Interplay of Sections 120-B, 406 and 420 of the Indian Penal Code: Doctrinal and Jurisprudential Analysis

Interplay of Sections 120-B, 406 and 420 of the Indian Penal Code: Doctrinal and Jurisprudential Analysis

Introduction

Sections 120-B (criminal conspiracy), 406 (criminal breach of trust) and 420 (cheating) of the Indian Penal Code, 1860 (“IPC”) often appear together in indictments that allege fraudulent commercial or fiduciary misconduct. Although the three provisions share the common thread of mens rea founded on dishonesty, each creates a distinct substantive offence with its own ingredients, evidentiary demands and sentencing contours. Contemporary Indian jurisprudence, from State of Maharashtra v. Som Nath Thapa[2] to Vipin Sahni v. CBI[7], has progressively clarified these distinctions while cautioning against the conversion of civil disputes into criminal prosecutions. This article critically analyses the statutory architecture, leading precedents and practical implications surrounding the simultaneous invocation of ss. 120-B, 406 and 420 IPC.

Statutory Framework

Section 120-A & 120-B: Criminal Conspiracy

Section 120-A defines conspiracy as an agreement between two or more persons to do an illegal act or a legal act by illegal means. Section 120-B prescribes punishment. The proviso requires an overt act where the conspiracy is not to commit an “offence”[1].

Section 406: Criminal Breach of Trust

Section 405 (definition) read with s. 406 criminalises dishonest misappropriation or conversion of property entrusted to the accused or dishonest use thereof in violation of any legal direction or contract.

Section 420: Cheating and Dishonestly Inducing Delivery of Property

Sections 415–420 punish fraudulent or dishonest inducement by deception resulting in delivery of property or alteration/destruction of valuable security.

Essential Ingredients and Comparative Matrix

Provision Core Ingredients Key Judicial Elucidation
120-B
  • Agreement (“meeting of minds”)
  • Intent to commit illegal act / legal act by illegal means
  • Overt act (except where agreement is to commit an offence)
 Som Nath Thapa: knowledge plus intent is essential; mere association is insufficient[2].
406
  • Entrustment or dominion
  • Dishonest misappropriation / conversion / use
  • Violation of law or contract
 R.K. Dalmia: “property” includes movable and immovable; “agent” construed broadly[5].
420
  • Deception of victim
  • Fraudulent or dishonest inducement
  • Delivery/alteration/destruction of property or security
 Vipin Sahni: dishonest concealment equals deception; seven-year maximum sentence[7].

Doctrinal and Jurisprudential Analysis

A. Criminal Conspiracy: Evidentiary Thresholds

The Supreme Court in Som Nath Thapa adopted the “prima facie view” test at the charge-framing stage—if on broad probabilities the court can infer an agreement, charges may be framed. Subsequent decisions, notably Yogesh Joshi v. State of Maharashtra[3], refined this approach by holding that discharge is warranted where key conspirators are exonerated, thereby collapsing the alleged agreement. The Court emphasised that circumstantial evidence must form a “cogent and unequivocal chain”; suspicion, howsoever strong, is inadequate.

High-court jurisprudence post-Thapa—Sanjay Pandey[10] and Pratik Sinha[11]—further differentiates between cognisable and non-cognisable conspiracies, cautioning against registration of FIRs without magisterial approval where only s. 120-B(2) is attracted.

B. Criminal Breach of Trust: Entrustment and Dominion

R.K. Dalmia remains the locus classicus on entrustment. The Court construed “property” and “agent” expansively to accommodate commercial misfeasance within s. 406. Later, in Ram Narayan Popli v. CBI[4], the Supreme Court underscored the necessity of credible corroborative evidence of misappropriation; absence of reliable testimony led to acquittal. More recently, Deepak Gaba v. State of U.P.[14] reaffirmed that summons under s. 406 cannot stand where entrustment is not specifically pleaded or proved.

C. Cheating under Section 420: Intention at Inception

The boundary between civil breach of contract and cheating was delineated in S.W. Palanitkar v. State of Bihar[6]. The Court held that fraudulent intent must exist ab initio; subsequent non-performance is, by itself, insufficient. High-court authorities—e.g., B.L. Nagendra Prasad[8], Shibaji Sengupta[17]—echo this principle, urging courts to “deprecate and discourage” criminalisation of purely civil disputes. At the same time, where material shows inducement by false representations, courts have sustained prosecution (Shoukat Rai Malhotra[19]; Kirtidev Khatri[24]).

