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:

Print Page

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

Print Page

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)

Print Page

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)

Print Page

When high court should not quash prosecution in case of misappropriation of fund?

We shall now venture to determine the above issue. A perusal of the complaint on the basis of which criminal prosecution came to be initiated against respondent nos.1 to 3 reveals, that the accused persons were described as office bearers of `the Association', during the period from 2004 to 2008. During the course of hearing, it was not disputed, that at the relevant time, respondent no.1 – Mohana Kurup was the President of `the Association'; respondent no.2 – Raveendran was the Secretary of `the Association'; and respondent no.3 – Sayed was the Treasurer of the Association. It was alleged, that during their tenure, as office bearers of the State Committee of `the Association', they had exclusive access to the funds of `the Association'. They, at their own, managed the funds, for and on behalf of `the Association'. Consequent upon their resignation in 2008, when an ad hoc Committee took up charge of the State Committee, it discovered serious misappropriation of funds of the State Committee, which were in the name of the State Committee, and were not accounted for. Even the account books maintained by the State Committee, made no reference to the receipt of such amounts. A specific reference was made to M/s Micro Labs Ltd., Bangalore, which paid a sum of Rs.19,00,000/- two demand drafts being D.D.No.718573 and D.D.No.718574 in the sum of Rs.9,50,000/- each, drawn on the Canara Bank, both dated 17.04.2007. It was also asserted in the complaint, that `the Association' issued two receipts dated 30.04.2007 and 15.05.2007 in acknowledgement of the receipt of the said amounts. It was alleged, that the said amount was never incorporated in the account books of `the Association'. It was also alleged, that respondent nos.1 to 3 dishonestly misappropriated the said amount to themselves, in violation of bye-laws and other regulations/directions of the State Committee, by creating false and fictitious accounts, by altering, destroying and mutilating the original accounts of the State Committee, with a willful intention to obtain illegal financial gains, and to defraud the State Committee. It is also relevant to mention, that consequent upon completion of investigation, the chargesheet dated 22.03.2009, filed against respondent nos.1 to 3, stated thus:-

“The accused persons being the office bearers of the State Committee, All Kerala Chemists & Druggists Association, in furtherance of their common intention to obtain illegal financial gain conspired conjointly and cheated the Association and its members by misappropriating the funds given by various drug companies to AKCDA functioning near South Railway Station, Ernakulam during the period from 17.04.2007 to 11.04.2008. The Demand Drafts and Cheques received were not credited in the account of AKCDA. The accused falsified the accounts of AKCDA and unauthorisedly opened accounts in South Malabar Gramin Bank, Palakkad Branch and ICICI Bank, Edappally Branch and credited the amounts in the said accounts. The DD's and cheques received were encashed in the aforesaid accounts on various dates and an amount of Rs.80,00,000/- was diverted for their own use. The accused thereby cheated the members and the association and committed criminal breach of trust. The accused also committed the offence alleged.” (emphasis is ours)

18. In the above view of the matter, we are satisfied that the allegations levelled against respondent nos.1 to 3 were of a nature, which could not be treated as purely of a personal nature. We are also astonished, that the complainants, who are arrayed in the present appeal as respondent nos.4 to 7 affirmed (in the compounding petition) that “no misappropriation of the amounts of All Kerala Chemists and Druggists Association is committed by the petitioners/accused persons”. We are also amazed, that respondent nos.8 and 9 herein, who were the General Secretary and the Treasurer respectively of the Association, at the time of filing of the compounding petition, confirmed the stand adopted by the complainants, in the compounding petition. The accusations levelled against respondent nos.1 to 3, in our considered view, do not pertain to a dispute which can be described as purely of a personal nature. It is also not possible for us to acknowledge the position adopted by the complainants, and the then members of the Association, that no misappropriation had been committed by the accused. We cannot appreciate how such a statement could have been made after the investigation had been completed, and charges were framed, which were pending trial before a court of competent jurisdiction.

19. We are of the view, that the basis on which the impugned order was passed, was incorrectly determined as of a personal nature. Additionally, the accusations were not of a nature which can be classified by this Court, as were amenable to be quashed, under Section 482 of the Criminal Procedure Code.

