Section 405, IPC defines criminal breach of trust. It states that in order to constitute the offence of criminal breach of trust, it must be established that accused was entrusted with the property or with dominion or power over the property of another and that he/she dishonestly misappropriated it or converted it to his/her own use.
A mere breach of a promise, agreement or contract does not, ipso facto, constitute the offence of the criminal breach of trust contained in Section 405 IPC, without there being a clear case of entrustment. The word “entrustment” in this section is very important. Unless there is entrustment, there can be no offence under this section. The word entrusted is not a term of law.
An act of breach of trust involves a civil wrong in respect of which the person may seek his/her remedy for damages in civil court but any breach of trust with mens rea give rise to criminal case. Intention to defraud or dishonest intention must be present from the very beginning or inception of the transaction without which criminal breach of trust cannot be involved. Every act of breach of trust may not be resultant in a penal offence of criminal breach of trust unless there is an evident of manipulating act of fraudulent misappropriation.
The legislature intended to criminalize only those breaches which are accompanied by fraudulent, dishonest or deceptive inducements.
Section 406 of the IPC prescribes punishment in case of criminal breach of trust. And Section 407 to 409 of the IPC deals with cases of aggravated form of criminal breach of trust.