Section 409 of Indian Penal Code, 1860 – Explained!

Legal Provisions of Section 409 of Indian Penal Code, 1860.

Criminal breach of trust by public servant, or by banker, merchant or agent:

Criminal breach of trust by a public servant, or by a banker, merchant or agent etc. has been made punishable under this section. It says that whoever being in any manner entrusted with either property or dominion over property in his capacity either of a public servant or in the way of his business as a banker, merchant, factor, broker, attorney or agent, commits criminal breach of trust in respect of that property, shall be punished with imprisonment for life, or with simple or rigorous imprisonment for a term extending up to ten years, and shall also be liable to fine.

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The accused under this section must be a public servant or banker, merchant, factor, broker, attorney or agent. He must be entrusted with property or 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.

He must commit criminal breach of trust in respect of that property. The offence is very serious as is clear from the quantum of punishment prescribed. The kinds of persons enumerated in this section perform duties of great confidence and that is why the law expects from them great sincerity. Breach of such confidence leading to the commission of criminal breach of trust has, therefore, been very severely punished under this section.

The expression ‘public servant’ has been defined in section 21 of the Code. A banker is a person 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 super-added obligation of honouring the customer’s cheques up to the amount of the money received and still in the banker’s hands. Persons working in a bank are not bankers.

A merchant is a person who traffics to remote countries, also any one dealing in the purchase and sale of goods. Factor is an agent employed to sell goods or merchandise consigned or delivered to him by or for his principal, for a compensation commonly called factor age or commission. Broker 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. More commonly he is an agent employed by one party only to make a binding contract with another.

While a factor is entrusted with both possession and disposal of property, a broker is employed to contract about it, without being put in possession. Attorney is a person 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 not only a person who carries on the profession of agent but also one who is entrusted with property or dominion over property in the way of his business as an agent.

Where the accused partner opened a bank account in the name of a partnership firm declaring himself as the sole proprietor and encashed the cheques payable to the firm, this section cannot be attracted unless it be proved that the other partners had entrusted to him partnership property or dominion over partnership property. Where the accused received money to disburse the same through bank drafts, but he failed to do so, and retained the money for a long time, he could be properly charged under this section.

Where large sums of money were deposited by the gram panchayat in a bank of which the accused was the manager, and there were fictitious entries found showing payments to sarpanches, and the accused obtained their signatures falsely representing to them that they were signing applications for fertilisers, it was held that he was guilty under this section.

The Punjab and Haryana High Court held that the President and Secretary of a co­operative society not being public servants section 409 does not apply on them since a co-operative society is not a corporation established by a State Act.

But where loans were advanced by a bank to members of a co-operative society through the secretary of the society, and the secretary failed to deposit the payments in the bank after realising the same from the members, he was held guilty under this section because the money received by him from members was entrustment on behalf of the bank.

Where a sub-postmaster dishonestly misappropriated money entrusted to him by a person by forging the thumb impression of that person, he was held guilty under this section. The offence of criminal misconduct punishable under section 5 of the Prevention of Corruption Act, 1947 is distinct and separate from the offence under section 409 of the Code and does not abrogate this section.

A public servant committing criminal breach of trust does not normally act in his capacity of a public servant and, therefore, sanction of the government for his prosecution is not necessary.

Where the accused was likely to lose his job and had already undergone imprisonment for six and a half months out of the two years he was sentenced to, it was appropriate to reduce his sentence to that already undergone and a fine of one thousand rupees. Where a young law graduate was convicted under this section a lenient view was taken and he was sentenced to one month’s rigorous imprisonment and a fine of five hundred rupees.

Where thirteen long years had elapsed since the incident took place, the sentence could be reduced to that already undergone. Probation benefit could not be given under this section as the offence is punishable with imprisonment for life. Where the accused had returned the money dishonestly misappropriated by him, a lenient view could be taken and the sentence awarded against him could be reduced to that already undergone.

Where an accused either promises to return the money misappropriated, or returns the same in fact, he continues to be guilty of the offence. Where a post-master who dishonestly misappropriated the money entrusted to him, but before he could be challenged he put back the whole money, he could not be acquitted on that ground. But where credit sale was prevalent and the money involved was deposited before a probe by the C.I.D. could begin, conviction could not be sustained.

Where the manager of a bank permitted money to be withdrawn against false drafts signed by him, he is guilty of committing criminal breach of trust under section 409. Where in a case under section 409 read with section 511 for an attempt to dishonestly misappropriate grain from a godown of the Food Corporation of India, the defence argued that loading was being done at the instruction of the godown keeper under a release order in favour of a co-operative society, and the police did not produce the documents, it was held that the accused could not be held guilty.

Where invitation of public subscription of equity shares was issued, but the application for enlisting shares with the stock exchange by the company was rejected, and the promoters failed to repay the investors, it was held that the investors were entitled to prosecute under sections 405, 409 and 420 of the Code and the High Court could not quash such proceedings despite remedy under sections 69 and 73 of the Companies Act, and the case was sent back to the lower court and the appeal was dismissed.

Where the accused, an accountant in a company, was responsible for accounts and amount received and entrusted to him, and entrustment and making of false accounts in respect of amounts received from a dealer firm was established, it was held that he was guilty under sections 409 and 477-A of the Code.

In Narindra Kumar Jain v. State of MP., the accused was in custody and management of huge stocks of paddy entrusted to him. Disinterested official witnesses had physically got the stock verified every year and had noted the deficiency in presence of the accused.

The Supreme Court held that the accused who had failed to account for 1500 quintals of paddy entrusted to him was guilty under Section 409 of the Code. In Krishna Rao Keshav v. State of U.P., there was an agreement between the complainant and the accused for production of a film in which the negative rights of the film and the right of distribution for exhibition would be vested with the complainant.

The accused departed from the terms and exhibited the film publicly without consent of the complainant. He was held guilty for criminal breach of trust under Section 409 of the Code. In Shanmugam v. State of Tamil Nadu the Madras High Court held that President of a Co­operative Society is not a public servant and so dishonest retention of money belonging to the society by him would make him guilty under section 406 and not under section 409 of the Code.

In Bhargavan Pillai v. State of Kerala the Supreme Court held that an accused facing prosecution for offences under the Prevention of Corruption Act, 1947 or under the Prevention of Corruption Act, 1988 cannot claim any immunity on the ground of want of sanction if he had ceased to be a public servant on the date when the Court took cognizance of the said offences. But the position is different in cases where section 197, Code of Criminal Procedure, 1973 has application. For prosecution under section 409, Indian Penal Code sanction under section 197, Code of Criminal Procedure, 1973 is not a condition precedent.

The offence under section 409 is cognizable, non-bailable and non-compoundable, and is triable by magistrate of the first class.

Of the Receiving of Stolen Property

This part of the offence against property deals with the receiving of stolen property and is spread over sections 410 to 414 of the Code, both inclusive.