Everything to know about Section 406 of IPC with LegalKart

Everything to know about Section 406 of IPC with LegalKart

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LegalKart Editor
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Last Updated: May 18, 2024

The establishment of long-standing trust between two people or entities is a time-consuming and difficult process. The same trust can easily be broken if the person commits a breach of trust and does something that endangers the trust and safety of the person. When a person is not in control of their property, and they have created a trust to entrust another person with the property, then the person entrusted has to always operate in good faith. 

However, if the person fails to operate in good faith, it shows that there is a criminal breach of trust. The person who is entrusted with the involved property or dominion has to be responsible enough not to misuse his rights of control under any circumstances. If the person entrusted with the property does not maintain the trust and breaches it, then he or she is liable to punishments under section 406 IPC. 

 

Definition of IPC 406 

Dhara 406 or IPC 406 deals with an important provision, such as the criminal breach of trust. This provision for the criminal breach of trust is found in Chapter 17 of the Indian Penal Code. Section 405 defines what a criminal breach of trust is, while section 406 IPC in Hindi details the punishment outlined for a criminal breach of trust. The imprisonment of the person booked under section 406 can be for three years or a fine or maybe both, depending on the gravity of the offence. 

 

To define a criminal breach of trust, you should know that it falls under the following circumstances: 

  • Suppose someone has been entrusted with property or any dominion and tries to misuse the property which is not legally his but is entrusted to him. If the person is not legally owning the property but is trying to convert it to his name, then he can be booked under section 406. 

  • If someone has been entrusted with property and, instead of taking care of the property, tries to sell and dispose of the property dishonestly without discussing it with the owner and for his own interests, it is a sign of breach of trust, which is punishable under IPC section 406. 

  • If the person who is already in a trust agreement decides to overlook that agreement and chooses to go into any other legal contract that discharges him of the previously formed trust agreement, then he or she loses the trust and can be booked for criminal breach of trust. 

  • If the person who has been entrusted with property or dominion is torturing and making the other party of this trust suffer, then he is misusing the trust placed in him, and he can be booked under criminal breach of trust. 

These are some of the conditions under which the criminal breach of trust code is valid, and the person who is accused of this can be imprisoned and fined based on the evidence provided. 

 

Entrustment of property 

The most crucial element of the section 406 IPC is the entrustment of property. The person who is accused and awaits punishment under section 406 should have been entrusted with property earlier. The person who has accused him should have formed a trust with a property involved with the other person. 

What does entrustment of property really mean? Entrustment of property means that one person has transferred the property ownership to the other person. The ownership transference does not mean that the original owner has lost his rights to the said property. The original owner will have his own property rights maintained while entrusting the property to the other party of the agreement. 

The term entrustment is often considered vague, and it is also extended to other people than just trusted people. Entrustment also extends to clerks, business officials, and servants who are entrusted with important tasks and business processes. For example, in the case of Som Nath Puri v. the State of Rajasthan (1972), the court ruled that the term entrustment is very wide and it can include all the properties that are handed over to a person with the will of the owner for safekeeping and as entrusted for a specific motive. The term entrustment is so widely used that it can also take on the meaning of trust when it is implied, even if it is not expressed explicitly in a legal agreement or concretely. 

Another display of entrustment and the criminal breach of trust is in the case of  R.K Dalmia v. Delhi Administration (1962). This case established that the extent of property in the definition of entrustment of property is not only about actual moveable property but other forms of property that could be entrusted to others. The court instructed and set a precedent that the term property will not be just confined to moveable ones as people entrust a varied range of things and entities to others. A breach of trust can happen under different circumstances, and the judgment depends on the gravity of the situation. 

In the crucial case of Shivnarayan Laxminarayan Joshi v. the State of Maharashtra, the court defined the term property as dominion, which is the entrustment of property and control over property. Therefore, the term dominion not only applies to land or moveable property but also to business ventures and facilities on which a director or a trustee has control by virtue of his position. Thus, companies can also hold their employees or managers responsible for the management of their property and book them under section 406 IPC if there is any misuse of the entrusted property. 

 

Dishonest misappropriation and its examples 

Another element of sections 405 and 406 of IPC is dishonest misappropriation. Dishonest misappropriation is emphasized when it is a criminal breach of trust because dishonesty plays a major role when a person breaks another person’s trust. The other person feels cheated, and this is due to the entrusted person's use of dishonest means. Dishonesty is a term that has also been defined in the IPC. 

For example, dishonesty is the act of wrongful gain on one person's behalf while also causing wrongful loss to another. Therefore, in layman’s terms, you are guilty of dishonesty when you are taking someone else’s property as your own illegally and by the use of wrongful means.  The section defines that the person who is entrusted with the property should use it for an unauthorized purpose and in a dishonest manner where the legitimate owner is not made aware of the use and feels cheated by the entrusted party. 

Dishonest misappropriation is not always easy to track and establish in a court of law. However, it is an automatic conclusion when it is already established that a certain entity or property was entrusted to a person, and he has the right to control the property by entrustment on behalf of the actual owner. However, when the entrusted person is unable to account for the property entrusted or gives a false explanation related to it, the dishonesty clause is triggered, and the person is accused of dishonest misappropriation of the entrusted property. 

An example of dishonest misappropriation is the Jaikrishnadas Manohardas Desai v. the State of Bombay (1960), which was a crucial precedent for criminal breach of trust punishment, cited even today. 

Another example of a remarkable verdict related to dishonest misappropriation and criminal breach of trust is Surendra Prasad Verma v. the State of Bihar (1973), where it was established that the accused had exclusive access to keys of a safe. The court then went on to rule that whether or not the accused had possession of the keys during the misuse of the safe and assets inside, he was to be liable for punishment because he was the only one who had the safe keys. 

Therefore, no one else could have access to the safe to misappropriate the assets. The court ruled that the accused was to be punished for criminal breach of trust under section 406 IPC because there was no other explanation, and the explanation provided by the accused was false. 

 

What are the penalties for section 406? 

According to section 406 of IPC, criminal breach of trust is a non-bailable offence and a cognizable crime. The most common form of punishment for section 406 is imprisonment, which can be extended to 3 years. The person might also be charged with a fine or both kinds of punishment depending on the offence. 

 

Conclusion 


406 IPC in Hindi is a charge that can be put on any person who has breached trust while being responsible for a certain purpose or property. The term entrusted property can be implemented widely and depends on the circumstances of the case. The person who is entrusting the property to the other person should have confidence in the person. Before entrusting the property, the owner should check on the background and criminal history of the other person of the trust to avoid cases of breach of trust. If you suspect that you have been exposed to a breach of trust, consult with our legal advisors at LegalKart.

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