Seeking advice on section 420 ipc
rajovin
(Querist) 07 April 2015
This query is : Resolved
Respected Experts,
My Uncle is working as Branch Manager in private media Company. One of his Customers placed advertisements. Ads are currently running.
Towards payment, Customer has made payments to the Savings Bank account of my Uncle instead of current account of media Company. Reason is Customer wanted to save money on taxes, for which my Uncle told him to pay to his SB account towards this objective. My Uncle instead of passing on the payment to media Company has paid only part amounts and some more money is yet to be paid (around 3 lakhs). Media Company after coming to know about this, is in the process of filing Police complaint against my Uncle.
Media company has given one weeks' time to settle payment. If money not paid in one week, I know he will be arrested. Kindly let me know what are the type of offences that have been committed.
1. Is it misappropriation or embezzlement or cheating or criminal breach of trust?
2. What are his chances of securing bail?
Look forward to your valuable inputs please.
SAINATH DEVALLA
(Expert) 07 April 2015
He can be charged u/s 405 and 406, for criminal breach of trust apart from 420. Actually they are cognizable and non bailable offences and compoundable too.
Punishment for Criminal Breach of Trust (Section 406 of IPC)
by Sukendar Debnath
Legal provisions regarding Punishment for Criminal Breach of Trust under section 406 of Indian Penal Code, 1860.
“Whoever commits criminal breach of trust shall be punished with imprisonment of either description for a term which may extend to three years, or with fine, or with both.”
The first part of Section 405 is a positive part dealing with dishonest misappropriation or conversion of property, and applies where it is known that the accused had dishonestly misappropriated or converted to his own use certain property at a particular place, and the jurisdiction to try the accused will be at the place where the dishonest misappropriation or conversion has taken place.
The second part of Section 405 is a negative part, and applies where it is alleged that the accused has failed to account for the property and jurisdiction exists at the place where the property should have been delivered by the accused. The second part is to be invoked only when the first part cannot.
The following are essential ingredients of the offence of criminal breach of trust under Section 405 are:
1) Entrusting any person with property or with any dominion over property;
2) The person entrusted:-
a) Dishonestly misappropriates or converts to his own use that property; or
b) Dishonestly uses or disposes of that property or wilfully suffers any other person so to do in violation-
(i) Of any direction of law prescribing the mode in which such trust is to be discharged, or
(ii) Of any legal contract made touching the discharge of such trust.
Criminal or dishonest intention is a sine qua non in an offence of criminal breach of trust. This being so the prosecution has to show that the accused dishonestly misappropriated or converted to his own use or dishonestly disposed of property entrusted to him.
To constitute the offence of criminal breach of trust under Section 405 there must be dishonest misappropriation by a person in whom confidence is placed as to the custody or management of the property in respect of which the breach of trust is charged.
The ownership of beneficial interest in the property in respect of which criminal breach of trust is alleged to have been committed must be in some person other than the accused and the latter must hold it on account of some person or in some way for his benefit.
The word ‘entruated’ is not a term of law, In its most general significance all it imports is a handing over of the possession for some purpose which may not imply the conferring of any proprietary right at all. The natural meaning of ‘entrusted’ involves that the assured should by some real and conscious volition have imposed on the person to whom he delivers the goods, some species of fiduciary duty.
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 property must have confidence in the person taking the property so as to create a fiduciary relationship between them. A person who obtains possession of property by a trick cannot be deemed to have been entrusted with property within the meaning of Section 405.
For application of Section 405 there must be entrustment of property. Entrustment means handing over the proprietary right. To constitute the offence under Section 405 there must be dishonest misappropriation by a person in whom confidence is placed as to the custody or management of the property in respect of which the breach of trust is charged.
The ownership of beneficial interest in the property in respect of which criminal breach of trust is committed, must be in some person other than the accused and the latter must hold it on account of some person or in some way for his benefit. Section 405 extends to entrustment of all kinds – whether to clerks, servants, business persons or other persons, provided they are holding a position of trust. Entrustment need not be express, it may be implied.
