Section Overview
Section Number:
IPC Section 406
Section Title:
Punishment for Criminal Breach of Trust
Act:
Indian Penal Code, 1860 (IPC)
Status:
Replaced under Bharatiya Nyaya Sanhita (BNS), 2023 with corresponding provisions relating to criminal breach of trust.
Applicability:
IPC Section 406 applies when:
-
Criminal breach of trust under Section 405 is established;
-
Property was entrusted to the accused;
-
The accused dishonestly misappropriated or converted the property;
-
Trust obligations were violated.
👉 Section 405 defines the offence, while Section 406 provides the punishment.
Section Explanation
Simple Explanation (Plain English/Hinglish)
IPC Section 406 ka simple matlab hai ki agar kisi vyakti ne trust karke property di aur us property ko galat tarike se use ya apna bana liya gaya, to uske liye punishment Section 406 ke under di jati hai.
Simple words mein:
"Trust todkar property ka misuse karna aur uske liye saza milna IPC 406 ka subject hai."
Legal Meaning
Section 406 punishes:
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Criminal breach of trust;
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Dishonest conversion of entrusted property;
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Misappropriation of assets held under trust.
The offence originates from Section 405.
Essential Ingredients
To establish Section 406, prosecution must prove:
Entrustment of Property
Property was entrusted to accused.
Dominion Over Property
The accused had lawful control because of trust relationship.
Dishonest Misappropriation
Property was:
-
Converted;
-
Retained;
-
Used contrary to trust conditions.
Breach of Trust
The accused violated legal, contractual, or fiduciary obligations.
Common Situations Where Section 406 Applies
Employee Misappropriation
Employee misuses employer funds.
Agent Misuse
Agent retains money meant for principal.
Partnership Disputes
Partner dishonestly diverts entrusted assets.
Family Property Cases
Entrusted family assets are wrongfully retained.
Financial Transactions
Entrusted funds are used for personal gain.
Punishment & Legal Classification
Punishment
IPC Section 406 provides:
-
Imprisonment up to 3 years; OR
-
Fine; OR
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Both.
Bailable / Non-Bailable
✔ Generally Bailable
Cognizable / Non-Cognizable
✔ Cognizable
Compoundable
❌ Generally Non-Compoundable
Triable By
Any Magistrate
IPC ↔ BNS Mapping
IPC Section
IPC Section 406
BNS Equivalent
The Bharatiya Nyaya Sanhita retains provisions relating to:
-
Criminal breach of trust;
-
Misappropriation of entrusted property;
-
Fiduciary misconduct.
Status
Concept retained under BNS.
Real-Life Examples
Example 1: Employee Taking Company Funds
An employee entrusted with cash uses it for personal expenses.
Section 406 applies.
Example 2: Agent Keeping Sale Proceeds
An agent sells goods but keeps the money.
IPC 406 applies.
Example 3: Misuse of Deposited Property
A person entrusted with valuables sells them without authority.
Section 406 applies.
Example 4: Financial Trustee Misappropriation
A trustee uses trust assets for personal benefit.
Section 406 applies.
Landmark Judgments
Case Name:
S.W. Palanitkar v. State of Bihar
Court:
Supreme Court of India
Key Takeaway:
Entrustment and dishonest intention are essential elements of criminal breach of trust.
Case Name:
State of Gujarat v. Jaswantlal Nathalal
Court:
Supreme Court of India
Key Takeaway:
Entrustment forms the foundation of liability under breach of trust provisions.
Case Name:
Velji Raghavji Patel v. State of Maharashtra
Court:
Supreme Court of India
Key Takeaway:
Misappropriation must be dishonest and connected to entrusted property.
Legal Insights
When Is Section 406 Applied?
Section 406 is invoked when:
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Entrustment exists;
-
Property is dishonestly used;
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Fiduciary obligation is violated;
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Wrongful gain or loss occurs.
Difference Between Civil Dispute and Criminal Breach of Trust
| Civil Dispute | Criminal Breach of Trust |
|---|---|
| Contract violation | Dishonest intention present |
| Compensation remedy | Criminal punishment possible |
| No criminal liability necessarily | IPC Section 406 applies |
👉 Mere non-payment does not automatically become criminal breach of trust.
Common Misuse Scenarios
Purely Civil Disputes
Contract disagreements are often wrongly converted into criminal complaints.
Absence of Entrustment
Property was never entrusted.
Lack of Dishonest Intention
No wrongful gain intended.
Business Losses
Commercial losses do not automatically amount to criminal breach of trust.
Defenses Available
No Entrustment
The accused never received entrusted property.
No Dishonest Intention
Actions were bona fide.
Civil Nature of Matter
Dispute is contractual, not criminal.
Lack of Evidence
No proof of conversion or misappropriation.