Report No. 42

Chapter 12

Offences Relating to Currency Notes, Coins and Stamps

12.1. Introductory.-

Chapter 12 deals exhaustively in as many as 24 sections with offences relating to the counterfeiting, debasing or altering of coin, both Indian and foreign, and the trafficking in counterfeit or spurious coin. Analogous activities in respect of "stamps issued by the Government of India for the purpose of revenue" (including Indian postage stamps) and in respect of foreign postage stamps are covered in ten sections.

12.2. Forging of currency note.-Legislative history.-

Originally, the Penal Code did not make any specific provision relating to the counterfeiting of currency notes, Indian or foreign. The general provisions relating to forgery were considered applicable and sufficient to deal with such counterfeiters. This was perhaps natural at a time when coin played a much more vital and important part in the monetary system of the country than currency notes. Legislation relating to paper currency, however, goes back to 1861.

Between that year and 1923, there were as many as six Indian Paper Currency Acts, passed successively in 1861, 1871, 1882, 1905, 1910 and 1923. The last of these Acts was repealed by the Reserve Bank of India Act, 1934 when the duty and responsibility of issuing and regulating currency notes was entrusted to the Reserve Bank. In 1940, however, the Government of India assumed the power and authority to issue one rupee notes as legal tender in addition to the Reserve Bank notes under the Currency Ordinance, 19401.

Forging or counterfeiting of currency notes and bank notes, both Indian and foreign, and other related offences, like possessing counterfeit notes, using them as genuine, and possessing instruments material for forging such notes, were first brought into the Penal Code by the Currency Notes Forgery Act. 1919. Four sections, 489A to 489D, were added in Chapter 18, on the basis that these offences were closely allied with forgery and other offences relating to documents dealt with in that Chapter. (Section 489E was added during the last war by Act 6 of 1943 to deal with a comparatively trifling matter). In recent times, criminal Courts are much more concerned with prosecutions under these four sections than with prosecutions under all the 35 sections of Chapter 12 put together.

1. Although called on Ordinance, this law continues in force as a permanent law.

12.3. Chapter 12 to cover currency notes also.-

We propose that sections 489A to 489E should be put in Chapter 12 where they rightly belong. The heading of the Chapter should, in consequence, be changed to "Offences relating to Currency Notes, Coins and Stamps". We propose also that in view of their greater importance the sections relating to currency notes should come first.

12.4. Section 489.-"Currency notes or bank notes..-

Section 489A which is the principal section in this group punishes the counterfeiting of "Currency Notes or bank notes". While there is no definition of "Currency Notes" the expression "bank note" is defined in an explanation as "a promissory note or engagement for the payment of money to bearer on demand issued by any person carrying on the business of banking in any part of the world, or issued by or under the authority of any State or Sovereign Power, and intended to be used as equivalent to, or as a substitute for money".

This definition is comprehensive enough to cover all notes issued by the Reserve Bank of India or by the Government of India, which are used as money in the country, and also, notes issued by or under the authority of the Government of a Foreign State used as money in that State. Currency Notes, as commonly understood, are notes which are in current circulation as money or, in other words, which are legal tender, in the country in which they are issued.1 It does not appear that the intention or effect of the Explanation in section 489A is to cover any other type of bank notes, if at all it exists in a foreign country.

So far as India is concerned, since private persons are prohibited2 by the Reserve Bank of India Act, 1934 from issuing a Bill of Exchange, hundi, Promissory Note or engagement for the payment of money payable to bearer on demand, there can be no such "bank notes". We propose, therefore, to adopt a clear and simple definition of "currency notes" in place of the lengthy definition of "bank notes" in the existing Explanation, and to omit all reference to "bank notes" in section 489A and the following sections.

1. Cf. section 1(2) of the (U.K.) Counterfeit Currency (Convention) Act, 1935 which defines "currency notes" as including any "notes (by whatever name called) which are legal tender in the country in which they are issued".

2. See sections 31 and 32, Reserve Bank of India Act, 1934.

12.5. Punishment provision modified.-

The punishment prescribed at present for the offence of counterfeiting currency notes is imprisonment for life or imprisonment of either description upto ten years to which fine may be added. We consider that life imprisonment is not called for, but on the other hand, the possibility of imposing simple imprisonment for a number of years should not be allowed. The maximum punishment for the offence may be rigorous imprisonment for fourteen years and fine.

12.6. Section revised.-

The first section in the revised Chapter 12 will accordingly read.-

"230. Counterfeiting currency notes.- Whoever counterfeits, or knowingly performs any part of the process of counterfeiting, any currency notes shall be punished with rigorous imprisonment for a term which may extend to fourteen years, and shall also be liable to fine.

Explanation.- The expression 'currency notes" means

"(i) any currency notes of the Government of India;

(ii) any bank notes issued by the Reserve Bank of India; and

(iii) any notes (by whatever name called) issued by or on behalf of the Government of any country outside India which are legal tender in that country."

12.7. Sections 489B, 489C and 489D. -

Only a few formal changes are required in sections 489B, 489C and 489D, which will be numbered 231, 232 and 233 after they are transposed to Chapter 12. These sections will read:

"231. Using as genuine counterfeit currency note.- Whoever sells to, or buys or receives from, any other person, or otherwise traffics in or uses as genuine, any counterfeit currency notes, knowing or having reason to believe the same to be counterfeit, shall be punished with rigorous imprisonment for a term which may extend to fourteen years, and shall also be liable to fine.

232. Possession of counterfeit currency notes.- Whoever has in his possession any counterfeit currency note, knowing or having reason to believe the same to be counterfeit and intending to use the same as genuine or that it may be used as genuine, shall be punished with imprisonment of either description for a term which may extend to seven years, or with fine, or with both.

233. Making or possessing instruments or materials for counterfeiting currency notes.- Whoever makes, or performs any part of the process of making, or buys or sells or disposes of, or has in his 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 counterfeiting any currency note, shall be punished with rigorous imprisonment for a term which may extend to fourteen years, and shall also be liable to fine."

12.8. Section 489E.-

While section 489A makes the counterfeiting of currency notes punishable with imprisonment for life, section 489E imposes a small fine of not more than Rs. 100 on a person who makes a document "so nearly resembling a currency note as to be calculated to deceive" the unwary individual. It is-doubtful if this section has at present any practical use. However, we see no harm in retaining it, but we propose increasing the maximum fine under sub-section (1) to Rs. 200 and that under sub-section (2) to Rs. 500. The words "or bank note"' occurring in sub-section (1) and the marginal heading will be omitted.

12.9. Sections 230 to 25.-Distinction between "Indian coins" and other coins.-

We now proceed to consider the group of sections in Chapter 12, sections 230 to 254, which deal with offences relating to coins. A noticeable aspect of the scheme of these sections is the distinction drawn between 'coins' in general and 'Indian coins'. Apparently, the maker of the Code were of the view that the offences when committed in relation to Indian coins were more reprehensible than when they related to non-Indian coins. This is reflected in the elaborate method of providing two different sections for each distinct offence, one relating to 'Indian coins' and carrying a severe punishment, and the other relating to 'coins' with a comparatively lighter punishment.

12.10. Abolition recommended.-

This distinction was, no doubt, important at the time when the Code was first drawn up. There were then a number of Indian States some of which had their own coinage. This condition no longer exists. Counterfeiting of non-Indian Coins should no doubt continue to be punishable; but it is not necessary to have two sets of provisions to deal with Indian and non-Indian coins separately. We would, therefore, recommend that each pair of sections dealing with one particular offence be combined into one.