Definition of Section 318(4) BNS According to the Government of India
What is Section 318(4) BNS?
Section 318(4) BNS: Cheating and dishonestly inducing delivery of property.— 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.
Interpretation of Section 318(4) BNS
Section 318(4) of the Bharatiya Nyaya Sanhita, 2023 (BNS) deals with the offence of cheating that results in the dishonest delivery of property or the creation, alteration, or destruction of a valuable security. This provision imposes a higher punishment because the act of cheating causes a person to suffer financial or legal loss.
To establish an offence under this provision, the prosecution must prove that:
- The accused cheated another person by deceiving them.
- The deception was dishonest from the beginning or was accompanied by dishonest intention.
- Because of such deception, the victim was induced to:
- deliver any property to any person; or
- make, alter, or destroy the whole or any part of a valuable security; or
- make, alter, or destroy any document that is signed or sealed and is capable of being converted into a valuable security.
- The victim acted because of the deception, resulting in wrongful gain to the accused or wrongful loss to the victim.
The dishonest intention must exist at the time the false representation or deception is made. If the intention to deceive develops only after a genuine transaction, the offence under this section may not be attracted, although other legal remedies may still be available depending on the facts.
The term “property” includes both movable and immovable property, money, goods, and other valuable assets. The expression “valuable security” refers to a document that creates, transfers, limits, extends, or extinguishes a legal right or liability, such as a cheque, bond, promissory note, share certificate, or similar legally enforceable instrument.
Section 318(4) BNS applies to a wide range of fraudulent activities, including obtaining money through false promises, inducing a person to transfer property by deception, securing signatures on important legal documents through dishonest means, or manipulating valuable documents for wrongful gain.
The punishment prescribed under Section 318(4) BNS is imprisonment of either description for a term that may extend to seven years, along with fine. The severity of the punishment reflects the serious financial and legal consequences caused by dishonest inducement and fraudulent conduct.
In essence, Section 318(4) BNS protects individuals and businesses from deception that leads to the wrongful transfer of property or the misuse of legally valuable documents. It reinforces the principle that no person should obtain property or legal rights through fraud, false representations, or dishonest inducement.
Practical Illustrations of Section 318(4) BNS
- A person falsely claims to be an authorised investment agent and convinces another person to transfer ₹5 lakh into a fake investment scheme. The money is transferred because of the false representation. This may amount to an offence under Section 318(4) BNS.
- A person dishonestly induces another person to sign documents by falsely stating that they are ordinary application forms, when they are actually documents transferring valuable legal rights. This may fall within Section 318(4) BNS.
- A person falsely promises to sell a property that they do not own and collects the purchase money through deception. If dishonest intention existed from the beginning, the conduct may attract Section 318(4) BNS.
Essential Ingredients of the Offence
For an offence under Section 318(4) BNS, the prosecution generally has to establish the following:
- There was deception or cheating by the accused.
- The accused acted dishonestly.
- The deception induced the victim to act.
- Because of that inducement, the victim:
- delivered property to any person; or
- made, altered, or destroyed a valuable security or another document that could become a valuable security.
- The victim suffered or was likely to suffer wrongful loss, or the accused obtained or intended to obtain wrongful gain.
Section 318(4) BNS Punishment, Bail, and Trial Details
| Section | Section 318(4) BNS |
|---|---|
| Offence | Cheating and dishonestly inducing delivery of property. |
| Punishment | Imprisonment for 7 years and fine. |
| Cognizable or Non-cognizable | Cognizable. |
| Bailable or Non-bailable | Non-bailable. |
| Person by whom offence may be compounded | The person cheated. With the permission of the Court before which any prosecution for such offence is pending. |
| By what Court Triable | Magistrate of the first class. |
Landmark Case Laws
- State of Kerala v. A. Pareed Pillai (1973): The Supreme Court held that to convict a person of cheating, the dishonest intention must be shown to exist at the time of making the promise. A subsequent failure to fulfill an agreement does not automatically invite criminal liability.
- Hridaya Ranjan Prasad Verma v. State of Bihar (2000) 4 SCC 168: The Supreme Court drew a clear distinction between a mere breach of contract and the offence of cheating. It held that to constitute cheating, the accused must have had a dishonest or fraudulent intention at the very beginning of the transaction. A mere failure to keep a promise or perform a contract does not amount to cheating unless such dishonest intention existed from the inception.
- Indian Oil Corporation v. NEPC India Ltd. (2006) 6 SCC 736: The Supreme Court held that criminal law should not be used to settle purely civil or commercial disputes. The Court observed that the offence of cheating is made out only when the complaint discloses dishonest intention at the inception of the transaction and the essential ingredients of the offence are satisfied.
- Ajay Mitra v. State of Madhya Pradesh (2003) 3 SCC 11: The Supreme Court reiterated that every breach of contract does not constitute cheating. The prosecution must prove that the accused had a dishonest intention from the very beginning and intentionally deceived the complainant to induce the delivery of property or valuable security.
- Vir Prakash Sharma v. Anil Kumar Agarwal (2007) 7 SCC 373: The Supreme Court held that for an offence of cheating, the complaint must specifically disclose that the accused had a dishonest intention at the time of making the representation. A subsequent failure to fulfil a promise, without such initial dishonest intention, does not attract criminal liability for cheating.
- Prof. R.K. Vijayasarathy v. Sudha Seetharam (2019) 16 SCC 739: The Supreme Court summarised the essential ingredients of cheating, namely deception, dishonest or fraudulent inducement, and delivery of property or alteration or destruction of a valuable security because of such inducement. The Court reaffirmed that dishonest intention is the foundation of the offence.
- Uma Shankar Gopalika v. State of Bihar (2005) 10 SCC 336: The Supreme Court held that if the intention to cheat did not exist at the time the promise or representation was made, the subsequent non-performance of the promise would not amount to the offence of cheating. The existence of dishonest intention at the inception is the decisive test.
- Mohammed Ibrahim v. State of Bihar (2009) 8 SCC 751: The Supreme Court explained that every fraudulent act involving documents does not amount to cheating. The prosecution must establish deception, dishonest inducement, and the resulting delivery of property or alteration of a valuable security to attract criminal liability.
Key Legal Principles Emerging from These Judgments
The Supreme Court has consistently held that:
- Dishonest intention must exist from the very beginning of the transaction.
- Mere breach of contract or failure to keep a promise is not cheating.
- There must be deception, followed by dishonest inducement.
- The deception must result in delivery of property or the making, alteration, or destruction of a valuable security.
- Criminal law should not be used to convert ordinary civil or commercial disputes into criminal cases unless the statutory ingredients of cheating are clearly established.
⚠️ Important Legal Update: The Indian Penal Code (IPC), 1860 has been replaced by the Bharatiya Nyaya Sanhita (BNS), 2023. The offense of cheating and dishonestly inducing delivery of property — formerly under Section 420 IPC — is now covered under Section 318(4) of the BNS. All offenses committed after July 1, 2024, are registered under the new BNS section.