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 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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Ten Clarifications On Non-Disclosure Agreement India And Its Sample Format

What is a non-disclosure agreement?

Known by various names such as confidentiality agreement (CA), confidentiality disclosure agreement (CDA), proprietary information agreement (PIA) and secrecy agreement (SA), a non disclosure agreement meaning is a legally binding contractual obligation between two or more parties containing information that the parties keep it confidential. A third party is not given access to the information present in a non-disclosure agreement. An NDA aims to create a confidential agreement whereby, both the parties mutually agree not to disclose information to a third party, which could also be a trade secret. NDAs play a major role in protecting private sensitive information as well as Intellectual Property rights by clearly outlining as to what information must be kept confidential and what must be made available to the world. An NDA is usually contracted between two entities, companies or individuals who consider doing business with each other and to understand the nature of the business carried out by each other. NDAs cannot be enforced if the contracted activities are felonies, just like all other contracts.

A few examples of a Non disclosure agreement are:-

1. Attorney-client privilege
2. Doctor-patient confidentiality
3. Priest-penitent privilege
4. Bank-client confidentiality

Types of Non Disclosure agreement

There are three kinds of non-disclosure agreements, namely unilateral, bilateral and multilateral.

1. Unilateral: In a unilateral non-disclosure agreement, there are two parties and one party anticipates the disclosure of certain information to the other party and protects that information from getting further disclosed. Example – Protection of a trade secret.
2. Bilateral: Unlike a unilateral non-disclosure agreement, bilateral non-disclosure agreement requires two parties to anticipate in disclosing information to each other that intends each to protect them from further disclosure. A bilateral NDA is also called mutual or two-way NDA.
3. Multilateral: As the name suggests, such an NDA requires three or more parties where at least one party anticipates disclosing some information to the other parties from further disclosure of the same. Hence, in such a kind of NDA, the parties usually have the scope of reviewing, deliberating and finally reaching a unanimous judgement.

The content of a Non-Disclosure Agreement

An NDA clearly defines who are the parties to the contract are. It is for the parties, (whether two, three or more) to decide what information must be kept confidential. In other words, the parties define the word ‘confidential.’ The way in which the recipient is ought to handle the confidential information, failing which will result in the breach of contract is also prescribed in an NDA. An NDA also mentions the disclosure period and the information not disclosed during the said period will not be deemed as confidential. Apart from these an NDA also defines the terms and conditions of the parties, the law and jurisdiction under which they are governed, no.of years the agreement is binding on them, if or not certain information can be disclosed to a third person with permission, etc.

 Non Disclosure Agreement in India

In India, a non-disclosure agreement is governed and protected by the legislation known as the Indian Contract Act,1872. It is mandatory for an NDA to be stamped to be legally enforceable in India. A penal action can also be initiated against an employee under Section 406 of the Indian Penal Code, 1860 for Criminal breach of trust if he/she engages in misusing and disclosing a secret information which was protected under an NDA. Further, civil proceedings are also maintainable under Section 63 of the copyright act, if the information protected under copyright act is stolen.

A Non Disclosure Agreement sample used in India

THIS NON-DISCLOSURE AGREEMENT (the “Agreement”) is entered into on this 29th day of June, 2016 by and between XYZ, having its registered office at A-7 Second floor, Connaught Place, New Delhi-110028  ( the “Receiving Party”), and …………………………………………………………….(operating under the trade name “A B C”), having its office at …………………………………………………………………………, (the “Disclosing Party”).

The Receiving Party hereto desires to participate in discussions regarding providing financial assistance in the form of various products from time to time to small and medium enterprises introduced to it by the Disclosing Party (the “Transaction”).  During these discussions, the Disclosing Party may share certain confidential and proprietary information with the Receiving Party.  Therefore, in consideration of the mutual promises and covenants contained in this Agreement, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

This includes —-

1. Definition of Confidential Information.
2. Disclosure of Confidential Information
3. Use of Confidential Information
4. Compelled Disclosure of Confidential Information.
5. Term.
6. Remedies.
7. Return of Confidential Information.
8. Notice of Breach.
9. No Binding Agreement for Transaction
10. Warranty.
11. Miscellaneous.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

DEF Ltd.,                                                                                    ABC.. Pvt. Ltd.                  

XYZ                                                     By                          _____

Vice President                                                           Name:

                                                                                Title: Director

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