Supreme Court of India

J.Ramesh Kamath & Ors vs Mohana Kurup & Ors on 4 May, 2016

Bench: Jagdish Singh Khehar, C. Nagappan

REPORTABLE

 CRIMINAL APPEAL No.445 OF 2016

 (Arising out of SLP(Crl.)No.3821 of 2010)

Citation:AIR 2016 SC 2452

Print Page

When prosecution for criminal misappropriation of stridhan is not tenable against IN-LAWS?

Giving of dowry and the traditional presents at or about
the time of wedding does not in any way raise a presumption that
such a property was thereby entrusted and put under the dominion
of the parents-in-law of the bride or other close relations so as to
attract ingredients of Section 6 of the Dowry Prohibition Act. As
noticed earlier, after marriage, Syamala Rani and first appellant
were living in Bangalore at their matrimonial house. In respect of
‘stridhana articles’ given to the bride, one has to take into
consideration the common practice that these articles are sent
along with the bride to her matrimonial house. It is a matter of
common knowledge that these articles are kept by the woman in
connection with whose marriage it was given and used by her in
her matrimonial house when the appellants 2 to 6 have been
residing separately in Vizianagaram, it cannot be said that the
dowry was given to them and that they were duty bound to return
the same to Syamala Rani. Facts and circumstances of the case
and also the uncontroverted allegations made in the complaint do
not constitute an offence under Section 6 of the Dowry Prohibition
Act against appellants 2 to 6 and there is no sufficient ground for

proceeding against the appellants 2 to 6. Be it noted that
appellants 2 to 6 are also facing criminal prosecution for the
offence under Sections 498A, 304B IPC and under Sections 3 and 4
of the Dowry Prohibition Act. Even though the criminal proceeding
under Section 6 of the Dowry Prohibition Act is independent of the
criminal prosecution under Sections 3 and 4 of Dowry Prohibition
Act, in the absence of specific allegations of entrustment of the
dowry amount and articles to appellants 2 to 6, in our view,
continuation of the criminal proceeding against appellants 2 to 6 is
not just and proper and the same is liable to be quashed.
REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO. 45 OF 2016
(Arising out of SLP (Crl.) No. 9344 of 2014)
BOBBILI RAMAKRISHNA RAJU YADAV & ORS. 
Versus
STATE OF ANDHRA PRADESH REP.
R. BANUMATHI, J.
Citation;(2016) 3 SCC309
Dated;January 19, 2016

Print Page

Whether a person can be held guilty for misappropriation of money if money is not entrusted to him?

On this evidence, it is obviously impossible to hold that the money ever came to be entrusted to the accused. Without proof of entrustment, there can be no question of the appellant being found guilty of the offence under Section 409 R.P.C.

Supreme Court of India

Roshan Lal Raina vs State Of Jammu & Kashmir on 23 March, 1983

Equivalent citations: AIR 1983 SC 631, 1983 CriLJ 975, 1983 (1) Crimes 1076 SC, 1983 (1) SCALE 292, (1983) 2 SCC 429

Bench: O C Reddy, S M Ali

Print Page

Whether misappropriation of public funds is done by public servant by obtaining more money from public otherwise than legal dues?

The sum of Rs. 398/4/6 correctly realised from the cultivators by the applicant as canal d

ues thus came into his hands as a trustee on behalf of the State Government & the findings of fact show that he discharged that trust properly by depositing that amount in the Government treasury. So far as the balance of Rs. 198/9/6 is concerned, that amount was never due to the Government. It was, therefore, never the property of the Government at any stage When the applicant realised this sum of money, it did not become Government property, nor did he ever become its trustee on behalf of the Government.

At the same time, he could not become the trustee of this money on behalf of the cultivators from whom he realised this money because, when they handed over the money to the applicant, they purported to surrender all their rights in that money. Their intention was that the money should go to the Government and it was in pursuance of that intention and for its fulfilment that they handed over the money to the applicant. Thereafter, therefore, it cannot be said that the money was held by the applicant as a trustee on their behalf.

The cases, where a person hands over his property to another intending to retain his rights in that property, are totally distinguishable from the present case. In cases, where the right in the property is retained by the person who hands over the property to another person who misappropriates it, the question of an offence of criminal breach of trust being committed may arise, even though the entrustment of the property may have been obtained by wrongful representations.

