Criminal misappropriation of property and criminal breach of trust : Nancy Garg

SECTION-403 talks about “Dishonest misappropriation of property”.
Misappropriation means “to take possession of property and putting it to unauthorized use”. In this section initial “taking of the property” could be innocent but it’s the later intention that leads towards this offence.
A person who finds property not in the possession of any other person, and takes such property for the purpose of protecting if for, or of restoring it to, the owner does not take or misappropriate it dishonestly, and is not guilty of an offence; but he is guilty of the offence above defined, if he appropriates it to his own use, when he knows or has the means of discovering the owner, or before he has used reasonable means to discover and give notice to the owner and has kept the property a reasonable time to enable the owner to claim it.

For example – a boy finds a letter on road, containing a bank note. From the direction and content he learns to whom the note belongs. He appropriates the note. He is guilty under this section.

Essentials Ingredients

1. Property must be of another: no criminal misappropriation can take place if that property is in nobody’s possession.
In Velji Raghavji patel v.State of Maharashtra the managing partner of a partnership firm had realised certain amounts from the business, but put it to own use. The Supreme Court held that if he as an owner of a property uses his property in whichever way he wants, and with whatever intention, will not be liable for misappropriation that even if he is not an exclusive owner.

2. Movable property: only moveable property can be the proper subject-matter of an offence under this section. Misappropriation can not be done with the immoveable property.

3. Converts to own use: the word converts to own use means dealing with the property of another as if it is his own property if the accused has not used the property for his own benefit, he cannot be charged with criminal misappropriation. Mere retention does not make him guilty of criminal misappropriation.

4. Dishonest intention: this offence cannot take place when the person concerned has innocently come into the possession of a thing, but when by a subsequent change of intention, or from the knowledge of some new facts with which the party was not previously acquainted, he keeps it, after which the retaining becomes wrongful and fraudulent.

SECTION- 405 talks about “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 trust is to be discharged, or of any legal contract, expressed 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.
The section requires that the offender must be entrusted with either property or dominion over property in any manner. He must then dishonestly misappropriate the same or dishonestly convert the same to his own use, or he must dishonestly use or dishonestly dispose of that property in violation of law which has prescribed the mode in which such trust is to be discharged, or any legal express or implied contract which he has made touching the discharge of such trust, or he wilfully suffers any other person so to do. This offence is also known by the name ‘embezzlement’ even though that word has not been used in the Indian Penal Code.

There are two explanations attached to the section. The first explanation explains that 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 for 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. The use of the words ‘shall be deemed to have’ at two places in the explanation has created fiction. This would make an employer, much more responsible than he has been in the past, and he would now try to see that there is no default on his part in this respect.

The second explanation states that a person, being an employer, who deducts the employee’s 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, 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.

ESSENTIAL INGREDIENTS:

1. Entrusting any person with property or with any dominion over property.
2. The person entrusted dishonestly misappropriates or converts, dishonestly uses or disposes in violation of any direction of law prescribing the mode in which such trust is to be discharged or of any legal contract made touching the discharge of such trust.
In State of Gujrat v. Jaswantlal Nathlal

The Supreme Court held that expression “entrustment” implies that the person handing over the property continues to be its owner and the person handing over the property must have confidence in the person taking the property.

Only knowing about the offence is not important, one should also be aware about its punishment. So SECTION-406 of the Indian Penal Code specifies the “Punishment for criminal breach of trust”.

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.

Punishment – 3 Years or Fine or Both
This is a Non-Bailable, Cognizable offence and triable by Magistrate First Class
This offence is compoundable by The owner of the property in respect of which the breach of trust was committed, with the permission of the Court.
Hence, this was all about criminal misappropriation of property and criminal breach of trust.

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