Holding

A conviction under Sections 489‑B and 489‑C of the IPC requires proof that the accused knew or had reason to believe the notes were forged or counterfeit, and without such mens rea the charge cannot stand.

Summary

The appellant, Umashankar, was charged with circulating counterfeit currency after paying for mangoes with a fake Rs 100 note and police recovered additional counterfeit notes and related items from his possession. He was convicted under IPC sections 489‑B (using counterfeit notes as genuine) and 489‑C (possession of counterfeit notes) and sentenced, a conviction later reduced by the High Court. On appeal, the Supreme Court examined whether the prosecution had proved the essential mens rea—knowledge or reason to believe the notes were counterfeit—required under these sections. The Court held that the trial court’s presumption of knowledge was not supported by evidence and violated Section 4 of the Evidence Act, and that no specific questioning under Section 313 of the CrPC was made. Consequently, the convictions under sections 489‑B and 489‑C were set aside and the appellant was acquitted. The appeal was allowed.

Issues considered

Whether knowledge or reason to believe that currency notes are forged or counterfeit is a necessary element for offences under IPC sections 489‑B and 489‑C.
Whether a presumption of such knowledge can be drawn in the absence of direct evidence under Section 4 of the Evidence Act.
Whether the failure to put a specific question about the counterfeit nature of the notes to the accused under Section 313 of the CrPC vitiates the conviction.

Legislation cited

Code of Criminal Procedure, 1973s. 313
Indian Evidence Act, 1872s. 4
Indian Penal Code, 1860s. 489-A, s. 489-B, s. 489-C

Subjects

counterfeit currencymens reaIPC 489-BIPC 489-Cevidencepresumptioncriminal lawpossessionconvictionappeal

Judgment

A UMASHANKAR
v.
STATE OF CHHATTISGARH

OCTOBER 5, 2001

B [SYED SHAH MOHAMMED QUADRI AND S.N. PHUKAN, JJ.]

Penal Code, 1860:

Ss.4898 and 489C-Accusedfound u; have circulated fake currency note
in market and similar currency notes recoveredfrom his possession-Prosecuted
c u!ss. 489A, 4898 and 489C-Convicted and sentenced u!ss. 4898 and 489C by
trial court-Conviction affirmed by High Court but sentence reduced-Held,
means rea of offences under ss. 4898 and 489C is "knowing or having reason
to believe the currency notes or bank notes to be forged or·counteJ;feit"-
Without such mens rea selling, buying or receiving from another person or
D otherwise trafficking i~i or using as genuine forged or counterfeit currency
notes or bank notes is not enough to constitute offence uls. 4898-So.also in
the absence of the said mens rea possessing or even intending to use such notes
is not sufficient to make out a case u!s. 489C-No material is brought on record
to show that accused had the requisite mens rea-"-The presumption drawn by
E trial court is not warranted u/s. 4 of Evidence Act-It is also not shown that any
specific question with regard to currency notes being fake or counterfeit was
put to accused in his examination u!s. 313 of Code of Criminal Procedure-
Charges framed ulss. 4898 ~nd 489C are not proved-Conviction and sentence
set aside-Evidence Act, 1872-S.4-Code of Criminal Procedure, 1973-
S.313-Criminal Law-Mens rea.
F
CRIMINAL APPELLATE JURISDICTION : Criminal Appeal No. 1024
of 2001.

From the Judgment and Order dated 2.11.99 of the Madhya Pradesh
High Court in Cr!. A. No. 39 of 1992.
G
Pramod Swarup, Ms. Pareena Swarup arid Praveen Swarup for the
Appellant.

Ms. Gitanjali Mohan for Prakash Shrivastava for the Respondent.

H The following Order of the Court was delivered :
646
UMASHANKER v. STATE 647
Leave is granted. A
The convict, in Session Trial No. 26 of 1991 on the file of the learned
Sixth Additional Sessions Judge, Bilaspur, under Sections 489-B and 489-C of
the Indian Penal Code (for short, 'l.P.C.') who was sentenced to three years'
rigorous imprisonment on each count, is in appeal from the judgment of the
High Court of Madhya Pradesh at J abalpur in Criminal Appeal No. 39 of 1992, B
allowing it in part on November 11, 1999. The High Court upheld the conviction
but reduced the sentence from three years' rigorous imprisonment to two years'
rigorous imprisonment under Section 489-B and one year's rigorous
imprisonment under Section 489-C.

