The Indian Penal Code of 1860 under Chapter XVII provides for offences against property. Criminal breach of trust is considered as an offence against property under this Chapter and Sections 405 to 409 deals with the specific provisions concerning the criminal breach of trust.

• Criminal: Criminal refers to something related to a wrong or crime or something prohibited by law.
• Breach: Breach can be defined as breaking the agreement, violating rules and regulations, or contravention of some rule.
• Trust: Trust can be defined as some kind of fiduciary relationship or a belief in something; to be honest and sincere. For example, the relationship between master and servant, lawyer and client, etc. 

The definition of criminal breach of trust provided under Section 405 can be construed as any dishonest use or disposition of property by one person upon whom the other person has entrusted his property and owing to this dishonest use or disposition the latter should have suffered breach of trust as the act must have been committed in discharge of such trust. For example, A may lend his car to his friend B to use it for transportation. B, instead, uses it for transporting illegal goods like ivory. Here, B is guilty of criminally breaching A’s trust.

Essentials of Criminal Breach of Trust

The following essentials must be fulfilled to hold anybody liable for the offence of criminal breach of trust:

1. A person must be entrusted with some property or should have any dominion (control or authority) over the property.
2. That the person:
   (a) must have dishonestly misappropriated or converted the property for his own use, or
   (b) should dishonestly use or dispose of that property or willfully make any other person to misappropriate the property.
3. Such an act must be done in violation of any law of trust or any legal contract of trust.

Entrusting a Property
The word “entrusting” does not contain any legal definition under the Code. In general terms, it basically means handing over possession of some property onto another person. Generally, such transfer of possession does not alienate ownership or other proprietary rights.
Furthermore, “entrusting” property requires the creation of some fiduciary relationship. In other words, the person receiving the property must be in a legal position of trust. In other words, the person entrusting the property must only transfer possession over it for a specific purpose.
Dishonestly violating the Trust
The crux of this offence requires the person in possession of the property breaches trust with mala fide intentions. This is clear from the use of the word “dishonestly” in Section 405. Therefore, a dishonest intention is important; merely committing a mistake is not enough. Secondly, this dishonest intention must translate into misappropriation or misuse of the
property. Even its disposal is sufficient is such disposal violates a law or a legal contract regulating the trust.

Dishonest Misappropriation, Conversion for own use, or dishonest disposal of Property

There must be misappropriation, conversion for own use, or disposal of property to constitute a criminal breach of trust. Not only that, such misappropriation/ conversion/ disposal must be with a dishonest intention, viz., with an intention to cause ‘wrongful losses’ to the owner.

In the case,Jaikrishnadas Manohardas Desai Vs. STate of Bambay, it was held that criminal breach of trust can be inferred by proving that there was entrustment of property, or dominion over property, and the person who was entrusted with it failed to account for it.

Violation of direction of law or legal Contract

There must be a violation of the direction of law or a Contract. The direction of law refers to statutory as well as departmental directions, rules, practices, and directions issued by authorities in the exercise of their administrative powers

Punishment for Criminal Breach of Trust

Punishment for the offence of criminal breach of trust is provided under Section 406 of IPC. Therefore whoever commits the offence of criminal breach of trust shall be punished with imprisonment of either description for a term which may extend to three years, or with fine, or with both.

In certain special transactions like transportation of goods, some persons may be in positions of trusts. For example, they may work as carriers, or warehouse-keepers. The punishment for breaching trust under such cases includes imprisonment up to 7 years with fine.
Similarly, persons like office clerks and employees also enjoy a position of trust inherently under their duties. If they criminally breach that trust, their punishment also includes imprisonment up to 7 years with fine.
Even public servants, bankers, merchants, brokers, attorneys or agents enjoy positions of trust with respect to properties. For example, a person may entrust his property with his advocate under a power of attorney agreement. Breach of trust by such persons is punishable with higher imprisonment up to 10 years with fine.

Criminal Trust Breach Forms by Particular Group of People

Criminal Breach of Trust by Carrier, or wharfinger, or warehouse-keeper (Section 407)

Section 407 encompasses Criminal breach of trust by the following categories of persons:

1. Carrier: A common carrier is defined under the Carriers ACT of 1865 as an individual, enterprise, or company (other than the government) that conveys products for money from one location to another, through land or inland waterways, for all individuals (consignors).

2. Wharfinger: A wharfinger is defined as “one who owns or keeps a wharf, for the purpose of receiving and shipping merchandise to or from it, for hire”

 Warehouse-keeper: In ordinary usage, a warehouse keeper is one who is in charge of operating, storing and handling cargo deposited in the warehouse.

Criminal Breach of Trust by clerk or servant (Section 408)

Section 408 encompasses Criminal breach of trust by the following categories of persons:

1. Clerk: A clerk is a white-collar employee who does routine office activities. Recordkeeping, filing, staffing service counters, screening callers, and other administrative duties are standard responsibilities for clerical employees.

2. Servant: In the general sense, a servant is an employee who works for the master, however, does not hold any power to exercise authority on behalf of the master.

Criminal Breach of Trust by Public Servant, or by Banker, Merchant, or Agent (Section 409)

This is a graver form of criminal breach of trust as it involves persons who hold a special trust with the public at large or have enormous control over the property entrusted to them. Under the section, persons in such an arrangement are broadly identified as:

1. Public servant: Section 21 of the IPC defines ‘public servant’. Broadly, the term refers to a person holding any office or position in a public body.

2. Banker: A banker is a person who conducts banking operations such as receiving deposits, lending money, withdrawing funds, and exchanging money. In other terms, a banker is someone who works directly in the banking industry.

3. Merchant: A merchant is someone who trades in items made by other people, particularly in other countries.

4. Factor: A factor is a commission-based trader who receives and sells items on commission. A factor is a mercantile fiduciary who transacts business in his own name while keeping his principal undisclosed.

5. Broker: A broker is a person or company that facilitates transactions between buyers and sellers in lieu of a commission after the transaction is completed. A broker who also serves as a seller or a buyer is considered a principal in the transaction.

6. Attorney: The term “attorney” refers to a person who has been designated by another to do a task in his or her absence and who has the power to act in the place and on behalf of the person to whom he or she has been authorized.

 Agent:Sec 182 of the Indian Contract Act, 1872 defines an ‘agent’ as a person employed to do any act for another, or to represent another in dealings with a third person. An agent can be made liable under the section only when he or she dishonestly misappropriates or converts for personal use. It must be noted that an agent cannot be made liable for merely exercising control or taking decisions against the principal’s lawful directions as the agent is not bound by them.

Ram Narain Popli vs Central Bureau of Investigation (2003)3 SCC 641.In this case, the court defined the term ‘entrustment‘ of any property. Entrustment means handing over the possession of the property for some purpose that may not infer the proprietary rights.

Conclusion:

By going through Section 405 of the Indian Penal Code,1860 it is clear that there are two main ingredients of criminal breach of trust that are entrustment and dishonest misappropriation of the property. Therefore, in order to constitute an offence under Section 406 of the Indian Penal Code, 1860 it is pivotal that both the ingredients of the criminal breach of trust are fulfilled. The person handing over the property must have confidence in the person taking the property. so as to create a fiduciary relationship between them or to put him in position of trustee. The accused must be in such a position where he could exercise his control over the property i.e; dominion over the property. The term property includes both movable as well as immoveable property within its ambit. It has to be established that the accused has dishonestly put the property to his own use or to some unauthorized use. Dishonest intention to misappropriate is a crucial fact to be proved to bring home the charge of criminal breach of trust.