An employee of a company transferred the company’s amount into his wife’s account. Whether he is liable, if so under which Section?

Facts of the Case

• The accused is an employee of a company who had access to the company’s funds as part of his employment.
• He intentionally transferred the company’s money into his wife’s personal bank account.
• The transfer was done without authorization, without consent, and with dishonest intention.
• The company discovered the unauthorised diversion of funds and initiated legal action against the employee.

Issues in the Case

1. Whether the act of transferring company money into a private account amounts to an offence under the Indian Penal Code (IPC)?
2. Whether such an act constitutes criminal breach of trust (Section 405 IPC)?
3. Whether the employee acted dishonestly with intention to misappropriate company property?
4. Whether transferring money to his wife’s account makes him liable, even if he did not personally use it?

Legal Principles Involved

A. Criminal Breach of Trust – Section 405 IPC

• A person commits criminal breach of trust when:
  • Property is entrusted to him,
  • He dishonestly misappropriates it,
  • Or converts it to his own use,
  • Or uses/disposes of it in violation of legal contract.

In this case, the company funds were entrusted to the employee due to his job role. The unauthorized transfer into his wife’s account amounts to dishonest misappropriation.

B. Punishment – Section 408 IPC (Criminal Breach of Trust by Clerk or Servant)

• When a clerk or servant commits criminal breach of trust:
  → Punishment is up to 7 years imprisonment, and fine.

Since the employee is a company servant/employee, Section 408 IPC specifically applies.

C. Dishonest Intention – Section 24 IPC

• Dishonesty means the intention of causing wrongful gain or wrongful loss.

Transferring company funds into a personal account indicates dishonest intention.

D. Conversion to Own Use

• Even if the money is transferred to his wife, it is legally treated as conversion for personal benefit, because the employee indirectly benefits.

E. Possible Additional Charges

• Section 420 IPC (Cheating) may apply if fraud or deceit was involved.
• Section 120B IPC (Criminal Conspiracy) may apply if the wife was aware and participated.

Possible Judgement

Court’s Likely Conclusion:

• The employee was entrusted with the company’s money by virtue of his employment.
• He dishonestly misappropriated the money by transferring it into his wife’s account.
• This clearly satisfies all ingredients of criminal breach of trust under Section 405 IPC.
• Since he is an employee/clerk of the company, the aggravated form under Section 408 IPC applies.

Probable Judicial Outcome:

1. Guilty under Section 408 IPC (Criminal breach of trust by employee).
2. Also liable under Section 405 IPC (definition section).
3. Additional charges may include:
   • Section 420 IPC (if deception involved),
   • Section 120B IPC (if wife collaborated).

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