On June 10, 2020, six people in Pune were arrested for scamming people with fake notes. The counterfeit notes included not only Indian Rupees but also the American Dollar. Sources say that the notes totalled around ₹87 Crores.
Officials stated that the planning for this scam began during demonetization in 2016. Most of the notes had “Children’s Bank of India” printed on them. In addition to this, the notes seized included notes of denomination of ₹1000. However, they have been out of circulation for the past four years.
This isn’t the first time India has faced the issue of Fake Indian Currency Note (FICN) circulation. There are reports of such incidents almost every year. According to the National Crime Records Bureau ₹2000 notes comprised of 56% of the fake notes seized in India after demonetization.
Moreover, reports for 2017-2018 stated that they seized counterfeit money worth ₹46 Crores. Of this, Gujarat reported the highest numbers of counterfeit currency notes in 2017.
What are the Legal Aspects of Counterfeiting Currency?
Such offences are punishable under the Indian Penal Code from Sections 498-A to 498-E.
Section 498-A
Under this section, a person is liable if he counterfeits currency notes or banknotes. The point to note is that the person is doing so knowingly, hence involving mens rea. The offenders can get imprisoned for life or a term extending up to ten years and with a fine.
Section 498-B
Under this section, any person who uses such counterfeit currency as genuine currency with the knowledge that such currency is counterfeit will be punished. As a result, they can get imprisonment for life or a term that extends up to ten years and also a fine.
Section 498-C
This section talks about the possession of counterfeit currency. The person must know that it is counterfeit. The person must have an intention to use the counterfeit currency as a genuine one. Its punishment can extend up to seven years in prison or a fine or both.
Section 498-D
Any person who possesses the material or instruments with the knowledge to make such counterfeit notes will be punished. They can get imprisonment for life or a term that extends up to ten years and will be liable to pay a fine.
Section 498-E
This Section is further divided into three subsections. Under Subsection (1), if any person makes or delivers another any document that resembles currency notes, with a resemblance that can deceive the receiver of such currency or document to believe that it is not counterfeit, he/she shall be punished with a fine of ₹100.
Under Subsection (2), if the names of any person appear on such a document as mentioned above, they have to be answerable to the Police. The Police are to ask whereabouts like the name and address of the person who made the document. However, if the person in possession of such a document fails to answer the Police, they can be liable for a fine up to ₹200.
Under Subsection (3), if the name of a person appears on any documents as mentioned under subsection (1), he shall be held liable for the same unless the contrary is proven. Hence, the Police will presume that the person in possession is the one who indulged in counterfeiting unless the contrary is proven.
How Can Unlawful Activities (Prevention) Act Help?
Note: This Act is not applicable in the present case. This paragraph is only intended for educational purposes.
- This Act will only be applicable counterfeiting is done for financing terrorist activities.
- Furthermore, the Central Government has the authority to declare an association unlawful. It has this power under Section 3 of the Act.
- Funding such terrorist organizations can lead to imprisonment of up to five years. It can extend up to life imprisonment along with a fine as per Section 17.
What does the Road Ahead Seem Like?
- Amendments in the Indian Penal Code are much needed. Fines of ₹100 or ₹200 cause no deterrence. They drafted the code in 1860. Thus, the penalties were suitable for that era. However, there needs to be a drastic increase in the penalties for them to have a deterrent effect now.
- The Council of Scientific Research, along with National Physics Laboratory, have developed a bi- luminescent security ink that will help curb the FICN.
- The new ink can become a key security check. According to RBI, ₹500 notes accounted for 121% of duplication, and ₹2000 accounted for 21.9% of duplication in 2018-2019.
- The Government of India has also taken certain initiatives to curb the spread of fake notes. Some are the FCORD or the FICN Coordination group and TFFC or the Terror Funding and Fake Currency Cell.
- Besides these factors, low conviction rates also lead to the undesired effect. India reported it’s first life imprisonment conviction for counterfeiting currency in 2018.
- Lastly, such counterfeits are not only illegal but also hamper the nation’s economy. It is necessary to further stringent the laws in this aspect.
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