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BY A P RANDHIR
STUDY
ON
CONCEPT
OF
CRIMINAL BREACH OF
TRUST
&
CHEATING
UNDER
I.P.C 406 & 420.
BY A P RANDHIR
1 Introduction
Section 405. of IPC defines Criminal breach of trust in the following
words-
BY A P RANDHIR
“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.”
2. Charge framing for criminal Breach of trust - Special Provision
As to framing of charge for criminal breach of trust in Cr.P.C 1973
there is special provision in section 212(2) ;
(2) When the accused is charged with criminal breach of trust or
dishonest misappropriation of money or other movable property, It shall
be sufficient to specify the gross sum or as the case may be describe the
movable property in respect of which the offence is alleged to have been
committed and the date between which the offence is alleged to have
been committed without specifying particular items or exact date and
charge so framed shall be deemed to be a charge of one offence within
the meaning of section 219.
In the matter of framing of charge for criminal breach of trust this
special provision is to the strictly complied with and proof must be given
that the offence was completed between the date given default in it cannot
be cure by section 465Cr.p.c . A completed act is necessary to constitute
the offence of criminal breach of trust.
3. Venue of trial : Criminal Breach of Trust; Cr. p. c 181(4)
BY A P RANDHIR
Any offence of criminal misappropriation or of criminal breach of
trust may be inquired into or tried by a court within whose local
jurisdiction the offence was committed or any part of the property which
is the subject of the offence was received or retained or was required to
be returned or accounted for by the accused person.
Thus the offence of criminal breach of trust can be tried at three
places, namely at the place where the property was received, at the place
where the property was retained by the accused of at the place where the
offence was committed and the under section 405, IPC, the offence can
be committed at a place where the accused according to the contract
entered by him fails to deposit the money and render accounts and
consequently, the court at that pa;ce is fully competent to try the case.
The offence of criminal misappropriation or breach of trust may be
enquired into or tried by the court within whose jurisdiction any of the
following five facts took place namely,
1. Any part of the property forming the subject matter of the offence was
received by the accused or,
2. Was retained by him or,
3. Was required to be returned by him or,
4. Was required to the accounted for by him, or
5. The offence was committed.
5. JUDICIAL PRONOUNCMENT.
5.1 ANZ Grindlays Bank v. Shipping & Clearing (Agents ) Ltd 1992
CrLJ 77 Cal
BY A P RANDHIR
The offence of criminal misappropriation or breach of trust may be
enquired into or at the place where the loss ensued to the complainant.
5.2 Jagdish V State 1998 Cr.LJ 554.
The offence u/s 406 and 498 A are distinct but if they are parts of
one transaction i.e. cruelty to wife and not paying pack her stridhan, then
court at place of her parents home would also have territorial jurisdiction
to try the case.
5.3 State of M.P v pramode 1965 (2) Cr l J
To Constitute dishonest misappropriation no entrustment is
required to be proved. when possession has been innocently acquired but
from subsequent intention or knowledge, the retention becomes
wrongful, the section applies.
5.4 Mohmmad ali v state 2006 Cr l j 1368 MP
Fifteen bundles of electric wire were seized from the appellant but
none including electricity department claimed that wire was stolen
property. Evidence on records Showed that impugned electric wire was
purchased by the applicant from scrap seller. Merely applicant not having
any receipt for purchase of impugned wire it cannot be said that he was
prima facie guilty of offence punishable u/s 403. Order of framing charge
was therefore quashed.
6. DIFFENCE BETWEEN CRIMINAL BREACH OF TRUST &
CHEATING
6.1.Ashraf lal V State, 1978 Cr.LJ (NoC) 33 (ALL)
BY A P RANDHIR
Distinction between criminal breach of trust and cheating is that
when for cheating criminal intention is necessary at the time of
entrustment, mere proof of entrustment is sufficient in criminal breach of
trust.
6.2. Vadivel V. Pakialakshmi 1996 Cr.LJ 300( MAD)
Where it was pointed out that both offences involves dishonest
intention but they are mutually exclusive and different in basic concept.
The Criminal breach of trust is voluntary whereas cheating is purely on
basis of inducement with dishonest intention.
6. 3. Bageswar Mishra v Khundari AIR 1970 Pat 20.
For conviction for an offence under section 420 IPC. It is essential
for the prosecution to establish the criminal intention at the time when
offence was committed. The distinction between mere breach of contract
and cheating depends upon the intention of the accused at the time of
alleged inducement which may however be hudged by subsequent
conduct.
6. 4. Hridaya Ranjan Pd. Verma V State of Bihar AIR 2000 SC 2341,
2000 CrLJ 2983
In the Supreme court case it has been held that a mere breach of
contract cannot give rise to a criminal prosecution for cheating unless
fraudulent or dishonest intention is shown right at the beginning of the
transaction. To establish the offence of cheating it is necessary to show
that he had fraudulent or dishonest intention as time of making the
promise.
BY A P RANDHIR
6.5 Jaswantrai Manilal Akhaney v State of Bombay, AIR 1956 SC 575.
That is to say that the beneficial interest in the property in respect
of which the offence is alleged to have been committed was vested in
some person other than the accused, and that the accused held the
property on behalf of that person. A relationship is created between the
transferor and transferee, where under the transferor remains the legal
owner of the property and the transferee has only the custody of the
property for the benefit of the transferor himself or someone else. At best
the transferee, obtains in the property entrusted to him only a special
interest limited to a claim for his charges in respect of safe retention, and
under no circumstances does he acquire a right to dispose of that property
in contravention of the entrustment.
6.6 Sushil Kumar Gupta v Joy Shanker Bhattacharjee, AIR 1971 SC
1543.
The offence of criminal breach of trust is committed when a
person who is entrusted in any manner with property or With dominion
over it, dishonestly misappropriates it, or converts it to his own use, or-
dishonestly uses it or disposes it of in violation of any direction of law
prescribing the mode in which the trust is to be discharged, or of any
lawful contract, express or implied, made by him touching such
discharge, or willfully suffers any other person so to do.
