As the title clearly mentions, when a person puts his trust on some other person and in furtherance of that trust he transfers possession of some property to that other person. The other person thereafter does some act so as to breach the trust of the person placing his trust in him. Such an act of the other person has been described as a criminal act under Indian Penal Code (hereinafter ‘IPC’ or ‘Code’).
The provision under IPC-
- Criminal Breach of Trust has been defined under Chapter VI – Of Offences Affecting Human Body, Ss. 405 to 409.
- 405 provides for the definition of the offense.
- 406 provides for its punishment.
- 407 – S. 409 state the conditions when the offense is committed by some specific people and punishment for it in those specific cases.
Definition- 405 of the Code defines the offense as follows:
Whoever, being in any manner entrusted with property, or with any dominion over property, dishonestly misappropriates or converts to his own use that property, or dishonestly uses or disposes of that property in violation of any direction of law prescribing the mode in which such trust is to be discharged, or of any legal contract, express or implied, which he has made touching the discharge of such trust, or willfully suffers any other person so to do, commits “criminal breach of trust”.
The definition above has the following ingredients:
a) There must be an entrustment-
- Entrustment means that possession of the property is handed over to some other person.
- It is not necessary that there has to be a transfer of any propriety right over that property to the other person.
- It is sufficient that the property has been handed over to the other person out of confidence, faith or trust and for some specific purpose.
- Such confidence/faith should be voluntary, freely placed and not under any pressure.
- What is required to be transferred here is mere possession and not ownership.
- The possession so transferred can be of two types – i) Constructive ii) Direct
- Direct possession is where the property is straight away given to other in its original form. For example, if we talk about a notebook, directly handing over the notebook to the other person is giving direct possession.
- Indirect or constructive possession is where the property itself is not given but it is given by way of some indication. For example, if we talk about a car, one does not directly hand over the car to the other person. It might be parked at some place far away. But by giving its keys it is considered that car is being given. This is called constructive possession.
b) Of Property-
- Since there is no adjective used with the word Property in the definition, the property here may be either movable or immovable property
- The only condition is that the property here should belong to the complainant.
- It is however not necessary that the complainant should be the owner of the property.
- The only requirement is that the complainant must have entrusted the property to the accused.
c) Or Dominion over the property-
- The offense under this section requires that either the property must have been entrusted to the accused or he must have dominion over it.
- Having dominion over something means that he must be in charge of the property or enjoys control over the property.
- For example, in Bimala Charan Roy, an inspector was hired for check supply and distribution of water from Municipal Water Works. Here the inspector has not been entrusted with the property. It still belongs to Municipal Water Works. But he enjoys dominion over it. So if he takes water for his own use, it will amount to Criminal Breach of trust under this Section.
d) Dishonest misappropriation or conversion to own use-
- Dishonest intention lays down the crux of this section.
- Term ‘Dishonestly’ has been defined under S.24 of the Code as doing something with the intention to cause wrongful gain to one person and wrongful loss to the other.
- Misappropriation means to steal something that you have been trusted to take care of and put it to your own use.
- Mere retention of good to oneself without misappropriating It would not amount to this offence.
- For example, in Welch’s case[ii], A had been handed over some money that he had to account for. He kept the money with him without using it for himself. He did not account for it. He was held to be liable for this offence even though there was no time was specified for him to do so.
- In another case, one Adinarayan Iyer[iii] left a box in B’s house. B refused to give him back till his debt was paid off. It was held that this offence was not committed.
e) Dishonest use or disposal of that property-
- This offence requires any of the four acts to be done
- Conversion to own use
- Use for any other purpose
- Misappropriation and conversion to own use has already been covered in the clause above.
- Dishonest use means to cause some appreciable loss to the complainant and appreciable gain to the accused by doing some act which he is not authorized to do or is wrong for him to do.
- Disposing of the property wrongfully that has been entrusted to him or on over which he enjoys a dominion will also constitute the commission of this offence.
- For example, if A has been given a printer to print catalogues of his client but he uses it to print catalogues of the rival of the client, it will constitute this offence.
- Trust in legal sense is a relationship under which a property is held by one party on behalf of other person for the benefit of that other person.