In R.K. Dalmia v. Delhi Administration [AIR 1962 SC 1821], the Supreme Court held that the word ‘property’ is used in the IPC 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 Section 405.
But it must be a property which belonged to the complainant. It does not matter that the compainant on whose behalf the property is entrusted is the owner of it or not provided there is entrustment of property.
The word ‘property’ includes the sale proceeds of goods entrusted to the accused. A cancelled cheque comes within the term ‘property’.
The property regarding which the offence is alleged to have been committed must have been ‘entrusted’ to the accused or he must have ‘dominion’ over it.
Dishonest intention is the gist of the offence of breach of trust. Dishonestly is, as defined in Section 24, IPC, causing wrongful gain or wrongful loss to a person. The meaning of wrongful gain and wrongful loss is defined in Section 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 unauthorised use. Dishonest intention to misappropriate is a crucial fact to be proved to bring home the charge of criminal breach of trust. Negligence is not ‘dishonestly keeping the property in possession.
If a person receives money which he is bound to account for and does not do so, he commits the offence of breach of trust, although no precise time can be fixed at which it was his duty to pay over the money.
In J.M. Desai v. S [AIR 1960 SC 889] it was observed that conviction of a person for the offence of criminal breach of trust may not in all cases be founded merely on his failure to account for the property entrusted to him, or over which he has dominion, even when a duty to account is imposed upon him, but when he is unable to account or renders an explanation for his failure to account which is untrue and inference of misappropriation with dishonest intent may readily be made.
An offence under Section 405 consists of any one of four positive acts, namely, misappropriation, conversion, user, or disposal of property.
A user of property comes within the definition of Section 405 when such user causes substantial or appreciable loss to the owner of property or gain to the accused.
Explanation to Section 405 makes the employer liable for dishonest misappropriation of employee’s contribution to Provident Fund or Family Pension Fund because he is deemed to have been entrusted with the amount of contribution so deducted.
In B.P. Gupta v. State of Bihar [2000 CrLJ 781 (Pat)], the directors of a company were prosecuted for non-deposit of PF amount of employees. It was held that directors are not in the position of the principal employer. They could not be prosecuted as there was no entrustment of the amount to them in terms of Explanation 1 to Sec. 405.
Explanation 2 to Section 405 makes the employer liable for dishonest misappropriation of employee’s contribution to the Employee’s State Insurance Fund because he is deemed to have been entrusted with the amount of contribution so deducted by him.
In Employee’s State Insurance Corporation v. S.K. Aggarwal [AIR 1998 SC 2676], it was observed that Directors of the company would not be covered by the definition of ‘principal employer’ under Section 2(17) of the Employees’ State Insurance Act. It was held that in the absence of any express provision in the Indian Penal Code incorporating the definition cannot be held to apply to the term ‘employer’ in Explanation 2.
The term employer in Explanation 2 to Section 405 must be understood as in ordinary parlance. In ordinary parlance it is the company which is the employer and not its directors either singly or collectively. Therefore the director of a company cannot be held liable for criminal breach of trust in case of default in payment of contribution to Employees State Insurance.
The words of the section are wide enough to include the case of a partner, if it be proved that he was in fact entrusted with the partnership property, or with a dominion over it, and has dishonestly misappropriated it or converted it to his use.
In R.K. Dalmia v. Delhi Administration [AIR 1962 SC 1821] it has been held that when one partner is given authority by the other partners to collect money or property of the firm, he is entrusted with dominion over that property, and if he dishonestly misappropriates it, then he comes within Section 405.
In Lok Nath v. Jagbir Suri [1982 CrLJ 1328 J & K] it has been observed that the partner, unless there is a special agreement to the effect that the partners shall hold the partnership property in trust, does not hold the partnership property as a trustee and consequently cannot be held guilty of an offence under Section 405, even if he is shown to have dishonestly misappropriated that property or converted the same to his own use.
