Criminal Breach of Trust

Edited By Ritika Jonwal | Updated on Aug 28, 2024 04:40 PM IST

Criminal Breach of Trust falls under the offences Against Property given under the Indian Penal Code. The Indian Penal Code, 1860 defines criminal breach of trust in Section 405. This section refers to it as "conversion to own use" or "dishonest misappropriation" of another person's property. The difference between criminal misappropriation (under Section 403) and criminal breach of trust is that the former involves an accused person entrusted with property, or who has jurisdiction or control over the property. Although this section's structure allows for a broad application, "entrustment" of the property is necessary for a crime to be punished under Section 405 of the IPC.

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This Story also Contains

Meaning of Criminal Breach of Trust
Meaning of Entrustment
Meaning of Misappropriation
Essentials of Criminal Breach of Trust
Criminal Breach of Trust under IPC
Punishment for Criminal Breach of Trust under IPC
Difference Between Criminal Misappropriation and Criminal Breach of Trust
Case Laws on Criminal Breach of Trust
Conclusion

Criminal Breach of Trust

Meaning of Criminal Breach of Trust

Put simply, when someone is trusted with another person's property and dishonestly misuses or takes advantage of it for their benefit, that person has committed a criminal breach of trust. For example, it would be deemed a breach of trust if someone sent their bicycle to someone else to fix but someone used it for their use instead. In these situations, the betrayer of confidence is held responsible for their dishonest behaviour.

According to Section 405 of the Indian Penal Code, if someone is entrusted with or has dominion over any property, whether it be immovable or mobile, and they dishonestly use it for their benefit, misappropriate it, or dispose of it against any legal contract, express or implied, that they have made regarding the discharge of that trust, or willfully allow another person to do so, they are guilty of a criminal breach of trust.

Meaning of Entrustment

As the wording of the offence itself suggests, entrustment of property is an essential precondition to any offence under this provision. This section makes extensive use of terminology. The phrase that is used is "in any manner entrusted with property". Entrustments of all kinds are therefore covered as long as someone is in a position of "trust," regardless of whether they are given to clerks, servants, business partners, or other people.

Entrust is not a term of art. The phrase 'entrusted' is sufficiently inclusive to cover all circumstances where property is voluntarily relinquished for a specific purpose and is dishonestly disposed of in contravention of the terms of the transfer of ownership. Entrustment can be inferred rather than explicitly stated.

In the case of, R.K. Dalmia v. Delhi Administration

In this case, the Supreme Court maintained that the Code uses the term "property" considerably more broadly than the phrase "moveable property." When the term "property" is used in Section 405 without any qualification, there is no compelling reason to limit its definition to simply include moveable goods.

Meaning of Misappropriation

The primary subject of this section is dishonest misappropriation. Sec. 24 of the IPC defines dishonesty as bringing about an undue benefit or loss for someone. Unjust gain and wrongful loss are defined in Section 23 of the IPC. It's not sufficient to prove that the money was misplaced or unaccounted for for it to be considered a crime.

It must be proven that the accused dishonestly used the property for his own or an unapproved purpose. To successfully prosecute someone for criminal breach of trust, it is essential to demonstrate that there was a deliberate intent to misappropriate.

Essentials of Criminal Breach of Trust

A criminal breach of trust requires the presence of certain fundamental factors. To demonstrate a criminal breach of trust, the following elements must typically be proven:

Entrustment of Property to the accused is mandatory

The original act of entrusting is a necessary condition for the offence to be proven; otherwise, the property will belong to the person who later commits the breach of trust.

Dishonest misappropriation of Property

The accused must willfully force another person to utilize the entrusted property improperly, or they must dishonestly misappropriate or convert it for their purpose.

Violation of Trust, Law and Contract

A breach of trust occurs when one party violates a legal requirement, a contract, or a trust that regulates the parties' relationship.

Criminal Breach of Trust under IPC

Section 405 IPC handles the offence of criminal breach of trust committed by an individual to a property, whether it is moveable or immovable, which they have been entrusted with or have control over. When someone dishonestly appropriates, misappropriates, or disposes of property in contravention of any legal requirements or agreements on the release of such entrusted property, it is considered an offence. The act of knowingly permitting another person to carry out such deeds constitutes a criminal breach of trust offence.

Punishment for Criminal Breach of Trust under IPC

A criminal breach of trust offence carries a three-year prison sentence, a fine, or both, per Section 405 of the IPC. The police may detain the accused without a warrant because it is a cognisable offence and is not subject to bail. The trial for this offence is presided over by an exceptional magistrate.

Section 407- criminal Breach of Trust on the part of a carrier, warehouse worker, or wharfinger.