D. Concurrency and Misjoinder of Charges

Because breach of trust and cheating are “mutually exclusive” in conceptual foundation[17], simultaneous framing of s. 406 and s. 420 must be preceded by judicial scrutiny to ascertain whether both entrustment and deception coexist. The Supreme Court in Hira Lal Bhagwati v. CBI illustrated that post-settlement immunity under fiscal amnesty schemes may extinguish related IPC counts, demonstrating that substantive statutory defences can bar parallel criminal process[7].

E. Procedural Safeguards: Charge Framing and Discharge

The twin decisions of Som Nath Thapa[2] (charge framing) and Yogesh Joshi[3] (discharge) collectively set the procedural compass. They require that:

  • Material on record must create “grave suspicion”, not mere doubt.
  • An accused should be discharged where the prosecution’s own material renders conviction improbable.
  • Over-inclusion of accused dilutes prosecutorial focus and risks miscarriage of justice.

Contemporary Trends and Policy Concerns

Recent bail and anticipatory-bail orders, such as Lekh Narayan Chand[16] and Sunil Gupta[15], show heightened judicial sensitivity to prolonged investigations and the proportionality of custodial interrogation, especially in economic offences. Concurrently, trial courts have been reminded—Parle Agro Pvt. Ltd.[21]—to avoid mechanical cognisance of ss. 120-B/406/420 when police reports file ‘B’ summaries.

Academic commentary also urges clearer legislative guidance on overlapping economic offences to curb forum shopping and jurisdictional conflicts, particularly where specialised statutes (PMLA, Companies Act) already address the misconduct.

Conclusion

The triptych of ss. 120-B, 406 and 420 IPC forms a formidable prosecutorial arsenal against fraud and fiduciary delinquency. Yet, judicial precedent repeatedly emphasises calibrated use: conspiracy requires demonstrable agreement; breach of trust demands proven entrustment and dishonest misappropriation; cheating hinges on fraudulent inducement at inception. Courts must therefore interrogate the factual matrix with doctrinal precision, resist the allure of over-criminalisation, and ensure that civil disputes or regulatory infractions are not dressed in criminal colours. The evolving case law, particularly post-Som Nath Thapa, equips the judiciary with nuanced tools to balance deterrence with due process—an equilibrium indispensable to the credibility of India’s criminal justice system.

Footnotes

  1. Indian Penal Code, 1860, ss. 120-A & 120-B.
  2. State of Maharashtra v. Som Nath Thapa, (1996) 4 SCC 659 (SC).
  3. Yogesh alias Sachin Jagdish Joshi v. State of Maharashtra, (2008) 10 SCC 394 (SC).
  4. Ram Narayan Popli v. CBI, (2003) 3 SCC 641 (SC).
  5. R.K. Dalmia v. Delhi Administration, AIR 1962 SC 1821.
  6. S.W. Palanitkar v. State of Bihar, (2002) 1 SCC 241 (SC).
  7. Vipin Sahni v. CBI, (2024) (SC) — twin orders dated 2024.
  8. B.L. Nagendra Prasad v. State of Karnataka, 2022 SCC OnLine SC 344.
  9. Abhinandan Dyeing (P) Ltd. v. State of West Bengal, Cal HC, 2025.
  10. Sanjay Pandey v. Directorate of Enforcement, Delhi HC, 2022.
  11. Pratik Sinha v. State of Bihar, Patna HC, 2016.
  12. Raju Krishna Shedbalkar v. State of Karnataka, SC, 2024.
  13. Deepak Gaba v. State of Uttar Pradesh, (2023) 3 SCC 423.
  14. Sunil Gupta v. CBI/SCB, Lucknow, Allahabad HC, 2024.
  15. Lekh Narayan Chand v. CBI, Jharkhand HC, 2024.
  16. M/s Parle Agro Pvt. Ltd. v. State of Karnataka, Karnataka HC, 2022.
  17. Shibaji Sengupta v. State of West Bengal, Cal HC, 2024.
  18. Shoukat Rai Malhotra v. Dellatora Enterprises Ltd., Delhi HC, 2012.
  19. Kirtidev Jadubhai Khatri v. State of Gujarat, Gujarat HC, 2021.