SUPREME COURT EXPLAINS THE INGREDIENTS NECESSARY TO PROVE CHARGES UNDER SECTION 409, 420 & 477A IPC

 Supreme Court Explains The Ingredients Necessary To Prove Charges Under Section 409, 420 & 477A IPC

Therefore, it is held that nothing proved against the accused constitutes 'criminal misconduct' or does not fall within the purview of sections 409, 420 and 477-A IPC.
In a judgment delivered on 13 December 2021, a bench of the then Chief Justice NV Ramana, Justice Surya Kant and Justice Hima Kohli, read Section 13(2) read with Sections 409, 420, and 477A and Section 13(2) of the Indian Penal Code. 2) (1)(d) made these observations while allowing the appeal filed by an accused convicted under the Prevention of Corruption Act, 1988.

Section 409 IPC - Criminal breach of trust by public servant, or banker, merchant or agent
Section 409 Indian Penal Code The Indian Penal Code deals with criminal breach of trust in respect of property entrusted to him by a public servant or banker. The onus is on the prosecution to prove that the accused, public servant or a banker was entrusted with the property to which he is duly bound and has committed criminal breach of trust.

Handing over public property and dishonest misappropriation or use thereof in an illustrated manner under section 405 is a necessary condition for making an offense punishable under section 409 of the IPC. The expression 'criminal breach of trust' has been defined under section 405 of the IPC, which provides, inter alia, that whoever in any way entrusts property or with any dominion over any property, dishonestly misuses that property or converts it to his own use, or dishonestly uses or disposes of that property contrary to law, or contravenes any law in which the discharge of such trust is to be done, or violates any legal contract, express or implied, etc., shall be deemed to be a criminal breach of trust.
Therefore, in order to attract Section 405 IPC, the following content must be satisfied: (i) entrusting the property to any person or with any dominion over the property; (ii) that person has dishonestly misused that property or has converted that property for his own use; (iii) or that person is dishonestly using or disposing of that property or willfully causing suffering to any other person in breach of any direction of law or a legal contract.
It is to be noted that the key word used in Section 405 IPC is 'dishonest' and hence, it presupposes the existence of intent. In other words, mere handing over of property entrusted to a person without any malpractice cannot amount to criminal breach of trust.

Unless there is some actual use by the accused in breach of law or contract, adding to it dishonest intent, there is no criminal breach of trust. The second important expression is 'mis-appropriated' which means to improperly own use and alienate the owner from it.
The two fundamental elements of 'criminal breach of trust' within the meaning of section 405 IPC are not soon proved, and if such criminal breach is attributable to any public servant or banker, merchant or agent, the said offense of criminal breach of trust page. 30 punishable under section 409 IPC, for which it is necessary to prove that-
(i) the accused must be a public servant or banker, trader or agent;
(ii) he would have been assigned to the property, in such capacity; And
(iii) he must have committed a breach of trust in respect of such property.
Accordingly, unless it is proved that the accused, a public servant or a banker etc., was 'handed over' with the property for which he is responsible and such person has committed criminal breach of trust, section 409 IPC shall not attract .
'Assignment of property' is a broad and general expression. While the initial obligation is on the prosecution to show that the property in question was 'handed over' to the accused, it is not necessary to further prove the actual manner of handing over or misusing the property.
Where 'assigned' is admitted by the accused or established by the prosecution, to prove that the obligation of the property entrusted was performed in a legally and contractually acceptable manner.
Section 409 of the Indian Penal Code in the case of a bank officer, thus, is one of the most important ingredients of the evidence of 'criminal breach of trust' in embezzlement with dishonest intention.
Indian Penal Code The offense under section 409 of the Indian Penal Code can be committed in various ways, and as we are concerned with its applicability in the case of a bank officer, it is useful to point out that the banker is the one who then proceeds to withdraw money. Receives from when the owner has the opportunity for it.
Since the present case involves a traditional bank transaction, it may be further noted that in such situations, the customer is the lender and the bank is the borrower, the latter being under a super additional obligation to pay the customer's cheque. The money has to be received and is still in the hands of the banker.
The money a customer deposits in the bank is not with him in the trust of the bank.

