A cashier who is authorised to encash cheques from the Bank, receives Rs. 3,000/- from the Bank on encashment of a cheque. He utilises that amount for his own personal use intending to make up that amount later. What offence is committed by the cashier?

Setting Out the Facts

A cashier is authorised by his employer to encash cheques from the bank. He does so, receiving Rs. 3,000 from the bank on encashment of a cheque. Instead of depositing this money with his employer or applying it as directed, he utilises the entire amount for his own personal use. He does so with the intention of making up the amount later — that is, he believes he will replenish the fund from his own resources at some future point.

Identifying the Applicable Section

There is little difficulty in identifying the correct section once the facts are examined. The cashier is an employee — a clerk or servant — of his employer. He is entrusted, by virtue of his appointment as cashier and his specific authorisation to encash cheques, with the company's money and with dominion over it. He receives Rs. 3,000 in that capacity, holds it on behalf of his employer, and diverts it to his personal use in violation of the implied contract and trust underlying his employment.

Every one of these features falls squarely within the definition of criminal breach of trust under Section 316 BNS (= Section 405 IPC), and more specifically within its aggravated form under Section 316(4) BNS (= Section 406 IPC), which punishes criminal breach of trust committed by a clerk or servant.

Section 316(1) BNS provides in material part:

"Whoever, being in any manner entrusted with property, or with any dominion over property, dishonestly misappropriates or converts to his own use that property, or dishonestly uses or disposes of that property in violation of... any legal contract, express or implied, which he has made touching the discharge of such trust... commits criminal breach of trust."

The sources are explicit on this point at Section 316.9: "When a servant is entrusted with funds to purchase some articles for the master but diverts the money to his own use, the act amounts to criminal breach of trust under this section." The cashier's position is, in its legal character, exactly analogous — he is entrusted with funds to be brought to the employer's account, and he diverts them to his own personal use. The offence is complete.

The Three Elements Examined

First — Entrustment. The cashier received the Rs. 3,000 in the capacity of cashier, authorised specifically to encash cheques on behalf of the employer. As the Supreme Court held in Jaswantrai Manilal Akhaney v. State of Bombay (AIR 1956 SC 575), the trustee obtains in the property entrusted to him only a special interest limited to his charges for safe retention — under no circumstances does he acquire the right to dispose of that property in contravention of the conditions of the entrustment. The cashier's authorisation to encash cheques is not an authorisation to use the proceeds for personal purposes. His receipt of the Rs. 3,000 was plainly an entrustment.

In SP Verma v. State of Bihar (AIR 1973 SC 488), the Supreme Court held that a cashier who was in possession of the iron safe with all its keys at all relevant times must be held under a duty to account for the contents of the safe, including cash — and if the cash was embezzled, he must be held liable. The parallel with the present case is direct: the cashier who encashes a cheque is equally under a duty to account for the proceeds.

Second — Dishonest misappropriation. The cashier diverted Rs. 3,000 to his personal use. This is the paradigm case of converting to one's own use property that belongs to another. The Supreme Court in Ramaswami Nadar v. State of Madras (AIR 1958 SC 56) established that the words "converts to his own use" connote the use or dealing with the property in derogation of the rights of the owner. The cashier's use of the money for personal expenses is precisely such a derogation — the employer's right to receive the money and apply it to its proper purpose is being violated in the most direct manner.

Third — Violation of a legal contract. The cashier's employment carries with it an implied legal contract that all moneys received on behalf of the employer will be accounted for and deposited. His diversion of the money violates this implied contract touching the discharge of his trust — precisely the language of Section 316(1) BNS.

The Critical Question: Does the Intention to Repay Make a Difference?

Here lies the heart of the problem. The cashier did not intend to keep the money permanently. He believed he would make up the amount later. Does this intent to repay or restore negate the element of dishonesty that the section requires?

The answer is a firm and unequivocal no — and this principle is settled beyond all doubt by both the statutory definition of dishonesty and a long line of judicial decisions.

