What is difference between cheating and criminal breach of trust?

 Cheating and criminal breach of trust differ mainly in the stage of dishonest intention: in cheating, the dishonest intention exists from the very beginning and the property is obtained by deception, while in criminal breach of trust, the property is initially received lawfully through entrustment and is dishonestly misappropriated later.

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What is difference between criminal breach of trust and misappropriation of property as per indian penal code and BNS ?

Difference Between Criminal Breach of Trust and Misappropriation of Property under BNS

1. Criminal Breach of Trust (Section 316, BNS,S 405 of IPC)

Definition:

Criminal breach of trust occurs when a person who has been entrusted with property, or has dominion over it, dishonestly misappropriates or converts it to their own use, or uses/disposes of it in violation of any law or contract governing the trust.

Key Elements:

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Whether Use Of Deceased Brother's SIM Card amounts to An Offence of Criminal breach of trust and cheating?

Merely because the sim-card of real brother was used by the sister i.e. the present petitioner, that by itself will not constitute or amount to commission of the offence. The fact remains that to infer misuse of sim-card by the petitioner, there is no iota of evidence to infer such act. It is an admitted fact that the sim-card is duly received by the complainant from the petitioner before the date of lodging of the complaint. {Para 7}

IN THE HIGH COURT OF JUDICATURE AT BOMBAY

CRIMINAL APPELLATE JURISDICTION

CRIMINAL WRIT PETITION NO.1871 OF 2022

Heena Afrin Huzaifa Shaikh Vs The State of Maharashtra & Anr. 

CORAM : NITIN W. SAMBRE & R. N. LADDHA, JJ.

DATE : 17th AUGUST, 2023

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Whether offence of criminal breach of trust is made out if there is no misappropriation of property?

 As observed by the High Court, a criminal breach of proceeding

is defined in Section 405 of the Indian Penal Code and punishment for the same is prescribed in Section 406 thereof.

Section 405 of the Indian Penal Code reads as hereunder :-

“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 High Court rightly held that the said provision would be

attracted where the accused person had been entrusted with

property, and such property had dishonestly been misappropriated or converted by him to his own use. The provision would also be attracted if the accused person dishonestly used or disposed of such property in violation of any direction of law. The High Court rightly found that the sine qua non for attracting the said provision was the entrustment of the property with the accused persons.

In this case, the petitioners had handed over waste plastic

material to the concerned respondent and the respondent had

processed the same and made the same over to the petitioners.

S U P R E M E C O U R T O F I N D I A

Petition(s) for Special Leave to Appeal (Crl.) No(s). 5485/2021

GURUKANWARPAL KIRPAL SINGH  VsvSURYA PRAKASAM & ORS. 

These matters were called on for hearing today.

CORAM : HON'BLE MS. JUSTICE INDIRA BANERJEE

HON'BLE MR. JUSTICE C.T. RAVIKUMAR

Date : 12-05-2022

UPON hearing the counsel the Court made the following

O R D E R

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Whether court can convict accused for substantive offence if prosecution has failed to prove conspiracy to commit that offence?

 It was submitted that since the complainant himself did not support the prosecution version fully, it was impermissible to convict the accused persons. The statutory presumption available under Section 7 read with Section 20 of the Act was not to be utilized against the accused person. The effect of an affidavit by the complainant was lost sight of. He did not implicate the accused persons directly. Since there was no recovery from A-1, there was no material to connect him with the tainted money and he should not have been held guilty. As A-2 was not in the same room where A-1 was sitting, it has not been established as to what was his role. There was no conspiracy. A-2 did not know that the amount that was offered was bribe. Great stress has been laid by the learned counsel for the appellants on the evidence of PW-1 to show that he has not categorically implicated the accused persons. Since the accused persons were acquitted of the charge under Section 120B IPC, they are entitled to acquittal for the offence relatable to the Act. Such a plea was specifically rejected by this Court in Madan Lal v. The State of Punjab MANU/SC/0369/1967 : 1967CriLJ1401 . It was held that if the charge of conspiracy to commit criminal breach of trust is followed by a substantive charge of criminal breach of trust in pursuance of such conspiracy, the Court can convict the accused under the second charge even if conspiracy was not established. In an event, no prejudice is caused to the accused persons where there was a substantive charge of criminal breach of trust.{Para 5}

IN THE SUPREME COURT OF INDIA

Criminal Appeal Nos. 909 and 910 of 1997

Decided On: 12.01.2004

T. Shankar Prasad   Vs State of Andhra Pradesh

Hon'ble Judges/Coram:

Doraiswamy Raju and Dr. Arijit Pasayat, JJ.

