|
Section 405. Criminal breach
of trust.
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 wilfully suffers any other person so to do, commits
'criminal breach of trust.'
The aim of this paper is to
explore how the supreme courts & the high courts ,in their
various
rulings have incorporated this concept of Live divided my project
broadly under 4 categories:
1. What Is Criminal Breach Of Trust.
2. Entrustment
3. Property
4. Criminal Misappropriation
What
Is Criminal Breach Of Trust
The offence of criminal breach of trust, as defined under this
section, is similar to the offence of embezzlement under the
English law. A reading of the section suggests that the gist of
the offence of criminal breach of trust is 'dishonest
misappropriation' or 'conversion to own use' another's property,
which is nothing but the offence of criminal misappropriation
defined u/s 403. The only difference between the two is that in
respect of criminal breach of trust, the accused is entrusted
with property or with dominion or control over the property.
Entrustment
As the title to the offence
itself suggests, entrustment or property is an essential
requirement before any offence under this section takes place. The
language of the section is very wide. The words used are 'in any
manner entrusted with property'. So, it extends to entrustments of
all kinds-whether to clerks, servants, business partners or other
persons, provided they are holding a position of trust. "The term
"entrusted" found in a 405, IPC governs not only the words "with
the property" immediately following it but also the words "or with
any dominion over the property"
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 the
implication that the person handing over any property or on whose
behalf that property is handed over to another, continues to be
its owner. Further, the person handing
over the property must have confidence in the person taking the
property. so as to create a fiduciary relationship between them. A
mere transaction of sale cannot amount to an entrustment. If the
accused had violated the conditions of purchase, the only remedy
is to prosecute him under law relating to cement control. But no
offence of criminal breach of trust was made out.
In Jaswant Rai Manilal Akhaney
vs State of Bombay,
It was held that when securities are pledged with a bank for
specific purpose on specified conditions, it would amount to
entrustment. Similarly, properties entrusted to directors of a
company would amount to entrustment, because directors are to some
extent in a position of trustee. However, when money was paid as
illegal gratification, there was no question of entrustment.
In State of UP vs Babu Ram,
The accused, a sub-inspector (SI) of police, had gone to
investigate a theft case in a village. In the evening, he saw one
person named Tika Ram coming from the side of the cannal and
hurriedly going towards a field. He appeared to be carrying
something in his dhoti folds. The accused searched him and found a
bundle containing currency notes. The accused took the bundle and
later returned it. The amount returned was short by Rs. 250. The
Supreme Court held that the currency notes were handed over to the
SI for a particular purpose and Tika Ram had trusted the accused
to return the money once the accused satisfied himself about it.
If the accused had taken the currency notes, it would amount to
criminal breach of trust..
In Rashmi Kumar vs Mahesh Kumar Bhada the Supreme Court held that
when the wife entrusts her stridhana property with the dominion
over that property to her husband or any other member of the
family and the husband or such other member of the family
dishonestly misappropriates or converts to his own use that
property, or willfully suffers and other person to do so, he
commits criminal breach of trust
Property
The definition in a 405 does not restrict the property to
movables or immoveable alone. In R K Dalmia vs Delhi
Administration, the Supreme Court held that the word 'property' is
used in the Code in a much wider sense than the expression
'moveable property'. There is no good reason to restrict the
meaning of the word 'property' to moveable property only, when it
is used without any qualification in s 405. Whether the offence
defined in a particular section of IPC can be committed in respect
of any particular kind of property, will depend not on the
interpretation of the word 'property' but on the fact whether that
particular kind of property can be subject to the acts covered by
that section. Dominion Over Property
The word 'dominion' connotes
control over the property. In Shivnatrayan vs State of
Maharashtra, it was held that a director of a company was in the
position of a trustee and being a trustee of the assets, which has
come into his hand, he had dominion and control over the same.
However, in respect of
partnership firms, it has been held29 that though every partner
has dominion over property by virtue of being a partner, it is not
a dominion which satisfies the requirement of s 405, as there is
no 'entrustment of dominion, unless there is a special agreement
between partners making such entrustment.
