This document provides an overview of criminal breach of trust and cheating under sections 406 and 420 of the Indian Penal Code. It discusses the definitions of criminal breach of trust, special provisions for charging someone, where the offense can be tried, relevant case laws that establish differences between criminal breach of trust and cheating, and the ingredients required for criminal breach of trust. The key points are that criminal breach of trust involves dishonest misuse of entrusted property, while cheating requires fraudulent intent at the time of inducement.

1. BY A P RANDHIR
STUDY
ON
CONCEPT
OF
CRIMINAL BREACH OF
TRUST
&
CHEATING
UNDER
I.P.C 406 & 420.
BY A P RANDHIR

2. 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 the
offence 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.

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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

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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. ,

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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,

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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

27. BY A P RANDHIR
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

28. 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.

29. BY A P RANDHIR
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

30. 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

31. 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 title
clearance certificate which turns out to be false ­ Held, lawyer

32. BY A P RANDHIR
cannot be held liable for forgery or cheating for the same ­
Complaint quashed.
Case against the petitioner is only on account of giving
title clearance report by him. It is not in dispute that petitioner
has not played any role in preparing the power of attorney or
other documents. So far as preparing title clearance report is
concerned, it is the say of the petitioner that after verifying all
relevant revenue entries and after giving advertisement in the
newspaper, he has given the certificate. Neither examination of
revenue entry nor giving of advertisement in newspaper can be
said to be sufficient to ascertain the status of the property. It is
also the say of the petitioner that he has made inspection in
Sub­Registrar office before giving his opinion. (Para 8)
13.2 C.B.I., Hyderabad v. K. Narayana Rao, 2012 (9) SCC
512
As stated above, there is no case of prosecution against
the present petitioner. The only case is giving title clearance
report by the petitioner. The report given by the petitioner turn
out to be inaccurate. Petitioner ought to have taken proper care.
At worst, petitioner can be said to have shown negligence. In
the circumstances of the case, petitioner cannot be held liable
for 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

33. BY A P RANDHIR
accused sold away land by forged and fabricated Power of
Attorney of owner ­ Confirmation deed by son of donor that
Power of Attorney genuine ­ Opinion by hand­writing expert
that signature on Power of Attorney not genuine ­ Held, merely
because allegations involves dispute of civil nature or civil suits
filed by complainant side investigation cannot be scuttled ­
Petition dismissed.
There could be cases and cases related to civil dispute
which may simultaneously and inherently also have ingredients
and elements of criminal offence. Instances of such cases can be
found where the dispute arise from commercial transactions
which are assailed on ground of fraud or cheating or in cases of
sale of immovable property (e.g. land, residential premises,
commercial premises, etc.) and in some cases family disputes
related to ancestral properties or family business, etc. In such
cases, there would be elements of civil nature and ingredients of
offence as well, e.g. criminal breach of trust, criminal trespass,
forged/fabricated documents, such as sale­deed or Power of
Attorney or any other deed/agreement so as to earn undue gain.
In such cases, allegations of civil dispute and criminal offence
would run parallel and simultaneous and when such cases are
brought before the Court with a prayer to exercise jurisdiction
under Sec. 482 of the Code and quash the complaint, then
merely because the allegations involve and reflect dispute of
civil nature, the ingredients or traits or elements of criminal
offence cannot be overlooked or ignored and only on that
ground, the complaint/F.I.R. cannot be quashed, without any
other strong supervening facts and circumstances which may
ex??facie demonstrate that the alleged offence is not made out.
(Para 20)

34. BY A P RANDHIR
When the submissions with reference to the
report/opinion of hand­writing expert are considered and
examined in light of the above??quoted observations by Hon'ble
Apex Court, then it becomes clear that this Court cannot
pronounce or record any opinion on that count at this stage and
the said report justifies the need for investigation and
persuades the Court to not interfere under Sec. 482 of the Code,
with the investigation or the proceedings, at this stage. In view
of this Court, this is not a fit case to exercise the said inherent
power to scuttle investigation as directed by the learned
Magistrate vide order dated 18­4­2012 and/or to embark upon
the process of analyzing the case of the complainant in light of
all probabilities or to examine whether the disputed documents,
viz. Power of Attorney and/or the will, are forged/fabricated or
not and the quality of the evidence cannot be tested by this
Court at this stage. This Court has to refrain from entering into
examination of merits and demerits of the allegations.(Para 25)
What emerges from the principle explained by the Hon'ble
Apex Court in the above??quoted observations is that it would
not be proper for the Court, in exercise of jurisdiction under
Sec. 482 of the Code, to enter into the process of determining
how weighty the defence raised on behalf of the accused is or
evaluating the allegations. (Para 11.2)
The powers vested in the High Court under Sec. 482 of the
Code, when exercised, have far­reaching consequences, most
important being the consequence that it would negate the
prosecution's/complainant's case without allowing the
prosecution/complainant to lead evidence and that, therefore,
the exercise of the said powers should be with utmost caution,
care and circumspection. (Para 11.4)

