IPC 406 – Provision and Punishment for Criminal Breach of Trust

Section 406 IPC is dealing with the punishment clause of Criminal Breach of trust, defined under section 405 of the Indian Penal Code, 1860. So basically by its own heading of section 405, it is to be clear that, when any “person” putting their trust on “someone” for transferring the possession of some property to “someone” and that “someone” thereafter breaches the trust of the “person” by retaining the property by some forge way or by any other act, then such type of activities done by any person has come under the ambit of criminal act under the provision of Indian Penal Code, 1860. The offenses of criminal breach of trust, as defined under section 405, is very similar to the offense of embezzlement under the English law.

Furthermore, to constitute the offense of criminal breach of trust under section 405, it must be established that the accused was entrusted with some property or power over the property of other person and that the person with mala-fide intention misappropriated it or converted it to their use. In short, the section reads as ‘dishonest misappropriation’ or ‘convert the property to own use’ some other person’s property. Criminal breach of trust and criminal misappropriation (under Section 403) is distinct from each other in the context of the fact that in the criminal breach of trust, the accused person is entrusted with property or control over the property.

Provisions under IPC: –

That the provision related to Criminal Breach of Trust is mentioned under Chapter VI (of offenses against the body) from section 405 to 409. Whereas section 405 defines Criminal Breach of Trust, section 406 provides punishment of offense defining u/s 405 and section 407-409 sets when some specific people and their punishment commit the wrong of breach of trust.

Although Section 405 has a wide ambit, however ‘entrustment’ of the property is an essential ingredient for an offense to be punished under S.406 of IPC.

Some of the other essential elements of the offense of Criminal Breach of Trust under Sec. 405 are the following: 

1. giving a charge of their property to any person in whom confidence is placed or providing any power over property;
2. Also, the person is entrusted:-
   1. •  With mala-fide intention misappropriates the property or converts the property to his use or,
      • With the mala-fide intention uses or disposes of that property or willfully suffers any person of any contracts which is legal made touching the discharge of such kind of trust.

Section 405 of the IPC extends to the entrustment of all type – whether, to clerks, servants, business persons or some other persons, just one thing is taken into consideration that, they are holding a position of trust. Entrustment need not be express always, and it may be implied.

Read Also: 5 Points To Consider Before Hiring Property Dispute Lawyers

Punishment (Under Section 406 IPC) 

Whoever commits offenses defined under section 405 of IPC shall be punished with imprisonment which may extend to three years, or with fine, or with both.

Case laws: –

In the State of Gujarat vs. Jaswantlal Nathalal (AIR 1968 SC 700.) Supreme Court held pronounce that the expression ‘entrustment’ carries with it the implication that the person handing over any property or on whose behalf that property is handed over to another person, they continue to be its owner.

Further, the person who is handing over the property must have confidence in the person taking the property. To create a relationship based on trust between them. Only the transaction of sale cannot amount to an entrustment. If the accused had infringed or violated the conditions of purchase, the only legal help is to prosecute him under the law.

Stridhan and Criminal Breach of Trust: –

Basically, In Stridhan it includes all kind of gifts given by the husband to his wife before their wedding; Also, gifts given by the husband or as we can say (groom) and his family, or other guests or persons, and the wife’s (bride) parents to the wife at the time of marriage, and any type of gifts given to her after the marriage by an person including her parents, her husband and his husbands family, or anybody else. In Stridhan it may include jewelry, apartments, vehicles or any other item. Stridhan is considered as the exclusive property of the wife according to the Hindu Marriage Act, and the definition is accepted by judicial authorities for other purposes too.

