CRIMINAL BREACH OF TRUST
INTRODUCTION
Chapter XVII, Section 405 to 409 of the Indian Penal Code, 1860 Deals with the criminal breach of trust, Sections 405 to 409 deals with the criminal breach of trust Section 405 defines criminal breach of trust, while section 406 prescribes punishment for criminal breach of trust. And section 407 to section 409 deals with the case of aggravated forms of criminal breach of trust as defined us 405 IPC.
SECTTION 405, CRIMINAL BREACH OF TRUST
It states that in order to constitute the offence of criminal breach of trust it must be establish that the accused was entrusted with property or with any lead over the property and that he illegally converted to his own use. Criminal breach of trust is handling over the property by one person to another or any lead over the property in violation of any direction of law prescribing the mode in which trust is to be discharged or of any legal contract, express or implied, which he made touching the discharge of such trust or wilfully suffers any other person so to do, commits Criminal Breach of Trust.
INGREDIENTS
- Entrustment of the property by one person to another or any dominant over the property.
- Such promises are may be trust.
- Misrepresentation of property by the person who received the property in trust of own use.
- The property must be misappropriated or converted dishonestly.
Entrustment means handling the property by one person to another person in such a manner so that the person on whose behalf the property is handed over continuous to be owner. Section 405 IPC requires doing of something with respect to property which would indicate misrepresentation. A mere dispute of civil nature will not attract the provision of this section.
CASES
- Surender Pal Singh V/S State of Uttar Pradesh AIR 1957 All 122.
- Ramaswami Nadar v. State of Madras, AIR 1958, SC 56
- Mohammed Sulaimon vs. Mohammed Ayub AIR 1965, SC 1319
- In State of Gujarat vs jaswantlal Nathalal
The government sold cement to the accused only on the condition that it will be used for construction work. However, a portion of the cement purchased was diverted to a godown. The accused was sought to be prosecuted for criminal breach of trust. The supreme court held that the expression `entrustment` carries with it Implication that the person handling over any property or on whose behalf that property is handed over to another, continues to be its owner.
- In Shivnatrayan vs State of Maharashtra
It was held that a director of a company was in the position of trustee and being a trustee of the assets, which has come into his hands, he had dominion and control over the same.
Illustration:
1. A residing in Maharashtra, is agent Z, residing at Kolkata. There is an express or implied contract between A and Z, that all sums ramified by Z to A, shall be invested by A according to Z’s direction. Z remits a lakh of rupees to A with directions to invest the same in the company’s paper. A dishonesty disobeys the directions and employs the money in his own business. A has committed criminal breach of trust.
2. But if A in last illustration not dishonestly, but in good faith, believing that it will be more for z’s advantage to hold shares in the Bank of Maharashtra, disobeys Z directions and buys shares in Bank of Maharashtra for Z instead of buying company paper, here, though Z suffers loss and is entitled to bring action against A, on account of that loss, yet, A not having acted dishonestly, has not committed criminal breach of trust.
Scope of section 405 is broadened by explanations:
Explanations (1) and (2) to the section provides that an employee of an establishment who deducts employee’s contribution from wages payable to the employee to the credit of a State Insurance fund, shall be deemed to be entrusted with the amount of the contribution deducted and default in payment will amount to dishonest use of the amount and hence will constitute an offence of criminal breach of trust.
DETAILED ANALYSIS OF THE SECTION
A. Entrustment:
Entrustment of property is an essential requirement before any offence under this section takes place. The language of section is wide, as it includes all kinds of entrustment whether to clerks, servants, business, partners or other persons, provided they are holding a position of trust. In common parlance, it embraces all cases in which a thing handed over by one person to another for specific purpose. Entrustment need not be expressed. It may be implied.
In State of Gujarat Vs Jaswantlal Nathalal, AIR 1968 SC 700, the government sold cement to the accused only on the condition that it will be used for construction work. However, a portion of the cement purchased was diverted to a godown. The accused was sought to be prosecuted for criminal breach of trust. The Supreme Court held that the expression ‘entrustment’ carries with it the implication that the person handling over any property or on whose behalf that property is handed over to another, continues to be its owner. Thus, a mere transaction of sale cannot amount to an entrustment. So, if accused had isolated the conditions of purchase, then only remedy is to prosecute him under law relating to cement control.
B. Property
The definition in section 405 does not restrict the property to movables or immovable alone. In R K Dalmia V Delhi Administration AIR 1962 SC 1821, the Supreme Court held that the word “property” is used in the Indian Penal Code in much wider sense than the expression movable property. Whether the offence defined in the particular section of IPC can be committed in respect of any particular properly but on the fact whether that particular kind of property can be subject to acts covered by that section.
C. Dominion over property
The word “dominion” connotes control over the property. In Shivnaryan Vs. State of Maharashtra AIR 1980 SC 439, the Supreme Court held that a director of company was in the position of a trustee and being trustee of the assets, which has come into his hand, he had dominion and control over the same.
D. Misappropriation
Dishonest Misappropriation is the essence of this section. Dishonesty is as defined in section 24 IPC, causing wrongful gain or loss, which again is defined in section 23 IPC. In order to establish an offense, it is not enough that the money has not been accounted for or mismanaged. It has to be established that the accused has dishonesty put the dishonesty to his own use or to some unauthorized use.
SECTION (IPC) 406, PUNISHMENT IN CRIMINAL BREACH OF TRUST
Who so ever commit criminal breach of trust shall be punished with imprisonment of a term, which may extent to three years.
WHAT HAS TO BE PROVED ESSENTIALLY?
Must to prove the interest of beneficiary in the property in respect of which offence declared to have been committed was delivered in some person other than accused and that the accused held that property on behalf of that person Rashmi Kumar vs. Mahesh Kumar Bhada, 1997 2 SCC 397), The Supreme Court held that when the wife entrusts her stridhan with the dominion over that properly to her husband or any other member of family and the husband or such other member of the family dishonestly misappropriates or converts to his own that property or wilfully suffers any other person to do so, commits criminal breach of trust.
SECTION 407 (IPC), CRIMINAL BREACH OF TRUST BY CARRIER, ETC.
Whosoever being entrusted with property as carrier, wharfinger or warehouse keeper. Imprisonment for term which may extend to 7 years and shall also be liable to fine. IPC 407 is a Non-Bailable offence. IPC 407 is tried in the court of Magistrate First Class.
| Offence | Punishment | Cognizance | Bail | Triable |
| Criminal breach of trust by a carrier, wharfinger, etc. | 7 Years + Fine | Cognizable | Non-Bailable | Magistrate First Class |
SECTION 408 (IPC), CRIMINAL BREACH OF TRUST BY CLERK AND SERVENT.
Criminal breach of trust by clerk or servant. Imprisonment either for term which may extend to 7 years and shall also be liable to fine. IPC 408 is a Cognizable. IPC 408 is a Non-Bailable offence. tried in the court of Magistrate First Class.
| Offence | Punishment | Cognizance | Bail | Triable |
| Criminal breach of trust by a clerk or servant | 7 Years + Fine | Cognizable | Non-Bailable | Magistrate First Class |
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