Q. Define and Distinguish Between Criminal Breach of Misappropriation & Criminal Breach of Trust. ~ Balochistan Law Forum

Q. Define and Distinguish Between Criminal Breach of Misappropriation & Criminal Breach of Trust.

1. INTRODUCTION.

To constitute the offence of Criminal Breach of Trust there must be dishonest misappropriation by a person in whom confidence is placed as to the custody or management of the property in respect of which the breach of trust is charged. Criminal Misappropriation takes place when the possession has been innocently come by but subsequent change of intention or from the knowledge of some new fact with which the party was not previously acquainted, the retaining becomes wrongful and fraudulent.

2. RELEVANT PROVISIONS.

(I). Section 403 & 404 of Pakistan Penal Code 1860 deal the term Criminal Misappropriation of Trust.

(II). Sections 405 to 409 of Pakistan Penal Code 1860 deal the term Criminal Breach of Trust.

3. MEANING OF CRIMINAL MISAPPROPRIATION UNDER BLACK’S LAW DICTIONARY.

Misappropriation means “the unauthorized, improper, or unlawful use of funds or other property for purpose other than that for which intended.”

4. DEFINITION OF CRIMINAL MISAPPROPRIATION UNDER SECTION 403 OF PAKISTAN PENAL CODE 1860.

Whoever dishonestly misappropriates or converts to his own use any ' movable property, shall be punished with imprisonment of either description for a term which may extend to two years, or with fine, or with both.

(i). Illustrations.

(a). ‘A’ takes property belonging to ‘Z’ out of ‘Z's possession in good faith, believing, at the time when he takes it, that the property belongs to himself, ‘A’ is not guilty of theft; but if ‘A’, after discovering his mistakes, dishonestly appropriates the property to his own use, he is guilty of an offence under this section.

(b). ‘A’, being on friendly terms with ‘Z’, goes into ‘Z's library in ‘Z's absence, and takes away a book without ‘Z's express consent- Mere, if ‘A’ was under the impression that he had ‘Z's implied consent to take the book for the purpose of reading it, ‘A’ has not committed theft But, if ‘A’ afterwards sells the book for his own benefit, he is guilty of an offence under this section.

(c). ‘A’ and ‘B’, being joint owners of a horse. ‘A’ takes the horse out of ‘B's possession, intending to use it. Here as ‘A’ has a right to use the horse he does not dishonestly misappropriate it. But, if ‘A’ sells the horse and appropriates the whole proceeds to his own use, he is guilty of an offence under this section.

Explanation 1.

A dishonest misappropriation for a time only is a misappropriation within the meaning of this section.

(i). Illustration.

‘A’ finds a Government promissory-note belonging to ‘Z’, bearing a blank endorsement. ‘A’ knowing that the note belongs to ‘Z’, pledges it with a banker as a security for a loan, intending at a future time to restore it to ‘Z’. ‘A’ has committed an offence under this section.

Explanation 2.

A person who finds property not in the possession of any other person, and takes such property for the purpose of protecting it for, or of restoring it to, the owner, does not take or misappropriate it dishonestly, and is not guilty of an offence; but he is guilty of the offence above defined, if he appropriates it to his own use, when he knows or has the means of discovering the owner, or before he has used reasonable means to discover and give notice to the owner and has kept the property a reasonable time to enable the owner to claim it.

What are reasonable means or what is a reasonable time in such a case, is a question of fact.

It is not necessary that the finder should know who is the owner of the property, or that any particular person is the owner of it, is sufficient if, at the time of appropriating it, he does not believe it to be his own property, or in good faith believes that the real owner cannot be found.

(i). Illustrations.

(a). ‘A’ finds a rupee on the high-road, not knowing to whom the rupee belongs. ‘A’ picks up the rupee. Here ‘A’ has not committed the offence defined in this section.

(b). ‘A’ finds a letter on the road, containing a bank note. From the direction and contents of the letter he learns to whom the note belongs. He appropriates the note. He is guilty of an offence under this section.

(c). ‘A’ finds a cheque payable to bearer. He can form no conjecture as to the person who has lost the cheque. But the name of the person, who has drawn the cheque, appear, ‘A’ knows that this person can direct him to the person on whose favor the cheque was drawn. ‘A’ appropriates the cheque without attempting to discover the owner. He is guilty of an offence under this section.

(d). ‘A’ sees ‘Z’ drop his purse with money In it, ‘A’ picks up the purse with the intention of restoring it to ‘Z’, but afterwards appropriates It to his own use, ‘A’ has committed an offence under this section.

5. SCOPE OF CRIMINAL MISAPPROPRIAITON UNDER PAKISTAN PENAL CODE 1860.

Criminal Misappropriation takes place when the possession has been innocently come by but subsequent change of intention or from the knowledge of some new fact with which the party was not previously acquainted, the retaining becomes wrongful and fraudulent.