Criminal breach of trust by a carrier, wharfinger, or warehouse keeper is covered under Section 407. According to the law, if a carrier, warehouse worker, or other person entrusted with property commits a criminal breach of trust concerning that property, they could face up to seven years in jail and a fine.

Section 408- Criminal Breach of Trust by Clerk, Servant

A criminal breach of trust by a clerk, servant, or anybody working as a clerk or servant and having any kind of authority over property is discussed in Section 408. They will be penalized in such a scenario with a fine and a maximum term of seven years in prison.

Section 409- Criminal Breach of Trust by Civil Servant

Criminal breaches of trust committed by public servants or in the course of their employment as bankers, merchants, factor, brokers, attorneys, or agents who have been entrusted with property or authority over such property are covered by Section 409. In addition to a life sentence or a ten-year prison term, they will also be fined.

Difference Between Criminal Misappropriation and Criminal Breach of Trust

Criminal Misappropriation	Criminal Breach of Trust
Section 403 of the Indian Penal Code, 1860 defines criminal misappropriation.	Section 405 of the Indian Penal Code, 1860 defines the crime of criminal breach of trust.
There is no contractual connection in misappropriation.	However, there is a contractual arrangement between the offender and the property in Criminal Breach of Trust.
In misappropriation, the property is acquired by some other means or misfortune.	When there is a criminal breach of trust, the property is acquired because the owner has the utmost faith in the offender.
The criminal misappropriates the property for personal gain.	When someone steals something for their benefit, it is considered a criminal breach of trust. Criminal misappropriation is considered a violation of trust, although the opposite is not necessarily true.
Property involved in criminal misappropriation is always transferable.	On the other hand, property in a criminal breach of trust may be immovable or mobile.
A criminal misappropriation offence is punishable by up to two years in prison, a fine, or both, per Section 403 of the Indian Penal Code.	According to Section 406 of the Indian Penal Code, a criminal breach of trust offence is punishable by a fine, up to two years in jail of any kind, or both.

Case Laws on Criminal Breach of Trust

In the case of, Rashmi Kumar v. Mahesh Kumar Bhada

In this case, According to the Hindu Marriage Act, the appellant and the respondent were a married pair. Three kids were born to them. The appellant claimed that she had experienced abuse and disrespect in her married home. She eventually faced expulsion from the home by her in-laws, along with her three children. The appellant had given her spouse custody of her possessions, which she had inherited from her family and relatives both before and after her marriage. She insisted on getting her sadhana property back, which her husband had been given.

The Supreme Court ruled that the wife retains ownership of her sadhana property, which she entrusts to her husband, who is in charge of it. Let's say the husband or any family member violates this trust by stealing or dishonestly utilizing the property for their gain. In that instance, Section 405 of the Indian Penal Code may hold them accountable for the crime of criminal breach of trust. They will therefore be punished for the aforementioned offense.

In the case of, Shivnatrayan v. State of Maharashtra

In this case, It was decided that a director of a firm had the role of trustee, with jurisdiction and authority over the assets that had come into his possession.

But when it comes to partnership firms, the ruling has been that while each partner naturally has dominion over property, this dominion does not meet the requirements of section 405 because there isn't an "entrustment of dominion" unless a specific agreement between partners has been made.

Conclusion

The Criminal Breach of Trust comes under the offences against property. This article talks about the Criminal Breach of Trust. Section 405 of the Indian Penal Code 1860 deals with the Criminal Breach of Trust. A criminal Breach of Trust means when a person is entrusted with possession of a particular property and the person with whom the possession of the property is misuse it for some unlawful means commits criminal breach of trust. Sections 405, 407, 408 and 409 deal with the punishment for criminal breach of trust by different persons.

Frequently Asked Question (FAQs)

1. What are breaches of Trust?

In legal terms, a breach of trust occurs when someone disobeys the terms of a trust or temporarily misuses property that has been granted to them.

2. What is the difference between Criminal Breach of Trust and theft?

While in criminal breach of trust, the offender owns the property before the offence and the offence is completed when the property is dishonestly converted to his use, in theft there is no prior lawful possession and the offence is completed as soon as the property is dishonestly taken away.

3. What is a criminal breach of trust by the Clerk and servant?

A fine and a maximum sentence of seven years in jail are the penalties for the offence of "Criminal Breach of Trust by Clerk or Servant" as stated in Section 408 of the Indian Penal Code (IPC).

4. What is section 409 of IPC?

Anyone found guilty of a criminal breach of trust involving property that they were in any way entrusted with, or had dominion over, while serving as a public servant or conducting business as a banker, merchant, factor, broker, attorney, or agent faces life in prison.

5. What is the punishment for Section 403 of IPC?

Section 403 of the Indian Penal Code, 1860 specifies that anyone dishonestly misappropriates or transforms to his use any movable property may be punished with imprisonment of either class for a time which may extend to two years, or with a fine, or with both.