In such a case, it is possible that two different offences -- one of committing criminal breach of trust and another of cheating by obtaining delivery of the property by false representations --may have been committed and it may" be possible to convict the person committing the acts for any one of those offences or both of them. In a case like the present one, where the money was realised by the applicant representing that the amount was due as canal dues, no entrustment of the property with the applicant, either on behalf of the State or on behalf of the persons who paid the money, came into existence.

The only offence, which, on these facts, the applicant can be held liable for, is the offence of cheating and obtaining delivery of property by commission of that offence which would be punishable under Section 420, Penal Code. We may say with respect that the remarks made by the Full Bench of the Madras High Court in Emperor v. John Melver, AIR 1936 Mad 353 (A) and the remarks made by the Law Lords in Lake v. Simmons, 1927 AC 487 . (B) support our view. In such a case as the present one, the appropriate provision of law is only Section 420, Penal code, where Section 409, Penal Code, cannot apply at all.

Allahabad High Court

Surendra Pal Singh vs The State on 18 September, 1956

Equivalent citations: AIR 1957 All 122, 1957 CriLJ 170

Bench: V Bhargava, Sahai

Print Page

When offence of criminal misappropriation of property U/S 409 of IPC is not made out?

 The only question which arises for consideration in this appeal is whether the appellant could be said to have committed criminal breach of trust in respect of the receipt-book. There can be no doubt and that it is amply proved by the oral evidence on record read with the list Ex. PA that the receipt book was entrusted to the appellant in his capacity as Patwari on 6th November, 1967 when he took charge of his post. It must equally be taken to be established that the receipt book was not in the room of the appellant when the lock was broken open and charge was forcibly taken from him on 29th December, 1967. Vide Ex. PF and PG. The receipt book was thus not returned by the appellant though he was bound to do so at the time of handing over of charge to his successor. But from this it does not necessarily follow that the appellant committed criminal breach of trust in respect of the receipt book. Section 409 can be invoked only if it can be shown that the accused being in any manner entrusted with property or with dominion over property in his capacity as public servant committed criminal breach of trust in respect of that property. The offence of criminal breach is defined in Section 405 and an essential ingredient of this offence is that the accused being in any manner entrusted with property or with 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. Here as we have already pointed out, the appellant was admittedly entrusted with the receipt-book or in any event with dominion over it, but there is no evidence to establish that he dishonestly misappropriated the receipt book or converted it to his own use or dishonestly used or disposed of the receipt book. It is quite possible that the appellant might have lost or mislaid the receipt book and hence he might have been unable to return it to the superior authorities. What the section requires is something much more than mere failure or omission to return the receipt book. The prosecution has to go further and show that the appellant dishonestly misappropriated or converted the receipt book to his own use or dishonestly used or disposed of it. That, we are afraid, the prosecution has not been able to do in the present case. We are, therefore, of the view that the appellant was wrongly convicted under Section 409.

Supreme Court of India

Sardar Singh vs State Of Haryana on 1 November, 1976

Equivalent citations: AIR 1977 SC 1766, 1977 CriLJ 1158, (1977) 1 SCC 463

Bench: A Gupta, P Bhagwati

Print Page

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

Print Page

Whether a person can be held guilty for misappropriation if he is acting in accordance with order passed by high court?

On this factual backdrop it is really difficult to see as to how the two accused persons who were the officers of the Reserve Bank and were acting under the orders of the High Court could be said to have committed an offence under Section 406 of the Indian Penal Code. This was a very tricky situation in which the Reserve Bank and more particularly, the accused persons who were the officers thereof were caught in without there being any role on their part. These officers have nothing to do with the marital discord between the complainant and his wife. They had also nothing to do with the liability of the complainant to pay maintenance to his wife. The Reserve Bank seems to have been dragged in on account of the order passed by the High Court, initially attached the salary which was also later on clarified by the High Court by the subsequent order that it was not an attachment, however, all the same the High Court directed the Reserve Bank to send the maintenance amount by money order. This order continued. It has come on record that the dispute between the complainant and his wife ultimately came to an end by the final judgment passed in F.A. No. 43 of 2002 on 14th February, 2003, wherein the liability of the petitioner was found at Rs. 3000/- per month by way of permanent alimony. It is to be remembered that this was precisely the amount by way of maintenance pendente lite under Section 24 of the Hindu Marriage Act by the order dated 4th September, 2001, passed by the Division Bench seems to have been continued in the final judgment. If this was so and if there was again an order passed by the Division Bench on 18th June, 2004 in the very same F. A. No. 43 of 2002 which already stood disposed of by the final judgment dated 14th February, 2003 directing the Reserve Bank to make the payment of Rs. 3000/-per month from the salary of the complainant, it was very natural on the part of the Reserve Bank and more particularly the accused persons who were its officers to expect a further order from the High Court to be able to stop the payment. They were after all acting under the orders of the High Court and they were quite justified in feeling bound by the direction given in the last order dated 18th June, 2004.

