CHAPTER I

INTRODUCTION

The offense of criminal breach of trust, as defined under section 405 of IPC, is similar to
the offense of ‘embezzlement’ under the English law. A reading of the section suggests that the
gist of the offense of criminal breach of trust is ‘dishonest misappropriation’ or ‘conversion to
own use’ another’s property, which is nothing but the offense 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 offense itself suggests, entrustment or property is an essential requirement before any offense
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 Section 405, IPC governs not only the words “with the property” immediately following
it but also the words “or with any dominion over the property.”1

Later an explanation was added to it by an amendment in the year 1973 and was later
renumbered as explanation 1 in the year 1975. In the same year, another explanation was added
to it. The explanations for this section are:

Explanation [i]: 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[ii]: 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.

1
LEWIS, Angelo J., The Indian Penal Code, London: Wm. H. Allen, 1870

1
 CHAPTER II

CRIMINAL BREACH OF TRUST IN INDIAN PENAL CODE

The provision for Criminal Breach of Trust is mentioned in Chapter XVII under Section
405 of Indian Penal Code. Section 405, of Indian Penal Code, states:

‘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.

ESSENTIALS:

The essential ingredients of Criminal breach of trust are:

 The accused must be entrusted with property or dominion over it.

 He must have dishonestly misappropriated the property or converted it to his own
use or disposed of it in violation of such trust.

There are two distinct parts involved in the commission of the offense of criminal breach of
trust. The first consists of the creation of an obligation in relation to the property over which
dominion or control is acquired by the accused. The second is misappropriation or dealing with
the property dishonestly and contrary to the terms of the obligation created. 2

ENTRUSTMENT

‘The principal ingredients of Criminal Breach of Trust are thus ‘entrustment’ and ‘dishonest
misappropriation’.

As the title to the offense itself suggests, entrustment of a property is an essential

requirement before any offense in this section takes place. The language of this 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’.3

The word entrust is not a term of art. In common parlance, it embraces all cases in which a
thing handed over by one person to another for a specific purpose. The term ‘entrusted’ is wide
enough to include in its ambit all cases in which property is voluntarily handed over for a
specific purpose and is dishonestly disposed of contrary to terms on which possession has been
handed over. Entrustment need not be expressed, it can be implied

2
Rathan Lal & Dhiraj Lal – Indian Penal Code, 2017 Edition.
3

2
 The definition in the section does not restrict the property to movables or immoveable
alone. In R K Dalmia vs Delhi Administration, the Supreme Court held that the word ‘property’
is used in the Code in a much wider sense than the expression ‘moveable property’. There is no
good reason to restrict the meaning of the word ‘property’ to moveable property only when it is
used without any qualification in Section 405.

Whether the offense 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[xii] 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.

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 offense of criminal breach of trust.

In 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.4

MISAPPROPRIATION

Dishonest misappropriation is 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 offense, 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 misappropriate is a crucial fact to be proved to
bring home the charge of criminal breach of trust.

4
Bhatt, P. R. (1 994), Penology in India, The Indian Publications.

3
 Proof of intention, which is always a question of the guilty mind of the person, is difficult
to establish by way of direct evidence. In Krishan Kumar V Union of India, the 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 had 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 defense 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 the railway depot. That was sufficient to sustain a conviction under this section.

Similarly, in Jaikrishnadas Manohardas Desai vs State of Bombay, 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.

In Surendra Prasad Verma vs 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 access to the safe, unless he could establish that he parted with the keys to the safe. As seen
in the case of criminal misappropriation, even a temporary misappropriation could be sufficient
to warrant conviction under this section.

Criminal Breach of Trust by a Public Servant, Banker, Merchant or Agent

As already seen in the previous sections, the acts of misappropriation or breach of trust
done by strangers is treated less harshly than acts of misappropriation or breach of trust who
enjoy special trust and are 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 case of a public servant. That is why Sections
407 & 408 provide for enhanced punishment of punishment up to seven years in case of
commission of offence of criminal breach of trust by persons entrusted with property as a carrier
or warehouse-keeper.

In respect of public servants a more stringent punishment of life imprisonment or

imprisonment up to ten years with fine provided. This is because of the special status and the

4
trust which a public servant enjoys in the eyes of public as a representative of the government or
government-owned enterprises.

The persons having fiduciary relationship between themselves have a greater responsibility
for honesty as they have more control over the property entrusted to them, due to their social
relationship. A mere carelessness to observe the rules of treasury ipso facto cannot make one
guilty of criminal breach of trust. There must be something more than carelessness, i.e., there
should be dishonest intention to keep the government out of moneys. Where under the rules, a
public servant is required to lodge in the treasury any government by the registers in his hands
and the public servant removes the excess from the office cash book, he is guilty of
misappropriation.

Moneys paid to Post Master for money order are public money; as soon as they are paid
they cease to be the property of the remitters and misappropriation of such moneys will fall
under this section. It is not necessary under the section that the property in respect of which the
offense is committed must be shown to the property of the State.

Under section 409 of IPC, the entrustment of property or dominion should be in the
capacity of accused as a public servant or in the way of his business as a banker, broker or
merchant etc. The entrustment should have the nexus to the office held by the public servant as a
public servant. Only then this section will apply.

In Superintendent and Remembrancer of Legal Affairs v SK Roy, the accused, a public

servant in his capacity in 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 of
some Pakistani policyholders and misappropriated the amounts after making false entries in the
relevant registers.

To constitute an offense of Criminal Breach of trust by a public servant punishable under

Section 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 policyholders, 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
be aware of the technical limitations of the powers of the public servants, under some 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 case, it was held
that the accused was guilty of an offense under s 409.

An employee of the Indian Airlines, who took excess money from the passengers and
pocketed the same by falsifying reports, was held guilty under s 409 and the Prevention of
Corruption Act, 1947.

5
 In order to sustain the conviction under Section 409, it is required to prove:

1. Entrustment of a property of which accused is duty bound to account for;

2. Commission of Criminal Breach of Trust.

The prosecution dealing with cases of criminal breach of trust by a public servant is
required to prove not only that the accused was a public servant but also was in a capacity
entrusted with property or with domination over the same and he committed breach of trust in
respect of that property[xxiii].

It is not necessary that the property entrusted to a public servant should be of government.
But what is important is that the property should have been entrusted to a person in his capacity
as a public servant[xxiv].

CHAPTER III

CRIMINAL BREACH OF TRUST AND JURISPRUDENCE

It is qute certain that the attention of the Legislature will be directed (among the
amendments of the law which willform the chief business of the approaching session) to the
improvement of our criminal code, as well the enactments as the procedure.

That a system of penal infliction, calculated to repress as well as to reform, may result from
changes of not very great extent in the existing law, It is believed is the opinion of most
reflecting persons.

That there must be provided the means of separating the hardened from the corrigible
offender, as well in the sentences pronounced as in the mode of executing them, appears
manifest, and it would even be an improvement upon our present proceedings, it had short terms
of imprisonment confined to petty offences, and the line drawn between first and repeated
convictions, so as to deem all inconigible who were presented a second time for trial, and could
show no special circumstances to take them out of that class.5

That long confinement, as the general rule, that even imprisonment for life, subject to the
term of remission, when, after a considerable period,amendment of life and habits was proved by
the profitable.

exercise of industry, would be a great amendment of the existing practice, and would
probably only be subject to such limitation as arise in all questions of penal infliction, from the
difficulty of obtaining convictions when the law goes beyond the general feeling, it took to be a
proposition free from all reasonable doubt. 6

5
VAIDYA, Nidhi and Raghuvanshi, Raghvendra Singh, Criminality of Intention - How to Adjudge Mens
REA? (February 25, 2010).
6
YANG, Anand A., ed., Crime and Criminality in British India, Tucson, , Ariz. : Published for the Association
for Asian Studies by the University of Arizona Press, c1985, xi, 192 p.,

6
 At present, however, The propose confining the attention to one great defect in the criminal
law, shown by late inquiries to have a most unfortunate influence upon the transaction of
business, and not rarely to bring loss and even ruin upon parties wholly removed from the
pursuits of active life, mean that peculiarity which so disgracefully marks the English law, of
treating the very grossest breach of trust, perpetrated for the sole benefit of the wrong-doer, as no
offence at all, and only the ground of claim by the injured party, as for a civil debt.

About a year ago, the attention of the Law Amendment Society was directed to this subject
by their president, who had repeatedly adverted to the matter in the House of Lords, and a
committee was appointed to examine the question in its details. The result of those inquiries was,
that breaches of trust are much more frequent than had been supposed, and that the greater
number are committed to the detriment of tradesmen in a small way of business.

A little reflection might have shown that this must eventually be the case. A sum of money,
inconsiderable in amount, £150 or £200 for example, the possession of which may make all the
difference to a petty shopkeeper, of solvency or bankruptcy, is withheld, or, to use the right
word, is purloined by a trustee or an executor, holding assets of the testator, and against the
trader who could barely pay Ins way if lie received payment, it is needless to observe that the
Court of Chancery is shut. The trustee and the executor are aware of this, and are safe in their
pillage.7

When the sum is larger there is a better chance of justice, and it is also more likely that the
party wrongfully treated should have other means of prosecuting his claim. Such embezzlements,
or thefts, are therefore less frequently committed by parties intrusted for persons in affluent
circumstances.

It is only say less frequently, for it is certain that not a few cases occur of such offences
committed in the upper ranks of life. Indeed, the cases referred to by Lord Brougham n the
House of Lords, and in his letter to Lord Radnor, which we published in our last number were of
this description.

And here there must mention a fact which adds considerably to the importance of these
cases. We had supposed that the King's Counsel alluded to was a member of the profession,
lately deceased, and who had made away with funds belonging to infant relatives, we thought so
because we were well aware that this had been done by the party to whom we now allude, and
we had hoped that two such instances had not occurred to disgrace the Bar.

Unfortunately, upon making inquiry of his lordship, we found that the King's Counsel to
whom he referred was a much more eminent member of the profession, long since deceased, but
who had also risen to a considerable judicial station, though less elevated than that of the judge
in the sister kingdom, to whom reference has also been made.

7
STARLING, M. H. (Matthew Henry) 1837-1903, Indian Criminal Law, 4th ed., Bombay: Education
Society's Press, 1886

7
 Here, then, are three instances in which defenceless infants have been ruined by the
robbery of their guardians or other natural protectors, and the wrongdoer having in each case
died insolvent, their case had been wholly remediless. Even had these guardians survived their
offence, some trifling dividend, by the operation of a Chancery suit, would have been their
utmost chance of escaping the union workhouse, and the possibility of obtaining that, must have
depended upon the charitable assistance of some humane persons, who had felt compassion for
the ward, or indignation at the guardian

It may be well here to pause, and ask, with a view to the benefits that may result from
relieving our criminal jurisprudence of the blot which now disfigures it, whether those three
persons, of distinguished station both at the Bar and in the Senate, would have committed the
same offence if the law had given it the name of theft, or of embezzlement, or of swindling, and
denounced against it the punishment due to such crimes.
It is probable that they would not. They were conscious of dishonest acts which full well
deserved such appellation, but their moral sense was blunted by the legal nicety which only
termed them, and treated then as equitable debts.

Each said to himself that he was not the first trustee who had wrongfully and incorrectly
got into debt with the trust estate, and, at all events, the wo rst which could befall him was a
decree in equity, charging him with interest, together with rests (or compound interest), while no
punishment whatever could be inflicted.

To know that a discovery of his frauds would have brought him into the Crown Court as a
felon, and that these frauds were by the law treated as theft, would most probably have arrested
him in his profligate career, made him abandon his criminal indulgences, or, if the temptation
was to avoid public insolvency, made him prefer the imputation of poverty to that of crime.

It is nothing like an answer to these observations, that frauds now punishable have
sometimes, and several very lately, been committed. With one exception it is to be remembered,
that these were not by persons in the same rank with those we have referred to, and the necessity
for an extension of the criminal law in this direction is urged upon the ground, that a large class
of such persons are of necessity induced to offend, when the very few instances of the law's
inefficacy to deter, gives the prospect of it proving more efficacious in other cases.

The first question that arises upon this subject, is how far the law should go, whether every
breach of trust should be treated as criminal in which the party violated his duty for his own
benefit (it being clear that no other kind can be visited with punishment), or only certain
infractions of that duty, of a plain and tangible description 9 We may take three several cases of
breach of trust as examples, for the purpose of making our views more clear and precise. 8

If a trustee, acting in good faith and intending to benefit the c. q. t., diverts the trust funds
to uses forbidden by the constitution of the trust,-as advancing these funds to the c. q. t. himself
for the uses of his trade, or lending them to another, and thereby occasiomng their loss, be being
hinself solvent, aid answerable to the estate-there has been an irregular, even a blameable act
done, how little soever culpable the intent may have been; but we should probably deem it not fit

8
Morris, T. and Morris, P. (1963), Pentonville-A Sociological Study of an English Prison, London.

8
to be treated as an offence even of the most trivial kind, and not to be visited even with a
nominal punishment.

It would seem that, in order to constitute the offence, the trustee's duty must be broken, not
only wilfully but for his own gain.

