The Superintendent and Remembrancer of Legal Affairs, West Bengal Vs. S.K. Roy, . It has been held in the said decision that :

There are, however, two distinct parts involved in the Commission of the offence of criminal breach of trust. The first consists of the creation of an obligation in relation to the property over which dominion or control is acquired by the accused. The second is a misappropriation or dealing with the property dishonestly and contrary to the terms of the obligation created.

In the case of an offence by a public servant punishable u/s 409, I.P.C. the acquisition of dominion or control over the property must also be in the capacity of a public servant. This is not the same thing as having the authority, as a public servant to get the control or dominion over property annexed with an obligation. The gravamen of the offence is the dishonest misappropriation of the money or property which comes into the possession or under the control of a public servant who has the ostensible authority to receive it even though, technically speaking, from the point of view of the distribution of departmental duties under internal rules of an office, it may not be within the scope of his authority or duty to accept the money. The fact that a public servant acts fraudulently in the exercise of his duties as a public servant to get dominion or control over some property will be an aggravating and not an exculpating circumstance. The “entrustment” results from what the person handing over money or property to a public servant, and believe about the purpose for which he hands over money or property is made to think, understand and believe about the purpose for which he hands over money or property to a public servant. If this takes place because of and due to the exercise of the official authority the requirements of Section 409, I.P. C, are satisfied.

Ordinarily, it is the ostensible or apparent scope of a public servant’s authority when receiving property and not its technical limitation, under some internal rules of the department or office concerned, and the use made by the servant of his actual official capacity which would determine whether there is a sufficient nexus or connection between the acts complained of and the official capacity so as to bring it within the ambit of Section 409 I.P.C.

To constitute an offence u/s 409, I.P.C. it is not required that mis-appropriation must necessarily take place after the creation of a legally correct entrustment of dominion over property. The entrustment may arise in “any manner whatsoever”. That manner may or may not involve fraudulent conduct of the accused. Section 409, I.P.C. covers dishonest misappropriation in both types of cases; that is to say, those where the receipt of property is itself fraudulent or improper and those where the public servant misappropriates what may have been quite properly and innocently received. All that is required is what may be described as “entrustment” or acquisition of dominion over property in the capacity of a public servant who, as a result of it, becomes charged with a duty to act in a particular way. or, at least honestly.

The obligation to act in a certain manner with regard to or to deal honestly with property, over which a public servant obtains dominion or control by the use of his official capacity may arise either expressly or impliedly.

Supreme Court in The State of Gujarat Vs. Jaswantlal Nathalal, In the said decision it has been indicated that the term ‘entrusted’ found in Section 405 I.P.C. governs not only the words ‘with the property’ immediately following it but also the words or ‘with any dominion over the property’ occurring thereafter. Before there can be any entrustment, the 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. A mere transaction of sale cannot amount to an entrustment. It has been observed in the said decision that although the government had sold the cement in question to BSS solely for the purpose of being used in connection with the construction work referred to earlier, that circumstance does not make the transaction in question anything other than a sale. After delivery of the cement, the Government had neither any right nor dominion over it. If the purchaser had failed to comply with the requirements of any law relating to cement control, he should have been prosecuted for the same. But the court was unable to hold that there was any breach of trust.

The expression ‘entrusted with property’ or ‘with any dominion over property’ has been used in a wide sense in Section 405 I.P.C. Such expression includes all cases in which goods are entrusted, that is, voluntarily handed over for a specific purpose and dishonestly disposed of in violation of law or in violation of contract. The expression ‘entrusted appearing in Section 405 I.P.C. is not necessarily a term of law. It has wide and different implications in different contexts. It is, however, necessary that the ownership or beneficial interest in the ownership of the property entrusted in respect of which offence 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 expression ‘trust’ in Section 405 I.P.C. is a comprehensive expression and has been used to denote various kinds of relationship like the relationship of trustee and beneficiary, bailor and bailee, master and servant, pledger and pledgee. When some goods arc hypothecated by a person to another person, the ownership of the goods still remains with the person who has hypothecated such goods. The property in respect of which criminal breach of trust can be committed must necessarily be the property of some person other than the accused or the beneficial interest in or ownership of it must be in other person and the offender must hold such property in trust for such other person or for his benefit. In a case of pledge, the pledged article belongs to some other person but the same is kept in trust by the pledgee. In the instant case, a floating charge was made on the goods by way of security to cover up credit facility. In our view, in such case for disposing of the goods covering the security against credit facility the offence of criminal breach of trust is not committed. In the facts and circumstances of the case, it, however, appears to us that the Respondents moved the High Court only in 1991 although the first FIR was filed in 1987 and the second was filed in 1989. The CBI, therefore, got sufficient time to complete the investigation for the purpose of framing the charge.


CENTRAL BUREAU OF INVESTIGATION, SPE, SIU (X), NEW DELHI Vs. DUNCANS AGRO INDUSTRIES LTD., CALCUTTA[(1996) 5 SCC 591 ]