Section 403

Whoever dishonestly misappropriated or converts misappropriation of 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

1. 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.
2.  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.
3. 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 own use, he is guilty of an offence under this section.

Explanation 1. A dishonest misappropriation for a time only is a misappropriation within 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 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 property not in the possession of any other person, and takes such property for the purpose of protecting it 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 own 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 for 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 appropriating it, he does not believe it to be his own property, or in good faith believe that real owner cannot be found.

Illustrations

1. A finds a rupee on the road, not knowing to whom the rupee belongs. A picks up the rupee. Here A has not committed the offence defined in this section.
2.  A finds a letter on the road, containing a bank note. 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.
3. 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 favour the cheque was drawn. A appropriates the cheque without attempting to discover the owner. He is guilty of an offence under this section.
4. A sees Z drop his purse with money in it. A picks up the purse with the intention of restoring it to Z, but afterwards appropriates it to his own use. A has committed an offence under this section.
5. A finds a purse with money, not knowing to whom it belongs; he afterwards discovers that it belongs to Z, and appropriates it to his own use. A is guilty of an offence under this section.
6. 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.

Ingredients : This section requires –

1. Dishonestly misappropriates or converts to his own use. There must be actual conversion of the thing misappropriated to the accused’s own use. Where, therefore, the accused found a thing, and merely retained it in his possession, he was acquitted of this offence.262 Where the accused found a purse on the pavement of a temple in a crowded gathering and put it in his pocket but was immediately after arrested, it was held that he was not guilty of criminal misappropriation, for it could not be assumed that by the mere act of picking up the purse or putting it in his pocket he intended to appropriate its contents to his own use.263 Where a person took possession of a bullock which had strayed, but there was no evidence that it was stolen property, and he dishonestly retained it, he could be convicted under this section and not under section 411.

In the case of Mashkullah vs State In Makhulshah, the accused purchased for one anna, from a child of 6 years, two pieces of cloth valued at fifteen annas, which the child had taken from the house of a third person. The accused would be guilty for criminal misappropriation if he knew that the property belonged to the child’s guardian and knowing that he dishonestly misappropriated it. In this case he had reasons to believe that the cloth belonged to the child’s guardian and knowing that he dishonestly misappropriated it.

‘Appropriates to one’s own use’ or ‘misappropriation’ means ‘setting apart for one’s own use’ to the exclusion of others. Thus setting apart of an article for use of some person other than himself may also amount to misappropriation.

In Albano Dias v. State 1981, the accused who was a cashier, made entries regarding payment made to the complainant in his cash book without, however, making any actual payment to him. Held, this was neither negligent nor inadvertent act of the accused but was a clear case of criminal misrepresentation under Section 403 of IPC.

Main contractor receiving payment but not paying to sub-contractor.- In the case of U Dhar vs State of Jharkhand 2003, The principal or main contractor contracted with a sub-contractor for completion of the project. The sub-contractor filed a criminal complaint alleging that the main contractor had received payment under the project but was not paying him. The Supreme Court said that the money paid to the main contractor was not in the nature of money or immovable property of the sub-contractor. Hence, there could be no misappropriation. It was a claim of civil nature.

• The second ingredient of Misappropriation is that such property must be moveable. The basic requirement for attracting the section is:
• the movable property in question should belong to a person other than the accused;
•  the accused should wrongly appropriate or convert such property to his own use; and
• there should be dishonest intention on the part of the accused. Here again the basic requirement is that the subject matter of dishonest misappropriation or conversion should be someone else’s movable property.

The Supreme Court in Anil Saran v. State,’ held that where a partner has been entrusted with certain movable property under a special contract and he keeps it for his own use, he will be guilty of the offence of criminal breach of trust under Section 405 and not for criminal misappropriation under Section 403, of IPC.

Section 404 :

This section deals with dishonest misappropriation of a property if a deceased person which is an aggravated form of offence under section 403, IPC . This section says :

Dishonest misappropriation of property possessed by deceased person at the time of his death. 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.

Illustration

Z dies in possession of furniture and money. His servant A, before the money comes into the possession of any person entitled to such possession, dishonestly misappropriates it. A has committed the offence defined in this section.

Comment : -This section relates to a description of property peculiarly needing

protection. The offence consists in the pillaging of movable property during the interval which elapses between the time when the possessor of the property dies, and the time when it comes into the possession of some person or officer authorized to take charge of it.

Object of the Section : The very object of this provision was to protect the property which was in possession of deceased at the time of his death till the person(s) entitled to it step in.

In the case of Gajraj vs State of Delhi 2011

The circumstances namely recovery of revolver of the deceased from accused, along with live and spent cartridges, the recovery of mobile handset of Panasonic from the custody of the accused, and the fact that the accused was using the same soon after the murder of the deceased with mobile phone which was registered in the name of the accused (and that he continued to use it till his arrest), leaves no room for any doubt, that the prosecution has brought home the charges as have been found to be established against the accused.

In another case of Ashok Kumar Kundi vs State of Uttrakhand 2014 , Where the accused misused the ATM card of the deceased, it was held he had committed offence under this section.

Distinction between theft and criminal misappropriation.-

1. In theft the offender dishonestly takes property which is in the possession of a person out of that person’s possession and the offence is complete as soon as the offender moves the property. Whereas the offences of criminal misappropriation takes place even when the possession has been innocently come but where, by a subsequent change of intention or from the knowledge of some new fact, with which the party was not previously acquainted, the retaining becomes wrongful and fraudulent.
2. The dishonest intention to appropriate the property of another is common to theft as to criminal misappropriation. But the intention in theft is sufficiently manifested by a moving of the property and in criminal misappropriation it is carried into action by an actual misappropriation or conversion.
3. In case of theft, it is not necessary that person in possession of property must be the owner of it but ownership of property is an essential elements of the offence of criminal misappropriation.

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