments of grains & oats meant for horses at the Delhi Race Club. The complainant used to raise invoices in favour of the Club and the Club used to pay the requisite amount. However, according to the complainant after 2017, the Club stopped making the payment. It is the case of the complainant that an amount of Rs. 9,11,434/- is due and payable by the appellants towards the supply of the consignment of oats.

The Court observed:"The impugned order passed by the High Court is a fine specimen of total non- application of mind. Although the complaint was filed for the offence punishable under Sections 406, 420 and 120B respectively of the IPC yet the Additional Chief Judicial Magistrate thought fit to take cognizance and issue process only for the offence of criminal breach of trust as defined under Section 405 of the IPC and made punishable under Section 406 of the IPC. We are of the view that even if the entire case of the complainant is accepted as true no offence worth the name is disclosed." 

The Court drew on its decision in S.W. Palanitkar & Ors. v. State of Bihar & Anr. reported in (2002) 1 SCC 241 expounded the difference in the ingredients required for constituting an of offence of criminal breach of trust (Section 406 IPC) viz-a-viz the offence of cheating (Section 420).

In order to constitute a criminal breach of trust (Section 406 IPC): -
1) There must be entrustment with person for property or dominion over the property, and
2) The person entrusted: -
a) dishonestly misappropriated or converted property to his own use, or
b) dishonestly used or disposed of the property or willfully suffers any other person so to do in violation of:
i. any direction of law prescribing the method in which the trust is discharged; or
ii. legal contract touching the discharge of trust (see: S.W.P. Palanitkar (supra).
Similarly, in respect of an offence under Section 420 IPC, the essential ingredients are: -
1) deception of any person, either by making a false or misleading representation or by other action or by omission;
2) fraudulently or dishonestly inducing any person to deliver any property, or
3) the consent that any persons shall retain any property and finally intentionally inducing that person to do or omit to do anything which he would not do or omit (see: Harmanpreet Singh Ahluwalia v. State of Punjab, (2009) 7 SCC 712 : (2009) Cr.L.J. 3462 (SC))

The judgement concluded:"We direct the Registry to send one copy each of this judgment to the Principal Secretary, Ministry of Law & Justice, Union of India and also to the Principal Secretary, Home Department, Union of India." It underlined the need of proper training of police and judicial officers so that they understand the distinction between criminal breach of trust and cheating.