Section 321 BNS: Dishonestly or fraudulently preventing debt being available for creditors

Bharatiya Nyaya Sanhita, 2023

Section 321 BNS at a Glance

Section 321 BNS deals with dishonestly or fraudulently preventing debt being available for creditors. It is bailable and non-cognizable, triable by any Magistrate; it replaced Section 422 IPC on 1 July 2024.

Punishment

Imprisonment of either description for a term which may extend to two years.

Bailable ⓘNon-Cognizable ⓘCompoundable ⓘ🏛️ Any Magistrate ⓘ
IPC Equivalent

Section 422 →

Section 321 BNS Bare Act Text

321. Dishonestly or fraudulently preventing debt being available for creditors

Whoever dishonestly or fraudulently prevents any debt or demand due to himself or to any other person from being made available according to law for payment of his debts or the debts of such 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.

Source: Section 321, Bharatiya Nyaya Sanhita, 2023

Section 321 BNS in Simple Words

Section 321 of the Bharatiya Nyaya Sanhita (BNS) deals with dishonestly or fraudulently preventing any debt or demand due to oneself or to another person from being made available according to law for the payment of one's own debts or the debts of that other person. Rather than covering the hiding of physical goods, this provision targets conduct where a person keeps receivables or money claims owed to them out of the reach of creditors.

This section matters where an enforceable debt or demand exists and can lawfully be used or attached to satisfy creditors, but the accused dishonestly releases, writes off, or diverts that claim to defeat recovery. The prosecution must prove dishonest or fraudulent intent.

In practice, this provision is used in insolvency and debt recovery disputes where a debtor colludes with their own debtors or executes sham discharges so that incoming funds cannot be reached by creditors.

Ingredients of Section 321 BNS

  • Existence of a debt or demand due to the accused or another person
  • Availability of that debt or demand according to law for satisfaction of debts
  • Prevention of that availability by the accused acting dishonestly or fraudulently
  • Punishment under Section 321 BNS of imprisonment of either description for up to two years, or fine, or both

Punishment Under Section 321 BNS

Imprisonment

Imprisonment of either description for a term which may extend to two years.

Fine

The court may impose fine alone, or fine in addition to imprisonment.

Bailable ⓘNon-Cognizable ⓘCompoundable ⓘ🏛️ Any Magistrate ⓘ

Dishonestly or fraudulently preventing a debt or demand from being made available for creditors carries imprisonment of either description up to two years, or fine, or both.

Example of Section 321 BNS

Varun owed substantial sums to creditors following a failed distribution venture in Meerut, while simultaneously holding a legally enforceable receivable of five lakh rupees due from a debtor. Rather than permitting his creditors to attach the receivable through execution proceedings, Varun colluded with the debtor to execute a receipt recording the debt as extinguished without consideration. Varun acted dishonestly to prevent the receivable from being made available according to law to pay his creditors. Varun is punishable under Section 321 BNS.

When Section 321 BNS Does Not Apply

  • No enforceable debt or demand was legally due to the accused or to the other party
  • The debt was compromised or adjusted in good faith in settlement of a genuine commercial dispute
  • The accused had no dishonest or fraudulent intention in releasing or settling the account
  • The receivable was delayed or withheld by third parties without any collusive or obstructive act by the accused

Section 321 BNS in the IPC (Previous Law)

Section 321 BNS replaces Section 422 IPC from the old criminal code.

Section 422 IPC corresponds to Section 321 BNS. Section 321 BNS reproduces the text and penalties of Section 422 IPC without substantive change, retaining imprisonment of either description for a term extending up to two years, or with fine, or with both, with no mandatory minimum period of imprisonment. The provision sits in Chapter XVII of the Bharatiya Nyaya Sanhita, 2023 under the heading Of fraudulent deeds and dispositions of property.

View IPC Section 422 →

FAQs on Section 321 BNS

Does Section 321 BNS apply if I settle or waive a debt owed to me?▼

Not automatically. Compromising, settling, or releasing a debt owed to you does not attract this section unless it was done dishonestly or fraudulently to stop that debt or demand from being available according to law to pay creditors.

Under Section 321 BNS, can a debtor be punished even if no money was actually lost by the creditor?▼

Yes, the offence focuses on dishonestly or fraudulently preventing a debt or demand due to the accused or another person from being made available according to law for payment of creditors.

Is the offence under Section 321 BNS bailable?▼

Yes, it is generally bailable. That means the accused has a right to seek bail, subject to the court's procedure.

How is Section 321 BNS different from cheating?▼

Cheating involves deceiving someone to induce them to deliver property or act to their detriment. Section 321 BNS applies where a person dishonestly or fraudulently prevents a debt or demand due to themselves or another person from being available under law to pay creditors.

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Disclaimer: This is for informational purposes only. Always consult a qualified advocate for legal advice.

Sources: Bare Act Text, Bharatiya Nyaya Sanhita, 2023 · Last updated: 16 Oct 2026 ·