AMAR SINGH AND ANOTHERversusSTATE OF U.P. AND ANOTHER

A.F.R.




         HIGH COURT OF JUDICATURE AT ALLAHABAD
               APPLICATION U/s 482 No. - 26175 of 2024

Amar Singh and another
                                                            …..Applicant(s)

                                  Versus

State of U.P. and another
                                                       …..Opposite Party(s)


Counsel for Applicant(s)            : Krishna Kumar Pandey, Vikrant
                                      Neeraj
Counsel for Opposite Party(s)       : Dhruva Dixit, G.A.


Court No. - 81

             HON'BLE ACHAL SACHDEV, J.


1.    The case has been taken up on mention slip given by Sri Dhruva
Dixit, learned counsel for the opposite party no. 2.

2.    Heard Sri Vikrant Neeraj, learned counsel for the applicants and
learned A.G.A. for the State.

3.    However, the learned counsel for the opposite party no. 2 is not
present at the time of hearing.

4.    The present application u/s 482 Cr.P.C. has been preferred by the
applicants with a prayer to quash the summoning order dated 10.07.2019
passed by Additional Chief Judicial Magistrate, Room No. 4, Aligarh in
Complaint Case No. 629 of 2017 (Suresh Chandra Vs. Amar Singh and
Ors.) u/s 406 I.P.C., Police Station- Quarsi, District- Aligarh.
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5.    Learned counsel for the applicants submits that the applicants
have been wrongly roped in, in the criminal case just to harass them.
Fact of the matter is that the daughter of applicant no.1 and sister of
applicant no. 2 was married to son of opposite party no. 2 on 28.11.2014.
The applicants had given gifts as per their status and daughter of
applicant no. 1 went to her in-laws house (sasural) and discharged her
duties to the best of her abilities but opposite party no. 2, his son and his
wife were not satisfied with the gifts provided at the time of marriage of
their son and were making additional dowry demand from the applicants
that were beyond the financial capabilities of applicant no. 1 and on
being annoyed due to non-fulfillment of additional dowry demand, they
treated the daughter of applicant no. 1 with cruelty and forced her out of
her in-laws house (sasural) and from then onwards, she is being residing
with the applicant no. 1.

6.    The complainant in his complaint has stated that on 30.07.2017,
the father of his daughter-in-law, Praveen, and her uncle came to the
house of the complainant and told him that they should send her
daughter-in-law, Praveen along with them as her mother was running
unwell. It is also stated that they were short of Rs.1,00,000/- in buying a
plot and asked for money and the same was provided by the complainant
to the opposite party no.1 (applicant no. 1 herein). At the most, it can be
said that applicant no. 1 had borrowed a sum of money from the
complainant as he was running short of finances for purpose of buying a
plot and the same was provided by the complainant to the opposite party
no.1 (applicant no. 1 herein) to buy a plot.

7.    The question arises whether giving of money for buying a plot to a
person in relation can be termed as entrustment of property. The court
distinction between ‘entrustment of property’ and ‘lending’ hinges on the
transfer of ownership and the purpose of transfer and the resulting
liability. ‘Entrustment’ and ‘lending’ both involve one person handing
property to another but the underlying intent and legal consequences are
entirely different. Entrustment occurs when a property is handed to other
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person for specific purpose or service with the clear expectation that the
property or its result will be returned or handled according to
instructions. Lending is a broader category where property is delivered
to another person for their own use either for a said period or a specific
cause after which it may be returned and if the person misappropriates
the item that has been entrusted to him, it may be treated as criminal
breach of trust but lending is generally governed by law of bailment and
if the borrower fails to return it, it is usually a civil matter (breach of
contract) unless there is a clear evidence of theft.

8.    As per Black's Law Dictionary, the definition of both the terms,
being, "entrustment" and "lending" are as under :-

Entrustment : To give (a person) the responsibility for something,
usually after establishing a confidential relationship.

