IPC Section 402
π Section 402 IPC β Dishonest removal of property to prevent distribution among creditors
This section deals with dishonestly removing property to defeat the claims of creditors when a person owes debts or is about to be declared insolvent.
πΉ Textual Meaning
Whoever being entrusted with property, or having control over it, dishonestly removes or disposes of it with the intent to prevent it from being applied to satisfy the claims of creditors, is punishable under Section 402 IPC.
In simple terms: It punishes anyone who dishonestly hides, removes, or disposes of property to cheat creditors.
πΉ Key Ingredients of Section 402 IPC
Property involved
Any movable property over which the accused has control or possession.
Dishonest intention
The act must be done intentionally and dishonestly.
Intent to defeat creditors
The property must be removed with the purpose of preventing it from being used to pay debts.
Entrusted or controlled property
The accused must have lawful possession or control over the property (e.g., as an owner, agent, or trustee).
πΉ Punishment
Imprisonment: Up to 3 years, or
Fine, or
Both.
Section 402 is linked to criminal breach of trust, specifically in the context of creditors and insolvency.
π Examples
A person owes money to creditors and transfers his property to a friend secretly to avoid repayment.
Intent to defeat creditors β Section 402 IPC.
A trustee removes goods from a debtorβs warehouse to prevent their seizure by creditors.
Dishonest removal to defeat creditor claims β Section 402 IPC.
A business owner sells assets secretly to avoid paying debts to suppliers.
Punishable under Section 402 IPC.
πΉ Relation to Other Sections
| Section | Focus | Example |
|---|---|---|
| 402 | Dishonest removal to defeat creditors | Hiding assets from creditors |
| 403 | Dishonest misappropriation | Misappropriating entrusted money or goods |
| 406 | Criminal breach of trust | Misusing property entrusted by someone |
β
In short:
Section 402 IPC punishes anyone who dishonestly removes or disposes of property to prevent it from being used to satisfy creditorsβ claims, with imprisonment up to 3 years, fine, or both.
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