Criminal Misappropriation of Property and Criminal Breach of Trust in IPC
Introduction- There is a fine line between Criminal Misappropriation and Criminal Breach of trust i.e., dishonest intention of a person with regard to the property or the conversion of the property for one’s own use. It means that offender unauthorizedly or wrongfully used the property against the owner. The word “dishonestly” is used in theft, criminal misappropriation and criminal breach of trust whereas the word “entrustment” is present in criminal breach of trust but lack in criminal misappropriation.
DISHONEST MISAPPROPRIATION OF PROPERTY (S.403 IPC)
Whoever dishonestly Mis-appropriates or converts to his own use any movable property, shall be punished with imprisonment of either description for a term which may extend to two years, or with fine, or with both.
The simply meaning of the word Misappropriation is an appropriation of property with dishonest intention and it’s use for the sole purpose of capitalizing it for one’s own usage. The Criminal Misappropriation takes place when the possession has come innocently, but continued with subsequent change of intention or knowledge of latest facts which the party was previously unknown. The retaining of property becomes wrongful and fraudulent when the very fact is understood. In Winfield’s case, Conversion means any act in relation to the goods of a person which constitutes an unjustifiable denial of his title to them.
The word dishonestly is defined under S.24 of IPC includes intentional act, to cause wrongful gain and wrongful loss to another person. The word has been used in relation to property. In the case of Sansar Singh v. Emperor, it was held that a dishonest intention may only be presumed only if an unlawful act is done, or if a lawful act is done by unlawful means. Any dispute should of civil nature like recovery of cash. Hence criminal complaint regarding such nature will not be maintainable.
The Criminal misappropriation of property was developed from the concept of theft. In order to held guilty of theft, taking away of property from the possession of owner is necessary but in criminal misappropriation it is not so required. Hence, the offence is very near to theft yet is not exactly the same of the offence of theft.
To constitute the offence of misappropriation the subsequent ingredients must be established: -
(1). Dishonest intention
(2). the accused misappropriated that property and converted the same to his own use
(3). the movable property belonged to the complainant
To fulfil the first ingredient, there must be dishonest intention and for second there should be actual misappropriation or conversion of thing. Merely retained into his possession does not constitute an offence unless and until it is used for own benefit or use. The key factor in determining the criminal liability of the person would be the value or nature of property in question.
1. Dishonest Intention
It plays a very important role in the criminal misappropriation of property. It is not necessary that dishonest intention should be present at the time of getting possession of the property, the possession of the property may come innocently or lawfully but subsequent change of intention and utilisation of property for his personal use bring the act under the category of criminal misappropriation.
Illustration (a) – A takes the property belonging to Z out of Z’s possession, in good faith, believing that the property belonging to him at the time of taking. But after he discovered his mistake, he misappropriates the property for his own use, he will be guilty of an offence under this section.
Dishonest intention to misappropriate the property is either permanent or temporary in nature as given under explanation-1 of S.403.
2. Misappropriation or Conversion of property for own use
There must be actual misappropriation of property of the thing. If an accused found a thing and merely retain it in his possession, it will not be considered an offence until he misappropriates it for his own use.
Illustration- A finds a valuable ring on the road not knowing to whom it belongs. He sells it immediately without attempting to discover the owner. He will be guilty of an offence under this section.
To make the person guilty of criminal misappropriation, there should be an owner of that property. There is no criminal misappropriation of things which has abandoned. Where the property is abandoned, anyone finds and take it to acquire a right over it, will be good even as against the former owner.
3. The property must be movable
The misappropriation must be of movable property and in possession of someone else. The word “movable property” is also defined under S.22 of IPC which includes the corporeal property of every description, except land and things attached to the earth. It does not include growing crops or standing timber but as soon as they are severed, they become movable property and capable of theft and misappropriation of that property which means it should be entirely disconnected with land.
In the case of Queen v. Bissessur Roy, a servant receiving money on behalf of the master and then misappropriates it, he considered to commits the offence of criminal misappropriation.
Finder of goods- The true owner of lost movable property is presumed to have lost possession but not ownership of the property. Finder of the property gets the good title but not the ownership.
Punishment for Criminal Misappropriation of Property-
The punishment for criminal misappropriation of property is already defined under Section 403 of IPC as those who commit the offence of dishonest misappropriation of property will be punished with imprisonment of either description for a term which may be extended to 2 Years, or with fine, or with both.
(Section 404 IPC) Aggravating form of criminal misappropriation of property is, when the property was possessed by the deceased person at the time of his death and other person misappropriate or convert it, shall be punish more strictly if he is a clerk or servant of that deceased person.
Difference between Theft and Criminal Misappropriation of Property -
The offence of theft is defined under S. 378 of IPC and the offence of criminal misappropriation of property is defined under S. 403 of IPC.
In the case of theft, from its initial it is wrongful but in criminal misappropriation of property it is lawful and innocent but with subsequent change of intention it converted into unlawful taking.
In the case of theft, there is invasion of possession of another person by wrongdoer without their consent but in criminal misappropriation the offender is already in possession and creates an offence when they unlawfully misappropriate it.
In theft, mere moving of a thing is an offence but in criminal misappropriation it is not.
In theft, property is moved without the consent of owner where as in the case of criminal misappropriation of property there might be possession of property with consent of the owner.
