IPC section 406 & 420 difference by a p randhir

BY A P RANDHIR

STUDY

ON

CONCEPT

OF

CRIMINAL BREACH OF

TRUST

&

CHEATING

UNDER

I.P.C 406 & 420.

BY A P RANDHIR

BY A P RANDHIR

1 Introduction

Section 405. of IPC defines Criminal breach of trust in the

following words

“Whoever, being in any manner entrusted with property, or

with any dominion over property, dishonestly misappropriates

or converts to his own use that property, or dishonestly uses or

disposes of that property in violation of any direction of law

prescribing the mode in which such trust is to be discharged, or

of any legal contract, express or implied, which he has made

touching the discharge of such trust, or willfully suffers any

other person so to do, commits ‘criminal breach of trust.”

2. Charge framing for criminal Breach of trust Special

Provision

As to framing of charge for criminal breach of trust in

Cr.P.C 1973 there is special provision in section 212(2) ;

(2) When the accused is charged with criminal breach of trust

or dishonest misappropriation of money or other movable

property, It shall be sufficient to specify the gross sum or as the

case may be describe the movable property in respect of which

the offence is alleged to have been committed and the date

between which the offence is alleged to have been committed

without specifying particular items or exact date and charge so

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framed shall be deemed to be a charge of one offence within the

meaning of section 219.

In the matter of framing of charge for criminal breach of

trust this special provision is to the strictly complied with and

proof must be given that the offence was completed between the

date given default in it cannot be cure by section 465Cr.p.c . A

completed act is necessary to constitute the offence of criminal

breach of trust.

3. Venue of trial : Criminal Breach of Trust; Cr. p. c

181(4)

Any offence of criminal misappropriation or of criminal

breach of trust may be inquired into or tried by a court within

whose local jurisdiction the offence was committed or any part

of the property which is the subject of the offence was received

or retained or was required to be returned or accounted for by

the accused person.

Thus the offence of criminal breach of trust can be tried at

three places, namely at the place where the property was

received, at the place where the property was retained by the

accused of at the place where the offence was committed and

the under section 405, IPC, the offence can be committed at a

place where the accused according to the contract entered by

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him fails to deposit the money and render accounts and

consequently, the court at that pa;ce is fully competent to try

the case.

The offence of criminal misappropriation or breach of

trust may be enquired into or tried by the court within whose

jurisdiction any of the following five facts took place namely,

1. Any part of the property forming the subject matter of theoffence was received by the accused or,

2. Was retained by him or,

3. Was required to be returned by him or,

4. Was required to the accounted for by him, or

5. The offence was committed.

5. JUDICIAL PRONOUNCMENT.

5.1 ANZ Grindlays Bank v. Shipping & Clearing (Agents )

Ltd 1992 CrLJ 77 Cal

The offence of criminal misappropriation or breach of

trust may be enquired into or at the place where the loss

ensued to the complainant.

5.2 Jagdish V State 1998 Cr.LJ 554.

BY A P RANDHIR

The offence u/s 406 and 498 A are distinct but if they are

parts of one transaction i.e. cruelty to wife and not paying pack

her stridhan, then court at place of her parents home would

also have territorial jurisdiction to try the case.

5.3 State of M.P v pramode 1965 (2) Cr l J

To Constitute dishonest misappropriation no entrustment

is required to be proved. when possession has been innocently

acquired but from subsequent intention or knowledge, the

retention becomes wrongful, the section applies.

5.4 Mohmmad ali v state 2006 Cr l j 1368 MP

Fifteen bundles of electric wire were seized from the

appellant but none including electricity department claimed

that wire was stolen property. Evidence on records Showed

that impugned electric wire was purchased by the applicant

from scrap seller. Merely applicant not having any receipt for

purchase of impugned wire it cannot be said that he was prima

facie guilty of offence punishable u/s 403. Order of framing

charge was therefore quashed.

6. DIFFENCE BETWEEN CRIMINAL BREACH OF

TRUST & CHEATING

6.1.Ashraf lal V State, 1978 Cr.LJ (NoC) 33 (ALL)

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Distinction between criminal breach of trust and cheating

is that when for cheating criminal intention is necessary at the

time of entrustment, mere proof of entrustment is sufficient in

criminal breach of trust.

6.2. Vadivel V. Pakialakshmi 1996 Cr.LJ 300( MAD)

Where it was pointed out that both offences involves

dishonest intention but they are mutually exclusive and

different in basic concept. The Criminal breach of trust is

voluntary whereas cheating is purely on basis of inducement

with dishonest intention.

6. 3. Bageswar Mishra v Khundari AIR 1970 Pat 20.

For conviction for an offence under section 420 IPC. It is

essential for the prosecution to establish the criminal intention

at the time when offence was committed. The distinction

between mere breach of contract and cheating depends upon

the intention of the accused at the time of alleged inducement

which may however be hudged by subsequent conduct.

6. 4. Hridaya Ranjan Pd. Verma V State of Bihar AIR

2000 SC 2341, 2000 CrLJ 2983

In the Supreme court case it has been held that a mere

breach of contract cannot give rise to a criminal prosecution for

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cheating unless fraudulent or dishonest intention is shown

right at the beginning of the transaction. To establish the

offence of cheating it is necessary to show that he had

fraudulent or dishonest intention as time of making the

promise.

6.5 Jaswantrai Manilal Akhaney v State of Bombay , AIR

1956 SC 575.

That is to say that the beneficial interest in the property

in respect of which the offence is alleged to have been

committed was vested in some person other than the accused,

and that the accused held the property on behalf of that person.

A relationship is created between the transferor and transferee,

where under the transferor remains the legal owner of the

property and the transferee has only the custody of the property

for the benefit of the transferor himself or someone else. At best

the transferee, obtains in the property entrusted to him only a

special interest limited to a claim for his charges in respect of

safe retention, and under no circumstances does he acquire a

right to dispose of that property in contravention of the

entrustment.