Citation: MANU/SC/0027/2004,(2004) 3SCC 753, AIR 2004 SC 1242

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Notes on offence of receiving of stolen property

Receiving stolen property (S 410- 414)

Ordinarily a culprit who obtains property by theft of other criminal means would be anxious to dispose it of,mainly with a view to destroy evidence,and also to convert it into money.If the receiver were to go unpunished,robbers and thieves would prosper.S 411 to 414 are enacted to punish receivers of stolen property.Thus receiving or obtaining stolen property,knowing it to be such,is punishable with imprisonment for 3 years or fine or both.(S 411 of IPC)

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Notes on criminal misappropriation of property,criminal breach of trust and cheating

Criminal misappropriation of property( S 403 of IPC) 

A person commits criminal misappropriation if he

1) dishonestly misappropriates or converts to his own use,

2) any movable property.

  The offence of criminal misappropriation takes place where the initial possession is innocent,but the retention thereof becomes wrongful and fraudulent by a subsequent change of intention or from knowledge of some new fact not previously known to the party.

Criminal breach of trust( S 405 of IPC)

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Whether sanction for prosecution is required if government servant is prosecuted for criminal breach of trust?

A survey of the precedents makes it absolutely clear
that there has to be reasonable connection between the
omission or commission and the discharge of official duty or
the act committed was under the colour of the office held by
the official. If the acts omission or commission is totally
alien to the discharge of the official duty, question of
invoking Section 197 CrPC does not arise. We have already
reproduced few passages from the impugned order from
which it is discernible that to arrive at the said conclusion
the learned Single Judge has placed reliance on the
authority in B. Saha’s (supra). The conclusion is based on
the assumption that the allegation is that while being a
public servant, the alleged criminal breach of trust was
committed while he was in public service. Perhaps the
learned Judge has kept in his mind some kind of concept
relating to dereliction of duty. The issue was basically
entrustment and missing of the entrusted items. There is
no dispute that the prosecution had to prove the case. But
the public servant cannot put forth a plea that he was doing

the whole act as a public servant. Therefore, it is extremely
difficult to appreciate the reasoning of the High Court. As is
noticeable he has observed that under normal
circumstances the offences under Sections 467, 468 and
471 IPC may be of such nature that obtaining of sanction
under Section 197 CrPC is not necessary but when the said
offences are interlinked with an offence under Section 409
IPC sanction under Section 197 for launching the
prosecution for the offence under Section 409 is a condition
precedent. The approach and the analysis are absolutely
fallacious. We are afraid, though the High Court has
referred to all the relevant decisions in the field, yet, it has
erroneously applied the principle in an absolute fallacious
manner. No official can put forth a claim that breach of
trust is connected with his official duty. Be it noted the
three-Judge Bench in B. Saha (supra) has distinguished in
Shreekantiah Ramayya Munipalli (supra) keeping in view
the facts of the case. It had also treated the ratio in Amrik
Singh (supra) to be confined to its own peculiar facts. The
test to be applied, as has been stated by Chandrasekhara
Aiyar, J. in the Constitution Bench in Matajog Dube (supra)

which we have reproduced hereinbefore. The three-Judge
Bench in B. Saha (supra) applied the test laid down in
Gill’s case wherein Lord Simonds has reiterated that the
test may well be whether the public servant, if challenged,
can reasonably claim, that what he does, he does in virtue
of his office.
 REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO. 159 OF 2016
(@ S.L.P.(Criminal) No. 3906 of 2012)
Punjab State Warehousing Corp. 
Versus
Bhushan Chander & Anr.
Dated:June 29, 2016
Citation:(2016) 13 SCC 44

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How to ascertain jurisdiction of court in case of misappropriation of streedhan property?

When the legislature in its wisdom has given such

a right by amending Section 181 (4) of the Code in the year 1978 the

judicial authority cannot deprive a citizen of India such advantage

acquired by law on the ground that it may be misused.

Section 181(4) of the Code runs thus:

“Any offence of criminal misappropriation or of criminal breach of

trust may be inquired into or tried by a Court within whose local

jurisdiction the offence was committed or any part of the property which is

the subject of the offence was received or retained, or was required to be

returned or accounted for, by the accused person.” (emphasis supplied

by me)

This Court wants to emphasize on the word ‘or was required to be

returned or accounted for, by the accused person’. It is true that as per

claim of the de facto complainant the dowry was paid at Siliguri and as perFIR when the victim opposite party was driven out from her matrimonial

abode she claimed her ‘Stridhan’ articles including her certificates but

those were not given to her and as such this Court is satisfied that there is

prima facie case under Section 406 of the Indian Penal Code.