35. BY A P RANDHIR
13.3 SANGEETABEN MAHENDRABHAI PATEL V. STATE
OF GUJARAT AND ANR. CRIMINAL APPEAL No : 645
Year : 2012 Decided on : 23/4/2012
(A) Constitution of India, 1950 ­ Art. 20(2) ­ Criminal Procedure
Code, 1973 (2 of 1974) ­ Sec. 300 ­ Negotiable Instruments Act,
1881 (26 of 1881) ­ Sec. 138 ­ Indian Penal Code, 1860 (45 of
1860) ­ Secs. 71, 407, 420 & 114 ­ Double jeopardy and issue
estoppel ­ Held, person tried for offence of dishonour of cheque
can be again tried for offences of criminal breach of trust,
cheating and abetment ­ In order to attract bar against
prosecution under Art. 20(2) of Constitution/Sec. 300 of Cr.P.C.,
ingredients of offence in earlier as well as in latter case must be
same and not different ­ Test to ascertain same is not identity of
allegations but identity of ingredients ­ Motive is not an
ingredient ­ Further, distinction between issue estoppel and
double jeopardy explained ­ Judgment by High Court of Gujarat
confirmed.
The law is well settled that in order to attract the
provisions of Art. 20(2) of the Constitution i.e. doctrine of
autrefois 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 the
earlier case as well as in the latter case must be the same and
not different. The test to ascertain whether the two offences are
the same is not identity of the allegations, but the identity of
the ingredients of the offence. Motive for committing offence
cannot be termed as ingredients of offences to determine the
issue. The plea of autrefois acquit is not proved unless it is
shown that the judgment of acquittal in the previous charge
necessarily involves an acquittal of the latter charge. (Para 24)

36. BY A P RANDHIR
Admittedly, the appellant had been tried earlier for the
offences punishable under the provisions of Sec. 138 of N. I. Act
and the case is sub­judice before the High Court. In the instant
case, he is involved under Sec. 406/420 read with Sec. 114 of
I.P.C. In the prosecution under Sec. 138 of N. I. Act, the mens
rea i.e. fraudulent or dishonest intention at the time of issuance
of cheque is not required to be proved. However, in the case
under I.P.C. involved herein, the issue of mens rea may be
relevant. The offence punishable under Sec. 420 of I.P.C. is a
serious one as the sentence of 7 years can be imposed. In the
case under N. I. Act, there is a legal presumption that the
cheque had been issued for discharging the antecedent liability
and that presumption can be rebutted only by the person who
draws the cheque. Such a requirement is not there in the
offences under I.P.C. In the case under N. I. Act, if a fine is
imposed, it is to be adjusted to meet the legally enforceable
liability. There cannot be such a requirement in the offences
under I.P.C. The case under N. I. Act can only be initiated by
filing a complaint. However, in a case under the I.P.C. such a
condition is not necessary. (Para 27)
There may be some overlapping of facts in both the cases
but ingredients of offences are entirely different. Thus, the
subsequent case is not barred by any of the aforesaid statutory
provisions. (Para 28)
13.4 PRAKASH RAMCHANDRA BAROT AND ORS. V.
STATE OF GUJARAT AND ANR. MISC. CRIMINAL
APPLICATION No : 2780 Year : 2011 Decided on :
18/8/2011

37. 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 substance
found in the allegations that accused had indulged in cheating,
made a false document or that there was criminal breach of
trust ­ Suits in respect of the dispute pending in Civil Court ­
Allegations in the F.I.R. and other material did not disclose
cognizable offence ­ F.I.R. quashed.
If on a consideration of the relevant materials, the Court
is satisfied that the offence is disclosed, the Court will normally
not interfere with the investigation into the offence and will
generally allow the investigation into the offence to be
completed for collecting materials for proving the offence. If, on
the other hand, the Court on a consideration of the relevant
materials is satisfied that no offence is disclosed, it will be the
duty of the Court to interfere with any investigation and to stop
the same to prevent any kind of uncalled for and unnecessary
harassment to an individual. (Para 14; See also 12 and 13)
It is not in dispute that the sale­deed has been executed
by the original owners with their genuine signatures. What is
disputed is the right, title and interest of the original owners to
execute the sale­deed for the second time in favour of accused
Nos. 1 and 2. This by itself will not render the sale­deed of the
year 1995 a false document within the meaning of Sec. 464 of
the 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 of
accused Nos. 1 and 2 by the original owners i.e. in the year
1995, the sale­transaction of 1982 was already declared to be
hit by the provisions of Sec. 63 of the Tenancy Act. It is not