6.6 Sushil Kumar Gupta v Joy Shanker Bhattacharjee ,

AIR 1971 SC 1543.

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The offence of criminal breach of trust is committed when

a person who is entrusted in any manner with property or

With dominion over it, dishonestly misappropriates it, or

converts it to his own use, ordishonestly uses it or disposes it

of in violation of any direction of law prescribing the mode in

which the trust is to be discharged, or of any lawful contract,

express or implied, made by him touching such discharge, or

willfully suffers any other person so to do.

6. 7 Re Venkata Gurunatha, AIR 1923 Mad 597.

It cannot however be said that it is impossible, under all

circumstances, for a person to commit criminal breach of trust

in respect of his own property. Where the accused who pledged

promissory notes with the complainant as security for a loan,

induced him to hand them over to him (i.e. the accused) by

pretending that he required them to collect money from his

debtors with the aid of which he would pay cash to him (i.e. the

complainant), Held that the possession of the promissory notes,

even without endorsement, in the hands of the person, with

whom they were pledged, was of some value to the complainant

as it gave him control over the accused and so long as they

remained with him, they prevented the accused from using

them to discharge the debts due by him to other creditors in

preference to him and the complainant had thus, some sort of

beneficial interest in the property and when he gave the notesto

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the accused for a definite purpose and the accused dishonestly

disposed of them in violation of the legal contract, there was

both entrustment and dishonest misappropriation.

The following ingredients are necessary to attract the operation

of section 405.

(a) The accused must be entrusted with property or dominion

over the property; and

(b) The person so entrusted (i.e., the accused) must

(i) dishonestly misappropriate, or convert to his own use, that

property, or

(ii) dishonestly use or dispose of that property or wilfilly suffer

any other person to do so in violation of

(1) any direction of law, prescribing the mode, in which such

trust is to be discharged, or

(2) any legal contract made touching the discharge of such

trust.

7. What Is Criminal Breach Of Trust?

The offence of criminal breach of trust, as defined under

this section, is similar to the offence of embezzlement under the

English law. A reading of the section suggests that the gist of

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the offence of criminal breach of trust is ‘dishonest

misappropriation’ or ‘conversion to own use’ another’s property,

which is nothing but the offence of criminal misappropriation

defined u/s 403. The only difference between the two is that in

respect of criminal breach of trust, the accused is entrusted

with property or with dominion or control over the property.

As the title to the offence itself suggests, entrustment or

property is an essential requirement before any offence under

this section takes place. The language of the section is very

wide. The words used are ‘in any manner entrusted with

property’. So, it extends to entrustments of all kindswhether to

clerks, servants, business partners or other persons, provided

they are holding a position of trust. “The term “entrusted”

found in a 405, IPC governs not only the words “with the

property” immediately following it but also the words “or with

any dominion over the property”.

7.1 State of Gujarat vs Jaswantlal Nathalal AIR 1968 SC

700.

In the case of State of Gujarat vs Jaswantlal Nathalal,

the government sold cement to the accused only on the

condition that it will be used for construction work. However, a

portion of the cement purchased was diverted to a godown. The

accused was sought to be prosecuted for criminal breach of

BY A P RANDHIR

trust. The Supreme Court held that the expression

‘entrustment’ carries with it the implication that the person

handing over any property or on whose behalf that property is

handed over to another, continues to be its owner. Further, the

person handing over the property must have confidence in the

person taking the property. so as to create a fiduciary

relationship between them. A mere transaction of sale cannot

amount to an entrustment. If the accused had violated the

conditions of purchase, the only remedy is to prosecute him

under law relating to cement control. But no offence of criminal

breach of trust was made out.

7.2 Jaswant Rai Manilal Akhaney vs State of Bombay

AIR 1956 SC 575.

It was held that when securities are pledged with a bank

for specific purpose specified conditions, it would amount to

entrustment. Similarly, properties entrusted to directors of a

company would amount to entrustment, because directors are

to some extent in a position of trustee. However, when money

was paid as illegal gratification, there was no question of

entrustment.

7.3 State of UP vs Babu Ram AIR 1961 SC 751. ,

BY A P RANDHIR

the accused, a subinspector (SI) of police, had gone to

investigate a theft case in a village. In the evening, he saw one

person named Tika Ram coming from the side of the cannal and

hurriedly going towards a field. He appeared to be carrying

something in his dhoti folds. The accused searched him and

found a bundle containing currency notes. The accused took the

bundle and later returned it. The amount returned was short by

Rs. 250. The Supreme Court held that the currency notes were

handed over to the SI for a particular purpose and Tika Ram

had trusted the accused to return the money once the accused

satisfied himself about it. If the accused had taken the currency

notes, it would amount to criminal breach of trust..

7.4 Rashmi Kumar vs Mahesh Kumar Bhada (1997[2]

SCC 397

The Supreme Court held that when the wife entrusts her

stridhana property with the dominion over that property to her

husband or any other member of the family and the husband or

such other member of the family dishonestly misappropriates or

converts to his own use that property, or willfully suffers and

other person to do so, he commits criminal breach of trust.

8.Entrustment

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As the title to the offence itself suggests, entrustment of

property is an essential requirement before any offence under

this section takes place. The language of the section is very

wide. The words used are ‘in any manner entrusted with

property’. So, it extends to entrustments of all kinds whether

to clerks, servants, business partners or other persons, provided

they are holding a position of trust. The word entrust is not a

word of art. In common parlance, it embraces all cases in which

a thing handed over by one person to another for specific

purpose. It need not be express it may be implied. It not only

covers the relationship of a trustee and beneficiary between the

complainant and the accused, like master and servant,

guardian and ward, and the pledgor and pledge. It connotes

that the accused holds the property for, and on behalf of

another. Hence in all such transactions like that of a consignor

and consignee, bailor and bailee and hirer and hiree, there is an

element of trust implied in the transaction because in all such

relation, the property entrusted to the accused is ‘property of

another person’.

