Mere Retention Of Blank Signed Cheques Without Misappropriation Does Not Attract Criminal Breach Of Trust: Kerala High Court

Justice Raja Vijayaraghavan V held added that for attracting the offence of criminal breach of trust, the entrusted person must misappropriate or dishonestly use the property entrusted to him for his own use. The Court held thus:

“There is no case for the prosecution that the petitioner has dishonestly misappropriated property entrusted to him contrary to the terms of an obligation imposed. Admittedly, except for retaining blank cheques in his possession, the petitioner has neither dishonestly used nor disposed of the same.”

Section 405 defines criminal breach of trust and Section 406 of the IPC provides punishment for criminal breach of trust.

The petitioner was the secretary of the Air Cargo Loading and Unloading Workers Union at the Cochin International Airport Ltd. (CIAL). He informed the complainant and other workers that a lawyer has to be appointed for conducting various litigations on behalf of the labour union. For security, the petitioner obtained blank signed cheques from the complainant and others. As the cheques were not returned, a case was registered against the petitioner under Section 406 of the IPC and final report was filed in the Court.

The Counsel for the petitioner contended Section 406 IPC was not attracted as there was no misappropriation or conversion of the cheques. It was averred that the cheques were not presented for payment nor its proceeds were misappropriated. Further, it was also averred that the cheques were collected by the petitioner on behalf of the labour Union based on the collective decision of the executive committee of the Union and the petitioner cannot be made liable for it.

The Court analyzed the definition of criminal breach of trust u/s 405 of the IPC and culled out the essential ingredients as follows:

1. there must be entrustment of property
2. the entrusted person must use that property
3. there must be dishonest use of the property causing violation of any direction of law or contract regarding its mode of use

The Court held that merely retaining the entrusted property will not attract the offence of criminal breach of trust u/s 405 of IPC. It held thus:

“In other words, mere retention of property entrusted to a person without any misappropriation cannot fall within the ambit of criminal breach of trust. Unless there is some actual use by the accused in violation of law or contract, coupled with dishonest intention, there is no criminal breach of trust.”

The Court held that to attract offence of criminal breach of trust, the accused must dishonestly use or dispose of the entrusted property or wilfully suffer any other person to do so in violation of any direction of law or of any legal contract prescribing the mode of discharging the trust.

The Court noted that the petitioner who was the secretary of the labour Union was only retaining blank cheques based on the decision taken by the Union. It found that the petitioner has neither dishonestly used nor disposed of the cheques in his possession.

Based on the above findings, the Court quashed the criminal proceedings against the petitioner.

Case name: K.O. Antony V State of Kerala

Citation: 2023 LiveLaw (Ker) 423

Case number: Crl. MC No. 2126 Of 2022

Counsel for the petitioner: Advocate K K Ashkar

Counsel for the respondents: Advocate Thomas J Anakkallunkal, Jayaraman S, Nirmal Cherian Varghese, Abishek Johny, Senior Public Prosecutor T R Ranjith