Every partner has dominion over partnership property by reason of the fact that he is a partner and this is a dominion of a kind which a joint owner has over joint property. No joint owner can commit misappropriation in respect of the property which he owns jointly with other co-owners.
A trust is an obligation annexed to the ownership of property, and arising out of a confined reposed in and accepted by the owner, or declared and accepted by him, for the benefit of another and the owner. Hence, where there is no original confidence there is no trust and a misappropriation, if punishable at all, will be under Section 403.
A person who pledges what is pledged to him may be guilty of offence of breach of trust. A pledgee can retain possession until all the dues coming under the agreement are cleared and, if he is a bailee who has a general lien, until the whole of the account between the parties is cleared, and he does not thereby commit any breach of trust.
In State v. Sita Ram [1998 CrLJ 4225] it was observed that where, in derogation of the statutory requirement of giving reasonable notice before disposing of the articles pledged, the pledgee sells them and the price obtained is also not commensurate with the real value of the goods, the court expressed that it may amount to criminal breach of trust.
In Janaradan Banduji Dighe v. Vishwa Karma Mandir Trust [1991 CrLJ 1095 (Bom)], the chairman of a trust was alleged to have purchased some property out of the trust money effecting the purchase in the name of his son, who was not concerned with the trust. The complaint did not disclose the ingredients of the charge against the son.
His father died while the inquiry was still pending. It was held that the principal accused having died the proceeding could not survive against the second accused. He could have been held liable under Section 405 read with Section 34 if it could be shown that he had acted in concert with his father. But the court observed that there was a total vacuum as far as any of the ingredients of Section 34 were concerned.
In order to constitute the offence of criminal breach of trust under Section 406, IPC the prosecution must prove that the accused was entrusted with some property or with dominion or power over it.
It is also to be established further that in respect of the property so entrusted, there was dishonest disposal in violation of legal contract by the accused himself or by someone else which he willingly suffered to do.
In Halimuddin Ahmad [1976 CrLJ 449 (Pat)] it was observed that where the accused took a jeep on loan for a specific purpose and for a particular period but refused to return it on demand by the complainant after the purpose had been served and the stipulated period was long over, it was held that there was of criminal breach of trust and as such the complaint could not be thrown out.
In Mohan v. State [(1960) 10 Raj 1527], the complainant entrusted some gold to the accused for being sold and the accused neither returned the gold nor the sale proceeds thereof to the complainant, it was held that an offence under Section 406 was committed.
In Babaji Bin Bhau v. R [(1867) 4 BHC (CrC) 16], the accused were entrusted with some silver for the purpose of making ornaments and they introduced copper into the ornament, it was held that the offence of breach of trust has been committed by them.
The offence of breach of trust under Section 406 is cognizable, and warrant should, ordinarily, issue in the first instance. It is not bailable. It is only compoundable with permission of Court when the value of the property does not exceed Rs. 250 and not compoundable otherwise, and is triable by a Magistrate of the first or second class.
Guest
(Expert) 07 April 2015
Hypothetical academic query! The question arises, how the media company allowed the ad to run without verifying the receipt of payment?
When you know it is a 420 case, why can't you read section 420 to know about the type of offences your uncle is likely to be charged with. It seems you or your uncle gives more importance to know the type of offences, rather than showing any interest in settling the case with the company by paying their dues.
Moreover, you would be able to know from the FIR with police and thereafter the charge sheet filed by the police in the court of law.
Guest
(Expert) 07 April 2015
Sainath ji,
The description clearly indicates towards fake question of a hypothetical problem of academic nature. From the nature of two questions put by the querist, it clearly reveals as if he is a law student and has the intention to solve his school exercise with the help of the experts.
SAINATH DEVALLA
(Expert) 07 April 2015
This has to be stopped by the admin of lci.They can filter the queries.
Sudhir Kumar, Advocate
(Expert) 07 April 2015
I fully agree with Mr Dhingra.