It is the admitted position that at present this opposite party wife is

residing at her father’s house at Lilua, Howrah. Thus, if the articles are to

be returned after the conclusion of the trial the venue of such return must

be either the court at Howrah or the residence of the de facto complainant,

the victim of this case. Thus, this Court is satisfied that interest of justice

demands that in this scenario the protection must be given to the deserted

lady by applying Section 181 (4) of the Code. The legislature in its wisdom

amended that sub-section and if such advantage has been given to the wife

or the de facto complainant why should the court will take out that

advantage from her mouth. Her entitlement as per law should not be taken

out in the disguise that such sub-section may be used just to oppress her

counterpart.

Thus, in view of the discussion so long made this court is satisfied

that there is enough of material to go for trial even against the petitioners.

This court is also satisfied that in view of Section 181 (4) of the Cr.P.C, the

Chief Judicial Magistrate, Howrah has perfect jurisdiction over the case.Thus, this application under Section 482 of the Code of Criminal

Procedure, 1973 is answered in the negative and dismissed accordingly.

IN THE HIGH COURT AT CALCUTTA

CRIMINAL REVISIONAL JURISDICTION

Present :  Justice Indrajit Chatterjee

C.R.R. 1529 of 2014

Ashok Kumar Marda & Ors.

V

State of West Bengal & Anr.

Judgment on : 06.10.2016.

Citation: 2017 CRLJ 73

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How to appreciate evidence in case of offence of criminal breach of trust?

We have perused the entire record and the evidence. We find
that the case could have been conducted in a more proper and
appropriate manner. Learned APP is right in submitting that trial court
could have been more vigilant in conducting the trial. At the relevant
time, the amount which was not accounted for was a substantial amount
i.e. Rs. 95,396/-. The Investigating officer ought to have taken pains to
produce the prosecution witnesses cited in support of the prosecution
case. The record shows that efforts were made by the Prosecutor for
getting summons issued at times, even bailable warrant were issued, but
for the reasons best known to the Investigating Agency, the persons who
claimed to have deposited money with the post office did not come
forward to depose in favour of the prosecution.
7. The evidence of PW1, PW2 and PW3 who were from the
department shows that entire record was scanned by them. They seized
the record. The record also shows that several receipts were seized
which were executed in the name of persons who paid money towards

money order. The record is relevant to the allegations made. The
prosecution witnesses 1, 2 and 3 calculated the amount of Rs. 95,396/-
which was not accounted for. In the normal circumstances, respondent
being a Branch Post Master of Kausa post office must have been made
responsible and accountable. Being a Branch Post Master, it was the
responsibility and duty of the respondent to explain the circumstances
and allegations made.
8. We cannot loose site of the fact that prosecution has to establish its
case beyond reasonable doubt. The seizure of record from the residence
of respondent was not supported by Panchas but the same was
supported by the Investigating Officer. The investigating officer in the
cross-examination stated that receipt books were sealed after the
panchnama was drawn but there was no reference of the same in the
panchnama. He further stated that receipt books do not bear signature
of Panchas but he denied suggestion that panchnama was fabricated.
The Investigating officer has averred that he did not seized original
money order receipts from witnesses i.e. sender of money orders. This is
serious lacuna on the part of Investigating Officer. The Investigating
Officer ought to have obtained specimen signature and hand-writing
expert report while conducting investigation. For the reasons best known

to Investigating Officer, we do not find such an evidence was brought on
record. These are matters where confidence of people is involved. The
Investigating Agency ought to have been more vigilant in conducting
investigation in such cases. In this fact of scenario and considering the
nature of quality of evidence, benefit would be derived by the accused
person for the lacunas, lapses and defects in the prosecution evidence. It
is the cardinal principle of criminal jurisprudence that on mere conjectures
and surmises a person cannot be held guilty and punished. 
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
 APPELLATE JURISDICTION
CRIMINAL APPEAL NO. 547 OF 2002
State of Maharashtra 
V/s.
Mrs. Mandabai Ashok Sawant,

CORAM : NARESH H. PATIL AND
PRAKASH D. NAIK, JJ.
Dated:28th July, 2016.
Citation: 2016 ALLMR(CRI)4065

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When offence of criminal breach of trust is not made out?

Mere retention of the amount for a short period,

without the element of dishonesty cannot make it an

offence of criminal breach of trust. There cannot be a

presumption of dishonest or fraudulent intention. A

temporary retention of money, in these contexts, cannot

invite a criminal offence, because of the absence of mens

rea. There was no intention on the part of the appellant

to commit any criminal misappropriation or criminal

breach of trust, as held in Thankappan(supra). Matters

being so, this is a fit case wherein the conviction and

sentence passed by the court below are liable to be set aside.

