Criminal Misappropriation of Property: Overview

Overview : Criminal Misappropriation of Property

• Introduction
• Essentials
• Property for Criminal Misappropriation
• Misappropriates or Converts to own use
• Abandoning a Property: Is it just Found? Or Misappropriated?
• Dishonest Intention
• Master-Servant Relationship
• Misappropriation for the time being
• Difference Between English Law And Indian Law
• Difference between Theft and Criminal Misappropriation
• Aggravated form of Criminal Misappropriation
• Illustration

The present research article is about what is meant by criminal misappropriation of property and other details of that offence. The article has an introduction of the offence with its meaning and the relevant section in the penal code. The essentials are elaborately explained in this section. Further, there is a brief discussion regarding the difference between English Law and Indian Law with respect to criminal misappropriation.

Apart from that, the difference between theft and criminal misappropriation is discussed in brief to understand why the criminal misappropriation, though deriving out of the offence of theft, is made a separate offence. In the end, the aggravated form of the criminal misappropriation is mentioned as well as explained in short for better understanding.

Introduction

The penal code deals with the offence of criminal misappropriation of property under the category of ‘Of Criminal Misappropriation of Property’^[1] under the head ‘Of Offences Against Property’ under the Indian Penal Code.^[2]

The definition of criminal misappropriation does not define the term criminal misappropriation of the property but explains what is dishonest misappropriation of property in section 403 under the penal code.^[3] This is a kind of offence which is derived out of another offence i.e., “theft”.^[4]

“403 Dishonest misappropriation of property—Whoever dishonestly misappropriates or converts to his own use any movable property, shall be punished with imprisonment of either description for a term which may extend to two years, or with fine, or with both

Misappropriation is known as the act of possessing the property of another and using it without the authorisation of the rightful owner of the same.^[5] For example, “A finds a letter on the road, containing a banknote. From the direction and contents of the letter he learns to whom the note belongs. He appropriates the note. He is guilty of an offence under this section”.^[6] If in case, he would have tried to look for the actual owner to return it then he might be held to be innocent. The misappropriation may be permanent or for time being both are punishable under this law.^[7]

I. Essentials

The following are the essentials of the offence of dishonesty misappropriation of the property-

1. The “property must belong to the victim or complainant”
2. The property must be “any movable property”
3. That property must be “misappropriated or converted to his own use”
4. That “use must be dishonest”

Property for Criminal Misappropriation

The law requires that the property which is referred to in the section must belong to the complainant. But property must be in the accused possession as the misappropriation can take place only when it is in someone’s possession and not when it is possessed by none. So the first and foremost thing to prove is that the property is rightfully owned by or belongs to the complainant. And the second thing to prove is that the possession of that property is with the accused. Further, the property must be any movable property then only the section will be applicable.

In the case of Velji Raghavji Patel v. State of Maharashtra (AIR 1965 SC 1433), the accused belonged to a partnership firm and was one of the partners managing the business. He was said to have utilised the money belonging to the partnership business for his own use. The accused was thus charged for criminal misappropriation. The court decided that as a partner the accused was the owner of the business and had the right over all the assets of the business. Hence, there is no criminal misappropriation if one uses his own assets for any reason thereof. The court cannot direct one on how to spend their own money. Further, if one partner uses the assets of the firm he is responsible to account the utilisation to other partners and bear the burden. But the accused cannot be convicted under section 403 of IPC for the same.

In the other case of Ramaswamy Nadar v. State of Madras, (AIR 1958 SC 56), the accused was running a business of prize competitions and charged the participants and audience with some nominal fee. The victims who won had claimed that they did not receive their prize money. The accused was charged with the offence of criminal misappropriation. The accused pleaded that the business had run into losses and had, therefore, shut it down. The lower court ruled against the accused that the amount collected from the participant and audience must have been used for paying the winner their prize money rather than paying it to his own debtors. But the supreme court overruled it by saying that the court should direct the accused as to how to use his money. The amount collected was rightfully owned by him. The accused cannot be criminally liable for the business run into losses. Thus the accused was acquitted.

Misappropriates or Converts to own use

It has earlier explained as to what misappropriation is. The point arises when we see a term called “converts to own use” along with the term “misappropriates”. The term means to use the property found and deal with the property as if it belongs to the finder which actually belongs to someone else. So, if one finds something on the road on his way and the finder sells it or pawns it then it would be known as converting to his own use.^[8] The accused who finds the property must either use it for his own purpose or convert it for his own use, then only he is said to have criminally misappropriated.^[9] The retaining of property without any actual conversation is not amounting to criminal misappropriation, hence, not guilty.^[10]

Abandoning a Property: Is it just Found? Or Misappropriated?

