Criminal Misappropriation of Property

Introduction

• The word ‘misappropriation’ means a dishonest appropriation and use of another person’s property for one’s own use.
• Section 403 of the Indian Penal Code, 1860 states that 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.

Illustrations

• A takes property belonging to Z out of Z’s possession, in good faith, believing, at the time when he takes it, that the property belongs to himself. A is not guilty of theft; but if A, after discovering his mistake, dishonestly appropriates the property to his own use, he is guilty of an offence under this section.
• A, being on friendly terms with Z, goes into Z’s library in Z’s absence, and takes away a book without Z’s express consent. Here, if A was under the impression that he had Z’s implied consent to take the book for the purpose of reading it, A has not committed theft. But if A afterwards sells the book for his own benefit, he is guilty of an offence under this section.

Essential Ingredients of Dishonest Misappropriation of Property

• Property must be of another.
  • The essence of offence under this section is that some property belonging to another which comes into the possession of the accused innocently, is misappropriated or converted by the accused to his own.
  • The term misappropriation implies misappropriation of property in the possession of someone else.
  • No criminal misappropriation can take place if that property is in nobody's possession.
• Finding of the property.
  • The law relating to finding property by a stranger and his liability is well indicated in the illustrations to this Section. For example, if someone finds the goods on the roadside belonging to someone else, he retains the goods to himself and uses them even after knowing the actual owner of the property. He commits the offence defined under this Section.
• Converts to own use.
  • The words ‘convert to own use’ means using the property of another as if it is one's own property. There must be actual conversion of the thing misappropriated to the accused’s own use.
• Servant or Clerk Taking his master's property.
  • It is clear that a servant cannot be convicted of theft for taking goods which belonged to the master except when the goods were in the possession of the servant unlawfully through him.
  • For instance, where a clerk is sent out to collect money due on a bill, or a servant to buy and bring home goods, if the money or goods are misappropriated, he will be charged under Section 403 or under Section 408 (Criminal Breach of Trust by clerk or servant).
• Dishonest intention.
  • For an offence of criminal misappropriation, it is not necessary that the property should be taken with dishonest intention, the possession of the property may come innocently and then by subsequent change of intention, or knowledge of some new facts with which the party was not previously acquainted, the retaining of that property becomes wrongful or fraudulent.

Aggravated Form of Criminal Misappropriation

• Section 404 deals with dishonest misappropriation of property of a dead person. It is considered an aggravated form of the offence, that is why it provides for enhanced sentences.

Dishonest Misappropriation of Property Possessed by Deceased Person at the time of his Death

• Section 404 of the Code states that 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.

Ingredients of Section 404

• The property must be movable in nature or must be a movable property;
• Such property must be in the possession of the deceased person at the time of the death of such person;
• The offender converted it or misappropriated it for his own use;
• The accused must have dishonest intentions while committing such a crime.

Case Law

• U.Dhar v. State of Jharkhand (2003):
  • The Supreme Court held that the word ‘dishonestly’ and ‘misappropriate’ are necessary ingredients of an offence under Section 403. Any dispute being about recovery of money is purely of civil nature. Hence, a criminal complaint regarding such a matter is not maintainable.
• State of Madhya Pradesh v. Pramod Mategaonkar (1964):
  • Madhya Pradesh HC held that misappropriation of property can be deemed as temporary or permanent, and no endorsement or approval is necessary to establish this offence.
• Ramaswamy Nadar v. State of Madras (1957):
  • The Supreme Court interpreted the phrase “converts to his own use” as mentioned in Section 403 of the IPC 1860. The court held that it implies the accused has utilized the property in a manner that goes against the rights of the actual owner of the property.

Conclusion

Criminal misappropriation of property is a serious offence under the Indian Penal Code, 1860 that involves the dishonest appropriation of someone else’s property without their consent. It is punishable by imprisonment and/or fines.