Section 406 IPC (Criminal Breach of Trust): Punishment and Bail (2026)

Legal Explainer · Indian Penal Code

Updated for 2026 · Claw Editorial

Someone handed over money, goods or documents in trust, and later says you kept or misused them. A police complaint under Section 406 IPC follows, and the first questions are always the same: is this arrestable, can I get bail, and is this really a crime or only a money dispute? Section 406 IPC punishes criminal breach of trust, meaning dishonest misuse of property that was entrusted to you, with up to three years in jail, or fine, or both. This guide explains the section in plain words and shows how it differs from cheating under Section 420. It also covers how bail and quashing work, and what replaced the section under the new criminal law.

01What Section 406 IPC says

Section 406 IPC is the punishment section for criminal breach of trust. Section 405 IPC defines the offence, and Section 406 says what the court can do when it is proved.

In simple terms, Section 405 covers a person who is entrusted with property, or given control over it, and then dishonestly misappropriates it, converts it to his own use, or uses or disposes of it against the law or against a contract about how it must be used. Section 406 then sets the sentence: imprisonment of either description for up to three years, or fine, or both.

The idea is easy to see in everyday cases. A partner keeps firm money for himself. An agent does not hand over the sale proceeds. A person given jewellery for safekeeping sells it. In each case the property reached the accused lawfully, and the wrong lies in what he did with it afterwards.

Criminal breach of trust is not about getting property by fraud. It is about betraying a trust after the property was handed over lawfully.

02The key ingredients the prosecution must prove

A case under Section 406 stands or falls on two core ingredients: entrustment and dishonest misappropriation. If either is missing, the charge should fail.

1. Entrustment

The accused must have been entrusted with property, or with dominion (control) over it. The property can be money, goods, documents or anything movable. Entrustment means the owner placed it with the accused in a position of trust, for a stated purpose. Courts look at who handed over what, when, and for what purpose. A simple loan or a debt is usually not entrustment, because the borrower becomes the owner of the money and only owes a repayment.

2. Dishonest misappropriation, conversion, use or disposal

The accused must then have misappropriated the property, converted it to his own use, or used or disposed of it in breach of a legal direction or a contract. The word “dishonestly” matters. It means an intention to cause wrongful gain to one person or wrongful loss to another. A delay in returning property, or an honest mistake in accounts, is not by itself a crime.

3. Guilty mind (mens rea)

Dishonest intention is the heart of the offence. The prosecution has to show it from the facts, such as false accounts, denial of receipt, sale of the property or siphoning of funds. A bare allegation of non-payment does not prove it.

Higher forms exist for special cases: carriers and warehouse-keepers (Section 407), clerks and servants (Section 408), and public servants, bankers, merchants and agents (Section 409). These carry heavier punishment and are separate sections.

03Is Section 406 cognizable, bailable and triable by whom?

Section 406 IPC is cognizable and non-bailable. This is the part most people worry about, so here it is in a table, based on the First Schedule of the Code of Criminal Procedure, 1973.

Because the offence is cognizable, police do not need a magistrate’s permission to start an investigation. Because it is non-bailable, a person who is arrested must apply for bail. In practice, courts often grant bail in simple breach of trust cases, as the maximum sentence is not severe and the case turns on documents.

04Punishment under Section 406 IPC

The punishment under Section 406 IPC is imprisonment of either description for up to three years, or fine, or both. “Either description” means simple or rigorous imprisonment, and the court chooses.

Three points are worth knowing. First, three years is the maximum, not the usual sentence. Second, the court can impose only a fine. Third, the court can also take into account any restitution, meaning the accused returning the property or paying the loss, when it decides the sentence.

For more serious forms, such as breach of trust by a clerk, servant or public servant, the maximum is higher. Those fall under different sections and should not be confused with a plain Section 406 charge.

Note that this is the position under the old Indian Penal Code. The Bharatiya Nyaya Sanhita raised the maximum for the basic offence, as explained in the BNS section below.

05Section 406 vs Section 420: breach of trust or cheating?