6. 7 Re Venkata Gurunatha, AIR 1923 Mad 597.
It cannot however be said that it is impossible, under all
circumstances, for a person to commit criminal breach of trust in respect
of his own property. Where the accused who pledged promissory notes
BY A P RANDHIR
with the complainant as security for a loan, induced him to hand them
over to him (i.e. the accused) by pretending that he required them to
collect money from his debtors with the aid of which he would pay cash
to him (i.e. the complainant), Held that the possession of the promissory
notes, even without endorsement, in the hands of the person, with whom
they were pledged, was of some value to the complainant as it gave him
control over the accused and so long as they remained with him, they
prevented the accused from using them to discharge the debts due by him
to other creditors in preference to him and the complainant had thus,
some sort of beneficial interest in the property and when he gave the
notesto the accused for a definite purpose and the accused dishonestly
disposed of them in violation of the legal contract, there was both
entrustment and dishonest misappropriation.
The following ingredients are necessary to attract the operation of section
405.
(a) The accused must be entrusted with property or dominion over the
property; and
(b) The person so entrusted (i.e., the accused) must-
(i) dishonestly misappropriate, or convert to his own use, that property, or
(ii) dishonestly use or dispose of that property or wilfilly suffer any other
person to do so in violation of
(1) any direction of law, prescribing the mode, in which such trust is to be
discharged, or
(2) any legal contract made touching the discharge of such trust.
BY A P RANDHIR
7. What Is Criminal Breach Of Trust?
The offence of criminal breach of trust, as defined under this
section, is similar to the offence of embezzlement under the English law.
A reading of the section suggests that the gist of the offence of criminal
breach of trust is ‘dishonest misappropriation’ or ‘conversion to own use’
another’s property, which is nothing but the offence of criminal
misappropriation defined u/s 403. The only difference between the two is
that in respect of criminal breach of trust, the accused is entrusted with
property or with dominion or control over the property.
As the title to the offence itself suggests, entrustment or property is
an essential requirement before any offence under this section takes
place. The language of the section is very wide. The words used are ‘in
any manner entrusted with property’. So, it extends to entrustments of all
kinds-whether to clerks, servants, business partners or other persons,
provided they are holding a position of trust. “The term “entrusted” found
in a 405, IPC governs not only the words “with the property”
immediately following it but also the words “or with any dominion over
the property”.
7.1 State of Gujarat vs Jaswantlal Nathalal AIR 1968 SC 700.
In the case of State of Gujarat vs Jaswantlal Nathalal, the
government sold cement to the accused only on the condition that it will
be used for construction work. However, a portion of the cement
purchased was diverted to a godown. The accused was sought to be
prosecuted for criminal breach of trust. The Supreme Court held that the
expression ‘entrustment’ carries with it the implication that the person
BY A P RANDHIR
handing over any property or on whose behalf that property is handed
over to another, continues to be its owner. Further, the person handing
over the property must have confidence in the person taking the property.
so as to create a fiduciary relationship between them. A mere transaction
of sale cannot amount to an entrustment. If the accused had violated the
conditions of purchase, the only remedy is to prosecute him under law
relating to cement control. But no offence of criminal breach of trust was
made out.
7.2 Jaswant Rai Manilal Akhaney vs State of Bombay AIR 1956 SC
575.
It was held that when securities are pledged with a bank for
specific purpose specified conditions, it would amount to entrustment.
Similarly, properties entrusted to directors of a company would amount to
entrustment, because directors are to some extent in a position of trustee.
However, when money was paid as illegal gratification, there was no
question of entrustment.
7.3 State of UP vs Babu Ram AIR 1961 SC 751.,
the accused, a sub-inspector (SI) of police, had gone to investigate a theft
case in a village. In the evening, he saw one person named Tika Ram
coming from the side of the cannal and hurriedly going towards a field.
He appeared to be carrying something in his dhoti folds. The accused
searched him and found a bundle containing currency notes. The accused
took the bundle and later returned it. The amount returned was short by
Rs. 250. The Supreme Court held that the currency notes were handed
over to the SI for a particular purpose and Tika Ram had trusted the
BY A P RANDHIR
accused to return the money once the accused satisfied himself about it. If
the accused had taken the currency notes, it would amount to criminal
breach of trust..
7.4 Rashmi Kumar vs Mahesh Kumar Bhada (1997[2] SCC 397
The Supreme Court held that when the wife entrusts her stridhana
property with the dominion over that property to her husband or any other
member of the family and the husband or such other member of the
family dishonestly misappropriates or converts to his own use that
property, or willfully suffers and other person to do so, he commits
criminal breach of trust.
8.Entrustment
As the title to the offence itself suggests, entrustment of property is
an essential requirement before any offence under this section takes
place. The language of the section is very wide. The words used are ‘in
any manner entrusted with property’. So, it extends to entrustments of all
kinds- whether to clerks, servants, business partners or other persons,
provided they are holding a position of trust. The word entrust is not a
word of art. In common parlance, it embraces all cases in which a thing
handed over by one person to another for specific purpose. It need not be
express it may be implied. It not only covers the relationship of a trustee
and beneficiary between the complainant and the accused, like master and
servant, guardian and ward, and the pledgor and pledge. It connotes that
the accused holds the property for, and on behalf of another. Hence in all
such transactions like that of a consignor and consignee, bailor and bailee
and hirer and hiree, there is an element of trust implied in the transaction
BY A P RANDHIR
because in all such relation, the property entrusted to the accused is
‘property of another person’.
