CRIMINAL
MISAPPROPRIATION SECTION 386
The next issue before us
is, to consider whether the prosecution has established the charge of
misappropriation in this case. The Learned Trial Judge after analyzing the
evidence had proceeded to discharge the Accused-Appellant from the count of
cheating which is the 1ST count in the Indictment. Since the two
counts in the Indictment are alternative counts, I see no reason for the trial
judge to record a discharge in the 1ST count, since the court had
the discretion to convict the accused for either of the offences. The second count is one under section 386 of
the Penal Code, read with the provisions of section 5 of the Offences against
Public Property Act No 12 of 1982.
Section 386 of the Penal
Code reads as follows;
"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."
In a case of Criminal Misappropriation actus
reuse comprise three facets namely,
a. There should be misappropriation or
conversion of the property by the accused
b. The properly must be movable property
c. The property should belong to a person
other there the accused
The requisite mens rea of
this offence derives from the element of dishonesty and it was considered as an
initial innocent taking of the property followed by a guilty state of mind at a
later stage in a series of decided cases including Kanavadipillai Vs. Koswotte
(1914) 4 Balasingham's Notes 74, Peiris Vs. Anderson (1928) 6 Times of Ceylon
Reports 49 and Gratiaen Perera 61 NLR 522, until it was overturned in the
case of Attorney General Vs. Menthis 61 NLR 561.
In the case of Menthis Sinnethamby J observed
that
"The Penal Code
departed in this respect from the English law and made it an offence to
misappropriate property even if the original possession was honest. Explanation
2, it seems to me, was merely intended to emphasize the difference
between the law in England and under the Code but it does not postulate that in
order to constitute criminal misappropriation the initial taking must always be
honest. Indeed it suggests that an initial dishonest taking also amounts to
criminal misappropriation for it states that a person who finds property and
takes it "for the purpose of protecting it for, or of restoring it to, the
owner, does not take or misappropriate it dishonestly", thereby
suggesting that if the finder does not take it for such a purpose he will be
guilty of the offence.
The main provisions of Section 386 make
dishonest misappropriation at any stage an offence; Explanation 2 only
provides for a special case where the initial taking is honest and its intended
to protect the finder of property not in the possession of anyone so long, and
only so long, as his continued possession of that property is honest. If,
of course, the property taken was in the possession of some person the
resulting offence would be theft. In my opinion, therefore in order to
constitute 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 out. In regard to
this, I agree with the view expressed by Justice Moseley in Salgado V. Mudali
Pulle (supra).
" However when going through the judgment
of the Learned High Court Judge I observe that instead of considering the legal
provisions required to be established a charge under section 386, the trial
judge had proceeded to consider the requirement to establish a charge under
section 388 a charge under Criminal Breach of Trust. Whilst discussing the
provision of section 388 of the Penal Code Learned Trial Judge had applied the
evidence led in the trial for the legal requirement in a charge of Criminal
Breach of Trust and concluded that the Accused had used or disposed of that
property in violation of any legal contract expressed or implied which he has
made touching the discharge of such trust (Page 29 and 30 of the Judgment).
In the absence of consideration under section
386 of the Penal Code, whether the Accused-Appellant "dishonestly
misappropriated or converts to his own use" the said money, specially in
the light of documents marked P-14 and ~- t 9 I observe that it is unsafe to
conclude that the available material is sufficient to convict the
Accused-Appellant for the second count
Walgamage v/s The
Attorney-General SC Appeal No. 38 of 90 & CA No. 126 of 85 & MC Matara
No. 5 of 8 Decided On, 10 July 1991
Special leave to appeal was granted in this case in view of conflicting
decisions (in A.G. v. Menthis,(1) and Ranasinghe v. Wijendra,(2) and the
decisions cited therein) upon the question whether to constitute the offence of
criminal misappropriation or criminal breach of trust it is essential that the
initial taking be innocent.
The Appellant was convicted of criminal breach of trust, in respect of a sum of
Rs. 50,000/- while being employed as Manager of a Rural Bank. The Rural Bank
accepted savings deposits, and granted small loans, and also carried on the
business of a pawn broker. According to prescribed operating procedures, its
cash balance at any given time should not have exceeded Rs. 5,000/-. If the
Bank required cash, a sum not exceeding Rs. 5,000/- at a time was obtained from
the Multi-Purpose Co-operative Society ("M.P.C.S.") within whose
premises it functioned.
