Criminal Breach of Trust and Cheating Cannot Co-Exist

Source: High Court of Orissa 

Why in News? 

Justice R.K. Pattanaik of the High Court of Orissa in Priyam Pratham Sabat v. State of Odisha (2025) set aside a trial court's order that took cognizance of both criminal breach of trust under Section 316 of Bharatiya Nyaya Sanhita, 2023 (BNS) and cheating under Section 318 of BNS simultaneously, holding that both offences cannot co-exist. 

What was the Background of Priyam Pratham Sabat v. State of Odisha (2025) Case? 

• The revision petition was filed challenging the order of cognizance dated 29th August 2025 passed by the learned J.M.F.C., Digapahandi in G.R. Case No.287 of 2025. 
• The case originated from Digapahandi P.S. Case No. 232 dated 25th June 2025, registered under Sections 316 and 318 of BNS. 
• The FIR contained allegations of misappropriation of Rs. 70 lakh by the petitioner. 
• The trial court took cognizance of both offences of criminal breach of trust and cheating simultaneously based on the same set of allegations. 
• The petitioner contended that the learned court below could not have taken cognizance of both offences simultaneously and the impugned order could not be sustained in law. 
• The petitioner's counsel cited the Supreme Court decisions in Delhi Race Club (1940) Ltd. and others v. State of Uttar Pradesh and others (2024) and Arshad Neyaz Khan v. State of Jharkhand and others (2025) to support the contention that the order of cognizance was illegal. 

What were the Court's Observations? 

• The High Court noted that in Delhi Race Club (supra), the Supreme Court concluded that both offences cannot co-exist when one allegation is of breach of trust and the other is of cheating. 
• A similar view was expressed in Arshad Neyaz Khan (supra), which discussed in detail the nature of offences such as criminal breach of trust and cheating and their essential ingredients. 
• The Court observed that there may not be instant intention to commit breach of trust, whereas for the offence of cheating, criminal intention is necessary at the time of making false and misleading representation from the very inception. 
• The Court held that the learned trial court did not properly consider the materials on record along with the chargesheet to reach a definite conclusion as to which of the two offences had been committed by the petitioner. 
• The High Court concluded that there was no judicial application of mind by the learned trial court, and therefore the decision needed to be revisited keeping in view the settled position of law. 
• The Court held that the impugned order dated 29th August 2025 could not be upheld and had to be set aside. 
• The High Court directed the learned J.M.F.C., Digapahandi to reconsider taking cognizance of the offence vis-à-vis the petitioner and pass a reasoned order reflecting upon the materials on record. 
• The Court emphasized that the trial court must keep in view the observations made and the settled legal position of law discussed in the judgment. 

What is Section 316 of BNS? 

Section 316 - Criminal Breach of Trust 

• Entrustment of Property: A person must be entrusted with property or dominion over property in any manner, creating a fiduciary relationship between the parties. 
• Dishonest Misappropriation or Conversion: The entrusted person must dishonestly misappropriate or convert the property to his own use, departing from the terms of entrustment. 
• Violation of Legal Direction or Contract: The accused must dishonestly use or dispose of the property in violation of any direction of law prescribing the mode of discharge of trust, or breach any legal contract (express or implied) regarding the trust discharge. 
• Wilful Permission to Others: The section covers situations where the accused wilfully suffers any other person to commit the aforementioned acts, extending liability to passive facilitation. 

What is Section 318 of BNS? 

Section 318 – Cheating  

• Deception: The accused must deceive any person through false representations, concealment of material facts, or other fraudulent means. 
• Fraudulent or Dishonest Inducement: The deception must fraudulently or dishonestly induce the deceived person to deliver property to any person or consent to property retention by another. 
• Intentional Inducement for Action/Omission: The accused must intentionally induce the deceived person to do or omit doing something which they would not have done or omitted if not deceived. 
• Causation of Damage or Harm: The act or omission caused by deception must result in or be likely to cause damage or harm to the deceived person in body, mind, reputation, or property. 

What is the Difference Between Section 316 (Criminal Breach of Trust) and Section 318 (Cheating)?