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The Bharatiya Nyaya Sanhita, 2023 (BNS) replaced the Indian Penal Code, 1860 (IPC) with effect from 1 July 2024. The core offences — murder, theft, cheating, criminal breach of trust, forgery — are all retained in the BNS, but with renumbered sections. For example, IPC Section 420 (cheating) is now BNS Section 318(4), and IPC Section 405 (criminal breach of trust) is now BNS Section 316. The BNS adds new offences including organised crime (Section 111), terrorism (Section 113), and community service as a new punishment.
The most commonly invoked BNS sections in banking fraud cases are: Section 316 (Criminal Breach of Trust — for diversion of loan proceeds), Section 318 and Section 318(4) (Cheating, and cheating inducing delivery of property — for fraudulent loan applications), Section 320 (Fraudulent removal of property to defeat creditors), Section 336/338/340 (Forgery, forgery of valuable security, and using a forged document as genuine), and Section 344 (Falsification of accounts). These are typically combined with Economic Offences such as Prevention of Money Laundering Act and Prevention of Corruption Act.
Yes. Civil/quasi-civil remedies (SARFAESI enforcement, DRT Original Application) and criminal remedies (BNS complaint/FIR) are independent and can run simultaneously. The Supreme Court has repeatedly held that initiation of civil proceedings does not bar criminal proceedings for the same transaction, and vice versa. Many banks and NBFCs adopt a dual-track approach — pursuing SARFAESI/DRT for speedy civil recovery while simultaneously filing FIRs for the criminal aspects of fraud.
Criminal complaints under BNS do not have the same statutory limitation as civil suits. However, courts apply the principle of unreasonable delay as a factor. Section 514 of the BNSS (erstwhile CrPC Section 468) bars cognizance of offences punishable with fine only (or imprisonment up to 1 year) after 1 year, and for offences up to 3 years' imprisonment, after 3 years. For serious offences (forgery of valuable security: 7 years; CBT aggravated: 7 years), there is no limitation under BNSS.
No. The BNS applies to offences committed on or after 1 July 2024. FIRs registered under IPC before that date will continue to be tried under the IPC. Cases pending as of 1 July 2024 will proceed under the old IPC/CrPC framework. This is confirmed by Section 358 of the BNS (savings clause).
BNS Section 111 is a new provision that defines 'organised crime' as continuing unlawful activity by a gang or syndicate using violence, intimidation, or corruption to obtain pecuniary benefits. Financial fraud networks — loan fraud rings involving multiple borrowers, intermediaries, valuers, and insiders who systematically defraud banks — can potentially be charged under S.111. The provision imposes a minimum sentence of 5 years and a ₹5 lakh fine, making bail extremely difficult. In practice, the Economic Offences Wing and CBI have used analogous provisions to target structured fraud networks, and S.111 BNS formalises this.
Criminal Breach of Trust (S.316) and Cheating (S.318) are distinct offences though both involve fraud. CBT requires: (a) prior lawful entrustment of property, (b) dishonest misappropriation or disposal. The property was legitimately given to the accused, who then betrayed the trust. Example: a borrower who has pledged goods to a bank and then sells the pledged goods without the bank's permission. Cheating (S.318) requires: (a) deception or false representation, (b) the deceived person hands over property as a result. The property was obtained by deception from the start. Example: a borrower who submits forged financials to get a loan. In banking fraud, both offences are typically charged together when a loan was obtained by fraud (S.318(4)) and the proceeds were then diverted in breach of the terms of the loan (S.316).
The IBC (Insolvency and Bankruptcy Code) and BNS criminal provisions serve parallel but distinct purposes. The IBC provides a civil insolvency resolution process — it maximises asset recovery for creditors through a structured resolution or liquidation, with the moratorium preventing piecemeal enforcement. BNS criminal provisions (S.316 CBT, S.318(4) cheating, S.336 forgery) punish the individuals responsible for the fraud and aim for deterrence. Both can run simultaneously — the IBC moratorium does not bar criminal investigation or prosecution (the Supreme Court confirmed this in Mafatlal Industries). Banks and financial institutions often pursue IBC proceedings for asset recovery while simultaneously filing criminal complaints under BNS/IPC for the criminal fraud, particularly when promoter fraud is suspected.
Under BNS, criminal liability is primarily individual — companies cannot be imprisoned. However, companies can be fined. Directors, officers, and employees who are personally responsible for criminal acts are individually liable. Under Section 10 of the Companies Act, 2013, every person who was in charge of and responsible for the conduct of the business at the time the offence was committed is liable. The FIR in banking fraud cases typically names: the corporate borrower (for fine), the Managing Director/CMD, executive directors, CFO, and other key decision-makers. The principle of 'directing mind and will' of the company — the person who actually authorised the fraud — determines individual criminal liability.
These three forgery provisions form a hierarchy: S.336 (basic forgery) covers any false document made with fraudulent intent — punishment up to 2 years. S.338 (forgery of valuable security) is specifically for documents that represent property rights — cheques, demand drafts, mortgage deeds, powers of attorney — punishment up to 7 years, reflecting the higher value at risk. S.336(3) (forgery for purpose of cheating) applies when any forgery (whether S.336 or S.338) is committed specifically with the intent to cheat someone — punishment up to 7 years. In banking fraud FIRs, all three are charged: S.336 for creating false documents, S.338 for valuable securities, and S.336(3) for the purpose being to cheat the bank.
Whether you are a creditor pursuing criminal action under BNS, or an accused seeking to challenge an FIR, Our partner-led team provides specialist counsel for banking and financial fraud matters.