Criminal Breach of Trust

Criminal breach of trust (CBT) is the dishonest misappropriation or conversion to one's own use of property that another person has entrusted to the accused. Section 316 of the BNS, 2023 (formerly Section 405 IPC) provides: 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.

Two essential elements: (1) Entrustment — the accused must have been entrusted with the property or must have dominion over it. This distinguishes CBT from theft: in theft, the accused takes property from the owner's possession; in CBT, the accused already has lawful possession of the property by virtue of entrustment. (2) Dishonest misappropriation — the accused then dishonestly misappropriates the property (uses it for their own benefit), converts it (changes its form and applies it to their own use), or deals with it contrary to the directions of law or the trust agreement.

CBT vs cheating: in CBT, the accused already has lawful possession of the property (by entrustment) and then misappropriates it. In cheating, the accused uses deception to induce the victim to hand over property. The critical distinction: entrustment came first, then misappropriation (CBT); vs deception came first, then delivery (cheating). A company director who receives funds for a specific purpose and diverts them is guilty of CBT; a person who misrepresents a business opportunity to obtain funds is guilty of cheating.

For advocates, CBT cases arise in: (1) corporate fraud — directors, managers, trustees who misappropriate company or client funds; (2) bank fraud — bank officers diverting customer deposits; (3) lawyer's accounts — an advocate who receives money for a court fee/settlement and uses it personally; (4) employee theft — an employee entrusted with cash or valuable property who steals it; and (5) public servant CBT — aggravated CBT by public servants, carrying higher punishment.