This article is written by Aashiya Rahman, a student of Jogesh Chandra Chaudhuri Law College, Kolkata. This article talks about Section 405 of the Indian Penal Code i.e., criminal breach of trust. The article exclusively discussed Section 405 IPC, differences between Section 405 and Section 403 IPC and case laws related to it. 

It has been published by Rachit Garg.

Introduction 

Chapter XVII – Sections 378 to 462 of the Indian Penal Code,1860 (“IPC”) deals with offences against property. Criminal breach of trust has been defined under Section 405 of IPC and Section 406 deals with the punishment of the same. Sections 407, 408 and 409 of the IPC talks about criminal breach of trust by carrier, etc; criminal breach of trust by clerk or servant and criminal breach of trust by public servant or by banker, merchant or agent respectively. By dismantling the phrase, we get three different words. Let us understand the meaning of each word. 

“Criminal” means something that is prohibited under the law- which the law does not permit or is morally wrongful.

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“Breach” can be understood as a violation of something. It can be a promise, a code of conduct or in our case, trust.

“Trust” can be defined as confidence or belief in someone’s character, ability, strength, or truth. It can be explained as a kind of fiduciary relationship.

What is criminal breach of trust

In layman’s terms, a criminal breach of trust involves trust regarding a property that one person entrusts to another person (namely the accused) and he breaks or violates it with a dishonest intention and consequently, it becomes a criminal act. For example, A entrusted his bicycle to B to repair it but he uses it for his own purpose. Here, the trust that A has over B is breached by B and it is done with a dishonest intention therefore it shall be termed as criminal breach of trust.

Here, it is to be noted that the section talks about only ‘property’ so it can either be a movable property or an immovable property. The Supreme Court in the case of R.K. Dalmia v. Delhi Administration (1962), held that the word ‘property’ in Section 405 IPC has been used in different senses. It has a wider interpretation. The use of the word ‘property’ is not restricted to only movable or immovable property. It includes both.

The word ‘entrust’ is of immense importance in this section. It means handing over a property to another person for certain specific reasons but it must be pointed out that entrusting gives only limited rights to the other person it does not grant them proprietary rights or the right of ownership over the property. They have significant control or dominion over the property but in no sense, they can become the lawful owners of the said property. The property in question can be misappropriated, converted, used or disposed of.

Section 405 IPC talks about criminal breach of trust committed by a person with respect to a property whether movable or immovable which he has been entrusted with or has dominion over and he dishonestly uses such property for his own purpose or misappropriates it 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 wilfully suffers any other person so to do, commits criminal breach of trust.

Illustration

  • A is an officer who has been entrusted with public money. He dishonestly uses it for his own purpose. Thus, A has committed criminal breach of trust.
  • A entrusts his furniture to B who owns a furniture shop to repair it while he is on a journey but B dishonestly sells the furniture. Therefore, B has committed criminal breach of trust.

Punishment under the law for the offence of criminal breach of trust under Section 405 IPC

The punishment for criminal breach of trust is imprisonment for 3 years and a fine, or both. It is non-bailable and a cognizable offence and is triable by a first class Magistrate.

Section 407 IPC

Section 407 talks about criminal breach of trust by carrier, wharfinger or warehouse-keeper. It says that if the carrier, wharfinger or warehouse-keeper are entrusted with property and they commit a criminal breach of trust in respect of such property then they shall be punished with imprisonment for a term which may extend to 7 years along with a fine.

Section 408 IPC

Section 408 talks about criminal breach of trust by a clerk, servant or someone employed as a clerk or servant who has been entrusted in any manner with property or dominion over such property. In such a case, they shall be punished with imprisonment for a term that may extend to 7 years along with a fine.

Section 409 IPC

Section 409 deals with criminal breach of trust by a public servant or in the way of his business as a banker, merchant, factor, broker, attorney, or agent, who has been entrusted with property or dominion over such property. They shall be punished with imprisonment for life or for a term of ten years along with a fine.

Essentials of criminal breach of trust

There are certain essential factors that must be fulfilled for criminal breach of trust to take place. They are as follows:

  • Entrustment of property to the accused is mandatory.
  • That the person must dishonestly misappropriate or convert such property for his  own  use or wilfully make any other person use such property.
  • There must be a violation of a law, contract, or trust by the accused.

Difference between criminal breach of trust and criminal misappropriation

The differences between criminal breach of trust and criminal misappropriation are listed below:

  1. Criminal misappropriation is defined in Section 403 IPC and criminal breach of trust in Section 405 as we have read above. Criminal misappropriation is defined in Section 403 IPC as: “Whoever dishonestly misappropriates or converts to his own use any movable property, shall be punished with imprisonment of either description for a term which may extend to two years, or with fine, or with both.”
  2. A contractual relationship exists between the two parties in criminal breach of trust but such a contract is absent in case of criminal misappropriation. There exists no such contractual relationship between the parties in criminal misappropriation.
  3. In a criminal breach of trust, the property is obtained by the accused from the owner by entrustment of such property. But in criminal misappropriation, the property is obtained by the owner through any source. For instance, A finds a wallet on the road he opens it and sees that it contains all the details of the owner. The wallet had a total sum of Rs. 500 in it but rather than contacting the owner and returning it to him, he used it for his own purpose. Thus, he is guilty of criminal misappropriation and he was not entrusted by the owner of the wallet to keep it rather he obtained it through a different source.
  4. In criminal breach of trust, the property might be movable or immovable but in criminal misappropriation, the property is movable.
  5. As per Section 406, criminal breach of trust is punishable by imprisonment for a period of 2 years or a fine or both. As per Section 403, criminal misappropriation is punishable by imprisonment for a period of 2 years or a fine or both.

