These two offences address the dishonest conversion of property that is already in the offender's possession. Unlike theft (where the offender takes property out of another's possession), here the property came into his hands lawfully or without any initial wrongdoing, and the crime lies in the subsequent dishonest dealing with it.
BNS S.314 = IPC S.403 (criminal misappropriation). BNS S.315 = IPC S.404 (misappropriation of deceased's property). BNS S.316 = IPC S.405/406/407/408/409 (CBT definition + all punishment levels consolidated into one section with five sub-sections).
Criminal Misappropriation (S.314)
Definition
"Whoever dishonestly misappropriates or converts to his own use any movable property, shall be punished..."
Elements
| Element | Content |
|---|---|
| Movable property | Already in the accused's possession (not taken from another) |
| Dishonest misappropriation or conversion | Using it as his own, or diverting it from the rightful owner's purpose |
| How the property came into possession | By finding, by accident, by mistake of another, or by any means other than entrustment |
| Not theft | Because the accused did not take it from another's possession; it was already with him |
Punishment
Up to 2 years (increased from IPC's 2 years, but the BNS now states "not less than 6 months" for the basic offence) + fine. S.315 (property of deceased person at time of death): up to 3 years + fine; if the offender was employed as clerk or servant: up to 7 years.
Explanation 1 (Temporary Misappropriation)
"A dishonest misappropriation for a time only is a misappropriation within the meaning of this section." Borrowing without authority, even with intent to return, satisfies the offence.
Explanation 2 (Property Found)
A person who finds property not in anyone's possession and takes it to protect or restore it commits no offence. He commits the offence only if he appropriates it to his own use when he knows or can discover the owner, or before using reasonable means to find and notify the owner.
Criminal Breach of Trust (S.316)
Definition (S.316(1))
"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 it in violation of any direction of law or legal contract touching the discharge of such trust, or wilfully suffers any other person so to do, commits criminal breach of trust."
Elements
| Element | Content |
|---|---|
| Entrustment | Property or dominion over property entrusted to the accused |
| Dishonest misappropriation or conversion | Conversion to own use, or use contrary to the direction of law or contract |
| Violation of direction of law or legal contract | The trust is specific: the property was to be used in a particular way |
| Wilfully suffering another to do so | Passive connivance suffices |
Facts: A government servant was entrusted with public funds for a specific purpose and diverted them.
Issue: Whether diversion of entrusted funds constitutes CBT.
Held: Where property is entrusted to a person for a specific purpose and he dishonestly diverts it to another purpose, criminal breach of trust is complete even if no personal gain results.
Relevance: Establishes that personal benefit is not essential; diversion contrary to the terms of entrustment suffices.
Punishment (S.316(2) to (5))
| Sub-section | Category of offender | Punishment |
|---|---|---|
| (2) | General (any person) | Up to 5 years, or fine, or both |
| (3) | Carrier, wharfinger or warehouse-keeper | Up to 7 years + fine |
| (4) | Clerk or servant entrusted in that capacity | Up to 7 years + fine |
| (5) | Public servant, or banker, merchant, factor, broker, attorney or agent | Life, or up to 10 years + fine |
The Distinction: S.314 vs S.316
| Basis | Criminal Misappropriation (S.314) | Criminal Breach of Trust (S.316) |
|---|---|---|
| How property came into possession | Found, received by accident/mistake, or any means other than entrustment | Entrusted to the accused or dominion given |
| Relationship of trust | None required | Required: the accused held the property in trust for another |
| Gravity | Lesser (up to 2 years basic) | Greater (up to 5 years basic; life for public servants) |
| Example | Finding a purse and keeping it | A bank manager diverting depositors' funds |
| Key word | "Misappropriates" (without prior trust relationship) | "Entrusted" (with a specific relationship) |
| Overlap with theft | Not theft (property not taken from another's possession) | Not theft (property lawfully received) |
Recall Check
- What is the key difference between S.314 and S.316?
- Is personal gain necessary for criminal breach of trust?
- What is the punishment for CBT by a public servant?
- Can temporary misappropriation constitute an offence?
Key Cases
Onkar Nath Agarwal v State of UP (1957) Onkar Nath Agarwal v State of UP 1957
Issue: Whether diversion of entrusted funds without personal gain is CBT.