I especially endorse the view of Mr DHingra that
"It seems you or your uncle gives more importance to know the type of offences, rather than showing any interest in settling the case with the company by paying their dues."
Sudhir Kumar, Advocate
(Expert) 07 April 2015
This may not be isolated case.
Given facts indicate that the client wanted to evade taxes and your uncle abetted him. SO this also constitutes an offense.
If the facts are true the you should be aware that your uncle has committed crime (and also created evidence for the same). The so called client will tell a different story in thana.
Once taken on remand by next morning your uncle will yell out as to in how many other cases he has repeated the offence.
SO your UNCLE should beg for mercy of the company.
You probably believe no law has been violated by him.
So what is the section involved/ how to get bail what are the facilities available in jail / what will be the colour of hair of judge / whether it will be raining on judgement date ALL THESE FACTS ARE IRRALEVENT. YOUR UNCLE IS YET TO REAP THE HARVEST.
Dr J C Vashista
(Expert) 08 April 2015
No reply for academic and hypothetical query. If, your uncle is charging fees/ commission/salary to the tune of Rs. 3 lakh and above, you and your uncle are capable and afford to engage and consult a local lawyer, what was the necessity to post the query on this platform which is charitable and meant for those who are unable to afford consultancy fees of prudent lawyer.
rajovin
(Querist) 09 April 2015
Respected experts,
Thank you all for your inputs.
I would like to submit that I dont know what is the meaning of 'academic query'.
Whether rich or poor is not a criteria for querying. I am a common man, and common people do not know the differences or intricacies in legal circumstances. Only from the views of legal people can I understand where I stand in a particular legal case.
rajovin
(Querist) 09 April 2015
When a person who has killed scores of innocent public people in full public view is given all legal mechanisms for his defence, am I wrong in expecting some legal armour for my Uncle's defence?
Please do not expect querist to have full command over legal parlance or legal etiquette.
I posted about section 420 in the subject line because I want to catch attention to my query. I understand only loosely about what is cheating.
Myself and scores of common people hold the view that no one is guilty unless proven so.
Common people like myself are not intelligentsia, You cannot expect us to have the same levels of intelligence as you possess. Rather than we raising to your level, you have to come down to our IQ levels to understand us better.
Guest
(Expert) 09 April 2015
Mr. Rajovin,
Of course, great lecture with elderly advice from you for those persons from whom you seek advice!
Your statement, "I dont know what is the meaning of 'academic query" and also "Please do not expect querist to have full command over legal parlance or legal etiquette" is really astonishing. From your good command on English, I don't think you are so illiterate that you don't underastand, what is 'academic query' and what is a query pertaining to some real problem for legal advice. Moreover, the term academic is not a legal term, rather a common usage literary term, which an ordinary person can understand.
In fact, the nature of your queries clearly indicates, as if you are not interested in knowing the solution to the problem of your uncle, as to how he should wriggle out of his problem, if he was really facing any. From the followings queries of yours, any one can understand that you were interested to know the classification of offence, whether that falls within the category of misappropriation, embezzlement, cheating or criminal breach of trust and whether the offence is bailable or not.
YOUR QUERIES:
"1. Is it misappropriation or embezzlement or cheating or criminal breach of trust?"
"2. What are his chances of securing bail?"
Moreover, rather than an advice how to tackle the offence of your uncle, you desired inputs of the experts, by stating, "look forward to your valuable inputs please."
The question arises, what was the need of asking such type of question, when the case was quite premature, as no FIR was lodged by the company, so far? You would have automatically found answers to your queries when the FIR would have been lodged by the company against your uncle.
That clearly indicates, as if you are a law student and you were interested only in solving your law school exercise with the inputs of the experts, rather than having any desire to get any solution for your so called uncle to get him out of trouble on account of the so called problem.