8.1 AIR 1998 SC 2676.
In order to constitute a legal entrustment, therefore, the
complainant must be the owner of the property; there must be a transfer
of possession; such transfer must be actual transfer, and not a fictional or
notional one; such transfer should be made to somebody who has no right
excepting that of a custodian, and such entrustment must be made to a
person, and not to a company or a firm. These are the panchsheel of a
legal entrustment. Mere transaction of sale cannot amount to an
entrustment; entrustment means that the person handing over any
property, or on whose behalf that property is handed over to another,
must have confidence in the person, taking the property, so as to create a
fiduciary relationship between them. The word entrustment in this
section, governs not only the words ‘with the property’ immediately
following it, but also the word ‘or with any dominion over the property’,
occurring thereafter. Similarly, the managing director of a company,
including the amounts received from the subscribers, and dominion is as
good as entrustment for the purpose of this section.
8.2 Dwarkadas Haridas v Emperor AIR 1928 Bom 521.
For a valid entrustment it is not necessary that the accused should
receive the money directly from the complainant. In the case of Where
under the terms of a contract, some goods were entrusted to the accused,
who was to sell those goods, obtain money for them, and that money on
account of the complainant, it was held that though he didn’t actually
BY A P RANDHIR
receive the money from the complainant, he was ‘entrusted’ with it within
the meaning of this section.
9 Property
9.1 R K Dalmia vs Delhi Administration AIR 1962 SC 1821.
The definition in a 405 does not restrict the property to movables
or immovable alone. In the above mentioned case Hon'ble Supreme Court
held that the word ‘property’ is used in the Code in a much wider sense
than the expression ‘movable property’. There is no good reason to
restrict the meaning of the word ‘property’ to movable property only,
when it is used without any qualification in s 405. Whether the offence
defined in a particular section of IPC can be committed in respect of any
particular kind of property, will depend not on the interpretation of the
word ‘property’ but on the fact whether that particular kind of property
can be subject to the acts covered by that section.
The word ‘dominion’ connotes control over the property. In Shivnatrayan
vs State of Maharashtra, it was held that a director of a company was in
the position of a trustee and being a trustee of the assets, which has come
into his hand, he had dominion and control over the same.
However, in respect of partnership firms, it has been held that though
every partner has dominion over property by virtue of being a partner, it
is not a dominion which satisfies the requirement of s 405, as there is no
‘entrustment of dominion, unless there is a special agreement between
partners making such entrustment.
BY A P RANDHIR
Explanations (1) and (2) to the section provide that an employer of an
establishment who deducts employee’s contribution from the wages
payable to the employee to the credit of a provident fund or family
pension fund or employees state insurance fund, shall be deemed to be
entrusted with the amount of the contribution deducted and default in
payment will amount of the contribution deducted and default in payment
will amount to dishonest use of the amount and hence, will constitute an
offence of criminal breach of trust.
9.2 Employees State Insurance Corporation vs S K Aggarwal
The Supreme Court held that the definition of principal employer
under the Employees State Insurance Act means the owner or occupier.
Under the circumstances, in respect of a company, it is the company itself
which owns the factory and the directors of the company will not come
under the definition of ’employer.’ Consequently, the order of the High
Court quashing the criminal proceedings initiated u/ss 405 and 406, IPC
was upheld by the Supreme Court
10. Misappropriation
Dishonest misappropriations the essence of this section.
Dishonesty is as defined in sec.24, IPC, causing wrongful gain or
wrongful loss to a person. The meaning of wrongful gain and wrongful
loss is defined in sec 23, IPC. In order to constitute an offence, it is not
enough to establish that the money has not been accounted for or
mismanaged. It has to be established that the accused has dishonestly put
the property to his own use or to some unauthorized use. Dishonest
intention to
BY A P RANDHIR
misappropriate is a crucial fact to be proved to bring home the charge of
criminal breach of trust.
Proof of intention, which is always a question of the guilty mind or mens
rea of the person, is difficult to establish by way of direct evidence.
10.1 Krishan Kumar V UOI AIR 1959 SC 1390.
He accused was employed as an assistant storekeeper in the
Central Tractor Organization (CTO) at Delhi. Amongst other duties, his
duty was the taking of delivery of consignment of goods received by rail
for CTO. The accused has taken delivery of a particular wagonload of
iron and steel from Tata Iron and Steel Co, Tatanagar, and the goods were
removed from the railway depot but did not reach the CTO. When
questioned, the accused gave a false explanation that the goods had been
cleared, but later stated that he had removed the goods to another railway
siding, but the goods were not there. The defence version of the accused
was rejected as false. However, the prosecution was unable to establish
how exactly the goods were misappropriated and what was the exact use
they were put to. In this context, the Supreme Court held that it was not
necessary in every case to prove in what precise manner the accused
person had dealt with or appropriated the goods of his master. The
question is one of intention and not direct proof of misappropriation.
The offence will be proved if the prosecution establishes that the
servant received the goods and that he was under a duty to account to his
master and had not done so. In this case, it was held that the prosecution
has established that the accused received the goods and removed it from
BY A P RANDHIR
the railway depot. That was sufficient to sustain a conviction under this
section.
10.2 Jaikrishnadas Manohardas Desai vs State of Bombay AIR 1960
SC 889.,
It was held that dishonest misappropriation or conversion may not
ordinarily be a matter of direct proof, but when it is established that
property, is entrusted to a person or he had dominion over it and he has
rendered a false explanation for his failure to account for it, then an
inference of misappropriation with dishonest intent may readily be made.
Prosecution need not establish the precise mode of dishonest
misappropriation of conversion.
10.3 Surendra Prasad Verma v State of Bihar
The accused was in possession of the keys to a safe. It was held
that the accused was liable because he alone had the keys and nobody
could have the access to the safe, unless he could establish that he parted
with the keys to the safe.
The offence under section 405 can be said to have committed only
when all of its essential ingredients are found to have been satisfied. As in
the case of criminal misappropriation, even a temporary misappropriation
could be sufficient to warrant conviction under this section. Even if the
accused intended to restore the property in future, at the time
misappropriation, it is a criminal breach of trust.
