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BNS 2024ACTIVE FRAMEWORK

Section 320

Fraudulent Execution of Deed of Transfer Containing False Statement of Consideration

Replaces colonial-era: IPC 423

BailableCognizable: Non-CognizableAny Magistrate

Reform Highlights

1

Renumbered from IPC 423 to BNS 320.

2

Same 2-year maximum and non-cognizable status preserved.

3

Covers both understated consideration and false beneficiary identification.

THE STATUTE

The Clause

Whoever dishonestly or fraudulently signs, executes or becomes a party to any deed or instrument which purports to transfer or subject to any charge any property, or any interest therein, and which contains any false statement relating to the consideration for such transfer or charge, or relating to the person or persons for whose use or benefit it is really intended to operate, shall be punished with imprisonment of either description for a term which may extend to two years, or with fine, or with both.

Legal Commentary

Section 320 criminalises a specific form of document fraud common in property transactions: executing a deed of transfer that contains false statements about the consideration (purchase price) or the intended beneficiaries. This is most commonly seen in property transactions where: (1) the stated sale price is artificially low to evade stamp duty (understating consideration); (2) the transfer is structured to benefit a person other than who is stated in the deed (benami transactions); or (3) the deed falsely states who is receiving the property to conceal the true beneficial owner. The provision targets all parties who sign or execute such documents — buyer, seller, and intermediaries who knowingly participate in the fraudulent documentation.

Case Simulations

"A property sold for ₹1 crore but the deed states ₹30 lakh to evade stamp duty — Section 320 for both parties."
"A property registered in someone's name while the deed falsely states it's for another person's benefit — Section 320."

Expert Insights

Yes — stating a false lower consideration in a deed of transfer to evade stamp duty is an offence under Section 320.