Calcutta High Court rules that possession of fake currency isn’t automatic trafficking under 489B IPC, stressing mens rea. | The Legal Observer
A Larger Bench of the Calcutta High Court has ruled that mere possession of Fake Indian Currency Notes (FICN) cannot automatically be treated as “trafficking” under Section 489B IPC.
Larger Bench Rejects Automatic Presumption Under 489B IPC
In a significant judgment refining legal standards for counterfeit currency offences, a Larger Bench of the Calcutta High Court has clarified that mere possession of Fake Indian Currency Notes (FICN) — regardless of the number of notes recovered — does not automatically constitute ‘trafficking’, nor does it justify drawing the statutory presumption under Section 489B of the Indian Penal Code (IPC).
The Court stressed that mens rea remains central, and the prosecution must establish that the accused knew the notes were counterfeit and intended to use, circulate, or traffic them. This ruling corrects earlier uncertainty, especially within trial courts, about whether the recovery of a substantial quantity of fake notes alone implied criminal intent.
Readers can track similar developments in the National News section of The Legal Observer (https://thelegalobserver.com/category/news/national/).
Background of the Case: Why a Larger Bench Was Constituted
The reference to a Larger Bench arose from conflicting earlier judgments. In certain cases, courts had suggested that large recoveries of fake currency automatically created a presumption of trafficking, while others insisted that the prosecution must still prove knowledge and intent.
The case before the Larger Bench involved an accused from rural Bengal, arrested after police recovered multiple notes later confirmed as counterfeit. Trial courts and a prior Division Bench differed on whether such possession shifted the burden onto the accused under 489B IPC. To eliminate inconsistencies, the matter was placed before a three-judge Larger Bench.
The questions referred included:
- Whether possession of fake currency, by itself, permits a presumption of trafficking under Section 489B IPC.
- Whether quantity of counterfeit notes can substitute proof of mens rea.
- Whether earlier judgments that relied heavily on quantity were good law.
What the Court Held: Mens Rea Cannot Be Presumed
The High Court made a clear distinction:
- 489B IPC deals with using or trafficking counterfeit currency, which requires knowledge + intention to circulate.
- 489C IPC deals with mere possession of counterfeit currency, where the standard for proving intent is different and less stringent.
The Larger Bench held:
- Possession of FICN does not automatically escalate a case from 489C to 489B.
- The prosecution must independently prove the accused intended to use, pass off, or traffic the notes.
- Mere recovery, even in bulk, cannot replace proof of mental element.
This is in line with earlier Supreme Court guidance that criminal liability must rest on clear evidence of intention and cannot be inferred solely from circumstances that merely arouse suspicion.
Readers may explore detailed commentary on such rulings in the Insight Section of The Legal Observer (https://thelegalobserver.com/category/views/insight/).
How the Judgment Departs From Earlier Views
Some earlier decisions had treated possession of large quantities of fake currency as “quasi-conclusive evidence” of trafficking, shifting the burden onto the accused.
The Larger Bench clarified that such interpretations were inconsistent with criminal jurisprudence, which places the burden squarely on the prosecution to prove guilt beyond reasonable doubt. The Court noted that:
- Quantity may be indicative, but never determinative.
- Automatic presumption under 489B IPC breaches constitutional protections unless the statute expressly allows it — which it does not.
Thus, the ruling overrules earlier case law that blurred the lines between 489B and 489C IPC.
Expert Opinions: Why the Judgment Matters
Legal experts welcomed the ruling for reinstating doctrinal clarity.
A criminal law professor from a leading national university noted that the judgment “realigns counterfeit currency offences with core principles of mens rea,” ensuring that accidental or ignorant possession is not equated with organised criminal activity.
A former public prosecutor added that the ruling helps prevent “overcharging” by investigative agencies, which would sometimes invoke 489B IPC simply due to quantity.
According to economic crime specialists, the judgment may also improve conviction rates, as prosecutions will now require clear investigation, including tracing the source of the fake currency and establishing the accused’s role in distribution networks.
Viewers may follow expert panel discussions on such criminal law developments via The Legal Observer’s official YouTube channel: https://www.youtube.com/@thelegalobserver.
Broader Implications for Counterfeit Currency Investigations
The ruling may influence investigative practices across India. Police are expected to:
- Document how and from whom the notes were obtained
- Gather proof of intent to circulate FICN
- Avoid relying solely on the quantity of notes
- Use forensic and surveillance tools to establish trafficking networks
The Court also encouraged the prosecution to present comprehensive evidence, noting that mere seizure reports are not enough to meet the threshold for 489B IPC.
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