Do you want to know about Criminal Breach Of Trust? Then, read this article to learn about Criminal Breach Of Trust
Overview
Property offences are covered under Sections 378 through 462 of the Indian Penal Code, 1860 (“IPC”), Chapter XVII. The IPC defines criminal breach of trust in Section 405, while Section 406 deals with the related punishments. Sections 407, 408 and 409 of the IPC deal with criminal breach of trust by clerks, carriers, and servants, as well as criminal breach of trust by public officers, bankers, merchants, and agents. Three distinct words are obtained by breaking the sentence down. Let’s examine each word’s definition. “Criminal” refers to something that is against the law, that is, morally bad or that the law forbids. A “breach” is defined as an infringement. It may be a vow, a set of rules, or, in our case, trust. The word “trust” refers to confidence or belief in the qualities, abilities, strength, or veracity of another person. It seems sense to think of it as a duty of care.
What constitutes a criminal trust violation?
In short, a criminal breach of trust happens when someone entrusts something to another individual (the accused), and that someone intentionally causes harm or breaches the property in order to commit a criminal offence. For instance, B was given A’s bicycle to fix, but A utilises it for his personal gain. Since B betrayed A’s confidence in this instance with dishonest purpose, it will be considered a criminal breach of trust.
It should be emphasised that this section solely discusses “property,” which can refer to either moveable or immovable property. In the 1962 case of R.K. Dalmia v. Delhi Administration, the Supreme Court ruled that there are many interpretations of the word “property” in Section 405 IPC. It can be interpreted in several ways. The term “property” does not just refer to tangible or intangible assets. Both are included.
In this part, the word “entrust” is quite important. Entrusting is the process of transferring property to another party for a predetermined set of uses. It’s crucial to understand that entrusting just places constraints on the recipient; it doesn’t provide them ownership or proprietary rights. They are unable to obtain legal ownership of the property, yet having significant control or influence over it. The property in question may be misappropriated, converted, used, or disposed of.
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 own 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.
Illustration
An officer named A has been given custody of public funds. He utilises it dishonestly to further his own agenda. As a result, A broke the law by betraying trust. While A is travelling, he trusts B, the owner of a furniture store, to fix his furniture; instead, B deceitfully sells the furniture. As a result, B broke the law by betraying trust. Penalties imposed by law for the criminal breach of trust crime under Section 405 IPC Section 405. Criminal breach of trust is punishable by a fine, three years in prison, or both. A first-class magistrate will try the case since it is a cognizable offence that is not subject to bail.
IPC Section 407
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 with regard to that property, fine and 7 years prison will filed.
IPC Section 408
A clerk, servant, or anybody working as a clerk or servant who has been entrusted in any way with property or authority over such property is subject to criminal breach of trust under Section 408. Under such circumstances, they will be penalised with a fine and up to seven years in prison.
IPC Section 409
Criminal breaches of trust by public servants or those acting in the course of their profession as bankers, merchants, factor, brokers, solicitors or agents who have been entrusted with property or jurisdiction over property are covered by Section 409. They will get a fine in addition to a ten-year or life sentence in prison.
The elements of a criminal deception
For there to be a criminal breach of trust, a few necessary conditions must be met. Given below in the following order
- The property must be handed over to the owner/ victim.
- There must be a breach of law, contract, or trust by the accused
- The individual must will fully cause any other person to utilise the property, or dishonestly misappropriate or convert it for his own use.
What distinguishes criminal misappropriation from criminal breach of trust?
Below is a list of the distinctions between criminal misappropriation and criminal breach of trust:
- The IPC defines criminal misappropriation in Section 403 and criminal breach of trust in Section 405 of the law. Anyone who transfers his or her personal benefit anything movable asset, will be penalised with imprisonment of either kind during an amount of time that can go up to a period of two years, or by an a penalty, or with both of them, as provided in Section 403 of the Indian Penal Code.
- When there is a criminal breach of trust, there is a contractual connection between the two parties; nevertheless, when there is criminal misappropriation, there is no such contract. Such a contractual arrangement between the parties to criminal misappropriation does not exist.
- When there is a criminal breach of trust, the accused gets the property by entrusting it to the owner. However, in criminal misappropriation, the owner obtains the item from any source. For example, when A finds a wallet on the street, he opens it and discovers all of the owner’s personal information. The wallet had 500 rupees in total, but instead of getting in touch with the owner and giving it back, he utilised it for personal use. As a result, he is guilty of criminal misappropriation and did not get the wallet from the owner; instead, he got it from another source.
- Property may be immovable or moveable in cases of criminal breach of trust, but it is movable in cases of criminal misappropriation.
