An Analytical Examination of Offences Pertaining to Currency-Notes and Bank-Notes under Chapter XVIII, Sections 489A-489E of the Indian Penal Code, 1860
Introduction
Chapter XVIII of the Indian Penal Code, 1860 (IPC), specifically Sections 489A to 489E, delineates a set of offences aimed at preserving the sanctity and integrity of currency-notes and bank-notes. These provisions criminalize various activities associated with counterfeiting, from the very act of counterfeiting to the possession and use of such forged notes, as well as the making or possessing of instruments for their creation. The economic stability of a nation is intrinsically linked to the reliability of its currency, and these sections serve as a bulwark against activities that could undermine public confidence in monetary instruments. This article undertakes a comprehensive analysis of these provisions, drawing upon statutory language and judicial pronouncements, primarily focusing on the interpretation and application of Sections 489A, 489B, 489C, and 489D by Indian courts. The discussion will delve into the constituent elements of these offences, with particular attention to the crucial aspect of mens rea, the scope of terms like "currency note" and "counterfeit," and the evidentiary requirements for securing a conviction.
The Legislative Framework: Sections 489A-489E of the IPC
The IPC, under Chapter XVIII titled "Of Offences Relating to Documents and to Property Marks," dedicates a sub-segment to "Currency-Notes and Bank-Notes." This was introduced by the Currency-Notes Forgery Act, 1899 (Act XII of 1899), recognizing the growing need to specifically address crimes related to monetary paper. The key provisions are as follows:
- Section 489A: Counterfeiting currency-notes or bank-notes. This section penalizes whoever counterfeits, or knowingly performs any part of the process of counterfeiting, any currency-note or bank-note. The punishment prescribed is imprisonment for life, or imprisonment of either description for a term which may extend to ten years, and also liability to fine.
- Section 489B: Using as genuine, forged or counterfeit currency-notes or bank-notes. This provision targets those who sell to, or buy or receive from, any other person, or otherwise traffic in or use as genuine, any forged or counterfeit currency-note or bank-note, knowing or having reason to believe the same to be forged or counterfeit. The punishment is similar to that under Section 489A.
- Section 489C: Possession of forged or counterfeit currency-notes or bank-notes. This section criminalizes the possession of any forged or counterfeit currency-note or bank-note, knowing or having reason to believe the same to be forged or counterfeit and intending to use the same as genuine or that it may be used as genuine. The punishment is imprisonment of either description for a term which may extend to seven years, or with fine, or with both.
- Section 489D: Making or possessing instruments or materials for forging or counterfeiting currency-notes or bank-notes. This section deals with the preparatory acts of making, or performing any part of the process of making, or buying or selling or disposing of, or having in possession, 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. The punishment can extend to imprisonment for life, or imprisonment of either description for a term up to ten years, along with a fine.
- Section 489E: Making or using documents resembling currency-notes or bank-notes. This section addresses the creation or use of documents that, while not exact counterfeits, bear such a resemblance to currency-notes or bank-notes as to be likely to deceive. This is a less severe offence, punishable with a fine which may extend to one hundred rupees.
The legislative intent behind these provisions is clearly to combat the menace of fake currency at every stage, from its creation to its circulation and even the preparation for its creation (Jubeda Chitrakar @ Jaba @ Zubeda Chitrakar v. State Of West Bengal, 2019; Ashu Mondal Alias Ashu Khamaru v. State Of West Bengal, 2012 SCC ONLINE CAL 12428).
Defining "Counterfeit" and "Currency Note"
A foundational aspect of understanding Sections 489A-489E IPC lies in the interpretation of "counterfeit" and "currency note."
"Counterfeit" under Section 28 IPC
Section 28 of the IPC defines "counterfeit." A person is said to "counterfeit" who causes one thing to resemble another thing, intending by means of that resemblance to practice deception, or knowing it to be likely that deception will thereby be practiced. Explanation 1 clarifies that it is not essential to counterfeiting that the imitation should be exact. Explanation 2 states that when a person causes one thing to resemble another, and the resemblance is such that a person might be deceived thereby, it shall be presumed, until the contrary is proved, that the person so causing the one thing to resemble the other thing intended by means of that resemblance to practice deception or knew it to be likely that deception would thereby be practiced. The Supreme Court, in K. Hashim v. State Of T.N. (2005 SCC 1 237), while dealing with counterfeiting of US $20 notes, affirmed that the intention or knowledge to deceive, as inferred from the resemblance caused by the counterfeit, satisfies the statutory requirement for counterfeiting, even if the imitation is not exact.
