Case: – Rajappan Assari v/s State of Kerala; Crl. Rev. Pet. No. 1177 OF 2005
The Kerala High Court in a recent judgement dealt with the issue that whether an accused could be held criminally liable under Section 406 IPC for misappropriating fixed deposits without the existence of express or implied trust.
The Hon’ble Court held that a mere commercial transaction and deposit of amount with any person or institution would not attract 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.
The Hon’ble Court further explained that criminal breach of trust as defined under Section 405 of Indian Penal Code requires 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 court also noted that the Explanation No. 1 and 2 incorporated by Act 40 of 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.
In this case, the Hon’ble Court found that there was no evidence to show that the fixed deposits were entrusted to the accused for any specific purpose either express or implied. Therefore, the court held that the accused could not be held criminally liable under Section 406 IPC for misappropriating the fixed deposit.

Author of this article:
Adv. Ravish Bhatt,
Partner, R&D Law Chambers,
Dual Qualified Lawyer Solicitor | International Tax Affiliate

Connect with Mr. Bhatt on Linkedin: https://www.linkedin.com/in/adit-ravishbhatt/

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