It becomes a part of the banker's money which is subject to a contractual obligation. The amount deposited by the customer is to be paid on demand with an agreed rate of interest. Such a relationship between a customer and a bank is that of a creditor and a borrower. The bank is liable to return the money to the customers on demand, but until it is asked to pay, the bank is entitled to use the money in any way possible to make a profit.

Section 420 IPC - Fraudulent and dishonest abetment to distribute property
Section 420 IPC provides that whoever defrauds and thereby dishonestly induces any person to give any property, or to make, alter or destroy the whole or any part of a valuable security , or anything, which is signed or sealed, and which is capable of being converted into a valuable security, shall be punished with imprisonment of either description for a term which may extend to seven years and shall also be liable to fine.
It is paramount that in order to attract the provisions of section 420 IPC, the prosecution has to prove not only that the accused has defrauded someone, but also that by doing so he has given property to the person who committed the fraud. has led to dishonesty.
Thus, this offense has three components, viz.,
(i) defrauding any person,
(ii) fraudulently or dishonestly inducing that person to give any property to any person, and (iii) with intent to induce the accused for the time being. It goes without saying that for the offense of fraud, the intention to defraud and dishonest must have been present from the time the promise or representation was made.
It is equally well settled that the phrase 'dishonest' entails intention to cause wrongful gain or wrongful loss, and when combined with fraud and distribution of property, constitutes an offense under section 420 IPC. becomes punishable. Conversely, mere breach of contract cannot give rise to criminal prosecution under section 420 unless fraudulent or dishonest intention is shown right at the beginning of the transaction.
It is equally important that for the purpose of convicting a person under section 420, the evidence produced must, beyond reasonable doubt, establish the reasoning of intent on his part. Unless the complaint shows that the accused had a dishonest or fraudulent intention 'at the time the complainant gave the property', it would not be an offense under section 420 IPC and could only amount to breach of contract.
Section 477A - Forgery of accounts
Section 477A defines and punishes the offense of 'forgery of accounts'. Provided that whoever, being a clerk, officer or servant, or is employed or is acting in that capacity, knowingly and in any manner any book, electronic record, paper, writing, valuable security or account belonging to his employer, or is in his possession, or has been obtained by him or on behalf of his employer, or willfully and with fraudulent intent, or if he abets to do so, shall be punished with imprisonment of either description for a term which may extend to seven years can go. This clause indicates the legislative intent by way of its marginal note that it is applicable only where there is fraud in the accounts i.e. ledger or written account.

In a charge under section 477A IPC IPC, the prosecution has to prove-
(a) that the accused has destroyed, altered, mutilated or misrepresented the books, electronic records, papers, writings, valuable security or account in question;
(b) the accused did so in his capacity as clerk, officer or servant of the employer;
(c) the books, papers, etc., belong to or are in his possession by his employer or were received by him for or on behalf of his employer;
(d) that the accused had intentionally and with a fraudulent intent. In this case, the accused was alleged to have abused his official position in the bank under the said provisions and in 1994 despite having insufficient funds in the said account Three undated checks were passed to withdraw money from an account, and thus undue period was extended to benefit his brother-in-law, a co-accused.
The second allegation was that the FDR was prematurely encashed by him. Referring to the evidence on record, the Bench noted the following: First, there was no financial loss to the bank. Second, the record does not show that there has been any pecuniary loss to B Satyajit Reddy or any other customer of the bank.
Third, the material before us does not reveal any conspiracy between the accused persons.
Therefore, it is held that nothing proved against the accused constitutes 'criminal misconduct' or does not fall within the purview of sections 409, 420 and 477-A IPC.
Allowing the appeal, the court held that the prosecution has failed to prove the charges against the accused under sections 409, 420 and 477A beyond reasonable doubt.

Case Title – N Raghavendra Vs State of Andhra Pradesh, CBI
Case No. – CRA 5 of 2010

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