8.1 AIR 1998 SC 2676.

In order to constitute a legal entrustment, therefore, the

complainant must be the owner of the property; there must be a

transfer of possession; such transfer must be actual transfer,

and not a fictional or notional one; such transfer should be

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made to somebody who has no right excepting that of a

custodian, and such entrustment must be made to a person,

and not to a company or a firm. These are the panchsheel of a

legal entrustment. Mere transaction of sale cannot amount to

an entrustment; entrustment means that the person handing

over any property, or on whose behalf that property is handed

over to another, must have confidence in the person, taking the

property, so as to create a fiduciary relationship between them.

The word entrustment in this section, governs not only the

words ‘with the property’ immediately following it, but also the

word ‘or with any dominion over the property’, occurring

thereafter. Similarly, the managing director of a company,

including the amounts received from the subscribers, and

dominion is as good as entrustment for the purpose of this

section.

8.2 Dwarkadas Haridas v Emperor AIR 1928 Bom 521.

For a valid entrustment it is not necessary that the

accused should receive the money directly from the

complainant. In the case of Where under the terms of a

contract, some goods were entrusted to the accused, who was to

sell those goods, obtain money for them, and that money on

account of the complainant, it was held that though he didn’t

actually receive the money from the complainant, he was

‘entrusted’ with it within the meaning of this section.

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9 Property

9.1 R K Dalmia vs Delhi Administration AIR 1962 SC

1821.

The definition in a 405 does not restrict the property to

movables or immovable alone. In the above mentioned case

Hon'ble Supreme Court held that the word ‘property’ is used in

the Code in a much wider sense than the expression ‘movable

property’. There is no good reason to restrict the meaning of the

word ‘property’ to movable property only, when it is used

without any qualification in s 405. Whether the offence defined

in a particular section of IPC can be committed in respect of any

particular kind of property, will depend not on the

interpretation of the word ‘property’ but on the fact whether

that particular kind of property can be subject to the acts

covered by that section.

The word ‘dominion’ connotes control over the property.

In Shivnatrayan vs State of Maharashtra, it was held that a

director of a company was in the position of a trustee and being

a trustee of the assets, which has come into his hand, he had

dominion and control over the same.

However, in respect of partnership firms, it has been held that

though every partner has dominion over property by virtue of

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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

offence of criminal breach of trust.

9.2 Employees State Insurance Corporation vs S K

Aggarwal

The Supreme Court held that the definition of principal

employer under the Employees State Insurance Act means the

owner or occupier. Under the circumstances, in respect of a

company, it is the company itself which owns the factory and

the directors of the company will not come under the definition

of ’employer.’ Consequently, the order of the High Court

quashing the criminal proceedings initiated u/ss 405 and 406,

IPC was upheld by the Supreme Court

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10. Misappropriation

Dishonest misappropriations the essence of this section.

Dishonesty is as defined in sec.24, IPC, causing wrongful gain

or wrongful loss to a person. The meaning of wrongful gain and

wrongful loss is defined in sec 23, IPC. In order to constitute an

offence, it is not enough to establish that the money has not

been accounted for or mismanaged. It has to be established that

the accused has dishonestly put the property to his own use or

to some unauthorized use. Dishonest intention to

misappropriate is a crucial fact to be proved to bring home the

charge of criminal breach of trust.

Proof of intention, which is always a question of the guilty mind

or mens rea of the person, is difficult to establish by way of

direct evidence.

10.1 Krishan Kumar V UOI AIR 1959 SC 1390.

He accused was employed as an assistant storekeeper in

the Central Tractor Organization (CTO) at Delhi. Amongst

other duties, his duty was the taking of delivery of consignment

of goods received by rail for CTO. The accused has taken

delivery of a particular wagonload of iron and steel from Tata

Iron and Steel Co, Tatanagar, and the goods were removed from

the railway depot but did not reach the CTO. When questioned,

BY A P RANDHIR

the accused gave a false explanation that the goods had been

cleared, but later stated that he had removed the goods to

another railway siding, but the goods were not there. The

defence version of the accused was rejected as false. However,

the prosecution was unable to establish how exactly the goods

were misappropriated and what was the exact use they were

put to. In this context, the Supreme Court held that it was not

necessary in every case to prove in what precise manner the

accused person had dealt with or appropriated the goods of his

master. The question is one of intention and not direct proof of

misappropriation.

The offence will be proved if the prosecution establishes

that the servant received the goods and that he was under a

duty to account to his master and had not done so. In this case,

it was held that the prosecution has established that the

accused received the goods and removed it from the railway

depot. That was sufficient to sustain a conviction under this

section.

10.2 Jaikrishnadas Manohardas Desai vs State of

Bombay AIR 1960 SC 889. ,

It was held that dishonest misappropriation or conversion

may not ordinarily be a matter of direct proof, but when it is

established that property, is entrusted to a person or he had

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dominion over it and he has rendered a false explanation for his

failure to account for it, then an inference of misappropriation

with dishonest intent may readily be made. Prosecution need

not establish the precise mode of dishonest misappropriation of

conversion.

10.3 Surendra Prasad Verma v State of Bihar

The accused was in possession of the keys to a safe. It was

held that the accused was liable because he alone had the keys

and nobody could have the access to the safe, unless he could

establish that he parted with the keys to the safe.

The offence under section 405 can be said to have

committed only when all of its essential ingredients are found

to have been satisfied. As in the case of criminal

misappropriation, even a temporary misappropriation could be

sufficient to warrant conviction under this section. Even if the

accused intended to restore the property in future, at the time

misappropriation, it is a criminal breach of trust.

11. Doctrine of Public Trust and Interpretation of Law

Courts

11.1 In the case of Common Cause, A Registered Society

v Union of India AIR 1973 SC 488.and in the case of Shiva

Sagar Tiwari v Union of India (1996) 6 SCC 558.,

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It was held by the Supreme court that a minister is in a

position of trustee in respect of public property under his charge

and discretion, and he must therefore deal with people’s

property in just and fair manner, failing which he or she would

be personally liable for criminal breach of trust.