But tins may be done in various ways. Thus the mixing of trust money with his own is
reckoned, and justly, such a misconduct, that the Court of Chancery visits it, as a matter of
course and by an inflexible rule, with the penalty of charging interest (sometimes compound
interest) against the trustee, by way of punishment as well as compensation, and therefore
without regard either to the point of whether a profit has been made by him, or to the point
whether any injury has been sustained.

It is a penalty on the trustee, and a compensation for risk, not loss. It might be possible to
deal with such an act as an offence; but we incline to think the scope of the penal enactment
should be narrower, and should not reach cases like this, where no injury has befallen the estate
in a word, that the exposing the fund to risk, though for the trustee's own benefit, should not be
punishable unless a loss accrued which lie was unable to make good.

It is, however, clear, that this restriction can only apply to the case in which the trustee has
made no change in the investment on which the funds were when they came into his hands.

If, far example, money was paid to him, and instead of placing it in the Three Per Cents., as
the Court requires, he employed it in his own trade, or in a purchase whereby he expected to be a
gainer, there may be objections to regarding the risk he thus brought on the estate for his own
profit, as a crime in case no loss arose.

But there seems to be no difficulty in drawing the line here, and in treating as criminal the
act of changing the security on which the fund was lent, as calling in money lent on mortgage, or
by selling out of the stocks, or by assigning bonds or cashing bills for any other purpose than the
reinvestment of the money, in order to obtain the interest for the estate. In all such cases there is
the offence committed, even if no loss be sustained by the c. q. t., and though it should be
deemed desirable to regard those acts only as criminal which occasion actual loss, when there
has been no appropriation by changing the security, it yet is right to treat as an offence this kind
of appropriation, even where no damage has been occasioned.

We are qiute sensible that the restriction of the proposed law to the cases of taking, as it
were, special possession of funds in a manner never contemplated by the creator of the trust,
excludes some cases of very culpable conduct, and the one that immediately occurs is suggested
by certain late transactions in the mercantile world. 9

It appears that individuals engaged in mercantile speculations, became directors of a

Banking Company, and obtained, through their influence in that capacity, large advances of
money, for which they gave very inadequate security; so that, on the failure of their schemes,

9
Vadakkumcherry, J. (1983), Criminology and Penology, Kairaly Books International, Thiruvananthapuram

9
great loss fell upon the Bank, which became insolvent, or could only meet the demands of the
depositors by calling upon the shareholders to come forward as the real debtors.

That the greatest blame is in these cases imputable to the managing directors as guilty of
gross negligence, in suffering any of their colleagues thus to obtain a large portion of the fhinds,
cannot be doubted. That the conduct of those colleagues was culpable in the highest degree, is
equally unquestionable.

But it may be doubted, whether there is a sufficient difference between their case and that
of persons obtaining money or credit upon a general though groundless reputation of' their
solvency, to warrant our holding the breach of duty in those directors a criminal act, and
punishable as such. It is not denied that the whole circumstances of their situation when they
obtained, or, as it is otherwise said, gave themselves the advances of money, might be brought
before the court which tried then, if indicted for the offence, and that it might be proved to be
impossible they should have honestly believed themselves solvent. Still the difference between
this and the ordinary cases of concealed difficulties, is probably too slight to warrant a penal
enactment in the one case, which no one has proposed in the other.

There may very possibly be good grounds for extending the provisions to cases where there
has been no such confidence reposed as that which renders the trustee peculiarly culpable; but
the amendment suggested of the criminal law might advantageously be confined, in the first
instance, to trustees, there being no possibility in their case of urging that the creditor had been
negligent, and had advanced his money, or furnished his goods without making due inquiry, and
had himself to blame for the loss. But it may further be considered better, even in the case of
trustees, to confine, at least in the first instance, the new law to an unauthorized appropriation, by
changing the investment of the funds, in a word, to extend the Banker's Act to the case of all
trustees, and to visit other breaches of trust with punishment only where actual loss had been
sustained. It must not be forgotten that we are now enacting a very great change in the law, and it
seems consistent, with due discretion, to make that change gradually

If, however, it be deemed better to attempt a more complete, and, we must admit, a more
consistent measure at once, the course to be pursued is plain enough. All using whatever of trust
funds, by the trnstee for his own behoof, must be treated as a crine, if it be wilfully and
deliberately done.

The proof that the risk run was either extremely small, or what in common parlance might
be held none at all, must be rejected altogether as a defence, and only considered in mitigation of
punishment. Even the consent of the e. q. t. should only be regarded in the same light, because it
is the trustee's first duty to act according to the letter of the ride laid down by the creator of the
trust, and certainly, as regards the protection of reversionary interests -perhaps, even, as regards
those of the party immediately concerned-he does a wrongful act by departing from that rule.

The next difficulty which presents itself arises from the unfortunate rule of law which
prevents witnesses, or parties, from being compelled to answer questions whereby they may
criminate themselves. 10

10
RANKIN, G.G., "The Indian Penal Code", (1944) 60 Law Quarterly Review 37-50;

10
 We have in this Journal frequently exposed the absurdity and the monstrous consequences
of this doctrine, and we conceive that the course we have recommended in the gene= ral case,
may be taken with respect to trustees called upon, either at law or in equity, to give their answers
touching the conduct of their trusts. The only material provision of Lord Broughaim's Evidence
and Procedure Bill, 1853, which was not adopted in the Common Law Procedure Act, removed
the protection as to self-crimination, but prevented the answer given from being used in evidence
against the person so swearing, in any case except a prosecution for perjury assigned upon that
answer. We entered so fully into the discussion of this question in all its points upon a former
occasion (L. R., vol. xviii. p. 178), that we shall now only refer the reader to the arguments there
adduced. But with a view to the present subject, it is enough to note that the same provision
against the trustee's answer being used in a prosecution for breach of trust, would seem sufficient
to remove the objection, now under consideration, against the proposed extension of the
Criminal Law.

The only other difficulty which we need to consider, relates to the alarm that may very
probably be given, both to trustees who have accepted, and to persons not clothed with the
judiciary character.

In many cases, the former might be led to resign their office, and the latter might be
deterred from undertaking it. But two remedies for these evils at once present themselves an
abrogation of the rule-another peculiarity in the law of England-that trustees shall receive no
remuneration for the trouble they undergo and the risk they encounter, and the providing a body
of competent persons to act as official trustees whenever any party creating a trust finds, or
apprehends he shall find, a difficulty in obtainung the consent of persons to accept the
trusteeship.

There can be no good reason for maintaining the rule against payment for trouble to a
trustee, any more than there ever has been a reason alleged against paying an executor, and
where the trustee did not accept under either a prohibition of payment, or an agreement to act
gratuitously, the court might safely and usefully remunerate hn for his trouble.

To the appointment of official trustees there is every inducement, from the signal success
which has attended the establishment of official assignees in bankruptcy Indeed, if the name of
that court were changed-if; for example, it were called a court of commercial jurisdiction, and
were clothed with a certain authority in superintending the execution of trusts-it could furnish
from a competent staff of its officers such trustees as might in any case thus be required by the
maker of a trust, or, after his decease, by those interested, supposing him to have left no
directions precluding such a measure.

The same court might indeed be of the greatest service in other matters connected with
trusts, and we have always understood that when it was established, in 1833, thus was intended,
nay, that the details of a plan for this purpose had been considered. It has been said that these
were in the hands of Mr. Vizard, then secretary of bankrupts, and still one of the honorary office-
bearors of the Law Amendment Society.

11
 CHAPTER IV

DIFFERENTIATION FROM CRIMINAL MISAPROPRIATION AND CRIMINAL

BREACH OF TRUST

Offence of criminal misappropriation is defined under section 403 of Indian Penal Code,
1860. Offence of Criminal Breach of Trust is defined under section 405 of Indian Penal Code,
1860

In misappropriation, there is no contractual relationship. But in Criminal Breach of Trust,

there is a contractual relationship of the offender regarding the property.

In misappropriation, the property is obtained by some casualty or otherwise. In criminal

breach of trust, the property is obtained due to the truest vested by the owner on the offender.

The property is misappropriated by the offender for his own use. In criminal breach of trust,
the property is misappropriated for his own personal use. A breach of trust includes criminal
misappropriation, but the converse is not always true.

In, Criminal misappropriation the property is always movable in nature. Whereas, in

criminal breach of trust, the nature of property can either be movable or immovable

Offence of Criminal Misappropriation is punishable with imprisonment of either description

for a term which may extent to 2 years or with fine, or with both (Sec.403,IPC). Offence of
Criminal Breach of Trust is punishable with imprisonment of either description for a term which
may extent to 2 years or with fine, or with both (Sec.406,IPC)

In the case of Badsudeb Patra v. K.L. Haldar11, Where the accused got a loan of certain
ornaments from the complainant for use on an occasion on the understanding that they should be
returned after the purpose was served and the accused failed to return them, it was held that the
accused was guilty under Sec. 406 and not Sec. 403 of Indian Penal Code, 1860.

CHAPTER V

HISTORICAL DEVELOPMENT OF CRIMINAL BREACH OF TRUST

However, historically the court in its equitable jurisdiction was said to award an
injunction only to protect an existing legal right. In other words, as in the US, the courts in
England were traditionally concerned with identifying a right that the grant of the injunction
would vindicate or uphold. Where various forms of information are concerned, the bases were
multifarious and varied over time: property, contract, patents and the law of ‘master and servant’.
However, from the early days there were instances of the grant of an injunction which could
11
(32 C.W.N. 641)
12
either not be explained by reference to any such rights, or relied on a very broad interpretation of
their existence and contours. Hence, while the early cases are marked by the search for a
property interest in an information asset, later courts emphasized that an autonomous basis for
granting injunctions relating to confidences existed. Thus, Lord Cottenham in the leading case
of Prince Albert v. Strange, where there was nonetheless an arguable (copyright-style) property
right in unpublished works (etchings) at stake, stated that the case did not depend ‘solely upon
the question of property; for a Breach Of Trust, confidence or contract itself would entitle the
Plaintiff to the injunction’ (emphasis added). It was the surreptitious and improper obtaining or
use of the etchings in the context of a relationship at the very least of trust or confidence (if not
of contract) that provided a potential autonomous basis for the grant of the injunction. Upholding
trust or good faith obligations between parties was after all an essential role of the equity
jurisdiction. Thus, the difficulty of holding there was property in informational goods outside the
statutory rights was gradually overcome by granting injunctions solely on the basis of an abuse
of trust relating to information shared. In that way the concern that the courts not usurp the role
of the legislator in creating property rights in forms of information (such as copyrights or
patents) is addressed.12

Sir George Turner V-C in Morrison v. Moat made a famous judicial statement
acknowledging that the basis for the grant of an injunction was not or not solely a right in
property or contract:

In some cases it has been referred to property, in others to contract, and in others, again,
it has been treated as founded upon trust or confidence, meaning, as I conceive, that the Court
fastens the obligation on the conscience of the party, and enforces it against him in the same
manner as it enforces against a party to whom a benefit is given the obligation of performing a
promise on the faith of which the benefit has been conferred; but, upon whatever grounds the
jurisdiction is founded, the authorities leave no doubt as to the exercise of it.

One of the difficulties inherent in restraining a breach of trust only on the basis of other
rights, in particular contractual ones, is privity, which prevented liability extending to a third
party recipient or user of information initially imparted under contract. The independent action
based in trust and confidence per se as recognized in Prince Albert and Morrison overcame this
difficulty and meant that knowing third-party recipients could be injuncted if certain conditions
were fulfilled.13

Morrison confirmed that an injunction could be granted on the simple basis of a breach of
trustor confidence alone, but it took a long time before the conditions that would have to be
satisfied in a given case were further elaborated. Other areas of law continued to provide an
alternative legal basis for restraining orders. The law did not (and still does not) have to fix upon
the conscience of the party where it could fix upon an implied or expressed contractual term, for
instance. This could occur in cases where confidentiality was not just an implied term of another
contract, but the central object of the contract itself. Wherever persons received information in
confidential circumstances, an implied contract could be found to exist whose whole terms were

12
The Indian penal Code as Originally Framed in 1837 with Notes, Madras: Higginbotham and co., 1888;
13
PATRA, A.C., "An Historical Introduction to the Indian Penal Code", (1961) 3 Journal of the Indian Law
Institute 351;

13
that the recipient would not use the information concerned to harm the interests of the confidor.
If, however, another contract, for instance for the sale of a personal business, existed between the
parties the court could readily imply a term that obliged the parties to observe confidentiality.

The situations in which contract could be found to do the job of protecting confidences
became so multifarious that Lord Greene MR in Vokes Ltd v. Heather was able to say that ‘the
introduction of equitable principles, apart from contract, into relationships of this kind is a thing
which I think should be, in general, repudiated’. The contract being in existence, whether or not
the parties were held to an obligation of confidence could simply be deduced by implication
from the express terms. Thus, courts granted injunctive relief on the basis of a breach of a
contractual term and in the absence of any proprietary interest, this difficulty being simply
ignored. Any problems of privity could be dealt with either by recourse to
the Morrison principle, or by reference to the developing tort of inducement of breach of
contract, the latter from the decision of 1835 in Lumley v. Gye onwards. Naturally the most
common cases concerned post-employment obligations. Wrongfully, wilfully or knowingly
inducing an employee to breach terms of his employment contract by hiring him, where damage
to the previous employer could be established, became actionable. The action was extended
beyond only employees and could thus form the basis for the grant of an injunction against any
party who approached another who was under a contractual obligation of confidence.

