BNS Section 320: Dishonest Or Fraudulent Removal Or Concealment Of Property To Prevent Distribution Among Creditors

Definition of BNS Section 320

Section 320 of the Bharatiya Nyaya Sanhita (BNS), 2023 states:

Whoever dishonestly or fraudulently removes, conceals or delivers to any person, or transfers or causes to be transferred to any person, without adequate consideration, any property, intending thereby to prevent, or knowing it to be likely that he will thereby prevent, the distribution of that property according to law among his creditors or the creditors of any other person, shall be punished with imprisonment of either description for a term which shall not be less than six months but which may extend to two years, or with fine, or with both.

Explanation and Illustration of Section 320

This section is applicable to any person within the sovereign borders of India, whether citizen, resident or otherwise. It deals with the offence of concealing property to avoid paying dues. Let us break down the section to get a better understanding of it.

• Offence

  Whenever a person fails to pay or repay a creditor as per the terms that were agreed at the time of providing the credit, then it is the duty of that person to liquidate any asset in his or her possession so as to meet the obligation of the creditor. And if he or she fails to do so, then a court may appoint an official liquidator to seize and liquidate the asset by force. So when a person purposely performs an action that prevents the property from being seized or liquidated, it shall be considered a crime under the provisions of this section. Here, there is a specific description of the actions that shall be considered as concealment of property. They are:

  • Removing a property
  • Concealing a property
  • Delivering the property to any person
  • Transferring or causing to transfer property to any person

• Now the actions above are not offences on their own. There are certain conditions or circumstances under which they become an offence. If a person owes money to creditors and is not in a position to pay them back, and under these circumstances performs any of the above actions, then it may be an offence under this section. If a person transfers or delivers a property to someone in exchange for adequate consideration for the property, then it is not a crime because the proceeds from the transaction can be used to repay the creditors. It is when such an action is performed without any adequate consideration, then it becomes suspect for such an offence.
  
  Further, it must be understood, that the above actions will still not be considered a crime if the person has other property that can be liquidated to pay the creditors. It becomes an offence only when the above actions prevent the liquidator from generating enough money to pay off the creditors.
  
  So when a person possesses certain property that can be liquidated to pay off such person's debts, and the person intentionally makes such property unavailable with the intent of preventing the repayment of the debts, then it shall be considered as an offence under the provisions of this section.

• Punishment

  Any person who disposes of any property in an inappropriate or unusual manner in order to prevent liquidation of such property for repayment of debts shall be punished with imprisonment for a term which shall not be less than six months but which may extend to two years, or with fine, or with both.

• The above actions may not be an offence under this section if:

  • The offender is forced or coerced into performing the offence
  • The offender is a minor or not of sane mind.

• However, there may be other sections under the BNS under which the above actions can be prosecuted and while they may be disqualified under the provisions of this section, such actions will still be punishable under the provisions of those respective sections of the BNS.

• Illustration

  A, knowing that he cannot repay his debts and that his house would be liquidated for repayment of such debts decides to transfer the property in the name of his cousin brother for no consideration six months before the payment becomes due. A is an offender under the provisions of this section. However, if it is later found that A has other property to pay off the debt and that he had transferred the house for other reasons, then it shall not be considered a crime under the provisions of this section as the transfer of property does not prevent the repayment to creditors.

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