Criminal Misappropriation

Sec. 403: Whoever dishonestly misappropriates, or converts to his own use, or causes any
other person to dispose of, any property, shall be punished with imprisonment of not less
than six months and not more than five years, with whipping and a fine.
- Sohan Lal v Emperor: To misappropriate means to set apart for or assign to the wrong
person or a wrong use and this act must be done dishonestly.
- Tuan Puteh v Dragon: Misappropriation means the retention of goods by the wrong
person to the exclusion of the rightful owner.

- ‘Conversion’ is any act in relation to the goods of a person which constitute an

unjustifiable denial of his title to them.
- Seng Peng Sawmill: If denial of title is justified, then there is no conversion.
- AG v Menthis: The mere taking is insufficient to indicate a conversion because it may
be a neutral act consistent with an innocent taking with a view to returning the goods
to the lawful owner.

- The offence is committed when the property is misappropriated or converted by the

accused to his own use or when the accuse causes any person to dispose of it.
- Durugappa v State of Mysore: The accused must actually deal with the property or use
it in a manner that is inconsistent with the rights of the owner.

- The essence of the offence is that the property of another comes into the possession
of the accused in a neutral manner and is misappropriated or converted to his own
use.
- Bhagiram Dome v Abar Dome: When possession had been innocently acquired,
but subsequent retention was with dishonest intention, criminal
misappropriation arises.
- Rex v Batly: Even if misappropriation was for a short time, there will still be
criminal misappropriation.

- Explanation 2 to Sec. 403: A person is guilty of the offence if he appropriates the goods
to his own use when he knows or has the means of discovering the owner. It is not
necessary for the finder to know the owner. It is sufficient if, at the time of
appropriating it, he does not believe the goods to be his own property or in good faith
believes that the real owner cannot be found – Illustrations (b), (c), (d), (e), (f)

- Bandhu: There can be no criminal misappropriation of things which have been

abandoned – Illustration (a) of Sec. 403
- The property must have its owner to render a person guilty of
misappropriation. If the property is abandoned, anyone who finds and takes it
acquires a right to it.
- Glyd: When a thing is accidentally lost, the property is not abandoned but remains in
the owner who lost it.
Criminal Breach of Trust
Sec. 405: Whoever, being in any manner entrusted with property, or with any dominion over
property either solely or jointly with any other person, 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’.
In order to establish the offence of criminal breach of trust, there are four elements which
must be fulfilled:
The accused was entrusted with the property or with dominion over the property:
- Entrustment
- Emperor v J Mac Iver: The person handing over the property must have
confidence in the person taking the property so as to create a fiduciary
relationship between them.
- CM Narayan: The ownership or beneficial interest in the property must be in
some person other than the accused and he holds it for that person’s benefit.
- Harihar Prased Dubey v Tulsi Das Mundha: The person who transfers
possession of the property to another still remains the legal owner of the
property; and the person in whose favour possession is so transferred has only
the custody of the property to be kept or disposed by him for the benefit of
the other party.

- Chin Ted Lit: The appellant was at all material times, the officer in charge of the
Sarawak Electricity Supply Corporation (SESCO) in Serian, East Malaysia. He
attended to a report of damaged electricity wire at a house. He agreed to
repair the wire for RM350, which when paid to him was clearly meant for
SESCO, and he held the money in trust for SESCO. However, no receipt of
payment was issued. Held: The appellant was found guilty under Sec. 405.

- Bahru Zaman bin Ali: The appellant was a clerk in Parcels Office, Malayan
Railways. A passenger handed 50 cents to him in demurrage charge, but was
not given any receipt. When questioned, the appellant denied receiving any
money. Held: When the money is given to any person in his official capacity,
whether he has a right to take it or not, he is entrusted with it within the
meaning of the section.

