Last Updated: April 2026 | LegalFund India — Pan India | ~4 min read
Someone stole from you.
Maybe it was your business partner. Maybe a trusted employee. Maybe someone who promised you a big deal and disappeared with your money.
You want to file a criminal case. You go to a lawyer. He says —
“Is this Section 316 or Section 318 under the new BNS?”
And you have no idea what he’s talking about.
Don’t worry. By the end of this blog, you will.
The Bharatiya Nyaya Sanhita, 2023 (BNS) is India’s new criminal law that replaced the old Indian Penal Code from July 1, 2024. Under it, there are two very different crimes that look similar from the outside — but are legally worlds apart.
Criminal Breach of Trust — Section 316 BNS Corporate Fraud / Cheating — Section 318 BNS
Same result: your money is gone. Different crime: how it was taken.
Getting this right determines everything — which case you file, where you file it, and whether the accused can wriggle out on a technicality.
📌 One-Line Difference
Breach of Trust = Someone you trusted misused that trust.
Cheating / Fraud = Someone tricked you into giving them your money from Day 1.
That’s it. That’s the core difference.
Now let’s break it down with real examples.
💔 Story 1: Rahul and His CFO — Breach of Trust
Rahul runs a manufacturing company in Pune. He hired a CFO he trusted completely. Gave him full access to company bank accounts and vendor payments.
Over 14 months — the CFO quietly created fake vendor invoices, approved payments to a shell company he secretly owned, and transferred ₹42 lakh out of the business.
Rahul discovered it during a routine audit.
Now ask yourself — was there a trust relationship? Yes. The CFO was trusted with full access to company money.
Did that trust get misused? Yes. He used that access to steal.
This is Criminal Breach of Trust — Section 316 BNS.
The CFO didn’t trick Rahul into giving him money. He was already trusted with it — and he betrayed that trust.
💔 Story 2: Meera and the Fake Investor — Corporate Fraud
Meera runs a food-tech startup in Bengaluru. A man approached her claiming to represent a Singapore-based investment fund.
He told her the fund was ready to invest ₹5 crore — but first she needed to pay ₹40 lakh as a “due diligence fee” and “regulatory compliance deposit.”
Meera paid. The man disappeared. No fund existed. It was all made up from the very first conversation.
Now ask yourself — was there a trust relationship before this? No. This was a stranger she had just met.
Did he deceive her to get the money? Yes. He lied about everything from Day 1.
This is Corporate Fraud / Cheating — Section 318 BNS.
The man never had any intention of investing. He planned to cheat her before he even sent the first message.
🔍 So What’s the Real Difference?
Think of it this way:
Breach of Trust — the person had a right to be near your money. Then they took it wrongly.
Like a security guard who robs the safe he was hired to protect.
Cheating / Fraud — the person tricked you into handing over your money. They had no right to it at all.
Like a stranger who dressed as a security guard, convinced you to give him the key, and ran away.
Same result — money gone. Very different crime.
⚖️ Section 316 BNS — Criminal Breach of Trust: 3 Things You Must Prove
To file a successful case under Section 316, you need to prove three things:
Thing 1 — The accused was trusted with your money or property.
This means there was a real relationship — employee, business partner, director, agent, or anyone you genuinely gave authority to handle your money.
Thing 2 — They misused that money.
They used it for themselves, transferred it out, or disposed of it in a way you never authorised.
Thing 3 — It was a clear betrayal of that trust.
Not a business disagreement. Not a bad investment decision. An actual dishonest betrayal.
Punishment: Up to 7 years in jail + fine (for employees and agents). Up to 3 years for basic cases.
Who gets caught by this: Employees stealing from the company. Directors misusing company funds. Business partners withdrawing money without authority. Agents diverting client money.
⚖️ Section 318 BNS — Cheating and Corporate Fraud: 3 Things You Must Prove
To file a successful case under Section 318, you need to prove three things:
Thing 1 — The accused lied to you or created a false impression.
False documents, fake identity, fake company, fake promises — any deliberate deception counts.
Thing 2 — You gave money because of that lie.
The deception caused you to pay. If you would have paid anyway — it weakens the case.
Thing 3 — They planned to cheat you from the very beginning.
This is the most important part. Courts want to see that the fraud was planned before the first interaction — not that a genuine deal went wrong later.
Punishment: Up to 7 years in jail + fine (when property is fraudulently obtained). Up to 3 years for basic cases.
Who gets caught by this: Fake investors. Advance payment fraudsters. Contractors who take mobilisation money and disappear. Companies that raise funds using false financial statements.