Case laws

Jaswantlal Nathalal V. State of Gujarat(1967)

In a landmark judgement of Jaswantlal Nathalal v. State of Gujarat (1967), a contract for the construction of a building for the government litho-printing press was given to the respondent by the government of Gujarat. Delivery of 5 tons, or 100 bags of cement was made to the respondent by Deputy Engineer (Construction sub-division, Ahmedabad). Thereafter, the respondent transferred 40 bags of cement to a godown and made delivery of the remaining 60 bags of cement to the construction site. The appellant filed a case to prosecute the respondent for criminal breach of trust.

The Apex Court held that the term “entrustment” implies that the person who is handing over his property to another continues to be its owner. And that there must exist a fiduciary relationship between them. But in the present case, there is a sale of cement to the respondent with the objective of using it only for the purpose of construction.  Therefore, the government after delivery of the cement to the accused does not have any right or dominion over it. The respondent can only be prosecuted if it has violated any law relating to cement control. The Court held that there was no breach of trust. 

State of UP v. Babu Ram Upadhya(2000)

In the case of State of UP v. Babu Ram Upadhya (2000), the respondent was a Superintendent of Police. He visited a village to investigate a case of theft. Lalji, an ex-patwari of Mohinuddinpur was accompanying him. While returning in the evening he saw Tika Ram coming from one side of a canal and rushing towards a field. It appeared that he was carrying something in the folds of his dhoti. Since his movements were not normal, the S.I. searched him and got hold of a bundle of currency notes. The accused took the bundle and later returned them to Tika Ram. But when Tika Ram counted the currency notes, it was found that they were short of Rs. 250. The Supreme Court held that there was an entrustment of property and the person taking dominion over such property converted it to his own use. Therefore, an offence under Section 409 IPC was held.

Jaswant Rai Manilal Akhaney v. State of Bombay (1956)

In the case of Jawant Rai Manilal Akhaney V. State of Bombay(1956), the accused was the Managing Director of the Exchange Bank of India. It was observed by the Court that he was in full control of the accounts of the bank. It was impossible to believe that he was not aware of the fact that his bank was obliged to pay the Cooperative Bank money by way of overdraft. Therefore, it cannot be assumed that the accused had no knowledge of it. It was further held that the accused might have made a mistake of law in believing that he was justified in dealing with those securities by law.

Securities that are pledged for particular purposes with a bank were held to be treated as ‘entrustment’. The properties which have been entrusted to the directors of a company likewise would amount to entrustment since, to some extent, they are trustees of the company. But no question of entrustment would arise if the money was paid as illegal gratification.

Rashmi Kumar v. Mahesh Kumar Bhada (1996)

In Rashmi Kumar v. Mahesh Kumar Bhada(1996), the appellant and the respondent, according to the Hindu Marriage Act, were a married couple. They had three children. The appellant contended that in her matrimonial home, she was subjected to cruelty. She was not treated with respect and she was thrown out of the house along with her three children by her in-laws. The belongings of the appellant which she received from her family members and relatives before her marriage and after her marriage were entrusted to her husband. She demanded to get back her sridhana property from her husband which was entrusted to him. The Supreme Court held that the ownership of sridhana property of the wife is with her and that she has entrusted her property to her husband and he only has dominion over it. If he or any member of his family breaches such entrustment and uses the same dishonestly for their own use or misappropriates it, they shall be held liable for the offence of criminal breach of trust under Section 405 IPC and shall be punished for the same.

Conclusion

For the offence of criminal breach of trust to be committed it is necessary that all its essential elements be fulfilled. There must be entrustment of property. It should give rise to a fiduciary relationship between the two parties. The accused must have dominion over the property. And that he has broken the trust of the other party by converting the property for his own use or for some other arbitrary purpose with dishonest intention. The existence of dishonest intention is a very crucial factor. The property need not necessarily be movable or immovable. It can be either.

Frequently Asked Questions (FAQs)

What are the essential ingredients required for offence of criminal breach of trust?

The essential ingredients that are required for offence of criminal breach of trust are dominion over property, dishonest intention to use the property for one’s own use or disposal of the property and breach of law. 

Whether it is a bailable or non-bailable offence?

The offence of criminal breach of trust is a non-bailable offence.

Whether the offence under Section 405 IPC is compoundable or non-compoundable?

It is a compoundable offence.

Whether the offence under Section 405 IPC is cognizable or non-cognizable offence?

It is a cognizable offence. The police have the power to arrest without a warrant. 

References 

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