Offences against property which do not involve threats or the use of violence in thecommission of the

offence:
i.
Criminal misappropriation of property;
ii.
Criminal breach of trust;
iii.
Cheating

Criminal Misappropriation of Property: Offences against

Property. (Section 386 Penal Code )

1) Introduction : 

         Section 386 of the Penal Code, deals with Criminal Misappropriation of Property.
Section 386 of the Penal code defines criminal misappropriation and prescribes the
punishment for the offence. Section 387 of the Penal Code deals with dishonest
misappropriation of a deceased persons property.

2) Meaning of Misappropriation of Property : 

         The word misappropriation means a dishonest appropriation, and use of another's

property for ones own use.

3) Dishonest misappropriation of property :

         Section 386 of the Penal Code says 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.

Criminal misappropriation takes place when the possession has been

innocently come by, but where, by a subsequent change of intention, or
the knowledge of new fact with which the party was not previously
acquainted, the retaining becomes wrongful and fraudulent. A person
commits criminal misappropriation, if he:
1. Dishonestly misappropriates or converts any property into his own
use,
2. Such property should be movable.
For Example - The retention of money by a servant authorized to collect
it from a person may be criminal misappropriation even though he
retains it on account of wages due to him. 

What is criminal misappropriation of property

Criminal misappropriation takes place when the possession has been innocently come by,
but where, by a subsequent change of intention, or the knowledge of new fact with which the
party was not previously acquainted, the retaining becomes wrongful and fraudulent. A
person commits criminal misappropriation, if he:

1. Dishonestly misappropriates or converts any property into his own use,

2. Such property should be movable.

For Example - The retention of money by a servant authorized to collect it from a person
may be criminal misappropriation even though he retains it on account of wages due to him.

Difference between “Theft” and “Criminal Misappropriation”

Theft
1. In theft, property is taken out of the possession of another person and the offence
is completed as soon as the property is moved.

2. In theft, dishonest intention precedes the act of taking.

3. The property in respect of which the offence is committed must be moveable in

theft.

4. Punishment: 3 years or fine or with both.

5. Illustrations: [Write some illustrations of Sec. 378.]

Criminal Misappropriation
1. In criminal misappropriation, there is no invasion of another’s possession. The
property often comes innocently into another’s possession.

2. In criminal misappropriation, dishonest intention develops subsequently.

3. The property in respect of which the offence is committed must be movable in

criminal misappropriation, but somewhat different with theft, such as cheque and
other negotiable instruments may be misappropriated.

The Actus Reus of the offence -

(1) There should be misappropriation or conversion of the property by the accused

(2) The property in respect of which the offence is alleged to have been committed,
must be movable property.
(3) The property should belong to some person other than the accused.
(1) The property should be used or exploited fro the benefit of some person who is not
legally entitled to the property.

What constitute misappropriation or conversion? – ATTORNEY GENERAL v MENTHIS

(2) The offence of criminal misappropriation can be committed only in respect of res mobiles.
The interpretation of movable property is the same in this context as it is in relation to theft.

(3) establishing as to whom the property belongs by the prosecution is not an essential
requirement. What should be established is that the accused should not be entitled to the
use and enjoyment of the property

Barber v Abdulla (1920) 7C.W. R 144

The Supreme Court held that in order to maintain a charge of criminal misappropriation, the
prosecution need show only that the property belonged to some person other than the
accused.
De Sampayo J “the offense of criminal misappropriation consists in the dishonest conversion
to the uses of the party charged of the property of another ……I do not think it is absolutely
necessary that the actual owner should be disclosed in all cases. It may be sufficient if there
is some person entitled to the possession of the goods misappropriated.

The MensRea of the offence –

Mens rea consist of the element of dishonesty.

Controversial issue = (i) the time when a dishonest intention is entertained by the accused.
(ii) the issue, whether a charge of criminal misappropriation of property can be maintained
only in circumstances which disclose an initial innocent taking of the property, followed by
a guilty state of mind at a later stage, or whether the ambit of the offence extends to cases
where the initial acquisition of the property is itself dishonest.

A series of Sri Lankan cases has held that an initial innocent taking represents an
indispensable feature of criminal misappropriation

Georgesy vSeyaduSaibo (1902 .3 . Browne’s Rep. 88) the accused had

dishonestly obtained possession of a cheque which he cashed and appropriated to his own
use. It was held in appeal that liability for criminal misappropriation of property could not be
imposed.
Middleton J – “now, all the cases which have been decided by the Indian courts point to the
conclusion that, in order to constitute the offence of criminal misappropriation there must be
first an innocent possession….. and then a subsequent change of intention. If I find that the
man dishonestly came by the cheque, as I do, although that would put him in a worse
position morally than if he had come by it in way such as would make him amenable under
section 386 , yet I am bound to confess that it is impossible to meet the weight of authority
that has been put before me and to say that the original misappropriation constitutes an
offence under section 386”

Stickney v Sinnatamby (1928) 6 Times of Ceylon 49.) the accused borrowed a gun
from the complainant and afterwards ran away with it . it was held that the accused’s
subsequent act amounted to criminal misappropriation, since he intended to return the gun
to the complainant when he first took possession of it.
ATTORNEY -GENERAL, v. MENTHIS(NLR Volume – 61- 561)

In order to constitute criminal misappropriation of property it is not necessary that there

should be an initial innocent taking followed by a subsequent dishonest change of
intention. If the initial taking of the property not in the 1 possession of any person is itself
dishonest, then too the offence is made out.

Two bulls belonging to S were let loose by his herdsman for grazing on a pasture land. The
accused was subsequently found at 10.45 p.m. driving the bulls away from the pasture land
at a distance of I 1/4 miles in circumstances showing that the accused intended to take the
bulls for his own use, to the detriment of the owner.