Though Misappropriation of Stridhan by the husband or husband’s side is a punishable crime by the provision of law defined in IPC u/s 406 (“punishment for criminal breach of trust“), the definition is given u/s 405, while sections 407- section 409 defines the penal provision for breach of trust in some specific relationships. The spectrum of relationships covered by these sections which include the relationship between sender and carrier of property or goods, and between an owner of the property and their employee, and between the owner of property and banker, and between public and public officials, and between an owner of the property their attornies or agents. Section 406 provides three years simple or rigorous imprisonment, both part, i.e., 407 and section 408 provides seven years simple or rigorous imprisonment, and section 409 prescribes severe punishment from ten years – life imprisonment. By some section 406 can be more correctly described as “punishment for criminal breach of trust simpliciter” in the light of these undoubtedly severe sections. There are many contradictory views regarding that the components of the Stridhan which has been gifted by the husband or the husband’s side. Some experts say that taking back such kind gifts creates only civil liability, while some of in the opinion that this may attract IPC section 406 (Criminal Breach of Trust), which is a criminal provision.

If we talk about some other aspect of the term Stridhan, any gifts given by the wife’s side to the husband or husband’s family are to be returned if and when the marriage collapses. Because If these kinds of gifts are deemed by the court to have been given “in consideration of marriage” (or as we can say as a price for marriage), then this is considered as dowry, and the husband’s side may be liable under the provision of Dowry Act for the imprisonment and /or a fine or both for demanding these items or accepting these items.

The Apex Court of the country i.e., Supreme court quoted that the sections under 498a and 406 under the Indian penal code are widely misused, and for no reason, the husband and his family members are prosecuted and send behind bars thereby, tarnishing the reputation of the family, these sections are termed as a “legal terrorism”. Hence the apex court in a very recent judgment of “Arnesh Kumar Vs. The state of Bihar” has given some compulsory or obligatory proposal of guidelines which are as follows: –

1. All the State Governments to instruct its police officers not to directly arrest when a case under Section 498-A of the IPC is lodged but it’s necessary to satisfy themselves about the requirements for arrest under the framework laid down above flowing from Section 41, Cr.PC;
2. The police officer or in charge may provide a check-list under section 41(1)(b)(ii) of the Criminal Procedure Code which shall forward  and furnish the reasons and materials which necessitated the arrest while producing the accused person before the Magistrate for further detention;
3. The magistrate may pursue the report furnished by police, and only after recording its satisfaction, the magistrate authorizes detention.
4. Notice send (for appearing in court) in terms of Section 41A of Cr.P.C.must be reach before accused within 14 days from the date of filing the case.
5. Giving detention without recording any reason by Judicial Magistrate shall be liable for a departmental inquiry by the appropriate HC.
6. Once FIR under 498a/406 is lodged the apprehension of arrests may create even with the guidelines and safeguards as to be mandatorily implemented by the police officials. The police officer can follow the guidelines and can arrest the person.

Read Also: 8 Legal Documents to Check Before Buying Property

Conclusion

Lastly, I will conclude this article with If we have to make a person liable under the discussed provision, it is not only sufficient to establish that the property has not been mismanaged, also, It has to be established that the accused has put the property to his use with the mala-fide detention or to some unauthorized use. And Negligence does not come under the ambit of ‘dishonestly keeping the property in possession,’ it’s an exception.

The wrong of breach of trust under Section 406 is cognizable, and a warrant should, ordinarily, an issue in the first aspect. The wrong is not bailable. It is only compoundable with Court permission when the value of the property does not exceed Rs. 250 and not compoundable otherwise, and is triable by a Magistrate of the first or second class.

Ten Things That Happen When You Are In Frustration Of Contract

When a contract is entered into between two parties, specific duties and rights arise between those two parties. The frustration of contract is a scenario whereby some unforeseen events happens after the contract is entered into, which make the performance of the contract impossible. Such a situation is known as the frustration of the contract. The parties need not perform the contract; thereafter, they are relieved from the entire contractual obligation that arose from such contract.

