S.314 BNS/ S.403 IPC
DISHONEST MISAPPROPRIATION OF PROPERTY
This section defines and punishes the offence of dishonest or criminal misappropriation of property.
It is clear from the language of the section that the offence of criminal misappropriation of property can be committed only with respect to a movable property and not against an immovable property.
The offender must dishonestly misappropriate such property or must dishonestly convert to his own use such property. In either case, dishonest intention on the part of the offender must always be proved.
This (dishonest intention) has the same meaning as given under sections 24 and 23 of the Code. Thus, intention to cause wrongful gain or wrongful loss must always be proved against the offender.
The word ‘misappropriates’ means appropriates in an illegal or unauthorised manner, that is to say, to set apart for or assign to the wrong person or a wrong use.
The words ‘converts to his own use’ mean wrongfully using the property for his own benefit or appropriating it for his own self without any authority.
The three illustrations (a), (b) and (c) below the main text help one to distinguish between the offences of theft and criminal misappropriation of property.
It is amply clear from these illustrations that before the offence of criminal misappropriation of property is committed by the offender, the movable property which is the subject of this offence is already in possession of the offender innocently.
THERE ARE TWO EXPLANATIONS ATTACHED TO THE SECTION
According to the first, a dishonest misappropriation for a time only is also a misappropriation within the meaning of this section.
In other words, it is not necessary that there should be an intention on the part of the offender to cause permanent wrongful loss or permanent wrongful gain. If such intention exists even for a short duration of time, it is punishable under this section.
THE SECOND EXPLANATION LAYS EMPHASIS ON A FINDER'S DUTY AND ON HIS TITLE.
This explanation also emphasizes that what are reasonable means and what is a reasonable time in such a case is a question of fact, which means that facts and circumstances of each case will have to be considered before this question can be decided and there can thus be no general rules to govern it.
The explanation also states specifically that it is not necessary for the finder to know as to who is the owner of such property or that any particular person is its owner.
It is sufficient that at the time of its misappropriation or conversion by him he does not believe it to be his own property, of in good faith believes that its real owner cannot be found.
RAJENDRA SINGH V. STATE, 1960 CR LI 857.
Where two accused persons took delivery of a necklace from a goldsmith on a false representation with promise to return the same, but subsequently refused to return it, it was held that they were guilty under sections 403 and 420 of the Code.
PHUMAN V. EMP., 1908 CR LI 250.
Where the accused found a purse on the pavement of a temple in a crowded gathering and put the same in his pocket but was caught immediately thereafter, it was held that he could not be held guilty under this section because merely picking up the purse did not establish dishonest intention on his part.
SHAMSOONDAR V. EMP (1870) 2 NWP 47J.
Where A paid some money to B under a mistake, and later on when B discovered the mistake even then he did not return the amount to A and appropriated the same for himself. It was held that he had committed an offence under this section.
BANDHU V.EMP. (1885) 8 ALL 51.
Since the offence of criminal misappropriation of property can be committed only after a movable property comes under the possession of the accused innocently, an abandoned property can never become a subject of this offence.
SARAJUL HAGUE V. EMP., (1920) 23 & LJ 401.
Where a person is the finder of such a property from the nature of which it was natural to assume that there would be an owner of it, he must take reasonable care of the same and try to make reasonable efforts to locate its owner, but such efforts could not be such as to make him spend quite a bit of money on advertisement.
EMP. V. GIRIJI, 1904 CR U 1109.
Where the accused had taken a loan from a person but denied having taken it, this in itself would not make him guilty under this section because attempt to evade civil liability does not necessarily mean that the accused had dishonest intention
NARAYAN SINGH V. STATE, 1986 CR LJ 1481 (MP)
Where the accused was the chairman of a ‘samiti’ and in that capacity had collected dues from its members, but he failed to deposit the same even after a long time had elapsed since his tenure as chairman was over, it was held that he was guilty under this section.
PARTNER’S LIABILITY:--
VELJI RAGHAVJI V. STATE
The Supreme Court has held that a partner has undefined ownership along with the other partners over all the assets of the partnership and if he chooses to use any of them for his own purposes, he may be accountable civilly to the other partners but he does not thereby commit any misappropriation within section 403 of the Code.
MAHAL CHAND SIKWAL V. STATE, 1987 CRLJ 1569 (CAL). 28A. 1996CRLJ 408 (SC)
Where a partner complained that the other partner had converted the partnership business into ownership business and had not paid him his share of the partnership business, the defaulting partner could not be held guilty under this section unless there was an allegation that the partnership had been dissolved.
ANIL SARAN V. STATE
In the Supreme Court observed that where a partner has been entrusted with property under a special contract and he keeps that property in this fiduciary capacity, misappropriation of that property would amount to criminal breach of trust.