IN THE HIGH COURT OF KERALA AT ERNAKULAM

   PRESENT:

  MR. JUSTICE B.KEMAL PASHA

Dated:  18TH DAY OF JULY2016

  CRL.A.No. 1098 of 2009 

   P.P. MOHANAN, Vs   STATE OF KERALA,

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Whether failure to follow rules and regulation amounts to offence of cheating or criminal breach of trust?

He will now proceed to consider the final report submitted by the Police (C.I.D.). I should, however, like to observe for the benefit of the learned Magistrate that he will bear in mind that mere failure to follow rules and regulations is neither cheating nor breach of trust. He will also bear in mind while applying himself to the case diary with all thoroughness whether there is any material to show that the Railways have suffered. In order to constitute offence of cheating causation of damage or harm to a person in body, mind, reputation or property is essential. The learned Magistrate will direct his attention to this aspect of the matter. Loss to the Railways cannot be presumed merely from the fact of irregular booking. The learned Magistrate will consider the effect of issuing of despatch advice and forwarding notes by Tisco at the time of despatch of goods. The learned Magistrate will also bear in mind that mere failure to pay does not amount to cheating for, mere breach of contract is not cheating. The attention of the learned Additional Chief Judicial Magistrate is particularly drawn to the cases of Harkrishna Mahatab v. Emperor MANU/BH/0295/1929 : AIR1930Pat209 , Major Robert Stuart Wauchope v. Emperor MANU/WB/0123/1933 : AIR1933Cal800 and the State of Kerala v. A. Prasad Pillai and Anr. MANU/SC/0263/1972 : 1972CriLJ1243 . To my mind that Railway as an organisation profited rather than lost by the unusual procedure adopted in relation to Tisco. The learned. Magistrate will also consider whether the whole case diary reveals any material indicating that any public servant had enriched himself either by bribery or by breach or by breach of faith. After going through the case diary thoroughly the learned Magistrate will decide dehors the recommendation of Superintendent of Railway Police, respondent No. 7 and C.I.D. whether any offence had been committed and if so which accused should be put on trial.

Equivalent Citation: AIR1980SC326, 1980CriLJ98, (1980)1SCC554, (1980)SCC(Cri)272, [1980]2SCR16

IN THE SUPREME COURT OF INDIA

Criminal Appeal Nos. 301 and 300 of 1979

Decided On: 13.11.1979

State of Bihar and Anr. Vs. J.A.C. Saldanha and Ors.

Hon'ble Judges/Coram:

D.A. Desai, O. Chinnappa Reddy and R.S. Sarkaria, JJ.

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Whether accused prosecuted for offence punishable under S 409 of IPC can be released if they deposit misappropriated amount in bank?

 The applicants are behind bars since 2.8.2013. As the
record shows that most of the persons are traced, though the
false record of 7/12 extract was created for giving them loan, this
Court holds that subject to some conditions, bail can be granted
to the applicants. There is no possibility of their absconding. If the
employer wants separate action can be taken for recovery of the
amount in respect of which loss is caused due to the conduct of

the applicants.
4. In the result, the application is allowed. The applicants
are to be released on bail on their furnishing PR and SB of Rs.
50,000/- (Rupees fifty thousand) each with one solvent surety of
like amount in C.R. No. 124/2012 registered in Dindrud Police
Station for offences punishable under sections 465, 468, 467,
471, 406, 409, 420 and 34 etc. of I.P.C., subject to condition that
each of them first to deposit amount of Rs. 3,00,000/- (Rupees
three lakh) in the account of District Bank in respect of aforesaid
society and in respect of aforesaid loan transaction. Only after
depositing of their individual share of their amount, they are to be
released on bail. They are not to tamper the prosecution
witnesses. 
IN THE HIGH COURT AT BOMBAY
APPELLATE SIDE, BENCH AT AURANGABAD
CRIMINAL APPLICATION NO. 4407 OF 2013
Navnath s/o. Shesherao Solanke & Anr. ....Applicants.
Versus
The State of Maharashtra ....Respondents.

CORAM : T. V. NALAWADE, J.
DATED : 8th October, 2013.
Citation; 2014ALLMR(Cri)1804, 2014(2)BomCR(Cri)574

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Whether Magistrate can release accused prosecuted for offence punishable U/S 409 of IPC?