Dishonesty under the criminal law means the intention to cause wrongful gain to one person or wrongful loss to another — and wrongful loss means loss to which the person suffering it is not entitled. The employer is entitled to receive the Rs. 3,000 immediately upon encashment. Every moment that the cashier holds it for his personal use — whether for one hour or one month — the employer suffers a wrongful loss of the use of its own money. The intention to repay at some future time does not extinguish this wrongful loss; it merely expresses a hope or plan that the wrongful loss will eventually be undone.

The sources confirm this principle with admirable clarity and directness at Section 316.9: "The offence is committed even when the act of the accused is to cause wrongful loss to his master for a time only." This refers to the Bombay High Court's decision in Emperor v. Tulsidas Chhaganlal (1907, 5 Cr. LJ 5), which is one of the foundational authorities on the point. The court in that case held that a temporary diversion of an employer's funds, with the intention of restoring them later, does not deprive the act of its criminal character, because the element of wrongful loss is satisfied by the very act of diversion, irrespective of how temporary it is or what the accused's future plans may be.

The Supreme Court reinforced this principle with great force in Vishwa Nath v. State of Jammu and Kashmir (AIR 1983 SC 174). The accused in that case was a head constable charged under Section 409 IPC — the equivalent of Section 316(5) BNS — for misappropriating Government money. He had applied it to personal use and later refunded the amount after detection. The Court was unambiguous: "The refund of the amount after detection did not absolve him of the offence." The facts and circumstances clearly established that there was embezzlement — the accused had put Government money entrusted to him to personal use instead of depositing it in the proper place, and he had complete dominion over it by putting it to his own use. The subsequent restoration of the money went only to the question of quantum of punishment, not to the question of guilt.

The principle in Vishwa Nath is the definitive answer to the cashier's case: the intention to make up the amount later, and indeed the actual making up of the amount even before discovery, does not retrospectively purge the dishonesty that was present at the moment of diversion. The offence was complete the moment the cashier spent the Rs. 3,000 on his personal needs.

Aggravated Form: Section 316(4) BNS

The offence does not fall merely under the basic form of criminal breach of trust. The cashier is a clerk or servant — employed by his employer in that capacity — and he is entrusted with the money in that capacity. Section 316(4) BNS applies expressly to this situation:

"Whoever, being a clerk or servant or employed as a clerk or servant, and being in any manner entrusted in such capacity with property, or with any dominion over property, commits criminal breach of trust in respect of that property, shall be punished with imprisonment of either description for a term which may extend to seven years, and shall also be liable to fine."

The sources confirm at Section 316.9 that this provision is specifically designed for the situation where a servant, by virtue of his position, enjoys the confidence of his master — and that the legislature has chosen to punish this aggravated form of betrayal with a heavier sentence precisely because the employer reposes a special trust in his clerk or servant. The cashier, who is the very person trusted to handle the employer's money at the bank, occupies this position of special confidence, and his breach of it attracts the enhanced penalty.

The ingredients of Section 316(4) BNS are satisfied completely:

1. The accused was a clerk or servant — the cashier is an employee in that capacity.

2. He was entrusted with property in that capacity — the Rs. 3,000 came into his hands specifically because he was the cashier.

3. He committed criminal breach of trust in respect of that property — by diverting it to personal use.

The Governing Principle Stated Definitively

The cashier has committed criminal breach of trust under Section 316(4) BNS (= Section 406 IPC), punishable with imprisonment of either description for a term which may extend to seven years and fine. His defence — that he intended to make up the amount later — is wholly unavailable in law. The offence was complete the moment he spent the Rs. 3,000 on personal expenses. The criminal law draws no distinction between a temporary and a permanent diversion of entrusted funds; what it looks at is the act of diversion and the wrongful loss that that act caused to the owner at the moment it was committed. An employer's money diverted to a servant's personal use — even briefly, even with the most sincere intention of restoration — is money wrongfully lost to the employer for as long as the diversion lasts. That wrongful loss, flowing from a dishonest use of entrusted property in violation of an implied employment contract, is criminal breach of trust — complete, unqualified, and not diminished by promises of repayment that come after the event.