CAHPTER XVII

Of Offnces against Property

Of Criminal Breach of Trust
S. 405. 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 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."
Explanation 1:— A person, being an employer, of an establishment
whether exempted under Section 17 of the Employees Provident Funds and
Miscellaneous Provisions Act, 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 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 law, shall be
deemed to have dishonestly used the amount of the said contribution in
violation of direction of law as aforesaid.
Explanation 2:— A person, being an employer, who deducts the
employee's contribution from the wages payable to the employee for credit
to the Employee's 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 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.
Illustrations
 (a) A, being executor to the will of a deceased person, dishonestly
disobeys the law which directs him to divide the effects according to
the will, and appropriates them to his own use. A has committed
criminal breach of trust.
(b) A is a warehouse-keeper. Z, going on a journey, entrusts his
furniture to A, under a contract that it shall be returned on payment
of a stipulated sum for warehouse-room. A dishonestly sells the
goods. A has committed criminal breach of trust.
(c) A, residing in Calcutta, is agent for Z, residing at Delhi. There is an
express or implied contract between A and Z, that all sums remitted by
Z to A shall be invested by A, according to Z's direction, Z remits a lakh
of rupees to A, with directions to A to invest the same in Company's
paper. A dishonestly disobeys the directions, and employs the money in
his own business. A has committed criminal breach of trust.
(d) But if A, in the last illustration, not dishonestly but in good faith,
believing that it will be more for Z's advantage to hold shares in the
Bank of Bengal disobeys Z's directions, and buys shares in the Bank
of Bengal, for Z, instead of buying Company's paper. Here though Z
should suffer loss, and should be entitled to bring a civil action
against A, on account of that loss, yet, A, not having acted
dishonestly, has not committed criminal breach of trust.
(e) A, a revenue officer, is entrusted with public money and is either
directed by law, or bound by a contract, express or implied, with the
Government, to pay into a certain treasury all the public money
which he holds. A dishonestly appropriates the money. A has
committed criminal breach of trust.

(f) A, a carrier, is entrusted by Z with property to be carried by land or

by water. A dishonestly misappropriates the property. A has
committed criminal breach of trust.

S. 409. 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 te n years, and shall also be
liable to fine.

Of Cheating
S. 415. Cheating:—
Whoever, by deceiving any person, fraudulently or dishonestly induces the
person so deceived to deliver any property, to any person, or to consent that
any person shall retain any property, or intentionally induces the person so
deceived to do or omit to do anything which he would not do or omit if he were
not so
deceived, and which act or omission causes or is likely to cause damage or
harm to that person in body, mind, reputation or property, is said to "cheat"•
Explanation:— A dishonest concealment of facts is a deception within
the meaning of this section.
Illustrations
(a) A, falsely pretending to be in the Civil Service, intentionally
deceives Z, and thus dishonestly induces Z to let him have on credit
goods for which he does not mean to pay. A cheats.
(b) A, by putting a counterfeit mark on an article, intentionally deceives
Z into a belief that this article was made by a certain celebrated
manufacturer, and thus dishonestly induces Z to buy and pay for the
article. A cheats.
(c) A, by exhibiting to Z a false sample of an article, intentionally
deceives Z into believing that the article corresponds with the
sample, and thereby dishonestly indüces Z to buy and pay for article.
A cheats.
(d) A, by tendering in payment for an article a bill on a house with
which A keeps no money, and by which A expects that the bill be
 dishonoured, intentionally deceives Z, and thereby dishonestly
induces Z to deliver the article, intending not to pay for it. A cheats.
(e) A, by pleadging as diamonds, articles which he knows are not
diamonds, intentionally deceives Z, and thereby dishonestly induces
Z to lend money. A cheats.
(f) A intentionally deceives Z into a belief that A means to repay any
money that Z may lend to him and thereby dishonestly induces Z to
lend him money, A not intending to repay it. A cheats.
(g) A intentionally deceives Z into a belief that A means to deliver to Z a
certain quantity of indigo plant which he does not intend to deliver,
and thereby dishonestly induces Z to advance the faith of
such delivery. A cheats; but if A, at the time of obtaining the money,
intends to deliver the indigo plant, and afterwards breaks his contract
and does not deliver it, he does not cheat, but is liable only to a civil
action for breach of contract.
(h) A intentionally deceives Z into a belief that A has performed A's part
of a contract made with Z, which he has not performed, and thereby
dishonestly induces Z to pay money. A cheats.

