Point of Law: No criminal liability can be extended for any breach of trust, unless there is an entrustment of property or dominion over property for any specific purpose.

ORDER :

1. This revision is by accused No. 1, who was convicted for the offence under Section 406 IPC by both the trial Magistrate and the first appellate court.

2. The prosecution case is that the accused No. 1 along with other accused were conducting a partnership business in the name of M/s Rajappan Achary and had accepted fixed deposit from different persons offering high interest @ 24% and after getting the deposit, misappropriated the same for their own use. PW-3 is one among the victim, who set the criminal law in motion on the allegation of misappropriation of a deposit of Rs. 1,54,345/-. It is the pensionary benefit received by PW-3 on his retirement. Ext.P4 and P5 are the passbook and Ext.P6 and P7 are the photocopies of the cheques, whereby the abovesaid amount was deposited. He was paid an amount of Rs. 3,300/- towards interest. The principal amount and the interest accrued thereafter was not paid as agreed. Both the courts below found that the accused No. 1/appellant is guilty of offence punishable under Section 406 IPC and convicted thereunder and sentenced to undergo rigorous imprisonment for a period of three years by the trial Magistrate. But it was modified by the first appellate court by imposing a lesser sentence of fine of Rs. 1,75,000/- in default, to undergo simple imprisonment for six months. Both the trial court and the first appellate court acquitted accused No. 1 of the offences punishable under Section 420 and 120B IPC. It is against the concurrent finding of conviction of accused No. 1 for the offence punishable under Section 406 IPC and the sentence imposed, he came up in revision.

3. The material question raised is pertaining to the criminal liability that can be extended under Section 406 IPC when there is neither express nor implied trust and whether both the courts below are justified in convicting the accused for the said offence without satisfying the existence of either express or implied trust.

4. A mere existence of a commercial transaction and deposit of amount with any person or institution would not attract criminal breach of trust as defined under Section 405 of Indian Penal Code. There should be an express or implied trust of property or entrustment for any specific purpose so as to attract the criminal responsibility punishable under Section 406 IPC. The Explanation No. 1 and 2 incorporated by Act 40 of 1973 with effect from 1.11.1973 is an exception to the abovesaid general principle. Hence, except the case which would fall under Explanation 1 and 2 attached to Section 405 IPC, no criminal liability can be extended for any breach of trust, unless there is an entrustment of property or dominion over the property for any specific purpose. A deposit of amount with a person, if it is intended for keeping the same without the liability of interest or any premium payable on that account would attract the criminal liability under Section 406 IPC, if it was dishonestly misappropriated, converted or dispossessed in violation of any direction prescribing the mode of its user or any legal contract. On the contrary, when the deposit is for the purpose of incurring interest, failure to return the amount as agreed would not canvass the criminal liability under Section 406 IPC, unless it constitutes entrustment of the said amount or any dominion over the property for any specific purpose either express or implied or to utilise the periodical interest for any such specific purpose, either express or implied. In short, a mere deposit of amount with any banker, financial institution or any person, if it is for getting interest, unless satisfies the abovesaid cardinal ingredients, cannot be brought under the purview of criminal breach of trust as defined under Section 405 IPC and no criminal liability can be fastened for the offence punishable under Section 406 IPC. The Apex Court in Deepak Gaba and Others vs. State of Uttar Pradesh and Another, (2023) 3 SCC 423 had laid down the ingredients, which would