Supreme Court of India· 12 August 2026

Under Section 318(4) of the Bharatiya Nyaya Sanhita, 2023 (BNS), when does a promise of future advantage amount to the offence of cheating?

PARAG KISHORE SATOSKAR AND OTHERS v. STATE OF JHARKHAND AND ANOTHER

2026 INSC 846
Coram: Augustine George Masih; Sanjay Karol

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Answer

Only if the promise was made without any intention of performing it at the time it was made; a mere breach of contract cannot give rise to a criminal prosecution for cheating unless fraudulent or dishonest intention is shown right from the beginning of the transaction, since it is that intention which is the gist of the offence.

Headnote

Bharatiya Nyaya Sanhita, 2023 — s.318(4) — s.316(2) — Cheating — Criminal breach of trust — Entrustment — Dishonest intention — Civil dispute given criminal overtone — Quashing of FIR — Article 226 — s.482 CrPC — Bharatiya Nyaya Sanhita, 2023 — s.318(4) — Cheating — Dishonest intention at inception — Held: A promise of future advantage becomes a deception only if it was made without any intention of performing it; where the first information report contains no averment of fact from which a dishonest or fraudulent intention at the inception of the transaction could be inferred, and the payments made were consistent with performance under a lawfully entered contract, the ingredients of the offence of cheating punishable under Section 318(4) of the Bharatiya Nyaya Sanhita, 2023 are not disclosed. (¶13, 14, 23) Bharatiya Nyaya Sanhita, 2023 — s.316(2) — Criminal breach of trust — Entrustment — Antithetical to cheating — Held further: Criminal breach of trust presupposes entrustment, requiring that the beneficial interest in the property remain with the person handing it over; money paid to a supplier as the price of goods or in advance of their supply passes to the supplier as his own and is not held in trust, so that in the absence of any averment of entrustment the offence under Section 316(2) BNS is not disclosed, and the two offences of cheating and criminal breach of trust, being antithetical, cannot both arise upon one indivisible set of allegations. (¶18, 19, 20) Article 226 — s.482 CrPC — Quashing of FIR — Civil dispute given criminal overtone — Held further: Where the allegations in a first information report, taken at their face value and accepted in their entirety, disclose no more than a dispute over price, supply and accounts arising out of a written commercial contract, to permit criminal proceedings to continue would be to permit that dispute to be pursued through the machinery of the criminal law, amounting to an abuse of the process of the court, and the FIR and all proceedings arising therefrom are liable to be quashed. (¶5, 22, 23, 24)

In the Court's own words

Paragraph 9This Court while dealing with the core and essence of the offence of cheating in Delhi Race Club (1940) Ltd. v. State of U.P.[^3], elaborated in Para 30, the relevant extract reads as under:

Paragraph 13So measured, the first information report in the case at hand is wanting in the essentials of the offence punishable under Section 318(4) of the BNS. It contains no averment of fact from which a dishonest intention at the inception could be inferred. It is not alleged that the offer of distributorship was made without any intention of conferring it or that the appellants knew, when the agreement was drawn up or when any of the six remittances was received, that they would not or could not supply the goods. It is not asserted that the distributorship had already been conferred upon another or that any representation was made as to an existing fact false to the knowledge of the maker. Nor is it stated when, where, in whose presence and in what terms the deceitful representation was made, or which of the five named persons made it. The word “cheated” and the expression “I got deceived” although appear in the information as conclusions but are bereft of the facts from which these conclusions might be drawn and thus the offence would not be made out.

Paragraph 14The averment which comes closest to a representation is that the respondent No. 2 was told that he would receive gifts and benefits in return for a payment of Rs. 20,00,000/- spread over three years. Accepting that averment as true, it is a promise as to the future and not an assertion as to an existing fact. A promise of future advantage becomes a deception only if it was made without any intention of performing it, and the information contains nothing from which such an absence of intention could be gathered. It is not even stated that the sum of Rs. 20,00,000/- was in fact paid. Section 318(4) of the BNS postulates a deception which precedes the delivery of property and induces it. The information points to no deception preceding the six remittances. It says only that the agreement was drawn up on 29.03.2024, signed and returned on 04.05.2024 by him, and that the remittances were made between 04.04.2024 and 26.06.2024 as advance for goods yet to be received. The payments were therefore made under the contract, and a contract lawfully entered into and acted upon is not a deception.

Acts & Sections

s.318(4) Bharatiya Nyaya Sanhita, 2023s.316(2) Bharatiya Nyaya Sanhita, 2023s.3(5) Bharatiya Nyaya Sanhita, 2023s.420 Indian Penal Code, 1860s.406 Indian Penal Code, 1860Article 226 Constitution of Indias.482 Code of Criminal Procedure, 1973

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Also decided in this judgment

Does the receipt of money by a supplier as the price of goods or as an advance for goods to be supplied under a contract amount to entrustment so as to attract the offence of criminal breach of trust under Section 316(2) of the Bharatiya Nyaya Sanhita, 2023 (BNS) if the goods are not delivered?

Plain-language answer prepared by the LexStreak Editorial Desk — verify against the judgment. Source: Supreme Court of India. Corrections