The Bank's cashier would
make an oral request for cash to the Appellant, who would prepare a voucher for
that purpose, and submit it to the Credit Manager of the M.P. C .S. The latter
was expected to satisfy himself that cash was actually required, and would then
authorize a cheque to be drawn for the stipulated amount, in the name of the
Appellant. A cheque would then be prepared, and duly signed, and delivered to
the Appellant, who would endorse it; his endorsement would be authenticated by
the Accountant, and the cheque would then be presented to the cashier of the
M.P.C.S., who would pay cash. The Appellant was expected to hand over the cash
to the cashier of the Bank.
Fourteen vouchers for Rs.
5,000/- each were prepared by the Appellant, at times when the cashier had not
required cash, and had made no request for cash; the Credit Manager had
approved the vouchers and sanctioned payment without due care. Fourteen cheques
for Rs. 5,000/- each had been issued, and in respect of ten of these, the
M.P.C.S. cashier had paid cash to the Appellant, which he had not handed over
to the Bank's cashier. The Appellant was found guilty by the High Court of
Matara of criminal breach of trust under section 391 of the Penal Code, and was
sentenced to two years R.I., and a fine of Rs. 50,000/- (in default 1 1/2 years
R.I.). The Court of Appeal while upholding the conviction, suspended the prison
sentence for a term of five years, and affirmed the fine and default sentence,
with appropriate directions to the High Court.
ENTRUSTED PROPERTY MUST BE CLEAR
If there was an "entrustment", it was not merely of the cheque but
also of the cash obtained in exchange.
In King u. Kabeer,(3) a jail guard was
entrusted with a railway warrant, and instructed to accompany a prisoner who
had served his sentence to the railway station, to receive a train ticket in
exchange for the warrant, and to give him the ticket. Having obtained the
ticket the jail guard sold it. De Sampayo, J., upheld an acquittal on a
charge of criminal breach of trust in respect of the warrant. The trust
in respect of the railway warrant was to deliver it to the proper officer at
the railway station and to receive a ticket in exchange; although it was true
that he had failed to perform the further duty of handing the ticket to the
prisoner, that had no immediate connection with the trust in respect of the warrant.
That case is distinguishable: there was no charge of criminal breach of trust
in respect of the ticket, and in any event, the ticket was not
"entrusted" by the prison authorities, but handed over by a third
party, the railway officer.
In the present case, the
Bank had an arrangement with the M.P.C.S. whereby the latter would provide cash
to designated officers of the Bank. The M.P.C.S., through one or more of its
officers, provided cash, and as part of its internal procedure (and it is
immaterial whether this was made known to the Bank or not) first issued a
cheque through one officer, and cash upon presentation of the cheque to another
officer. That transaction cannot be separated into two distinct components: the
delivery of a cheque subject to a "trust", and the delivery of cash
in exchange for the cheque, free of such "trust". In pursuance of an
arrangement with the Bank, the M.P.C.S. through its officers caused cash to be
delivered to the Appellant, and it was part of the arrangement that this sum was
"entrusted" to the Appellant to be handed over to the Bank's cashier.
It is true that the officers of the M.P.C.S. did not themselves, personally,
"entrust" the cash; they were no more than the hands which delivered
the cash, there being an entrustment by the legal person, namely the M.P.C.S.,
whose business organization they served.
It is possible that the Appellant had no dishonest intention on the first
occasion (and perhaps even on the second) when he obtained cash in this way; it
may well be that he obtained cash in anticipation of requests by the Bank's
cashier in order to expedite the Bank's business, by immediately responding to
a request for cash without having to spend time in going through the process of
approval, documentation, and payment. But the sum obtained on the first
occasion was not actually paid to the Bank's cashier. Hence it is reasonable to
conclude that at least on the subsequent occasions, he had a dishonest
intention at the outset. Learned President's Counsel submitted that the
Prosecution evidence thus established the offence of cheating; and that
criminal breach of trust had not been made out because
(a) there had been no initial taking bereft of a dishonest intention, and
(b) there had been no
entrustment: because a trust implies confidence reposed by one person in
another, and it is of the essence of confidence that it must be freely given
and that there must be a true consent; there is no true consent, if consent is
obtained as a result of a trick.In support of his contention that the initial
taking must be innocent, and that a dishonest intention must be formed
subsequently, learned President's Counsel advanced three arguments. He conceded
that ex facie section 386 does not impose such a requirement, but only that a
dishonest intention must exist at the time of misappropriation or conversion to
the offender's own use. Insistence upon an initial innocent taking amounts to
adding a further ingredient, namely "whoever having obtained possession of
any movable property without a dishonest intention thereafter dishonestly
misappropriates or converts to his own use such movable property . . ."
