Criminal Breach of Trust

Criminal Breach of Trust under IPC

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Every business in the world stands and runs on the trust which one necessarily has to imbibe towards one another. The trust is the firm belief in the ability of someone that whatever he will be endowed with will do it to the best of his capabilities. The criminal breach of trust is an offence under section 405 of IPC which thereby states that 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”.1 The offence is non-bailable, cognizable and triable by a judicial magistrate of first class. 

The section 406 of IPC has consecutively stated punishment for the offence of criminal breach of trust. The offence of criminal breach of trust is similar to the offence of “embezzlement” under english law. Embezzlement refers to a form of white-collar crime in which a person or entity misappropriates the assets entrusted to him or her. In this type of fraud, the embezzler attains the assets lawfully and has the right to possess them, but the assets are then used for unintended purposes. Embezzlement is a breach of the fiduciary responsibilities placed upon a person.

On the plain reading of the section one can clearly understand that it is the trust endowed on the one which gets broken. It is the moral and legal obligation of a person to carry out the responsibilities but such intentional criminal breach of trust also suffixes the society to not have firm trusts and keep a suspicious eye on their bonds as well.

What are the essentials of Criminal Breach of Trust

  1. The accused has to be entrusted with the property or any dominion over property
  2. Accused dishonestly misappropriates or converts that property to his own use
  3. Accused dishonestly disposes of that property or wilfully suffers any other person so to do. 


The word entrustment means to confer trust and as the offence itself proposes there has to be entrustment of the property upon a person for the offence to be committed. In the case of R K Dalmia v. Delhi administration 1963 SCR (1) 253, the Supreme Court emphasized that the word “property” can’t be restricted to “movable property” only, it comprises all types of property whether “movable or immovable”. In the case of Ramaswamy Nadar v. State of Madras3 The court reiterated that entrustment is necessary for the commission of the offence of criminal breach of trust as without entrustment no one can be liable for the criminal breach of trust. Similarly, in the case of Shivnatrayan vs State of Maharashtra4 the court said the director of the company has been entrusted with the assets of the company, has the power and control in his hands over the use and disposal of assets and has dominion regarding the same. (Not in the case of a partnership firm where there are one or more directors having the entrustment unless and until expressly declared by the contract, the dominion in the hand of one).

Dishonestly Misappropriation

The word “dishonestly” is defined under Section 24 of IPC which states that Whoever does anything with the intention of causing wrongful gain to one person or wrongful loss to another person, is said to do that thing “dishonestly” and Section 3 of IPC defines the wrongful gain/wrongful loss. It has to be proved that the accused has dishonestly misappropriated the property of others entrusted upon him and that he used it for his own benefit. In the case of Jaikrishnadas Manohardas Desai vs the State of Bombay5, the court stated if the person whom the property has been entrusted upon must do so accordingly and failure to render account of it then he can be charged for dishonest misappropriation. Also, the apex court in the case of Surendra Prasad Verma vs State of Bihar stated that even a slight misappropriation would warrant the person to be convicted under this section.

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

The provision has been defined under Section 409 which states that any person who is a public servant, banker, merchant or agent in the way of business if commits criminal breach of trust shall be either imprisoned for life or imprisonment extendable to ten years and also be liable for fine. The punishment is pretty hard which usually was imprisonment extendable for three years. The reason for harsher punishment may be attributed to the trust shown by the public towards a person sitting on a responsible chair is far more worthy than any other.

In State of UP vs Babu Ram6 The sub inspector went to the village to investigate the case and saw a man running towards the field hurriedly and so on account of suspicion searched the man and found a bundle of notes which were taken into possession. But after due investigation, it was found that the bundle of notes originally belonged to that man only and in pursuance of it the bundle of notes were returned in which Rs. 250 was less. The supreme court held the accused sub-inspector guilty of criminal breach of trust.

In Superintendent and Remembrancer of Legal Affairs v SK Roy7 the accused was a public servant in capacity who dishonestly misappropriated the policyholders to deposit the premiums on the pretext of false registries in the relevant registers. The supreme court held that the accused dishonestly misappropriated the public due to their unawareness of technicalities and of internal rules and regulations and compelled them to deposit the sums and accordingly was held guilty under criminal breach of trust.

Similarly in the case of Sadhupati Nageswara Rao v. State of Andhra Pradesh8 the supreme court held that it is necessary for the prosecution to prove that the accused i.e. a public servant was entrusted with the property of which he is duly bound to account for and that he committed criminal breach of trust under Section 409. 

Precedents of Courts

The Supreme Court in Employees State Insurance Corporation vs S K Aggarwal9 decided on 31/JULY/1998 upheld the order of High court quashing the criminal proceedings initiated against the directors of the company stating that the company itself owns the factory and is responsible for it and for that reason directors cannot be prosecuted under criminal breach of trust.

In Bhuban Mohan Rana v Surendra Mohan Das,(1952) 2 Cal 23 it was held that it is obvious that before a person can be said to have committed Criminal Breach of Trust it must be established that he was either entrusted with or entrusted with dominion over the property which he is said to have converted to his own use or disposed of in violation of any direction of law etc. Every partner has dominion over property by reason of the fact that he is a partner. This is a kind of dominion which every owner of the property has over his property. But it is not the dominion of this kind which satisfies the requirements of S. 405. In order to establish “entrustment of dominion” over the property to an accused person the mere existence of that person’s dominion over property is not enough. It must be further shown that his dominion was the result of entrustment. Therefore, as rightly pointed out by Harris C. J., the prosecution must establish that dominion over the assets or a particular asset of the partnership was, by a special agreement between the parties, entrusted to the accused person. If in the absence of such a special agreement a partner receives money belonging to the partnership he cannot be said to have received it in a fiduciary capacity or in other words cannot be held to have been “entrusted” with dominion over partnership properties.”

In Rashmi Kumar vs Mahesh Kumar Bhada10 held that if the wife entrust her husband or any other member of the family her stridhan property and they dishonestly misappropriates the property to their own use then they committed criminal breach of trust and are punishable.11

In Velji Raghavji Patel v State of Maharashtra12 the supreme court held that unless a case of special entrustment and agreement is made out as between the partners, the utilisation of the partnership property by one of the partners to the detriment of the other partners would not fall within the definition of criminal breach of trust under Section 405 IPC.


So, it is quite clear that for the conviction of an offence under criminal breach of trust is improbable unless and until there has been property entrusted to the accused who dishonestly misappropriates or uses it to his own benefit. The person showing confidence and firm belief gets shattered and torn as one has not even imagined that his close one will stab back at him in a manner that he will be fighting for his own valuable property. It is now a common happening of daily routine where we all are seeing our close one’s changing colors like chameleons and it can be traced almost everywhere. One of the most important aspects or fact which needs to be adhered to is to prove the dishonest intention of the accused on account of failure to prove the intention, the accused will be benefitted and the court shall quash the proceedings prosecuted against him. 



2.  1962 AIR 1821, 1963 SCR (1) 253 

3.  AIR 1958 SC 56

4.  AIR 1962 SC 1821

5.  AIR 1960 SC 889

6.  AIR 1961 SC 751

7.  AIR 1974 SC 794

8.  AIR 2012 SC 3242

9.  AIR 1998 SC 2676

10.  (1997) 2 SCC 397


12.  AIR 1965 SC 1433


Madhav Gupta

Student, Galgotias University

Passionate law student and research analyst, acquiring skills in corporate law. For any Clarifications, feedback, and suggestion, you can reach him at

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