An Analytical Study of Offences Relating to Counterfeit Currency under Sections 489A-489E of the Indian Penal Code, 1860
Introduction
Sections 489A to 489E of the Indian Penal Code, 1860 (IPC) constitute a critical legislative framework designed to combat the menace of counterfeit currency. These provisions criminalize various activities associated with the counterfeiting, possession, and trafficking of currency notes and banknotes. The legislative intent, as underscored by the Supreme Court in K. Hashim v. State Of T.N. (2004) and reiterated in cases like VISHALBHAI UMESHBHAI PADIYA v. STATE OF GUJARAT (2025), is twofold: to safeguard the economic stability of the nation and to provide robust protection to currency notes, which remain central to commercial transactions despite the rise of digital payments (K. Hashim v. State Of T.N., 2004; Anikul And Another v. State Of West Bengal, 2022, citing Umashankar v. State of Chhattisgarh). The judiciary has consistently emphasized the gravity of these economic offences, advocating for stringent application of these laws to deter perpetrators (State of Gujarat v. Sureshbhai Babubhai Chauhan, 2016). This article undertakes a comprehensive analysis of Sections 489A to 489E IPC, drawing upon statutory provisions and significant judicial pronouncements to elucidate their scope, interpretation, and application.
Legislative Framework: Sections 489A to 489E IPC
Chapter XVIII of the IPC, under the sub-heading "Of Currency-Notes and Bank-Notes," houses Sections 489A to 489E. These were introduced by Act 12 of 1899 (Jubeda Chitrakar @ Jaba @ Zubeda Chitrakar v. State Of West Bengal, 2019) to specifically address offences related to currency.
Section 489A: Counterfeiting Currency-Notes or Bank-Notes
Section 489A IPC penalizes the act of counterfeiting any currency-note or bank-note, or knowingly performing any part of the process of counterfeiting. The Supreme Court in K. Hashim v. State Of T.N. (2004) clarified that this section is not limited to the completed act of counterfeiting but extends to any participation in the counterfeiting process. The term "counterfeiting" itself implies causing one thing to resemble another with the intention to deceive, as per the explanation to Section 28 of the IPC, which can be read in conjunction with these provisions.
Section 489B: Using as Genuine, Forged or Counterfeit Currency-Notes or Bank-Notes
Section 489B IPC addresses the act of selling, buying, receiving, trafficking in, or using as genuine any forged or counterfeit currency-note or bank-note, with the knowledge or reason to believe that it is forged or counterfeit. A crucial element is the *mens rea* – the knowledge or belief regarding the counterfeit nature of the note and the intention to use it as genuine. Mere possession is insufficient to attract liability under this section (Muhammed Koya And Another v. State Of Kerala, 2020; Jubeda Chitrakar @ Jaba @ Zubeda Chitrakar v. State Of West Bengal, 2019; Ajmal Hussain Mazarbhuiya v. State of Mizoram, 2024). The legislative object, as noted in K. Hashim v. State Of T.N. (2004) and cited in Shabbir Sheikh And Others v. State Of Madhya Pradesh (2018), is to curb the circulation of forged notes by penalizing any act that could lead to their circulation, provided the requisite knowledge exists.
Section 489C: Possession of Forged or Counterfeit Currency-Notes or Bank-Notes
Section 489C IPC criminalizes the possession of forged or counterfeit currency-notes or bank-notes. However, similar to Section 489B, possession alone is not adequate. The prosecution must establish that the accused possessed the notes (actus reus) with the knowledge or reason to believe that they were forged or counterfeit, and with the intention to use them as genuine or that they might be used as genuine (mens rea) (K. Hashim v. State Of T.N., 2004; Anikul And Another v. State Of West Bengal, 2022, citing Umashankar v. State of Chhattisgarh). The term "reason to believe," defined in Section 26 IPC, implies sufficient cause to believe, which can be inferred from circumstances (Sainudheen Koya And Another /accused v. State Of Kerala, 2020).
Section 489D: Making or Possessing Instruments or Materials for Forging or Counterfeiting Currency-Notes or Bank-Notes
Section 489D IPC targets preparatory acts by penalizing the making, mending, performing any part of the process of making or mending, buying, selling, disposing of, or possessing any machinery, instrument, or material for the purpose of being used, or knowing or having reason to believe that it is intended to be used, for forging or counterfeiting any currency-note or bank-note. This provision aims to dismantle the infrastructure used for counterfeiting operations (VISHALBHAI UMESHBHAI PADIYA v. STATE OF GUJARAT, 2025).