His first submission was that in respect of offences against property there are
clear lines of demarcation in the Penal Code between those where the victim is
in possession at the time the offence is committed (such as theft and cheating)
and those where the victim is out of possession the offender being already in
possession (such as criminal misappropriation and criminal breach of trust);
all these offences are intended to be self-contained without any overlapping,
so that the same act could not constitute both cheating and criminal
misappropriation. He urged that "it is an established principle that
criminal laws must be construed narrowly or in favorem vitae aut libertatis'',
citing Maxwell (Interpretation of Statutes, 12th Edition, p. 245):
"Similarly, statutes dealing with jurisdiction and procedure are, if they
relate to the infliction of penalties, strictly construed: compliance with
procedural provisions will be stringently exacted from those proceeding against
the person liable to be penalised, and if there is any ambiguity or doubt it
will, as usual, be resolved in his favour. This is so even though it may enable
him to escape upon a technicality." Secondly he contended that the Indian
Courts had consistently taken this view; the decision in Rajendra v. State of
Uttar Pradesh,(4) cited in the Court of Appeal judgment was not in line with
the Indian trend.
In support of these two contentions reference was made to the observations of
Weeramantry, J., in Ranasinghe v. Wijendra (Supra)
"This indeed would appear to be the understanding of this offence in India
as well. Thus Ratanlal & Thakore begin their comment on this section with
the observation that:
"criminal misappropriation takes place
when the possession has been innocently come by, 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. The offence consists in the dishonest misappropriation or
conversion, either permanently or for a time, of property which is already
without wrong in the possession of the offender."
The authors go on to point out that in this,
respect the Penal Code is at variance with the English law according to which
the intention of the accused only at the time of obtaining possession is taken
into account.So also the original texts of the Penal Law of India by Sir Hari
Singh Gour himself would appear to draw this distinction. It is there stated:
"The question
whether the act is theft or misappropriation depends upon when the dishonesty
began - was it before or after the thing came into possession. This is a point
of division as much between the two offences of theft and criminal
misappropriation in the Code, as between criminal misappropriation and a civil
wrong under English law." This absence of wrongful initial taking is
stressed again for he observes in a later passage that in theft the initial
taking is wrongful but in criminal misappropriation it is indifferent and may
even be innocent but becomes wrongful by a subsequent change of intention or
from knowledge of some new fact with which the party was not previously
acquainted. The word "indifferent" in this passage would appear to
refer to a neutral state of mind - that is where the doer has not affirmatively
formed a wrongful intention at the time of taking.
Later editions of this celebrated work by other
editors seem to depart however from the view of the distinguished author, for
the 8th edition states that it is difficult to say that misappropriation cannot
be committed if the accused had a dishonest intention at the moment of taking
possession of the article. I would prefer on this point to follow the view
expressed by Sir Hari Singh Gour himself. "(pp 42-43)"
Thirdly he urged that the cursus curiae in Sri Lanka was to regard innocent
initial taking as an indispensable ingredient of criminal misappropriation,
except for a brief interlude of ten years between A. G. v. Menthis and
Ranasinghe v. Wijendra (Supra) this was the view expressed by professor G. L.
Peiris (Offences under the Penal Code, p 460).
Neither the Penal Code nor any other statute lays down a principle of
interpretation that the there is no offences in the Penal Code must be presumed
not to overlap. It is because the Criminal Procedure Code of 1898 recognized
that there may be such overlapping that section 180(2) (corresponding to
section 175(2) of the present Code of Criminal Procedure Act) provided that:
"If the acts alleged constitute an offence falling within two or more
separate definitions of any law in force for the time being by which offences
are defined or punished the person accused of them maybe charged with and tried
at one trial for each of such offences . ."
The first illustration to that section demonstrates that the same act could
constitute the offence of causing hurt as well as of using criminal
force. The principle that penal statutes are to be strictly construed does
not apply where a statute is clear and unambiguous. I am therefore of the view
that the suggested principles of interpretation cannot be applied so as to
introduce an additional ingredient into the definition of an offence. It is
unnecessary to consider when and how those principles could be utilized to
resolve an ambiguity, because we are here concerned not with an ambiguity but
with the imposition of an additional ingredient through interpretation.
It is true that at the time the Penal Code was
enacted in India larceny in English law did not include cases where property
was taken without a dishonest intention; probably the offence of criminal
misappropriation was intended to cover such cases. However, the definition
actually adopted to give effect to that intention covers not only such cases,
but extends also to cases where a dishonest intention existed at the outset.
