Criminal Breach of Trust Under Section 316 BNS: Partners, Employees and Agents

The offence

Section 316 of the Bharatiya Nyaya Sanhita, 2023 corresponds to Sections 405 to 409 IPC. A person commits criminal breach of trust when, having been entrusted with property or with dominion over it, they dishonestly misappropriate it, convert it to their own use, or dishonestly use or dispose of it in breach of a legal direction or contract about how it was to be dealt with.

Punishment by category

• Section 316(2), generally: up to five years, or fine, or both
• Section 316(3), by a carrier, wharfinger or warehouse-keeper: up to seven years and fine
• Section 316(4), by a clerk or servant in respect of the employer's property: up to seven years and fine
• Section 316(5), by a public servant, banker, merchant, agent, broker, attorney or factor: imprisonment for life, or up to ten years, and fine

Entrustment is the key

There must be entrustment: property handed over with a direction or understanding about its use. Money paid as the price under a sale, or advanced as a loan, ordinarily becomes the recipient's property and is not entrusted; non-payment is then a civil matter. Where entrustment is not shown, the offence is not made out.

Partnership disputes

Partners each have an interest in partnership property. In Velji Raghavji Patel v. State of Maharashtra (1965), the Supreme Court held that a partner does not commit criminal breach of trust merely by dealing with partnership property, unless there was a special entrustment and dishonest misappropriation. Disputes between partners are often really disputes about accounts, for which a suit for dissolution and rendition of accounts is the usual remedy.

Employees and agents

Cases under Section 316(4) and (5) often involve cashiers, collection agents, accountants and bank staff. The prosecution must link specific sums to the accused, usually through ledgers, receipts and audit reports. A general shortfall in the accounts, without proof of who received and misused the money, is not enough.

Remedies

Bail, discharge and quashing under Section 528 BNSS before the Patna High Court are the usual remedies, depending on the stage. Criminal breach of trust under Section 316(2) is compoundable by the owner of the property.