11. Doctrine of Public Trust and Interpretation of Law Courts
BY A P RANDHIR
11.1 In the case of Common Cause, A Registered Society v Union of
India AIR 1973 SC 488.and in the case of Shiva Sagar Tiwari v
Union of India (1996) 6 SCC 558.,
It was held by the Supreme court that a minister is in a position of trustee
in respect of public property under his charge and discretion, and he must
therefore deal with people’s property in just and fair manner, failing
which he or she would be personally liable for criminal breach of trust.
In the case of Common Cause, the apex court imposed a fine of Rs
50 lakh on Captain Satish Sharma, former petroleum minister in the P V
Narsimha Rao’s government for arbitrary exercise of discretionary power
of minister in allotment and distribution of petrol pumps and cooking gas
agencies; and ordered the central Bureau of Investigation.To probe into
the allotment scam and institute criminal proceedings for committing
breach of trust against Captain Satish Sharma for abuse of office during
his tenure as minister.
The bench consisting of justices Kuldeep Singh and Faizanuddin, setting
aside order of allotment of petrol pumps said”
Not only the relatives of most of the officials working for Captain
Satish Sharma but even his own driver and the driver of his additional
Private Secretary have been allotted a petrol pump and a gas agency
respectively……………. There is nothing on the record to indicate that
the Minister kept any criteria in view while making the
allotments………….. no criteria was fixed, no guidelines were kept in
view, none knew how many. petrol. pumps were available for allotment,
BY A P RANDHIR
applications were not invite and the allotments of petrol pumps were
made in an arbitrary and discriminatory manner.”
The court explained that in a welfare state the Government
provides a large number of benefits to the citizens and held:
“A Minister who is the executive head of the department concerned
distributed these benefits and largesse (generosity)s. He is elected by the
people and is elevated to a position where he holds a trust on behalf of the
people. He has to deal with the peoples’ property in a fair and just
manner. He cannot commit breach of the trust reposed in him by the
people.”
11.2 Shiv Sagar Tiwara v Union of India (1996) 6 SCC 558. The
decision was given by a bench consisting of Justices G. B. Pattnaik,
R. P. Sethi and Bisheswer Prasad Singh in 2002.
The apex court levied a fine of 60 lakhs on Mrs. Sheila Kaul,
former Union Minister for Housing and Urban Development and former
govermor of Himachal Pradesh and cancelled the allotment of 52 shops
and kiosks (stalls) for arbitrarily, oppressively and un-constitutionally
allotting the shops to her relatives, friends and staff members during her
tenure as Minister. The court directed the Government to formulate an
allotment policy within two months and complete the process of
allotment within four months.
Justice Kuldeep Singh and Justice Hansaria, while imposing the
fine said
BY A P RANDHIR
“Since the properties she was dealing with were Government
properties, the government by the people has to be compensated for
breach of public trust. Mrs. Kaul should pay for causing pecuniary loss to
the exchequer for action in an “oppressive and mala fide manner”, while
making shop allotments.
However the apex court in a review petition filed by Mrs. Kaul,
quashed the damages on compassionate ground having regard to the
peculiar facts and circumstances of Mrs. Kaul, who was stated to be old,
ailing and passing through great hardship.
It was thought that these decision have set at rest the controversy in
respect of exercise of discretionary power by the Ministers, Governors
etc., and have established jurisprudence of public accountability and
transparency in the Government’s working and would be an eye opener to
persons in high positions to exercise powers with restraint so as not to
make it farce and mockery of rule of law and democratic process. But to
the dismay of common man and disappointment to legal fraternity in a
review petition, a three member bench of the Supreme Court consisting of
the Justices Saghir Ahmed, Venkatswami and Rajendra Babu turned
down its earlier decision of November 4 1996 and ordered for the refund
of sum of Rs. 50 lakh to the petitioner and quashed the order of the court
for launching of prosecution against Capt. Sharma for criminal breach of
trust under section 406, IPC.
While endorsing the findings, it was found by the court that the
conduct of the Minister was wholly unjustified, the court said
nevertheless it falls short of “misfeasance”; and the petitioner “Common
Cause”, not being an applicant for allotment, it could not claim to have
BY A P RANDHIR
suffered any damage or loss on account of conduct of Minister. There has
to be an identifiable plaintiff or claimant whose interest are damaged by
the public officer (tort feaser) maliciously or with the knowledge that the
impugned section was likely to injure the interest of that person. As
regards the imposition of pecuniary damages, it was said by the court:
“State cannot derive itself the right of being compensated by its
officers on the ground that they had contravened or violated the
fundamental rights of a citizen. Directing the Minister to pay, a sum of 50
lakh to the Government, would amount to asking the government to pay
exemplary damages to itself, which is not tenable under law”.
Lastly, it was said by the court that the ‘Doctrine of Public Trust’ is
not applicable in the case of ministers in discharging their duties.
I fail to understand the logic of such a farfetched argument that
though the act of the Minister is wrong, it is not actionable, it also a
derogation from the maxim of ‘Ubi jus ibi remedium’, this should not be
so especially in a democratic country like India where public trust is the
breath of the system. With due respect to the court that in a democracy
the court cannot shirk from its constitutional responsibility by pleading its
inability to provide remedy applying the colonial theory of “the king can
do no wrong”. Another assumption of the court, that ‘the minister does
not assume the role of a trustee’ in the real sense, nor does a trust comes
into existence, is misleading. Moreover the fact that there is no injury to a
third person in the present case is not enough to make the principle of
public accountability inapplicable in as much as there was injury to the
high principle of public law, that a public functionary has to use its power
for the bona fide purpose and in a transparent manner.
BY A P RANDHIR
12. Criminal Breach of Trust by Public Servant or by Banker or by
Agent
Section 409 of IPC says – 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 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.
The acts of criminal breach of trust done by strangers is treated less
harshly than acts of criminal breach of trust on part of the persons who
enjoy special trust and also in a position to be privy to a lot of
information or authority or on account of the status enjoyed by them, say
as in the case of a public servant. That is why section 407 and 408
provide for enhanced punished of up to seven years (which is generally
three years or/with fine) in the case of commission of offence of criminal
breach of trust by persons entrusted with property as a carrier, wharfinger
or warehouse-keeper.