38. BY A P RANDHIR
clear and not explained by the first informant as to how the
order dated 19th November, 1983 declaring the sale in favour of
the Society as invalid was challenged in the year 1996, though
the sale has been validated subsequently. (Para 16)
When the entire matter revolves around the right, title
and interest in the subject land and when the parties are
already before the Civil Court past 14 years and the revenue
proceedings have also been undertaken, continuation of such a
prosecution will definitely amount to gross abuse of process of
law. (Para 19; See also Para 21)
To hold a person guilty of cheating, as defined in Sec. 415
of the I.P.C., it is necessary to show that at the time of making
the promise, he had fraudulent or dishonest intention to retain
the property or to induce the person so deceived to do some
thing which he would not otherwise do. (Para 24; Para 27)
13.5 POONAM CHAND JAIN AND ANR. V. FAZRU
CRIMINAL 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 first
complaint ­ Held, though there is no bar to entertain second
complaint, the same should be entertained only in exceptional
circumstances i.e. (a) where the previous order was passed on
incomplete record, or (b) on a misunderstanding of the nature of
the complaint, or (c) the order which was passed was manifestly
absurd, unjust or foolish, or (d) where new facts which could
not, with reasonable diligence, have been brought on the record
in the previous proceedings ­ Principle laid down in Pramatha
Nath Talukdar v. Saroj Ranjan Sarkar, AIR 1962 SC 876,
reiterated.

39. BY A P RANDHIR
(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 deliver
property and executing fraudulent sale­deeds ­ Complaint
dismissed by the Magistrate after elaborate discussion on
merits ­ Second Complaint filed on identical grounds without
disclosing any new facts ­ Held, Second Complaint could not be
entertained, hence dismissed.
13.6 LALITBHAI BHANUBHAI LIMBASIA vs. STATE OF
GUJARAT AND ANR CRIMINAL REVISION
APPLICATION 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 sale
price would not constitute an offence of criminal breach of trust
or cheating as there is no entrustment of goods nor there is
delivery of goods as a result of inducement ­ Framing of charge
illegal.
When there is a contract for sale and purchase of a
property, it is a matter of sale against consideration, and
therefore, the property cannot be said to have been entrusted
temporarily, for a limited purpose for a limited object. In the
present case the fertilizers were sold on credit. Therefore, it
cannot be said that there was entrustment of the said property
by the second respondent to the petitioner. When entrustment
is not there, then, an offence punishable under Sec. 406 of
I.P.C. cannot be said to have been committed. (Para 7)

40. BY A P RANDHIR
The discussion makes it clear that so far as the offence
punishable under Sec. 406 of I.P.C. is concerned, it cannot be
said to have been made out, as there was no case of
entrustment of any property. So far as the offence punishable
under Sec. 420 of I.P.C. is concerned, it also cannot be said to
have been made out in the absence of a case of inducement at
the time when the contract of sale and purchase took place.
Mere non­payment is not sufficient to hold even prima facie
that there is a case of cheating. Bouncing of cheque will not be
sufficient 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 should
proceed ahead against the petitioner. In that view of the
matter, when no offence is made out, the petitioner was
required to be discharged by the trial Court. (Para 15)
13.7 STATE OF GUJARAT V. GANPATBHAI KANTIBHAI
PATEL CRIMINAL APPEAL No : 938 Year : 2003 Decided
on : 10/2/2010
(A) Indian Penal Code, 1860 (45 of 1860) ­ Secs. 408, 409, 406,
405 & 477A ­ Confessional statement by accused recorded by
Auditor, held, is a weak piece of evidence and not sufficient to
establish charge of misappropriation in absence of corroboration
­ Acquittal confirmed.
13.8 STATE OF GUJARAT vs. ISHWARLAL
KHUMCHAND 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 law
that unless and until perversity is successfully pointed out or
unreasonableness in the assessment of evidence is successfully

41. BY A P RANDHIR
spelt out, it would not be expedient and safe for the appellate
Court to interfere with the acquittal recorded by the trial Court
even if a different view is possible on the evidence on record.
(B) CRIMINAL TRIAL ­ Circumstantial evidence alone ­
Conviction could be based on circumstantial evidence in
absence of direct evidence ­ But in such a case each of the
circumstance relied upon must be clearly established and the
proved circumstances taken together must be such as
reasonably 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 to
the satisfaction of the Court that the accused knew or had
reason to believe that an offence had been committed and
having got this knowledge, tried to screen the offence by
disposing of the incriminating material.
(D) INDIAN PENAL CODE, 1860 (XLV OF 1860) ­ Sec. 408 ­
Criminal breach of trust ­ To constitute an offence of criminal
breach of trust there ought to be a dishonest misappropriation
by a person in whom confidence is placed as to custody or
management of property in respect of which breach of trust is
charged ­ Thus entrustment of property or dominion over
property and dishonest misappropriation or conversion to his
own use by the person entrusted are necessary ingredients to be
proved by the prosecution beyond reasonable doubt.
(E) INDIAN PENAL CODE, 1860 (XLV OF 1860) ­ Sec. 477A ­
Falsification of accounts ­ The offence is complete when
accounts are falsified with an intention to defraud ­ Alteration
of accounts made after misappropriation will come within this
section if it is part of the scheme to deprive another of his
money.

42. BY A P RANDHIR
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.
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