Calcutta High Court

Arun Kumar Mohanti vs Probhat Kumar Chakravorty on 5 April, 2005

Equivalent citations: (2005) 3 CALLT 154 HC, 2005 (2) CHN 561, II (2005) DMC 203

Bench: V Sirpurkar

Print Page

Whether class four employee can be held guilty for misappropriation of money if he can not be handed over money as per rules?

Lastly, the learned Counsel for the revisionist contended that the revisionist was a class IV employee and the money would not have been entrusted to the revisionist. It was further pointed out that the special instructions have been given by the District Co-operative Bank, Uttarkashi that the money of the bank shall not be sent through the class IV employees. The learned A.G.A. refuted the contention and contended that even if there are administrative instructions in this regard, but if any contamination is made by the employees, they may be liable for the negligence. The revisionist cannot be acquitted on this score alone.

Uttaranchal High Court

Umed Chand Ramola vs State Of Uttaranchal on 25 July, 2005

Equivalent citations: 2006 CriLJ 951

Bench: J Rawat

Print Page

Whether a person can be held guilty for misappropriation when property is not entrusted to him?

 Paras Ram (P.W. 2), who had initially chalked out the damage report on 28-12-1990 has only given oral version to the effect that the case property was handed over to the respondent on spuardarinama but he nowhere has stated that any spuardarinama was ever executed to that effect. Unless or until entrustment of the case property or dominion over it is proved, no case can be said to have been made out against the respondent. Damage report Book Ex. P.W. 4/B did not contain Damage Report No. 35 dated 28-12-1990 which is alleged to have contained the spuardarinama.

Therefore, in these circumstances, in my considered opinion the respondent was rightly acquitted by the trial Court. As such, the judgment of acquittal passed by the trial Court cannot be said to be perverse.

Himachal Pradesh High Court

State Of H.P. vs Mast Ram on 4 July, 2007

Equivalent citations: 2007 CriLJ 4381

Bench: S Singh

Print Page

Whether offence of criminal misappropriation of property is made out when property is not entrusted to accused?

Criminal - Illegal gratification - Sections 147 of Indian Penal Code, 1860 and Section 368 of Cochin Penal Code - Appellant and accused No. 2 were joint receivers of textile business - Appellant charged for receiving large sums of money by way of illegal gratification as motive and reward for allotting cloth bales produced in mills - Appellant charged for offence under Section 147 for accepting illegal gratification and for offence under Section 389 for criminal breach of trust and also for abetment and entering into conspiracy for commission of these offences - Appellant and his co-accused acquitted by Special Magistrate who made Order of acquittal in favour of them - On appeal High Court set aside Order of acquittal made in favour of appellant - Hence, present appeal - Appellant contended that High Court reversed Order of acquittal made by Trial Court without adverting to or displacing main grounds upon which decision of Trial Judge rested - Further contended that offence committed by appellant cannot constitute breach of trust though it may amount to taking of illegal gratification - Charge nowhere indicates that the offence consisted in wrongful use or disposal of these goods in violation or any direction of law and it was not stated also what these directions of law were - Held, appellant cannot be convicted for offence of breach of trust - Order of High court set aside - Appeal allowed

The learned Advocate-General appearing for the State Government saw the difficulty in the way of establishing that there was any entrustment with the accused in respect of the sum of Rs. 23,100 paid to him by P. W. 1. He tried to get round this difficulty by saying that it could be held on the facts of this case that the entrustment with the accused was in respect of the goods of the mills and the criminal breach of trust consisted in disposing of the goods contrary to the directions of the court and misappropriating the sale proceeds. It is not necessary to enter into the merits of this argument for the simple reason that this was not the charge upon which the accused was tried.