In respect of public servants a much more stringent punishment of
life imprisonment or imprisonment up to 10 years with fine is provided.
This is because of special status and the trust which a public servant
enjoys in the eyes of the public as a representative of the government or
government owed enterprises. Under section 409, IPC, the entrustment of
property or dominion should be in the capacity of the accused as a public
servant, or in the way of his business as a banker, merchant broker, etc.
BY A P RANDHIR
The entrustment should have nexus to the office held by the public
servant as a public servant. Only then this section will apply.
12.1 Superintendent and Remembrance of Legal Affairs v. S K Roy
,AIR 1974 SC 794.
In the case the accused a public servant in his capacity as a
Superintendent of Pakistan unit of Hindustan Co-operative Insurance
Society in Calcutta, which was a unit of LIC, although not authorized to
do so, directly realized premiums in cash from Pakistani policy holders
and misappropriated the amounts after making false entries in the relevant
registers.
To constitute an offence of criminal breach of trust by a public
servant under sec 409, IPC, the acquisition of dominion or control over
the property must also be in the capacity of a public servant. The question
before the court was whether the taking of money directly from the policy
holders, which was admittedly unauthorized, would amount to acting in
his capacity as a public servant. The Supreme Court held that it is the
ostensible or apparent scope of a public servant’s authority when
receiving the property that has to be taken into consideration. The public
may not aware of the technical limitations of the powers of the public
servants, under some internal rules of the department or office concerned.
It is the use made by the public servant of his actual official capacity,
which determines whether there is sufficient nexus or connection between
the acts complained of and the official capacity, so as to bring the act
within the scope of the section. So, in this case it was held that the
accused was guilty of the offence under sec 409.
BY A P RANDHIR
12.2 Dishonest Intention
Unless dishonest intention is shown, an offence under sec 405,
IPC, cannot be committed. Every breach of trust in the absence of mens
rea, is not criminal. The court should ascertain whether the state of mind
in which the accused was, did not exclude the existence of dishonest
intention which is an essential ingredient of the offence of criminal
breach of trust. Evidence is certainly relevant for purpose of ascertaining
whether the state of mind of accused render it possible or likely for him to
have entertained dishonest intention when he dealt with the moneys
entrusted to him. If the accused was really unable to form the criminal
intention, he cannot be guilty of the offence under section 406.
12.3 Mohanlal Mulchand v Mehta Kanaiyalal Pranshanker AIR
1950 Kutch 52, 51 Cr LJ 1139.
In the case certain title deeds were entrusted to the accused for the
purpose of making enquiries about some land. The accused did not return
the documents and said that he had lost the bundle and that the task was
not completed. It was found that the accused had used the title deeds to
harm the transferee. Under these facts, it was held that the offence was
complete when the documents were used to harm the transferee and that
taking of money was not necessary to constitute the offence.
12.4 Gopi Nath Tripathi v State of Orissa, 40 Cut LT 771.
The prosecution is not bound to establish the mode in which the
accused has appropriated the amount of entrustment. Dishonest
misappropriation may be inferred from the established facts. Dishonest
intention was held to have been proved in the case of a post master who
BY A P RANDHIR
entered an amount in the saving bank pass book of a depositor without
entering the same in his account book.
12 .5 Kotamsath Appanna v Koppoju AIR 1953 Nag 310.
Where the accused took a gold jewel from a goldsmith for showing
it to his wife and placing an order for a similar jewel but failed to return it
and retained it with him towards some debt due to him by the goldsmith
and claimed it to be his own, it was held that the accused was guilty of
dishonestly retaining it and claiming it to be his by misappropriating it.
Every breach of trust gives rise to a suit for damages, but it is only
when there is an evidence of mental act of fraudulent misappropriation
that the commission of embezzlement of any sum of money becomes a
panel offence punishable as criminal breach of trust. A mere breach of
contract is not synonymous with criminal breach of trust. It is the mental
act of fraudulent misappropriation that distinguishes an embezzlement,
amounting to a civil wrong or tort, from the offence of criminal breach of
trust. If there is no mens rea, or if other essential ingredients are lacking,
the same set of facts would not sustain a criminal prosecution though a
civil action may lie. A mere failure to repay the loan would not constitute
a criminal breach of trust. Where the managing agents acted dishonestly,
12. 6 Abhinash Chandra Sarkar v Emperor, 37 Cr LJ 439.
It was held that they were not liable for criminal breach of trust
even though there has been a breach of contract causing loss to the policy
holders of the company. The mere fact that the payment was delayed in
no ground for imputing a criminal intention on the part of the accused,
when there is no particular obligation to pay it at a certain date.
BY A P RANDHIR
12.7 G. Sagar Suri v.State of U.P. [2000 (2) SCC 636 and Indian Oil
Corporation vs. NEPC India Ltd. [2006 (6) SCC 736]
This Court has time and again drawn attention to the growing tendency of
complainants attempting to give the cloak of a criminal offence to matters
which are essentially and purely civil in nature, obviously either to apply
pressure on the accused, or out of enmity towards the accused, or to
subject the accused to harassment. Criminal courts should ensure that
proceedings before it are not used for settling scores or to pressurize
parties to settle civil disputes. But at the same, it should be noted that
several disputes of a civil nature may also contain the ingredients of
criminal offences and if so, will have to be tried as criminal offences,
even if they also amount to civil disputes.
12. 8 [2011] 8 S.C.R. 1 2 SUSHIL SURI v. C.B.I. & ANR. (Criminal
Appeal No. 1109 of 2011) MAY 6, 2011
The definition of “forgery” in Section 463 IPC is also very wide. The
basic elements of forgery are:
(i) the making of a false document or part of it and
(ii) such making should be with such intention as is specified in the
Section viz.
