(a) A takes property belonging to Z out of Z’s possession in good faith, believing, at the time when he takes it, that the property belongs to himself. A is not guilty of theft, but if A, after discovering his mistake dishonestly appropriates the property to his own use, he is guilty of an offence under this Section.

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(b) A, being on friendly terms with Z, goes into Z’s library in Z’s absence, and takes away a book without Z’s express consent. Here, if A was under the impression that he had Z’s implied consent to take the book for the purpose of reading it, A has not committed theft. But, if A afterwards sells the book for his own benefit, he is guilty of an offence under this Section.

(c) A and B, being joint owners of a horse, A takes the horse out of B’s possession, intending to use it. Here, as A has a right to use the horse, he does not dishonestly misappropriate it. But, if A sells the horse and appropriates the whole proceeds to his own use, he is guilty of an offence under this Section.


A dishonest misappropriation for a term only is a misappropriation within the meaning of this Section.


A finds a Government promissory note belonging to Z, bearing a blank endorsement. A, knowing that the note belongs to Z, pledges it with a banker as a security for a loan, intending at a future time to restore it to Z. A has committed an offence under this Section.


A person who finds property not in the possession of any other person, and takes such property for the purpose of protecting it for, or of restoring it to, the owner, does not take or misappropriate it dishonestly, and is not guilty of an offence: but he is guilty of the offence above defined, if he appropriates it to his own use, when he knows or has the means of discovering the owner, or before he has used reasonable means to discover and give notice to the owner and has kept the property a reasonable time to enable the owner to claim it.

What are reasonable means or what is reasonable time in such a case, is a question of fact.

It is not necessary that the finder should know who is the owner of the property, or that any particular person is the owner of it; it is sufficient if, at the time of appropriating it, he does not believe it to be his own property, or in good faith believes that real owner cannot be found.


(a) A finds a rupee on the high-road, not knowing to whom the-rupee belongs. A picks up the rupee. Here A has not committed the offence defined in this Section.

(b) A finds a letter on the road, containing a bank note. From the direction and contents of the letter he learns to whom the note belongs. He appropriates the note. He is guilty of an offence under this Section.

(c) A finds a cheque payable to bearer. He can form no conjecture as to the person who has lost the cheque. But the name of the person, who has drawn the cheque, appears. A knows that this person can direct him to the person in whose favour the cheque was drawn. A appropriates the cheque without attempting to discover the owner. He is guilty of an offence under this Section.

(d) A sees Z drop his purse with money in it. A picks up the purse with the intention of restoring it to Z, but afterwards appropriates it to his own use. A has committed an offence under this Section.

(e) A finds a purse with money, not knowing to whom, it belongs. A afterwards discovers that it belongs to Z, and appropriates it to his own use. A is guilty of an offence under this Section.

(f) A finds a valuable ring, not knowing to whom it belongs. A sells it immediately without attempting to discover the owner. A is guilty of an offence under this Section.

Sec. 404 explains the dishonest misappropriation of property possessed by deceased person at the time of his death, and also prescribes the punishment. The offence under this Section is non- cognizable, bailable, non-compoundable, and triable by Magistrate of the first class.

Sec. 404. Dishonest misappropriation of property possessed by deceased person at the time of his death:

Whoever, dishonestly misappropriates or converts to his own use property, knowing that such property was in the possession of a deceased person at the time of that person’s decease, and has not since been in the possession of any person legally entitled to such possession, shall be punished with imprisonment of either description for a term which may extend to three years and shall also be liable to fine; and if the offender at the time of such person’s decease was employed by him as a clerk or servant, the imprisonment may extend to seven years.


Z dies in possession of furniture and money. His servant A, before the money comes into the possession of any person entitled to such possession dishonestly misappropriates it. A has committed the offence defined in this Section.

Important Points:

A. Ingredients:

1. The property must be movable property.

2. It must belong to the complainant.

3. The accused must have misappropriated the property or converted it to his own use.

4. The accused did so dishonestly.

B. Dishonestly:

‘Dishonestly’ is one of the essential ingredients of the offence of criminal misappropriation. This word signifies mens rea of the accused.

Narayan Singh vs. State of M.P. (1986 CrLJ 1481)

The accused was the Chairman of the Samithi. He collected certain dues from its members payable to the Government. It was the duty of the Chairman to credit all such amount in Government Treasury.

He did not remit during the tenure and even after the completion of his period. The Madhya Pradesh High Court held that the accused was guilty of the offence of criminal misappropriation.

C. Kartick Chandra Mukerjee vs. B.N. Banerji (AIR 1954 Cal. 547)

The accused obtained loan mortgaging his lands to the complainant/Bank. The State acquired that land under Land Acquisition Act, and paid compensation to the accused.

The Bank prosecuted the accused alleging that the accused criminal misappropriated the bank amount. The Supreme Court held that the compensation amount legally belonged to the accused, and he did not commit the offence of criminal misappropriation. It advised that it was a civil debt, and the complainant had to sue the accused under the Civil Procedure Code, 1908.

E. Partnership Property:

While disposing the case J.G. Patil vs. M.K. Patel (1972 CrLJ 945 Guj.), the Supreme Court held that a partner cannot be convicted on the allegation of criminal misappropriation in respect of partnership property.

F. Finder of Goods:

Finder of goods should take appropriate steps to handover the goods to their real owners. He should not appropriate them as soon as they are found. He may appropriate them after certain reasonable time and after taking appropriate and reasonable steps taken to find out the real owner. It depends upon the circumstances and facts of the case. [Refer to Topic “Finder of Goods” in Contract-I & II Notes.]

G. Section 404 is the aggravated form of Section 403:

Ingredients of both the Sections are similar, except that the movable property belongs to a deceased. The object of Sec. 404 is to give protection of property of a deceased, and get transferred such property to the legal heirs/successors of a deceased in a proper way.

H. Sathi Prasad vs. State of U.P. (AIR 1973 SC 448)

In an occasion of a murder, the accused-police constable was deputed at the dead body. One of the relatives of the deceased removed ornaments from the body of the deceased. The accused/ constable saw it, and slapped the relative and took those ornaments from him. After enquiry into the murder case, the constable did not return the ornaments to the heirs of the deceased. The Supreme Court held that it was an offence under Sec. 404.

I. Bhopa Sara Bharwad vs. State of Gujarat (1986 CrLJ 518)

While the deceased and accused were going to the outskirts of the village, several eye-witnesses had seen them, and they also observed that the deceased wore golden ornaments.

In the next day, the body of deceased, without ornaments, was found in a well of outskirts. The ornaments of the deceased were found on the persons of the accused. The accused were convicted under Sees. 302, 201,404 read with 34.

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