Legal provisions regarding Criminal breach of trust by public servant, or by banker, merchant or agent under section 409 of Indian Penal Code, 1860.
The persons having a fiduciary relationship between themselves have a greater responsibility for honesty as they have more control over the property entrusted to them due to their special relationship. Under Section 409, the punishment is severe and persons of fiduciary relationship have been classified as public servants, bankers, merchants, factors, brokers, attorneys and agents.
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ADVERTISEMENTS:
The term ‘public servant’ has been defined by Section 21 of IPC. In respect of public servant, a much more stringent punishment of life imprisonment or imprisonment up to 10 years with fine is provided. This is because of the special status and the trust which a public servant enjoys in the eyes of the public as a representative of the government or government owned enterprises.
It is not necessary that the property should be that of Government but that it should have been entrusted to a public servant in that capacity. The entrustment should have nexus to the office held by the public servant as a public servant. Only then Section 409 will apply. To constitute an offence of criminal breach of trust by a public servant punishable under Section 409, IPC, the acquisition of dominion or control over the property must also be in the capacity of a public servant.
A mere carelessness to observe the rules of treasury ipso facto cannot make one guilty of criminal breach of trust. There must be something more than carelessness i.e., there should be dishonest intention to keep the Government out of the moneys.
Where under the rules, a public servant is required to lodge in the treasury any Government money in excess of that shown due to Government by the registers in his hands and the public servant removes the excess from the office cash book, he is guilty of misappropriation.
ADVERTISEMENTS:
A ‘banker’ is one who receives money to be drawn out again as the owner has occasion for it, the customer being lender, and the banker borrower, with the superadded obligation of honouring the customer’s cheques up to the amount of the money received and still in the banker’s hands. The word ‘banker’ includes a cashier or shroff.
A ‘merchant’ is one who traffics to remote countries; also any one dealing in the purchase and sale of goods. A failure on the part of persons responsible to refund the share application money when it becomes refundable because of the stock exchange refusal to approve the prospectus has been taken to be a misappropriation by a merchant.
‘Factor’ is a substitute in mercantile affairs; a person or agent employed to sell goods or merchandise consigned or delivered to him by or for his principal, for a compensation commonly called factorage or commission.
‘Booker’ is an agent employed to make bargains and contracts between other persons in matters of trade, commerce and navigation, by explaining the intentions of both parties, and negotiating in such a manner as to put those who employ him in a condition to treat together personally. A ‘broker’ is an agent employed by one party only to make a binding contract with another.
ADVERTISEMENTS:
‘Attorney’ is one who is appointed by another to do something in his absence, and who has authority to act in the place and turn of him by whom he is delegated.
‘Agent’ is a person employed to do any act for another, or to represent another in dealings with third person. An agent though bound to exercise his authority in accordance with all lawful instructions which may be given to him from time to time by his principal is not subject in its exercise to the direct control or supervision of the principal.
In order to sustain conviction under Section 409, it is required to prove :
(i) That entrustment of property of which the accused is duty bound to account for;
(ii) That commission of criminal breach of trust;
(iii) That the accused was either a public servant, a banker, a merchant, a factor, or a broker or an attorney or an agent.
The prosecution dealing with cases of criminal breach of trust by a public servant is required to prove not only that the accused was a public servant, banker etc., but also was in such a capacity entrusted with property or with domination over the same and he committed breach of trust in respect of that property.
Section 409 requires that there must be entrustment of property to a public servant and breach of the trust committed by him in respect of the property entrusted. It is not necessary under Section 409 that the property in respect of which the offence is committed must be shown to be the property of the State.
Money paid to a postmaster for money-orders are public money; as soon as they are paid they cease to be the property of the remitters and a misappropriation of such moneys will fall under Section 409.
In State v. Vasant [AIR 1979 SC 1008], where a Tahsildar’s reader received money by way of revenue, fine, etc., from members of the public in presence of the Tahsildar and prepared receipts then and there which were signed by the Tahsildar, it was held that the Tahsildar had dominion over the property and non-deposit of money into the treasury amounted to an offence of criminal breach of trust as it was he that was responsible for misappropriating the amount. He was accordingly convicted under Section 409 IPC.
In Inder Sen Jain v. State of Punjab [AIR 1994 SC 1065] the accused, working as an assistant accountant in a company, received on behalf of the company certain recoveries from a firm but did not credit them in the account of the said firm. He was found guilty and was convicted under Section 409 and Sec. 477-A.
In Bonela Swaminathan v. State of AP [AIR 2000 SC 3578], the accused was convicted for misappropriating the bank money. He was sentenced to rigorous imprisonment for one year. He remitted the entire amount to the bank. His sentence was reduced to the period already undergone.
In Jaswantrai ManilaI Akhaney v. State of Bombay [AIR 1956 SC 575], the accused, the managing director of a bank, was charged and convicted under Section 409 because he pledged for a temporary period the securities which were pledged with the bank for the express purpose of covering an overdraft account, without the knowledge or consent of the owner with a third party for the purposes of obtaining a loan for the use of his bank.
In Bagga Singh v. State of Punjab [1996 CrLJ 2883 (SC)], the appellant was a Taxation clerk in the Municipal Committee, Sangrur. He had collected arrears of tax from taxpayers but the sum was not deposited in the Funds of the committee after collection but was deposited after about 5 months. As the accused failed to produce any receipt of payment to cashier for passing the money to him, the accused was held liable under Section 409.
The offence under Section 409 is cognizable and warrant should, ordinarily, issue in the first instance. It is both non-bailable and non-compoundable, and is triable by a Magistrate of the first class.