(a) to cause damage or injury to
(i) the public, or
(ii) any person; or
(b) to support any claim or title; or
(c) to cause any person to part with property; or
BY A P RANDHIR
(d) to cause any person to enter into an express or implied contract; or (e)
to commit fraud or that fraud may be committed.
In the instant case more than sufficient circumstances exist suggesting the
hatching of criminal conspiracy and forgery of several documents leading
to commission of the aforementioned Sections.
13 SOME JUDICIAL TREND
13.1 RAMESHBHAI VALLABHBHAI KORAT V. STATE OF
GUJARAT AND ANR. Year : 2012 Decided on : 24/7/2014
(A) Criminal Procedure Code, 1973 (2 of 1974) - Sec. 482 - Indian
Penal Code, 1860 (45 of 1860) - Secs. 465, 467, 468, 471, 120 & 34 -
Quashment of complaint - Lawyer issuing title clearance certificate which
turns out to be false - Held, lawyer cannot be held liable for forgery or
cheating for the same - Complaint quashed.
Case against the petitioner is only on account of giving title
clearance report by him. It is not in dispute that petitioner has not played
any role in preparing the power of attorney or other documents. So far as
preparing title clearance report is concerned, it is the say of the petitioner
that after verifying all relevant revenue entries and after giving
advertisement in the newspaper, he has given the certificate. Neither
examination of revenue entry nor giving of advertisement in newspaper
can be said to be sufficient to ascertain the status of the property. It is also
the say of the petitioner that he has made inspection in Sub-Registrar
office before giving his opinion. (Para 8)
13.2 C.B.I., Hyderabad v. K. Narayana Rao, 2012 (9) SCC 512
As stated above, there is no case of prosecution against the present
petitioner. The only case is giving title clearance report by the petitioner.
The report given by the petitioner turn out to be inaccurate. Petitioner
ought to have taken proper care. At worst, petitioner can be said to have
BY A P RANDHIR
shown negligence. In the circumstances of the case, petitioner cannot be
held liable for forgery or cheating. (Para 9)
13.3 SURESHBHAI @ KALI JAYANTIBHAI AHIR V. STATE OF
GUJARAT AND ORS. SP. CRI. APP.MISC. No : 5472 Year : 2012
Decided on : 13/9/2013
(A) Criminal Procedure Code, 1973 (2 of 1974) - Sec. 482 - Indian
Penal Code, 1860 (45 of 1860) - Secs. 420, 465, 467, 468, 471, 114 &
120-B - Quashment of complaint - Allegations that accused sold away
land by forged and fabricated Power of Attorney of owner - Confirmation
deed by son of donor that Power of Attorney genuine - Opinion by hand-
writing expert that signature on Power of Attorney not genuine - Held,
merely because allegations involves dispute of civil nature or civil suits
filed by complainant side investigation cannot be scuttled - Petition
dismissed.
There could be cases and cases related to civil dispute which may
simultaneously and inherently also have ingredients and elements of
criminal offence. Instances of such cases can be found where the dispute
arise from commercial transactions which are assailed on ground of fraud
or cheating or in cases of sale of immovable property (e.g. land,
residential premises, commercial premises, etc.) and in some cases family
disputes related to ancestral properties or family business, etc. In such
cases, there would be elements of civil nature and ingredients of offence
as well, e.g. criminal breach of trust, criminal trespass, forged/fabricated
documents, such as sale-deed or Power of Attorney or any other
deed/agreement so as to earn undue gain. In such cases, allegations of
civil dispute and criminal offence would run parallel and simultaneous
and when such cases are brought before the Court with a prayer to
exercise jurisdiction under Sec. 482 of the Code and quash the complaint,
then merely because the allegations involve and reflect dispute of civil
nature, the ingredients or traits or elements of criminal offence cannot be
overlooked or ignored and only on that ground, the complaint/F.I.R.
cannot be quashed, without any other strong supervening facts and
BY A P RANDHIR
circumstances which may ex??facie demonstrate that the alleged offence
is not made out. (Para 20)
When the submissions with reference to the report/opinion of hand-
writing expert are considered and examined in light of the above??quoted
observations by Hon'ble Apex Court, then it becomes clear that this Court
cannot pronounce or record any opinion on that count at this stage and the
said report justifies the need for investigation and persuades the Court to
not interfere under Sec. 482 of the Code, with the investigation or the
proceedings, at this stage. In view of this Court, this is not a fit case to
exercise the said inherent power to scuttle investigation as directed by the
learned Magistrate vide order dated 18-4-2012 and/or to embark upon the
process of analyzing the case of the complainant in light of all
probabilities or to examine whether the disputed documents, viz. Power
of Attorney and/or the will, are forged/fabricated or not and the quality of
the evidence cannot be tested by this Court at this stage. This Court has to
refrain from entering into examination of merits and demerits of the
allegations.(Para 25)
What emerges from the principle explained by the Hon'ble Apex
Court in the above??quoted observations is that it would not be proper for
the Court, in exercise of jurisdiction under Sec. 482 of the Code, to enter
into the process of determining how weighty the defence raised on behalf
of the accused is or evaluating the allegations. (Para 11.2)
The powers vested in the High Court under Sec. 482 of the Code,
when exercised, have far-reaching consequences, most important being
the consequence that it would negate the prosecution's/complainant's case
without allowing the prosecution/complainant to lead evidence and that,
therefore, the exercise of the said powers should be with utmost caution,
care and circumspection. (Para 11.4)
13.3 SANGEETABEN MAHENDRABHAI PATEL V. STATE OF
GUJARAT AND ANR. CRIMINAL APPEAL No : 645 Year : 2012
Decided on : 23/4/2012
(A) Constitution of India, 1950 - Art. 20(2) - Criminal Procedure Code,
1973 (2 of 1974) - Sec. 300 - Negotiable Instruments Act, 1881 (26 of
BY A P RANDHIR
1881) - Sec. 138 - Indian Penal Code, 1860 (45 of 1860) - Secs. 71, 407,
420 & 114 - Double jeopardy and issue estoppel - Held, person tried for
offence of dishonour of cheque can be again tried for offences of criminal
breach of trust, cheating and abetment - In order to attract bar against
prosecution under Art. 20(2) of Constitution/Sec. 300 of Cr.P.C.,
ingredients of offence in earlier as well as in latter case must be same and
not different - Test to ascertain same is not identity of allegations but
identity of ingredients - Motive is not an ingredient - Further, distinction
between issue estoppel and double jeopardy explained - Judgment by
High Court of Gujarat confirmed.