(i) A sells and conveys an estate to B. A, knowing that in consequence

of such sale he has no right to the property, sells or mortgages the
same to Z, without disclosing the fact of the previous sale and
conveyance to B, and receives the purchase or mortgage money from
Z. A cheats.
QUESTIONS AND ANSWERS
Q. 55. Gopal whilegoing Olt a journey entrusts his gold chain to Venu
till his return. Venu sells away thatgold chain. What offence, ifany, can be
said to have been committed by ; Venu' ? Explain with reasons? [Oct.
20071
Ans.: Section 405 IPC deals with criminal breach of Trust.
Section 405 IPC runs as under:—
 "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"
To constitute the offence u/s 405 IPC the following are required:-
(1) The accused must be entrusted with some property or with any
dominion over or.
(2) The accused must dishonestly misappropriate or convert
suchproperty to his own use; or
(3) The accused must dishonestly use or dispose of such property or
willfully suffer any other person so to do in violation of any
direction of the law or of any legal contract of trust.
Under Sec. 405 IPC the accused must have been entrusted with
property or dominion over it. The accused must have misappropriated the
property or disposed of that property in violation of such trust. Under this
section, as long as the accused is given possession of the property for a
specific purpose or to deal with it in a particular manner he can said to
have been entrusted with that property. Criminal or dishonest intention is
the gist of the offence of criminal breach of trust.
The offence of criminal breach of Trust could be committed against both
movable and immovable property. Section 406 IPC deals with punishmen t for
criminal breach of Trust,
Illustration (b) under Sec. 405 IPC is relevant for the purpose of the problem
under this question. It shows that 'A' is a warehouse-Keeper. '2' going on a
journey entrusts his furniture to 'A' under a contract that it shall be returned
on payment of a stipulated sum for ware house-room, 'A' dishonestly sells
the goods. 'A' has committed criminal breach of trust.
 In the given problem, Gopal while going on a Journey entrusted his gold
chain to 'Venu' till his return. Venu sold away the gold chain. On this there
is entrustment of gold chain by Gopal to Venu. Venu dishonestly sold away
the gold chain criminally or dishonestly. Illustration (b) snown under Sec.
405 IPC clearly attracts. Venu has committed an offence of criminal breach
of trust. He is liable to punishment u/s. 406 IPC.

Q. 56. What is the difference between the offences of criminal breach of trust
and cheating ? [Year 19871
Ans. Section 405 IPC defines criminal breach of trust as under :
"405. Criminal breach oftrust: — 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 wilfully suffers any other
person so to do, commits "criminal breach of trust".
Explanation 1:— A person, being an employer of an establishment
whether exempted under Section 17 of the Employees Provident Funds and
Miscellaneous Provisions Act, 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 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 law, shall be
deemed to have dishonestly used the amount of said contribution in
violation of direction of law as aforesaid.
Explanation 2:— A person, being an employer, who deducts the
employee's Contribution from the wages payable to the employee for credit to
the Employee's
State 'Insurance Fund held and administered by the Employees State Insurance
Corporation established under the Employees' State Insurance Act, 1948 (34
of 1948), shall be deemed to have been entrusted with the amount of the
contribution so deducted by 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."
Section 415 IPC, defines cheating as follows :
"415. Cheating:— Whoever, by deceiving any person, fraudulently
or dishonestly induces the person so deceived to deliver any property,
to any person, or to consent that any person shall retain any property,
or intentionally induces the person so deceived to do or omit to do
anything which he would not do or omit if he were not so deceived,
and which act or omission causes or is likely to cause damage or harm
to that person in body, mind, reputation or property, is said to "cheat".
Explanation:— A dishonest concealment of facts is a deception within
the meaning of this Section.
The difference between criminal breach of trust and cheating are given as follows:
Criminal breach of Trust Cheating
(1) (2)
(1) The accused is entrusted with (1) The accused comes into the
the property by the employer possession of the property by
himself for any purpose. deception.
(2) The property must be
(2) The property must be movable.
movable or immovable.
(3) The accused should deceive
(3) The dishonest
any person fraudulently or
misappropriation of property dishonestly by the accused in
entrusted to the accused cheating.
should be there to constitute
criminal breach of trust.
 Q. 57. Is the offence ofcriminal breach oftrust by public servant or by
Banker friable by the Court ofMagistrate of the First Class? Can the
Magistrate impose sentence of life imprisoniltent? [Year 19971
Ans. Q.NO. 13 ofCr.P.C. at page No. 86.