Scope of "Currency Note" – Inclusion of Foreign Currency
A significant clarification regarding the term "currency note" came from the Supreme Court in State Of Kerala v. Mathai Verghese And Others (1986 SCC 4 746). The Court overturned the Kerala High Court's narrow interpretation that Sections 489-A and 489-C IPC applied exclusively to Indian currency. The Supreme Court asserted that the term "currency note" as used in these sections is broad and inclusive of foreign currencies issued by any sovereign state. The Court reasoned that the explanation within Section 489-A does not restrict "currency note" to Indian currency and that the legislative intent was to protect the public from counterfeit currency, irrespective of its origin. This interpretation ensures that the IPC's counterfeiting provisions have a universal scope within India's jurisdiction. The Bombay High Court in Arte Indiana (Partnership Firm) v. M/S P. Mittulaul Lalah And Sons And Another (1999 SCC ONLINE BOM 337) also referenced this Supreme Court decision, emphasizing that when the legislature does not specify "Indian currency note," courts cannot substitute it for the broader term "currency note."
The Indispensable Element of Mens Rea
A cornerstone of criminal liability under Sections 489B, 489C, and 489D is the presence of mens rea, or a guilty mind. The statutes explicitly incorporate terms like "knowing or having reason to believe" and "intending to use." The judiciary has consistently emphasized that mere possession or use of counterfeit notes, without the requisite knowledge or intent, is insufficient to secure a conviction.
The Calcutta High Court in Jubeda Chitrakar (2019) articulated that the mens rea for offences under Section 489B and/or 489C is the "knowledge or having reason to believe that the currency note or bank note is forged or counterfeit, coupled with the intention to use the same as genuine or the knowledge that it may be used as genuine." Similarly, in Anikul And Another v. State Of West Bengal (2022), the court, citing M. Mammutti v. State Of Karnataka (AIR 1979 SC 1705), held that mere possession is not punishable unless it is established that the possession was with knowledge that the notes were fake or counterfeit. The prosecution bears the burden of proving this mental element (Anikul And Another, 2022).
The Kerala High Court in Mohanan v. State Of Kerala (2015), referencing Umashanker v. State Of Chhattisgarh (2001 (3) KLT 681 (SC)) and M. Mammutti, reiterated that the prosecution must prove possession with knowledge or reason to believe the notes are fake. However, Mohanan also noted, citing Vijayan v. State Of Kerala (2001 (2) KLT 951) and Ponnuswamy v. State (1995 Crl.L.J 2658 (SC)), that if the notes are of such a nature that a mere look would convince anyone of their counterfeit nature, knowledge can be presumed. Furthermore, if an accused offers no explanation for possessing counterfeit notes, such knowledge may be presumed.
In Sainudheen Koya And Another /accused v. State Of Kerala Represented By The Deputy Superintendent Of Police /state. (2020), the Kerala High Court acquitted an accused from whom a single counterfeit note was seized along with genuine notes, finding no evidence to show he knew it was counterfeit, especially when it was not established that the note was obviously fake on mere perusal. This contrasts with situations involving a large quantity of notes. The Madhya Pradesh High Court in Shabbir Sheikh And Others v. State Of Madhya Pradesh (2018), dealing with the recovery of a large number of counterfeit notes, observed that the accused's failure to explain their possession under Section 106 of the Evidence Act could lead to an adverse inference that their possession was not innocent and that they intended to use or transport them.
The Bombay High Court in VIRENDRASINGH KASHISINGH............ v. STATE OF MAH.THR. PSO NAGPUR (2018) also stressed the necessity of establishing mens rea for a conviction under Section 489-B, citing Umashankar v. State of Chattisgarh (2001 CRI. L.J. 4696) among others.