Rule: Diversion contrary to the terms of entrustment is CBT regardless of personal benefit.
Held: Convicted.
Distinctions
| Basis | Theft (S.303) | Criminal Misappropriation (S.314) | Criminal Breach of Trust (S.316) |
|---|---|---|---|
| How property was obtained | Taken from another's possession without consent | Already in accused's possession (found, mistake, etc.) | Entrusted to accused |
| Movement required | Yes (moving out of possession) | No (already with the accused) | No (already with the accused) |
| Trust relationship | None | None | Essential |
| Dishonest intent at time of receiving | Present at the time of taking | Arises subsequently | Arises subsequently (property received honestly, later misused) |
| Punishment (basic) | Up to 3 years | Up to 2 years | Up to 5 years (general); life (public servant) |
Flashcards
What distinguishes criminal misappropriation from criminal breach of trust?
In misappropriation, the property came into possession without entrustment (found, received by mistake). In CBT, the property was entrusted to the accused for a specific purpose.
Is temporary misappropriation punishable under S.314?
Yes. Explanation 1: a misappropriation for a time only is still misappropriation.
What is the punishment for CBT by a public servant (S.316(5))?
Imprisonment for life, or up to 10 years plus fine.
Is personal gain required for CBT?
No. Onkar Nath Agarwal (1957): diversion contrary to the terms of entrustment suffices, even without personal benefit.
How does theft differ from misappropriation?
In theft, the accused takes property from another's possession. In misappropriation, the property is already with the accused; only the dishonest intention arises later.
Exam Scenario
Problem: Gopal, an accountant employed by a company, is entrusted with Rs. 10 lakhs to pay suppliers. Instead, he deposits the amount in his personal fixed deposit for three months, intending to repay it from a bonus he expects. The bonus does not materialise and the company discovers the diversion. Separately, Hari finds an envelope containing Rs. 50,000 in a taxi. He knows the taxi company's phone number from the receipt but does not call. He spends the money. Advise.
Step 1: Test Gopal under S.316
| Element | Gopal |
|---|---|
| Entrusted with property | Yes: Rs. 10 lakhs for paying suppliers |
| Capacity | Clerk/servant (accountant) |
| Dishonest misappropriation or conversion | Yes: deposited in personal FD (conversion to own use) |
| Violation of direction | Yes: the money was to be paid to suppliers, not deposited personally |
| Intent to return | Irrelevant: Explanation 1 to S.314 (temporary misappropriation is still misappropriation); same principle applies under S.316 |
Gopal is liable under S.316(4) (CBT by clerk or servant): up to 7 years + fine.
Step 2: Test Hari under S.314
| Element | Hari |
|---|---|
| Movable property (Rs. 50,000) | Yes |
| Already in his possession | Yes: he found it in the taxi |
| Entrustment? | No: he found it; no one entrusted it to him |
| Dishonest conversion to own use | Yes: he spent it |
| Knew or could discover the owner | Yes: the taxi company's number was on the receipt |
| Used reasonable means to find owner? | No: he did not call |
Hari is liable under S.314: up to 2 years + fine.
Under Explanation 2, a finder commits the offence when he appropriates property to his own use while knowing or having the means to discover the owner, or before using reasonable means to find and notify the owner. Hari had the means (the receipt) and did nothing.
Intent to return does not save Gopal. The temporary diversion is itself the offence. The BNS carries forward the "for a time only" principle from S.314 Explanation 1, and the same logic applies to CBT.
Finding is not theft. Hari did not take the envelope from anyone's possession. It was lying in the taxi with no one in control. The offence is misappropriation, not theft, because the property was not in anyone's possession at the time Hari found it.
Conclusion. Gopal: CBT under S.316(4), up to 7 years. Hari: criminal misappropriation under S.314, up to 2 years.
See Also
- Theft, Extortion, Robbery and Dacoity : where property is taken from another's possession (the offender did not already have it).
- Definitions under BNS S.2 : "dishonestly" (S.2(7)) is the mental element for all three offences.
- Cheating and Mischief : cheating also involves dishonest inducement but by deception, not by misuse of entrustment.