At this stage, it may be useful to quote the observations of this Court in "Ambarish Rangshhi Patnigere V/s {11} Cri. Application No.3362/2009 State of Maharashtra" referred supra, which reads thus -

"17. It may be noted here that the learned Counsel for intervener contended that the Magistrate did not have jurisdiction to grant bail because the offences under Sections 467 and 409 IPC, carry punishment which may be life imprisonment. According to the learned Counsel, if the offence is punishable with sentence of death or life imprisonment, the Magistrate cannot grant bail under Section 437(1) Cr. P.C. unless there are special grounds mentioned therein. He relied upon certain authorities in this respect including Prahlad Sigh Bhati vs. NCT, Delhi & Anr. JT 2001 (4) SCC 116. In that case, offence was under Section 302 which is punishable with death sentence or life imprisonment and is exclusively triable by Court of Sessions. The offence underSection 409 is punishable with imprisonment for life or imprisonment for 10 years and fine. Similarly, the office under Section 467 is also punishable with imprisonment for life or imprisonment for 10 years and fine. Even though the maximum sentence which may be awarded is life imprisonment, as per Part I of Schedule annexed to Cr.P.C., both these offences are triable by a Magistrate of First Class. It appears that there are several offences including under sec.326 in the Indian Penal Code wherein sentence, which may be awarded, is imprisonment for life or {12} Cri. Application No.3362/2009 imprisonment for lesser terms and such offences are triable by Magistrate of the First Class. If the Magistrate is empowered to try the case and pass judgment and order of conviction or acquittal, it is difficult to understand why he cannot pass order granting bail, which is interlocutory in nature, in such cases. In fact, the restriction under Sec. 437(1) Cr. P.C. is in respect of those offences which are punishable with alternative sentence of death or life imprisonment. If the offence is punishable with life imprisonment or any other lesser sentence and is triable by Magistrate, it cannot be said that Magistrate does not have jurisdiction to consider the bail application. In taking this view, I am supported by the old Judgment of Nagpur Judicial Commissioner's Court in Tularam & Ors. vs. Emperor 27 Cri.L.J. 1926 page 1063 and also by the Judgment of the Kerala High Court in Satyan Vs. State 1981 Cr.L.J. 1313. In Satyan, the Kerala High Court considered several earlier Judgments and observed thus in paras 7 and 8 :-

"7. According to the learned Magistrate Section 437(1) does not empower him to release a person on bail if there are reasonable grounds for believing that he has committed an offence punishable with death or an offence punishable with imprisonment for life. In other words the learned Magistrate has interpreted the expression "offence punishable with death or imprisonment for life" in Section 437(1) to include all offences where the punishment extends to imprisonment for life. This reasoning, no doubt, is seen adopted in an old Rangoon Case H.M. Boudville v.

Emperor, AIR 1925 Rang 129 : (1925) 26 Cri LJ 427 while interpreting the phrase "an offence punishable with death or transportation for life" in Section 497 Cr. P.C. 1898. But that case was dissented from in Mahammed Eusoof v. Emperor, AIR 1926 Rang 51: (1926) 27 Cri LJ 401). The Rangoon High Court held that the prohibition against granting bail is confined to cases where the sentence is either death or alternative transportation for life. In other words, what the Court held was that the phrase "death or transportation for life" in Section 497 of the old Code did not extend to offences punishable with transportation for life only, it will be interesting to note the following passage from the above judgment :

"It is difficult to see what principle, other than pure empiricism should distinguish offences punishable with transportation for life from offences punishable with long terms of imprisonment; why, for instance, the detenu accused of lurking house trespass with a view to commit theft, for which the punishment is fourteen years imprisonment, should be specially favoured as against the individual who has dishonestly received stolen property, knowing that it was obtained by dacoity, for which the punishment happens to be transportation for life? It cannot seriously be argued that the comparatively slight difference in decree of possible punishment will render it morally less likely that the person arrested will put in an appearance in the one case rather than the other. On the other hand the degree of difference is so great as between transportation for life and death as to be immeasurable. A prudent Legislature will, therefore, withdraw from the discretion of the Magistracy cases in which, if guilt is probable, even a man of the greatest fortitude may be wiling to pay a material price, however, exorbitant, for life."

 The above decision has been followed by the Nagpur High Court in the case reported in Tularam v. Emperor, AIR 1927 Nag 53 : (1926) 27 Cr. LJ 1063).

"8. The reasoning applies with equal force in interpreting the phrase "offence punishable with death or imprisonment for life" So long as an offence under section 326 is triable by a Magistrate of the First Class there is no reason why it should be viewed differently in the matter of granting bail from an offence under Section 420 I.P.C. for which the punishment extends imprisonment for 7 years or any other non-bailable offence for which the punishment is a term of imprisonment."