About your advice for the experts, "rather than we raising to your level, you have to come down to our IQ levels to understand us better," I really wanted to come down to your expected IQ level when I intended to know your intention by stating, "It seems you or your uncle gives more importance to know the type of offences, rather than showing any interest in settling the case with the company by paying their dues." THE IRONY IS, YOU PREFERRED TO OUTSMART ALL THE RESPONDENTS TO YOUR QUERY BY KEEPING SILENT ON MY DOUBT AND INSTEAD OF CLARIFYING YOUR POSITION, YOU PREFERRED TO PREACH THE EXPERTS. Anyway, thanks for your valuable advice.
Nobody here intends to disagree with your noble views, "myself and scores of common people hold the view that no one is guilty unless proven so." BUT, when your uncle by holding a responsible position in the company, gets payment direct in to his personal account for the services rendered by his company to its client, do you feel that he did not guilty of committing an offence and you/your uncle would be ready to agree about that only if proved through the court of law? Moreso, when you have already admitted that your uncle "instead of passing on the payment to media Company has paid only part amounts and some more money is yet to be paid (around 3 lakhs)."
Anyway, thanks again for your valuable advice for one and all.
rajovin
(Querist) 09 April 2015
Sir, Thank you.
I am seeking advice on legal issues from legally knowledgeable people like yourselves, in which I am ignorant.
Even hon'able Supreme Court seeks the opinion of experts in experts' fields of specialisation.
I am far more mature enough to think cheaply about outsmarting others. This is a gross misunderstanding about my character.
I am always deeply indebted to experts here who I am aware, provide yeoman service to the whole community.
If you are going to a new place, will you not ask for directions? Similar is my position.
In case I offended experts anywhere in this thread, I offer my sincere apologies. It could only be due to my ignorance about the correct usage of words and nothing else.
Guest
(Expert) 09 April 2015
Your premature query and evasive replies are quite irrelevant to warrant any advice in the absence of any problem for the present.
Any query on your part would be justified only after the FIR is actually lodged against your uncle. Ask for clarification about any doubt, if any arises out of the offence made in the FIR.
SAINATH DEVALLA
(Expert) 09 April 2015
Rajovin,
Don't take the experts for a ride with UR hypothetical answers.Remember we are not UR servants, but advisors for UR self made legal problems. We give our opinions free of cost sparing our valuable time.Hence u have no business to question the experts for the problems U have invited.If satisfied accept the verdict of the experts or else follow UR lawyer at UR place. Time and again I have been saying that all the experts here are senior advocates, U cannot insult anyone here.
Sudhir Kumar, Advocate
(Expert) 09 April 2015
You are already advised.
why do you want to enter territory which is full of misery and suffering.
your uncle is yet to sit in blue wagon,. he can still pay the money and beg for mercy.
Indian police in actual is now what shown in movies. No comedians are employed there. ONly tough men sit there in thana who know their job very well. The Jails are also not as rosy as shown in movies.
So advise you uncle to avoid being accused.
SAINATH DEVALLA
(Expert) 09 April 2015
His uncle whether self made or dragged, has to pay the price for the irregularities committed either intentionally or otherwise. Unnecessarily earlier I had taken pains in providing him with case history. To conclude with he has to learn the process of pleading for advice with the experts instead of arrogance. Now he will be at he mercy of his local lawyer and is in a do or die situation as per my assessment after all the questions and answers.The section 420 itself indicates the velocity of the situation by his management.Whether the querist is U or UR uncle U R well versed in law.
Sudhir Kumar, Advocate
(Expert) 10 April 2015
I only partially agree with views of Mr Sainath.
He is yet to come to a stage of seeking mercy of local lawyers and cops and court clerks, hardened criminals in jail, .....etc ... etc.
Given facts indicate that at this stage mercy of the employer will save him from all this trouble, if he is interested to get the same.
T. Kalaiselvan, Advocate
(Expert) 10 April 2015
I stand by the experts views. I appreciate our expert Mr. Dhingra for straining so much to explain the author about his position as well as his academic query. It is a wonder that author is still elusive to reply to the queries made by the experts or whether intentionally backing off?