English Law on the frustration of contract

The doctrine of frustration of contract was initially developed in the English laws. The case which developed this doctrine was Taylor v. Cardwell, whereby there was an opera house which was rented to hold concerts via contract between the parties. The opera house was subsequently destroyed by fire. The court held that the contract was frustrated as the subject-matter of contract on which the entire contract was made, was destroyed by fire and in no way, the contract could be further carried on.[1]

The doctrine of Frustration of contract under the Indian Law

As a general rule, once a contract is entered into between the parties, it has to be carried on according to such agreement. But there is an exception to this rule under the Indian Contract Act, 1872 under Section 56. The section reads as follows-

“Contract to do act afterward becoming impossible or unlawful.-A contract to do an act which, after the contract is made, becomes impossible, or, because of some event which the Promisor could not prevent, unlawful, becomes void when the act becomes impossible or unlawful.

Compensation for loss through non-performance of act known to be impossible or unlawful.-Where one person has promised to do something which he knew, or, with reasonable diligence, might have known, and which the promisee did not know, to be impossible or unlawful, such promisor must make compensation to such promisee for any loss which such promisee sustains through the non-performance of the promise.”[2]

Therefore, a contract to do anything which is made impossible or unlawful to execute thereafter becomes void. Compensation is also provided to the party who suffers a loss on such non- performance of the contract by the person who knew that the act was unlawful or impossible to perform.

The doctrine is based on the legal maxim “les non cogit ad impossibilia,” which means the law will not compel a man to do what he cannot possibly do. The apex court very well explained the doctrine in the case of Satyabrata Ghose v. Mugneeram, whereby, the court held that the word ‘impossibility of contract’ and ‘frustration’ could be used as a synonym. Where the contract cannot be performed because of the impossibility, then the person cannot be compelled to do that task.[3]

 Conditions necessary for Section 56

1. There should be a valid contract existing between the parties. The contract occurred between the parties should satisfy all the requirements of a valid contract set out by the Indian Contract Act, 1972.
2. The contract must be set to be performed. That means it has not been performed either wholly or has been performed only in part. Only if some part of the contract is yet to be performed, section 56 will find its applicability.
3. The contract has either becomes impossible or unlawful after that. The contract, after being entered into, should become impossible to perform or unlawful. The party should be unaware of this fact or else they will have to pay the compensation to the party suffering from such known frustration of contract.

Grounds of the frustration of contract may be the destruction of the subject –matter, non- occurrence of the contemplated events, death or incapacity, change of circumstances, government, administration or legislation intervention, the intervention of war, and such other circumstances.

Conclusion

The doctrine of frustration of contract can be very well be defined after reading Section 56 of the Indian Contract Act, 1872. It is made evident can frustration can be allowed into in two circumstances, i.e., the impossibility of performance of contract and illegality of contract. Adequate compensation is provided to the party who has in any of the circumstances of the frustration suffered loss by the party who has gained something from the frustration.

[1] Taylor v. Cardwell (1863) 3 B.& S. 826.

[2] Indian Contract Act, 1872, s. 56.

[3] Satyabrata Ghose v. Mugneeram (1954) AIR 44.

Ten Bounced Cheque Cases In Online Banking Era That Had Gone Way Too Far

Introduction To Negotiable Instrument

  

A negotiable instrument is a transferable signed document that promises to pay the bearer a sum of money at a future date or on demand. Negotiable Instrument is a general term, and as per section 13 of Negotiable Instruments Act, there are three kinds of negotiable tools, it includes a promissory note[1], bill of exchange[2] or cheque [3] payable moreover to order to bearer.

The Negotiable Instruments Act came into force in the year 1881. Before this legislation was brought into force, laws relating to negotiable instruments were governed by English laws. Later the Act operates on the subject provision of Section 31 and 32 of the Reserve Bank of India Act 1934.

A Cheque is said to be bounced or dishonored when the bank can not clear it for want of sufficient funds in the account or various other reasons, some of it can be overwritten on the cheque, payment stopped by the account holder, signature mismatch, etc.