Apart from the employment cases, which contained the earliest references to an obligation
of confidence in the English courts, during a later period the law of copyright in unpublished
works was also called upon to do much of the work to protect confidential material. Before
the Copyright Act 1911, the law granting rights in unpublished copyright works extended so far
that a virtual common law copyright regime was created. Importantly for our topic, the works
concerned often contained information that could be described as confidential. But although the
real motivation for an action might lie more in privacy or an abuse of trust, such as where
unauthorized publication of unpublished letters was at stake, the action based on common law
rights in unpublished works was very attractive. 14

The authors of the second edition of Gurry on Breach of Confidence say the following about
copyright:

Moreover, with the common law property right [i.e. common law copyright] there was no
need for an obligation of confidence, nor even for damage. Infringement of the common law
right came to be viewed as a matter of strict liability, and applied not just to duplication of the
words or expressive form. There were few exceptions to this phenomenally restrictive right.
Importantly too, the rights were transferable, could survive death, and may even have been
enforceable by licensees.

All things that for an action based solely on an obligation of confidence would have been
problematic, to say the least. This history of association between confidence and copyright has
led Professor Cornish ‘to characterize the duty of confidence developed after 1911 as the
“modern derivative” of the common law action for copyright in unpublished works'.

14
Singh J.S.P., Socio- economic offences Sri Sai Law Publications (Law Publishers) Faridabad (Haryana).

14
 CHAPTER VI

COMPARATIVE ANALYSIS

The current limitations of legislative regulation of criminal law in our country and a few
scholars’ deviation of understanding Criminal Breach of Trust grant extremely significant
realistic meaning for conducting a comparative study of Criminal Breach of Trust in our country
and that in Germany and Japan.

At present, the study on Criminal Breach of Trust in our country mainly limits on simple
introduction to present progress of legislation of German and Japan and relevant theories, failing
to analyze in depth the connotation of Criminal Breach of Trust and distinguish breach trust
behaviors from default behaviors.

In addition, the studies on breach trust to harm the interests of the listed company and on
the breach trust of entrusted property in our country all limit on analysis of elements in crimes
and justice finds, and the essence theory on Criminal Breach of Trust in our country has not been
proposed and in-depth comparative study on Criminal Breach of Trust and that in Germany and
Japan is deficient.

Therefore, there is need to further illustrate the connation of Criminal Breach of Trust,
reasonably distinguish breach trust behaviors from general default behaviors, and properly
understand the connotation of Criminal Breach of Trust by studying the legislation background,
legislation evolution, and present study on legislation of Criminal Breach of Trust in Germany
and Japan, and to comparatively study the similarities and differences between Criminal Breach
of Trust in our country and that in Germany and Japan on this basis with a view to proposing
corresponding plans for the improvement of legislation of Criminal Breach of Trust in our
country.
The main body of this thesis is divided into five chapters, in which Chapter One, i.e.
Introduction to Criminal Breach of Trust, is a general introduction to Criminal Breach of Trust
with three parts listed.15

The first part in Chapter One is entitled Concept and Name of Criminal Breach of Trust
which gives a detailed introduction to basic structure of Criminal Breach of Trust,
misunderstanding of a few scholars in our country on Criminal Breach of Trust, and name of
Criminal Breach of Trust. 16

The second part, i.e. Legislation Evolution of Criminal Breach of Trust, is devoted to
complete representation of sprout and forming process, causation and basis of Criminal Breach
of Trust by following time order, which lays a good foundation for properly understanding
connotation of Criminal Breach of Trust.

15
MAYNE, John D., Commentaries on the Indian Penal Code (Act of 1860), Madras: Higginbotham, 1869;
16
SHARMA, V.S., A comparative study of the historical development and present structure of the Juvenile
Courts in England, India and Japan, Ph.D. thesis, London University, 1970;

15
 The third part, i.e. Legislation of Criminal Breach of Trust, gives a detailed analysis of
legislation of foreign countries and other areas in which Criminal Breach of Trust has not been
regulated and Criminal Breach of Trust has been standardized from the angle of space shaft,
which hides the foreshadowing for the comparative study of next chapters.

The second chapter, i.e. Study on Typical Criminal Breach of Trust in Germany and Japan,
respectively analyzes in-depth and studies present legislation of Criminal Breach of Trust
in Germany and Japan.

The first part, i.e. Study on Present Legislation of Criminal Breach of Trust in German,
starts from the stipulation of Article 266 of German legislation to categorize the elements in
Criminal Breach of Trust in Germany into two kinds, elements in abuse power and elements in
back support.

According to general theory in academic circle of Germany, the crime behavior that meets
the condition of abuse power refers to the action in which the actor oversteps the permission of
internal trust relation to exercise external legal right.

Thus, power abuse must meet such two conditions as being external and legal behavior.
The crime behavior regulated by elements in back support refers to behavior that the actor
engages in to violate the duty of property management, which gives an extreme extensive scope
and imposes on no limitations on such breach trust such as being external and legal. However,
both elements in abuse power and back support are based on the prerequisite of property damage
to claim the Criminal Breach of Trust.

The second part, i.e. Study on Present Legislation of Criminal Breach of Trust in Japan,
starts from the regulation of Article 247 of Japanese criminal law and analyzes such elements of
conditions of Criminal Breach of Trust as subject, behavior, subjective purpose, and result of
property loss. The Criminal Breach of Trust is identity crime and its subject is limited to person
who handles affairs for others, which refers to handling affairs of others for and on behalf of
others.

Thus, in case of handling affairs of oneself for other people, this element is not qualified
for this Criminal Breach of Trust, which is a major point for distinguish breach trust from
general default behavior. Doctor Tuanteng proposed concepts of internal relation and opposality
relation yet fails to give clear definition and interpretation when summarizing what are affairs of
other people.

Furthermore, Criminal Breach of Trust in Japan requires that the subject exercises behavior
that is against task and causes loss in the aspect of property for seeking profits for himself or
herself or for the third party or for causing damage to himself or herself. Based on the reality of
criminal legislation in China, Chapter Three analyzes and studies the present situation of
Criminal Breach of Trust in our country. 17

17
BANERJEE, Tapas Kumar, Background to Indian criminal law, Calcutta : R. Cambray, 1990, xviii, 402 p.;

16
 Criminal Laws passed in 1979 and 1997 by our country did not stipulate the general
Criminal Breach of Trust until the Amendment 6 to Criminal Law passed in 2006 regulated two
special crimes of breach trust, i.e. breach trust to harm the interests of the listed company and the
breach trust of entrusted property.

This chapter is consisted of two parts, in which the first part, i.e. Breach Trust to Harm The
Interests of The Listed Company, introduces legislation background of this crime, studies and
analyzes crime dispute related to this aspect, and draws the conclusion that the breach trust to
harm the interests of the listed company not only uncover the nature of breach trust but also
reflects the core element of harm, successfully reflecting the extension of this crime and relevant
boundary from all directions with concise, common, scientific, and reasonable expression.

Furthermore, this part also analyzes and studies the breach trust to harm the interests of the
listed company from such aspects of subject element, subjective element, objective element, and
crime object. The second part, i.e. breach trust of entrusted property, also introduces the
legislation background of this crime, studies and analyzes the element in this crime with a view
to master the element in Criminal Breach of Trust of entrusted property from aspects of object
element, subjective element, objective element, and crime object.

As the substance of whole thesis, Chapter Four comparatively studies Criminal Breach of
Trust in Germany and Japan and that in our country in the aspects of nature and element in
Criminal Breach of Trust on the basis of research listed in Chapter Two and Chapter Three.

There are always big disputes on nature of Criminal Breach of Trust in the academic circles
of Germany and Japan, and representative viewpoints are theory on abuse power, theory on
breach trust, theory on abuse power of breach trust, and theory on international trust relation etc.

Two kinds of Criminal Breach of Trust in our country limit the meaning of breach trust on
violating duties of being faithful and entrusted, which provides new idea and legislation
foundation for understanding the nature of Criminal Breach of Trust. 18

Through comparative analysis, the author holds the view that the theory on breach trust
uncovers the nature of Criminal Breach of Trust with correct and reasonable core substance from
the angle of property damage caused by violating trust relation, but unlimitedly understanding
the very abstract value concept of trust relation as the prerequisite of breach trust will lead to
vague boundary of breach trust and impossibility to distinguish breach trust and general default.

Japanese Doctor Tuanteng once proposed the standard to distinguish internal relation and
opposality relation, but failed to specify their connotation. On the basis of comprehensive and
comparative study, the author proposes her own viewpoint on internal relation and opposoality
relation. Internal relation refers to the internal trust relation between the actor and the principal.
The actor is the extensive subject of the principal who is engaged in economic activity.

18
Special Reports of Indian Law Coms. Report on Indian Penal Code, in British Parliamentary Papers, Session
1847-48, vol. 28, p. 1

17
 The two persons appear as the same party concerned when handling this affair. The action
orientation of the actor is the third party or irregular counter party instead of the very person.
And the opposality relation refers to the relation of both parties who are action objects who
appear as different objects instead of the same party concerned.

The action orientation of the actor is the very person. On the basis of understanding of such
internal relation, the author further proposes the new point on nature of crime of breach trust, i.e.
theory on internal trust relation in the process of handling economic affair, in which the nature of
breach trust is the crime which causes the damage to the proper of the very person for the
internal trust relation between the entrusted subject and the very person in economic activity fails
to handle affair from the perspective of maximum profit of the very person.

In addition, Chapter Four in this thesis also comparatively studies the elements in Criminal
Breach of Trust in our country and those in Germany and Japan. By comparison, the author finds
out similarity and their unique characteristics.

Firstly, from the aspect of subject, the Criminal Breach of Trust in our county and that in
Germany and Japan are all identity crime with subjects of special ones i.e. person who handles
affairs for others. However, the two kinds of crimes of breach trust are defined by our country as
that breach trust to harm the interests of the listed company includes crime of natural person and
that of unit and breach trust of entrusted property only limits on crime of unit.

The subject of Criminal Breach of Trust in Germany can only be crime of natural person
instead of unit or legal person. Moreover, from the covering scope of subject, the combination of
subjects of two kinds of crimes of breach trust is less than the scope regulated in Criminal
Breach of Trust in Germany.19

In addition, from the perspective of objective aspect, crime of breach trust in our country
and that in Germany and Japan are all trust-violating actions that subjects implement and belong
to property crime, but the specific definition of breach trust included in Criminal Breach of Trust
in our country and covering scope of action are different from that in Germany and Japan that are
based necessarily on property loss and belong to result crime.

Breach trust to harm the interests of the listed company in our country is also the result
crime and the element in committed crime is based on significant loss caused to the listed
company, while breach trust of entrusted property is the circumstance crime and the element in
committed crime is based on significance of circumstance. Secondly, from the perspective of
subjective aspect, Criminal Breach of Trust in Japan belongs to purpose crime in which the
action is taken on purpose in the subjective aspect and for the purpose of gaining profits or
imposing harm, i.e. obtaining interests for the actor or the third person and causing damage.
Neither Criminal Breach of Trust in Germany nor two kinds of special crimes of breach trust in
our country belong to purpose crime with such a special requirement in terms of this aspect. 20

19
ILBERT, C., "Indian Codification", (1889) 5 The Law Quarterly Review 347-369; does not deal more than
one page on the codification of the criminal law;
20
Smith & Hogan, Criminal Law, 10th Edition, 2002 Butterwoths Publication.

18
 Finally, from the perspective of crime object or protected legal benefits, Breach trust to
harm the interests of the listed company infringes dual objects, i.e. interfering management order
of the company and enterprise as well as property right of listed company, and breach trust of
entrusted property only infringes simple object, i.e. damaging finance management order.

The legal benefits that Criminal Breach of Trust in Germany and Japan protects is the
property right.Through aforesaid comparative study, it is not difficult to find out that the scope in
terms of subject and action of Criminal Breach of Trust in our country is regulated as more
narrow than that in Germany and Japan and unsatisfactory points in the process of regulating
general breach trust.

On the basis of aforesaid conclusion, Chapter Five proposes legislation suggestion to

improve Criminal Breach of Trust in our country. This chapter firstly testifies the necessity and
feasibility of increasing general Criminal Breach of Trust in our country and puts forward model
and conception of Criminal Breach of Trust and conception on setting up element in Criminal
Breach of Trust and that on criminal punishment of Criminal Breach of Trust.

Meanwhile, the present two kinds of crimes of breach trust are necessary to exist in the
practice because of their distinctiveness of regulated subjects and thus from a cooperation
relation of legal regulations in which special law and general law coexist since the Criminal
Breach of Trust is newly increased. Of course, there are still certain limitations of these two
special crimes of breach trust in aspects of subject scope, action mode and circumstance result
which shall be improved properly for perfection.

