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BNS 2024ACTIVE FRAMEWORK

Section 321

Fraudulent Removal or Concealment of Property

Replaces colonial-era: IPC 421

BailableCognizable: Non-CognizableAny Magistrate

Reform Highlights

1

Renumbered from IPC 421 to BNS 321.

2

Same 2-year maximum preserved.

3

Covers transfers, concealment, and removals — all modes of asset stripping.

THE STATUTE

The Clause

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 may extend to two years, or with fine, or with both.

Legal Commentary

Section 321 criminalises asset stripping designed to defeat creditors — concealing, transferring, or moving assets to prevent their distribution among legitimate creditors in insolvency or execution proceedings. This provision is the criminal counterpart to fraudulent preference provisions in the Insolvency and Bankruptcy Code. Common scenarios: a debtor who secretly transfers property to family members just before a court decree is executed; a company director who strips corporate assets before declaring insolvency; or an individual who hides bank accounts and investments to frustrate debt recovery proceedings. The 'without adequate consideration' element distinguishes criminal transfers from genuine arm's-length transactions.

Case Simulations

"A businessman who transfers all assets to his wife just before the bank obtains a decree against him — Section 321."
"A company director who secretly moves corporate funds offshore before declaring insolvency — Section 321."

Expert Insights

Yes — if the transfer was made fraudulently without adequate consideration with intent to prevent creditors from recovering their dues, it constitutes an offence under Section 321.