Dishonor of a negotiable instrument can be broadly committed in two ways, Dishonour by non-acceptance[4] and non-payment[5]. As per Section 138 of the Act, the disgrace of a cheque is a crime and is disciplinary by custody up to two years or with financial forfeit or with both.

The recipient must show the sign to the drawer with 30 days from the date of in receipt of “Cheque Return Memo” from the bank. The notice must be positioning that the cheque sum must be rewarded to the recipient within 15 days from the date of receiving of the notice by the drawer. After in receipt of the notice, if the drawer doesn’t make the sum within 15 days from the day of in receipt of the notice, then he has committed a wrong under Section 138 of the Negotiable Instruments Act.

The grievance should be listed in a judge’s court within a month of the termination of the notice period. It is vital in this case to refer an attorney who is well experienced and accomplished in this area of practice to proceed additional in the stuff.

On 18^th of February 2019, in the case of Sri Santhosh J v. Sri V Narasimha Murthy, High Court of Karnataka at Bangalore; proposed to amend the said act to address the issue of delay in the final resolution of cheque dishonor cases to provide relief to payees of the dishonored cheque. In addition to this, it will also discourage frivolous and unnecessary litigations and save the time of the Court.

After this proposal, certain amendments which are to be brought in the legislature were drafted in the form of The Negotiable Instruments (Amendment) Bill, 2017. After being passed by the Lok Sabha, the said Act is a step closer to becoming a law. In the age of net banking, businesses across India use cheques, including post-dated ones, to make and receive payments from vendors, suppliers, and customers.

The Rajya Sabha passes proposed amendments to be brought after this bill-

1. It aims to bring the provision enforce, under which the drawer of the cheque that has been dishonored to pay interim compensation to the complainant.
2. The Interim compensation that is to be provided shall not exceed the 20% of the amount of the cheque that was dishonored.
3. The interim compensation is to be paid by the drawer of the dishonored cheque in a summary trial or a summons case. The same is applicable even if he pleads not guilty to the charge made in the complaint.
4. The drawer of the cheque has to pay interim compensation within 60 days of the date of order. However, it is at the discretion of the bench to give an extension of further 30 days but not beyond that.
5. In the case when the drawer of the cheque is acquitted in the case, the complainant has to repay the drawer the interim compensation with interest. The repayment has to made within 60 days from the date of the order of the court.
6. An additional 20 percent compensation will have to be paid if the drawer goes for an appeal. This amount would be over the Interim compensation amount paid during the initial period of the suit. This clause aims to deter appeals.

Cutting across the party line, members of opposition parties including Congress supported the bill but suggested that the punishment must be more stringent to curb cheque payments defaults. Another view in the opposition of bill was that there is a presupposition that drawee is wrong and the payee is right, which is right, which is not good. In some instances, the payee is also a culprit.

During the debate on the bill, the Congress Leader Madhusudan Mistry said the penalty proposed was not enough to curb the fraudulent practices. They said the government should come out with laws in parallel with France and UAE, wherein the person who has committed default in the payment of cheque shall be barred from issuing a cheque for five years. This has proved to be an effective deterrence strategy, for that of an experimental law like this.

[1] Section 4 NI Act

[2] Section 5 NI Act

[3] Section 6 NI Act

[4] Section 91 NI Act

[5] Section 92 NI Act

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Most Effective Ways To Overcome Rectification Deed - All You Need To Know

What is Deed of Rectification

Amendment or Confirmation deeds are otherwise called Rectification deeds. They are entered between two parties to redress any blunders made in a past deed. These blunders may incorporate a typing mistake, an incorrectly spelled name, a blunder in the property depiction, or some other mistake in the execution of the reports. These oversights can be later redressed through a Rectification or Confirmation deed.

Read Also: Promissory Note Meaning in India

Following are the conditions under which rectification deeds are made

(a) The mistake must be real.

(b) It must be coincidental, not deliberate.

(c) All the parties must consent to the rectification thereof.