6. INGREDIENTS OF CRIMINAL MISAPPROPRIATION UNDER SECTION 403 OF PAKISTAN PENAL CODE 1860.

Following are important ingredients of Criminal Misappropriation Under Section 403 of Pakistan Penal Code 1860.

(I). Dishonestly Misappropriates.

The term ‘dishonestly’ has been defined in Section 24 as, “Whoever does anything with the intention of causing Wrongful Gain to one person or Wrongful Loss to another person, is said to do that thing dishonestly”. On the other hand the verb ‘to appropriate ’ in this connection means setting apart for, or assigning to, a particular person or use and to misappropriate means to set apart for or assign to the wrong person or a wrong use. Thus to constitute misappropriation the act of assigning to the wrong person or for wrong use must be done dishonestly.

(II). Covers To His Own Use.

To constitute this offence there must be actual conversion of the thing appropriated to the use of some person other than the person entitled thereto. A person obtaining goods of another and disposing of them fraudulently for the benefit of him or a third person is guilty of conversion.

(III). Any Movable Property.

The misappropriation of movable property which has been defined Under Section 22 as “The words “movable property” are intended to include corporeal property of every description, except land and thing attached to the earth or permanently fastened to anything which is attached to the earth.” There cannot be any Criminal Misappropriation with regard to immovable property.

7. PROOF OF CRIMINAL MISAPPROPRIATION.

In order to prove an offence Under Section 403 of Pakistan Penal Code 1860 the prosecution has to prove; (1). That the property was the property of the complainant, (2) that the accused misappropriated that property or converted it to his own use, and (3) that he did so dishonestly.

8. GIST OF THE OFFENCE.

Gist of the offence of Criminal Misappropriation is wrongful or dishonest intention. All that is necessary for an offence under Section 403 of Pakistan Penal Code 1860 is that there should be misappropriation or conversion with the intention of causing Wrongful Gain or Wrongful Loss.

9. PUNISHMENT FOR DISHONEST MISAPPROPRIATION OF PROPERTY POSSESSED BY DECEASED PERSON AT THE TIME OF HIS DEATH UNDER SECTION 404 OF PAKISTAN PENAL CODE 1860.

Whoever dishonestly misappropriates or converts to his own use properly, knowing that such property was in the possession of a deceased person at the time of that person decease, and has not since been in the possession of any persons legally entitled to such possession, shad be punished with imprisonment of either description for a term which may extend to three years and shall also be liable to fine; and if the offender at the time of such person's decease was employed by him as a clerk or servant, the imprisonment may extend to 7 years.

(i). Illustration.

‘Z’ dies in possession of furniture and money. His servant ‘A’, before the money comes into the possession of any person entitled to such possession, dishonestly misappropriates it. ‘A’ has committed the offence defined in this section.

10. MEANING OF CRIMINAL BREACH OF TRUST UNDER BLACK’S LAW DICTIONARY.

The term Breach of Trust means; the Wrongful Misappropriation by a trustee of any fund or property which had been lawfully committed to him in a fiduciary character.

11. DEFINITION OF CRIMINAL BREACH OF TRUST UNDER SECTION 405 OF PAKISTAN PENAL CODE 1860.

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 willfully suffers any other person so to do, commits "criminal breach of trust.

(I). Illustrations.

(a). ‘A’, being executor to the wilt 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 Dacca, is agent for ‘Z’, residing at Lahore. 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.

12. CONCEPT OF CRIMINAL BREACH OF TRUST UNDER PAKISTAN PENAL CODE 1860.

13. SCOPE OF SECTION 405 OF PAKISTAN PENAL CODE 1860.

The term of this Section are very narrow as compared to the one discussed below. It applies to one who is in any manner entrusted which property or dominion over property.

Case Law.

PLD 1956 SC 417.

To establish a charge of Criminal Breach of Trust the prosecution must prove not only entrustment of or dominion over property but also that the accused dishonestly misappropriated, converted, used or disposed of that property himself or that he willfully suffered some other person to do so.

14. INGREDIENTS OF CRIMINAL BREACH OF TRUST UNDER SECTION 405 OF PAKISTAN PENAL CODE 1860.

Following are the important ingredients of Criminal Breach of Trust.

(I). Entrusting Any Person.

The word entrustment in Section 405 of Pakistan Penal Code 1860 connotes that the accused holds the property in a fiduciary capacity. One of the ingredients of the offence of the Criminal Breach of Trust is that the person accused must have been entrusted with the property in question.

(II). Misappropriation or Conversion.

For an offence of Criminal Breach of Trust besides showing that the property was entrusted to the accused it is further necessary to show that he had dishonestly misappropriated or converted it to his own use. Therefore in absence of any allegation of misappropriation or conversion of property by the accused, an offence under Section 406 of Pakistan Penal Code 1860 is not constituted.

(III). Disposal In Violation of Any Law or Contract.