The subject of criminal breach of trust, as stated in the charge, was a sum of Rs. 23,100 and the definite allegation against the accused was that he and his co-receiver functioning as public servants neither remitted this amount to the credit of the company, nor brought it to the company's accounts, but dishonestly misappropriated the same with the intention of causing illegal loss to the company and illegal gain to themselves. No doubt the charge, which we have set out in the beginning, refers to the two accused having custody of the company's goods, but the charge nowhere indicates that the offence consisted in wrongful use or disposal of these goods in violation or any direction of law, and it was not stated also what these directions of law were.

Supreme Court of India

Chelloor Mankkal Narayan ... vs State Of Travancore-Cochin on 10 November, 1952

Bench: M. Patanjali Cji, B. K. Mukherjea, S. R. Das, V. Bose, G. Hassan

 Citation: AIR1953SC478, 1953()KLT173(SC),1954 CRLJ102 

Print Page

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

Print Page

How to appreciate defence of accused in case of criminal misappropriation of property?

There is no dispute that approximately 1,30,000 yards out of the cloth -entrusted to the company by the Textile Commissioner for dyeing has not been returned. By its letter dated December 4, 1950, the company admitted liability to deliver 1,29,748 yards of cloth, but this cloth has not been returned to the Textile Commissioner in spite of repeated demands. That the appellants, as directors of the company had dominion over that cloth was not questioned in, the trial court. The plea that there were other Directors of the company besides the appellants who had dominion over the cloth has been negatived by the High Court and in our judgment rightly. Direct evidence to establish misappropriation of the cloth over which the appellants had dominion is undoubtedly lacking, but to establish a charge of criminal breach of trust, the prosecution is not obliged to prove the precise mode of conversion, misappropriation or misapplication by the accused of the property entrusted to him or over which he has dominion. The principal ingredient of the offence being dishonest misappropriation or conversion which may not ordinarily be a matter of direct proof, entrustment of property and failure in breach of an obligation to account for the property entrusted, if proved, may in the light of other circumstances, justifiably lead to

-an inference of dishonest misappropriation or conversion. Conviction of a person for the offence of criminal breach of trust may not, in all cases, be founded merely on his failure to account for the property entrusted to him, or over which he has dominion, even when a duty to account is imposed upon him, but where he is unable to account or renders an explanation for his failure to account which is untrue, an inference of misappropriation with dishonest intent may readily be made.

In this case, on a search of the factory on December 29, 1952, the cloth remaining to be delivered by the company was not found. At the trial, the appellants sought to explain the disappearance of the cloth from the factory premises where it was stored, on the plea that it was old and was eaten up by white-ants and moths, and had been thrown away as rubbish. This plea of the appellants was not accepted by the High Court and we think rightly. No information was given at any time to the Textile Commissioner after December 4, 1950, that the cloth had been eaten up by white-ants and moths, and was therefore thrown away or otherwise destroyed. Nor was any evidence led in support of the plea by the appellants.

In this court, counsel for the first appellant contended that failure to return the cloth may give rise to a civil liability to make good the loss occasioned thereby, but in the circumstances of the case, the first appellant cannot be found guilty of the offence of criminal breach of trust. Counsel submitted that the first appellant had left Bombay in 1950 and had settled down in Ahmedabad and was attending to a factory in that town, that thereafter the first appellant was involved in insolvency proceedings and was unable to attend to the affairs of the company in Bombay, and if, on account of the pre-occupation of the first appellant at Ahmedabad, he was unable to visit Bombay and the goods were lost, no criminal misappropriation can be attributed to him. But the case pleaded by the appellant negatives this submission. The first appellant in his statement before the trial court admitted that he often went to Bombay even after he had migrated to Ahmedabad and-that he visited the mill premises and got the same opened by the Gurkha watchman and he found that the heap of cloth lying in the mill was getting smaller every time he visited the mill and on inquiry, he was told by the watchman that every day one basketful of sweepings was thrown away. He also stated that he was shown several places in the compound of the factory where pits had been filled up with these sweepings, and that he found a small heap lying by the side of the " Tulsipipe gutter" and also in the warehouses in the mill premises. It is clear from this statement and other evidence on the record that even after he migrated to Ahmedabad, the first appellant was frequently visiting the factory at Bombay. The evidence also discloses that meetings of Directors were held from time to time, but the minutes of the Directors' meetings have not been produced. The books of account-of the company evidencing disbursements to the Directors of remuneration for attending the meetings and the expenses for the alleged collection and throwing away of the sweepings have not been produced. It is admitted by the first appellant that the letter dated November 27, 1952, was written by the second appellant under his instructions. In his statement at the trial, the first appellant stated that he was informed of the letter dated November 26, 1952, from the Textile Commissioner and that hecould not attend the office of that officer because he was busy attending to the insolvency proceedings and that he deputed the second appellant to attend the office and to explain and discuss the position. Be then stated, "We had informed the Commissioner that the company was prepared to pay for the cloth remaining after deducting the amount claimed as damages". The letter dated November 27, 1952, was evidently written under the direction of the first appellant and by that letter, liability to pay for the cloth after certain adjustments for losses alleged to be suffered by the company in carrying out the contract was admitted. By the letter dated December 4, 1950, liability to deliver the cloth was admitted and by the letter dated November 27, 1952, liability to pay compensation for the loss occasioned to the Government was affirmed. The appellants who were liable to account for the cloth over which they had dominion have failed to do so, and they have rendered a false explanation for their failure to account. The High Court was of the opinion that this false defence viewed in the light of failure to produce the books of account, the stock register and the complete absence of reference in the correspondence with the Textile Commissioner about the cause of disappearance established misappropriation with criminal intent.