For breach trust to damage interests of listed company, the author proposes to increase the
action mode of dividend that against law to regard it as the sixth action mode, i.e. Violating
regulations of company law to distribute profit or stock capital.

For breach trust of entrusted property, the author proposes to increase crime subject of
natural person and cancel the conduct element of serious conduct of breach trust of entrusted
property, and to increase the result element of causing significant loss to clients. Part Three in
this thesis is the conclusion. On the basis of study and analysis of main body of previous
chapters, the conclusion part summarizes major viewpoints of the author and research
conclusion.

Firstly, the author specifies specific connotation of international relation and opposality
which is the standard for distinguishing affaris of others and affairs of the principal as well as
breach trust and general defaulty.

In this way, action of actor can be determined be breach trust or not by distinguishing
relation between the actor and the principal is internal relation or opposality relation. In other
words, clear distinguishing internal relation from opposality relation gives rise to apparent
connotation and scope of Criminal Breach of Trust. 21

21
K.D. Gaur, Textbook on the Indian Penal Code, 4 th Edition, Universal Publication

19
 Secondly, the author absorbs reasonable core of theory on breach trust, proposes new
viewpoint on nature of Criminal Breach of Trust, i.e. theory on internal trust relation in the
process of handing economic affairs by comparatively studying various theories on nature of
crime trust in Germany and Japan as well as that in our country. 22

In other words, the nature of Criminal Breach of Trust is the property crime action that the
subject is engaged in by violating internal trust relation between the entrusted subject and the
principal in economic activities and causes damage to property of the principal. Thirdly, the
author proposes suggestion to improve legislation of Criminal Breach of Trust on the basis of
comparative study on elements in Criminal Breach of Trust in our country and that
in Germany and Japan.

The author also suggests increasing a general Criminal Breach of Trust to regulate serious
breach trust. Meanwhile, the present two kinds of crimes of breach trust are necessary to exist in
the practice because of their distinctiveness of regulated subjects and thus from a coopetion
relation of legal regulations in which special law and general law coexist since the Criminal
Breach of Trust is newly increased.

Of course, there are certain inconsistent points of these two special crimes of breach trust in
aspects of subject scope, action mode, and circumstance result, which shall be properly improved
for perfection.

22
Jhala R.M. and Raju V.B. (Eastern Book Company) Lucknow,1997

20
 CHAPTER VII - APPROACH THROUGH CASE STUDY

CRIMINAL BREACH OF TRUST BY STRIDHAN

PRATIBHA RANI VS SURAJ KUMAR & ANR23

FACTS: The estranged wife has filed complaint against the husband of being asked dowry and
were harassing without food and no adequate sleep. The women escaped from the house to her
mother and filed in the judicial majistrate. She contested that the jewellery were been misused
which were given for her wedding.
ISSUE: Can the wife be assumed the owner of the property dominioned over husband?

REASONING: Nature, character and concomitants of stridhan-Right of exclusive ownership

over the stridhan during coverture- Whether the dowry/stridhan given to a wife and her
exclusive property becomes a joint property/partnership property by a fiction of being placed in
the custody of her husband and her relations, the moment a married woman enters her
matrimonial home-Indian Partnership Act, 1932, section 4. Dowry Prohibition Act (28 of 1961)
sections 2 Hindu Marriage Act, 1955 section 27 Hindu Succession Act Section 14 Indian Penal
Code, sections 405, 406 and 482 Remedies open under law-Whether criminal remedy
barred when civil remedy is available simultaneously.

Entrustment - Charge Or Criminal breach of trust by wife against her husband and his close
relations maintainability- Essential ingredients of an offence section 405/406 Indian
Penal Code. Inherent powers of the High Court to quash a First Information Report on a
complaint under section 482 the Code of Criminal Procedure, 197 (Act 11 of 1974),
explained.

CONCLUSION: The stridhan property of a married woman cannot acquire the character of a
joint property of both the spouses as soon as she enters her matrimonial home so as to
eliminate the application of section 406 IPC. The position of stridhan of a Hindu married
woman's property during coverture is absolutely clear and unambiguous; she is the absolute
owner of such property and can deal with it in any manner she likes-She may spend the whole
of it or give it away at her own pleasure by gift or will without any reference to her husband.
The entrustment to the husband of the stridhan property is just like something which the wife
keeps in a bank and can withdraw any amount when ever she likes without any hitch or
hindrance. Ordinarily, the husband has no right or interest in it with the sole exception that in
times of extreme distress.

VINOD KUMAR SETHI & ORS. V. STATE OF PUNJAB & ANR.24

23
1985 AIR 628, 1985 SCR (3) 191

24
AIR 1982 Punjab 372

21
FACTS: A perusal of the allegations made in the complaint undoubtedly makes out a positive
case of the accused having dishonestly misappropriated the articles handed over to then in a
fiduciary capacity. To characterise such an entrustment as a joint custody or property given
to the husband and the parents is wholly unintelligible.A perusal of the list reveals that so far
as the jewellery and clothes, blouses, nighties and gowns are concerned they could be used only
by the wife and were her stridhan. By no stretch of imagination could it be said that the
ornaments and sarees and other articles mentioned above could also be used by the husband.

ISSUES: Though not being used can it be framed as Criminal Breach Of Trust??

REASONING: If, therefore, despite demands these articles were refused to be returned to the
wife by the husband and his parents, it amounted to an offence of criminal breach of trust. All
the ingredients of an offence under section 405 IPC were pleaded and a prima facie case for
summoning the accused was made out. In such circumstances, the complaint should have been
given an opportunity by the High Court to prove her case rather than quashing the complaint.
Such an exercise of jurisdiction by the High Court under section 482 Cr.P.C is totally
unwarranted by law.

CONCLUSION: Criminal law and matrimonial home are not strangers. Crimes committed in
matrimonial home are as much punishable as anywhere else. The mere factum of the husband
and wife living together does not entitle either of them to commit a breach of criminal law and
if one does then he/she will be liable for all the consequences of such breach. In the case of
stridhan properly also, the title of which always remains with the wife though possession of
the same may sometimes be with the husband or other members of his family, if the husband or
any other member of his family commits such an offence, they will be liable to punishment for
the offence of criminal breach of trust under sections
405 and 406 IPC.

22
 BHAI SHER JANG SINGH & ANR. V. SMT. VIRINDER KAUR, 25

FACTS: Husband was holding the property of wife as in partnership.

ISSUE: Can there partnership exist although there exists no marital relation?

REASONING: It is neither appropriate nor apposite to import the concept of partnership of

husband and wife for the simple reason that the concept of partnership is entirely different from
that of the husbands' keeping the stridhan in his custody. From the definition of the partnership
in section 4 of the Indian Partnership Act, it is manifest that in a partnership the wife must by
some clear and specific act indicate that the stridhan which has been entrusted to the husband is
to be used for a partnership business and the losses of the firm, if any, would have to be
shared by both.A pure and simple act of entrustment of the stridhan to the husband does not
attract any of the essential ingredients of a partnership as defined in the Partnership Act. When
the essential conditions of a partnership do not exist. the mere factum of entrustment of stridhan
would not constitute any co-ownership or legal partnership, There is also no question of wife
and husband.

CONCLUSION: Hence, there must be portioned of property and hence be entrusted what they
afforded to have in their appropriate ratio.

BUSINESS AND TRADE

RAJAN TANEJA VS T. RAM NARESH TIRIPATHI

FACTS: Complainants accused the petitioner, that on the assurances and promises made by the
accused, goods were supplied to him, though the accused undertook to pay the value of the goods
supplied to him, within 30 days from the date of invoice and in case, he could not pay the
amount within the period, the amount due would carry interest at 24% per annum, he was not
prompt in clearing the dues without delay.

25
1979 Criminal Law Journal 493

23
The accused subsequently also failed to keep up his promise, though he assured for prompt
payment, on that basis, goods were also supplied to him. Therefore, according to the
complainants, in both the cases, the accused had failed to clear a sum of Rs.9,01 ,732/- and a
sum of Rs.4,14,087/-

ISSUE: Can the accused be framed for penalty u/s 406?

REASONING: prima facie, even disclosing the requirements either for Section 406 or
420 I.P.C. Therefore, on the basis of the above rulings relied upon by the learned counsel for the
petitioner, and the considered opinion, considering the facts and circumstances also, that 'civil
profile' outweighs the 'criminal outfit' as held in Medchl Chemicals & Pharma (P) Ltd.'s case.
Under the above said circumstances, it is to be held that the respondents/complainants had
chosen the short circuited way to realise the amount, converting a civil case into a criminal one,
thereby abusing the court process and therefore, invoking the inherent jurisdiction under Section
482 Cr.P.C

CONCLUSION: considering the facts in proper perspective and not even applying the mind, to
find out whether any criminal offence is made out or not, took the case as such, which appears to
be, in my view, incorrect. Under the above circumstances, inclined to allow these two petitions,
quashing the proceedings against the petitioner.

ALPIC FINANCE LTD VS P. SADASIVAN AND ANR26

FACTS: The appellant is a registered company having its head office at Mumbai. It is a non-
banking financial institution functioning under the regulation of the Reserve Bank of India. It is
carrying on business, inter alia, of leasing and hire purchase. The first respondent is the
Chairman and founder trustee of a trust by name 'Visveswaraya Education Trust'.

The second respondent, wife of the first respondent is also a trustee. The trust runs a
dental college by name Rajiv Gandhi Dental College. The respondents entered into an agreement
with the appellant company whereby the appellant agreed to finance the purchase of 100
hydraulically operated dental chairs. The total cost of the chairs was around Rs. 92,50,000/-.

26
AIR 2001 SC 194

24
 The appellant company agreed to finance the respondents for the purchase of these
chairs through a lease agreement and as per the agreement, the respondents were liable to pay
rentals quarterly. The respondents agreed to pay quarterly a sum of Rs. 7,50,000/- for the first
year; Rs. 12,50,000/- for the second year; Rs. 8,00,000/- for the third year and Rs. 6,25,000/- for
the fourth year. As per the agreement, the appellant company, the lessors would have sole and
exclusive right, title and interest in the dental chairs supplied till the entire hire purchase amount
was paid. In accordance with the agreement, the appellant made payments to M/s. United
Medico Dental Equipments and they delivered the dental chairs to the respondents.

The appellant company alleged that the respondents were not regular in making the
payments and committed default in payment of the instalments and that the bank had
dishonoured certain cheques issued by the respondents. The appellant company also alleged that
on physical verification, certain chairs were found missing from the premises of the respondents
and thus they have committed cheating and caused misappropriation of the property belonging to
the appellant. The appellant company filed a private complaint under Section 200 Cr. P.C. before
the Chief Metropolitan Magistrate, Bangalore alleging that the respondents had committed
offences under Sections 420, 406 and 423 read with Section 120-B I.P.C.

In that proceedings, the appellant company moved an application under Section 93 Cr.
P.C. to issue a search warrant to seize the property in dispute and also to hand over these items to
the complainant. The learned Magistrate took cognizance of the alleged complaint and issued
summons to the respondents and passed an order on the application filed under Section 93 of the
Cr. P.C. to have a search at the premises of the respondents and to take possession of the
properties involved in the case. These proceedings were challenged by the respondents
under Section 482 Cr.P.C. before the learned Single Judge of the Karnataka High Court at
Bangalore. The learned Single Judge was pleased to quash the entire proceedings and directed
the appellant company to return all the properties seized by the Police pursuant to the warrant
issued by the learned Magistrate.

Thus, the order of the learned Magistrate taking cognizance and issuing process to the
respondents as well as the order of search and the direction for restoration of the property to the
appellant company were set aside. Aggrieved by the same, the appellant company has preferred
this appeal.

ISSUE: Whether the allegations made in the complaint or the statements of the witnesses
recorded in support of the same taken at their face value make out absolutely no case against the
25
accused or the complaint does not disclose the essential ingredients of an offence which is
alleged against the accused?

REASONING: Though a case of breach of trust may be both a civil wrong and a criminal
offence but there would be certain situations where it would predominantly be a civil wrong and
may or may not amount to a criminal offence. The present case is one of that type where, if at all,
the facts may constitute a civil wrong and the ingredients of the criminal offences are wanting.

Having regard to the relevant documents, including the trust deed as also the
correspondence following the creation of the tenancy, the submissions advanced on behalf of the
parties, the natural relationship between the settlor and the trustee as mother and son and the fall
out in their relationship and the fact that the wife of the co-trustee was no more interested in the
tenancy, it must be held that the criminal case should not be continued.

CONCLUSION: Having regard to the facts and circumstances, it is difficult to discern an

element of deception in the whole transaction, whereas it is palpably evident that the appellant
had an oblique motive of causing harassment to the respondents by seizing the entire articles
through magisterial proceedings. We are of the view that the learned judge was perfectly
justified in quashing the proceedings and we are disinclined to interfere in such matters.