It would be illogical and incomprehensible to say that the magistrate who can hold the trial and pass judgment of acquittal or conviction for the offences punishable with sentence of life imprisonment or lesser term of imprisonment, for example in offences under S. 326, 409, 467, etc., cannot consider the application for bail in such offences. In fact, it appears that the restriction under Sec. 437(1) (a) is applicable only to those cases which are punishable with death sentence or life imprisonment as alternative sentence. It may be noted that in Prahlad Sigh Bhati (supra), in para 6, the Supreme Court held that even though there is no legal bar for a Magistrate to consider an application for grant of bail to a person who is arrested for an offence exclusively triable by a Court of session, yet it would be proper and appropriate that in such a case the Magistrate directs the accused person to approach the Court of Session for the purposes of getting the relief of bail. This may be applicable to many cases, wherein the sentence, which may be awarded, is not even life imprisonment, but the offence is exclusively triable by court of Sessions for example offences punishable under Sections 306, 308, 314,315, 316,399, 400 and

Bombay High Court

The Balasaheb Satbhai Merchant ... vs The State Of Maharashtra on 21 September, 2011

Bench: A. V. Potdar

Cri. Application No.3362/2009

Citation;2012(2) BOM C R(CRI)841

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What is Distinction between offence of cheating and breach of contract?

It is to be seen that whether
the averments in the complaint make out a case to constitute an
offence of cheating. The essential ingredients to attract Section
420 IPC are: (i) cheating; (ii) dishonest inducement to deliver
property or to make, alter or destroy any valuable security or
anything which is sealed or signed or is capable of being
converted into a valuable security and (iii) mens rea of the
accused at the time of making the inducement. The making of a
false representation is one of the essential ingredients to
constitute the offence of cheating under Section 420 IPC. In order
to bring a case for the offence of cheating, it is not merely
sufficient to prove that a false representation had been made, but,
it is further necessary to prove that the representation was false
to the knowledge of the accused and was made in order to deceive
the complainant.
Distinction between mere breach of contract and the
cheating would depend upon the intention of the accused at the
time of alleged inducement. If it is established that the intention
of the accused was dishonest at the very time when he made a

promise and entered into a transaction with the complainant to
part with his property or money, then the liability is criminal and
the accused is guilty of the offence of cheating. On the other
hand, if all that is established that a representation made by the
accused has subsequently not been kept, criminal liability cannot
be foisted on the accused and the only right which the
complainant acquires is the remedy for breach of contract in a
civil court. Mere breach of contract cannot give rise to criminal
prosecution for cheating unless fraudulent or dishonest intention
is shown at the beginning of the transaction. In S.W. Palanitkar &
Ors. vs. State of Bihar & Anr. (2002) 1 SCC 241, this Court held as
under:
“21 ……In order to constitute an offence of cheating, the
intention to deceive should be in existence at the time when
the inducement was made. It is necessary to show that a
person had fraudulent or dishonest intention at the time of
making the promise, to say that he committed an act of
cheating. A mere failure to keep up promise subsequently
cannot be presumed as an act leading to cheating.”
The above view in Palanitkar’s case was referred to and followed in
Rashmi Jain vs. State of Uttar Pradesh & Anr. (2014) 13 SCC 553.
REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO. 2128 OF 2011
INTERNATIONAL ADVANCED RESEARCH
CENTRE FOR POWDER METALLURGY
AND NEW MATERIALS (ARCI) & ORS.
V
NIMRA CERGLASS TECHNICS (P) LTD.
& ANR.
Citation;2015ALLMR(Cri)4101,2015(4)Crimes86(SC), 
 R. BANUMATHI, J.

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Whether vicarious liability can be imposed upon any person for acts of other person for offence of criminal breach of trust U/S 406 of IPC?

The learned counsel for the petitioners has rightly argued that in the absence of any clear, specific and unambiguous allegations either concerning entrustment of articles of dowry (constituting Istri Dhan) at the time of the marriage, to a particular accused, or, at a later stage, in the absence of specific allegations either that the accused refused to return Istri Dhan or articles of dowry entrusted to any individual accused or that the same were, dishonestly and mala fide retained by that particular accused, in order to cause wrongful gain to him and wrongful loss to the complainant, no prima facie case for commission of any offence punishable under Section 406, I.P.C. would be made out against that particular accused.

 Mere general allegations in the complaint either concerning entrustment of articles of dowry constituting istridhan to all the accused, or, their refusal to return such articles of dowry to the complainant wife at a later stage, would not per se be sufficient to make out a prima facie case for commission of offence punishable under Section 405 or 406, I.P.C. against any particular accused. In the absence of clear, specific and unambiguous allegations concerning entrustment of specific articles of dowry to any particular accused and in the absence of further allegations against him that he had dishonestly or with mala fide intention retained the same and had refused to return those articles to the wife for whose exclusive use such articles were allegedly entrusted to him, no prima facie case for commission of such offence would be made out against that particular accused. Normally, in the cases relating to commission of offence of criminal breach of trust punishable under Section 406 of the Indian Penal Code, a particular accused can prima facie be said to be responsible only for his individual acts and cannot be fastened with joint or vicarious liability.

