Student Notes - IPC - Criminal Misappropriation - Landmark Cases



The word misappropriation is defined under Section 403 of Indian Penal Code,1860 which is defined as whoever;

  1. Dishonestly misappropriated for its use or another person at the instance of it.
  2. Any movable property punishment for the offence is imprisonment of either description which may extend to two years or with fine or with both Section 405 is based on criminal breach of trust. Here ‘trust’ is the essential and ‘breach’ of this makes the offence under section 405 which is punishable with imprisonment of either description which may extend to three years or seven years (depending on the person who has breached the trust) or with a fine or both. 

In other words, when one person dishonestly misuses or misappropriate the property provided the property is movable for own use or another is known as criminal misappropriation. 



 (a) A takes property belonging to Z out of Z's possession, in good faith, believing, at any 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 use, he is guilty of an offence under this section.

(b) 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 taking the book to read it, A has not committed theft. But, if A afterward sells the book for his benefit, he is guilty of an offence under this section.

(c) A and B, being joint owners of a horse, A takes the horse out of B's possession, intending, to use it. Here, as A has a right to use the horse, he does not dishonestly misappropriate it. But, if A sells the horse and appropriates the whole proceeds to his use, he is guilty of an offence under this section.

Explanation 1- A dishonest misappropriation for a time only is a misappropriation with the meaning of this section. Illustration A finds a Government promissory note belonging to Z, bearing a blank endorsement. A, knowing that the note belongs to Z, pledges it with a 1 banker as a security for a loan, intending. at a future time to restore it to Z. A has committed an offence under this section.

Explanation 2- A person who finds a property, not in the possession of any other person, and takes such property for protecting if for, or of restoring it to, the owner does not take or misappropriate it dishonestly, and is not guilty of an offence; but he is guilty of the offence above defined, if he appropriates it to his use, when he knows or has the means of discovering the owner, or before he has used reasonable means to discover and give notice to the owner and has kept the property a reasonable time to enable the owner to claim it. What are reasonable means or what is a reasonable time in such a case, is a question of fact. It is not necessary that the finder should know who is the owner of the property, or that any particular person is the owner of it; it is sufficient if, at the time of appropriately it, lie does not believe it to be his property, or in good faith belief that the real owner cannot be found.

Finder of Lost Goods- Explanation 2 makes it clear that things abandoned cannot form a proper subject of an offence under the section. For constituting an offence under this section property appropriated must be owned by somebody. This explanation requires the finder of goods, before appropriating the property found, to attempt to find the owner, if they have means of doing so. The finder must wait up to a reasonable time to allow the owner to claim the property before he appropriates it. The question as to what are reasonable means and what is reasonable time would depend upon the facts of the case.

In Mohammad Ali vs State,[1]fifteen bundles of electric wire were seized from the appellant but none including the electricity department claimed that the wires were stolen property. Evidence on records showed that an impugned electric wire was purchased by the applicant from a scrap seller. Merely applicant not having any recipient for the purchase of impugned wire it cannot be said that he is guilty of offence punishable under Section 403 of the Code.


(a) A finds a rupee on the high road, not knowing to whom the rupee belongs. A pick up the rupee. Here A has not committed the offence defined in this section.

(b) 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.

(c) A finds a cheque payable to bearer. He can form no conjecture as to the person who has lost the cheque. But the name of the person, who has drawn the cheque, appears. A knows that this person can direct him to the person in whose favor the cheque was drawn. A appropriates the cheque without attempting to discover the owner. He is guilty of an offence under this section.

(d) A sees Z drop his purse with money in it. A picks up the purse with the tile intention of restoring it to Z but afterward appropriates it to his use. A has committed an offence under this section.

 (e) A finds a purse with money, not knowing to whom it belongs; lie afterward discovers that it belongs to 4 and appropriates it to his use. A is guilty of an offence under this section.

(f) A finds a valuable ring, not knowing to whom it belongs. A sells it immediately without attempting to discover the owner. A is guilty of an offence under this section.


To establish the offence of misappropriation following ingredients have to be satisfied:
(i) the defendant embezzled property and converted the property to his use.
(ii) he does so dishonestly.
(iii) the property is movable; and
(iv) the movable property belonged to the complainant

Nature of the Offence

The offence underneath Section 403 of the Code is non-cognizable, bailable, compoundable with the permission of the court, and triable by any magistrate.

The provision mandates that there shall be misappropriation or conversion of property by the accused, if the accused has merely retained the property in his possession, then it shall not constitute to be an offence under section 403.[2]

The Court held that, if a person picked up a purse in a temple in the crowded gathering and put it in his pocket, but he was immediately arrested. Then such an offence of picking up the purse and not misappropriating the property for his use shall not amount to offence under section 403 of the Indian Penal Code,1860.[3]

In the case of Ramaswami Nadar v. the State of Madras[4], the Supreme Court held that the words used in section 403 such as ‘converts to his use’ necessarily connotes that the accused has used or dealt with the property in derogation of the rights of the owner of the property.


Section 404 of the Indian penal code says that, whoever dishonestly misappropriates or converts to his 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 can reach 3 years, and shall also be liable to fine, and if the offender at the time of such person’s decease was utilized by him as a clerk or servant, the imprisonment may extend to 7 years.


To invoke Section 404 of the Indian penal code following ingredients should be met.
(i)  The property must be movable
(ii)  Such property was in possession of the deceased at the time of his death
(iii) The defendant misappropriated it or converted it to his use
(iv) The accused did so dishonestly.

Nature of Offence

Offence underneath this Section is non-cognizable, bailable, non-compoundable, and triable by a magistrate of the first class.

In the case of State of Orissa v. BishnuCharanMuduli[5], the Supreme Court held that where the Head Constable who had forcefully taken the articles to his custody from a boatman, who had previously recovered those articles from a dead body of a drowned person, keeps those articles in his possession dishonestly. Then, the officer who was holding the articles of a deceased person dishonestly was held guilty of an offence under section 404.

Section 404 does not specify as to the nature of property whether it must be movable or immovable. The Courts have unanimously observed that the section shall apply only in cases of the movable property while deciding many cases.

The Bombay High Court has clarified the nature of the property and this clarification has been reiterated by other High Courts in various cases. The Bombay High Court held that the property under section 404 shall include only movable property and hence in the case where the misappropriated property was the house which was in possession of a deceased person, the accused was not held guilty of an offence under section 404[6]

Keeping in view the above-mentioned provisions of the Indian Penal Code,1860 it can be concluded that the criminal misappropriation of property is an offence that requires dishonest misappropriation or conversion of movable property by the accused.

  • [1]2006 CriLJ 1368
  • [2](1868) 10 WR (Cr) 23A.
  • [3](1907) PR No. 11 of 1908
  • [4]AIR 1958 SC 56
  • [5]1985 Cr LJ 1573(SC)
  • [6](1869) 6 BHC (Cr C) 33. 


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on 29 September 2020
Published in Criminal Law
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