The difference between Section 406 and Section 420 is when the dishonest intention begins. In breach of trust, the property is handed over honestly and the dishonesty comes later. In cheating, the dishonest intention exists from the very start and induces the owner to part with the property.

The two are close to mutually exclusive on the same facts. If the complaint says the accused lied at the start to get the money, that is cheating. If it says the accused honestly received the money and later kept it, that is breach of trust. Complaints often add both sections, and courts have repeatedly examined whether both can really stand together on one set of facts.

For another section that is often charged alongside, see our explainer on Section 307 IPC. For a very different kind of offence that also depends on intent, see Sections 499 and 500 IPC on defamation.

06How bail, defence and quashing work

A person accused under Section 406 has three main routes: seek bail, defend the case on its facts, or ask the High Court to quash the proceedings. Which one fits depends on the stage and the facts.

Bail

Since the offence is non-bailable, the accused applies to the Magistrate or the Sessions Court for regular bail after arrest. If an arrest is feared, a person can apply for anticipatory bail before the Sessions Court or the High Court. Courts usually weigh the nature of the allegation, the maximum sentence, whether the accused will cooperate with investigation, and the risk of tampering with evidence. In a simple trust dispute backed by documents, courts often grant bail on conditions.

Common defences

• No entrustment: the money was a loan, advance or payment under a contract, not property held in trust.
• No dishonest intent: a delay, a dispute over accounts or an honest claim of right is not dishonesty.
• Civil dispute in disguise: the real dispute is about a contract or a debt, which a civil suit can resolve.
• Proper accounting: records show the property was used as directed or returned.

Quashing and compounding

The High Court can quash an FIR or a complaint under its inherent powers if, even taken at face value, it discloses no offence, or if it is plainly a civil dispute given a criminal colour. Because Section 406 is compoundable with the court’s permission, parties can also settle and ask the court to close the case. Courts have also quashed cases on settlement even when the offence is not strictly compoundable, but that is a matter for the High Court to decide in each case.

07BNS 2023 and BNSS 2023 equivalent of Section 406 IPC

The Bharatiya Nyaya Sanhita, 2023 (BNS) replaced the Indian Penal Code from 1 July 2024. Criminal breach of trust now sits in Section 316 BNS. Section 316(2) BNS is the equivalent of Section 406 IPC, and it raises the maximum imprisonment for the basic offence from three years to five years, or fine, or both.

Two cautions. First, the section numbers can differ and may change with later amendments, so always check the current bare act. Second, the law that applies depends on the date of the offence. For offences committed before 1 July 2024, the IPC still governs the offence and its punishment, and the BNS punishment cannot be applied backwards to the accused’s disadvantage. For offences after that date, BNS applies.

Procedure follows the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS), which replaced the CrPC. Bail, anticipatory bail, compounding and quashing have new BNSS section numbers, and the numbers differ from the old CrPC ones.

For a full table of old and new numbers, use our IPC to BNS section mapping guide.

08Where Claw fits

Claw is an all-in-one legaltech platform for Indian advocates, law firms, and corporate legal teams, combining AI-based case search, an AI legal assistant (Legal GPT), case management, and compliance automation across all Indian courts and tribunals.

For a Section 406 matter, the research task is to find how courts have treated entrustment, dishonest intent, and the line between a civil dispute and a criminal case. Claw covers 9,102 forums, holds 30 crore+ judgments, and returns results in under 5 seconds, so you can search how courts have read this section in your own High Court. Case search runs across the Supreme Court and the 25 High Courts. If you act in a live matter, you can also track related cases by party name.

Create a FREE Claw account to search 30 crore+ judgments on this section and track related cases by party name. Claw has a free plan for individual advocates. If you need to check a counterparty before you file or defend, see our guide to the best litigation check APIs in India.

09Sources and further reading

Always check the bare act and the latest judgments before you rely on any section number:

• India Code (official bare acts): indiacode.nic.in
• Supreme Court of India (official judgments): sci.gov.in
• Claw: clawlaw.in

Last verified: October 2026. This page is general information and not legal advice.

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