In the case of Common Cause, the apex court imposed a

fine of Rs 50 lakh on Captain Satish Sharma, former petroleum

minister in the P V Narsimha Rao’s government for arbitrary

exercise of discretionary power of minister in allotment and

distribution of petrol pumps and cooking gas agencies; and

ordered the central Bureau of Investigation.To probe into the

allotment scam and institute criminal proceedings for

committing breach of trust against Captain Satish Sharma for

abuse of office during his tenure as minister.

The bench consisting of justices Kuldeep Singh and

Faizanuddin, setting aside order of allotment of petrol pumps

said”

Not only the relatives of most of the officials working for

Captain Satish Sharma but even his own driver and the driver

of his additional Private Secretary have been allotted a petrol

pump and a gas agency respectively……………. There is

nothing on the record to indicate that the Minister kept any

criteria in view while making the allotments………….. no

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criteria was fixed, no guidelines were kept in view, none knew

how many. petrol. pumps were available for allotment,

applications were not invite and the allotments of petrol pumps

were made in an arbitrary and discriminatory manner.”

The court explained that in a welfare state the

Government provides a large number of benefits to the citizens

and held:

“A Minister who is the executive head of the department

concerned distributed these benefits and largesse (generosity)s.

He is elected by the people and is elevated to a position where

he holds a trust on behalf of the people. He has to deal with the

peoples’ property in a fair and just manner. He cannot commit

breach of the trust reposed in him by the people.”

11.2 Shiv Sagar Tiwara v Union of India (1996) 6 SCC

558. The decision was given by a bench consisting of

Justices G. B. Pattnaik, R. P. Sethi and Bisheswer

Prasad Singh in 2002.

The apex court levied a fine of 60 lakhs on Mrs. Sheila

Kaul, former Union Minister for Housing and Urban

Development and former govermor of Himachal Pradesh and

cancelled the allotment of 52 shops and kiosks (stalls) for

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arbitrarily, oppressively and unconstitutionally allotting the

shops to her relatives, friends and staff members during her

tenure as Minister. The court directed the Government to

formulate an allotment policy within two months and complete

the process of allotment within four months.

Justice Kuldeep Singh and Justice Hansaria, while

imposing the fine said

“Since the properties she was dealing with were

Government properties, the government by the people has to be

compensated for breach of public trust. Mrs. Kaul should pay

for causing pecuniary loss to the exchequer for action in an

“oppressive and mala fide manner”, while making shop

allotments.

However the apex court in a review petition filed by Mrs.

Kaul, quashed the damages on compassionate ground having

regard to the peculiar facts and circumstances of Mrs. Kaul,

who was stated to be old, ailing and passing through great

hardship.

It was thought that these decision have set at rest the

controversy in respect of exercise of discretionary power by the

Ministers, Governors etc., and have established jurisprudence

of public accountability and transparency in the Government’s

working and would be an eye opener to persons in high

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positions to exercise powers with restraint so as not to make it

farce and mockery of rule of law and democratic process. But to

the dismay of common man and disappointment to legal

fraternity in a review petition, a three member bench of the

Supreme Court consisting of the Justices Saghir Ahmed,

Venkatswami and Rajendra Babu turned down its earlier

decision of November 4 1996 and ordered for the refund of sum

of Rs. 50 lakh to the petitioner and quashed the order of the

court for launching of prosecution against Capt. Sharma for

criminal breach of trust under section 406, IPC.

While endorsing the findings, it was found by the court

that the conduct of the Minister was wholly unjustified, the

court said nevertheless it falls short of “misfeasance”; and the

petitioner “Common Cause”, not being an applicant for

allotment, it could not claim to have suffered any damage or

loss on account of conduct of Minister. There has to be an

identifiable plaintiff or claimant whose interest are damaged by

the public officer (tort feaser) maliciously or with the knowledge

that the impugned section was likely to injure the interest of

that person. As regards the imposition of pecuniary damages, it

was said by the court:

“State cannot derive itself the right of being compensated

by its officers on the ground that they had contravened or

violated the fundamental rights of a citizen. Directing the

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Minister to pay, a sum of 50 lakh to the Government, would

amount to asking the government to pay exemplary damages to

itself, which is not tenable under law”.

Lastly, it was said by the court that the ‘Doctrine of Public

Trust’ is not applicable in the case of ministers in discharging

their duties.

I fail to understand the logic of such a farfetched

argument that though the act of the Minister is wrong, it is not

actionable, it also a derogation from the maxim of ‘Ubi jus ibi

remedium’, this should not be so especially in a democratic

country like India where public trust is the breath of the

system. With due respect to the court that in a democracy the

court cannot shirk from its constitutional responsibility by

pleading its inability to provide remedy applying the colonial

theory of “the king can do no wrong”. Another assumption of the

court, that ‘the minister does not assume the role of a trustee’

in the real sense, nor does a trust comes into existence, is

misleading. Moreover the fact that there is no injury to a third

person in the present case is not enough to make the principle

of public accountability inapplicable in as much as there was

injury to the high principle of public law, that a public

functionary has to use its power for the bona fide purpose and

in a transparent manner.

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12. Criminal Breach of Trust by Public Servant or by

Banker or by Agent

Section 409 of IPC says – Criminal breach of trust by

public servant, or by banker, merchant or agent.– Whoever,

being in any manner entrusted with property, or with any

dominion over property in his capacity of a public servant or in

the way of his business as a banker, merchant, factor, broker,

attorney or agent, commits criminal breach of trust in respect of

that property, shall be punished with [ imprisonment for life],

or with imprisonment of either description for a term which

may extend to ten years, and shall also be liable to fine.