Lending : To allow the temporary use of (something), sometimes in
exchange for compensation, on condition that the thing or its equivalent
be returned.

9.    In the context of Section 406 I.P.C., proceedings may be quashed
if the complaint or F.I.R., even if taken at face value, does not disclose
the essential ingredients of the offence. A clear absence of allegations
regarding entrustment or dishonest misappropriation can be a ground for
quashing. The Supreme Court in Anand Kumar Mohatta (S) v. State
(Govt. Of NCT Of Delhi), emphasized the need to ascertain if the facts
make out an offence under Section 406 I.P.C.

10.   The punishment for an offence under Section 406 I.P.C. is
imprisonment which may extend to three years, or with fine, or with
both. Consequently, as per Section 468(2)(c) of the Code of Criminal
Procedure, 1973 (Cr.P.C.), the period of limitation for taking cognizance
of such an offence is three years. The commencement of the limitation
period can be contentious, particularly in cases involving commercial
transactions where it might be argued to commence from the date of
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demand and refusal. Section 406 I.P.C. is generally not considered a
continuing offence. However, Section 473 Cr.P.C. empowers a court to
take cognizance of an offence after the expiry of the period of limitation
if it is satisfied on the facts and in the circumstances of the case that the
delay has been properly explained or that it is necessary so to do in the
interests of justice.

11.    Section 406 of the Indian Penal Code, 1860 (I.P.C.) prescribes the
punishment for the offence of criminal breach of trust. This provision
plays a crucial role in upholding fiduciary relationships and ensuring
accountability for the misappropriation of property entrusted to another.
Criminal breach of trust, as defined in Section 405 of the I.P.C., is a
nuanced offence, requiring a careful examination of the elements of
entrustment, dishonest misappropriation, and the violation of legal or
contractual duties. Section 406 I.P.C. is intrinsically linked to Section
405 I.P.C., as the former provides punishment for the offence defined by
the latter.

12.    For the sake of convenience, Section 405 I.P.C. is being
reproduced hereinbelow :

       405. Criminal breach of trust - 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 that property in violation of any
       direction of law prescribing the mode in which such trust is to be
       discharged, or of any legal contract, express or implied, which he
       has made touching the discharge of such trust, or wilfully suffers any
       other person so to do, commits criminal breach of trust.

This definition is further elucidated by two explanations, which create
deeming fictions in specific employer-employee contexts.

Explanation 1 pertains to deductions made by an employer from an
employee's wages for contribution to a Provident Fund or Family
Pension Fund. If the employer defaults in remitting such contributions,
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they are deemed to have been entrusted with the amount and to have
dishonestly used it.

Similarly, Explanation 2 addresses deductions for the Employees' State
Insurance Fund, with a similar deeming provision for default in
payment.

13.   For a conviction under Section 406 I.P.C., the prosecution must
prove the commission of criminal breach of trust as defined in Section
405 I.P.C. In Binod Kumar and Others v. State Of Bihar and
Another, (2014) 10 SCC 663, the Supreme Court reiterated that the
prosecution must prove:

(i) entrustment with property or dominion over it ; and

(ii) dishonest misappropriation, conversion, use, or disposal of that
property in violation of law or legal contract.

14.   The cornerstone of criminal breach of trust is 'entrustment'. The
expression "entrusted" as used in Section 405 I.P.C. is not a term of art
with a narrow technical meaning. Entrustment implies that the accused
had voluntarily handed over property for a specific purpose, creating a
relationship of trust and confidence.