- Chin Wah: The complainant lent her gold necklace to the accused in order for
his wife to wear it at a party. The necklace was not returned to the complainant
despite frequently asking for its return, and eventually the accused admitted
that he had pawned it. Held: The evidence proved that the accused had
dishonestly converted the property to his own use.
 - Hussin Mohd Rejab: A manager of a firm cannot be liable for breach of trust
where there was no personal entrustment of the money to him, but to the
firm. The mere conduct of the manager influencing his officers into making the
payment of an ‘advance’ to him is not necessarily an offence.

- Entrustment also applies for the purpose of an illegal transaction.

- R v Tan Ah Seng: The accused had received $40 to rent a house to be used by
prostitutes. He misappropriated the money. Held: The phrase ‘in any manner
entrusted’ was wide enough to cover money entrusted to a person for an
illegal purpose.

- Dominion
- The factor that determines whether there is entrustment or dominion over
property is the degree of control exercised by the offender.
- A person who has a greater responsibility, has more dominion over the
property.

- Sinnathamby: The appellant was an employee of a Public Works Department

quarry. He received $10 from a contractor in return for leaving some stones in
a place where it was later recovered.
- Held: Sec. 405 applies in cases where:
- The exercise of possession of dominion over property is one of
the legal incidents of the contract of service
- By virtue of the existence of the contract of service, the accused
is in a position to exercise dominion
- Thus, even if there was no entrustment of property, the accused had
dominion over it.

- Yeoh Teck Chye: The second accused, the manager of a bank, with the
knowledge of the first accused, the Deputy General Manager, had granted
overdraft facilities for amounts in excess of the approved limits to the third
accused. However, he had no such authority to approve these excess
overdrawn amounts. Held: There had been entrustment to or dominion over
the property of the bank and that the second accused had no authority to allow
the overdrawn amounts.
The accused had a dishonest intention:
- Sathiadas: The dishonest use of the property is regarded as a violation of the direction
relating to the mode in which the trust is to be discharged.

- Mohamed Adil: The non-accounting of or the temporary retention of property

entrusted is not sufficient evidence.
 - The dishonesty may be inferred from the circumstances surrounding the non-
accounting of the property.
- Ibrahim Musra: The accused was the chief cashier of Sabah Bank Bhd. He did
not report the shortage of RM 38,901.64, which was required as banking
practice. He was unable to explain the shortage when asked. Held: Actual
conversion may be inferred from the conduct of the accused such as his failure
to report the missing money, failure to forward soiled and mutilated notes to
Bank Negara etc.
- Wong Kim Fatt: Failure of the accused to account (give reason) for the money
proved to have been received by him or the act of giving a false account as to
its use is generally a strong circumstance against him.
The accused had committed dishonest misappropriation, conversion or disposal:
- Mohamed Adil: Where the appellant, a headmaster, had deducted certain sums from
teachers’ salaries as their contributions to a co-operative society, but never remitted
the money to the society, the appellant was found justly convicted.
The accused had dishonestly misappropriated, converted or disposed the property in
violation of any direction of law or legal contract (If any):

- Murni bin Haji Mohamed Taha: The appellant, a paymaster of an army camp, was
entrusted with sums of money and was to use cheques issued by the Treasury to pay
serving soldiers. Discrepancies were revealed and the appellant was convicted on
charges of criminal breach of trust. The issue was whether he had used or disposed of
the property in violation of any law or contractual term. The contractual terms
included a direction for the officer to follow the State Financial Regulations. Held: The
appellant had violated a term of his employment contract which obliged him to follow
the State Financial Regulations.

Wilfully suffers any other person to do so (Only if applicable):

- Where a person who has been entrusted with or has dominion over the property has
allowed another person to misappropriate, convert or dispose of it in violation of any
law or legal contract.
- Yeow Fook Yuen: The conviction of the accused was upheld where he, as the treasurer,
wilfully suffered the secretary to dishonestly misappropriate $7,500 from the funds of
the union without any authority, instead of banking it into the union’s bank account.
Defence of consent

- Periasamy Sinnappan: The Board of Directors had a general meeting and ratified the
act of the accused. This amounted to a consent.
- Consent is a defence which can be given before and after
Sec. 406: Punishment for criminal breach of trust – 10 years imprisonment, whipping and fine.