The acts of criminal breach of trust done by strangers is

treated less harshly than acts of criminal breach of trust on

part of the persons who enjoy special trust and also in a

position to be privy to a lot of information or authority or on

account of the status enjoyed by them, say as in the case of a

public servant. That is why section 407 and 408 provide for

enhanced punished of up to seven years (which is generally

three years or/with fine) in the case of commission of offence of

criminal breach of trust by persons entrusted with property as

a carrier, wharfinger or warehousekeeper.

In respect of public servants a much more stringent

punishment of life imprisonment or imprisonment up to 10

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years with fine is provided. This is because of special status and

the trust which a public servant enjoys in the eyes of the public

as a representative of the government or government owed

enterprises. Under section 409, IPC, the entrustment of

property or dominion should be in the capacity of the accused as

a public servant, or in the way of his business as a banker,

merchant broker, etc. The entrustment should have nexus to

the office held by the public servant as a public servant. Only

then this section will apply.

12.1 Superintendent and Remembrance of Legal Affairs

v. S K Roy ,AIR 1974 SC 794.

In the case the accused a public servant in his capacity as

a Superintendent of Pakistan unit of Hindustan Cooperative

Insurance Society in Calcutta, which was a unit of LIC,

although not authorized to do so, directly realized premiums in

cash from Pakistani policy holders and misappropriated the

amounts after making false entries in the relevant registers.

To constitute an offence of criminal breach of trust by a

public servant under sec 409, IPC, the acquisition of dominion

or control over the property must also be in the capacity of a

public servant. The question before the court was whether the

taking of money directly from the policy holders, which was

admittedly unauthorized, would amount to acting in his

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capacity as a public servant. The Supreme Court held that it is

the ostensible or apparent scope of a public servant’s authority

when receiving the property that has to be taken into

consideration. The public may not aware of the technical

limitations of the powers of the public servants, under some

internal rules of the department or office concerned. It is the

use made by the public servant of his actual official capacity,

which determines whether there is sufficient nexus or

connection between the acts complained of and the official

capacity, so as to bring the act within the scope of the section.

So, in this case it was held that the accused was guilty of the

offence under sec 409.

12.2 Dishonest Intention

Unless dishonest intention is shown, an offence under sec

405, IPC, cannot be committed. Every breach of trust in the

absence of mens rea, is not criminal. The court should ascertain

whether the state of mind in which the accused was, did not

exclude the existence of dishonest intention which is an

essential ingredient of the offence of criminal breach of trust.

Evidence is certainly relevant for purpose of ascertaining

whether the state of mind of accused render it possible or likely

for him to have entertained dishonest intention when he dealt

with the moneys entrusted to him. If the accused was really

BY A P RANDHIR

unable to form the criminal intention, he cannot be guilty of the

offence under section 406.

12.3 Mohanlal Mulchand v Mehta Kanaiyalal

Pranshanker AIR 1950 Kutch 52, 51 Cr LJ 1139.

In the case certain title deeds were entrusted to the

accused for the purpose of making enquiries about some land.

The accused did not return the documents and said that he had

lost the bundle and that the task was not completed. It was

found that the accused had used the title deeds to harm the

transferee. Under these facts, it was held that the offence was

complete when the documents were used to harm the transferee

and that taking of money was not necessary to constitute the

offence.

12.4 Gopi Nath Tripathi v State of Orissa , 40 Cut LT 771.

The prosecution is not bound to establish the mode in

which the accused has appropriated the amount of

entrustment. Dishonest misappropriation may be inferred from

the established facts. Dishonest intention was held to have been

proved in the case of a post master who entered an amount in

the saving bank pass book of a depositor without entering the

same in his account book.

12 .5 Kotamsath Appanna v Koppoju AIR 1953 Nag 310.

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Where the accused took a gold jewel from a goldsmith for

showing it to his wife and placing an order for a similar jewel

but failed to return it and retained it with him towards some

debt due to him by the goldsmith and claimed it to be his own,

it was held that the accused was guilty of dishonestly retaining

it and claiming it to be his by misappropriating it.

Every breach of trust gives rise to a suit for damages, but

it is only when there is an evidence of mental act of fraudulent

misappropriation that the commission of embezzlement of any

sum of money becomes a panel offence punishable as criminal

breach of trust. A mere breach of contract is not synonymous

with criminal breach of trust. It is the mental act of fraudulent

misappropriation that distinguishes an embezzlement,

amounting to a civil wrong or tort, from the offence of criminal

breach of trust. If there is no mens rea, or if other essential

ingredients are lacking, the same set of facts would not sustain

a criminal prosecution though a civil action may lie. A mere

failure to repay the loan would not constitute a criminal breach

of trust. Where the managing agents acted dishonestly,

12. 6 Abhinash Chandra Sarkar v Emperor, 37 Cr LJ 439.

It was held that they were not liable for criminal breach of

trust even though there has been a breach of contract causing

loss to the policy holders of the company. The mere fact that the

BY A P RANDHIR

payment was delayed in no ground for imputing a criminal

intention on the part of the accused, when there is no particular

obligation to pay it at a certain date.

12.7 G. Sagar Suri v.State of U.P. [2000 (2) SCC 636 and

Indian Oil Corporation vs. NEPC India Ltd. [2006 (6) SCC

736]

This Court has time and again drawn attention to the growing

tendency of complainants attempting to give the cloak of a

criminal offence to matters which are essentially and purely

civil in nature, obviously either to apply pressure on the

accused, or out of enmity towards the accused, or to subject the

accused to harassment. Criminal courts should ensure that

proceedings before it are not used for settling scores or to

pressurize parties to settle civil disputes. But at the same, it

should be noted that several disputes of a civil nature may also

contain the ingredients of criminal offences and if so, will have

to be tried as criminal offences, even if they also amount to civil

disputes.

12. 8 [2011] 8 S.C.R. 1 2 SUSHIL SURI v. C.B.I. & ANR.