EXCHANGING A RAILWAY TICKET:---
EMP. V. RAZA HUSSAIN, 1905 CR LJ 94.
A and B were about to board a train from Benares City. A had a valid ticket to Ajudhia while B had a valid ticket to Benares Cantonment. A voluntarily gave her ticket to B to check as to whether her ticket for the journey was valid. While returning A's ticket back to her B deliberately substituted his ticket in its place and gave the same to her while keeping her ticket with him. B was held guilty of criminal misappropriation of property and not of cheating.
HARVESTING CROPS UNDER ATTACHMENT :---
QUEEN EMP. V. OBAYYA, (1898) 22 MAD 151.
Where the accused judgment debtor, whose standing crops had been attached, harvested the same while the order of attachment was in force, it was held that he had committed an offence under this section. The offence under section 403 is non-cognizable, bailable and compoundable when permitted by the court which is trying the case, and is triable by any magistrate.
CASES
Where 'A had taken loan from 'B' and the debt was paid by 'A but 'A' paid the money again by mistake and 'B', either at the time of receipt or at any time subsequently, discovers the mistake and decides to appropriate the money, he would be guilty of criminal misappropriation.
Similarly, where A, the tenant of B who had already paid the rent, pays to B the rent for the same month again under the impression that it was not paid by him. B accepted the rent and later on discovered that no rent was due to him. In this case the retention of money by B after finding out that no rent was due amounts to criminal misappropriation.
A paid Rs. 50/- to B to be handed over to a public servant as a bribe. B does not pay the amount to the public servant and also refuses to return the money to A. Here A will be liable for abetment to commit an offence under section 161, I.P. Code and B will be liable for criminal misappropriation.
GADGAYYA V. PURUN SIDDESHWAR,
It was held that the property of an idol or a temple must be used for the purposes of that idol or temple and any other use of that property, being dishonest, would amount to criminal misappropriation.
RAM KRISHNA,
The accused was a Government' servant employed to receive money on behalf of the Government and pay it into treasury. He retained some money for several months but on fearing detection paid the amount into treasury, making a false entry at the time in his books with a view to avert suspicion. He was held guilty of criminal misappropriation.
TOMSON 32 L.T. (M.C.) 50.
In above case a lady intending to buy a railway ticket, finding a crowd at the ticket window asked A who was nearer the window, to purchase a ticket for her and handed him a ten rupee note. A took the note intending to steal it, and instead of buying a ticket with the money ran away with it.
It was held that A would be guilty of theft because the lady had not abandoned her possession over the currency note but she had only used the hand of the stranger A in place of her own hand to buy the ticket.
It is submitted that the above view of the English Court is not in conformity with t section 378, of the Indian Penal Code. The essential ingredients of theft are that dishonest intention at the time of moving of property from another's possession is necessary and here moving amounts to taking.
A has not taken the ten rupee note from the possession of the lady with dishonest intention. She has voluntarily handed over the possession to A for purchasing the ticket. Money has not been taken by A without consent of the lady.
Therefore A is guilty of criminal misappropriation because he used the money, the possession of which has come to h m innocently but he subsequently misappropriated it.
The problem is fully covered by section 403 of Indian Penal Code. According to some A may be guilty of criminal breach of trust but in my view (AUTHOR) there is no entrustment of property misappropriated.
S.316(1) BNS/S.405 IPC
CRIMINAL BREACH OF TRUST
Whoever, being in any manner entrusted with property, or with any dominion over property, dishonestly misappropriates or converts to his own use that property, or dishonestly uses or disposes of that property in violation of any direction of law prescribing the mode in which such trust is to be discharged, or of any legal contract, express or implied, which he has made touching the discharge of such trust, or willfully suffers any other person so to do, commits "criminal breach of trust".
EXPLANATION 1-
A person, being an employer of an establishment whether exempted under section 17 of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (19 of 1952), or not who deducts the employee's contribution from the wages payable to the employee for credit to a Provident Fund or Family Pension Fund established by any law for the time being in force, shall be deemed to have been entrusted with the amount of the contribution so deducted by him and if he makes default in the payment of such contribution to the said Fund in violation of the said law, shall be deemed to have dishonestly used the amount of the said contribution in violation of a direction of law as aforesaid.
EXPLANATION 2-
A person, being an employer, who deducts the employees' contribution from the wages payable to the employee for credit to the Employees' State Insurance Fund held and administered by the Employees' State Insurance Corporation established under. the Employees' State Insurance Act, 1948 (34 of 1948), shall be deemed to have been entrusted with the amount of the contribution so deducted by him and if he makes default in the payment of such contribution to the said Fund in violation of the said Act, shall be deemed to have dishonestly used the amount of the said contribution in violation of a direction of law as aforesaid.
