Section 406 of the Indian Penal Code, 1860 – Punishment for Criminal Breach of Trust:
Image Source: mahadvocates.com
“Whoever commits criminal breach of trust shall be punished with imprisonment of either description for a term which may extend to three years, or with fine, or with both.”
ADVERTISEMENTS:
Ingredients:
The essential ingredients of the offence of criminal breach of trust are’
(i) The accused must be entrusted with property or with dominion over it;
(ii) The person so entrusted must use that property; or
ADVERTISEMENTS:
(iii) He must dishonestly use or dispose of that property or wilfully suffer any other person to do so in violation
(a) Of any direction of law prescribing the mode in which such trust is to be discharged; or
(b) Of any legal contract made touching the discharge of such trust.
Entrustment:
ADVERTISEMENTS:
For the offence of criminal breach of trust the first essential ingredient to be proved is that the property was entrusted. However, Section 405 does not contemplate the creation of a trust with all the technicalities of the law of trust. In order to constitute a legal entrustment
(1) the complainant must be the owner of the property; (2) there must be a transfer of possession; (3) such transfer must be an actual transfer and not a fictional or notional one; (4) such transfer must be made to somebody who has no right except that of a custodian; and (5) such entrustment may be made to a person and not to a company or firm. These are the Panch Sheel of a legal entrustment within the purview of Section 405, I.P.C.
The question arose whether a company can file a complaint. It was held that if the accused is guilty of committing the alleged offences, the company which has suffered loss cannot be debarred from launching the prosecution.
Giving a loan is not entrustment of money with any direction as to the manner in which it is to be used. Failure to pay back a debt does not amount to dishonest misappropriation or conversion.
The only circumstance that the key of the store used to remain with the accused during the night is not sufficient to prove the charge against him beyond a reasonable doubt.[347]
The complainant gave an amount of money to the accused as advance which became the property of the accused and could be used in any way he liked. The amount was to be given back in the shape of adjustments against supplies to be made by the accused to the complainant.
If the said amount is not returned in accordance with stipulation for return or the understanding on the basis of which the same was advanced, it may be a breach of the condition agreed to between the complainant and the accused and it cannot be treated as a breach of trust or misappropriation.
An offence under Section 405, I.P.C., will be made out if any amount is held by any one not as his own property, but as a trust. In case the amount is paid in such manner that the person to whom it is paid becomes its full owner and is free to use in any manner he likes, but the same is not paid back according to the conditions agreed to, it is not a case of criminal breach of trust, but only that of a breach of contract which will give rise to a civil liability.
Section 405 does not provide that the entrustment of the property should be by someone or the amount received must be the property of the person on whose behalf it is received. As long as the accused is given possession of the property for a specific purpose or to deal with it in a particular manner, the ownership being in some person other than the accused, he can be said to be entrusted with that property to be applied in accordance with the terms of entrustment and for the benefit of the owner.
The expression ‘entrustment’ has been used in a wide sense and includes all cases in which property is voluntarily handed over for a specific purpose and it is dishonestly disposed of contrary to the terms on which the possession has been handed over.
A person authorised to collect moneys on behalf of another is entrusted with the money when the amounts are paid to him. Concerned with the contributions of employees under
Employees’ Provident Funds Act, Madhya Pradesh High Court in Akharbhai Nazarali v. Md. Hussain Bhai’ opined that it may be that the deduction and retention of employees’ contribution is a trust created by virtue of that very fact, or by virtue of a provision in statute or statutory rule. But even apart from the latter, the mere fact of telling the employees that it is their contribution to the provident fund scheme and then making a deduction or recovery and retaining it constitutes the offence of criminal breach of trust. In Harihar Prasad Dubey v. Tidsi Das Mundhra, Supreme Court held this view to be the correct statement of the position.
The accused a traffic assistant in the office of the Indian Airlines Corporation, demanded on behalf of the Corporation certain excess amounts for trunk call charges from passengers for reservation of seats. After the amounts were received he passed receipts on behalf of the Corporation.
He, however, subsequently falsified the counterfoil receipts and fraudulently misappropriated the excess amounts. It was held by the Supreme Court that the accused was guilty of criminal breach of trust.
The accused who was public servant used government money for his own purpose. He committed criminal breach of trust with respect of this money over which he had complete dominion by putting the same to his own use. The refund of the amount after detection does not absolve him of the offence.