The law is well settled that in order to attract the provisions of Art.
20(2) of the Constitution i.e. doctrine of autrefois acquit or Sec. 300 of
Cr.P.C. or Sec. 71 of I.P.C. or Sec. 26 of General Clauses Act, ingredients
of the offences in the earlier case as well as in the latter case must be the
same and not different. The test to ascertain whether the two offences are
the same is not identity of the allegations, but the identity of the
ingredients of the offence. Motive for committing offence cannot be
termed as ingredients of offences to determine the issue. The plea of
autrefois acquit is not proved unless it is shown that the judgment of
acquittal in the previous charge necessarily involves an acquittal of the
latter charge. (Para 24)
Admittedly, the appellant had been tried earlier for the offences
punishable under the provisions of Sec. 138 of N. I. Act and the case is
sub-judice before the High Court. In the instant case, he is involved under
Sec. 406/420 read with Sec. 114 of I.P.C. In the prosecution under Sec.
138 of N. I. Act, the mens rea i.e. fraudulent or dishonest intention at the
time of issuance of cheque is not required to be proved. However, in the
case under I.P.C. involved herein, the issue of mens rea may be relevant.
The offence punishable under Sec. 420 of I.P.C. is a serious one as the
sentence of 7 years can be imposed. In the case under N. I. Act, there is a
legal presumption that the cheque had been issued for discharging the
antecedent liability and that presumption can be rebutted only by the
person who draws the cheque. Such a requirement is not there in the
offences under I.P.C. In the case under N. I. Act, if a fine is imposed, it is
BY A P RANDHIR
to be adjusted to meet the legally enforceable liability. There cannot be
such a requirement in the offences under I.P.C. The case under N. I. Act
can only be initiated by filing a complaint. However, in a case under the
I.P.C. such a condition is not necessary. (Para 27)
There may be some overlapping of facts in both the cases but
ingredients of offences are entirely different. Thus, the subsequent case is
not barred by any of the aforesaid statutory provisions. (Para 28)
13.4 PRAKASH RAMCHANDRA BAROT AND ORS. V. STATE
OF GUJARAT AND ANR. MISC. CRIMINAL APPLICATION No :
2780 Year : 2011 Decided on : 18/8/2011
(A) Criminal Procedure Code, 1973 (2 of 1974) - Sec. 482 - Indian
Penal Code, 1860 (45 of 1860) - Secs. 465, 467, 468 & 471 - Dispute
pertained to immovable property - No substance found in the allegations
that accused had indulged in cheating, made a false document or that
there was criminal breach of trust - Suits in respect of the dispute pending
in Civil Court - Allegations in the F.I.R. and other material did not
disclose cognizable offence - F.I.R. quashed.
If on a consideration of the relevant materials, the Court is satisfied
that the offence is disclosed, the Court will normally not interfere with
the investigation into the offence and will generally allow the
investigation into the offence to be completed for collecting materials for
proving the offence. If, on the other hand, the Court on a consideration of
the relevant materials is satisfied that no offence is disclosed, it will be
the duty of the Court to interfere with any investigation and to stop the
same to prevent any kind of uncalled for and unnecessary harassment to
an individual. (Para 14; See also 12 and 13)
It is not in dispute that the sale-deed has been executed by the
original owners with their genuine signatures. What is disputed is the
right, title and interest of the original owners to execute the sale-deed for
the second time in favour of accused Nos. 1 and 2. This by itself will not
render the sale-deed of the year 1995 a false document within the
meaning of Sec. 464 of the Code so as to constitute offences punishable
under Secs. 465, 467, 468, 471 of I.P.C. (Para 15)
BY A P RANDHIR
At the time when the sale-deed was executed in favour of accused
Nos. 1 and 2 by the original owners i.e. in the year 1995, the sale-
transaction of 1982 was already declared to be hit by the provisions of
Sec. 63 of the Tenancy Act. It is not clear and not explained by the first
informant as to how the order dated 19th November, 1983 declaring the
sale in favour of the Society as invalid was challenged in the year 1996,
though the sale has been validated subsequently. (Para 16)
When the entire matter revolves around the right, title and interest
in the subject land and when the parties are already before the Civil Court
past 14 years and the revenue proceedings have also been undertaken,
continuation of such a prosecution will definitely amount to gross abuse
of process of law. (Para 19; See also Para 21)
To hold a person guilty of cheating, as defined in Sec. 415 of the
I.P.C., it is necessary to show that at the time of making the promise, he
had fraudulent or dishonest intention to retain the property or to induce
the person so deceived to do some thing which he would not otherwise
do. (Para 24; Para 27)
13.5 POONAM CHAND JAIN AND ANR. V. FAZRU CRIMINAL
APPEL No : 203 Year : 2010 Decided on : 28/1/2010
(A) Criminal Procedure Code, 1973 (2 of 1974) - Secs. 200 & 203 -
Filing of second complaint after dismissal of first complaint - Held,
though there is no bar to entertain second complaint, the same should be
entertained only in exceptional circumstances i.e. (a) where the previous
order was passed on incomplete record, or (b) on a misunderstanding of
the nature of the complaint, or (c) the order which was passed was
manifestly absurd, unjust or foolish, or (d) where new facts which could
not, with reasonable diligence, have been brought on the record in the
previous proceedings - Principle laid down in Pramatha Nath Talukdar v.