Held, that the accused was guilty of criminal misappropriation and not of theft.

March 14, 1960. SINNETAMBY, J.-

The accused in this case was charged with dishonest misappropriation --of two bulls valued
at Rs.150/- property belonging to one S. P. Samichiappu, an offence made punishable under
Section 386 of the Penal Code.

At the conclusion of the trial; the Magistrate took the view that the offence established by the
evidence was not criminal misappropriation but theft and he accordingly acquitted the
accused. Against this finding, the Attorney General has appealed.

The only question that now remains for consideration whether, to constitute criminal
misappropriation, there should be an innocent taking. Would it be criminal misappropriation if
the initial taking was also dishonest?

In my opinion, therefore, in order to constitute criminal misappropriation under our law it is

not necessary that there should be an innocent initial taking. If the initial taking of the
property not in the possession of anyone is dishonest then too the offence is made on.
R. V. RANASINGHE, v WIJENDRA New Law Reports Volume – 74-38

A person who, at the time he takes over property from the possession of another
person, already entertains a guilty state of mind is not liable to be convicted of the
offence of criminal misappropriation under section 386 of the Penal Code.

The accused-appellant, who was a participant in a scheme of fraud with an unknown

person in order to cheat a third party S, received a sum of Rs. 20 from S so that he
could deliver it to the unknown person in pursuance of the scheme.

Held, that the accused was not liable to be convicted of criminally misappropriating
the money, inasmuch as he took it initially from S with a guilty mind.

Attorney-General v. Menthis (61 N. L. R. 561) distinguished.

.

FERNANDO v. CHARLES - New Law Reports Volume – 4- 215

Though the mere fact of a servant not paying over to his master moneys received by
him on account of his master is not an offence under section 386 of the Penal Code,
yet a fraudulent failure to account for such moneys is dishonest misappropriation.
A, having been placed in funds by his master to carry on the concerns of a shop,
caused an entry to be made in the account books debiting the master with Rs. 2,465
as amount paid by A to meet a bill drawn by a foreign firm on the master, whereas in
fact no such amount was ever paid.
Held, this was a fraudulent failure to account, and that the Police Magistrate was
wrong in refusing to issue process on the accused on the complaint of the master.
SILVA   v.    BANDA -  New Law Reports Volume – 21-207

A sold a bull to B, who sold it to C no    cattle  voucher    was executed in favour of B
or C. A there after purported    to    sell    the bull to D on a cattle voucher duly
executed.

Held, that A had not committed criminal misappropriation.

Criminal misappropriation
Attorney General v. Dewapriya Walgamage and Another -
(1990) 2 Sri LR 212
1. (a) There are two basic ingredients to the offence of criminal
misappropriation under S. 386 of the Penal Code

i. A mental element of dishonesty, and

ii. An act of misappropriation or conversion of movable property to his own

use by the accused.

There are no words in Section 386 which require that the mens rea of
dishonesty should be preceded by an innocent state of
mind.Dishonest intention is the element of mens rea of the offence of
criminal misappropriation as defined in Section 386 of the Penal
Code.

Although there are some illustrations to the section which reveal that
dishonesty may be preceded by an innocent or neutral state of mind,
is not a prerequisite of the offence, further more dishonesty is the
element of mens rea in relation to all other offences of theft, cheating
and criminal misappropriation.

(b) A person could be found guilty of the offence of criminal

misappropriation even if there is evidence to the effect that he had a
dishonest intention at the time he initially took the property being the
subject of the offence.
(c) Where the accused is charged with only criminal misappropriation or
criminal breach of trust it has to be considered whether on the evidence the
offences of cheating or theft are committed at the time of the initial taking of
the property. If it could be said beyond reasonable doubt that such an
offence is committed at the time of the initial taking of the property, the
accused could not be found guilty of the offence-of criminal
misappropriation or criminal breach of trust.

(d) If the initial taking could be only an irregularity of procedure or would not
constitute theft or cheating, the accused could be found guilty of criminal
misappropriation or criminal breach of trust. The correct test is to ascertain
whether the accused is guilty of another offence such as cheating or theft
at the time of the initial taking.

(2) Re sentence a term of imprisonment is not warranted because (i)

Thirteen years have lapsed since the commission of the offence, (ii) The
accused will lose his employment and related benefits, (iii) A substantial
fine had been imposed, which would meet the ends of-justice.

S. N. Silva, J

Whatever may have been the approach in early years, the current approach'. to this
aspect by the Courts and the text writers in India, appear to be clear cut and simple.
In Gour's Penal Law of India (1984), 10th Edition, p. 3453 it is stated as follows.

"The argument that criminal misappropriation cannot be committed if the accused

had dishonest intention at the time of taking possession of the article, cannot be
accepted. The complainant has the choice ; if he thinks that he can make out a case of
dishonest intention while taking delivery of article he can charge the accused with
cheating ; otherwise he is entitled to charge the accused with criminal
misappropriation. If the prosecution proves a case of Section 403, I.P.C., the accused
by proving that he had a dishonest intention at the time of taking delivery of the
article cannot change the nature of the offence to that of cheating. The Criminal
Procedure Code does not contemplate any such change in the nature of the offence
committed by an accused ; If it did, it would have consistently with dictates of justice
allowed him to be convicted for the offence made out even though not charged with
it . . . .".
Dissanayake v AG Sri Skantha Vol. Ii part 10 page 150
Criminal misappropriation – Section 386 of the penal code – essential ingredients of
the charge.
Held – that the onus is on the prosecution to prove that the misappropriation was
committed with a dishonest intention. Mere deficiency in the quantity of goods
entrusted to a servant is not sufficient to maintain charge. Even though deficiency in
quantity is proved and accepted by the person responsible for the goods, intention
to misappropriate cannot be presumed.