Section 421 of Indian Penal Code, 1860 – Explained!

Legal Provisions of Section 421 of Indian Penal Code, 1860.

Dishonest or fraudulent removal or concealment of property to prevent distribution among creditors:

This section makes dishonest or fraudulent removal or concealment etc. of property to prevent distribution among creditors a punishable offence. It states that whoever either dishonestly or fraudulently removes, conceals or delivers to any person, or transfers or causes to be transferred to any person, any property without adequate consideration, with the intention thereby to prevent, or with the knowledge that it is 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 simple or rigorous imprisonment for a term extending up to two years, or with fine, or with both.

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ADVERTISEMENTS:

The section requires the proof of dishonest or fraudulent intention on the part of the offender. With such intention he must either remove or conceal or deliver to any person, or transfer or cause to be transferred, any property without adequate consideration. By such act he must have intention to prevent or must have knowledge that it is likely that he will thereby prevent the distribution of that property according to law either among his creditors or among the creditors of any other person.

This part of the Code under sections 421 to 424, both inclusive, deal with fraudulent conveyances referred to in section 53, Transfer of Property Act and the Presidency Towns and Provincial Insolvency Acts. The use of the word ‘property’ shows that the section is applicable to both movable and immovable property.

The offence under this section is non-cognizable, bailable and compoundable when permitted by the court trying the case, and is triable by any magistrate.