(Criminal Appeal No. 1109 of 2011) MAY 6, 2011

The definition of “forgery” in Section 463 IPC is also very wide.

The basic elements of forgery are:

(i) the making of a false document or part of it and

BY A P RANDHIR

(ii) such making should be with such intention as is specified in

the Section viz.

(a) to cause damage or injury to

(i) the public, or

(ii) any person; or

(b) to support any claim or title; or

(c) to cause any person to part with property; or

(d) to cause any person to enter into an express or implied

contract; or (e) to commit fraud or that fraud may be

committed.

In the instant case more than sufficient circumstances exist

suggesting the hatching of criminal conspiracy and forgery of

several documents leading to commission of the aforementioned

Sections.

13 SOME JUDICIAL TREND

13.1 RAMESHBHAI VALLABHBHAI KORAT V. STATE OF

GUJARAT AND ANR. Year : 2012 Decided on : 24/7/2014

(A) Criminal Procedure Code, 1973 (2 of 1974) Sec. 482 Indian Penal Code, 1860 (45 of 1860) Secs. 465, 467, 468, 471,120 & 34 Quashment of complaint Lawyer issuing titleclearance certificate which turns out to be false Held, lawyer

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cannot be held liable for forgery or cheating for the same Complaint quashed.

Case against the petitioner is only on account of givingtitle clearance report by him. It is not in dispute that petitionerhas not played any role in preparing the power of attorney orother documents. So far as preparing title clearance report isconcerned, it is the say of the petitioner that after verifying allrelevant revenue entries and after giving advertisement in thenewspaper, he has given the certificate. Neither examination ofrevenue entry nor giving of advertisement in newspaper can besaid to be sufficient to ascertain the status of the property. It isalso the say of the petitioner that he has made inspection inSubRegistrar office before giving his opinion. (Para 8)

13.2 C.B.I., Hyderabad v. K. Narayana Rao, 2012 (9) SCC512

As stated above, there is no case of prosecution againstthe present petitioner. The only case is giving title clearancereport by the petitioner. The report given by the petitioner turnout to be inaccurate. Petitioner ought to have taken proper care.At worst, petitioner can be said to have shown negligence. Inthe circumstances of the case, petitioner cannot be held liablefor forgery or cheating. (Para 9)

13.3 SURESHBHAI @ KALI JAYANTIBHAI AHIR V.STATE OF GUJARAT AND ORS. SP. CRI. APP.MISC. No :5472 Year : 2012 Decided on : 13/9/2013

(A) Criminal Procedure Code, 1973 (2 of 1974) Sec. 482 Indian Penal Code, 1860 (45 of 1860) Secs. 420, 465, 467, 468,471, 114 & 120B Quashment of complaint Allegations that

BY A P RANDHIR

accused sold away land by forged and fabricated Power ofAttorney of owner Confirmation deed by son of donor thatPower of Attorney genuine Opinion by handwriting expertthat signature on Power of Attorney not genuine Held, merelybecause allegations involves dispute of civil nature or civil suitsfiled by complainant side investigation cannot be scuttled Petition dismissed.

There could be cases and cases related to civil disputewhich may simultaneously and inherently also have ingredientsand elements of criminal offence. Instances of such cases can befound where the dispute arise from commercial transactionswhich are assailed on ground of fraud or cheating or in cases ofsale of immovable property (e.g. land, residential premises,commercial premises, etc.) and in some cases family disputesrelated to ancestral properties or family business, etc. In suchcases, there would be elements of civil nature and ingredients ofoffence as well, e.g. criminal breach of trust, criminal trespass,forged/fabricated documents, such as saledeed or Power ofAttorney or any other deed/agreement so as to earn undue gain.In such cases, allegations of civil dispute and criminal offencewould run parallel and simultaneous and when such cases arebrought before the Court with a prayer to exercise jurisdictionunder Sec. 482 of the Code and quash the complaint, thenmerely because the allegations involve and reflect dispute ofcivil nature, the ingredients or traits or elements of criminaloffence cannot be overlooked or ignored and only on thatground, the complaint/F.I.R. cannot be quashed, without anyother strong supervening facts and circumstances which mayex??facie demonstrate that the alleged offence is not made out.(Para 20)

BY A P RANDHIR

When the submissions with reference to thereport/opinion of handwriting expert are considered andexamined in light of the above??quoted observations by Hon'bleApex Court, then it becomes clear that this Court cannotpronounce or record any opinion on that count at this stage andthe said report justifies the need for investigation andpersuades the Court to not interfere under Sec. 482 of the Code,with the investigation or the proceedings, at this stage. In viewof this Court, this is not a fit case to exercise the said inherentpower to scuttle investigation as directed by the learnedMagistrate vide order dated 1842012 and/or to embark uponthe process of analyzing the case of the complainant in light ofall probabilities or to examine whether the disputed documents,viz. Power of Attorney and/or the will, are forged/fabricated ornot and the quality of the evidence cannot be tested by thisCourt at this stage. This Court has to refrain from entering intoexamination of merits and demerits of the allegations.(Para 25)

What emerges from the principle explained by the Hon'bleApex Court in the above??quoted observations is that it wouldnot be proper for the Court, in exercise of jurisdiction underSec. 482 of the Code, to enter into the process of determininghow weighty the defence raised on behalf of the accused is orevaluating the allegations. (Para 11.2)

The powers vested in the High Court under Sec. 482 of theCode, when exercised, have farreaching consequences, mostimportant being the consequence that it would negate theprosecution's/complainant's case without allowing theprosecution/complainant to lead evidence and that, therefore,the exercise of the said powers should be with utmost caution,care and circumspection. (Para 11.4)

BY A P RANDHIR

13.3 SANGEETABEN MAHENDRABHAI PATEL V. STATEOF GUJARAT AND ANR. CRIMINAL APPEAL No : 645Year : 2012 Decided on : 23/4/2012

(A) Constitution of India, 1950 Art. 20(2) Criminal ProcedureCode, 1973 (2 of 1974) Sec. 300 Negotiable Instruments Act,1881 (26 of 1881) Sec. 138 Indian Penal Code, 1860 (45 of1860) Secs. 71, 407, 420 & 114 Double jeopardy and issueestoppel Held, person tried for offence of dishonour of chequecan be again tried for offences of criminal breach of trust,cheating and abetment In order to attract bar againstprosecution under Art. 20(2) of Constitution/Sec. 300 of Cr.P.C.,ingredients of offence in earlier as well as in latter case must besame and not different Test to ascertain same is not identity ofallegations but identity of ingredients Motive is not aningredient Further, distinction between issue estoppel anddouble jeopardy explained Judgment by High Court of Gujaratconfirmed.

