M.N.G. Bharateesh Reddy v. Ramesh Ranganathan

Criminal Appeal No. 1273 of 2022 (decided 18 August 2022; no neutral citation printed on the official copy)

Court: Supreme Court of India (Criminal Appellate Jurisdiction)
Case: Criminal Appeal No. 1273 of 2022 (arising out of SLP (Crl) No. 9509 of 2019)
Decided: 18 August 2022
Bench: Dr Dhananjaya Y Chandrachud, A S Bopanna (judgment by Dr Dhananjaya Y Chandrachud, J.)
Citation: Criminal Appeal No. 1273 of 2022 (decided 18 August 2022; no neutral citation printed on the official copy)
Provisions: Indian Penal Code, 1860, s. 405 (criminal breach of trust) (now Bharatiya Nyaya Sanhita, 2023, s. 316(1))
Indian Penal Code, 1860, ss. 415 and 420 (cheating) (now Bharatiya Nyaya Sanhita, 2023, s. 318)

Headnote

Criminal breach of trust · IPC s. 405 (BNS s. 316(1)) · Entrustment · Breach of contract is not breach of trust · Quashing of cognizance

The case, in the Court's words

The issue which presents itself for determination in these proceedings is whether the ingredients of the offences of cheating and criminal breach of trust have been made out on the face of the complaint. [para 10]

Held

The offence of criminal breach of trust contains two ingredients: (i) entrusting any person with property, or with any dominion over property; and (ii) the person entrusted dishonestly misappropriates or converts to his own use that property to the detriment of the person who entrusted it. [para 20]
The basic requirement to bring home the accusations under Section 405 are the requirements to prove conjointly (1) entrustment, and (2) whether the accused was actuated by the dishonest intention or not misappropriated it or converted it to his own use to the detriment of the persons who entrusted it. As the question of intention is not a matter of direct proof, certain broad tests are envisaged which would generally afford useful guidance in deciding whether in a particular case the accused had mens rea for the crime. [para 21]
"Entrustment" of property under Section 405 of the Penal Code, 1860 is pivotal to constitute an offence under this. The words used are, "in any manner entrusted with property". So, it extends to entrustments of all kinds whether to clerks, servants, business partners or other persons, provided they are holding a position of "trust". [para 22]
However, an alleged breach of the contractual terms does not ipso facto constitute the offence of the criminal breach of trust without there being a clear case of entrustment. No element of entrustment has been prima facie established based on the facts and circumstances of the present matter. [para 23]

Result

We accordingly allow the appeal and set aside the impugned judgment and order of the High Court dated 12 July 2019. [para 25]

Editorial note: subsequent treatment

Editorial note: the judgment reproduces and applies the passage on entrustment from Vijay Kumar Ghai v. State of West Bengal (2022) and the statement of ingredients in Anwar Chand Sab Nanadikar v. State of Karnataka (2003).

The headnote consists of extracts from the Court's judgment, selected by The Daily Bench for convenience. The selection is not part of the judgment, is not a law report and should not be cited. It may contain errors; rely on the official judgment. Library reference TDB-LL BNS-316/04 is our own cataloguing label and is not a citation.