Section 489E: Making or Using Documents Resembling Currency-Notes or Bank-Notes
Section 489E IPC addresses a distinct but related offence: making, or causing to be made, or using for any purpose whatsoever, or delivering to any person, any document purporting to be, or in any way resembling, or so nearly resembling as to be calculated to deceive, any currency-note or bank-note. This section carries a lesser punishment and aims to prevent confusion and deception caused by documents that mimic genuine currency, even if not perfect counterfeits.
Judicial Interpretation and Key Legal Principles
Scope of "Currency Note"
A significant clarification regarding the ambit of these provisions came from the Supreme Court in State Of Kerala v. Mathai Verghese And Others (1986). The Court held that the term "currency note" as used in Sections 489A and 489C is not restricted to Indian currency but is capacious enough to include currency notes of any country. This interpretation was reaffirmed in K. Hashim v. State Of T.N. (2004), where it was explicitly stated that Section 489C applies to American dollar bills as well. This broad interpretation is crucial for combating international counterfeiting operations that may affect India.
The Indispensability of Mens Rea
The element of *mens rea*, specifically "knowing or having reason to believe the currency notes or banknotes are forged or counterfeit," is paramount for establishing offences under Sections 489B and 489C IPC. The Supreme Court in Umashankar v. State of Chhattisgarh (2001), as cited in Anikul And Another v. State Of West Bengal (2022) and Ajmal Hussain Mazarbhuiya v. State of Mizoram (2024), emphasized that these provisions are not intended to punish "unwary possessors or users." The prosecution must adduce material to demonstrate this requisite mental element. In Jubeda Chitrakar @ Jaba @ Zubeda Chitrakar v. State Of West Bengal (2019), the Calcutta High Court elaborated that for Sections 489B and/or 489C, *mens rea* involves knowledge or reason to believe the note is counterfeit, coupled with the intention to use it as genuine or the knowledge that it may be used as genuine. The absence of *mens rea* can be fatal to the prosecution's case, as observed in Anikul And Another v. State Of West Bengal (2022).
The inference of *mens rea* can often be drawn from circumstantial evidence. For instance, the possession of a "sizeable quantity" or "bulk quantity" of counterfeit notes, especially if concealed or transported, and without a plausible explanation from the accused (particularly when questioned under Section 313 CrPC), can lead to an inference of knowledge and intention (MD. KAMIRUL ISLAM v. CENTRAL BUREAU OF INVESTIGATION, 2024, citing Jubeda Chitrakar and Narendra Prasad v. The State Of West Bengal). Similarly, the manner of acquisition and other circumstances surrounding the seizure are relevant (Sainudheen Koya And Another /accused v. State Of Kerala, 2020).
Distinction between Section 489B and Section 489C
Courts have consistently highlighted the distinction between the ingredients of Section 489B and Section 489C IPC. While Section 489C deals with the possession of counterfeit notes with the requisite *mens rea*, Section 489B requires a further act of "using as genuine" which includes selling, buying, receiving, or otherwise trafficking in such notes (K. Hashim v. State Of T.N., 2004, as cited in Shabbir Sheikh And Others v. State Of Madhya Pradesh, 2018). Mere possession, even with knowledge, does not automatically translate to an offence under Section 489B unless one of the specified activities is proven (Muhammed Koya And Another v. State Of Kerala, 2020; Sainudheen Koya And Another /accused v. State Of Kerala, 2020). The argument that possession by itself does not amount to activities falling under Section 489B has been frequently raised by the defence (Jubeda Chitrakar @ Jaba @ Zubeda Chitrakar v. State Of West Bengal, 2019; Ajmal Hussain Mazarbhuiya v. State of Mizoram, 2024).
Evidentiary Standards and Procedural Safeguards
The prosecution bears the onus of proving the charges under Sections 489A-489E beyond a reasonable doubt. The seriousness of an economic offence does not dilute the standard of proof required. As observed in Mohammed Shabbir v. State Of Maharashtra (2016), courts cannot accept unsatisfactory evidence or hold a case as proved merely because the offence is serious; rather, the gravity necessitates cautious and careful examination of evidence. Defective investigation can lead to acquittal if it creates doubt about the prosecution's case (Mohammed Shabbir v. State Of Maharashtra, 2016).
A crucial procedural safeguard is the examination of the accused under Section 313 of the Code of Criminal Procedure, 1973 (CrPC). Failure to put incriminating circumstances, such as the alleged knowledge of the notes being counterfeit, to the accused during this examination can vitiate the conviction (Mohammed Shabbir v. State Of Maharashtra, 2016). Conversely, if an accused offers no explanation for possessing a large quantity of counterfeit notes when questioned under Section 313 CrPC, it can be a factor considered against them, potentially invoking Section 106 of the Evidence Act regarding facts especially within their knowledge (MD. KAMIRUL ISLAM v. CENTRAL BUREAU OF INVESTIGATION, 2024).