📊 Quick Comparison — Which One Is Your Case?
| Question | Section 316 — Breach of Trust | Section 318 — Cheating / Fraud |
|---|---|---|
| Did you know and trust this person before? | Yes — employee, partner, agent | Not necessarily — could be a stranger |
| Was this person given authority over your money? | Yes — legitimately | No — they tricked you into giving it |
| When did the dishonesty start? | After the relationship began | From the very first conversation |
| What was taken? | Money or property they were trusted with | Money paid because of deception |
| Examples | CFO fraud, partner fraud, employee theft | Fake investors, advance fraud, identity fraud |
| Old IPC equivalent | Section 406 IPC | Section 420 IPC |
⚠️ The Biggest Mistake People Make — Filing the Wrong Case
Every week in India, businesses file cheating cases (Section 318) when the real crime is breach of trust (Section 316) — and vice versa.
Why does this matter? Because the accused’s lawyer will immediately challenge the complaint on the grounds that the wrong provision was invoked. Courts take this seriously. Cases get quashed. Time is wasted. The accused walks free on a technicality.
The rule is simple:
If someone you already trusted stole from you — Section 316.
If a stranger deceived you into paying them — Section 318.
If both happened — charge both.
🚨 Warning: A Bad Business Deal Is NOT a Crime
This is very important.
A vendor who took your advance and couldn’t deliver — is not automatically a criminal.
A client who didn’t pay your invoice — is not automatically a fraudster.
A business deal that went wrong — is not automatically cheating.
For Section 318 (cheating) to apply, the courts require proof that the accused planned to cheat you before the deal began. If they genuinely intended to deliver but couldn’t — that is a civil dispute, not a criminal case.
Filing a criminal complaint for a pure business dispute is a serious mistake. Courts take a dim view of it — and it can actually harm your civil case too.
For business disputes where money is owed, read our guide: What to Do If Someone Owes You Money and Won’t Pay
💡 Run Criminal AND Civil Cases Together
Here is something most people don’t know:
A criminal case punishes the fraudster. It does not automatically get your money back.
A civil case — a recovery suit or arbitration — is what actually gets your money back.
You need both.
The criminal complaint creates pressure — police notice, arrest risk, court summons. This pressure often forces faster settlement than any civil notice alone.
The civil suit or arbitration runs alongside — and results in a money decree with asset attachment that puts the actual money back in your hands.
For your overall dispute strategy, see: Resolving Commercial and Business Disputes in India
And if a bounced cheque is also involved in your case: Legal Action for Bounced Cheques in India
💼 LegalFund Funds the Civil Recovery Track
Filing the criminal complaint is free — you do it through the police or a Magistrate court.
But the civil recovery case — the commercial suit, the arbitration, the decree execution — costs money. Advocate fees, court costs, asset tracing, attachment applications. Easily ₹3–10 lakh for a significant fraud case.
Most fraud victims have already lost money once. They cannot absorb this second financial hit.
LegalFund funds your civil recovery case at zero upfront cost.
We pay all legal costs. You pay us only after we recover your money. If the case fails — you owe us nothing.
Learn how it works: legalfund.in/litigation-financing
Submit your case: legalfund.in/contact — free expert review in 10 days.
❓ FAQs — In Plain Language
Q: Is Section 420 IPC still valid? A: No. From July 1, 2024, Section 420 IPC was replaced by Section 318(4) of the BNS. If someone cheated you before July 2024 — the old IPC applies. After July 2024 — the BNS applies.
Q: Is Section 406 IPC still valid? A: No. It was replaced by Section 316(2) of the BNS from July 1, 2024. Same crime, new section number.
Q: Can I file both Section 316 and Section 318 in the same complaint? A: Yes — if the facts support both. For example, a director who had company funds in his control (Section 316) AND created fake documents to justify taking them (Section 318) can be charged under both in one complaint.
Q: Can a company itself be accused — not just individuals? A: Yes. Under Section 10 BNS, when a crime is committed by a company, every director or person responsible for running the company can be held personally liable — along with the company itself.
Q: My vendor took advance payment and didn’t deliver. Can I file a fraud case? A: Only if you can prove he never intended to deliver from the very beginning. If it was a genuine business deal that went wrong — it is a civil recovery case, not a criminal fraud case. File the civil suit first. Add the criminal complaint only if you have clear evidence of intent to cheat from Day 1.
Q: Can LegalFund fund my fraud recovery case? A: Yes — for the civil recovery track. Submit your case at legalfund.in/contact.
💡 Final Thought — The Simple Version
Someone you trusted stole from you? → Section 316 BNS. Criminal Breach of Trust.
Someone tricked you into giving them money? → Section 318 BNS. Cheating / Corporate Fraud.
Not sure which? → Talk to a lawyer. But now at least you know the right question to ask.
And whatever you do — don’t file the wrong one. The accused’s lawyer is waiting for exactly that mistake.
File right. Fight smart. And get your money back.
👉 Contact LegalFund → legalfund.in/contact