ILLUSTRATIONS
a. A, being executor to the will of a deceased person, dishonestly disobeys the law which directs him to divide the effects according to the will, and appropriates them to his own use. A has committed criminal breach of trust.
b. A is a warehouse-keeper. Z, going on a journey, entrust his furniture to A, under a contract that it shall be returned on payment of a stipulated mm for warehouse-room. A dishonestly sells the goods. A has committed criminal breach of trust.
c. A, residing in Calcutta, is an agent for Z, residing at Delhi There is an express or implied contract between A and Z, that all sums remitted 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 A to invest the same in company's paper. A dishonestly disobeys the directions and employs the money in his own business. A has committed criminal breach of trust.
d. But if A, in the 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's directions, and buys shares in Bank of Bengal, for Z, instead of buying Company's paper here, though Z should suffer loss, and should be entitled to bring a civil action against A, on account of that loss, yet A, not having acted dishonestly, has not committed criminal breach of trust.
e. A, a revenue officer, is entrusted with public money and is either directed by law, or bound by a contract, express or implied, with the Government, to pay into a certain treasury-all the public money which he holds. A dishonestly appropriates the money. A has committed criminal breach of trust.
f. A, a carrier, is entrusted by Z with property to be carried by land or by water. A dishonestly misappropriates the property. A has committed criminal breach of trust.
(2) Whoever commits criminal breach of trust shall be punished with imprisonment of either description for a term which may extend to five years, or with fine, or with both.
(3) Whoever, being entrusted with property as a carrier, wharfinger or warehouse- keeper, commits criminal breach of trust in respect of such property, shall be punished with imprisonment of either description for a term which may extend to seven years, and shall also be liable to fine.
(4) Whoever, being a clerk or servant or employed as a clerk or servant, and being in any manner entrusted in such capacity with property, or with any dominion over property, commits criminal breach of trust in respect of that property, shall be punished with imprisonment of either description for a term which may extend to seven years, and shall also be liable to fine.
(5) Whoever, being in any manner entrusted with property, or with any 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 commits criminal breach of trust in respect of that property, shall be punished with imprisonment for life, or with imprisonment of either description for a term which may extend to ten years, and shall also be liable to fine
INGREDIENTS
The following are essential elements of the offence of criminal breach of trust:
1. Entrusting any person with property or with any dominion over property;
2. The person entrusted—
a. dishonestly misappropriates or converts to his own use that property; or
b. dishonestly uses or disposes of that property or willfully suffers any other person so to do in violation—
I. of any direction of law prescribing the mode in which such trust is to be discharged, or
II. of any legal contract made touching the discharge of such trust.
In any manner entrusted with property.—
For application of this section there must be entrustment of property. Entrustment means handing over the possession of property for some purpose which may not imply the conferring of any proprietary right.
The ownership of beneficial interest in the property in respect of which criminal breach of trust is committed, must be in some person other than the accused and the latter must hold it on account of some person or in some way for his benefit.
A trust implies a confidence placed by one man in another. Such confidence must be voluntarily and freely placed. If confidence is obtained by playing trick, there is no consent and no true entrustment.
In order that money be "entrusted" to the accused person, it should be transferred to him in circumstances which show that, notwithstanding its delivery, the property in it continues to vest in the prosecutor and the money remains in the possession and control of the accused as a bailee, and in trust for the prosecutor as a bailor, to be restored to him or applied in accordance with his instructions.
PUSHPA KUMAR V. STATE OF SIKKIM
The accused was a conductor of the bus belonging to the Sikkim Nationalised Transport and in such capacity had collected bus fares and freight charges amounting to more than Rs. 2.000. He did not render any accounts to the transport authorities nor did he deposit any amount with them despite several reminders.
The High Court held that one of the most important elements of "entrustment' is that the property in respect of which criminal breach of trust is alleged to have been committed must have been made over or transferred or handed over by the aggrieved person, who continues to be the owner thereof, to the accused. In this case there was no entrustment because the amount was not made over or transferred or handed over by any one on behalf of Sikkim Transport to the accused.
It is submitted that the above view of High Court is not correct in view of the decision of the Supreme Court in Som Nath v. State of Rajasthan.
It was held in that case that a person authorised to collect money on behalf of another is entrusted with the money when the amounts are paid to him, and though the person paying may no longer have any proprietary interest, nonetheless, the person on whose behalf it was collected becomes the owner as soon as the amount is handed over to the person authorised to collect on his behalf.
Thus in view of the decision of the Supreme Court the accused conductor was entrusted with the amounts of money as soon as he collected the same on behalf of the Sikkim Transport.
