Section 409 IPC:

Section 409 of the Indian Penal Code (IPC) deals with the offence of Criminal Breach of trust by a public servant, banker, merchant, or agent. It states that if a public servant, banker, merchant, factor, broker, attorney, or agent, who has been entrusted with someone else’s property in their official capacity or business, dishonestly misappropriates or misuses that property, it is considered a criminal breach of trust. The punishment for this offence is imprisonment for life or imprisonment for up to ten years, along with the possibility of a fine. The section reads as follows:

“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 ten years, and shall also be liable to fine.”

Essential ingredients of the offence:

• Entrustment: The accused must be entrusted with property or given dominion over property in one of the following capacities:

1. a) Public servant: The accused holds a position as a public servant.
2. b) Banker: The accused is engaged in the business of banking.
3. c) Merchant: The accused is engaged in the business of buying and selling goods.
4. d) Factor: The accused acts as a factor, i.e., an agent entrusted with the sale of goods or management of property.
5. e) Broker: The accused acts as a broker, facilitating transactions between parties.
6. f) Attorney: The accused is an attorney entrusted with property.
7. g) Agent: The accused acts as an agent, representing the interests of another party.

• Criminal breach of trust: The accused commits a criminal breach of trust regarding the property entrusted to them. This means they dishonestly misappropriate or misuse the property in violation of the trust placed in them. The breach of trust involves the wrongful disposal, conversion, or utilization of the property for their own benefit or for any purpose other than the one for which it was entrusted.
• Intent: The accused must have the intention to commit criminal breach of trust. It requires a dishonest intention or knowledge on the part of the accused that their actions would amount to a breach of trust.

Punishment

According to the above provision, the punishment for the offence of criminal breach of trust under Section 409 IPC includes:

• Imprisonment for life: The court has the discretion to impose a sentence of imprisonment for the remainder of the convict’s natural life

Or,

• Imprisonment of either description for a term up to ten years: The court may also choose to impose a specific term of imprisonment, which can be any duration up to ten years.

Additionally, the convicted individual is also liable to pay a fine as part of their punishment. The specific amount of the fine is determined by the court based on the circumstances of the case. The court has the discretion to decide the appropriate punishment based on the facts and circumstances of each case, and the penalties mentioned above are the maximum limits prescribed by the law.

Landmark judgements

• State v. Suresh Pal: In this case, the Delhi High Court held that Section 409 IPC would not be attracted if the accused did not have any dominion or control over the property and was merely acting as an employee without any authority to handle or deal with the property.
• CBI v. Ramesh Gelli (2013): This case involved the scam at the National Housing Bank and the role of Ramesh Gelli, the Chairman and Managing Director of the bank. The Supreme Court held that the accused, being a public servant and entrusted with the property, was guilty of criminal breach of trust under Section 409 IPC.
• Harshad S. Mehta v. State of Maharashtra (2001): In this case, the Bombay High Court dealt with the issue of whether Section 409 IPC can be applied to cases of financial misappropriation by a person who is not a public servant. The court held that the section is not limited to public servants only and can be applied to cases where bankers or financial agents are entrusted with property.
• State of Rajasthan v. Om Prakash (2013): This case highlighted the need for establishing the element of dishonest intention on the part of the accused to prove criminal breach of trust under Section 409 IPC. The Supreme Court emphasized that mere breach of trust or negligence would not be sufficient unless there is clear evidence of dishonest intention.

Conclusion:

The offence is significant in promoting trustworthiness, accountability, and ethical conduct in public service, banking, and various professional relationships involving the handling of property or funds. It serves to protect the interests of individuals and maintain the integrity of such positions and professions in society.