MRS. ARTI BHANDARI VS STATE OF WEST BENGAL AND ANR27

FACTS: Managing partner of a concern called "Nelufer's Collections" filed a petition before
learned CJM, Alipore, South 24 Pgs, against the present petitioner alleging that the
accused/petitioner who is a nonresident Indian running business under the name and style of
"Artee Collection Inc", having office at a place in Hudson, USA came to India and proposed to
the complainant to enter into partnership with the accused to which the complainant agreed and
since then the Export Credit Guarantee Corporation withdrew their commercial risk coverage of
the complainant's export to "Artee Collection Inc" and the complainant on purchase order placed
by the accused persons continued to export to the accused persons high valued embroderied and
printed furnishing fabrics on terms of payment on documents against the acceptance for payment
within 90 days from the date of Airway bill through Hudson Savings Bank, USA and through the
complainant's banker Oriental Bank of Commercial Overseas Branch, Kolkata allegedly the
accused to gain more confidence of the complainant and fulfil a dishonest and fraudulent

27
2008 CriLJ 22

26
intention to cheat the accused/petitioner had been sending her purchase order and upon receipt of
the shipment had been remitting payments within 90 days till the month of August 2004.

Since September 2004 the accused persons started cheating the complainant by delaying
the payments in spite of receipt of the goods as per the purchase order given by the accused
persons and further induced the complainant to deliver the goods against purchase order sent by
her.

On good faith the complainant exported 14 shipments since September 2004 to the accused
persons, the total value of which was $ 51274. 24. After receiving their aforesaid goods exported
by the complainant to the accused persons and for non-payment of the dues to the accused
persons approximately in the sum of Rs. 20 lakh in Indian currency the complainant intimated
the accused persons on several occasions to pay the dues but the accused paid no heed and
threatened the complainant with dire consequences.

The complainant came to the accused when the accused came to Kolkata on 16-3-2005 and
requested her to make payment of the money but the accused denied and told that as she is an
NRI residing in the USA the complainant would not be able to do anything against her.

ISSUE: Although being a cheating case, can it be still considered as breach of trust?

REASONING: It is not that the complainant was sending goods/products of different concern or
of her own exclusive business to the petitioner in the USA. The complainant had been doing her
business with the petitioner until February 2001 and before the petitioner was inducted as a
partner.

CONCLUSION: Alleged criminal breach of trust or cheating took place in September 2004 and
it continued till March 2005. In April 2005 FIR was lodged by the opposite party while in May
2005 the petitioner instituted the suit for accounts and winding up of partnership firm in the civil
Court at Alipore. Hence, not being a case under criminal breach of trust.

27
 CRIMINAL BREACH OF TRUST BY CLERK

RAJENDRA PRASAD BAGARIA VS PHARMACY COUNCIL OF STATE

OF RAJ.& ANR28
FACTS: Accused was working as servant with Subhash Bansal, the complainant, who was
dealing with building materials. The accused without authority of his master Subhash Bansal,
sold certain cement bags to another person without any authority which was found later on, when
enquiry was conducted by the complainant. Hence, FIR u/s 408 IPC was registered against the
accused.

ISSUES: Can the clerk be concluded of the opinion of being carred away by Breach of trust and
also forgery?

REASONING: The main requirement of these section is there must be entrustment of the
property, there must be dishonest mis-appropriation of conversion of that property. It is
important to mention here that him-appropriation simplicitor without dishonest intention does
not attract section 405 IPC. The entrustment means handing over the dominion over the property
by someone. The word "entrusted" is not a term of law in its most general significance, all its
merits is a handing over of the possession for some purpose which may not imply the conferring
of any proprietory right at all.

Another important requirement of section 408 IPC is that such act should be committed by clerk
or servant. In the present case it is stated that accused was employed as servant of the
complainant. A servant means the relation of master and servant whereby a person calls in
assistance of other where his owned skill and labour are not sufficient to carry out his own
business or purpose.

CONCLUSION: It is considered opinion that prosecution has established the liability of the
against beyond reasonable doubt, that accused being in the capacity of a clerk/servant of Subhash
Bansal, committed the criminal breach of trust with regard to 70 cement bags by forging certain
cash memos, by putting his signatures thereof. Thus, I am of the considered opinion that accused
has committed an offence punishable u/s 408 IPC. Hence, he is convicted accordingly.

28
6th Feb, 2012 SC

28
 STATE VS SHASHI RANJAN 29

FACTS: It is alleged by prosecution that on 09.11.2011, accused being servant (driver) of

complainant was sent to Gurgaon by complainant's wife and one packet / envelope containing
Rs. 7,40,000/ was entrusted to him by complainant's motherinlaw to be given to her daughter, but
he did not return back to complainant's house and dishonestly misappropriated the money for his
own use.

ISSUES: Can the driver be considered as clerk and being instituted of commiting the offence
under section 408, IPC?

REASONING: The conduct of accused Shashi Ranjan in having fled away after
misappropriating Rs. 7,40,000/ and having evaded his arrest till 11.01.2012 also becomes
significant as per illustration (i) of Section 8of Indian Evidence Act, 1872 which is reproduced
below for reference : Illustration (i) A is accused of a crime.

CONCLUSION: Hence, on the basis of evidence led on record by prosecution and my finding
upon the plea of defence raised by accused, I am of the considered opinion that prosecution has
proved the guilt of accused Shashi Ranjan for having dishonestly misappropriated Rs. 7,40,000/
entrusted to him beyond reasonable doubt. So far as offence of receiving stolen property is
concerned, accused being held guilty of offence u/s 408 IPC and recovery of Rs. 6750/
constituting part of the misappropriated money being effected at his instance, he cannot be
convicted as receiver of the misappropriated money. Hence no conviction u/s 411 IPC is made
out. Accordingly accused Shashi Ranjan stands convicted of the offence of criminal breach of
trust by clerk or servant punishable under section 408 IPC.

STATE VS : ASHIM KUMAR GANGULY ON 7 JULY, 201230

FACTS: The case of the prosecution is that the accused was working with the complainant
Decent Pvt. Ltd. G.KII, New Delhi as Chief Manager (Finance and Accounts) in the year 1994.
It is alleged that the accused took the advantage of his post and willfully, FIR No. 200/94 1/23

29
AIR 2014 DELHI 30
30
AIR 2012 Delhi District Court 112

29
deliberately and dishonestly falsified, altered and forged the books and accounts of the
organization from December, 1992 to October 1993.

ISSUES: Although the clerk is just a maintainee of the record book with no authority of
encashing it, can he still be charged under section 408?

REASONING: mere fact that the accused had shown shortfall in cash in hand is not sufficient to
prove charges against the accused. No evidence has been produced by the prosecution that the
accused had stolen the books to destroy the evidence. No recovery of any book was effected
from the accused. No evidence has been produced to prove that the accused has made any asset
from the alleged misappropriated amount. The mere fact that a short fall of Rs. 50,000/ was
shown by the accused in the reconciliation statement does not give rise to any proof against the
accused.

CONCLUSION: Thus, The prosecution has failed to establish charges against accused and
accused Ashim Kumar Ganguly stands acquitted of the charges under section 408/467/471/477A.

Delhi District Court

ST VS . VIJAY KUMAR BANSAL ON 27 FEBRUARY, 2008

FACTS: Mr. O.P. Bindal, Partner of M/s. Indian Roadways Corporation to SHO PS Karol Bagh
on 08.07.89. In his complaint Mr. O.P. Bindal stated that accused Vijay Kumar Bansal was
working as Head Cashier/Chief Accountant in M/s. Indian Roadways Corporation

According to the complaint, a sum of Rs.10,20,000/- which was entrusted with accused Vijay
Kumar Bansal was misappropriated by him for his persona use. Mr. O.P. Bindal further stated in
his complaint that accused was asked vide letter dt. 29.3.1989 to submit his explanation for the
above discrepancy and misappropriation. Accused confessed and admitted to have
misappropriated the above said amount for his own gain, in his reply written in his own hand
writing in the presence of complainant Mr. O.P. Bindal and Mr. Sunil Kemka. However, accused
sought time to return the amount.

30
Accused in his statement u/s. 313 Cr.PC stated that he has been falsely implicated due to the
rivalry between the partners of M/s. Indian Roadways Corporation. Accused stated that he would
evidence in defence. However, no defence witness was examined.

ISSUES: Is the accused be convicted for being commiting fraud under section 408?

REASONING: A careful examination of the entire evidence adduced by the prosecution will
show that prosecution has not been able to prove that amount as alleged in the complaint was
entrusted with the accused. In other words, the first ingredient of section 405 IPC as mentioned
above has not been fulfilled in this case. Apart from that, the investigation has been very faulty
in this case.

CONCLUSION: Prosecution has failed to prove its case against beyond reasonable doubts.
Accused is acquitted.

CRIMINAL BREACH OF TRUST BY BANKER

JASWANTRAI MANILAL AKHANEY VS THE STATE OF BOMBAY31

FACTS: The appellant was the Managing Director of a bank and held a power of attorney to act
on behalf of its Director and authorising him to borrow money on behalf of the bank. Certain
Government -Promissory Notes were pledged with the bank by another bank to cover an
overdraft account up to a specified amount. There was, however, no overdraft by the pledgor.
The pledgee bank was in a precarious financial condition. The appellant pledged the securities
with a third party to get a loan for the bank's use and on its failure to repay the same on
demand, the creditors sold the securities for realising their dues. The pledgee bank was thus
no longer in a position to return the securities on demand made by the pledgor. Information.
was lodged with the police at the instance of the Official Liquidator appointed to wind up the
bank and the appellant was put up for trial under s. 409 of the Indian Penal Code.

ISSUE: The question whether the remedy of the pledgor was by way of a suit for damages for
breach of contract or by way of a criminal prosecution?

REASONING: although the offence of criminal breach of trust presupposes an entrustment,

such entrustment need not conform to all the technicalities of the law of trust, and,

31
1956 AIR 575

31
consequently, in a case such as the present where the accused had the necessary power and
exercised dominion over the securities and caused wrongful loss to the pledger and wrongful
gain to the pledgee by dealing with the securities, he was guilty of the offence.

CONCLUSION: As all the grounds raised in support of the appeal fail, it is accordingly
dismissed.

PUNJAB NATIONAL BANK AND ORS VS SURENDRA PRASAD SINHA32

FACTS: Bank-Appellant, gave a loan of RS.15,000 to one S.N. Dubey. The respondent and
his wife executed a Security Bond, as guarantors and handed over afixed Deposit Receipt for a
sum of Rs. 24,000 which was valued at Rs. 41,292 on its maturity on 1.11.1988. The principal
debtor defaulted marking payment of the debt. When the respondent's F.D. matured, the Manager
of the Bank (appellant No.5) adjusting a sum of Rs.27,037.60 due and payable by the principal
debtor as on December 1988 and the balance sum of Rs.14,254.40 was credited to the S.B.
Account of the respondent. The respondent filed a private complaint against the appellants in
the Court of Addl. Chief Judicial Magistrate u/ss.409,109/114, IPC, alleging that the debt
became barred by limitation as on 5.5.1987; that the liability of the respondent being co-
extensive with that of the principal debtor, his liability also stood extinguished as on
5.5.1987; that without taking any action to recover the amount from the principal debtor within
the period of limitation, on 14.1.1989, the Branch Manager credited to his S.B. Account only
Rs.14,254.00 on the maturity of his F.D.R. and thereby the appellants criminally embezzled the
amount.

ISSUE: Can the bank be alleged of commiting the crime under breach of trust?

REASONING: The complaint was laid impleading the Chairman, the Managing Director of the
Bank by name and a host of officers. There lies responsibility and duty on the Migistracy to find
whether the concerned accused should be legally responsible for the offence against the juristic
person or the persons impleaded then only process would be issued.

CONCLUSION: The appeal is accordingly allowed and the complaint is quashed.

BIHTA CO-OPERATIVE DEVELOPMENT VS THE BANK OF BIHAR & ORS 33

32
AIR 1992 SC 2011

32
FACTS: The first plaintiff was a Society registered under the Biharand Orissa Co-operative
Societies Act, 1935, and the second plaintiff was its Secretary. The Society had an account
with the first defendant Bank. The 6th and the 7th defendants were the joint secretary and
treasurer of the Society respectively, who were jointly authorised to operate on the account. A
sum of Rs. 11,000 was withdrawn from the account by means of a cheque which did not come
out of the cheque book of the Society but which was a loose cheque form surrendered by an ex-
constituent of the Bank. The spurious cheque bore the signature of the 7th defendant and the
forged signature of the 6th defendant. The suit against the Bank, its manager (the 2nd defendant)
its employees (the 3rd, 4th and 5th defendants) and ,defendants 6 and 7 was decreed against
defendants 1, 2, 4, 5 and 7 jointly.

REASONING: the signature of the 6th defendant was forged, there never was any mandate by
the Society to the Bank. Therefore, there was no negligence on the part of the Society. On
the Contrary, there was negligence on the part of the Bank in not ascertaining whether the
signatures on the cheque were genuine and the circumstances attending the encashment of the
cheque showed conclusively that the Bank was negligent and some of its officers fraudulent

CONCLUSION: Consequently, there will be no decree as against the said respondent. The other
respondents must pay the costs of this appeal.

VELJI RAGHAVJI PATEL VS STATE OF MAHARASHTRA34

FACTS: The appellant was the working partner in a firm. It was agreed among the partners that
he should carry on the work of recovery of the dues of the partnership. On the allegation that
he misappropriated certain sums and also failed to deposit in bank some collections as he was
required to do, he was convicted for the offence of criminal breach of trust under s. 409, Indian
Penal Code.