Explanations (1) and (2) to
the section provide that an employer of an establishment who
deducts employee's contribution from the wages payable to the
employee to the credit of a provident fund or family pension fund
or employees state insurance fund, shall be deemed to be entrusted
with the amount of the contribution deducted and default in
payment will
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. In Employees State
Insurance Corporation vs S K Aggarwal, the Supreme Court held that
the definition of principal employer under the Employees State
Insurance Act means the owner or occupier. Under the
circumstances, in respect of a company, it is the company itself
which owns the factory and the directors of the company will not
come under the definition of 'employer.' Consequently, the order
of the High Court quashing the criminal proceedings initiated u/ss
405 and 406, IPC was upheld by the Supreme Court
Misappropriation
Dishonest misappropriations the essence of this section.
Dishonesty is as defined in sec.24, IPC, causing wrongful gain or
wrongful loss to a person. The meaning of wrongful gain and
wrongful loss is defined in sec 23, IPC. In order to constitute an
offence, it is not enough to establish that the money has not been
accounted for or mismanaged. It has to be established that the
accused has dishonestly put the property to his own use or to some
unauthorized use. Dishonest intention to
misappropriate is a crucial fact to be proved to bring home the
charge of criminal breach of trust.
Proof of intention, which is
always a question of the guilty mind or mens rea of the person, is
difficult ot establish by way of direct evidence. In
Krishan Kumar
V UOI, the accurse was employed as an assistant storekeeper in the
Central Tractor Organisation (CTO) at Delhi. Amongst other duties,
his duty was the taking of delivery of consignment of goods
received by rail for CTO. The accused had taken delivery of a
particular wagonload of iron and steel from Tata Iron and Steel
Co, Tatanagar, and the goods were removed from the railway depot
but did not reach the CTO. When questioned, the accused gave a
false explanation that the goods had been cleared, but later
stated that he had removed the goods to another railway siding,
but the goods were not there. The defence version of the accused
was rejected as false. However, the prosecution was unable to
establish how exactly the goods were misappropriated and what was
the exact use they were put to. In
this context, the Supreme Court held that it was not necessary in
every case to prove in what precise manner the accused person had
dealt with or appropriated the goods of his master. The question
is one of intention and not direct proof of misappropriation. The
offence will be proved if the prosecution establishes that the
servant received the goods and that he was under a duty to account
to his master and had not done so. In this case, it was held that
the prosecution has established
that the accused received the goods and removed it from the
railway depot. That was sufficient to sustain a conviction under
this section. Similarly, in Jaikrishnadas Manohardas Desai vs
State of Bombay, it was held that dishonest misappropriation or
conversion may not ordinarily be a matter of direct proof, but
when it is established that property, is entrusted to a person or
he had dominion over it and he has rendered a false explanation
for his failure to account for it, then an inference of
misappropriation with dishonest intent may readily be made. In
Surendra Prasad Verma vs State of Bihar, the accused was in
possession of the keys to a safe. It was held that the accused was
liable because he alone had the keys and nobody could have access
to the safe, unless he could establish that he parted with the
keys to the safe. As seen in the case of criminal
misappropriation, even a temporary misappropriation could be
sufficient to warrant conviction under this section.
Conclusion:
Hence its clear that for an offence to fall under this section all
the four requirements are essential to be fulfilled. The person
handing over the property must have confidence in the person
taking the property. so as to create a fiduciary relationship
between them or to put him in position of trustee. The accused
must be in such a position where he could exercise his control
over the property i.e; dominion over the property. The term
property includes both movable as well as immoveable
property within its ambit. It has to be established that the
accused has dishonestly put the property to his own use or to some
unauthorized use. Dishonest intention to misappropriate is a
crucial fact to be proved to bring home the charge of criminal
breach of trust.
|
Criminal Breach Of Trust
More
Articles:
The
author can be reached at:
divijain@legalserviceindia.com /
