Criminal Breach of Trust Under Section 406 PPC: Misuse, Misinterpretation, and the Duty of Courts

The offence of criminal breach of trust, as defined under Section 406 of the Pakistan Penal Code (PPC), continues to be widely misunderstood and misapplied in Pakistan's legal system. A recent judgment by Justice Sardar Tariq Masood in the case of Muhammad Amjad Naeem v. The State through P.G Punjab, Lahore and another (Crl.P.L.A.170-L/2025) sheds much-needed light on the true scope of this offence and highlights the serious concerns over its misuse in civil matters.

Understanding Criminal Breach of Trust

A plain reading of Section 406 PPC reveals two critical elements that must be established for a conviction:

1. Entrustment of property as a trust (Amanat) — meaning that the property was handed over to someone with a responsibility to hold it in trust.

2. Dishonest misappropriation or misuse of that property — where the trustee misuses or disposes of the property against the terms of the trust or the law.

Both conditions are essential. If either is missing, the charge of criminal breach of trust does not hold.

What Constitutes Entrustment?

Under Section 405 PPC, entrustment is a broad concept. It refers to a scenario where the ownership of the property remains with the giver, and only temporary custody or possession is transferred to another person for a specific purpose. The entrusted property must be returned as-is and cannot be used for any unauthorized purposes.

This arrangement creates a fiduciary relationship between the parties. However, it does not have to conform to the technical definitions of trust in civil law. The key idea is that the property was handed over with the expectation that it would be returned or used strictly according to the giver’s instructions.

Distinguishing Civil Disputes from Criminal Offences

One of the most significant observations in the judgment is the growing misuse of Section 405 PPC in matters that are essentially civil in nature, such as business disputes or breaches of contract. For instance, when money is invested in a business venture, the expectation is profit, not the return of the exact amount. Therefore, such transactions do not fall within the scope of entrustment, and hence cannot be prosecuted under criminal breach of trust laws.

In contrast, a sale transfers ownership of the property to the buyer. The concept of trust or amanat does not apply between a seller and buyer, or between a shopkeeper and customer. Hence, business relationships involving investments, profits, and contracts are governed by civil law — not criminal law.

Failure to Pay Profits ≠ Criminal Breach of Trust

The Supreme Court has also clarified that mere failure to deliver profits, a breach of contract, or non-fulfillment of a promise — without clear entrustment of property — does not qualify as criminal breach of trust. Treating such cases as criminal offences distorts the line between civil and criminal law, often for personal or strategic gain.

Concern Over Misuse and Judicial Oversight

Justice Sardar Tariq Masood has voiced deep concern over the widespread abuse of Section 405 PPC in civil cases. Litigants are increasingly using criminal law to pressure opposing parties or expedite financial recoveries. This not only burdens the criminal justice system but also leads to unwarranted criminal proceedings against individuals — many of whom end up in jail for offences that are not even prima facie made out.

The judgment underscores the responsibility of Magisterial and Sessions Courts to carefully evaluate whether the two elements of criminal breach of trust are present. If not, the accused must not be denied bail — doing so would be a grave miscarriage of justice.

Bail and the Binding Nature of Precedents

Another critical point addressed in the judgment is the repeated failure of trial courts to follow binding precedents, particularly the principles laid down in the Tariq Bashir case. Under Article 189 of the Constitution of Pakistan, judgments of the Supreme Court are binding on all lower courts.

Justice Masood highlighted that failure to apply settled law, especially in non-prohibitory offences under Section 497 Cr.P.C., is unacceptable and reflects judicial indiscipline. In such cases, grant of bail is the rule, not the exception, and should only be denied in extraordinary circumstances.

Conclusion and Directive to Lower Courts

In a powerful conclusion, the Supreme Court directed that a copy of this judgment be sent to the Registrars of all High Courts for circulation among District Courts nationwide. The Court reminded the judiciary that compliance with this ruling is mandatory, not optional.

The ruling serves as a stern reminder that criminal law cannot be weaponized for civil disputes, and that liberty should not be compromised due to misinterpretation or neglect of binding legal principles.

Key Takeaways:

• Not every business loss or breach of contract amounts to criminal breach of trust.

• Entrustment must be clearly established before invoking Section 406 PPC.

• Misusing criminal law for civil matters is a growing concern.

• Lower courts must follow Supreme Court precedents strictly, especially in bail matters.

• Bail in non-prohibitory offences should be granted unless exceptional circumstances exist.

References:

• Muhammad Amjad Naeem v. The State through P.G Punjab, Lahore and another (Crl.P.L.A.170-L/2025)

• Justice Khurshid Anwar Bhinder v. Federation of Pakistan (PLD 2010 SC 483)

• Allied Bank Limited v. Habib-ur-Rehman (2023 SCMR 1232)