Supreme Court of India

Jaikrishnadas Manohardasdesai ... vs The State Of Bombay on 16 March, 1960

Equivalent citations: 1960 AIR 833, 1960 SCR (3) 329,1960 CRLJ 1250

Bench: Gajendragadkar, P.B.

Print Page

Whether property obtained by misappropriation amounts to stolen property?

Stolen property as used in this section has been defined in section Section 410 :

"410. Stolen Property.--Property, the possession whereof has been transferred by theft, or by extortion, or by robbery, and property which has been criminally misappropriated or in respect of which criminal breach of trust has been committed, is designed as "stolen property", whether the transfer has been made, or the misappropriation or breach of trust has been committed, within or without India. But, if such property subsequently comes into the possession of a person legally entitled to the possession thereof, it then ceases to be stolen property."

Section 410 accordingly defines stolen property. A property is stolen for the purpose of this section when its possession is transferred by theft, extortion, robbery, dacoity or criminal breach of trust or which was obtained under misappropriation committed whether in India or outside.

An extended meaning is given to the words `stolen property' which are used in the four subsequent sections. Not only things which have been stolen, extorted or robbed but also things which have been obtained by  criminal misappropriation or criminal breach of trust are within the meaning assigned to these words.

Criminal - Stolen Property - Section 411 of Indian Penal Code - Not only things which have been stolen, extorted or robbed but also things which have been obtained by criminal misappropriation or criminal breach of trust are within the meaning of stolen property.

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, 

Print Page

When offence of criminal misappropriation of property U/S 409 of IPC is not made out?

In the instant case even if it was proved as contended by learned counsel for the appellant, that money was entrusted which fact is borne out by the admitted case about missing of money from the cash counter of the bank, one factor which needs to be decided is whether the accused had dishonestly misappropriated or converted to his own use the property entrusted or dishonestly used or disposed of that property. As presented by the prosecution, the money was taken away from the cash counter. It is not the case of prosecution that money which was given to the accused-Gautam Bose and the cash peon to obtain bank drafts was taken away by accused-Gautam Bose or the cash peon Ganaori Sao. Because of an intervening situation, the disappearance of the cash due to theft by somebody else the bank drafts could not have been prepared and handed over to the appellant. Even if there is loss of money, the ingredients necessary to constitute criminal breach of trust are absent. If due to a fortuitous or intervening situation, a person to whom money is entrusted is incapacitated from carrying out the job, that will not bring in application of Section 405 IPC or Section 409 IPC, unless misappropriation, or conversion to personal use or disposal of property is established. Unfortunately, the courts below have not looked at the issues from these vitally relevant angles. The inevitable conclusion is that accused persons cannot be convicted under Section 409 IPC. 

Supreme Court of India

Kailash Kumar Sanwatia vs The State Of Bihar And Anr on 2 September, 2003

Bench: Doraiswamy Raju, Arijit Pasayat.

Citation; AIR2003SC3714, 2003CriLJ4313,(2003)7SCC399, 

Print Page