Entrustment Of Property For Execution Of Task Sufficient To Attract Section 409 IPC: Bombay High Court Denies Default Bail To Trustee

The petitioner had argued that the offences initially registered against him carried punishment of less than seven years and that the investigation agency failed to file the charge sheet within the statutory 60-day period. He contended that the subsequent addition of Section 409 IPC was unsustainable since a trustee could not be treated as an “agent” of the trust.

Justice N. J. Jamadar while dismissing a writ petition filed by Robert Gragery D’Souza challenging the rejection of his application for default bail observed, “…in the capacity of the trustee of the trust, the Petitioner was entrusted with the task of obtaining the sanction of the Charity Commissioner for the sale of the trust property, execute the instrument and receive the consideration. In breach of the duties of the trustee and specific engagement, the Petitioner allegedly sold a larger area of the property of the trust than resolved to by the trust, and converted to his own use a part of the consideration dishonestly. The payment of the consideration to the Petitioner was by way of entrustment in the capacity of the accused as an agent of the trust. Thus, prima facie, the acts attributed to the accused fall within the tentacles of the offence punishable under Section 409 of the IPC”.

“…it is not imperative that the property should come in the hands of the accused in the business of an agency. It would suffice, if the accused is entrusted with the property for execution of a particular task”, the Bench noted.

Advocate Saurabh Butala appeared for the petitioner and D J Haldankar, APP appeared for the respondent.

In the matter, it was alleged that the petitioner, who was the secretary and trustee of a charitable trust, obtained sanction from the Charity Commissioner for sale of trust property by allegedly making false statements and documents.

The prosecution alleged that he received ₹1.2 crore as advance consideration for the sale but instead of depositing the amount in the trust’s bank account, he opened another account by forging trustees’ signatures and transferred the funds to a separate trust under his control.

The Court observed that the right to statutory bail under Section 167(2) CrPC is an important safeguard flowing from the constitutional guarantee of personal liberty under Article 21 of the Constitution of India. However, a Magistrate must first examine whether the offences invoked by the investigating agency are prima facie made out, since the period of permissible detention depends on the gravity of those offences.

The Court, thus, after analysing the ingredients of criminal breach of trust under Sections 405 and 409 IPC noted that Section 409 applies where property is entrusted to a public servant, banker, merchant, broker, attorney, or agent who then commits breach of trust in that capacity.

While referring to the Superintendent & Rememberancer of Legal Affairs, West Bengal v. S K Roy (1974) 4 SCC 230, it categorically noted that entrustment need not arise strictly from a formal agency relationship and the “entrustment” within the meaning of Section 409 of the Penal Code may arise “in any manner whatsoever”.

The Bench, thus, found prima facie material showing that the petitioner, as trustee and secretary of the trust, had been entrusted with the responsibility of obtaining sanction for sale of the trust property, executing the transaction, and receiving the consideration. If the allegations are accepted at face value, the petitioner allegedly sold a larger portion of the trust land than authorised and dishonestly converted part of the sale proceeds for personal use, it noted.

Therefore, concluding that the offence punishable under Section 409 IPC was prima facie attracted, extending the permissible investigation period to 90 days, the Bench consequentially, held that the payment received by the petitioner was entrusted to him in the capacity of an agent of the trust for the limited purpose of completing the sale transaction.

Cause Title: Robert Gragery D’Souza v. The State of Maharashtra & Anr. [Neutral Citation: 2026:BHC-AS:12002]

Appearances:

Petitioner: Saurabh Butala i/b Regina Correia, Advocates.

Respondent: Hrishikesh Mundargi, P. Chadha, D J Haldankar, APP, Advocates.

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