While the case of Rizwan Khan v. State Of Chhattisgarh (2020) primarily dealt with the NDPS Act, its observations on the reliability of police testimonies, even in the absence or hostility of independent witnesses, reflect a general principle in criminal jurisprudence. The Supreme Court in Rizwan Khan affirmed that police testimonies should not be inherently distrusted. Such principles could be relevant in counterfeit currency cases where independent witnesses may be difficult to secure or may turn hostile, though the specific evidentiary requirements of Sections 489A-E IPC must always be met.
Broader Implications and Procedural Aspects
Economic Offences: Gravity and Judicial Approach
Offences under Sections 489A-489E IPC are treated as grave economic offences due to their potential to destabilize the country's economy (K. Hashim v. State Of T.N., 2004; VISHALBHAI UMESHBHAI PADIYA v. STATE OF GUJARAT, 2025). The judiciary has often expressed the need for a stern approach. In State of Gujarat v. Sureshbhai Babubhai Chauhan (2016), the Gujarat High Court emphasized that leniency in economic offences sends a wrong signal and that such offences must be dealt with an "iron hand," advocating for adequate and deterrent punishment.
Bail and Pre-Trial Procedures
The seriousness of offences under Sections 489A-489E IPC influences decisions regarding bail. While general principles of bail apply, as seen in cases like Uma Shankar Sahu Applicant v. State Of Chhattisgarh (2022) (though dealing with Section 379 IPC, where factors like no previous criminal antecedents were considered for anticipatory bail), the economic nature and gravity of counterfeiting offences often lead to stricter scrutiny. The conditions for bail under Section 441 CrPC and the provision for deposit instead of recognizance under Section 445 CrPC, as discussed in Krishna Kumar And Others v. State Of Karnataka (1979) in the context of Sections 489A-489E, outline the framework within which bail is granted. The court in Krishna Kumar clarified that the powers under Sections 441 and 445 CrPC are mutually exclusive regarding the forms of security.
The right to default bail under Section 167(2) CrPC is also a significant procedural right for accused persons in such cases. In AVINASH JAIN v. CENTRAL BUREAU OF INVESTIGATION (2023), the Delhi High Court, referencing precedents, discussed the implications of filing incomplete chargesheets in cases involving, inter alia, Sections 489A-489E IPC, affirming that an incomplete chargesheet cannot defeat the accused's right to default bail.
Trial and Jurisdiction
Offences under Sections 489A to 489E IPC are included in the Schedule of the National Investigation Agency Act, 2008 (NIA Act). As detailed in Sayed Mohd. Ahmad Kazmi v. Union Of India & Ors. (2014), Section 22 of the NIA Act empowers State Governments to constitute Special Courts for the trial of these scheduled offences. Until such Special Courts are constituted, the Court of Session of the division where the offence was committed can exercise jurisdiction, following the procedure under Chapter IV of the NIA Act.
Inclusion in Preventive Laws
The gravity with which these offences are viewed is further evidenced by their inclusion in preventive detention and externment statutes. For example, Section 47 of the Delhi Police Act, 1978, as discussed in Arun Kumar v. State (1985) and Avinash Janu v. Lt. Governor Of Delhi Through State Govt Of Nct Of Delhi & Ors. (2017), lists engagement in offences punishable under Sections 489A to 489E IPC as a ground for directing a person to remove themselves from Delhi if their acts cause alarm, danger, or harm. This underscores the legislative assessment of such offenders as threats to public order and safety.
The initiation of proceedings, as a general matter of criminal procedure, would follow the CrPC. While Har Prasad Das Accused, v. The Emperor (1913) discusses older CrPC provisions (Sections 476, 478, etc.) concerning courts taking action, the current CrPC framework governs how complaints are filed and cognizance is taken for offences under Sections 489A-E IPC, typically initiated by police reports (challans) after investigation.
Conclusion
Sections 489A to 489E of the Indian Penal Code provide a comprehensive legal arsenal against the multifaceted crime of currency counterfeiting. Judicial interpretations have consistently emphasized the necessity of proving *mens rea* – the knowledge or reason to believe that the currency is counterfeit and, for certain sections, the intent to use it as genuine. The courts have clarified the broad scope of "currency note" to include foreign currency and have distinguished the nuanced requirements of each section, particularly between mere possession (Section 489C) and active use or trafficking (Section 489B). While underscoring the seriousness of these economic offences and the need for stringent enforcement, the judiciary also upholds crucial procedural safeguards, including the standard of proof beyond reasonable doubt and the proper examination of the accused under Section 313 CrPC. The legislative framework, fortified by judicial pronouncements, aims to protect India's economic integrity while ensuring that criminal liability is founded upon established principles of criminal law.