Sections 405, 406, 407, 408, 409 IPC Explained
The best of the criminal lawyers in Chandigarh can inform you that cases of criminal breach of trust are quite commonly filed these days only as a means to bring monetary business disputes within the ambit of criminal laws. It enables the party at loss to make a speedy recovery by exerting pressure on the defaulter party. Being classified as cognizable but non-bailable (406, 407, 408, 409) in CrPC, the offense is harshly unforgiving. In due course, which includes getting bail from the courts, investigation, attempts of mediation and settlement etc. The accused party succumbs and starts feeling a dire need to compromise. Once the terms of compromise are agreed, and a stage of compromise comes, it is then that maximum number of legal mishaps occur. The prime reason is that once the compromise seems near, the accused start acting complacent, whereas, they should act with more caution especially in a case under 409, IPC given the fact that criminal breach of trust by public servant, banker, merchant or agent etc. under section 409 is a NON-COMPOUNDABLE OFFENCE in CrPC and a settlement drawn in such a case has to be very well guarded and needs to call for intervention of the State High Court under Section 482 for quashing of the FIR so that the case does not continue to be unaffected of the settlement. It also becomes an utmost necessity to completely understand the nuances of proceedings which run in offense of Criminal Breach of Trust U/s 409 especially or hire an expert lawyer. Of all the decisions you make in life, hiring the best criminal lawyer is the one you’ll never regret.
Through this article we aim to provide all the information one needs to know about the offense of Criminal Breach of Trust in purview of Indian Penal Code 1860 (IPC):
Sections 405 to 409 deals with the criminal breach of trust Section 405 defines criminal breach of trust, while section 406 prescribes punishment for criminal breach of trust. And section 407 to section 409 deals with the case of aggravated forms of criminal breach of trust as defined u/s 405 IPC. It is similar to the offence of embezzlement under English law.
Section 405 IPC defines Criminal Breach of Trust:
Whoever being in any manner entrusted with property or with any domain over property, dishonestly misappropriates or converts to its own use that property or dishonestly uses or disposes off that property in in violation of any direction of law prescribing the mode in which trust is to be discharged or of any legal contract, express or implied, which he made touching the discharge of such trust or willfully suffers any other person so to do, commits Criminal Breach of Trust.
A is a warehouse keeper. Z, going on a journey, entrusts his furniture to A, under a contract that it shall be returned on payment of a stipulated sum for warehouse room. A dishonesty sells the good. A has committed Criminal Breach of Trust.
1. Accused must be entrusted with some property or domain over it.
2. He must have dishonestly misappropriated the property or converted it to his own use or disposed of it in isolation of such trust.
So, the principle ingredients of criminal breach of trust are “entrustment” and “dishonest misappropriation”.
Detailed Analysis of the section:
Entrustment of property is an essential requirement before any offence under this section takes place. The language of section is wide, as it includes all kinds of entrustment whether to clerks, servants, business, partners or other persons, provided they are holding a position of trust. In common parlance, it embraces all cases in which a thing handed over by one person to another for specific purpose. Entrustment need not be expressed. It may be implied.
In State of Gujarat Vs Jaswantlal Nathalal, AIR 1968 SC 700, the government sold cement to the accused only on the condition that it will be used for construction work. However, a portion of the cement purchased was diverted to a godown. The accused was sought to be prosecuted for criminal breach of trust. The Supreme Court held that the expression ‘entrustment’ carries with it the implication that the person handling over any property or on whose behalf that property is handed over to another, continues to be its owner. Thus a mere transaction of sale cannot amount to an entrustment. So if accused had isolated the conditions of purchase, then only remedy is to prosecute him under law relating to cement control.
The definition in section 405 does not restrict the property to movables or immovable alone. In R K Dalamia V Delhi Administration AIR 1962 SC 1821, the Supreme Court held that the word “property” is used in the Indian Penal Code in much wider sense than the expression movable property. Whether the offence defined in the particular section of IPC can be committed in respect of any particular properly but on the fact whether that particular kind of property can be subject to acts covered by that section.
