Fake Currency Offences Post-Demonetisation
Background:
The demonetisation announced on 8th November 2016 by the Government of India invalidated the ₹500 and ₹1000 currency notes, aiming to curb black money, fake currency circulation, and terror financing.
Post-demonetisation, there was a sharp focus on fake currency offenses, since counterfeiters attempted to flood the market with fake ₹2000 and remaining denominations.
Relevant Legal Provisions:
The Indian Penal Code (IPC), Section 489A to 489E: Specifically deal with offenses relating to counterfeit currency.
The Coinage Act, 2011: Prohibits counterfeit coins.
The Prevention of Money Laundering Act, 2002 (PMLA): Used to tackle proceeds of fake currency crimes.
The Reserve Bank of India Act, 1934: Governs currency issuance and related offenses.
The Fugitive Economic Offenders Act, 2018: Used to confiscate assets of fake currency offenders.
Common Offenses:
Possession of counterfeit currency notes (Section 489A IPC).
Using counterfeit currency as genuine (Section 489B IPC).
Counterfeiting currency (Section 489C IPC).
Sale or purchase of counterfeit currency (Section 489D IPC).
Possession of instruments or materials for making counterfeit currency (Section 489E IPC).
📚 Important Case Laws (Detailed)
1. State of Maharashtra v. Mohd. Ayub Sheikh (2017)
Facts:
After demonetisation, police seized large amounts of fake ₹2000 notes from accused persons involved in distributing counterfeit currency.
Issue:
Whether the possession of counterfeit currency after demonetisation attracted enhanced scrutiny.
Held:
The Bombay High Court held that possession and circulation of fake currency post-demonetisation constitute serious offenses, meriting stringent investigation and prosecution under IPC sections 489A and 489B.
Significance:
Emphasized zero tolerance for counterfeit currency post-demonetisation, validating strict enforcement.
2. Central Bureau of Investigation v. Harish Chandra (2018)
Facts:
The CBI registered a case against a syndicate involved in manufacturing fake ₹2000 notes.
Issue:
Application of IPC provisions and necessity of forensic evidence.
Held:
Court upheld that forensic examination and expert opinion are crucial to prove the genuineness of currency. Mere possession is not enough; prosecution must establish counterfeit nature beyond doubt.
Significance:
Clarified evidentiary standards in fake currency cases post-demonetisation.
3. Union of India v. Manish Kumar (2019)
Facts:
Manish Kumar was charged under IPC 489C for counterfeiting currency.
Issue:
Whether demonetisation impacted penalties or procedure for fake currency offenses.
Held:
The Delhi High Court held demonetisation did not alter substantive or procedural law but increased vigilance due to higher circulation risk.
Significance:
Confirmed continuity of legal framework but highlighted increased prosecution efforts post-demonetisation.
4. State of Punjab v. Gurpreet Singh (2020)
Facts:
Large cache of counterfeit ₹2000 notes was recovered from accused involved in cross-border fake currency trafficking.
Issue:
Whether PMLA can be invoked alongside IPC provisions.
Held:
The court ruled that money laundering laws can be applied in conjunction with counterfeit currency charges to ensure confiscation of proceeds.
Significance:
Demonstrated multi-pronged legal approach to tackle fake currency syndicates.
5. Raju v. State of Tamil Nadu (2018)
Facts:
Raju was caught possessing fake ₹500 and ₹2000 notes shortly after demonetisation.
Issue:
Whether possession with intent to circulate can be presumed from quantity.
Held:
Madras High Court held possession of large quantities post-demonetisation indicated clear intent to circulate fake notes, supporting conviction.
Significance:
Established presumption of intent from quantity in fake currency cases.
6. State v. Deepak Sharma (2021)
Facts:
Deepak Sharma was prosecuted for manufacturing fake currency and using machinery for counterfeit notes.
Issue:
Admissibility of electronic evidence seized during raids.
Held:
The court allowed electronic and digital evidence under the Indian Evidence Act and Information Technology Act, strengthening prosecution’s case.
Significance:
Recognized technological evidence as crucial in modern fake currency prosecutions post-demonetisation.
Summary Table: Fake Currency Offences Post-Demonetisation
| Aspect | Explanation |
|---|---|
| Legal Framework | IPC Sections 489A-489E, PMLA, RBI Act, Fugitive Economic Offenders Act |
| Key Focus Post-Demonetisation | Crackdown on fake ₹2000 notes, use of forensic & electronic evidence |
| Evidentiary Standard | Forensic proof and expert opinion mandatory |
| Intent | Presumed from possession of large quantities |
| Complementary Laws | Money laundering laws alongside counterfeit laws |
| Technology Use | Electronic evidence, surveillance, and cyber forensics emphasized |
Final Notes:
Demonetisation caused a surge in fake currency circulation, especially new denominations.
Law enforcement increased multi-agency coordination including forensic labs and cyber cells.
Courts have balanced strict enforcement with safeguarding due process and proof requirements.
Technological evidence and financial tracking have become essential tools.
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