15.   At this stage, it is crucial to distinguish entrustment from other
transactions. For instance, a mere transaction of sale does not amount to
entrustment. Similarly, the Supreme Court in Indian Oil Corporation
Vs. Nepc India Ltd. And Others, 2006 (6) SCC 736, held that
hypothecation of goods as security for a debt does not constitute
"entrustment" as required under Section 405 I.P.C., because ownership
and possession (subject to the hypothecatee's rights) remain with the
debtor. The absence of a clear allegation or proof of entrustment is fatal
to a prosecution under Section 406 I.P.C., as highlighted in cases like
Pradeep Kumar Alias Pradeep Kumar Verma Vs. State Of Bihar
and Another, 2007 (7) SCC 413 and Arti And 3 Others Vs. State of
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U.P. and Another, Neutral Citation No. - 2024:AHC:152597. In K.
Sampath Kumar Vs. State, where a contractor purchased cement, it
was argued that there was no entrustment, leading to an alteration of the
charge    from    Section       406   to       Section   403   I.P.C.   (dishonest
misappropriation of property).

16.   The second critical element is the "dishonest misappropriation or
conversion" of the entrusted property. "Dishonestly" is defined in
Section 24 I.P.C. as doing anything with the intention of causing
wrongful gain to one person or wrongful loss to another. This implies a
deliberate act of using the property for a purpose other than that for
which it was entrusted, or converting it to the accused's own use.

17.   The Apex Court in Anand Kumar Mohatta (supra) has held that
the dishonest misappropriation or use must be "in violation of any
direction of law prescribing the mode in which such trust is to be
discharged, or of any legal contract, express or implied, which he has
made touching the discharge of such trust."

18.   This means the accused's actions must contravene either a
statutory duty or a contractual term (whether express or implied)
governing how the entrusted property was to be handled. This element
underscores the fiduciary nature of the relationship and the breach of the
specific terms of that trust.

19.   Mens rea, specifically a "dishonest intention," is the lynchpin of
the offence of criminal breach of trust. A mere failure to return property
or a simple breach of contract does not automatically translate into a
criminal breach of trust. The prosecution must establish that the accused
acted with a dishonest mind. The Supreme Court in Indian Oil
Corporation (supra) emphasized the distinction between a civil wrong
(breach of contract) and a criminal offence, noting that criminal liability
arises when elements like fraudulent or dishonest intention are present.
The lack of dishonest intention can lead to the quashing of proceedings
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                            under Section 406 I.P.C. Dishonest intention is the sine qua non of the
                            offence of criminal breach of trust. Mere failure to account for money
                            does not constitute criminal breach of trust. The prosecution must
                            establish that the accused dishonestly misappropriated or converted the
                            property. A mere civil liability to pay does not attract Section 406 I.P.C.
                            as held by the Apex Court in Velji Raghavji Mehta Vs. State of
                            Maharashtra, (AIR 1965 SC 1433).

                            20.         The Delhi Race Club case [Delhi Race Club (1940) Ltd. Vs.
                            State of U.P. and Anr., (2024) 10 SCC 690], is a recent Supreme Court
                            precedent emphasizing that commercial disputes should not be
                            criminalized unless clear evidence of dishonest intention exists. It is now
                            a strong authority for quashing criminal complaints in business debt
                            recovery matters.

                            21.         In the present complaint, it appears that a sum of money had been
                            lent by the complainant to the opposite party no. 1 (applicant no. 1
                            herein) for buying a plot as he was running short of amount to enable
                            him to purchase the property. There were no clear instructions as to how
                            the money has to be used for a specific purpose. There is clear admission
                            on the part of the complainant that the money had been provided to the
                            opposite party no. 1 (applicant no. 1 herein) to enable him to purchase
                            the plot.

                            22. The trial court has clearly ignored this aspect of law and the
                            summoning order dated 10.07.2019 passed by Additional Chief Judicial
                            Magistrate, Room No. 4, Aligarh in Complaint Case No. 629 of 2017
                            (Suresh Chandra Vs. Amar Singh and Ors.) u/s 406 I.P.C., Police
                            Station- Quarsi, District- Aligarh, suffers from non-application of
                            judicial mind and is unsustainable and is hereby quashed.

                            23. The present application u/s 482 Cr.P.C. is accordingly, allowed.

                                                                                     (Achal Sachdev,J.)
                            April 28, 2026
                            KS




Digitally signed by :-
KISHAN SINHA
High Court of Judicature at Allahabad