C. Dominion over property
The word “dominion” connotes control over the property. In Shivnaryan Vs. State of Maharashtra AIR 1980 SC 439, the Supreme Court held that a director of company was in the position of a trustee and being trustee of the assets, which has come into his hand, he had dominion and control over the same.
Dishonest Misappropriation is the essence of this section. Dishonesty is as defined in section 24 IPC, causing wrongful gain or loss, which again is defined in section 23 IPC. In order to establish an offense, it is not enough that the money has not been accounted for or mismanaged. It has to be established that the accused has dishonesty put the dishonesty to his own use or to some unauthorized use.
1. A residing in Calcutta, is agent Z, residing at Delhi. There is an express or implied contract between A and Z, that all sums ramified by Z to A, shall be invested by A according to Z’s direction. Z remits a lakh of rupees to A with directions to invest the same in the company’s paper. A dishonesty disobeys the directions and employs the money in his own business. A has committed criminal breach of trust.
2. But if A in last illustration not dishonestly, but in good faith, believing that it will be more for z’s advantage to hold shares in the Bank of Bengal, disobeys Z directions and buys shares in Bank of Bengal for Z instead of buying company paper, here, though Z suffers loss and is entitled to bring action against A, on account of that loss, yet, A not having acted dishonestly, has not committed criminal breach of trust.
Scope of section 405 is broadened by explanations:
Explanations (1) and (2) to the section provides that an employee of an establishment who deducts employee’s contribution from wages payable to the employee to the credit of a State Insurance fund, shall be deemed to be entrusted with the amount of the contribution deducted and default in payment will amount to dishonest use of the amount and hence will constitute an offence of criminal breach of trust.
Punishment under section 406 IPC:
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.
WHAT HAS TO BE PROVED ESSENTIALLY?
It must be proved that the beneficial interest in the property in respect of which offence alleged to have been committed was vested in some person other than accused and that the accused held that property on behalf of that person. Subsequently, he dishonestly misappropriates it. In Rashmi Kumar vs. Mahesh Kumar Bhada, 1997 2 SCC 397), The Supreme Court held that when the wife entrusts her stridhan with the dominion over that properly to her husband or any other member of family and the husband or such other member of the family dishonestly misappropriates or converts to his own that property or willfully suffers any other person to do so, commits criminal breach of trust.
Section 407 IPC – Criminal breach of trust by carrier, wharfinger or warehouse keeper. Imprisonment for term which may extend to 7 years and shall also be liable to fine.
Section 408 IPC – Criminal breach of trust by clerk or servant. Imprisonment either for term which may extend to 7 years and shall also be liable to fine.
Section 409 IPC – Criminal breach of trust by Public Servant or by transfer, merchant or agent. Imprisonment for life or with imprisonment of either for term which may extend to 10 years and shall also be liable to fine.
‘A’ being executor of will of the deceased person, dishonestly disobeys the law which directs him to divide the effects according to the will and appropriates them to his own use.
As discussed above, ‘entrustment’ is the essence of this offence and as in Velji Raghavji Patel Vs. State of Maharashtra AIR 1965, SC 1433, it was held that before there can be any entrustment, there must be a trust meaning thereby an obligation annexed to the ownership of properly and a confidence reposed in and accepted by the owner or declared and accepted by him for the benefit of another or of another and the owner.
In the present situation, it is admitted that A’ being executor of will of the deceased person, dishonestly disobeys the law which directs him to divide the effects according to the will and appropriates them to his own use which resultantly satisfies all ingredients to constitute an offense of Criminal Breach of Trust, therefore, A is liable under this section and can be fastened with penal liability accordingly.
A PUBLIC SERVANT TAKING MONEY FOR DOING LAWFUL WORK. ALSO COMES UNDER THE PURVIEW OF CRIMINAL BREACH OF TRUST AND SECTION 409 APPLIES.