Cheating
Chapter Fifty-Two
Syllabus topic 1, "Offences under Indian Penal Code"
Pages 251 to 255 of 802
In one line
Cheating is deceiving somebody into doing something they would not otherwise have done, and the punishment doubles where the deception produces delivery of property.
In the wording a student can write in an exam: by section 318(1) of the Bharatiya Nyaya Sanhita, 2023 whoever, by deceiving any person, fraudulently or dishonestly induces the person so deceived to deliver any property 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.
Why there are two halves to the definition
The first half is about property. Deceiving a person into delivering property, or into consenting that somebody retain it.
The second half is about anything else. Deceiving a person into doing or omitting something he would not otherwise do, where the act or omission causes or is likely to cause damage or harm in body, mind, reputation or property.
The second half is much wider and is often forgotten. A deception that costs the victim nothing in money but damages his reputation is cheating.
The Explanation adds a mode. A dishonest concealment of facts is a deception within the section, so cheating can be committed by silence where there was a duty to speak.
The provision itself
Section 318(1) as set out above, with the Explanation on dishonest concealment.
The illustrations are the best teaching in the section. They cover falsely pretending to be in the Civil Service to obtain goods on credit; putting a counterfeit mark on an article; exhibiting a false sample; tendering a bill on a house where the drawer keeps no money; pledging as diamonds articles known not to be; obtaining a loan on a false promise to repay; and, in illustration (g), the case that draws the line: a man who takes money on a promise to deliver indigo which he does not intend to deliver cheats, but a man who intended to deliver and later broke his contract does not, and is liable only to a civil action.
Section 318(2), simple cheating. Up to three years, or fine, or both.
Section 318(3), cheating a person whose interest the accused was bound to protect. Where the offender cheats with the knowledge that he is likely to cause wrongful loss to a person whose interest in the transaction he was bound, by law or by legal contract, to protect: up to five years, or fine, or both.
Section 318(4), cheating with delivery. Cheating and thereby dishonestly inducing the person deceived to deliver any property, or to make, alter or destroy the whole or any part of a valuable security or anything signed or sealed and capable of being converted into one: up to seven years and fine. This is the old section 420 of the Penal Code.
Cheating
Section 319, cheating by personation. A person cheats by personation if he cheats by pretending to be some other person, by knowingly substituting one person for another, or by representing that he or any other person is a person other than he really is. The Explanation: the offence is committed whether the individual personated is a real or an imaginary person. Punishment: up to five years, or fine, or both.
Broken down: the line between cheating and breach of contract
Illustration (g) to section 318(1) draws it, and it is the single most useful thing in the section.
The question is the intention at the time of the promise. A man who takes money intending never to perform has cheated. A man who intended to perform and later failed has broken a contract.
That is why a failed business is not cheating. The prosecution must show that the accused never meant to perform, and evidence of what happened afterwards is only material as it bears on what he intended at the time.
The burden is a real one. Proving a state of mind at a past moment is difficult, and that difficulty is the protection of honest commerce.
Distinctions that carry marks
| Section 318(2) | Section 318(4) | |
|---|---|---|
| The result | The person deceived does or omits something to his damage or harm | The person deceived delivers property, or makes, alters or destroys a valuable security |
| Maximum | Three years, or fine, or both | Seven years and fine |
| Penal Code equivalent | Section 417 | Section 420 |
| Cheating, s.318 | Extortion, s.308 | |
|---|---|---|
| How consent is obtained | By deception | By putting in fear of injury |
| The victim's state of mind | He does not know the truth | He knows the truth and is afraid |
| Cheating, s.318 | Criminal breach of trust, s.316 | |
|---|---|---|
| When the dishonesty exists | At the beginning, when the property is obtained | After the entrustment, which was honest |
| The victim parts with property | Because he was deceived | Because he trusted the accused |
A worked example
Mahesh tells a shopkeeper that he is a purchasing officer of a Government department and orders goods worth two lakh rupees on credit, giving a departmental address. He is nothing of the kind, and he sells the goods and disappears.
Which provisions? Section 318(4), because he cheated and thereby dishonestly induced the shopkeeper to deliver property, punishable with seven years and fine. And section 319, cheating by personation, because he cheated by representing that he was a person other than he really is, punishable with five years.
Cheating
Does it matter that the officer he pretended to be does not exist? No. The Explanation to section 319(1) says the offence is committed whether the individual personated is real or imaginary.