The law is well settled that in order to attract theprovisions of Art. 20(2) of the Constitution i.e. doctrine ofautrefois acquit or Sec. 300 of Cr.P.C. or Sec. 71 of I.P.C. or Sec.26 of General Clauses Act, ingredients of the offences in theearlier case as well as in the latter case must be the same andnot different. The test to ascertain whether the two offences arethe same is not identity of the allegations, but the identity ofthe ingredients of the offence. Motive for committing offencecannot be termed as ingredients of offences to determine theissue. The plea of autrefois acquit is not proved unless it isshown that the judgment of acquittal in the previous chargenecessarily involves an acquittal of the latter charge. (Para 24)

BY A P RANDHIR

Admittedly, the appellant had been tried earlier for theoffences punishable under the provisions of Sec. 138 of N. I. Actand the case is subjudice before the High Court. In the instantcase, he is involved under Sec. 406/420 read with Sec. 114 ofI.P.C. In the prosecution under Sec. 138 of N. I. Act, the mensrea i.e. fraudulent or dishonest intention at the time of issuanceof cheque is not required to be proved. However, in the caseunder I.P.C. involved herein, the issue of mens rea may berelevant. The offence punishable under Sec. 420 of I.P.C. is aserious one as the sentence of 7 years can be imposed. In thecase under N. I. Act, there is a legal presumption that thecheque had been issued for discharging the antecedent liabilityand that presumption can be rebutted only by the person whodraws the cheque. Such a requirement is not there in theoffences under I.P.C. In the case under N. I. Act, if a fine isimposed, it is to be adjusted to meet the legally enforceableliability. There cannot be such a requirement in the offencesunder I.P.C. The case under N. I. Act can only be initiated byfiling a complaint. However, in a case under the I.P.C. such acondition is not necessary. (Para 27)

There may be some overlapping of facts in both the casesbut ingredients of offences are entirely different. Thus, thesubsequent case is not barred by any of the aforesaid statutoryprovisions. (Para 28)

13.4 PRAKASH RAMCHANDRA BAROT AND ORS. V.STATE OF GUJARAT AND ANR. MISC. CRIMINALAPPLICATION No : 2780 Year : 2011 Decided on :18/8/2011

BY A P RANDHIR

(A) Criminal Procedure Code, 1973 (2 of 1974) Sec. 482 Indian Penal Code, 1860 (45 of 1860) Secs. 465, 467, 468 & 471 Dispute pertained to immovable property No substancefound in the allegations that accused had indulged in cheating,made a false document or that there was criminal breach oftrust Suits in respect of the dispute pending in Civil Court Allegations in the F.I.R. and other material did not disclosecognizable offence F.I.R. quashed.

If on a consideration of the relevant materials, the Courtis satisfied that the offence is disclosed, the Court will normallynot interfere with the investigation into the offence and willgenerally allow the investigation into the offence to becompleted for collecting materials for proving the offence. If, onthe other hand, the Court on a consideration of the relevantmaterials is satisfied that no offence is disclosed, it will be theduty of the Court to interfere with any investigation and to stopthe same to prevent any kind of uncalled for and unnecessaryharassment to an individual. (Para 14; See also 12 and 13)

It is not in dispute that the saledeed has been executedby the original owners with their genuine signatures. What isdisputed is the right, title and interest of the original owners toexecute the saledeed for the second time in favour of accusedNos. 1 and 2. This by itself will not render the saledeed of theyear 1995 a false document within the meaning of Sec. 464 ofthe Code so as to constitute offences punishable under Secs.465, 467, 468, 471 of I.P.C. (Para 15)

At the time when the saledeed was executed in favour ofaccused Nos. 1 and 2 by the original owners i.e. in the year1995, the saletransaction of 1982 was already declared to behit by the provisions of Sec. 63 of the Tenancy Act. It is not

BY A P RANDHIR

clear and not explained by the first informant as to how theorder dated 19th November, 1983 declaring the sale in favour ofthe Society as invalid was challenged in the year 1996, thoughthe sale has been validated subsequently. (Para 16)

When the entire matter revolves around the right, titleand interest in the subject land and when the parties arealready before the Civil Court past 14 years and the revenueproceedings have also been undertaken, continuation of such aprosecution will definitely amount to gross abuse of process oflaw. (Para 19; See also Para 21)

To hold a person guilty of cheating, as defined in Sec. 415of the I.P.C., it is necessary to show that at the time of makingthe promise, he had fraudulent or dishonest intention to retainthe property or to induce the person so deceived to do something which he would not otherwise do. (Para 24; Para 27)

13.5 POONAM CHAND JAIN AND ANR. V. FAZRUCRIMINAL APPEL No : 203 Year : 2010 Decided on :28/1/2010

(A) Criminal Procedure Code, 1973 (2 of 1974) Secs. 200 &203 Filing of second complaint after dismissal of firstcomplaint Held, though there is no bar to entertain secondcomplaint, the same should be entertained only in exceptionalcircumstances i.e. (a) where the previous order was passed onincomplete record, or (b) on a misunderstanding of the nature ofthe complaint, or (c) the order which was passed was manifestlyabsurd, unjust or foolish, or (d) where new facts which couldnot, with reasonable diligence, have been brought on the recordin the previous proceedings Principle laid down in PramathaNath Talukdar v. Saroj Ranjan Sarkar, AIR 1962 SC 876,reiterated.