- A criminal breach of trust is punished under Section 406 by up to two years in jail, a fine, or both. According to Section 403, criminal misappropriation carries a two-year jail sentence, a fine, or both.
Case law
State of Gujarat vs Jaswantlal Nathalal (1967)
The Gujarati government awarded the respondent a contract in the seminal case of Jaswantlal Nathalal v. State of Gujarat (1967) for the construction of a building for the government lithoprinting plant. The respondent received 5 tonnes, or 100 bags, of cement from the Deputy Engineer (Construction sub-division, Ahmedabad). The respondent then delivered the remaining sixty bags of cement to the building site after transferring forty of them to a godown. In order to pursue the defendant for criminal breach of trust, the appellant filed a case.
The Supreme Court ruled that the word “entrustment” suggests that the owner of the property is still the one giving it to the other. and that they have to be in a fiduciary relationship. However, in this instance, cement is being sold to the responder with the intention of utilising it only for building. Consequently, the government has no authority or control over the cement after it is delivered to the accused. The responder may only face legal action if it has broken any cement control-related laws. According to the Court, there was no betrayal of confidence.
Babu Ram Upadhya vs State of UP (2000)
The respondent in the State of Uttar Pradesh v. Babu Ram Upadhya (2000) case was a superintendent of police. In order to look into a theft case, he travelled to a village. Lalji, a former Mohinuddinpur patwari, was going with him. On his nighttime return, he witnessed Tika Ram bolting towards a field from one side of a canal. There seemed to be something tucked away in the folds of his dhoti. The S.I. checked him since his motions were strange and found a bundle of bills. After taking the package, the accused gave them back to Tika Ram. However, Tika Ram discovered that they were lacking in when she tallied the money notes.
However, Tika Ram discovered that they were short by Rs. 250 when she tallied the money notes. According to the Supreme Court, property was entrusted to someone else, and that person used it for his own purposes. As a result, a Section 409 IPC crime was committed.
State of Bombay vs Jaswant Rai Manilal Akhaney (1956)
The accused in Jawant Rai Manilal Akhaney V. State of Bombay (1956) was the Exchange Bank of India’s Managing Director. The Court noted that he had complete authority over the bank’s accounts. It seemed inconceivable that he was unaware of his bank’s obligation to reimburse the Cooperative Bank for overdraft fees. Consequently, it cannot be presumed that the defendant was unaware of it. It was additionally decided that the accused may have erred in law when he thought he had legal justification for handling the securities.
Pledged securities with a bank for certain reasons were deemed to be considered “entrustments.” Since the directors of a corporation are, in a sense, trustees of the firm, the properties handed to them would also constitute entrustment. But if the money was paid as illicit gratification, then there would be no issue of entrustment.
Mahesh Kumar Bhada vs Rashmi Kumar (1996)
The Hindu Marriage Act recognised the appellant and respondent in Rashmi Kumar v. Mahesh Kumar Bhada (1996) as a married pair. Three kids were born to them. The appellant claimed that she experienced maltreatment in her married household. Her in-laws did not treat her with dignity and threw her and her three kids out of the house. The appellant’s spouse was given custody of the possessions she inherited from her family members and relatives both before and after her marriage. She insisted on regaining the sridhana property that her husband had been given.
The Supreme Court ruled that while a wife has given her husband control over her sridhana property, she remains the rightful owner of such property. He and any member of his family who violates this entrustment and either dishonestly utilises it for their personal benefit or misappropriates it will be prosecuted under Section 405 IPC for criminal breach of trust and will face consequences.
K. Dalmia vs Delhi Administration
A broader interpretation of the term “property” was required. It held that the interpretation of property will decide whether or not an infraction under this statute has been committed.
Mohammed Sulaiman vs Mohammed Ayub
The property must be handled in a way that would imply misappropriation, conversion, or utilisation or destruction in violation of any express or implicit legal contract, as required by Section 405 of the Indian Penal Code. The rules of this section do not apply to a simple civil dispute.
Superintendent and Remembrancer of Legal Affairs, WB vs SK Roy
Section 409 of the IPC penalises misappropriation of property by fraudulent entries.
SUMMARY
All of the prerequisites for the criminal breach of trust crime must be met for it to be committed. Property entrustment is a requirement. The two parties ought to establish a fiduciary relationship as a result of it. The property must be under the accused’s control. And that by converting the property for his personal use or for any other arbitrary purpose with dishonest intention, he has betrayed the confidence of the other party. One extremely important issue is the existence of dishonest purpose. The property does not have to be movable or stationary. Either might be the case.
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