Fraudulent Deeds and Disposition of Property: Overview

Fraudulent Deeds and Disposition of Property | Overview

• Dishonest or Fraudulent Removal or Concealment of Property to Prevent Distribution Among Creditors
• Dishonestly or Fraudulently Preventing Debt Being Available for Creditors
• Dishonest or Fraudulent Execution of Deed of Transfer Containing False Statement of Consideration
• Dishonest Or Fraudulent Removal Or Concealment Of Property

The article talks about the offences fraudulent deeds and disposition of property. The essentials of each section are explained as the competitive exams especially focus on one’s ability to differentiate between these sections. This article is very briefly informative.

Fraudulent Deeds and Disposition of Property: Overview

The penal code deals with the offence of Fraudulent Deeds and Dispositions of Property under the category of ‘Of Fraudulent Deeds and Dispositions of Property’^[1] under the head ‘Of Offences Against Property’ under the Indian Penal Code.^[2]

Sections 421 and 422 protects the interest of the creditor or creditors affected. While the sections 423 and 424 safeguards the interests of the person affected and is broad enough to include other people other than the creditors whoever is affected by such act of the accused.

I. Dishonest or Fraudulent Removal or Concealment of Property to Prevent Distribution Among Creditors

“421 Dishonest or fraudulent removal or concealment of property to prevent distribution among creditors— Whoever dishonestly or fraudulently removes, conceals or delivers to any person, or transfers or causes to be transferred to any person, without adequate consideration, any property, intending thereby to prevent, or knowing it to be likely that he will thereby prevent, the distribution of that property according to law among his creditors or the creditors of any other person, shall be punished with imprisonment of either description for a term which may extend to two years, or with fine, or with both”

Essentials

The following are the essentials of this offence-

1. “Any property” is either- a. “Removed” or; b. “Concealed” or; c. “Delivered to any person” or; d. “Transferred to any person” or; e. “Caused to be transferred to any person without any adequate consideration”
2. It must be done with “dishonestly or fraudulently” by the accused
3. The accused must be- a. “Intending to prevent” or; b. “Knowing it to be likely that he will thereby prevent the distribution of property”
4. Such “distribution of property according to the law must be among his creditors or the creditors of any other person”.

This is a non-cognizable offence, which is a bailable and compoundable offence as well. This offence is compoundable only at the will of the creditor who is affected thereby due to the commission of this offence.

II. Dishonestly or Fraudulently Preventing Debt Being Available for Creditors

“422 Dishonestly or fraudulently preventing debt being available for creditors— Whoever dishonestly or fraudulently prevents any debt or demand due to himself or to any other person from being made available according to law for payment of his debts or the debts of such other person, shall be punished with imprisonment of either description for a term which may extend to two years, or with fine, or with both”

Essentials

The following are the essence of this offence-

1. The accused must “prevent”- a. “any debt” due or; b. “demand due to himself or to any other person”
2. The accused must prevent it “from being made available according to law for payment of his debts or the debts of such other person”
3. Such prevention must be done “dishonestly” or “fraudulently”.

This offence is non-cognizable and bailable. This offence is compoundable at the will of the credit who is thereby affected due to the commission of this offence.

III. Dishonest or Fraudulent Execution of Deed of Transfer Containing False Statement of Consideration:

“423 Dishonest or fraudulent execution of deed of transfer containing false statement of consideration— Whoever dishonestly or fraudulently signs, executes or becomes a party to any deed or instrument which purports to transfer or subject to any charge any property, or any interest therein, and which contains any false statement relating to the consideration for such transfer or charge, or relating to the person or persons for whose use or benefit it is really intended to operate, shall be punished with imprisonment of either description for a term which may extend to two years, or with fine, or with both”

Essentials

The following are the essentials for this offence-

1. There must be “any deed or instrument which purports to transfer or subject to any charge any property or interest therein”
2. To which accused must “dishonestly” or “fraudulently”- a. “Sign” or; b. “Execute” or; c. “Become party”;
3. It shall “contain any false statement”- a. “Relating to the consideration for such transfer or charge or”; b. “Relating to the person or persons for whose use or benefit it is really intended to operate”.

This offence is non-cognizable and bailable. This becomes compoundable when the person affected thereby due to the commission of this offence agrees for the same.

IV. Dishonest Or Fraudulent Removal Or Concealment Of Property

“424 Dishonest or fraudulent removal or concealment of property— Whoever dishonestly or fraudulently conceals or removes any property of himself or any other person, or dishonestly or fraudulently assists in the concealment or removal thereof, or dishonestly releases any demand or claim to which he is entitled, shall be punished with imprisonment of either description for a term which may extend to two years, or with fine, or with both”

Essentials

A person can be made liable for this offence-

1. If the accused “dishonestly or fraudulently”- a. “Conceals” or; b. “Removes any property of himself or any other person” or;
2. If the accused “dishonestly or fraudulently assists” in the- a. “Concealment” or; b. “Removal thereof” or;
3. If the accused “dishonestly releases”- a. “Any demand” or; b. “Any claim to which he is entitled”.

This offence is non-cognizable and bailable. This offence is compoundable only when the person or person affected thereby due to the commission of this offence agrees for the same.

Each of these sections deals with different types of offences under the same category. The difference is difficult to be made out but be understood only by paying attention to the essentials of each section. The common thing between these sections is the intention of the accused to be “dishonestly^[3] or fraudulently^[4]”. The Benami transactions are covered by section 423 of the penal code, but there is a separate act to deal with such cases under The Prohibition of Benami Transactions Act 1988^[5].

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^[1] Indian Penal Code 1860, ss 421-424

^[2] Indian Penal Code 1860, ch XVII

^[3] Indian Penal Code 1860, s 24

^[4] Indian Penal Code 1860, s 25

^[5] The Prohibition of Benami Transactions Act 1988, Act No 45 of 1988 (India)

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1. Indian Penal Code; Case Laws, Notes And Study Material
2. Study Material