Where the contract is such that it creates a trust in respect of the property alleged to have been misappropriation and converted, this section is attracted. It means that where there was a contract of trust in order to hold certain property in question and the same is violated by disposing of the property in any manner other than that was incorporated in the contract, it would amount to Criminal Breach of Trust. Accused shall also be liable under this Section if he does any act in violation of the law concerning the trust.

(IV). Dishonestly.

Another important ingredient of Criminal Breach of Trust is that misappropriation or conversion must be the result of dishonestly.

Case Law.

1985 P. Cr. L.J 596 (DB).

Every breach of trust gives rise to a suit for damages but it is only when there is evidence of mental act of fraudulent misappropriation that the commission of embezzlement of amount becomes a penal offence punishable as Criminal Breach of Trust.

15. PUNISHMENT FOR CRIMINAL BREACH OF TRUST UNDER SECTION 406 OF PAKISTAN PENAL CODE 1860.

Whoever, commits criminal breach of trust snail be punished with imprisonment of either description for a term which may extend to [7] years, or with fine, or with both.

16. PUNISHMENT FOR CRIMINAL BREACH OF TRUST BY CARRIER ETC. UNDER SECTION 407 OF PAKISTAN PENAL CODE 1860.

Whoever, being entrusted with property as a carrier, wharfinger or warehouse-Keeper, commits criminal breach of trust in respect of such property, shall be punished with imprisonment of either description for a term which may extend to 7 years, and shall also be liable to fine.

17. PUNISHMENT FOR CRIMINAL BREACH OF TRUST BY CLERK OR SERVANT UNDER SECTION 408 OF PAKISTAN PENAL CODE 1860.

Whoever, being a clerk or servant or employed as a clerk or servant, and being in any manner entrusted in such capacity with property, or with any dominion over property, commits criminal breach of trust in respect of that property, shall be punished with imprisonment of either description for a term which may extend to 7 years, and shall also be liable to fine.

18. PUNISHMENT FOR CRIMINAL BREACH OF TRUST BY PUBLIC SERVANT, OR BY BANKER, MERCHANT OR AGENT UNDER SECTION 409 OF PAKISTAN PENAL CODE 1860.

Whoever being in any manner entrusted with property, or with any dominion over property in his capacity of a public servant or in the way of his business as a banker, merchant, factor, broker, attorney or agent, commits criminal breach of trust in respect of that property, shall be punished with imprisonment for life or with imprisonment of either description for a term which may extend to 10 years, and shall also be liable to fine.

19. DIFFERENCE BETWEEN CRIMINAL MISAPPROPRIATION & CRIMINAL BREACH OF TRUST.

(I). As To Relevant Provisions.

Criminal Misappropriation.

Section 403 & 404 of Pakistan Penal Code 1860 deal the term Criminal Misappropriation.

Criminal Breach of Trust.

Sections 405 to 409 of Pakistan Penal Code 1860 deal the term Criminal Breach of Trust.

(II). As To Meaning.

Criminal Misappropriation.

Misappropriation means “the unauthorized, improper, or unlawful use of funds or other property for purpose other than that for which intended.”

Criminal Breach of Trust.

The term Breach of Trust means; the Wrongful Misappropriation by a trustee of any fund or property which had been lawfully committed to him in a fiduciary character.

(III). As To Definition.

Criminal Misappropriation.

Criminal Breach of Trust.

(IV). As To Acquisition of Property.

Criminal Misappropriation.

Criminal Misappropriation applies to property coming into the hands of the offender by chance or anyhow.

Criminal Breach of Trust.

Criminal Breach of Trust only applies to property acquired by a person in a fiduciary capacity.

(V). Contractual Relationship.

Criminal Misappropriation.

There is no such relationship exists between the offender and the victim.

Criminal Breach of Trust.

In Criminal Breach of Trust there is a contractual relationship between the offender and the victim.

(VI). As To Nature of Offence.

Criminal Appropriation.

The offence of Criminal Misappropriation is not a serious offence.

Criminal Breach of Trust.

The offence of Criminal Breach of Trust is more serious offence.

(VII). As To Punishment.

Criminal Misappropriation.

The punishment of Criminal Misappropriation is imprisonment of either description for a term which may extend to 2 years or fine or both.

Criminal Breach of Trust.

The punishment for Criminal Breach of Trust is imprisonment of either description for a tem which may extend to 7 years or fine or both.

20. CONCLUSION.

The pith and marrow of all the previous discussion there is no iota untruth shows that Criminal Misappropriation takes place when the possession has been innocently come by but subsequent change of intention or from the knowledge of some new fact with which the party was not previously acquainted, the retaining becomes wrongful and fraudulent. To constitute the offence of Criminal Breach of Trust there must be dishonest misappropriation by a person in whom confidence is placed as to the custody or management of the property in respect of which the breach of trust is charged.