Illustrations (b), (c) and (f) to explanation 2 to section 386 are against
learned President's Counsel's contention that criminal misappropriation deals
with cases where the offender is already in possession, for they show that a
person who finds property not in the possession of any one, and immediately
misappropriates it is guilty of that offence. This explanation, is not an
exception to, or an extension of, the section, but namely illustrates the
principle contained therein. It serves to emphasise that all that is required
is dishonesty at the time of the act of misappropriation or conversion.
The position in India is by no means consistent. Gour's view has not been acted
upon in many instances. Cases referred to in the Commentaries on the Indian
Penal Code include the following:
false representation and take the possession is
misappropriation
"A Hindu girl having picked up a gold necklet and made it over to a
sweeper girl, the accused, the brother of the finder, represented to the latter
that the necklet belonged to a person of his acquaintance and thus got possession
of it from her. On inquiry by a police constable a few hours later, he repeated
the representations, but afterwards gave up the necklet. These representations
were found to be untrue to the knowledge of the accused. It was held that he
had committed this offence (criminal misappropriation)." Ram Dayal,(1886) P.R. No. 24 1886).
By mistake received a article and appropriate is
misappropriation
"Where money is paid to a person by mistake, and such person,
either at the time of the receipt or at any time subsequently, discovers the
mistake, and determines to appropriate the money, that person is guilty of
criminal misappropriation." Shamsooudur,( (1870) 2 N.W.P. 475).
Article hand over voluntary by A but B swap with
some other article is misappropriation
"A and B were about to travel by the same train from Benares City. A had a
ticket for Ajudhia. B had two tickets for Benares Cantonment. A voluntarily
handed over her ticket to B in order that he might tell her if it was right. B
under the presence of returning A's ticket, substituted therefore one of his
own, and kept A's ticket. It was held that the offence committed by B was that
of criminal misappropriation rather than that of cheating." Raza Husain,( (1905) 25 A.W.N. 9, 2 Cr.L. 394).
"Even though the accused when they induced the complainant to part with
certain properties had the intention of deceiving him, a subsequent
misappropriation by them of the property to their own use would amount to
criminal breach of trust. The fact that there was a complete offence of
cheating when the property was received would not prevent the accused being
guilty of the offence of criminal breach of trust." Mc Iver,((1935) 69 M.L.J. 681).
[Ratanlal and Thakore, Law of Crimes, 22nd ed, pp 1040, 1041, 1045, 1051, Gour,
Penal Law of India, 10th ed, pp 3450, 3459, 34601 in view of such decisions it
is not surprising that the present edition of Gour's work (at p. 3453) states
Who asked the article and run then
its criminal misappropriation
"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 first of the local
cases relied on as establishing a cursus curiae is Stickney v. Sinnatamby,( (1886) 5 Tam b 112). There, upon being asked for his gun by the accused, the complainant
voluntarily parted with it. The accused ran away with it. It was held that the
accused was wrongly convicted of theft and that he could not be convicted of
cheating as there was no dishonest or fraudulent inducement to the complainant
to deliver the gun. The conviction was altered to criminal misappropriation.
Article came by automatic but refused
to returned
In Peries v. Anderson (1928) 6 Times 49 ) the Appellant gave his
chauffeur an identifiable 25-cent coin, and sent him to a boutique to buy
cigarettes. The chauffeur placed the coin on the table, whereupon it rolled
into the drawer, but the salesman denied receipt of the money and refused to
give the cigarettes. When this was told to the Appellant, he insisted on
searching the drawer, and found the coin; he then took the salesman to the
Police Station, using some degree of force or compulsion. The Appellant was
charged for that offence, and the question was whether he could justify the
arrest of the salesman on the basis that the salesman had committed a
cognisable offence. It was held that the salesman had not committed theft as
"there was no taking of the property from (the chauffeur); ... there was
nothing dishonest in the manner in which he acquired possession of it, but the
dishonesty occurred when he denied the receipt of the money. This offence
therefore was dishonest misappropriation."
what is the situation if initial taking is
dishonest
These decisions are not authority for the principle that if a dishonest
intention exists at the time possession is acquired, there can be no conviction
for criminal misappropriation.In Georgesy v. Saibo,(11) the payee of a cheque,
having endorsed it, put it into an envelope with a letter addressed to his
banker requesting that the proceeds be placed to his credit. The accused having
come into possession of the cheque, endorsed it in favour of a Chetty who
thereupon paid him the amount of the cheque, less his commission. The accused
was found guilty under section 394 of dishonestly receiving stolen property. It
was held in appeal that there was no definite evidence that the cheque had been
stolen, for it might have been lost in the post. Faced with an imminent
acquittal, Counsel suggested that the Court should consider whether the accused
could be convicted of criminal misappropriations. Middleton, j., having held
that on the evidence the only inference was that the accused had come
dishonestly by the cheque, observed:
"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 such a way 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."
