Temporary Misappropriation Cannot Constitute Criminal Breach of Trust Without Proof of Entrustment and Dishonest Intention: Supreme Court
The Supreme Court of India has reiterated that a person cannot be convicted of criminal breach of trust merely on the basis of an allegation of misappropriation unless the prosecution establishes the essential ingredients of the offence, including entrustment of property and dishonest intention. In a judgment delivered on October 8, 2026, the court restored the acquittal of a former Telephone Department employee accused of misappropriating money collected from customers.
A bench comprising Justice Ujjal Bhuyan and Justice Atul S. Chandurkar set aside a Bombay High Court judgment that had overturned the trial court’s acquittal of Ramkrushna Prahllad Dongardive, who had served as a Cashier-cum-Counter Clerk in the Telephone Department at Aurangabad, Maharashtra. The High Court had convicted him under Section 409 of the Indian Penal Code (IPC), which deals with criminal breach of trust by a public servant, banker, merchant or agent.
The case arose from allegations that the employee had misappropriated money collected from telephone subscribers. The prosecution alleged irregularities in the handling and accounting of the collections, leading to criminal proceedings against him. However, the trial court had acquitted the accused after examining the evidence presented during the trial.
The Supreme Court examined whether the prosecution had established that the money in question had been entrusted to the accused and that he had dishonestly misappropriated or converted it to his own use. The bench emphasised that criminal breach of trust requires proof of specific legal ingredients and cannot be established merely by pointing to an alleged financial discrepancy or failure to account for money.
The court also found significant deficiencies in the prosecution’s evidence, particularly the failure to produce crucial financial registers necessary to establish the alleged misappropriation. The deficiencies in the documentary evidence weakened the prosecution’s case and prevented the essential elements of the offence from being established beyond reasonable doubt.
The bench further disapproved of the approach adopted by the High Court in reversing the acquittal and placing the burden on the accused to explain the alleged irregularities. It reiterated that the prosecution must first establish the foundational facts necessary to prove the offence. The accused cannot be convicted simply because the defence has failed to provide a satisfactory explanation for the allegations.
The judgment also addressed the distinction between a mere breach of trust and criminal breach of trust. A breach of trust does not automatically attract criminal liability; the prosecution must establish dishonest misappropriation, conversion, use or disposal of entrusted property in violation of the applicable legal or contractual obligations.
The court discussed the principle that even temporary misappropriation may constitute criminal breach of trust when accompanied by dishonest intention. However, the duration of the alleged misappropriation does not eliminate the requirement to prove entrustment and dishonesty. Without evidence establishing these essential ingredients, criminal liability cannot be sustained.
The Supreme Court consequently set aside the High Court’s conviction and restored the trial court’s order of acquittal. The decision reinforces the principle that the prosecution must prove every essential element of a criminal offence through reliable evidence and that the presumption of innocence cannot be displaced merely because an accused person is unable to explain an alleged financial irregularity.
The ruling carries significance for criminal prosecutions involving public servants and employees entrusted with handling public money. It underscores that allegations of missing funds or accounting discrepancies must be supported by evidence demonstrating both the entrustment of property and the dishonest intention required by law before a conviction for criminal breach of trust can be sustained.
