The Allahabad High Court has reaffirmed a critical principle in criminal jurisprudence: Sections 406 and 420 of the Indian Penal Code cannot be invoked simultaneously in the same case. This ruling, grounded in the Supreme Court’s recent decision in Delhi Race Club (1940) Ltd. v. State of Uttar Pradesh, clarifies a long-standing confusion in charging practices and provides definitive guidance to investigating agencies and trial courts.
Background & Facts
The Dispute
The applicant, Ramanevas, was named as an accused in Case Crime No. 08 of 2021, registered at Police Station Khalilabad, District Sant Kabir Nagar. The case arose from allegations that the applicant dishonestly induced a complainant to transfer property and subsequently misappropriated it. Based on these allegations, a chargesheet was filed on 06.03.2021 under Sections 406, 420, and 506 IPC. Cognizance was taken by the Chief Judicial Magistrate on 31.08.2021, and summoning orders were issued against the applicant.
Key Facts
- The complainant alleged that the applicant, while holding himself out as a property dealer, induced him to pay Rs. 12,00,000 for the purchase of land.
- The applicant allegedly failed to deliver the land and retained the payment.
- The complainant filed an FIR on 15.01.2021.
- The police investigation concluded with the filing of a chargesheet on 06.03.2021, invoking Sections 406, 420, and 506 IPC.
- No separate allegations were made to distinguish between fraudulent inducement (cheating) and subsequent misappropriation (criminal breach of trust).
Procedural History
- 15.01.2021: FIR registered at PS Khalilabad, Case Crime No. 08 of 2021
- 06.03.2021: Chargesheet filed under Sections 406, 420, and 506 IPC
- 31.08.2021: Cognizance taken and summoning issued by Chief Judicial Magistrate, Sant Kabir Nagar
- 12.04.2021: First hearing before the Magistrate
- 23.08.2024: Supreme Court delivered judgment in Delhi Race Club (1940) Ltd. v. State of Uttar Pradesh (2024) 10 SCC 690
- 28.03.2026: Application under Section 528 BNSS filed before Allahabad High Court seeking quashing of chargesheet and cognizance order
- 29.04.2026: Judgment delivered by the High Court
The Parties' Positions
Relief Sought
The applicant sought quashing of the chargesheet dated 06.03.2021, the cognizance/summoning order dated 31.08.2021, and all proceedings in Case No. 11288 of 2021 on the ground that Sections 406 and 420 IPC are mutually exclusive and cannot be charged together.
The Legal Issue
The central question was whether Sections 406 and 420 IPC can be invoked simultaneously in the same set of facts, or whether they constitute mutually exclusive offences as held by the Supreme Court in Delhi Race Club (1940) Ltd. v. State of Uttar Pradesh.
Arguments Presented
For the Appellant/Petitioner
The applicant’s counsel relied on the Supreme Court’s judgment in Delhi Race Club (1940) Ltd. v. State of Uttar Pradesh (2024) 10 SCC 690, which held that cheating under Section 420 IPC and criminal breach of trust under Section 406 IPC are distinct and antithetical offences. The counsel argued that cheating requires fraudulent intention at the inception of the transaction, whereas criminal breach of trust arises only after lawful entrustment of property. Since the same factual matrix cannot simultaneously establish both intentions, charging both offences together is legally unsustainable. The counsel further submitted that the chargesheet failed to distinguish between the two offences and thus violated the settled legal principle.
For the Respondent/State
The Additional Government Advocate did not dispute the legal proposition laid down in Delhi Race Club. He conceded that the chargesheet may have been framed incorrectly but argued that the court below could rectify the error during trial. However, he offered no legal counter-argument to challenge the Supreme Court’s reasoning.
The Court's Analysis
The High Court undertook a detailed review of the Supreme Court’s judgment in Delhi Race Club (1940) Ltd. v. State of Uttar Pradesh. The Court emphasized that the Supreme Court had explicitly held that the two offences are not complementary but mutually exclusive. The Court quoted the following passage:
"In case of cheating, the intention of the accused at the time of inducement should be looked into which may be judged by a subsequent conduct, but for this, the subsequent conduct is not the sole test. 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 i.e. the time when the offence is said to have been committed. Therefore, it is this intention, which is the gist of the offence."
The Court noted that the chargesheet in the present case did not allege distinct facts to support two separate intentions. The complainant’s allegations centered on a single transaction: payment made in expectation of land delivery, followed by non-delivery and retention of funds. This scenario, as per Delhi Race Club, can only support one of the two offences - not both.
The Court further held that the judgment in Delhi Race Club, though delivered on 23.08.2024, applies retrospectively. It relied on Kanishk Sinha v. State of West Bengal (2025 SCC Online SC 443), which affirmed that judicial pronouncements declaring the true meaning of law are retrospective unless expressly stated otherwise. Since the Supreme Court did not limit its ruling to future cases, the principle must apply to pending proceedings, including those initiated before the judgment.
The Court concluded that the cognizance order dated 31.08.2021, which was based on an erroneous conflation of two legally incompatible offences, was unsustainable in law.
The Verdict
The applicant succeeded in part. The High Court set aside the cognizance and summoning order dated 31.08.2021 in Case No. 11288 of 2021. The chargesheet under Sections 406 and 420 IPC is quashed to the extent it invokes both provisions together. The matter is remitted to the Chief Judicial Magistrate, Sant Kabir Nagar, to consider whether cognizance may be taken under Section 406 IPC alone or Section 420 IPC alone, based on the facts and evidence, in light of the Supreme Court’s ruling in Delhi Race Club (1940) Ltd. v. State of Uttar Pradesh. The proceedings under Section 506 IPC remain unaffected.
What This Means For Similar Cases
Charging Both Sections 406 and 420 IPC Is Legally Invalid
- Practitioners must now scrutinize FIRs and chargesheets to ensure that Sections 406 and 420 IPC are not jointly invoked without distinct factual bases
- If the allegation is that property was obtained by deception from the outset, only Section 420 applies
- If property was lawfully received and later misappropriated, only Section 406 applies
- Joint charges invite immediate quashing under Section 482 CrPC or Section 528 BNSS
Retrospective Application of Clarificatory Judgments Is Mandatory
- Judicial interpretations of law, even if delivered after the initiation of proceedings, apply retrospectively
- Courts cannot uphold charges based on legal errors that have since been corrected by the Supreme Court
- Defence counsel must invoke Delhi Race Club in all pending cases where Sections 406 and 420 are jointly charged, regardless of when the case was filed
Police Training and Charging Protocols Require Urgent Reform
- Investigating officers continue to routinely invoke both sections without understanding their legal distinction
- Prosecutors must now be trained to select the correct charge based on the nature of the dishonesty - initial deception versus subsequent breach
- The judgment mandates a paradigm shift in how police draft chargesheets and how prosecutors frame complaints