In appeal to the Supreme Court it was contended that as he realized the sums in his capacity as
partner and utilised them for the business of the partnership, he was only liable to render
accounts to his partners and his failure to do so would not amount to criminal breach of trust.

33
AIR 1967 SCR (1) 848
34
1965 SCR (2) 429

33
ISSUES: Can the appellant be convicted under criminal breach of trust?

REASONING: Though as a partner he had dominion over the property of the partnership for the
purpose of criminal breach of trust the mere existence of such dominion is not enough. It must
be further shown that his dominion was the result of entrustment, that is, the prosecution
must establish that the dominion over the partnership assets was, by a specific agreement,
entrusted to the accused.

CONCLUSION: The appellant could not be said to have been guilty

of criminal breach of trust

CRIMINAL BREACH OF TRUST BY MERCHANT

PRAKASH GUPTA VS STATE OF DELHI35

FACTS: the complainant Rajiv Kumar Gupta, a Cost Accountant by profession, had 06 Kgs. of
gold bars i.e. 03 pieces of 01 Kg. each and 30 pieces of 100 grams each as his ancestral property.
He had good relationship with accused Nikesh Gupta, a gold merchant, dealing in sale and
purchase of raw gold with whom he had met through a close acquaintance.

On 07.12.2016, the complainant expressed his intention to Nikesh Gupta to sell his 06 Kgs. gold
bars to some good buyers. Nikesh Gupta assured him that he would arrange/facilitate the same
within a span of one or two hours with the assistance of his partner/business associate Prakash
Gupta (the accused/petitioner herein).

Pursuant to this discussion, he received a telephonic call from the petitioner at about 02.30 PM,
who claimed to have a buyer for gold bars and told him that he would sell the said gold bars at
the rate of Rs.3,140/- per gram.

Believing the assurance of the petitioner, the complainant called him at his office to collect the
gold bars and at about 04.00 PM, after due confirmation with Nikesh Gupta, the complainant
entrusted the said 30 gold bars of 100 gram each i.e. 03 Kgs. to the petitioner at his office at

35
Cr. Lj 2017 DHC 221

34
Laxmi Nagar, Delhi. He also entrusted remaining 03 gold bars of 1 Kg. each to the petitioner in
front of the gate of Santushti Apartment, Vasant Kunj, New Delhi. The petitioner assured the
complainant that he would deliver the gold consignment to his and Mr. Nikesh Gupta‟s associate
at Vasant Kunj and would make total payment of Rs.1,88,60,000/- by cheque. The complainant
specifically asked the petitioner not to sell the gold in cash and receive the payment only through
cheque and only on his positive response, he entrusted 06 Kgs. of gold bars to the petitioner. The
petitioner confirmed to the complainant that he would deliver the cheque of Rs.1,88,60,000/- at
about 07.00 PM. However, at about 06.00 PM, the complainant received a call from Nikesh
Gupta and the complainant informed him about the delivery of 06 Kgs. gold bars to the petitioner
and requested him to take care of the transaction, which was in his knowledge as he was the
person, who was facilitating the entire deal.

The complainant was waiting for his cheque at his office and when the petitioner did
not turn up till 07.00 PM, the complainant made several calls to the petitioner, who informed the
complainant at about 09.00 PM that the party, who had purchased the gold bars paid him cash
instead of cheque and he would deliver him the same in his office within one hour‟s time. At
about 09.30 PM, the petitioner again called the complainant and put up a concocted story that he
had been robbed by 2/3 persons near Mehrauli-Vasant Kunj Road, New Delhi.

The complainant called up Nikesh Gupta about the incident, who told him that the
petitioner was also carrying his cash and that too was robbed which amounted to
Rs.3,00,00,000/-. Later on, the complainant met Nikesh Gupta at Hotel Shangrila, Ashok Road,
New Delhi, who assured the complainant that he will go in depth of the story of the petitioner
and solve his problem. The complainant made some inquiries and found that they have made
false and frivolous story of robbery and in fact they have misappropriated his 06 Kgs. of gold
bars amounting to Rs.1,88,60,000/- and converted the same to their personal use. The
complainant had expressed his apprehension that both these accused have hatched a conspiracy
and with common knowledge cheated him and misappropriated his gold worth Rs.1,88,60,000/-.
The complainant further claimed that the accused persons had deliberately with ulterior motive
have caused wrongful loss to him and wrongful gain to themselves.

ISSUES: Can the merchant Nikesh gupta be accused of criminal breach of trust and criminal
misappropriation?

REASONING: The petitioner being the gold merchant has committed criminal breach of trust by
dishonestly misappropriating the valuable property of the complainant. The prime consideration
35
is gravity and serious nature of the offence. The custodial interrogation of the petitioner is
required to unearth the conspiracy and to recover the gold bars or the sale proceeds thereof and
to find out to whom the said gold bars were sold out by the petitioner and sharing of gold bars or
proceeds thereof by his co- accused Nikesh Gupta.

CONCLUSION: Keeping in view the serious nature of the offence committed and gravity of the
accusation and the possibility of the petitioner to tamper with the evidence or flee from the
justice, the petitioner has no ground with him for his entitlement to grant of anticipatory bail.
Application was dismissed.

CRIMINAL BREACH OF TRUST BY PUBLIC SERVANT

BAIJNATH GUPTA AND OTHERS VS THE STATE OF MADHYA PRADESH36

FACTS: G was Chief Accountant-cum-Office Superintendent in the Electric Supply

Undertaking run by the Government of the erstwhile state of Madhya Bharat. He was
prosecuted along with K, an assistant Superintendent in the same office, for criminal breach of
trust of money which had been entrusted to them. They were also charged with making false
entries in the accounts. The prosecution case was that sums amounting to Rs.
21,450 were falsely shown in the accounts as having been sent to the treasury but were not
actually deposited there. Further, a sum of Rs. 10,000 had been falsely shown on the debit
side to cover the extraction of that sum by K, the said entry having been later on cancelled by G.
G was convicted by the trial court under s. 477A read with s. 109 and under s. 409 of the Indian
Penal Code. The High Court dismissed his appeal By special leave be appealed to this Court.

G was Chief Accountant cum Office Superintendent in the Electric Supply Undertaking run
by the Government of the erstwhile state of Madhya Bharat. He was prosecuted along with K,
an assistant Superintendent in the same office, for criminal breach of trust of money which had
been entrusted to them. They were also charged with making false entries in the accounts.
The prosecution case was that sums amounting to Rs. 21,450 were falsely shown in the
accounts as having been sent to the treasury but were not actually deposited there. Further, a
sum of Rs. 10,000 had been falsely shown on the debit side to cover the extraction of that sum
by K, the said entry having been later on cancelled by G. G was convicted by the trial court

36
1966 AIR 220

36
under s. 477A read with s. 109 and under s. 409 of the Indian Penal Code. The High Court
dismissed his appeal By special leave be appealed to this Court.

ISSUE: Was the offence committed under the discharge of his duty?

REASONING: Whether an offence was committed in the course of official duty will depend
on the facts of each case. The test is whether the public servant, if challenged, can reasonably
claim that what he did he did in virtue of his office.

The facts of the present case could not be distinguished from those in Amrik Singh's case.
The appellant when charged with the defalcation of Rs.21,450 could have reasonably said
that he sent the amounts to the treasury as the accounts showed, and that would have been an act
in the performance of his official duty. In respect of the sum of Rs. 10,000 he could similarly
have said that he spent them in the discharge of his duty. Whether he had actually done that or
not would be irrelevant for deciding the necessity for sanction.

The trial and conviction of the appellant under s. 409 Indian Penal Code for defalcation of
the two sums of Rs. 10,000 and Rs. 21,450 was therefore bad in the absence of the necessary
sanction.

CONCLUSION: The evidence of these two witnesses has been accepted by the lower Courts as
true and it has been found that the appellant and Gupta jointly made an attempt to have the
accounts rewritten and manipulated.Hence, the appeal was dismissed.

SOM NARTH PURI VS THE STATE OF RAJASTHAN37

FACTS: The appellant who was an employee of the Indian Airlines Corporation was
convicted under s. 409, Penal Code, and section 5(2) read with section 5 (1) (c) of the
Prevention of Corruption Act, 1947. The appellant's duty was to make reservations for the
passengers. The practice was that whenever the quota was full intending travellers were
required to pay trunk telephone charges for enabling the Corporation to obtain release of seats
from quotas allotted to other centers. The appellant who was incharge of this arrangement, it

37
1972 SCR (3) 497

37
was alleged, collected Rs. 184.90 towards trunk telephones charges but actually deposited
with the corporation only a sum of Rs. 44.90 and misappropriated the balance.

The modus operandi, it was alleged, was that he would demand a higher, amount for Trunk
Call charges than was likely to be incurred and he would issue a correct receipt for this
amount on behalf of the corporation but after making the trunk call, he would alter the
counterfoil with the actual amount of trunk call charges. In the appeal to this Court it was urged
that since the prosecution case as disclosed by the evidence was that the appellant had collected
excess charges representing them to be actual charges for trunk calls and not that any excess
over the actualcharges would be returned to the appellant he could not be-convicted either under
s. 5(2) read with 5(1)(c) of the Prevention of Corruption Act or under s. 409 penal code,
because, the important ingredient, viz., entrustment of the amount was absent.

ISSUE: Can the extra charges laid down be brought to breach of trust although being corruption?

REASONING: The receipts in respect of the sums, were given on behalf of the Corporation
and it would be the Corporation that would be liable directly to ,the person who had paid this
amount, if no trunk calls were made, or any excess over the actual amount of the trunk call
charges was charged by it. The amount was not paid by passengers to the accused as such but to
the corporation and as soon as the receipt for the amount actually received from the passengers
was given by the accused on behalf of the corporation, he was entrusted with that amount. His
subsequent conduct in falsifying the counterfoils and fraudulently misappropriating the amount
would make him guilty of criminal breach of trust under s. 409 I.P.C., as also under section
5(2) read with section 5(1)(c) of the Act.

CONCLUSION: There is, therefore, no merit in this appeal and it is accordingly dismissed.

SURENDRA PAL SINGH VS THE STATE38

FACTS: Appellant was convicted u/s 409 of ipc. The applicant realised a sum of Rs. 596/14/-
from certain cultivators on account of canal dues in his capacity as extra canal amin and
deposited only a sum of Rs. 398/4/6 out of it in the Government treasury. The excess sum of Rs.
198/9/6 was not deposited in the treasury, though it was realised from the cultivators.

38
AIR 1957 All 122, 1957 CriLJ 170

38
It further appears that the sum of Rs. 596/14/-realised by the applicant was not really due from
those cultivators as canal dues. The sum due was Rs. 398/4/8 and that was the sum which, after
realisation, was deposited by the applicant in the Government treasury. The amount of Rs.
198/9/6, which was misappropriated by the applicant, had been realised by him from the
cultivators representing that it was due from them as canal dues, though this was not correct.

ISSUE: Whether, on these findings, the conviction of the applicant for the offence punishable
under Section 409, Penal Code is justified.

REASONING: The only offence, which, on these facts, the applicant can be held liable for, is the
offence of cheating and obtaining delivery of property by commission of that offence which
would be punishable under Section 420, Penal Code. We may say with respect that the remarks
made by the Full Bench of the Madras High Court in Emperor v. John Melver, AIR 1936 Mad
353 (A) and the remarks made by the Law Lords in Lake v. Simmons, 1927 AC 487 . (B)
support our view. In such a case as the present one, the appropriate provision of law is
only Section 420, Penal code, where Section 409, Penal Code, cannot apply at all.

CONCLUSION: Hence, set aside the conviction and sentence of the applicant and, without
recording any order of acquittal, quash these proceedings against the applicant. His bail bonds
are discharged. The fine if paid, shall be refunded.

STATE VS DAHYALAL DALPATRAM39

FACTS: The accused Dahyalal was employed in the revenue Department of the State of Bombay
as a Talati of the Piparala Seza which consists of four villages- Piparala. Raza, Madhatra and
Cramdi in the Santalpur Taluka of Radhanpur Sub-Division District Banaskantha. One Vagha
Ganga had unauthorisedly cultivated land near the village pond of Roza in the year 1951-52 and
1952-53. An enquiry was started by the Mamlatdar of Santalpur in that behalf and the Mamlatdar
directred the accused to recover from Vagha Ganga Rs. 4/- as fine for each year for unauthorised
cultivation and Rs. 1/12/- as assessment. In enforcement of the order of the Mamlatdar, the
accused recovered from Vagha Ganga Rs. 13/9/- sometime between 18th May, 1955 and July
1955, but he did not credit the amount in the revenue account. The accused was transferred to

39
(1959) 61 BOMLR 885

39
another village in the month of July 1955 and one Ganesh was appointed Talati of Piparala Seza.
Ganesh inspected the revenue accounts are found that Vagha Ganga was shown as a debitor for
the amount directed to be recovered from him as fine and assessment, and he accordingly called
upon Vagha Ganga to pay the amount. Vagha Ganga appeared before Ganesh and showed him a
receipt issued by the accused Dahyalal acknowledging receipt of Rs. 13/9/- from Vagha Ganga.
Thereafter an enquiry was started against the accused, and in the course of the enquiry the
accused made two statements before the Prant Office Radhanpur. In his first statement, dated 1st
May, 1956, the accused told the Prant Officer that he had given the receipt for Rs. 13/9/- to
Vagha Ganga in acknowledgment of receipt of the amount, and that the amount was not credited
in the Goveernment Treasury nor was it credited in the Government accounts and it had
remained with him "due to oversight" but he had not intentionally committed any default. In his
reply to the notice isssued to him, the accused informed the Mamlatdar that the amount which
was recovered by him from Vagha Ganga was not recovered by him as 'Government dues", that
after he had returned the same to the latter and that he had not misappropriated the amount and
that he had obtained a receipt from Vagha Ganga for repayment of the amount. The accused was
thereafter charged before the Judicial Magistrate, First Class, Radhanpur, for having commited
criminal breach of trust in respect of the amount of Rs. 13/9/- and having thereby committed an
offence under S. 409 of the Indian Penal Code.