The fact that a property is abandoned for a while does not always imply that it is thrown away. One must study the facts of each case to understand this aspect. The English law elaborates on this aspect as follows- “The newspapers or the remnants of food, which a traveller leaves behind him in a railway carriage being abandoned by the previous owner cannot be the subject of misappropriation. The difficulty arises in regard to articles which have been lost without being abandoned, or which have been abandoned only because they were lost.

Where the property has been mislaid or forgotten in the owner’s house, or upon his premises, or in an article of furniture which still remains his own, the property is still in his possession, and both by English and Indian law, the misappropriation of it is theft. Where valuable articles, which cannot be supposed to have been thrown away, are left in a shop, or in a railway carriage or hackney coach or in any similar place where the owner would naturally come back to look for them, the owner’s property remains, though his possession is lost for the time.

A person who takes up and converts to his own use property so found, commits larceny, according to English law, and criminal misappropriation according to the Code. But if a man takes cattle when they were with the herd of an adjoining village, not knowing to whom they belong and thinking they were without an owner, he commits the offence of theft and not criminal misappropriation because (a) the cattle may return to their owner; and (b) the belief that the cattle were without an owner cannot be said to be a reasonable belief.”^[11]

The Indian legal system is concurrent at this point. In the case of R v Sita (1893) ILR 18 Bom 212, the accused found a property and misappropriated it the next day. The court found him guilty in an appeal. Even after years the property for which the accused was convicted was not claimed by anyone. Thus, the court set aside the conviction of the accused.^[12]

If one only finds a property then it does not amount to criminal misappropriation but if one uses it then only the liability arises. In such cases, even though the accused may not have looked for the true owner of the property but he would fall short of actual usage or conversation which would make the conviction impossible. Because that would only amount to mere possession and not misappropriation within the language of the law.^[13] Hence, finding the property or mere possession is not an offence.

Dishonest Intention

As mentioned earlier the conversation or misappropriation must take place, the essential element that is required here is the intention. The moment the retaining of a property is made with a dishonest intention, the possession becomes fraudulent or wrongful which may not amount to misappropriation.^[14] In the case of Albano Dias v. State (1981) Cr LJ 677, the accused was a cashier and did not make the payment of amounts mentioned against the complainant. Further he also falsely wrote in the cash book that the amounts have been paid. The court held that this kind of act cannot be a negligent one. Hence, the accused was convicted after studying the evidence and was liable for criminal misappropriation along with other proven charges.^[15]

Master-Servant Relationship

The master-servant relationship in the case of criminal misappropriation can be used as an exception. Unless and until the property possessed by the servant is obtained fraudulently. When the driver drives the car of his master and travels to different localities for official purposes, then it is not criminal misappropriation. If a clerk or servant has been authorised to collect the income tax and if that clerk or servant misappropriated instead of paying it to the treasury, then it is a case of criminal misappropriation under section 403.^[16]

Further, if a servant or a clerk misappropriated the property of the master then the case may be filed for criminal misappropriation under section 403^[17] or for criminal breach of trust under section 408^[18] against the accused.

Misappropriation for the time being

Section 403 explanation 1 makes it clear that the law will punish even if the property was misappropriated for time being or temporarily.^[19] This is because the law recognises that even if the misappropriation is for a short period of time it is still unauthorised and such unauthorised use is illegal.

In the case of Khandu Sonu Dhobi v. State of Maharashtra (AIR 1972 SC 958), the accused was working as an agricultural assistant in the soil department authorised by the government of Maharashtra. He was given the work of rectification of agricultural bunds and for which he received the necessary amount of money. The accused prepared a report of rectification even though he did not complete the work of rectification. Due to various complaints being made, the accused completed the work after several months. The court held that the act of the accused of not using the amount provided for the work allotted made no difference to the charge of criminal misappropriation and thus, it is a case falling within the purview of explanation 1 of section 403. The accused was held guilty under section 403 of IPC.^[20]

II. Difference Between English Law And Indian Law

In cases of doubt, the court of law does refer to English law, then we must study what are the differences between English Law and Indian Law when it comes to criminal misappropriation. In section 403, it pays heed to the mental element i.e., dishonest intention at the time of misappropriation. Whereas this is slightly different in English Law which states that subsequent dishonesty is not sufficient to hold a person liable. Hence it does not convert the innocent possession into an illegal one due to subsequent change in the intention of the accused. As this is considered as civil wrong but not an offence. But in India even if there is a subsequent change in intention possession leads to criminal misappropriation.

As the terms “misappropriation” and “conversation” in section 403 have been explained earlier, if compared to English Law are different. There is a misappropriation if one uses the property for his own purpose by excluding the actual owner to enjoy its benefits of possession. And the term “converts” as ejusdem generis to the former term.^[21]

III. Difference between Theft and Criminal Misappropriation

Although the offence of criminal misappropriation is derived out of theft there are certain differences between them. In case of theft, taking the property of another is always wrongful and unlawful but in the criminal misappropriation, it is different. The definition given describes that the law considers only the dishonest misappropriation as an offence. Hence there are possibilities that taking of property may be innocent or dishonest and the law decides upon this.