- The person who keeps the property does so under the confidence that has been placed in him by the person to whom the property originally belongs.
- The person who holds the property is called as trustee.
- The trust need not be in furtherance of any lawful object.
- In order to commit this offence, the trustee has to do any of the 4 acts discussed above in clause e.
g) Wilfully suffer any other person to do so-
- This phrase means that there must be an intention involved to commit this offence.
- Therefore, the intention is one of the main ingredient of this offence.
- The act done should be done wilfully or intentionally and not have happened as a result of mere accident or by chance.
h) Violation of legal contract-
- The definition says that if any of the four acts mentioned in clause (e) above are done in violation of either of the following shall constitute this offence-
- Law describing the mode of discharge of trust, or
- Any legal contract made touching discharge of trust
- Trust has already been discussed above in clause (f).
- Act done in violation of legal contract means that there was a contact made between the complainant and accused under which the property concerned shall pass only when the option has been exercised and full payment has been made.
- In this case, if the option has not been exercised and still the property concerned is disposed of without making the payment, it will also constitute this offence.
- For example, in the case of Moses, there was a hire sell agreement under which A got the possession of a cycle for which he had to make payment in instalment as rent. Once the instalments reached the amount of selling price of cycle, A could sell the cycle as his own. A without making all payments, sells the cycle. A commits the offence under this Section.
Difference between Theft and Criminal Breach of Trust-
|Criminal Breach of Trust||Theft|
|1. There is an actual or constructive transfer of possession of the property.||1. There is no transfer of possession.|
|2. The person in possession of property misappropriates the property.||3. The person takes away the property which was never in his possession either constructive or direct.|
Difference between Misappropriation and Criminal breach of Trust-
|Criminal breach of Trust||Criminal Misappropriation|
|1. There is entrustment of property which has been misappropriated.||1. There is a misappropriation of property no matter how it came.|
|2. There is some sort of contractual relationship between the parties.||2. There is no relation between the parties.|
|3. The property misappropriated by accused came to him through some entrustment etc. for some purpose which he did not perform.||3. The property came to the offender by some accident etc and he converts it to his own use.|
|u/r S. 406||u/r S. 407||u/r S. 408||u/r S 409|
|ü Imprisonment of either description for a term up to 3 years
ü Or with fine
ü Or both
|If entrusted with property as carrier, wharfinger or warehouse keeper,
ü Imprisonment of either description for a term up to 7 years
ü And with fine
|If done by a clerk or servant,
ü Imprisonment of either description for a term up to 7 years
ü And with fine
|If done in capacity of public servant, banker, merchant, factor, broker, attorney, agent,
ü Imprisonment for life, or
ü Imprisonment of either description for a term up to 10 years
ü And with fine
M.G. Mohat v. Shivputrappa and another
- A pledged some gold articles with State Bank of India to secure a loan.
- At the time of repayment of the loan, he paid the amount and requested for return of his gold articles.
- He found that articles returned to him were not the same that he had pledged.
- It was held that the bank manager enjoyed dominion of the property and hence he was held responsible for the act.
Anil Saran v. State of Bihar
- The question that came before the Supreme Court was whether a partner could commit offence under S. 405 of this Code.
- It was held that partnership is not a legal entity but all the partners enjoy dominion over the property and funds of partnership.
- There is a legal contract between the partners under which they do not own the property of partnership but they enjoy dominion over it.
- So, if one of the partners converts the common property of firm or its funds to their own use, he commits this offense.
State of UP v. Baburam
- In this case, the accused who was Sub Inspector of Police (SI) had been asked to investigate a theft in a village.
- During the investigation, he found a man almost running towards some place and hiding something in his dhoti.
- On investigation, he found currency notes in his dhoti which he immediately seized.
- After the investigation, it was found that it was not stolen money but belonged to that man only.
- The money was returned to him but it was short of about Rs. 250.
- It was held that the SI had been entrusted with that currency by the man upon a belief that post investigation it will be returned back to him.
- So if it is short of some money, it is the responsibility of SI and he will be held liable under this section.
Criminal Breach of Trust is an offence that requires entrustment of any movable or immovable property which has been misappropriated by the accused and converted to his own use or disposed of dishonestly. Malicious intent is an important factor to commit this offence.