Any broken business promise or failed deal counts as cheating under the law.

Cheating requires dishonest or fraudulent intent from the outset; a person who genuinely intended to fulfil a promise but later failed has only breached a contract, which is a civil matter, not a criminal offence under this section.

Bharatiya Nyaya Sanhita, 2023

Section 318

Cheating

(1) Whoever, by deceiving any person, fraudulently or dishonestly induces the person so deceived to deliver any property to any person, or to consent that any person shall retain any property, or intentionally induces the person so deceived to do or omit to do anything which he would not do or omit if he were not so deceived, and which act or omission causes or is likely to cause damage or harm to that person in body, mind, reputation or property, is said to cheat. Explanation.—A dishonest concealment of facts is a deception within the meaning of this section. Illustrations.§

(a) A, by falsely pretending to be in the Civil Service, intentionally deceives Z, and thus dishonestly induces Z to let him have on credit goods for which he does not mean to pay. A cheats.§

(b) A, by putting a counterfeit mark on an article, intentionally deceives Z into a belief that this article was made by a certain celebrated manufacturer, and thus dishonestly induces Z to buy and pay for the article. A cheats.§

(c) A, by exhibiting to Z a false sample of an article intentionally deceives Z into believing that the article corresponds with the sample, and thereby dishonestly induces Z to buy and pay for the article. A cheats.§

(d) A, by tendering in payment for an article a bill on a house with which A keeps no money, and by which A expects that the bill will be dishonoured, intentionally deceives Z, and thereby dishonestly induces Z to deliver the article, intending not to pay for it. A cheats.§

(e) A, by pledging as diamonds articles which he knows are not diamonds, intentionally deceives Z, and thereby dishonestly induces Z to lend money. A cheats.§

(f) A intentionally deceives Z into a belief that A means to repay any money that Z may lend to him and thereby dishonestly induces Z to lend him money, A not intending to repay it. A cheats.§

(g) A intentionally deceives Z into a belief that A means to deliver to Z a certain quantity of indigo plant which he does not intend to deliver, and thereby dishonestly induces Z to advance money upon the faith of such delivery. A cheats; but if A, at the time of obtaining the money, intends to deliver the indigo plant, and afterwards breaks his contract and does not deliver it, he does not cheat, but is liable only to a civil action for breach of contract.§

(h) A intentionally deceives Z into a belief that A has performed A’s part of a contract made with Z, which he has not performed, and thereby dishonestly induces Z to pay money. A cheats.§

(i) A sells and conveys an estate to B. A, knowing that in consequence of such sale he has no right to the property, sells or mortgages the same to Z, without disclosing the fact of the previous sale and conveyance to B, and receives the purchase or mortgage money from Z. A cheats.§

(2) Whoever cheats shall be punished with imprisonment of either description for a term which may extend to three years, or with fine, or with both.§

(3) Whoever cheats with the knowledge that he is likely thereby to cause wrongful loss to a person whose interest in the transaction to which the cheating relates, he was bound, either by law, or by a legal contract, to protect, shall be punished with imprisonment of either description for a term which may extend to five years, or with fine, or with both.§

(4) 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.§

Why this exists

Cheating protects people from fraud and deception used to dishonestly extract property or cause harm, with the illustrations carefully distinguishing genuine fraud (intending never to perform, or deceiving from the start) from ordinary broken promises or contract breaches, which remain civil rather than criminal matters. The escalated punishments target cheating that breaches a special duty of protection, or that manipulates valuable financial documents.

How courts read it

Courts have consistently emphasised the distinction in the illustrations between cheating (deceiving someone with dishonest intent from the outset, such as never intending to perform a promise) and a genuine breach of contract (where the person intended to perform but later failed) — the latter remains a civil matter and does not attract criminal liability under this section.

Common misconceptions

Myth: Any broken business promise or failed deal counts as cheating under the law.
Fact: Cheating requires dishonest or fraudulent intent from the outset; a person who genuinely intended to fulfil a promise but later failed has only breached a contract, which is a civil matter, not a criminal offence under this section.