Heard Mr. Pramod Swarup, the learned counsel appearing with Mr.
c
Praveen Swarup, Advocate-on-.Record for the appellant and Ms. Gitanjali
Mohan, the learned counsel appearing with Mr. Prakash Shrivastava, Advocate-
on-Record for the respondent-State.

The gravamen of the charge against the appellant is that on May 25, 1990 D
at about 10 p.m. having purchased one kilo gram of mango costing Rs. 5 he
paid a fake currency-note of Rs. 100 to P.W. 4 who doubted its genuineness.
She showed it to P.Ws. 2 and 7 who also said that it was a fake currency-note.
He was handed over to police who recovered 13 more such fake currency-notes
from him. Further some papers, refills or different colours and scissors were
also r...covered from his house. On these facts charges were framed against him E
under Sections 489-A, 489-B and 489-C of l.P.C.

After considering the evidence on record the learned trial judge acquitted
him of charge under Section 489-A but found him guilty of charges under
Sections 489-B and 489-C of 1.P.C. and sentenced him for the periods noted
F
above. On appeal the High Court confirmed the conviction but reduced the
sentence, afore-mentioned.

The conviction of the appellant by the trial court as confirmed by the
High Court, is under Section 489-B and Section 489-C of l.P.C., which read

- as under:

"489-B. Using as genuine, forged or counteifeit currency-notes or
G

bank-notes. -

Whoever sells to, or buys or receives from, any other person, or
otherwise traffics in or uses as genuine, any forged or counterfeit . H
648 SUPREME COURT REPORTS (2001] SUPP. 3 S.C.R.
A currency-note or bank-note, knowing or having reason to believe the
same to be forged or counterfeit, shall be punished with [imprisonment
for life], or with imprisonment of either description for a term which
may extend .to ten years, and shall also be liable to fine.

489-C. Possession of forged or counterfeit currency notes or bank-
B notes.-

Whoever has in his possession any forged or counterfeit currency-note
or bank-note, knowing or having reason to believe the same to be
forged or counterfeit and intending to use the same as genuine or that
it may be used as genuine, shall be punished with imprisonment of
c either description for a term which may extend to seven years, or wit.h
fine, or with both."

·Sections 489-A to 489-E deal with various economic offences inrespect
of forged or counterfeit currency-notes or bank-notes. The object of Legislature
D . in enacting these provisions is not only to protect the economy of the country
but also to provide adequate protection to currency-notes and bank-notes. The
currency-notes are, inspite of growing accustomedness to the credit cards
system, still the backbone of the commercial transactions by multitudes in our
country. But these provisions are not meant to punish unwary possessors or
users.
E
A perusal of the provisions, extracted above, shows that mens rea of
offences under Section 489-B and 489-C is, "knowing or having reason to
believe the currency-notes or bank notes to be forged or counterfeit". Without
the afore-mentioned mens rea selling, buying or receiving from another person
F or otherwise tranfficking in or using as genuine forged or counterfeit currency-
notes or bank-notes, is not enough to constitute offence under Section 489-B
of l.P.C. So also possessing or even intending to use any forged or counterfeit
currency-notes or bank-notes is not sufficient to make out a case under Section
489-C in the absence of the mens rea, noted above. No material is brought on
record by the prosecution to show that the appellant had the requisite mens rea.
....
G The High Court, however, completely missed this· aspect. The learned trial
judge on the basis of the evidence of P.W.2, P.W.4 and P.W. 7 that they were
able to make out that currency note alleged to have been given to P.W. 4, was
fake "presumed" such a mens rea. On the date of the incident the appellant was
said to be 18 year old student. On the facts of this case the Presumption drawn
H by the trial court is not warranted under Section 4 of the Evidence Act. Further
UMASHANKER v.STATE 649
it is also not shown that any specific question with regard to the currency-notes A
being fake or counterfeit was put to the appellant in his examination under
Section 313 of Criminal Procedure Code. On these facts we have no option but
to hold that the charges framed under Sections 489-B and 489-C are not
proved. We, therefore, set aside the conviction and sentence passed on the
appellant under Sections 489-B and 489-C of l.P.C. and acquit him of the said
B
charged [see : M. Mammutti v. State of Karnataka, AIR (1979) SC 1705.

Accordingly, the order under challenge of the High Court dated November
2, 1999 in Criminal Appeal No. 39 of 1992 is set aside and the appellant is
acquitted of the charges framed against him.

The appeal is thus allowed.
c
R.P. Appeal allowed.