Introduction
Criminal breach of trust (CBT) and misappropriation are key offences under the Indian Penal Code (IPC, 1860) that deal with dishonest handling or misuse of property entrusted to a person. Unlike theft, where property is taken without consent, criminal breach of trust involves entrusted property being misused or converted for personal gain, thereby violating trust and fiduciary responsibility. These offences safeguard commercial, financial, and personal property interests and are covered under Sections 405–409 IPC.
Criminal Breach of Trust (Sections 405–409 IPC)
Definition:
Section 405 IPC defines criminal breach of trust as an act where a person is entrusted with property and dishonestly misappropriates it or converts it for personal use.
Essential Ingredients:
- Entrusted Property: The person must have been lawfully entrusted with property.
- Dishonest Intention: Misappropriation must be intentional and dishonest.
- Conversion for Personal Gain: The property is used or disposed of contrary to the terms of entrustment.
Punishment:
- General punishment (Section 406 IPC): Imprisonment up to 3 years, or fine, or both.
- Enhanced punishment (Section 409 IPC): For public servants, bankers, or agents, imprisonment up to 10 years.
Illustration:
- An employee entrusted with company funds diverts money for personal use.
Case Law:
- State of Punjab v. Ram Singh (1974 AIR 1760) – The Court emphasized that possession along with dishonest intention constitutes criminal breach of trust.
🔗 Read Case Summary - K.K. Verma v. Union of India (1982) – Misappropriation by government officers qualifies as criminal breach of trust under Section 409.
🔗 Read Case Summary
Also Read: Dowry Death and Cruelty under the Indian Penal Code
Misappropriation of Property (Section 403 IPC)
Definition:
Misappropriation occurs when a person dishonestly misapplies property belonging to another without lawful authority, but the property may not have been formally entrusted.
Distinction from Criminal Breach of Trust:
| Aspect | Misappropriation (Section 403) | Criminal Breach of Trust (Section 405) |
|---|---|---|
| Property | Belongs to another, not necessarily entrusted | Must be entrusted |
| Intent | Dishonest use or conversion | Dishonest conversion contrary to trust |
| Consent | Property taken without consent | Property legally entrusted |
| Punishment | Up to 2 years imprisonment, or fine | Up to 3 years (general), 10 years (special) |
Illustration:
- Taking someone else’s money from a common pool without consent and using it for personal purposes constitutes misappropriation.
Case Law:
- R v. Burn (1863) – Laid down that unauthorized use of another’s property dishonestly amounts to misappropriation.
🔗 Read Case Summary
Key Principles
- Entrustment vs. Ownership: CBT requires lawful entrustment, while misappropriation can occur without formal trust.
- Dishonest Intention (Mens Rea): Both offences necessitate criminal intent to convert property for personal gain.
- Severity of Punishment: Enhanced punishments under Section 409 reflect higher public or fiduciary responsibility.
- Distinction from Theft: Theft involves unauthorized taking, whereas CBT involves misuse of property already in possession lawfully.
Conclusion
Criminal breach of trust and misappropriation protect societal trust, financial interests, and fiduciary responsibilities. Judicial interpretations emphasize entrustment, intention, and dishonest conversion as critical elements. Understanding these offences is essential for corporate governance, legal practice, and safeguarding property rights in India.