SECTION 405 IPC : Criminal breach of trust: Anyone who, while having any kind of dominion over property, dishonestly misappropriates or converts it for his own use, uses it or disposes of it in violation of any legal agreement he has made regarding the discharge of that trust, whether it be express or implied, or willfully permits another person to do so.
Explanation: “A person, being an employer of an establishment whether exempt under Section 17 of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (19 of 1952), or not, shall be deemed to have been entrusted with the amount of the contribution so deducted by the employer from the employee’s wages payable to the employee for credit to a Provident Fund or Family Pension Fund established by any law for the time being in force.”
Explanation 2.—A person, being an employer, who withholds an employee’s contribution from wages due to them for credit to the Employees’ State Insurance Fund held and administered by the Employees’ State Insurance Corporation established under the Employees’ State Insurance Act, 1948 (34 of 1948), shall be deemed to have been entrusted with the amount of the contribution so withheld, and if he defaults in the payment of such contribution to the Employees’ State Insurance Fund,
Illustrations
(a) A dishonestly disobeys the law, which instructs him to divide the effects according to the will, and appropriates them for his personal use while acting as the executor of a decedent’s will. A broke the law by betraying confidence.
(a) A manages a warehouse. Z gives his furniture to A before leaving on a trip with the understanding that it will be returned after payment of a set amount for storage space. A deceptively offers the products. A broke the law by betraying confidence.
(c) A, who resides in Calcutta, represents Z, who resides in Delhi. There is an express or implied agreement between A and Z that A will invest all funds sent by Z to A in accordance with Z’s instructions. Z sends A a check for one lakh rupees with instructions to invest it in the company’s paper. A dishonestly disobeys the order and uses the funds for his own venture. A has violated trust in a criminal manner.
(d) However, if A disobeys Z’s instructions in the last example and buys shares in the Bank of Bengal for Z instead of company paper, believing that doing so will be more advantageous for Z, without acting dishonestly and in good faith, then even though Z should suffer a loss and be entitled to sue A in civil court for that loss, A has not broken the law because A was not acting dishonestly.
(e) A, a revenue officer, has been entrusted with public funds and is required by law or a contract, express or implied, with the government to deposit all of the public funds in question into a specific treasury. A stealthily appropriates the funds. A broke the law by betraying confidence.
(f) Z gives property to be transported by land or by water to A, a carrier. A fraudulently takes possession of the property. A broke the law by betraying confidence. Comments Criminal Coordination According to State of Kerala v. Padmanabham Nair, 1999 Cr LJ 3696 (SC), a public employee charged with engaging in a criminal conspiracy for a breach of trust does not require a sanction for prosecution. Criminal trust violation: Definition and scope The beneficial ownership of the property in relation to which the alleged offense was committed must be established, and it must be shown that the accused held the property on behalf of the other party. The transferor and transferee establish a relationship whereby the transferor retains ownership of the property and the transferee receives legal custody of it for the benefit of the transferor personally, or solely for the benefit of the transferor personally or another person. As stated in Jaswantrai Manilal Akhaney v.
State of Bombay, AIR 1956 SC 575, the transferee only has a special interest in the property that has been entrusted to him, which is limited to a claim for his fees related to its safe retention. Under no circumstances does he gain the right to dispose of the property in violation of the terms of the entrustment. Entrustment According to Ramaswami Nadar v. State of Madras, AIR 1958 SC 56, the word “entrusted” in the provision’s title is crucial since without entrustment, there can be no violation of the section.