BACK TO SECTIONS(1997) 2 SCC 397
Non-BailableCognizable: CognizableAny Magistrate
THE STATUTE
Original Text
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... commits 'criminal breach of trust'.
Simplified
Section 405 defines Criminal Breach of Trust (CBT) — the foundational white-collar crime provision covering the misuse of entrusted property. Two essential elements: (1) entrustment — the property must have been explicitly handed over to the accused for a specific purpose; (2) dishonest misappropriation or disposal in violation of the trust. CBT differs from theft in that possession is lawfully given; it differs from misappropriation (Section 403) in that the property was entrusted rather than found. The widest application: company directors, lawyers, agents, bankers, trustees, employees with access to petty cash — all persons who receive property for specific purposes and misuse it.
Legal Evolution
Post-liberalisation India has seen massive growth in CBT prosecutions — chit fund scams, bank fraud by industrialists, and corporate embezzlement are routinely prosecuted under this provision.
Landmark Precedents
Rashmi Kumar v. Mahesh Kumar Bhada (1997)
RELEVANCE
Stridhan given to husband for safekeeping constitutes entrustment — misappropriation of stridhan is Section 405 CBT, not merely a civil matrimonial dispute.
Practical Scenarios
"A company director who uses employee provident fund money for personal investments — CBT."
"An agent who sells their principal's goods and keeps the cash — CBT."
Common Queries
In theft, the offender takes property out of another's possession. In CBT, the property was entrusted to the offender and they subsequently misappropriate it — the initial possession was lawful.