Section 405 IPC: Criminal breach of trust

Section 405 IPC Bare Act Text

405. Criminal breach of trust

Whoever, being in any manner entrusted with property, or with any dominion over property, dishonestly misappropriates or converts to his own use that property, or dishonestly uses or disposes of that property in violation of any direction of law prescribing the mode in which such trust is to be discharged, or of any legal contract, express or implied, which he has made touching the discharge of such trust, or wilfully suffers any other person so to do, commits "criminal breach of trust".

Explanation 1.—A person, being an employer of an establishment whether exempted under section 17 of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (19 of 1952) or not who deducts the employee's contribution from the 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, shall be deemed to have been entrusted with the amount of the contribution so deducted by him and if he makes default in the payment of such contribution to the said Fund in violation of the said law, shall be deemed to have dishonestly used the amount of the said contribution in violation of a direction of law as aforesaid.

Explanation 2.—A person, being an employer, who deducts the employees' contribution from the wages payable to the employee 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 deducted by him and if he makes default in the payment of such contribution to the said Fund in violation of the said Act, shall be deemed to have dishonestly used the amount of the said contribution in violation of a direction of law as aforesaid.

Illustrations

(a) A, being executor to the will of a deceased person, dishonestly disobeys the law which directs him to divide the effects according to the will, and appropriates them to his own use. A has committed criminal breach of trust.

(b) A is a warehouse-keeper. Z going on a journey, entrusts his furniture to A, under a contract that it shall be returned on payment of a stipulated sum for warehouse room. A dishonestly sells the goods. A has committed criminal breach of trust.

(c) A, residing in Calcutta, is agent for Z, residing at Delhi. There is an express or implied contract between A and Z, that all sums remitted by Z to A shall be invested by A, according to Z's direction. Z remits a lakh of rupees to A, with directions to A to invest the same in Company's paper. A dishonestly disobeys the directions and employs the money in his own business. A has committed criminal breach of trust.

(d) But if A, in the last illustration, not dishonestly but in good faith, believing that it will be more for Z's advantage to hold shares in the Bank of Bengal, disobeys Z's directions, and buys shares in the Bank of Bengal, for Z, instead of buying Company's paper, here, though Z should suffer loss, and should be entitled to bring a civil action against A, on account of that loss, yet A, not having acted dishonestly, has not committed criminal breach of trust.

(e) A, a revenue-officer, is entrusted with public money and is either directed by law, or bound by a contract, express or implied, with the Government, to pay into a certain treasury all the public money which he holds. A dishonestly appropriates the money. A has committed criminal breach of trust.

(f) A, a carrier, is entrusted by Z with property to be carried by land or by water. A dishonestly misappropriates the property. A has committed criminal breach of trust.

Source: Section 405, Indian Penal Code, 1860

Section 405 IPC in Simple Words

Ingredients of Section 405 IPC

• Entrustment of property, or of dominion over property, to the accused in any manner
• Dishonest misappropriation of that property or dishonest conversion of it to the offender's own use
• Dishonest use or disposal of the property in violation of any direction of law prescribing the mode of discharging the trust, or of any legal contract touching its discharge, or wilfully suffering another to do so
• Under Explanation 1, an employer who deducts employee contributions for a provident fund or family pension fund and defaults in payment in violation of law is deemed to have dishonestly used the money in violation of a direction of law
• Under Explanation 2, an employer who deducts employee contributions for the Employees' State Insurance Fund and defaults in payment in violation of the Employees' State Insurance Act, 1948 is deemed to have dishonestly used the money in violation of a direction of law

Punishment Under Section 405 IPC

Section 405 IPC defines criminal breach of trust; it creates no offence and prescribes no penalty. Punishment is supplied by Section 406 IPC through Section 409 IPC.

Example of Section 405 IPC

When Section 405 IPC Does Not Apply

• The accused never received entrustment of the property or any dominion over it.
• The person entrusted with the property applied or returned it strictly as required by law and by the contract governing the trust.
• The person dealt with the entrusted property in good faith, believing the action would benefit the owner, without any dishonest intention.
• A party merely fails to fulfill a contractual payment obligation in a commercial transaction where no property was entrusted in trust.

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