ISSUE: Though lack of intention, can the accused be charged under section 409 of ipc?

REASONING: The accused having received the amount in his capacity as a Talati from Vagha
Ganga in satisfaction of an alleged liability of the latter to pay assessment and fine, the accused
committed the offence of criminal breach of trust when he misappropriated that amount.

CONCLUSION: Hence, the accused appellant was acquitted.

STATE OF ORISSA VS GANESH PRASAD DUTTA40

FACTS: In the year 1948 when Balasore was under Cuttack Judge-ship, the then District Judge
by his order dated April 17, 1948 appointed the Nazir, Munsifs Court, Bhadrak, as Receiver in
Insolvency case No. 6-B of 1946; since then whoever was Nazir of the said Court was Receiver;
the accused respondent, who was a stenographer of the Additional District Judge, Balasore was

40
1962 CriLJ 658

40
appointed Nazir of Munsif's Court, Bliadrak and in the said capacity was the Nazir till February
16, 1957, when he handed over charge of his office as Nazir to his successor one Brajasundar
Pati, consequent upon his transfer to Balasore, In course of his term of office as Nazir, the
accused respondent sold certain properties of the insolvent as Receiver and thereby realised a
sum of Rs. 1500/-; the Receiver did not credit the amount in the General Cash Book; in fact, the
Receiver was approached for payment of the said sum of Rs. 1500/- but he evaded payment on
some pretext or other. The prosecution case is that on February 16, 1957, when the Receiver
made over charge to his successor as aforesaid the accused respondent did not make over the said
amount. In 1958, a demand was made on the accused respondent for payment of the money and
he was asked to deposit the amount; thereupon the accused respondent wanted time for payment
and he could deposit a sum of Rs. 150/- only within the time allowed but failed to deposit the
balance. On these facts the then District Judge, Mayurbhanj, Sri R.C. Misra wrote to the
Superintendent of Police, Balasore, a letter requesting him that necessary steps may be taken
against the accused respondent for defalcation, made by the accused respondent, on the facts and
circumstances stated in his: letter. Thereafter, the Nazir was, in due course, sent up for trial for
criminal Breach of trust, as a public servant under Section 409 Indian Penal Code and the learned
Magistrate acquitted him of the charge as aforesaid. Hence this Government Appeal against the
said order of acquittal.

ISSUES: whether there was entrustment of the money to the accused respondent as alleged?

REASONING: the accused respondent had entered in the General Cash Book this sum of Rs.
1500/- which he received as Receiver in insolvency proceedings, then there would have been
some indication to that effect in the book itself; in any event, it was for the accused respondent to
explain the account; there is nothing on record to show that such money, which he received as
Receiver as sale proceeds out of the sale of the insolvent's property, was, in fact entered in the
General Cash book under the appropriate or any head. In the absence of any evidence, showing
the exact position, the point taken by Mr. G.C. Das in support of the defence does not appear to
get any support.

CONCLUSION: the accused respondent guilty of the offence of criminal breach of trust
under Section 409I.P.C., convict him thereunder, and sentence him to undergo rigorous
imprisonment for six months and pay a fine of Rs. 500/-and in default of payment of fine, he
shall undergo rigorous imprisonment for a further period of six months.

41
 R. K. DALMIA VS DELHI ADMINISTRATION41

FACTS: Appellant Dalmia was the Chairman of the Board of Directors and Principal Officer of
the Bharat Insurance company and appellant Chokhani its agent in Bombay. Appellant Vishnu
Prasad, nephew of Chokhani, was the nominal owner of Bhagwati Trading Company but
its business was entirely conducted by Chokhani. Gurha, the other appellant, was a Director
of Bharat Union Agencies, a company dealing in forward transactions of speculation in shares,
and owned for all practical purposes by Dalmia. This Company suffered heavy losses in its
business during the period August, 1954, to September, 1955. The prosecution case against
the appellants in substance was that in order to provide funds for the payment of those losses in
due time, they entered into a conspiracy, along with five others, to divert the funds of the
Insurance company to the Union Agencies through the Bhagwati Trading Company and to
cover up such unauthorised transfer of funds, the various steps for such transfer and the
falsification of accounts of the Insurance Company and the Union Agencies and its allied
concern and committed offences under s. 120B read with s. 409 of the Indian Penal Code.

ISSUE: After the confession, can the case be concluded as cheating or criminal breach of trust?

REASONING: Both Dalmia and Chokhani were agents of the Bharat Insurance
Company within the meaning of s. 409 of the Code. The confession of Dalmia was not hit by
Art. 20(3) of the Constitution since it was not made by him at a time when he was accused of an
offence.

The expression 'with intent to defraud' in s. 477A of the Indian Penal Code did not mean
intention to defraud someone in the future and could relate to an attempt to cover up what had
already happened.

CONCLUSION: The appellants have been rightly convicted of the offences charged. It has been
urged for Chokhani that his sentence be reduced to the period already undergone as he made no
profit for himself out of the impugned transactions, that he is 59 years old and had already been
ten days in jail. Appeals are dismissed.

CRIMINAL BREACH OF TRUST IN PENSIONERS

41
1962 AIR 1821

42
 S. SAMPATH KUMAR VS THE STATE OF MAHARASHTRA42

FACTS: It has been alleged that the Company M/s Deve Paints Limited and its officers have
committed offence punishable under Section 405 and 406 of Indian Penal Code by committing
the criminal breach of trust as defaulted in the payment of the contribution of the family pension
fund, even though deducted from the salary of the employees of the said Company.

ISSUE:

1. Can the company withhold the pensions of a employer although the money has been
already deducted earlier during the employment?

2. Who in the company is liable for the act?

REASONING: Shri P.T. Kulkarni is the person in-charge of the establishment and is responsible
for the conduct of the business of the aforesaid company/establishment.

The basic principle of invoking the prosecution is not only against the company, or against all
the officers or Manager or Directors of the Company, but basically against the person who is/are
in-charge at the relevant time or who is or are conducting the affairs of the company.

CONCLUSION: No offence, as contemplated under Section 405 of I.P.C. explanation (1), has
been made out against the petitioner.

P.PRABHAKARAN NAIR VS UNION OF INDIA43

FACTS: In 1979, the petitioner joined the State Bank of Travancore as a Security Guard on
provisional basis. Subsequently, with effect from 28/11/1983, he was appointed on regular basis
as a Security Guard. During 1998, the petitioner was posted at Neyyattinkara branch of the Bank.

42
(2005) IILLJ 817 Bom
43
29672 of 2002 KERALA HC

43
In the night of 31/05/1998, the petitioner and another Guard by name, Krishnankutty, were on
duty. During the midnight, when the petitioner, admittedly, was sleeping, some unknown persons
trespassed into the Bank and stabbed Shri.Krishnankutty, opening the rear door of the branch.
Shri.Krishnankutty succumbed to injuries. This led to the suspension of the petitioner with effect
from 06/06/1998.

When petitioner attained the age of superannuation, Manager of the Branch issued dated
28/07/1998 permitting the petitioner to retire from service and clarifying that the disciplinary
action already initiated will be continued under the Pension Regulations.

Managing Director issued preliminary order dated 18/02/2000 stating that considering the grave
misconducts proved against the petitioner, he proposed to withdraw permanently the pension
payable to the petitioner under Regulation 43 of the Pension Regulations.

ISSUE: Can the Managing Director withhold and cancel the pension permanently?

REASONING: A reading of the charge memo shows that the petitioner being a Security Guard,
under the influence of alcohol slept while on duty, and he did not even know the door of the
Bank was opened, and his colleague was stabbed resulting in his death. This certainly is a very
grave misconduct which was proved in a proper enquiry.

CONCLUSION: If the competent authority, having regard to the facts, passed an order
withholding or withdrawing his pension in full, The court is not persuaded to think that the said
order is a disproportionate one shocking the conscience of this Court, warranting interference
under Article 226 of the Constitution of India.

Hence, petition has been dismissed.

RENUKABEN RASHMIKANT PADIA VS BANK OF MAHARASHTRA THR' CHIEF

MANAGER44

FACTS: The petitioner-appellant's husband was working with the respondent-Bank. He joined
his service in the year 1976 and continued to work with the Bank till 24.10.2000 when he met

44
2007 GJ HC

44
with an accidental death. The respondent-Bank by a communication dated 5.10.2004 conveyed
to the appellant that the entire past service of her late husband was forfeited on account of his
involvement in fraudulent transactions leading to pecuniary loss to the Bank and, therefore, his
family was not entitled to family pension.

According to the respondent-Bank, the deceased husband had indulged in fraud on Bank by
falsely crediting several amounts into the accounts of his family members and withdrawing the
same and thereby had swindled approximately Rs. 11,96,940/- while he was in service.
According to the respondent-Bank, it was a case of "deemed dismissal" from service. The Bank
was, therefore, entitled to recover pecuniary loss suffered by it from the amount receivable by
the family of the deceased employee. The appellant is a conscious beneficiary and, therefore, the
Bank was entitled to recover the same from the amount receivable by her in the form of gratuity,
provident fund, pension etc.

ISSUES: Can the bank raise any objection over the pension allowance?

REASONING: Undisputedly, there has been no departmental proceedings, there has been no
adjudication or verdict on the question whether the said entries were, in fact, made by the
deceased employee or not. The case of the Bank stands on a mere assertion by the Bank, in
absence of any verdict from competent authority to that effect, by following due procedure of
law. In our view, if Regulation 49 is read, it contemplates recovery of dues to the Bank on
account of housing loans, advances, licence fees, dues to the Staff Cooperative Credit Society
and the like. In the instant case, such amounts have already been recovered, to which the
appellant has not raised any objection here.

CONCLUSION: That part of the order, which authorises the respondent-Bank to adjust the
amount of pecuniary loss, allegedly caused by the fraudulent acts of the appellant's deceased
husband, from the amount of family pension payable to the petitioner-appellant, is hereby
quashed and set aside.

45
 CHITTA RANJAN GHOSH VS UCO BANK & ORS45

FACTS: This is a case of Writ of Mandamus. The petitioner joined the respondent bank in the
year 1971. From time to time he was promoted and in the year 2003 he was promoted to the post
of General Manager in the bank's top executive grade.

During the period 21 June, 2001 till 8 April, 2003, the petitioner was posted as General Manager,
Regional Office, Calcutta. A letter dated 29 September, 2004 was served on the petitioner
wherein the respondent bank alleged certain irregularities in the advance portfolio of the bank's
Beck Bagan Branch during the year 2001-02. The petitioner was called upon to offer an
explanation regarding such alleged irregularities.

The bank informed the petitioner that disciplinary proceedings have been initiated against the
petitioner and since the same cannot be completed before the date of retirement of the petitioner
i.e. 31 December, 2009, the competent authority had decided to invoke Regulation and amended
as to the manager is deemed to be the employer of the bank until the enquiry is completed but is
not eligible for the pension until the allegation are necessarily proved to be false.

ISSUES: Can the bank allegedly withhold the pension although not being proved of guilty?

REASONING: In agreement with the submission of Ld. Counsel for the bank that the fact that
another retired employee namely, Samar Kumar Mitra, had been paid all retiral benefits
including commutation of pension although a judicial proceeding was pending against him,
cannot create a right in favour of the petitioner. It is clear from the supplementary affidavit
affirmed on behalf of the bank that such payment was made to Samar Kumar Mitra erroneously.
The petitioner cannot insist on repeatation if such an erroneous act. A benefit erroneously
granted to a person by an authority cannot and does not entitle another person similarly situated
to insist that similar benefit be extended to him. The right guaranteed under Art. 14 of the
Constitution is a positive right and not a negative right. Before a petitioner can legitimately pray
for issuance of a writ of mandamus he must establish that he has a legally enforceable right i.e. a
positive right recognized by law, which the petitioner has failed to do in the present case. In this
connection the Hon'ble Supreme Court decision in the case of Ram Chandra Dev (supra) has
already been referred to hereinabove.

45
WP 325 OF 2015

46
CONCLUSION: Hence, The petition has been dismissed and the interim relief cannot be granted
unless he is not proved guilty.