Distinguishing Between Section 489B and Section 489C
While both Section 489B and Section 489C deal with counterfeit currency and require mens rea, they address different activities. Section 489B pertains to more active conduct such as "selling, buying, or receiving from any other person, or otherwise trafficking in or using as genuine" counterfeit notes. Section 489C, on the other hand, penalizes the "possession" of such notes with the specified knowledge and intent.
The Kerala High Court in MD. KAMIRUL ISLAM v. CENTRAL BUREAU OF INVESTIGATION (2024) discussed this distinction, where the appellants argued that the facts proved would only amount to an offence under Section 489C and not 489B, as the ingredients for 489B (selling, buying, trafficking, etc.) were not established. The court examined the evidence and the questioning under Section 313 CrPC to determine the appropriate charge. In Sainudheen Koya (2020), the court found evidence insufficient for Section 489B but sufficient for 489C against one accused, highlighting the different evidentiary thresholds.
The quantity of notes can be a factor in inferring the nature of the offence. As held by the Gujarat High Court in Rayab Jusab Sama Vs. State of Gujarat ((1999) CrLJ 942), cited by the Madhya Pradesh High Court in Shabbir Sheikh (2018), possession of a large number of fake currency notes can be considered active transportation, thus falling under the purview of trafficking within Section 489-B IPC. The court in Shabbir Sheikh concluded that the possession of numerous counterfeit notes by the appellants indicated they meant either to use them or transport them, thus substantiating a charge under Section 489-B.
In Ashu Mondal (2012), the accused was found loitering suspiciously and, upon interrogation, admitted to possessing counterfeit notes with the intention to use them in the local market. The seizure of a significant number of notes (20 notes of Rs. 1000, 3 notes of Rs. 500, and 24 notes of Rs. 100) from him led to conviction under both Sections 489-B and 489-C IPC, suggesting the court inferred both possession with intent and an attempt or preparation for "using as genuine."
Section 489D: Instruments and Materials for Counterfeiting
Section 489D IPC addresses the preparatory stages of counterfeiting by criminalizing the making or possession of machinery, instruments, or materials intended for such purposes. Similar to other sections, mens rea – knowledge or reason to believe that these items are intended for counterfeiting – is a critical ingredient.
The Andhra Pradesh High Court in Kalakoti Somireddi And Others v. State (1958) dealt with a charge under Section 489-D. The court noted that "mere possession without proof of mens rea would not be sufficient to substantiate a charge under Section 489-D." However, it also observed that "the question whether the ... accused knew or had reason to believe that [the materials] were intended to be used for counterfeiting is a matter of inference from the particular facts and circumstances." In that case, the accused was found keeping materials buried under the ground at his house and had no explanation. The court held that the mens rea was sufficiently established by these circumstances, leading to his conviction under Section 489-D. This indicates that unaccounted-for possession of such materials can lead to an inference of guilty knowledge or intention.
Evidentiary Aspects and Procedural Considerations
Successful prosecution under Sections 489A-489D IPC hinges on robust evidence and adherence to procedural safeguards.
Proof of Counterfeit Nature
A primary requirement is to establish that the currency notes in question are indeed counterfeit. This is typically done through expert evidence. In Ashok Baburao Shinde v. State Of Maharashtra (2004 SCC ONLINE BOM 801), the conviction for an offence under Section 489-B IPC was based, inter alia, on a report from the Bank Note Press, Devas, which confirmed that the currency note tendered by the appellant was counterfeit. The physical characteristics of the note (e.g., missing numbers, pasted pieces) also contributed to the finding. The forensic report from a designated laboratory is crucial, as noted in MD. KAMIRUL ISLAM (2024), where the report from the Forensic Science Laboratory was deemed unassailable.
Accomplice Testimony
In cases involving conspiracy to counterfeit, the testimony of accomplices can be vital. The Supreme Court in K. Hashim (2004) extensively discussed the admissibility and sufficiency of accomplice testimony under Sections 133 and 114, Illustration (b) of the Indian Evidence Act, 1872. While Section 133 allows conviction based solely on an accomplice's testimony, the rule of prudence, as per Section 114, Illustration (b), suggests that such testimony is presumptively unreliable unless corroborated in material particulars. The Court upheld the convictions, finding the accomplice testimonies credible and adequately supported by other evidence, including material recoveries and expert reports.