Punjab-Haryana High Court

Dr. Vinod Kumar Goyal And Ors. vs Union Territory And Ors. on 14 December, 1990

Equivalent citations: 1990 CriLJ 2333

Bench: S Grewal

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Whether offence of S 406 or S 420 of IPC is made out if there is breach of contract?

In my view, the complainant also has not established that the accused from the inception had an intention to adduce the complainant to deliver the property and from the inception intended to cheat the accused. The complainant has relied on the fact that apart from paying the marginal money no installment was paid by the accused and from this an inference could be drawn about the intention of the accused. Reliance was placed on Illustration F to Section 415 and was submitted that this case was squarely covered under the said illustration. It is not possible to accept the submission of the learned counsel appearing on behalf of the appellant. In my view, there is no evidence on record from which an inference could be drawn that the accused from the inception had intended to cheat the complainant. In a case where there is a breach of an agreement executed between the parties merely because there is a breach and several amounts which are due and payable by one party to the other are not paid it cannot be said that the offence punishable under Section 420 or that the offence of criminal breach of trust is committed by the accused. There are catenas of judgments of the Supreme Court and this Court wherein it has been observed that in order to attract the provisions of Section 406 or Section 420 of the Indian Penal Code the ingredients of the said offence have to be established. It is no doubt true that in a given case of a breach of contract a prosecution could be launched under the provisions of Section 406 or Section 420 and at the same time simultaneously a civil suit could also be filed. However, this is not always true and in order to establish that the breach of contract had resulted into an offence punishable under Sections 406 or 420 of the Indian Penal Code there should be sufficient material on record on the basis of which such inference can be drawn. In my view, from the evidence on record, it is not possible to draw such an inference.

Bombay High Court

National Small Industries Corpn. ... vs Samudra Corporation And Anr. on 17 August, 2005

Bench: V Kanade

Citation;2005 CRLJ 3432 Bom

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Whether breach of trust without dishonest intention is offence?

In my opinion no charge is made out against Rangi Lal under Section 408, I.P.C. It should be borne in mind that mere retention of money or mere failure to return it does not necessarily raise a presumption of dishonest misappropriation. The mere fact that the payment was delayed is no ground for imputing a criminal intention. Though the ingredients of the offence of criminal breach of trust are somewhat broadly stated, there is no doubt as to their meaning. The sections dealing with the offence of criminal breach of trust were intended to punish an offence of which dishonesty is the essence. Any breach of trust is not an offence, lt may be intentional without being dishonest or it may appear dishonest without being really so.

Equivalent Citation: AIR1930Oudh321, (1931) ILR 6 LUCK 68,1931 CRLJ1678

IN THE HIGH COURT OF OUDH

Decided On: 08.04.1930

 Rangi Lall  Vs.  Emperor

Coram: Raza, J.

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When offence of criminal breach of trust is made out against bank officers?

CRIMINAL BREACH OF TRUST The next charge we shall deal with is one arising under Section 409 of the IPC with which the accused herein have also been convicted of by the special judge. The punishment for criminal breach of trust by a public servant is provided under Section 409. However we must herein make reference of definition of criminal breach of trust simplicitor which reads as under Section 405:

"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 willfully suffers any other person so to do, commits `criminal breach of trust'."

The punishment for criminal breach of trust is provided in Section

406. Punishment for aggravated forms of criminal breach of trust is provided in Section 407 toSection 409.

The terms of the section are very wide. It applies to one who is in any manner entrusted with property or dominion over property. The section does not require that the trust should be in furtherance of any lawful object. The section provides inter alia, that if such a person dishonestly misappropriates or converts to his own use property entrusted to him he commits criminal breach of trust. There are separate offences by which criminal breach of trust may be committed. This section requires :

1) Entrusting any person with property or with dominion over property.

2) That person entrusted (a) dishonestly misappropriates or converting to his own use that property; or (b) dishonestly using or disposing of that property or willfully suffering any other person so to do in violation -

(i) of any direction of law prescribing the mode in which such trust is to be discharged, or

(ii) of any legal contract made touching the discharge of such trust.

In Onkar Nath Mishra and Ors. vs. State (NCT of Delhi) and Anr., [(2008) 2 SCC 561] this court noted that in the commission of the offence of criminal breach of trust, two distinct parts are involved. The first consists of  the creation of an obligation in relation to the property over which dominion or control is acquired by the accused. The second is misappropriation or dealing with the property dishonestly and contrary to the terms of the obligation created.