Change the facts. Suppose Mahesh really did run a business, ordered the goods intending to pay, and then failed because his own customers did not pay him. That is not cheating, on illustration (g) to section 318(1): a person who intended to perform and later broke his contract is liable only to a civil action.
Change them again. Suppose Mahesh, a lawyer, advises a client to sign a document, concealing that it transfers the client's land to Mahesh's brother. He obtains no property himself and the client suffers a loss of property. That is cheating on the second half of section 318(1), and because Mahesh was bound by his professional relationship to protect the client's interest, section 318(3) applies with five years.
Is silence enough? Yes. The Explanation to section 318(1) provides that a dishonest concealment of facts is a deception within the section.
Once more. Suppose Mahesh sits an examination in another candidate's name. He is not obtaining property at all. Section 319 applies: he cheats by pretending to be some other person, five years, and the second half of section 318(1) supplies the harm, since the examining body is induced to do what it would not have done and the real candidate's interests are damaged.
What beginners get wrong
Thinking cheating always involves money. The second half of section 318(1) covers damage or harm in body, mind or reputation as well as property.
Calling everything section 420. Section 420 of the Penal Code is now section 318(4), and it applies only where the deception produced delivery of property or dealing with a valuable security. Simple cheating is section 318(2).
Treating a broken contract as cheating. Illustration (g) says otherwise unless the accused never intended to perform.
Thinking personation needs a real person. The Explanation to section 319(1) says it does not.
Limits and criticism
The line between cheating and civil breach is enforced unevenly. Because the ingredient is a past intention, a complainant with a bad bargain can frequently persuade a police station to register a case, and the accused's remedy is to have the proceedings quashed at a later stage.
"Damage or harm in body, mind, reputation or property" is very wide, and "mind" in particular has no settled content.
The maximum for section 318(4) is seven years, unchanged in substance from 1860, although the sums now obtained by deception, particularly by electronic means, are of a different order.
Cheating
The overlap with the Information Technology Act is unresolved. Cheating by personation using a computer resource is a separate offence under section 66D of that Act, worked in Module III.
And the rule that settles such an overlap is now clear. In Sharat Babu Digumarti v. Govt. (NCT of Delhi), (2017) 2 SCC 18, the Supreme Court held that where an offence relates to an electronic record, the Information Technology Act is a special law which, by virtue of its section 81, prevails over the general provision in the Penal Code. The case is worked in full in the Module III chapter on obscenity in electronic form.
Quick revision
Section 318(1), two halves. Deceiving and fraudulently or dishonestly inducing delivery of property or consent to its retention; or intentionally inducing an act or omission the person would not otherwise do, causing or likely to cause damage or harm in body, mind, reputation or property.
The Explanation. A dishonest concealment of facts is a deception.
Illustration (g). Intention at the time of the promise decides cheating from breach of contract.
Section 318(2). Three years, or fine, or both.
Section 318(3). Cheating a person whose interest the accused was bound by law or contract to protect: five years, or fine, or both.
Section 318(4). Cheating and thereby dishonestly inducing delivery of property or dealing with a valuable security: seven years and fine. The old section 420.
Section 319. Cheating by personation: five years, or fine, or both. Real or imaginary person.
Test yourself
1. State the two halves of the definition of cheating. Deceiving a person and thereby fraudulently or dishonestly inducing him to deliver property or to consent that any person shall retain property; and intentionally inducing the person deceived to do or omit anything he would not do or omit if he were not deceived, where that act or omission causes or is likely to cause damage or harm to him in body, mind, reputation or property.
2. Which sub-section replaced section 420 of the Penal Code? Section 318(4), cheating and thereby dishonestly inducing the person deceived to deliver property or to make, alter or destroy a valuable security, punishable with seven years and fine.
3. How is cheating distinguished from a breach of contract? By the accused's intention at the time of the promise. Illustration (g) to section 318(1) says that a person who takes money on a promise he does not intend to keep cheats, while a person who intended to perform and later broke his contract is liable only to a civil action.
4. Can cheating be committed by silence? Yes. The Explanation to section 318(1) provides that a dishonest concealment of facts is a deception within the meaning of the section.
Cheating
5. Does cheating by personation require the person impersonated to exist? No. The Explanation to section 319(1) provides that the offence is committed whether the individual personated is a real or an imaginary person.
The rest of this subject
These notes are cut from the University's printed syllabus. Open the syllabus itself, or the past papers, for the same subject.