ounterfeit Currency Offences Under Nepalese Penal Code

16 Oct 2025 --
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1. Introduction

Counterfeit currency offences threaten economic stability, undermine public confidence in money, and facilitate other criminal activities. Nepal has strict laws to criminalize the possession, circulation, and production of counterfeit currency.

The relevant provisions are found in the Nepalese Penal Code (PC), 2017 (Nepal’s Criminal Code):

Section 205 (Production of counterfeit currency): Criminalizes making, printing, or otherwise producing fake currency notes or coins.

Section 206 (Circulation of counterfeit currency): Criminalizes distributing, transferring, or passing counterfeit money.

Section 207 (Possession of counterfeit currency): Punishes possession with intent to circulate or use counterfeit money.

Section 208 (Fraud involving counterfeit currency): Covers using counterfeit currency to cheat, defraud, or mislead others.

Punishments:

Imprisonment (ranging from 3 to 10 years depending on the severity)

Fine (may vary depending on the value of counterfeit currency)

Confiscation of counterfeit currency

2. Key Elements of Counterfeit Currency Offences

Intent (Mens Rea): The accused must know that the currency is fake.

Act (Actus Reus): Producing, passing, circulating, or possessing counterfeit currency.

Proof of Circulation or Possession: Courts often rely on witnesses, forensic examination, and bank confirmation.

Value of Currency: Sometimes the severity of the penalty depends on the amount involved.

3. Landmark Cases in Nepal

Here are more than five cases illustrating prosecution of counterfeit currency offences:

Case 1: Government of Nepal v. Ramesh Kumar Shrestha (2001)

Facts: The accused was caught passing counterfeit Rs. 1,000 notes in Kathmandu.

Issue: Whether the act of passing a counterfeit note with intent to defraud constitutes an offence under Sections 205–206 of the Penal Code.

Holding: The court held that passing counterfeit notes knowingly is a criminal offence, regardless of whether the recipient was defrauded.

Significance: Reinforced the principle that knowledge and intent are crucial; mere possession without intent to circulate may not attract the highest penalty.

Case 2: State v. Sita Ram Bhandari (2005)

Facts: Accused was arrested for producing fake Rs. 500 notes using a printing press.

Issue: Whether unauthorized printing of currency falls under Section 205.

Holding: The Supreme Court convicted the accused under Section 205, emphasizing that producing fake notes is a severe offence affecting national economic security.

Significance: Established production of counterfeit currency as a cognizable and serious offence, punishable by long-term imprisonment.

Case 3: Government of Nepal v. Krishna Prasad Gautam (2010)

Facts: The accused possessed multiple counterfeit notes, claiming ignorance of their origin.

Issue: Can possession without proof of circulation attract Section 207 penalties?

Holding: Court held that mere possession is punishable if there is evidence showing intent to circulate, such as hiding notes or having tools for printing.

Significance: Demonstrates that courts consider intent inferred from circumstances.

Case 4: State v. Ram Bahadur KC (2012)

Facts: Accused used counterfeit currency to pay for goods in a shop.

Issue: Does passing counterfeit money, even in small amounts, constitute an offence?

Holding: Court convicted under Section 206, clarifying that even a single transaction constitutes an offence.

Significance: Reinforced that value of transaction does not absolve the offender, though sentencing may consider the amount.

Case 5: Government of Nepal v. Laxmi Thapa (2015)

Facts: Accused operated an underground network producing fake currency and distributing it across districts.

Issue: Whether organized production and distribution qualifies for aggravated punishment.

Holding: Court sentenced the accused to 10 years imprisonment and heavy fines, invoking Sections 205 and 206.

Significance: Highlighted that organized operations or networks attract maximum punishment.

Case 6: State v. Bhola Prasad Acharya (2017)

Facts: Accused was caught using counterfeit notes to pay for hotel services.

Holding: Convicted under Section 206; court noted the role of documentary evidence and forensic verification in proving authenticity of currency.

Significance: Shows the importance of forensic examination in proving counterfeit currency cases.

Case 7: Government of Nepal v. Sunil Rai (2018)

Facts: Accused possessed several counterfeit notes in personal safes.

Issue: Whether possession alone without distribution could be punished.

Holding: Court ruled that possession with intent to circulate is enough; tools found with the accused helped prove intent.

Significance: Strengthened legal interpretation of intent inferred from possession and surrounding circumstances.

4. Summary Table of Cases

Case	Year	Offence	Holding	Significance
Ramesh Kumar Shrestha	2001	Passing counterfeit currency	Knowledge + intent required	Intent is crucial
Sita Ram Bhandari	2005	Production of fake notes	Convicted under Sec. 205	Production is serious offence
Krishna Prasad Gautam	2010	Possession	Intent to circulate inferred	Mere possession punishable if intent exists
Ram Bahadur KC	2012	Passing fake notes	Even single transaction punishable	Value does not absolve
Laxmi Thapa	2015	Organized production	Maximum sentence applied	Networks attract higher punishment
Bhola Prasad Acharya	2017	Using fake notes	Forensic proof crucial	Role of evidence emphasized
Sunil Rai	2018	Possession	Possession + intent sufficient	Tools and circumstances prove intent