Saroj Ranjan Sarkar, AIR 1962 SC 876, reiterated.
(B) Indian Penal Code, 1860 (45 of 1860) - Secs. 406, 420 & 465 -
Criminal Procedure Code, 1973 (2 of 1974) - Secs. 200 & 203 -
Complaint filed for cheating and dishonestly inducing to deliver property
and executing fraudulent sale-deeds - Complaint dismissed by the
BY A P RANDHIR
Magistrate after elaborate discussion on merits - Second Complaint filed
on identical grounds without disclosing any new facts - Held, Second
Complaint could not be entertained, hence dismissed.
13.6 LALITBHAI BHANUBHAI LIMBASIA vs. STATE OF
GUJARAT AND ANR CRIMINAL REVISION APPLICATION No
: 85 Year : 2001 Decided on : 3/9/2003
(A) Negotiable Instruments Act, 1881 (XXVI of 1881) - Sec. 138 -
Indian Penal Code, 1860 (XLV of 1860) - Secs. 406 and 420 - Where
goods are sold on credit, mere non-payment of the sale price would not
constitute an offence of criminal breach of trust or cheating as there is no
entrustment of goods nor there is delivery of goods as a result of
inducement - Framing of charge illegal.
When there is a contract for sale and purchase of a property, it is a
matter of sale against consideration, and therefore, the property cannot be
said to have been entrusted temporarily, for a limited purpose for a
limited object. In the present case the fertilizers were sold on credit.
Therefore, it cannot be said that there was entrustment of the said
property by the second respondent to the petitioner. When entrustment is
not there, then, an offence punishable under Sec. 406 of I.P.C. cannot be
said to have been committed. (Para 7)
The discussion makes it clear that so far as the offence punishable
under Sec. 406 of I.P.C. is concerned, it cannot be said to have been made
out, as there was no case of entrustment of any property. So far as the
offence punishable under Sec. 420 of I.P.C. is concerned, it also cannot
be said to have been made out in the absence of a case of inducement at
the time when the contract of sale and purchase took place. Mere non-
payment is not sufficient to hold even prima facie that there is a case of
cheating. Bouncing of cheque will not be sufficient to infer a case of
inducement. In view of the matter, when these two offences have not
been prima facie made out, then there is no reason, as to why the
prosecution should proceed ahead against the petitioner. In that view of
BY A P RANDHIR
the matter, when no offence is made out, the petitioner was required to be
discharged by the trial Court. (Para 15)
13.7 STATE OF GUJARAT V. GANPATBHAI KANTIBHAI PATEL
CRIMINAL APPEAL No : 938 Year : 2003 Decided on : 10/2/2010
(A) Indian Penal Code, 1860 (45 of 1860) - Secs. 408, 409, 406, 405 &
477A - Confessional statement by accused recorded by Auditor, held, is a
weak piece of evidence and not sufficient to establish charge of
misappropriation in absence of corroboration - Acquittal confirmed.
13.8 STATE OF GUJARAT vs. ISHWARLAL KHUMCHAND
SHAH CRIMINAL APPEAL No : 1256 Year : 1984 Decided on :
22/12/1992
(A) CRIMINAL PROCEDURE CODE, 1973 (II OF 1974) - Sec. 408 -
Appeal against Acquittal - It is a settled position of law that unless and
until perversity is successfully pointed out or unreasonableness in the
assessment of evidence is successfully spelt out, it would not be
expedient and safe for the appellate Court to interfere with the acquittal
recorded by the trial Court even if a different view is possible on the
evidence on record.
(B) CRIMINAL TRIAL - Circumstantial evidence alone - Conviction
could be based on circumstantial evidence in absence of direct evidence -
But in such a case each of the circumstance relied upon must be clearly
established and the proved circumstances taken together must be such as
reasonably to exclude the probability of innocence.
(C) INDIAN PENAL CODE, 1860 (XLV OF 1860) - Sec. 201 - For
securing a conviction under Sec. 201 - It must be shown to the
satisfaction of the Court that the accused knew or had reason to believe
that an offence had been committed and having got this knowledge, tried
to screen the offence by disposing of the incriminating material.
(D) INDIAN PENAL CODE, 1860 (XLV OF 1860) - Sec. 408 - Criminal
breach of trust - To constitute an offence of criminal breach of trust there
ought to be a dishonest misappropriation by a person in whom confidence
is placed as to custody or management of property in respect of which
BY A P RANDHIR
breach of trust is charged - Thus entrustment of property or dominion
over property and dishonest misappropriation or conversion to his own
use by the person entrusted are necessary ingredients to be proved by the
prosecution beyond reasonable doubt.
(E) INDIAN PENAL CODE, 1860 (XLV OF 1860) - Sec. 477A -
Falsification of accounts - The offence is complete when accounts are
falsified with an intention to defraud - Alteration of accounts made after
misappropriation will come within this section if it is part of the scheme
to deprive another of his money.
13.9 Parminder Kaur vs State Of U.P. & Anr on 26 October, 2009
2010 CR.L.J 895 SC
To attract the second clause of Section 464 there has to be alteration of
document dishonestly and fraudulently. So in order to attract the clause
"secondly" if the document is to be altered it has to be for some gain or
with such objective on the part of the accused. Merely changing a
document does not make it a false document. Therefore, presuming that
the figure "1" was added as was done in this case, it cannot be said that
the document became false for the simple reason that the appellant had
nothing to gain from the same. She was not going to save the bar of
limitation.
The last offence which is alleged against the appellant is Section
471 IPC. This section is not applicable in the case of the appellant for the
simple reason that we have already found that there was no dishonest
intention on the part of the appellant nor had she acted fraudulently. This
Section applies only in case of the use of a forged document as a genuine
document. Since we have found that there is no element of forgery at all,
there would be no question of there being any valid allegation against the
appellant.
BY A P RANDHIR
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