Criminal breach of trust | The Daily Star

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12:00 AM, January 16, 2018 / LAST MODIFIED: 12:00 AM, January 16, 2018

Law in-depth

Criminal breach of trust

Section 405 of the Penal Code, 1860 begins with the phrase 'whoever, being in any manner entrusted with property or with anAy dominion over the property'. This is quite simple and unambiguous that there should be an 'entrustment' of the property (along with other ingredients) between the parties. In practice, it is observed in maximum cases under section 406 of the Penal Code that the accused is alleged to have taken money as loan from the complainant for some purpose and subsequently refuses to repay the loan money. Often stamp-paper containing loan agreement is submitted therewith in order to substantiate the transaction. In few instances, the Court takes cognisance of the offence directly or on the basis of the investigation report.

A question arises as to whether the offence of criminal breach of trust is constituted when the complainant admits in his complaint as well as in his examination held under section 200 of Code of Criminal Procedure, 1898 that the accused has taken money from him as a loan, .

To satiate the question, a brief analysis of section 405 is required. Following ingredients are necessary to constitute the offence of criminal breach of trust i.e. (a) entrustment of the property or dominion over the property (mere dominion shall not suffice, such dominion must  emanate from entrustment), (b) dishonest misappropriation or conversion to one's own use, (c) dishonest use or disposal of that property violating any direction of law or terms of any legal contract, and (d) wilful suffering caused to any person.

The foremost ingredient of the offence of criminal breach of trust is 'entrustment' which signifies that there should be a fiduciary relationship between the accused and the complainant. In criminal breach of trust, the beneficial interest of the property rests with the owner of the property or with someone other than the accused and the accused is entrusted with the mere possession or dominion over the property against which the offence is committed.

As loan is distinct from entrustment, in a transaction of loan the loanee becomes the absolute owner of the money lent. His only obligation is to return the money within the time stipulated by the loan agreement. The loanee can use or dispose of the loan-money according to his whim. Whereas in case of entrustment, the person on whom the property is entrusted can use or dispose of the property only in conformity with the conditions attributed by the contract of trust or by the provision of law. Thus the loanee cannot be conceived of committing criminal breach of trust. If there is any violation of the terms of contract, that will be decided in Civil Court and no criminal action would lie therefrom [Shamsul Alam & Others v A.F.R. Hasan & Others (1988) 40 DLR 46].

The illustrations appended to the section 405 also do not contain any provision regarding transaction of loan and violation of a loan agreement. Hence, violation of a loan agreement shall not constitute an offence of criminal breach of trust.

In Shafiuddin Khan v State 45 DLR 102, a complainant lends money to the accused-petitioner induced by representation to repay. The Court opined that in absence of any entrustment, allegations constituted no offense of criminal breach of trust.

In the case of Ayub Ali alias Mukul v State 61 DLR 52, the accused-petitioner took money from the informant as loan for business purpose and in the allegation, the Honorable High Court Division did not find any entrustment or that the money had been taken with any specific promise or inducement. Therefore, the Court rightly observed that in the absence of definite allegation, it cannot be held that taking money as loan and subsequent failure or refusal by loanee shall constitute a criminal offence. In this particular case the accused approached before the High Court Division resorting to its inherent power under section 561A of the Code of Criminal Procedure and the proceedings was quashed by the Court. Meanwhile, the accused had undergone the rigor of a criminal case which was ultimately found baseless. 

But if the money is taken after giving a specific promise of returning it within a specified time, failure to repay the money attracts the offence of cheating [Siddique Abedin v Md. Musa Alam & State 54 DLR 506]. As we know the offences under sections 417 and 420 are bailable and such lenient sections shall not appease the 'grievance' of the complainant. Accordingly, to propitiate the grievance of the complainant and to put some pressure on the accused the non-bailable section 406 is deliberately charged with.

Another aspect is that, in very rare instances, the Court, while granting bail petition, requires an undertaking from the accused asking that he shall repay the loan-money within a short time. Since the criminal court is not endowed with the power to realise money in a case under section 406 of the Penal Code, such requirement of undertaking seems to be injudicious.

When the academic technicalities of law do not get sufficient attention, the litigants may be deprived of the fountain of justice.

The writer is an Advocate, Judge Court, Comilla. 

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