Tuesday, 10 April 2012

Sections 405, 409 CRIMINAL BREACH OF TRUST

Section 405. 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 wilfully suffers any other person so to do, commits "criminal breach of trust".

Explanation 1 - A person, being an employer 170[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 appropriate them to his own use. A has committed criminal breach of trust.

(b) 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 dishonestly sells the goods. A has committed criminal breach of trust.

(c) A, residing in Calcutta, is 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 lakhs of rupees to A, with directions to A to invest the same in Company's paper. A dishonestly disobeys the direction 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 the 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 ]and or by water. A dishonestly misappropriates the property. A has committed criminal breach of trust.

Section 405 defines what Criminal breach of trust (CBT) is. The section declares that whoever is, in any manner, entrusted with a property, dishonestly misappropriates that property or uses that property or dispose of that property in disregard of any direction of law, or wilfully suffers any other person so to do, commits CBT.

Section 24 defines what is “acting dishonestly”. When the doing of any act or not doing of any act causes wrongful gain of property to one person or a wrongful loss of property to a person, the said act is done dishonestly. Wrongful means unlawfully. See section 471.

Section 23 defines what is Wrongful loss and Wrongful gain. The Wrongful means affecting a person of his legal right. For Wrongful loss or gain, any property, movable or immovable must be lost to the owner, or the owner must be, without any reason, is deprived of its beneficial use.

The word property may simply be defined as all things which can be measured in value in money terms, including the money itself, and the said thing capable of being possessed by a person, to the exclusive use/ enjoyment as owner of that thing from rest of the world.


CRIMINAL BREACH OF TRUST – AIR 2006 SC 2780

I say that in the present case, the properties were entrusted in the hands of ______, and they have dominion / control over the property; and ________, and have dishonestly disposed off the property, for their own benefit, thereby causing wrongful gain to themselves and causing wrongful loss to ______

Criminal Breach of Trust – section 405 of IPC –
AIR 1953 SC 478, 484, Para 21;
(2006) 6 SCC 736, 751, Para 22.

1987 CrLJ 447;
AIR 1968 SC 700
AIR 1956 SC 575
AIR 1962 SC 1821
(1997) 2 SCC 397;
AIR 1999 SC 2979
AIR 1980 SC 439
AIR 1959 SC 1390
(2003) 3 SCC 641
AIR 1960 SC 889
AIR 1973 SC 488

Sr. No.
Ingredients of the offence / Facts to be Proved
The facts of the case
1
The Person accused was

entrusted / given / handed over, a Property, movable or immovable,

or

entrusted / given / handed over, a Property, movable or immovable, who had dominion or control over the said property; and


2
The said Person had, deceitfully / fraudulently, misappropriated that property,

or

The said Person had deceitfully / fraudulently, converted to his own use the said property;

or

The said Person had deceitfully / fraudulently used or disposed of that property, (a) in disregard of the directions of law, the law which prescribed the mode in which such entrustment is to be performed / discharged, or (b) in disregard of any legal contract, express or implied, which the said Person had made touching the discharge / performance of such entrustment,

or

where the said Person had deceitfully / fraudulently, wilfully, allows any other person to use or dispose of that property, (a) in disregard of the directions of law, the law which prescribed the mode in which such entrustment is to be performed / discharged, or (b) in disregard of any legal contract, express or implied, which the said Person had made touching the discharge / performance of such entrustment.



The offence is cognizable and Non Bailable; and triable Magistrate of the First Class; and therefore FIR or Application u/s 156(3) or Private Complaint u/s 200 may be preferred.





Section 409 of Indian Penal Code: Criminal breach of trust by public servant, or by banker, merchant or agent: 
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 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.

The word property may simply be defined as all things which can be measured in value in money terms, including the money itself, and the said thing capable of being possessed by a person, to the exclusive use/ enjoyment as owner of that thing from rest of the world.

CLASSIFICATION OF OFFENCE
Cognizable—Non-bailable—Triable by Magistrate of the first class—Non-compoundable.


PREVENTION OF CORRUPTION
Discharge
RS Nayak Vs AR Antulay and Anr AIR 1986 SC 2045


Disproportionate Assets
R Janakiraman vs State rep by Inspector of Police AIR 2006 SC 1106


Illegal Gratification
Chaturdas Bhagwandas Patel Vs The State of Gujarat AIR1976SC1497
CI Emden Vs State of Uttar Pradesh AIR1960SC548
Madhukar Bhaskarrao Joshi V State of Maharashtra 2001 CriLJ 175


Sanction
State of TN v Damodaran AIR 1992 SC 563
State through IP AP v K Narasimhachary AIR 2006 SC 628
State of HP v MP Gupta 2004 2 SCC 349


Sr. No.
Ingredients of the offence / Facts to be Proved
The facts of the case
1
The Person accused was

entrusted / given / handed over, a Property, movable or immovable, in his capacity of a public servant or in the way of his business as a banker, merchant, factor, broker, attorney or agent,

or

entrusted / given / handed over, a Property, movable or immovable, who had dominion or control over the said property, in his capacity of a public servant or in the way of his business as a banker, merchant, factor, broker, attorney or agent; and


2
The said Person had, deceitfully / fraudulently, misappropriated that property,

or

The said Person had deceitfully / fraudulently, converted to his own use the said property;

or

The said Person had deceitfully / fraudulently used or disposed of that property, (a) in disregard of the directions of law, the law which prescribed the mode in which such entrustment is to be performed / discharged, or (b) in disregard of any legal contract, express or implied, which the said Person had made touching the discharge / performance of such entrustment,

or

where the said Person had deceitfully / fraudulently, wilfully, allows any other person to use or dispose of that property, (a) in disregard of the directions of law, the law which prescribed the mode in which such entrustment is to be performed / discharged, or (b) in disregard of any legal contract, express or implied, which the said Person had made touching the discharge / performance of such entrustment.



The offence is cognizable and Non Bailable; and triable by Magistrate of the First Class; and therefore FIR or Application u/s 156(3) or Private Complaint u/s 200 may be preferred.


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