Examination under Section 313 CrPC
The examination of the accused under Section 313 of the Code of Criminal Procedure, 1973 (CrPC) is a critical procedural safeguard. This allows the accused to personally explain any circumstances appearing in the evidence against them. Failure to put specific questions regarding the counterfeit nature of the notes or the accused's knowledge can be fatal to the prosecution. In Anikul And Another (2022), the Calcutta High Court, relying on M. Mammutti, set aside a conviction partly because no specific question regarding the notes being fake or counterfeit was put to the appellant during his Section 313 examination. Conversely, in MD. KAMIRUL ISLAM (2024), the Kerala High Court found no infraction in the Section 313 examination as every aspect concerning possession and attempted use was put to the appellants, distinguishing it from M. Mammutti.
Seizure and Investigation
Proper seizure and investigation procedures are fundamental. The case of Ashu Mondal (2012) illustrates a typical scenario where police, acting on source information, apprehended the accused, seized counterfeit notes under a seizure list in the presence of witnesses, and subsequently lodged an FIR. In Gurnam Singh v. State Of Union Territory, Chandigarh (1992 SCC ONLINE P&H 64), a case was registered after a bank employee detected a counterfeit note during an exchange of old notes, leading to an investigation and expert examination of the note.
Judicial Scrutiny and Burden of Proof
The judiciary plays a crucial role in ensuring that convictions under these serious offences are based on cogent evidence establishing guilt beyond a reasonable doubt. The courts have consistently highlighted that suspicion, however strong, cannot replace proof (Sonu @ Amar Kumar v. The State Of Madhya Pradesh, Madhya Pradesh High Court, 2025 – though this case primarily dealt with Section 302 IPC, the principle is universally applicable). The burden is squarely on the prosecution to prove all ingredients of the offence, including the vital element of mens rea.
In VIRENDRASINGH KASHISINGH (2018), the defence argued that the prosecution failed to prove its case beyond reasonable doubt, particularly the mens rea for Section 489-B and even the seizure of counterfeit notes for Section 489-C. This underscores the meticulous scrutiny applied by courts to the evidence presented. The reference to cases like Umashankar v. State of Chattisgarh and Ashok Baburao Shinde v. State of Maharashtra in this judgment indicates a consistent line of judicial thought requiring clear proof of both the actus reus and mens rea.
The offence under Section 489 IPC is also listed among those for which a licence can be cancelled or suspended under certain other statutes, such as Section 29(d) of the Karnataka Excise Act, 1965, as noted in Siddappa D. v. Deputy Commissioner (Excise) & Anr. (1984 SCC ONLINE KAR 88), indicating the gravity with which these offences are viewed in the broader legal landscape.
Conclusion
Sections 489A to 489E of the Indian Penal Code constitute a critical legal arsenal against the multifaceted crime of currency counterfeiting. The judiciary, through consistent interpretation, has emphasized that these provisions must be applied rigorously but fairly. The pronouncements in cases like State Of Kerala v. Mathai Verghese have broadened the protective ambit of these laws to include foreign currency, reflecting the transnational nature of such economic offences. However, the courts have also been vigilant in safeguarding the rights of the accused, particularly by insisting on clear proof of mens rea – the knowledge or reason to believe that the notes are counterfeit and the intention to use them as genuine. Mere possession, without this crucial mental element, has been repeatedly held insufficient for conviction under Section 489C, as affirmed in numerous judgments including those referencing M. Mammutti and Umashanker. The distinction between the active use or trafficking under Section 489B and possession under Section 489C, as well as the preparatory acts under Section 489D, requires careful consideration of the specific facts and evidence in each case. Adherence to procedural safeguards, particularly during investigation, seizure, and the accused's examination under Section 313 CrPC, remains paramount. Ultimately, the effective enforcement of these provisions is essential not only for punishing offenders but also for maintaining public faith in the monetary system, which is a cornerstone of economic stability.