Criminal breach of trust by a public servant has been dealt with under Section 409 which reads as under:

"409. Criminal breach of trust by public servant, or by banker, merchant or agent.-- Whoever, being in any manner entrusted with property, or with any dominion over property in his capacity of a public servant or in the way of his business as a banker, merchant, factor, broker, attorney or agent, commits breach of trust in respect of that property, shall be punished with 1[imprisonment for life], or with imprisonment of either description for a term which may extend to ten years, and shall also be liable to fine."

Since we have dealt with the said issue in detail in K Venkatkrishnan v. Central Bureau of Investigation (Criminal Appeal 76 of 2004 decided today), we need not deal with it here again.

However, it is important to mention here that more recently this court in State of Punjab v. Pritam Chand and Ors., 2009 (2) SCALE 457 opined:  "The ingredients of offence under Section 405 are

(i) entrusting any person with property or with dominion over the property, (ii) the person entrusted (a) dishonestly misappropriated or converted to his own use the property or (b) dishonestly used or disposed of the property or willfully suffered any other person so to do in violation (i) of any direction of law prescribing mode in which such mode is to be discharged or

(ii) of any legal contract made touching the discharge of trust."

Further, more the court in Sharon Michael and Ors. v. State of Tamil Nadu and Anr., 2009 (1) SCALE 627 noted thus:

"Ingredients of Section 409 of IPC read as under:

(i) The accused must be a public servant;

(ii) He must have been entrusted, in such capacity, with property.

(iii) He must have committed breach of trust in respect of such property."

Therefore, in view of the principles of law extracted above in our opinion there is no doubt that the offences relating to criminal breach of trust stands established against the accused. They were the officers in the Funds Department of Andhra Bank. In the said capacity they had been entrusted with the funds of the Bank. In that sense they had dominion over a thing. The money which was transferred to the account of A3 was the money  belonging to the Bank. Only the said accused had the power to transfer it to the account of A3.

In the present case, the same has been done dishonestly to cause wrongful gain to A3 and in the process wrongful loss has been caused to the Bank. The instruments based on which the funds of Andhra Bank were transferred to the account of A3 were not physically available with Andhra Bank at the time the accused persons authorized the transfer of the funds of Andhra Bank to the account of A3.

Supreme Court of India

Mir Nagvi Askari vs C.B.I on 7 August, 2009

Bench: S.B. Sinha, Cyriac Joseph
Citation: AIR2010SC528, (2009)15SCC643, 

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Whether disposal of goods hypothecated as security for loan amounts to offence of criminal breach of trust?

In the instant case, a serious dispute has been raised by the learned counsel appearing for the respective party as to whether on the face of the allegations, an offence of criminal breach of trust is constituted or not. In our view, the expression 'entrusted with property' or 'with any dominion over property' has been used in wide sense in Section 405 I.P.C. Such expression includes all case in which goods are entrusted, that is, voluntarily handed over for a specific purpose and dishonestly disposed of in violation of law or in violation of contract. The expression 'entrusted appearing in Section 405 I.P.C. is not necessarily a term of law. It has wide and different implication in different context. It is, however, necessary that the ownership or beneficial interest in the ownership of the property entrusted in respect of which offence is alleged to have been committed must be in some person other than the accused and the latter must hold it on account of some person or in some way for his benefit. The expression 'Trust' in Section 405I.P.C. is a comprehensive expression and has been used to denote various kinds of relationship like the relationship of trustee and beneficiary, bailer and bailee, master and servant, pledger and pledger. When some goods are hypothecated by a person to another person. the ownership of the goods still remains with the person who has hypothecated such goods. The property in respect of which criminal breach of trust can be committed must necessarily be the property of some person other than the accused or the beneficial interest in or ownership of it must be in other person and the offender must hold such property in trust for such other person or for his benefit. In a case of pledge, the pledged article belongs to some other person or for his benefit. In a case of Pledge, the pledged article belongs to some other person but the same is kept in trust by the pledgee. In the instant case, a floating charge was made on the goods by way of security to cover up credit facility. In our view, in such case for disposing of the goods covering the security to cover up credit facility. In our view, In such case for disposing of the goods covering the security to cover up credit facility. In our view, in such case for disposing of the goods covering the security against credit facility the offence of criminal breach of trust is not committed. 

Supreme Court of India

Central Bureau Of Investigation, ... vs Duncans Agro Industries ... on 9 July, 1996

Equivalent citations: JT 1996 (6), 227 1996 SCALE (5)99,AIR1996SC2452,1996CriLJ3501, 1996(3)Crimes60(SC),(1996)5SCC591,

BENCH:

RAY, G.N. (J)
G.B. PATTANAIK (J)

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