Dishonest intention is seeming in both. In theft, it is shown when there is actual moving of property but in criminal misappropriation it is affected by actual misappropriation.
CRIMINAL BREACH OF TRUST (S.405 IPC)
We all live in a civilised society governed by rules and regulations which are binding upon all of us but still there are lot of interactions which are based on trust and good faith. That’s why it is an offence in IPC if we break it. The societal structure is made up of relationships and the relationships are based on trust. Trust in a legal sense is a relationship under which property is held by other party on the behalf and benefit of that other person. Breaking of the trust is cause not only emotional but financial loss also.
S.405 IPC- Whoever, being in any manner entrusted with property, or with any dominion over property, dishonestly misappropriates or converts to his own use that property, or dishonestly uses or disposes of that property in violation of any direction of law prescribing the mode in which such trust is to be discharged, or of any legal contract, express or implied, which he has made touching the discharge of such trust, or wilfully suffers any other person so to do, commits “criminal breach of trust”.
In this 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 advantage of the transferor himself or somebody else.
To constitute the offence of criminal breach of trust following subsequent ingredients must be established-
the accused must be entrusted with property or with dominion over property
the person so entrusted must-
dishonestly misappropriate or convert that property to his own use, or
dishonestly use or dispose of that property or wilfully suffer any other person to do so
in violation of any legal directions
any legal contract
The word ‘entrustment’ means the person handling the property must have confidence in the person taking so as to create fiduciary relationship between them. The entrustment need not be expressed, it can be implied. The word ‘dominion’ means control over property. The factor to determine whether there is entrustment or dominion over property is the degree of control exercised by the offender.
An offence under this section contains any one of the four aspects namely misappropriation, conversion, user or disposal of property. A user of the property comes under this section when such user causes substantial and appreciable loss to owner or gain to accused. For example- A asks B, a jeweller to make a gold ring for him and he paid the cost of that ring. After that B neither delivers the rings nor returns the money. He will be liable under this section.
Dishonest intention to misappropriate is a crucial fact to be proved to bring the charge of criminal breach of trust. Any breach of trust is not an offence until it is intentional. As we know that mere retention of goods without misappropriation does not constitute to criminal breach of trust.
In the case of State of Gujarat v. Jaswantlal Nathalal, the accused was allotted certain bags of cement by the government on the condition for a specific performance of a construction work. However, he transfers certain portion of cement to different area of subject and the contractor did not use cement for the authorised purpose alone. The Supreme Court held that they break the entrustment of contract between them.
Punishment for Criminal Breach of Trust-
The punishment for criminal breach of trust is prescribed under section 406 of IPC which may extend to three years of imprisonment or fine or both. The offence is cognizable, non- bailable, compoundable with permission of the court, and triable by the magistrate of first class.
(Section.407- 409) deals with aggravating forms of the offence with stricter punishments because of the nature of the relationship between the offender and the complainant.
Difference between Criminal Misappropriation and Criminal Breach of Trust-
The offence criminal misappropriation of property is defined under S. 403 of IPC whereas the offence of criminal breach of trust is defined under S. 405 of IPC.
In criminal misappropriation the property comes into the possession of accused in some natural manner whereas in criminal breach of trust possession of property comes either by expressed or implied entrustment or by some dominion. And there is some fiduciary relationship between them.
In criminal misappropriation, property can be only movable property whereas in criminal breach of trust property can either be movable or immovable property.
In criminal misappropriation of property, there is no contractual relationship between owner of the property and offender whereas in criminal breach of trust there is fiduciary and contractual relationship between them.
The punishment in criminal misappropriation of property is of imprisonment which may extend to 2yrs or fine or both whereas punishment in criminal breach of trust is of imprisonment which may extend to 3yrs, or with fine or with both.
Difference between Theft and Criminal Breach of Trust-
The offence of theft is defined under Section. 378 of IPC whereas the offence of criminal breach of trust is defined under Section. 405 of IPC.
In the former there is wrongful taking of property out of the possession of owner without their consent whereas in the latter the property is given in trust or on someone’s behalf and instead of discharging trust they misappropriated or disposed in violation of law.
In theft there is no prior lawful possession whereas in criminal breach of trust there is prior possession of property.
In theft the offence is completed as soon as the property is taken away whereas in the latter the offence is completed when he misappropriated or use for his own use.
In theft there must be movable property whereas in criminal breach of trust the property can be both movable and immovable.
The punishment in theft and criminal breach of trust is of same severity with imprisonment which may extend to 3 yrs. or with fine or with both.
We can conclude that criminal misappropriation and criminal breach of trust cannot consider being the same offence. In criminal misappropriation the property comes into the possession of the accused by some natural manner. The criminal breach of trust is different from breach of trust as in the former there is dishonest intention. As there is no contractual relationship between owner of the property and the accused in criminal misappropriation of property, it arises when the offender gets possession and misappropriates or converts that property for his own use. It is necessary that the property is of movable nature. In criminal breach of trust, the parties to them are in fiduciary capacity and under the legal contractual obligation with respect to property. Property can either be movable or immovable. The finder of the property in criminal misappropriation does not have the means to discover the true owner then he has to wait for some reasonable time period before approaching the property.
-- POORNIMA GUPTA
BA.LLB. 3rd Year
Delhi Metropolitan Education (DME),
Affiliated to GGGSIPU, New Delhi