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(B) Indian Penal Code, 1860 (45 of 1860) Secs. 406, 420 & 465 Criminal Procedure Code, 1973 (2 of 1974) Secs. 200 & 203 Complaint filed for cheating and dishonestly inducing to deliverproperty and executing fraudulent saledeeds Complaintdismissed by the Magistrate after elaborate discussion onmerits Second Complaint filed on identical grounds withoutdisclosing any new facts Held, Second Complaint could not beentertained, hence dismissed.

13.6 LALITBHAI BHANUBHAI LIMBASIA vs. STATE OFGUJARAT AND ANR CRIMINAL REVISIONAPPLICATION No : 85 Year : 2001 Decided on : 3/9/2003

(A) Negotiable Instruments Act, 1881 (XXVI of 1881) Sec. 138 Indian Penal Code, 1860 (XLV of 1860) Secs. 406 and 420 Where goods are sold on credit, mere nonpayment of the saleprice would not constitute an offence of criminal breach of trustor cheating as there is no entrustment of goods nor there isdelivery of goods as a result of inducement Framing of chargeillegal.

When there is a contract for sale and purchase of aproperty, it is a matter of sale against consideration, andtherefore, the property cannot be said to have been entrustedtemporarily, for a limited purpose for a limited object. In thepresent case the fertilizers were sold on credit. Therefore, itcannot be said that there was entrustment of the said propertyby the second respondent to the petitioner. When entrustmentis not there, then, an offence punishable under Sec. 406 ofI.P.C. cannot be said to have been committed. (Para 7)

BY A P RANDHIR

The discussion makes it clear that so far as the offencepunishable under Sec. 406 of I.P.C. is concerned, it cannot besaid to have been made out, as there was no case ofentrustment of any property. So far as the offence punishableunder Sec. 420 of I.P.C. is concerned, it also cannot be said tohave been made out in the absence of a case of inducement atthe time when the contract of sale and purchase took place.Mere nonpayment is not sufficient to hold even prima faciethat there is a case of cheating. Bouncing of cheque will not besufficient to infer a case of inducement. In view of the matter,when these two offences have not been prima facie made out,then there is no reason, as to why the prosecution shouldproceed ahead against the petitioner. In that view of thematter, when no offence is made out, the petitioner wasrequired to be discharged by the trial Court. (Para 15)

13.7 STATE OF GUJARAT V. GANPATBHAI KANTIBHAIPATEL CRIMINAL APPEAL No : 938 Year : 2003 Decidedon : 10/2/2010

(A) Indian Penal Code, 1860 (45 of 1860) Secs. 408, 409, 406,405 & 477A Confessional statement by accused recorded byAuditor, held, is a weak piece of evidence and not sufficient toestablish charge of misappropriation in absence of corroboration Acquittal confirmed.

13.8 STATE OF GUJARAT vs. ISHWARLALKHUMCHAND SHAH CRIMINAL APPEAL No : 1256 Year: 1984 Decided on : 22/12/1992

(A) CRIMINAL PROCEDURE CODE, 1973 (II OF 1974) Sec.408 Appeal against Acquittal It is a settled position of lawthat unless and until perversity is successfully pointed out orunreasonableness in the assessment of evidence is successfully

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spelt out, it would not be expedient and safe for the appellateCourt to interfere with the acquittal recorded by the trial Courteven if a different view is possible on the evidence on record.

(B) CRIMINAL TRIAL Circumstantial evidence alone Conviction could be based on circumstantial evidence inabsence of direct evidence But in such a case each of thecircumstance relied upon must be clearly established and theproved circumstances taken together must be such asreasonably to exclude the probability of innocence.

(C) INDIAN PENAL CODE, 1860 (XLV OF 1860) Sec. 201 For securing a conviction under Sec. 201 It must be shown tothe satisfaction of the Court that the accused knew or hadreason to believe that an offence had been committed andhaving got this knowledge, tried to screen the offence bydisposing of the incriminating material.

(D) INDIAN PENAL CODE, 1860 (XLV OF 1860) Sec. 408 Criminal breach of trust To constitute an offence of criminalbreach of trust there ought to be a dishonest misappropriationby a person in whom confidence is placed as to custody ormanagement of property in respect of which breach of trust ischarged Thus entrustment of property or dominion overproperty and dishonest misappropriation or conversion to hisown use by the person entrusted are necessary ingredients to beproved by the prosecution beyond reasonable doubt.

(E) INDIAN PENAL CODE, 1860 (XLV OF 1860) Sec. 477A Falsification of accounts The offence is complete whenaccounts are falsified with an intention to defraud Alterationof accounts made after misappropriation will come within thissection if it is part of the scheme to deprive another of hismoney.

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13.9 Parminder Kaur vs State Of U.P. & Anr on 26

October, 2009 2010 CR.L.J 895 SC

To attract the second clause of Section 464 there has to be

alteration of document dishonestly and fraudulently. So in

order to attract the clause "secondly" if the document is to be

altered it has to be for some gain or with such objective on the

part of the accused. Merely changing a document does not make

it a false document. Therefore, presuming that the figure "1"

was added as was done in this case, it cannot be said that the

document became false for the simple reason that the appellant

had nothing to gain from the same. She was not going to save

the bar of limitation.

The last offence which is alleged against the appellant is

Section 471 IPC. This section is not applicable in the case of the

appellant for the simple reason that we have already found that

there was no dishonest intention on the part of the appellant

nor had she acted fraudulently. This Section applies only in

case of the use of a forged document as a genuine document.

Since we have found that there is no element of forgery at all,

there would be no question of there being any valid allegation

against the appellant.

THANK YOU

IPC section 406 & 420 difference by a p randhir

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