PROPERTY
In order to constitute an offence under this section property may be movable or immovable. It does not matter that the complainant on whose behalf the property is entrusted is the owner of it or not.
DOMINION OVER PROPERTY
For an offence under this section either the property must have been entrusted to the accused or he must have dominion over it. A person is said to be having dominion over property when he supervises, or exercises control over the property or is in the charge of that property.
The Inspector of Water Works whose duty is to supervise and check the distribution of water from the Municipal Water Works is said to be having dominion over the water belonging to his employer. Therefore, if such Inspector deliberately misappropriates such water for his own use or for the use of his tenants for which he pays no tax and gives no information to his employer he would be guilty of criminal breach of trust.
So far as the criminal liability is concerned there is difference between a person entrusted with property and one having control or general charge over the property.
In the case of entrustment, the person will be liable to account for the property if it is found missing, without any further proof or requirement as to actual misappropriation.
In the latter case, the person will be liable only when it is shown that he misappropriated the property or was a party to use- or disposal, etc. of that property by any other person.
M.G. MOHAT V. SHIVAPUTRAPPA AND ANOTHER
The respondent had pledged some gold articles with the State Bank of India branch of Hunagund for securing loan of Rs. 1,500/-. When he returned the amount of loan he found that the articles returned to him were not those that he had pledged with the bank. He charged the bank for breach of trust. It was held that branch manager, who had power to transact business on behalf of the bank had dominion over the pledged articles. The accountant and head cashier were minor functionaries who only carry on their functions through manager and under his directions, therefore manager is guilty of breach of trust.
ANIL SARAN V. STATE OF BIHAR
The question was whether the partner of a firm can be charged of misappropriating the property of the firm. It was held by the Supreme Court that partnership firm is not a legal entity but a legal mode of doing business by all the partners, until the firm is dissolved as per law and the accounts settled, all partners have dominion in common over the property and funds of the firm.
Only after the settlement of accounts and allotment of respective shares, the partner become owner of his share. Therefore where a partner is entrusted with property under special contract, such property is held by him in fiduciary capacity and if he misappropriates it he will be guilty of criminal breach of trust under Section 406, I.P Code.
DISHONESTLY MISAPPROPRIATES OR CONVERTS TO HIS OWN USE
Dishonest intention is the essence of this offence. But appropriation of a property in assertion of a claim, however, unfounded does not constitute an offence under this section. Mere retention of goods by a person without misappropriation does not amount to criminal breach of trust.
In a case A had left his box in B's house and the latter refused to allow A to remove the box unless debt due to B by A was paid, it was held that this offence was not committed.3
In a case A receives Rs. 5,000 from B for keeping in safe custody. A invests the money in his own business. After a year B demands his money back which is promptly returned back by A. Here A will not be liable for criminal breach of trust, because although the money is invested by A but he promptly returns and as such there is no dishonest misappropriation.
DISHONESTLY USES OR DISPOSES OF THAT PROPERTY
An offence under this section consists of any one of four positive acts, namely, misappropriation, conversion, user, or disposal of property.
A user in order to be an offence under this section must cause substantial or appreciable loss to the owner of the property or gain to the accused.
§A asks B. a jeweller to make him a gold ring and pays him the cost of the gold required for the ring. B neither delivers the ring nor returns the money. Here B would be liable under this section.
Partner.—A partner would be liable for an offence under this section if it can be proved that he was in fact entrusted with the partnership property or with a dominion over it, and he has dishonestly misappropriated it or dishonestly converted to his own use.3 It was observed in R.K Dalmia v. Delhi Administration.4 that where one partner is given authority by the other partners to collect money or property of the firm, he is entrusted with dominion over that property and if he dishonestly misappropriates it. he will be liable under this section.
Willfully suffers any other person so to do.—This expression means that the acts constituting criminal breach of trust have been done deliberately or intentionally and not by accident or inadvertence.
Cases. —In Gurumahanty Appalasamy, the accused as entrusted with a pair of ear-rings for the purpose of raising Rs. 7/- only upon them for the complainant's use: but he pledged them for a larger amount, gave Rs. 7/- to the complainant and applied the additional amount to his own use without telling him what he had done. He was held liable for an offence under this section.
In Jage Ram, the accused borrowed a cycle from the complainant promising to return the same within a period of two or three days. He failed to return the cycle as promised, disposed of the same and appropriated the sale proceeds to his own use. It was held that the relationship between the complainant and the accused was that of a bailor and bailee as the complainant had given his cycle to the accused for specific purpose and for a specific time upon contract that after the expiry of the said period the cycle would be returned to him, and in disposing of the cycle dishonestly and appropriating the money to his own use, the accused was guilty of criminal breach of trust.