Q. 58. The accused was a Superintendent of an Insurance Society which

was a tiliit of the Life Insurance Corporation. Though under the internal
rules of the office relating to distribution ofduties, it was not strictly within
the scope ofhis authority or duty to accept the amounts, the accused
collected premiums from the policy holders, issued receipts and after
making false adjustments in the records, misappropriated the amounts
collected by him, The policy holders assumed that he had the authority to
collect the premiums as he was a Superintendent in the Office. The
Sessions Judge acquitted him of the charge u/ s. 409 1.P.C. on the ground
that the money was not entrusted to him in his capacity as a public servant
as he was not authorised by the rules to receive the money. Was the
Sessions Judge right? [Year 19781
Ans. Section 409 IPC deals with punishment for criminal breach of trust
by public servant, or by banker, merchant or agent. In order to bring home
the offence u/s. 409 IPC the prosecution has first to establish that the person
charged with the offence was in any manner entrusted with the property.
The prosecution has to further establish that the property has been either
misappropriated or converted to his use by the accused, or that he
dishonestly used or disposed 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 had made touching the discharge of such trust or he wilfully
suffered any other person so to do.
In the given case, as per the internal rules, the accused was not
authorised to accept the amounts from the policy holders. The accused
collected the premium from the policy holders, issued receipts. He also
made false adjustments in the records. In view of the ingredients of Sec.409
and the evidence it reveals that the accused cannot be deemed to have been
entrusted with the amounts, as he had no authority to receive funds as per
the internal rules of the office relating to distribution of duties. It may
amount to cheating or any other offence but does not amount to an offence
u/s. 409 IPC, because entrustment is not proved under this section. See the
Case Law Tilak Ram vs. State of 1969 Crl.L.J. 682 (All.).
 Q. 59. The accused, a village Munsif, whose duty was to collect land
revenue from ryots and remit the same into the Treasury, collected land revenue
of Rs.100/- Rs. 150/- Rs. 200/-fr0111 three ryots but failed to remit the
amounts into the Treasury. This fact was discovered by the Tahsildar about a
year later at the time of checking the village accounts. The Tahsildar
immediately gave a report to the police. Oli the next day, however, the accused
remitted the entire amount into the Treasury. After completing the investigation
the police filed a charge sheet against the accused for an offence under Section
409 1.P.C. It was argued for the accused that there was no misappropriation
since the amounts were made good, though late. It was also argued that the
prosecution should fail as the precise mode of conversion or misappropriation
was not proved. Consider the arguments advanced for the accused ? [Year
1972]
Ans: The Section 409 IPC requires—
(1) Entrusting any person with property or with any dominion over
property.
(2) The person entrusted (a) dishonestly misappropriating or
converting to his own use that property; or (b) dishonestly using
or disposing of that property or wilfully suffering any other
person so to do in violation—
(i) of any direction of law prescribing the mode in which such
trust is to be discharged; or
(ii) of any legal contract made touching the discharge of such
trust.
In this case admittedly Village Munsif is a public servant. When he collec ts
land revenue, money is entrusted to him for remitting the same into the
Treasury as per the rules in force. The Village Munsif in this case collected
land revenue from 3 persons and kept it with him for about one year. On
pointing out the same by the Tahasildar, the Village Munsif remitted the
amount to Government. In this case though it is not necessary to prove in which
manner, the accused has dealt with or appropriated the money, the question is
one of intention and not direct p roof• The fact that one year has elapsed before
the amount is remitted back into the Treasury does not mitigate the offence.
The time lapse may clearly raise a prosecuti011 that he has misappropriated the
amount. Precise mode of conversion or misappropriation of property entrusted
need not be proved. Any overt act like
not accounting for the money in the register and retention of money for one
year with him, justify a finding that the accused definitely had the intention
of wrongfully keeping Government out of the money. Hence delay in
payment of money entrusted does not by itself always furnish a sufficient
proof of misappropriation. Mere deposit of money apparently made to avoid
prosecution does not help the accused, as misappropriation can always be
temporarily. The prosecution has proved the element of dishonesty to sustain
criminal breach of trust i.e. offence under Section 409 IPC.