In this note: Which offences may apply to forged expense claims, how to distinguish cheating and forgery from breach of trust, how a complaint may lead to an FIR, and what to address in the complaint, including limitation and recovery.
Forged or inflated expense claims can lead to charges of cheating and forgery. The main offences discussed below carry imprisonment of up to seven years, and the charge that fits depends on what the evidence establishes. Two dates matter. The date of the claims decides which offences apply, and the date the case begins decides which procedure applies. Police stations are often slow to register a complaint, but there is a clear route for pushing it forward. Do not assume an arrest will follow, and when you report to head office, describe the stage the case has reached rather than promise a result.
Which law applies
Conduct on or after 1 July 2024 falls under the Bharatiya Nyaya Sanhita, 2023 (BNS). Earlier conduct is still judged under the Indian Penal Code, 1860, because Article 20(1) of the Constitution and section 358 BNS protect against retrospective punishment (see Vijay Sharma v State of Rajasthan, Rajasthan High Court, 2024 SCC OnLine Raj 2897). Procedure generally follows the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS), but section 531(2)(a) keeps any appeal, application, trial, inquiry or investigation that was already pending on 1 July 2024 under the old Code of Criminal Procedure, 1973.
Which offences apply?
A false claim that tricks the company into reimbursing the employee is cheating under section 318(4) BNS. A forged receipt made so that it can be used for cheating falls under section 336(3). Using that receipt as genuine, knowing or having reason to believe it is forged, falls under section 340(2), and the punishment is the one provided for the underlying forgery. Where the facts show that someone made a fake hotel seal or plate to forge an ordinary document, section 341(2) applies. If someone counterfeited a stamp or mark, or kept material carrying one, to make a forged document look authentic, section 342(2) applies, and the document does not have to have been used. Sections 318(4), 336(3), 341(2) and 342(2) each carry imprisonment of up to seven years, plus fine. Where more than one person was involved, sections 3(5), 45, 49 and 61 deal with common intention, abetment and conspiracy.
Why is it not breach of trust?
An employee who submits a false claim has not been entrusted with the company’s money. The company pays because it believes what it was told. That is why criminal breach of trust under section 316 is usually the wrong main charge. It may still need a look where an employee was given an advance or float to account for. The Supreme Court has stressed that cheating and criminal breach of trust are separate offences with different ingredients (Delhi Race Club (1940) Ltd v State of UP, (2024) 10 SCC 690).
How does a complaint become an FIR?
A complaint can be given to the police orally or electronically. If it is electronic, the informant must sign it within three days for it to be taken on record (section 173(1) and (2) BNSS). In Lalita Kumari v Government of UP, (2014) 2 SCC 1, the Supreme Court said a preliminary enquiry is allowed only to check whether the information discloses a cognizable offence, not to test whether the allegation is true. The Court listed commercial offences among the cases where such an enquiry may be made, and asked that it be time bound, within seven days. That seven day period comes from the Court’s guidelines and is separate from the 14 days under section 173(3), which is a statutory provision.
Section 173(3) BNSS now allows a preliminary enquiry, with a Deputy Superintendent’s permission and within 14 days, but only for offences punishable with three years or more and less than seven. Read plainly, that leaves out a seven year maximum such as cheating under section 318(4) and forgery for cheating under section 336(3). The Supreme Court describes the provision in the same terms (Imran Pratapgadhi v State of Gujarat, 2025 INSC 410).
If the police still do not register an FIR, the company can write to the Superintendent of Police under section 173(4). If that fails, it can apply to the Magistrate under section 175(3), enclosing a copy of the first application and a supporting affidavit. The Magistrate must consider that application and what the police say, and may hold any inquiry he thinks necessary (Om Prakash Ambadkar v State of Maharashtra, 2025 INSC 139). Escalation like this is routine. It does not mean the complaint is weak.
What to expect next
Once an FIR is registered, the police must tell the informant how the investigation is progressing within 90 days (section 193(3)(ii) BNSS). That is a progress update, not a deadline for finishing. For suspected cognizable offences punishable up to seven years, section 35(1)(b) BNSS allows arrest only where the officer records written reasons and is satisfied that arrest is necessary for one of the statutory purposes. If arrest is not necessary, the police must issue a notice of appearance under section 35(3) (see also Arnesh Kumar v State of Bihar, (2014) 8 SCC 273). The Supreme Court has since held that, for offences punishable up to seven years, a notice under section 35(3) is the rule, and arrest under section 35(6) read with section 35(1)(b) is a clear exception (Satender Kumar Antil v CBI, 2026 INSC 115).
A sensible update to head office follows the stages: complaint filed, FIR registered or escalation under way, notice to the accused if issued, investigation, final report, and trial if the court takes cognizance.
What the complaint needs
It should be signed by someone authorised by the company, with a board resolution or other written authority to file and pursue it. It should set out the facts in date order, identify each forged document and put a figure on the loss claim by claim. Keep and annex the original bills and hotel folios, the approval trail, the travel policy and the signed undertakings, the audit findings with the date the fraud was discovered, and the hotel’s written confirmation that the stay, stamp or receipt is not genuine.
An admission from the employee is useful if it was voluntary and is backed by documents. Any dismissal should follow the employment contract, standing orders and the rules of natural justice, and a documented inquiry is usually sensible. Emails, ERP entries and access logs should be preserved in their original form, with the certificate required under section 63(4) of the Bharatiya Sakshya Adhiniyam, 2023.
Limitation and recovery
Section 514 BNSS bars cognizance only for certain offences punishable with up to three years, so there is no criminal limitation bar for the offences above. Recovering the money through a civil suit is a separate matter. Where the claim rests on the employee’s fraud, section 17 of the Limitation Act, 1963 can start the period from the date the fraud was discovered, or could with reasonable diligence have been discovered. Its conditions must be met on the facts, and it does not help against someone who bought in good faith for value. The company should therefore record the date its audit first identified the fraud.
In short: build the complaint around the forged documents and their dates, expect to have to push the police to register it, and tell head office only the stage the case has actually reached.
Image credit: illustrative image generated with AI.
General information only, not legal advice. Reading this note creates no advocate-client relationship, and no responsibility is accepted for action taken in reliance on it. The law changes and outcomes depend on the facts, so please take specific advice before acting. See the Disclaimer.