Guest
(Expert) 11 April 2015
Dear Shri Kalaiselvan,
Thnaks for your understanding and appreciation. Normally, the law students try to hoodwink the experts by stating the hypothetical academic exercises as their personal or relative's problems, while they don't have answers when asked for any further information pertaining to the so called problem. Both of his questions clearly indicated that he wanted to seek answer to his academic exercise rather than seeking solution for his so called uncle to get rid of the problem.
SAINATH DEVALLA
(Expert) 11 April 2015
Its better to stop further replies to this query
rajovin
(Querist) 11 April 2015
Pls excuse me for this delayed reply.
For the painstaking efforts experts have taken to reply to my issue, I will have gratitude till my lifetime.
I have understood what stand we can take, what needs to be done in this issue from the views of all experts.
Thank you.
For Mr Sainath - I am grateful for your detailed explanation.
For Mr Sudhir Kumar - For explaining ground realities.
For Mr Dhingra - Sir, Media Company has given time for 3 days to make full payment.
If he had the money to repay immediately, my query does not arise.
He has spent the money. He cannot raise the money immediately. At the most he can bring in Rs 1 lakh.
Of course he has to reap the reward for his action.
My fear is that my Uncle can commit the extreme step if Police arrest him.
I have consulted local lawyer. He has advised Uncle not to be in Station for one Week, and that he (lawyer) and myself will request for some more time to settle the payment.
Guest
(Expert) 11 April 2015
Needless to point out, with reference to your query, you have not been able to provide any satisfactory justification.
However, whatever amount your uncle can arrange for the present, he can deposit with the company and ask for some moratorium to deposit the rest of the amount in installments. The company, if desirous of recovery of the amount can compromise, as by his arrest the company is also not going to gain even a single penny, except to wait for the court's verdict or to write-off the amount and bad debt.
T. Kalaiselvan, Advocate
(Expert) 11 April 2015
The query getting a final shape at last is appreciated since the stretched query kept prolonging with a suspicion about its genuineness hovering over its head.
Sudhir Kumar, Advocate
(Expert) 11 April 2015
your lawyer advised
" have consulted local lawyer. He has advised Uncle not to be in Station for one Week, and that he (lawyer) and myself will request for some more time to settle the payment."
ha. ha. ha.
do you really think that Indian police is really so dumb or your uncle is professional criminal like a terrorist who will never be caught if absconding.
this action will reduce chances of bail and if company has not given complaint to the police then they will be provoked.
Sudhir Kumar, Advocate
(Expert) 11 April 2015
Incidentally had it been case of my relative I would have dropped him like hot potato and would have totally refused to be of any help to him.
I know some persons understand that 2+2=4 only when taken on remand by police.
Your uncle is may be understanding that arrest (in true case like this) is followed by many miseries.
Sudhir Kumar, Advocate
(Expert) 11 April 2015
you said
" At the most he can bring in Rs 1 lakh."
as this money been paid by him as suggested by Mr DHingra.
has he swindled more money than his standing in market (you have not disclosed the actual amount)
you are also hiding as to where/how and how much money he spent out of usurped money.
does he have a vehicle.
does he have a car.
any jwellery in the house.
has no he bank deposit/fd/insurance policy/shares etc
mobile phones/tv/fridge/ac/deck etc.
criminal case is not the only recourse they can still file civil suit for recovery.
SAINATH DEVALLA
(Expert) 12 April 2015
Rajovin,
I presume U have got more food than Ur appetite.If UR Uncle is innocent in the eyes of law he will come unscathed, if proved guilty, he has to pay the price.OK bye, and I wish UR uncle the best of luck
Biswanath Roy
(Expert) 14 April 2015
From the given facts it glaringly appears that your uncle committed criminal wrong knowingly with full knowledge of its consequences. Mens-rea for committing crime is also present. Hence, I ADVICE YOUR UNCLE THROUGH YOU TO SURRENDER BEFORE THE MEDIA COMPANY AND TO SETTLE THE MATTER AMICABLY.