Section 17 of the Indian Registration Act, 1908—-

The Indian Registration Act, 1908 governs Rectification deeds. As indicated by Section 17 of the Act, any deed affirming any interest for an immovable property should be enlisted. The affirmation might be given either by passive consent, by impediment, or by deeds.  Rectification deeds attract stamp duty. If the main document is registered or to be registered, then it mandatory for the corresponding confirmation deed to also get registered.

The content of a Deed of Rectification

a) Name and address of the parties involved.

b) Details of the original deed and description of the rectification to be made.

c) Must have clear and concise in language to avoid future complications.

d) Should not alter the scope of the original document or violate any regulations.

e) Must not deprive the party of their rights.

The procedure involved in Rectification deeds

The parties must first mutually agree to the deed and then proceed to a duly executed document.

The parties are required to pay rectification deed registration charges and stamp duty as per the laws of the State. Charges are Rs/-100 for each.

The deed then has to go to the sub-registrar’s office where the original deed has been duly registered.

If by any chance there is an error of any kind in the rectification deed, a supplementary rectification deed shall be executed by paying stamp duty and registration charges, provided that the error must be genuine, inadvertent and not intentional in nature. The parties must agree to the same thereof.

A rectification deed can rectify only factual errors and not those which involve errors of law such as,

a)  Deficient stamp duty
b) A jurisdictional error of Sub-Registry office
c) The basic character of the transaction e.g. Sale transaction cannot be corrected as Gift
d) It is meant to rectify defects in the original deed NOT to change the nature of the transaction OR Intention of the parties involved

In case the parties involved do not agree to the said rectification or amendment of the documents executed, the aggrieved party may file a suit under Section 26 of the Specific Relief Act, 1963. The court, by virtue of its power, can direct the rectification of an instrument if the deed does not express any real intention of the parties.

Format

DEED OF RECTIFICATION

This DEED OF RECTIFICATION is executed at                                                                        this the             day               2004  between

s/o                                                      residing at

hereinafter referred to the RECTIFIER/VENDOR which term includes  its successors and assigns of the ONE PART;

AND

s/o                                     residing at

hereinafter referred to as PURCHASER  which term includes his heirs, executors, administrators, representatives and assigns of the OTHER PART

WHEREAS the property more fully described in the Schedule hereunder was sold by the Rectifier/Vendor in favour of the purchaser herein in and by sale deed dated and registered as Document No. of Book1 volume filed at pages to on the file of the Sub Registrar of            hereinafter referred as the Principal Deed.

WHEREAS in the Principal Deed dated                 in line     of page No.      and inline

of page     the Survey number of the property was wrongly typed as             instead of              .

WHEREAS this typographical error has come to the knowledge of the above said Purchaser and requested the Rectifier/Vendor to rectify the same.

NOW, THIS DEED OF RECTIFICATION WITNESSETH AS FOLLOWS:

That  is the Principal Deed dated      in line       of page No.    and in line     of page No.   the Survey number  of the property conveyed is wrongly typed as       is rectified as

by this Deed of Rectification.

That as rectified as aforesaid, the Principal sale Deed shall remain in full force and effect.

That no consideration has been received by the RECTIFIER/VENDOR for executing this Deed of Rectification.

SCHEDULE OF PROPERTY

(As in the Principal Deed)

SCHEDULE OF PROPERTY

(Rectified by this  deed of Rectification)

Present Market Value of the Property is Rs.

In Witness whereof the RECTIFIER/VENDOR and the  PURCHASER  have set their hands on the day and month year first above written in the presence of

WITNESS                                                                               RECTIFIER/VENDOR

                                                                                                     PURCHASER

No Time Limit—-

There is no time bar for the execution of a rectification or correction deed. At any point in time, when a mistake is discovered, a rectification deed may be executed.

Hence, these deeds are a kind of correction templates which give ample room for the parties to understand and change any error, be it a wrongly spelled name or an error in typing, which might have occurred accidentally.

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