Section 405 of Indian Penal Code and case laws

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 (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 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 a direction of law as aforesaid.

Explanation 2. - A person, being an employer, who deducts the employees' 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 (34 of 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.

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 appropriate 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 direction 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. Comments Criminal Conspiracy Sanction for prosecution is not necessary if a public servant is charged for offence of entering into a criminal conspiracy for committed breach of trust; State of Kerala v. Padmanabham Nair, 1999 Cr LJ 3696 (SC). Criminal breach of trust: Meaning and extent It must be proved 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 that property on behalf of that person. A relationship is created between the transferor and transferee, whereunder the transferor remains the owner of the property and the transferee has legal custody of the property for the benefit of the transferor himself or 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 special interest limited to claim for his charges in respect of its safe retention, and under no circumstances does he acquire a right to dispose of that property in contravention of the condition of the entrustment; Jaswantrai Manilal Akhaney v. State of Bombay, AIR 1956 SC 575. Entrustment The word entrusted in the section is very important unless there is entrustment, there can be no offence under the section; Ramaswami Nadar v. State of Madras, AIR 1958 SC 56.

405 IPC Case Laws (Supreme Court and High Courts)

Per Lord Haldane in Lake v. Simmons, 1927 ALJ 487

C.M. Narayan AIR SC 478

Devakinandan (1958) 60 Bom LR 1413

Thakarsi AIR 1949 Nag. 620

Pushpa Kumar v. State of Sikkim 1978 Cri. LJ 1379

Som Nath v. State of Rajasthan 1972 Cri. LJ 897

Kundan Tillumal AIR 1942 Kar. 288

Dahyalal Dalpatram (1959) 61 Bom LR 885

Bimala Charan Roy (1913) 35 All. 361

Kesar Singh 1969 (Cri.) LJ 1595

M.G. Mohat v. Shivaputrappa and another 1984 Cri. LJ 969 (Kart.)

Anil Saran v. State of Bihar 1996 Cri. LJ 408 (SC)

Nirmalabai AIR 1953 Nag. 813

Welch's Case (1846) 1 Den 199

Adinarayan Iyer (1907) 17 MLJ 413

Pratibha Ram v. Suraj Kumar 1985 Cri. LJ 817 SC

Kailash Kumar Sanwatia v. State of Bihar 2003 Cri. Lj. 4313 (SC)

Keshab Chandra Boral v. Ntya Nand Biswas (1901) 6 CWN 203

Okhoy Cooman Shaw (1874) 13 Beng LR 307

R.K. Dalmia v. Delhi Administration AIR 1962 SC 1821

Nemchand Parakh AIR 1938 Mad. 639

Kedarnath AIR 1965 All. 233

Gurumahanty Appalasamy (1894) 1 Weir 464

Jage Ram (1951) 4 Punj. 286

Shailendra Nath Mitter (1943) 1 Cal 493

Khitish Chandra Deb Roy (1924) 51 Cal 796

Madho Singh v. Kamala Devi 1992 Cri. LJ 1858 (Bom)

Balram Singh v. Sukhwant Kaur 1992 Cri. LJ 792 (P7 H)

Employees State Insurance Corporation v. S.K. Aggarwal AIR 1998 SC 2676