RAVINDER GOSAIN VS PUNJAB & SIND BANK46

FACTS: The challenge in this appeal is against a judgment dated 24th January 2018 of the
learned Single Judge.

The background facts are that major penalty proceedings were instituted by the Bank against the
Appellant, who was at the relevant time General Manager of the Bank, by a charge-sheet dated
20th December 2012 followed by a memorandum dated 31st December 2012 in relation
tolapses/irregularities committed by him in the accounts of M/s.Majestic Hotels (P) Ltd.,
M/s.Star Biotech and Sh.Naresh Kumar - Godown Construction Loan while working as a
General Manager at the local head office (LHO), Chandigarh from 27th December 2010 to 17th
July 2012. A further charge was concerning his lapses in supervising the affairs of the Branch
Office, Sector 24, Chandigarh while working as a Zonal Manager, Zonal Office-I, Chandigarh
from 28th February 2009 to 23rd December 2010.

ISSUES: Can the bank deduct the pay scale of the appellant and also suspend the employer’s
pension?

REASONING: The Court finds that not only the report of the EA but even the order of the DA
has discussed the entire evidence in respect of the each of the articles of charge and given
detailed reasons why the Appellant is guilty of those charges. There is a limited scope of
interference with the disciplinary enquiry proceedings under Article 226 of the Constitution, as
rightly noted by the learned Single Judge. With the Appellant unable to point out to any
procedural error whatsoever in the conduct of the enquiry, the Court concurs with the view of the
learned Single Judge that the merits of the enquiry does not warrant interference.

Under Regulation 46 of the Pension Regulations, provisional pension is payable to an employee

who retired on attaining the age of superannuation or otherwise against whom departmental
proceedings were instituted and continued. However, he is not entitled to gratuity till the
conclusion of such proceedings.

46
2018 DELHI HC 221

47
CONCLUSION: Consequently, this Court finds no reason to interfere with the decision of the
Bank communicated to the Appellant by the letter dated 3 rd May 2018 pursuant to the impugned
judgment of the learned Single Judge.

CRIMINAL BREACH OF TRUST IN PROPERTY

T.T.G.Industries Ltd vs State

FACTS: M/s.T.T.G Machinery Manufacturing Company in the year 1987 and it underwent a
change of name in 1992 as M/s.T.T.G.Industries Limited. It was engaged in manufacturing of
Wind Electric Generators in collaboration with a German company. During the year 1994 to
1995, the first petitioner approached the Chennai office of the Industrial Finance Corporation of
India, shortly called as IFCI, for the sanction of a term loan of Rs.11.65 crores for setting up of a
"Wind Farm" with 2.5 MW capacity near Kethanoor, Palladam Taluk and for expanding its
capacity of manufacturing Wind Electric Generators at its plant at Ayanambakkam, Chennai.
IFCI agreed to lend financial assistance on condition that the loan amount should be secured by
way of first charge on all the movable and immovable assets of M/s.T.T.G Industries Ltd., both
present and future. It was also agreed that the possession of such movable and immovable assets
of the first petitioner would be treated as properties entrusted to it by IFCI. Out of the agreed
amount of loan, at various points of time, a total amount of Rs.11 crores was released to the first
petitioner herein by way of cheques. However, the loan in respect of the balance amount of
Rs.65 lakhs was cancelled. The first petitioner executed a deed of hypothecation dated
06.06.1995 hypothecating Wind Electric Generators with their parts and accessories. Pursuant to
the execution of the deed of hypothecation and with the help of the financial assistance rendered
by IFCI, the first petitioner company installed 10 wind electric generators at Kethanur, Palladam
Taluk on condition that the possession of the said wind mills and enjoyment of the same by the
first petitioner was for doing business of electricity generation and out of the profit earned, the
principal and interest should be repaid to IFCI.

When the officials of IFCI visited the Wind Farm of the first petitioner in December 2002 for
verification of the hypothecated properties, the first petitioner company handed over false and
fabricated documents as if those wind electric generators were sent for repair works and thus the
sale of the 8 wind electric generators and removal of the same were concealed.

48
The first petitioner company's representatives also falsely submitted before the Board for
Industrial and Financial Reconstruction (shortly called BIFR) on 21.03.2002 that the subject
wind electric generators had been sent for repairs. During the course of investigation, the second
and the third petitioners (A2 and A3), who were the representatives of the first petitioner
company also furnished false information to the Registrar of companies by producing false
balance sheets for the year 2003 and 2004, as if the wind electric generators had been sent for
repairs.

The 4th and 5th petitioners, who are also the officials of the first petitioner company,
during investigation gave confessional statements before the Chief Metropolitan Magistrate,
Chennai bringing the malpractice to light that they also entered into a criminal conspiracy with
other petitioners to commit the said malpractice.

ISSUES: Although the company owns the electricity generators, can they sell them if they are
hypothecated to the bank?

REASONING: Apart from the fact that the person allegedly cheated has accepted the amount in
full settlement of the claim and agreed to withdraw all cases and thereby agreed for
compounding the case, it is also an admitted case that none of the officials of IFCI gave the
complaint for the registration of the case and that they have also informed the CBI of their
having no interest in pursuing the criminal case. Under such circumstances, if the case against
the petitioners is allowed to proceed further, as rightly pointed out by the learned counsel for the
petitioners, the same will result in not only waste of exercise of judicial time, but also an abuse
of process of Court.

CONCLUSION: Hence, The petitioners being waived of the loan amount are considered to be
the actual owners instead of deemed owners and hence petitioners are acquitted.

SELVI J. JAYALALITHA VS STATE REP BY ADDL. SUPERINTENDENT47

FACTS: The petitioner Selvi Jayalalitha was the Chief Minister of Tamil Nadu between June,
1991 to May, 1996. In 1996, the respondent police have registered a case in Crime No.17 of
1996 in respect of sale of two immovable properties of Tamil Nadu Small Industries

47
2000 (2) CTC 116

49
Corporation, a Tamil Nadu Government Corporation incorporated under the Companies Act,
1956 to (1) M/s. Jaya Publication and (2) M/s. Sasi Enterprises.

The major charge against the petitioner is that while she was Chief Minister of Tamil Nadu, M/s.
Jaya Publication and M/s. Sasi Enterprises, the two firms wherein she was a partner, have
purchased two immovable properties for a price lower than that of the Government guideline
value.

ISSUES: Can the chief minister be held of abusing power?

REASONING: As already stated since the property was sold in public auction and the
registration fees was paid, no independent charge for an offence under Section 420 I.P.C. can be
made out and the charge is depending upon the other charges. The fact of the case is such that if
there is material to frame the charge under any one of the Sections, there will be materials for
framing the charges for other offences though they are different and distinct.

In the circumstances of the case, the very question of deception, fraudulent and dishonestly
inducing delivery of property cannot arise and in fact there is no such material to presume that
the accused has committed an offence punishable under Section 420 I.P.C.

CONCLUSION: Hence, The petition is allowed as the sale and purchase was done through mode
of auction and is nothing against the law.

SMT. VIMLA GAUTAM & ORS. VS SMT. MOHINI JAIN & ANR. ON 16 JANUARY,
2012

FACTS: respondents/plaintiffs claimed to be owners of the suit property inasmuch as the suit
property was said to belong to their mother-Smt. Indira Kumari Jain who died on 2.11.1996.
Smt. Indira Kumari Jain is said to have executed a Will dated 9.4.1991 with respect to the suit
property in favour of the respondents/plaintiffs-daughters.

Smt. Indira Kumari Jain is said to have purchased rights in the suit property by means of usual
documents being registered power of attorney dated 17.4.1986; a receipt for a sum of ` 15,000/-,
an agreement to sell dated 17.4.1986; an affidavit dated 17.4.1986. Sh. Birender Kumar Jain
from whom Smt. Indira Kumari Jain, mother of the respondents/plaintiffs purchased the suit
50
property is said to have purchased the property by means of a registered sale deed dated
11.7.1966;from one Smt. Raj Kumari Bhatnagar to Smt. Raj Kumari Bhatnagar had purchased
the suit property from Delhi Housing Company vide registered sale deed dated 20.8.1959. The
respondents/plaintiffs employed a Chowkidar, namely, Dildar Hussain alias Chunnu to look after
the suit plot who was also residing in the suit plot along with his family members. This
Chowkidar in breach of trust made some forged documents such as the power of attorney in
collusion with the defendants and thereafter on 9.3.1994 under the power of attorney first
executed certain documents and thereafter gave possession of the land to the defendants.

ISSUES: Can the chowkidar be the the prima facie for breach of trust?

REASONING: It has been established that Sh. Birender Kumar Jain was the owner of the said
property and that he had agreed to sell the said property to Smt. Indira Kumar Jain and had
placed Smt. Indira Kumar Jain in possession of the said property in part performance of the
Agreement to Sell. Sh. Birender Kumar Jain also appeared as a witness and testified that he had
entered into the transaction with Smt. Indira Kumari Jain.

It is not disputed that Smt. Indira Kumar Jain died during the pendency of the first suit after
leaving behind a Will dated 09.04.1991. The said Will has been exhibited as by its attesting
witness Sh. Vidya Bhushan. Even otherwise, the plaintiffs are the natural heirs of the deceased
being her daughters. On the other hand according to Ld. counsel for the defendants, in the
absence of any registered documents like Sale Dee, the plaintiffs are not entitled for relief of
declaration as claimed in the suit.

CONCLUSION: The chowkidar is concluded with forgery of the original documents and is
hence also committed the breach of trust.

SHRI SUNIL BABURAO SHEGAONKAR AND ANR VS PIMPRI-CHINCHWAD

MUNICIPAL B HC

FACTS: The Petitioners claim to be public spirited citizens. They have approached this Court
under Article 226 of the Constitution of India praying that a CBI enquiry be ordered into the
allegations made by them in the Petition. The Petition is directed against the Municipal
Corporation of Pimpri-Chinchwad, the Mayor and Commissioner of the Corporation and the
Chairman of the Standing Committee, the Respondent Nos. 1 to respectively. According to the
Petitioners, Respondent Nos. 2, 3 and 4 have purchased cars for their use, well beyond the value
51
sanctioned by the State Government for officers of autonomous bodies. The Petitioners contend
that Respondent Nos. 2, 3 and 4 as officers of Respondent No. 1 i.e., Pimpri-Chinchwad
Municipal Corporation (hereinafter referred to as the Corporation) could have purchased cars
worth Rs. 4 lacs only for use in their official capacity.Despite this, the General Body of the
Corporation, has permitted the purchase of cars worth Rs. 9.66 lacs and 11.23 lacs which
amounts are well beyond the stipulated figure.

ISSUES: Can the head of the body of the government allot himself a vehicle more than the price
indicated by the government?

REASONING: In this case the court cannot conclude that there has been misappropriation of the
property since the property i.e., the cars have been purchased in the name of the Corporation and
are assets of the Corporation. Neither can it be said that there is a conversion of the property to
the personal use of Respondent Nos. 2,3 and 4 as the cars remain the assets of the Corporation.
As regards the user of the property, Respondent Nos. 2 to 4 are using the cars in their official
capacity and not as their personal property. Therefore, none of the ingredients of the criminal
breach of trust are satisfied. The Petitioners wish to press into service Section 409

CONCLUSION: The court did not find that the Petition discloses that any offence has been
committed, prima facie, by the Respondents and hence, the submission of the Petitioners cannot
be accepted.

J.H.JEWELERS VS UMED CHINDALIYA & ORS48

FACTS: Defendant instead of depositing the cheques of the plaintiff in the plaintiff's account,
defendant No.1 opened a separate account in his name as that of the plaintiff, i.e. J.H.Jewellers
and deposited all the plaintiff's cheques in the said account. Later on, it came to the notice of the
plaintiff about the said account that the money was further transferred by defendant No.1 to his
personal account and defendant No.2's account, both with defendant No.4 Bank. Defendant No.2
is the wife of defendant No.1. According to the plaintiff, both the defendants have hatched a
conspiracy to defraud the plaintiff and have cheated the plaintiff in terms of money to the tune of
Rs.10.18 crores.

48
AIR 2017 DHC 180

52
It is submitted by the learned counsel for the plaintiff that defendant no.2 was living in this
residential property and since house bearing no.16/805, Orange County, Indirapuram,
Ghaziabad, U.P. belong to her, she having registered documents in her name, she may be
allowed along with his family to reside in the said house till further orders for reasons mentioned
in this application. It is alleged though the house is attached by the order of this Court but the
real purpose of attachment is only to secure the property till decree is passed and to satisfy the
decree. It is argued the defendant no.2 shall not dispose of the said property or create any third
party right in the same till the disposal of this suit if allowed to stay in the same.

ISSUE: Can the defendant be accused of criminal breach of trust?

REASONING: the plaintiff has filed statement of its bank accounts which show the money has
been transferred to the account of the pseudo name of the plaintiff and then from there the
defendant no.1 had transferred the money in his account and that of defendant no.2. The accounts
allegedly show the payments were made to the seller of the flat from such misappropriated
money.

CONCLUSION: Thus a serious question qua ownership/ title of the subject property is raised by
the plaintiff and hence at this stage where the evidence is being led, it would not be appropriate
to allow this application.

53