Whoever dishonestly misappropriates or converts to his own use any movable property, shall be punished with imprisonment of either description for a term which shall not be less than six months but which may extend to two years and with fine.
Illustrations
(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.
(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, ifAwas under the impression that he had Z’s implied consent to take the book for the purpose of reading it,Ahas not committed theft. But, ifAafterwards 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.
Explanation 1 — —A dishonest misappropriation for a time only is a misappropriation within the meaning of this section.
Illustrations
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.
Explanation 2 — —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 a 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 believe that the real owner cannot be found.
Illustrations
(a) A finds a rupee on the high road, not knowing to whom the rupee belongs, Apicks up the rupee. Here A has not committed the offence defined in this section.
(b) Afinds 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) Afinds 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. Apicks 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) Afinds a purse with money, not knowing to whom it belongs; he 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.
Legal Commentary & Landmark Judgments: Section 314
Section 314 penalises dishonest misappropriation of movable property, punishing anyone who dishonestly misappropriates or converts to their own use any movable property (replacing Section 403 IPC).
Distinguish between civil retention under a bona fide claim of right and criminal conversion. For defence, show that the property was retained under a legitimate lien or pending accounting settlement.