Criminal Breach of Trust under Bharatiya Nyaya Sanhita, 2023

The concept of criminal breach of trust under Indian law is pivotal in safeguarding the integrity of fiduciary relationships. Section 316 of the Bharatiya Nyaya Sanhita (2023) outlines measures to deal with cases where an individual entrusted with property or control over it dishonestly misappropriates or uses it for personal benefit, thereby breaching trust and violating legal duties.

Legal Definition of Criminal Breach of Trust

Section 316 of the BNS defines criminal breach of trust as follows:

Whoever, being in any manner entrusted with property, or with any dominion over property, dishonestly misappropriates or converts to his own use that property, or dishonestly uses or disposes of that property in violation of any direction of law prescribing the mode in which such trust is to be discharged, or of any legal contract, express or implied, which he has made touching the discharge of such trust, or wilfully suffers any other person so to do, commits criminal breach of trust.

Illustration:

A, residing in Kolkata, is agent for Z, residing at Delhi. There is an express or implied contract between A and Z, that all sums remitted by Z to A shall be invested by A, according to Z’s direction. Z remits one lakh of rupees to A, with directions to A to invest the same in the Company’s paper. A dishonestly disobeys the directions and employs the money in his own business. A has committed criminal breach of trust. 

Under the Indian Penal Code (IPC), the offence of Criminal Breach of Trust was delineated across Sections 405 to 409, each addressing specific scenarios and prescribing corresponding punishments. With the enactment of the Bharatiya Nyaya Sanhita (BNS) 2023, these provisions have been consolidated into a single Section 316.

The BNS has increased the maximum punishment for the general offence from three years to five years of imprisonment, along with a fine.

Key Ingredients of Criminal Breach of Trust

For an act to qualify as a criminal breach of trust, the following essential elements must be satisfied:

• Entrustment of Property: The accused must have been entrusted with property or dominion over it.
• Dishonest Misappropriation: The accused must have dishonestly misappropriated or converted the property for their use.
• Violation of Legal Directions or Contracts: The accused must have acted contrary to legal directions or contractual terms governing the trust.

Explanations under Section 316 BNS

Explanation 1: Employer’s Role in Provident Funds

An employer who deducts employees' contributions for credit to a Provident Fund or Family Pension Fund but fails to deposit the amount as required by law is deemed to have committed a criminal breach of trust. This emphasizes the fiduciary responsibility of employers in handling employee contributions.

Explanation 2: Employer’s Role in Employees’ State Insurance Fund

Similarly, if an employer deducts contributions for the Employees’ State Insurance Fund under the Employees’ State Insurance Act, 1948, and defaults on payment, they are presumed to have dishonestly misused the entrusted amount.

Punishments

• General criminal breach of trust: Up to 5 years imprisonment, or fine, or both.
• Carriers, wharfingers, or warehouse keepers: Up to 7 years imprisonment and fine.
• Clerks or servants: Up to 7 years imprisonment and fine.
• Public servants, bankers, merchants, or agents: Life imprisonment or up to 10 years imprisonment, along with a fine.

Judicial Interpretations

[1] State of Gujarat v. Jaswantlal Nathalal (1968)

The State Government contracted a building's construction to a contractor, who subcontracted it to K & Co. The respondent, overseeing the work for K & Co., received 100 bags of cement allocated to the contractor by the government. While some cement was delivered to the construction site, the rest was diverted for K & Co.’s use.

The respondent argued this was compensation for cement already utilized by K & Co. The Trial Court convicted the respondent for breach of trust under Section 409 IPC, but the High Court acquitted him, citing the lack of proof of entrustment. The Supreme Court upheld the acquittal, ruling the transaction was a sale, not a fiduciary entrustment, leaving no grounds for criminal breach of trust.

[2] Som Nath Puri v. State of Rajasthan (1972)

The appellant, an employee of Indian Airlines Corporation, was convicted under Section 409 IPC and Section 5(2) read with Section 5(1)(c) of the Prevention of Corruption Act, 1947, for misappropriating funds. Tasked with collecting trunk call charges from passengers, he charged higher amounts than required and issued receipts for the full amounts, but falsified counterfoils to reflect lower charges, misappropriating the balance.

The court held that the amounts collected were entrusted to the appellant on behalf of the Corporation, making his actions a clear case of criminal breach of trust and corruption. The appeal was dismissed.

Conclusion

The Bharatiya Nyaya Sanhita, 2023, through Section 316, underscores the critical importance of trust in both personal and professional relationships by addressing criminal breach of trust comprehensively. By consolidating and enhancing provisions, the BNS simplifies legal processes and ensures stricter accountability for breaches, reflecting the evolving needs of society. These changes not only streamline the justice system but also act as a deterrent against dishonesty in fiduciary relationships, emphasizing the sanctity of trust as a cornerstone of ethical and legal conduct.

References

[1] Bharatiya Nyaya Sanhita (2023)

[2] State of Gujarat v. Jaswantlal Nathalal, 1968 AIR 700

[3] Som Nath Puri v. State of Rajasthan, 1972 AIR 1490

[4] Indian Penal Code (1860)