The intention of the thief is always dishonest whereas the intention of the accused charged under section 403 may be innocent at the beginning but may turn dishonest subsequently which may lead to his conviction. In theft, the possession of the property is invaded by the thief whereas in criminal misappropriation the possession is with the offender without infringement of the owner’s right to possess. Hence, we can say that dishonest intention is common to both the offences. In theft, the mere movement or displacement may amount to theft but it is not a case of criminal misappropriation until and unless it is unlawfully and dishonestly misappropriated. The consent of the owner is absent in theft whereas in the latter the consent may be present and may not be present depending upon case facts and circumstances.^[22]

IV. Aggravated form of Criminal Misappropriation

The aggravated form of criminal misappropriation is the offence of “Dishonest misappropriation of property possessed by a deceased person at the time of his death” provided under section 404 of the penal code.^[23]

“404 Dishonest misappropriation of property possessed by deceased person at the time of his death—Whoever dishonestly misappropriates or converts to his own use property, knowing that such property was in the possession of a deceased person at the time of that person’s decease, and has not since been in the possession of any person legally entitled to such possession, shall be punished with imprisonment of either description for a term which may extend to three years, and shall also be liable to fine, and if the offender at the time of such person’s decease was employed by him as a clerk or servant, the imprisonment may extend to seven years

Illustration

Z dies in possession of furniture and money; His servant A, before the money comes into the possession of any person entitled to such possession, dishonestly misappropriates it; A has committed the offence defined in this section”

This law is made for the protection of the property of the deceased and handing it over to the rightful heir. The section not only deals with criminal misappropriation by the strangers but also by the servant or clerk of the deceased. The latter is subject to severe punishment when compared to the former.

In order to convict a person, one must prove that the property in question was possessed by the deceased at the time of his death, further that property was misappropriated by the accused with complete knowledge of the same. Finally, it must be proved that the misappropriation was dishonest.^[24] Thus, the section is not applicable if the property is removed from the body of the deceased then it is not criminal misappropriation as the dead body does not fulfil the criteria of “a person”.^[25] But if a person commits murder and obtains the ornaments from the dead body then it comes under the purview of section 404.^[26]

Further, if a person takes the property from a dead body and from whom the accused forcefully takes possession and misappropriates for personal use, then it is a case of criminal misappropriation under section 404.^[27]

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^[1] Indian Penal Code 1860, ss 403-404

^[2] Indian Penal Code 1860, ch XVII

^[3] Indian Penal Code 1860, s 403

^[4] Gour Hari Singh, The Penal Law Of India Vol 3 (11th edn, Law Publishers, Allahabad 1998)

^[5] K I Vibhute, PSA Pillai: Criminal Law (12 edn, LexisNexis 2014)

^[6] Indian Penal Code 1860, s 403, explanation 2, illustration (a)

^[7] R v Ramakrishna (1888) ILR 12 Mad 49

^[8] Ram Bharosey v State of Uttar Pradesh AIR 1952 All 481

^[9] Mahabir Prasad v State of Assam AIR 1961 Assam 132

^[10] Emperor v Phul Chand Dube AIR 1929 All 917

^[11] John D Mayne, The Criminal Law of India (4th edn, Higginbotham 1896)

^[12] R v Sita (1893) ILR 18 Bom 212

^[13] Phuman v R (1908) 8 Cr LJ 250

^[14] Bhagiram Dome v Abar Dome (1888) ILR 15 Cal 388

^[15] Albano Dias v State (1981) Cr LJ 677

^[16] R v Ramakrishna (1888) ILR 12 Mad 49

^[17] Indian Penal Code 1860, s 403

^[18] Indian Penal Code 1860, s 408

^[19] Indian Penal Code 1860, s 403, explanation 1

^[20] Khandu Sonu Dhobi v State of Maharashtra AIR 1972 SC 958

^[21] R W G, ‘Larceny, Embezzlement and Obtaining Property by False Pretences’ (1920) 20 Colum. L. Rev. 318

^[22] K I Vibhute, PSA Pillai: Criminal Law (12 edn, LexisNexis 2014)

^[23] Indian Penal Code 1860, s 404

^[24] Dhulji v Kanchan AIR 1956 MB 49

^[25] Balla Munshi Bhoi v State of Madhya Pradesh AIR 1958 MP 192

^[26] Turuku Budha Karkariya v State of Orissa (1994) Cr LJ 552(Ori)

^[27] Re Sathi Prasad (1973) Cr LJ 344(SC)

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2. Offences Relating to Religion: Chapter XV of Indian Penal Code