Criminal Breach of Trust

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.”

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.1

The following ingredients are necessary to attract the operation of section 405.
1. The accused must be entrusted with property or dominion over the property; and
2. The person so entrusted (i.e., the accused) must-
A. dishonestly misappropriate, or convert to his own use, that property, or
B. dishonestly use or dispose of that property or wilfully suffer any other person
to do so in violation of
I. any direction of law, prescribing the mode, in which such trust
is to be discharged, or
II. any legal contract made touching the discharge of such trust.

Entrustment
It is an essential requirement before any offence under this section takes place. 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. 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 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.2

Property
In the case of R K Dalmia v Delhi Administration3 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 s 405. The word
‘dominion’ connotes control over the property.

1
Jaswantrai Manilal Akhaney v State of Bombay, AIR 1956 SC 575.
2
K Lakshman Das v K Krishno Murthy, 1981 CLR 60
3
AIR 1962 SC 1821