However, neither the names nor the references of the Indian decisions are set
out in the judgement. In Kanavadipillai v. Koswatta,((1914) 4 Bal. N.C. 74 ) the accused asked a boutique keeper for a box of matches, and having
obtained it, gave a five rupee note. The boutique keeper said he had no change
and gave back the note. The accused took the note and the box of matches to the
railway station, there got the note changed, and was returning when he met the
constable and the complainant. Although it was observed that he should not have
been convicted of criminal misappropriation, as that offence requires an initial
innocent acquisition of possession, yet it was held on the facts that there was
no appropriation or conversion to his own use by the accused, nor an intention
to cause wrongful loss to the complainant. These two decisions do not discuss
the provisions of section 386, and state the proposition that criminal
misappropriation requires an initial innocent possession almost as if it were
axiomatic. Georgesy v. Saibo Supra) referred to this proposition only in
reference to the invitation to convict the accused on a different charge, and
Kanavadipillai v. Koswatta (Supra) could have been determined, on the facts,
without any reliance on this proposition.
On the other hand, in R. v. Suppaiya,(13) it was held that a servant who
receives money on behalf of his master and enters the amount received in his
master's book, but afterwards denies the receipt of the money is guilty of
criminal breach of trust. Although the judgment does not consider whether the
dishonest intention should have been formed after receiving the money, yet the
contention for the prosecution on appeal was that "the original taking was
with dishonest intention." Clearly, the Court did not consider this to
negative criminal misappropriation. In the sixth volume of the Ceylon Law Review
there is a note of a decision that:
prior knowledge of real owner is not nessassary
"It is not enough in a case of criminal misappropriation of property to
say that the accused must have known at the time he took the property that it
belonged to the complainant. There must be undoubted proof of such knowledge on
the part of the accused. "(4. S.C. 61 P.C. Chilaw 29737;
4. 3. 1910. 6 C.L. Revision 137. 153)
Thus it can hardly be said that by 1960 there was a clear, definite and
consistent line of authority on this point. In Gratiaen Perera v. The Queen-(1960) 61 NLR 5225) Sinnetamby, J.,
stated that
"the authorities seem to suggest that there
must be an initial honest possession followed by a dishonest conversion"
but it was not necessary to decide the point; when it did become necessary, a
week later, he held in A. G. v. Menthis, (Supra) that if the initial taking of
property, not in the possession of anyone, was dishonest, the offence was made
out.
In Ranasinghe v. Wijendra (1970) 74 NLR 38 Weeramantry, J., distinguished
A.G. v. Menthis (1960) 61 NLR 561 as applicable only to the taking of property not
in the possession of anyone. Relying on Georgesy v. Saibo(11) and
Kanavadipillai v. Koswatte,(12) and Gour's views as to the
demarcation between theft and criminal misappropriation, he held that for the
latter offence an initial innocent taking was essential. R v. Suppaiya (Supra)
does not appear to have been cited.
With much respect to that
distinguished Judge, I regret that I am unable to agree. The plain language of
section 386 imposes no such requirement; the Penal Code does not contain any
rigid demarcation between offences; the cursus curiae in India and Sri Lanka
does not reveal an emphatic and uniform insistence on such a requirement.
Section 388 is even plainer: it refers to an ingredient of
"entrustment" (which is anterior to and distinct from the dishonest
misappropriation, conversion, use or disposal which is another ingredient), but
does not require that there be an innocent intention at the time of
entrustment. The Appellant's first contention therefore fails.
The Appellant's second contention is based upon the assumption that the M.P. C.
S. and its officers were induced to entrust each cheque to him by a trick. The
arrangement between the Bank and the M.P.C.S. was that upon a voucher being
submitted, a cheque would be issued to the Appellant; the M.P.C.S. was not
required to inquire into the motives of the Appellant or whether the Bank
actually needed cash; the operative cause of each cheque being entrusted to the
Appellant was the submission of vouchers in due form. Thus even if it be
correct that an entrustment induced by a trick will not satisfy section 388 -
and I express no opinion as to whether that is an inflexible rule - that
question does not arise here. "Entrustment" does not contemplate the
creation of a trust with all the technicalities of the law of trust; it
includes the delivery of property to another to be dealt with in accordance with
an arrangement made either then or previously. That was the case here.
I therefore dismiss the appeal and affirm the order of the Court of Appeal.
