Section 421 IPC: Dishonest or fraudulent removal or concealment of property to prevent distribution among creditors

Indian Penal Code, 1860

Section 421 IPC at a Glance

Section 421 IPC deals with dishonest or fraudulent removal or concealment of property to prevent distribution among creditors. It is bailable and non-cognizable, triable by any Magistrate; from 1 July 2024 it is replaced by Section 320 BNS.

Punishment

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

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

Section 320 →

Section 421 IPC Bare Act Text

421. Dishonest or fraudulent removal or concealment of property to prevent distribution among creditors

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.

Source: Section 421, Indian Penal Code, 1860

Section 421 IPC in Simple Words

Section 421 of the Indian Penal Code (IPC) punishes dishonest or fraudulent removal, concealment, delivery, or transfer of property without adequate consideration to prevent its legal distribution among creditors. Whoever commits this offence is punished with imprisonment of either description for a term which may extend to two years, or with fine, or with both.

Under the First Schedule to the Code of Criminal Procedure, 1973, the offence is non-cognizable, bailable, and triable by any Magistrate. The offence is compoundable without the permission of the court by the affected creditors under Section 320(1) CrPC.

Ingredients of Section 421 IPC

  • The accused removed, concealed, or delivered to any person, or transferred or caused to be transferred to any person, any property
  • The transfer or delivery of property was made without adequate consideration
  • The accused acted dishonestly or fraudulently within the statutory definitions of those terms
  • The act was committed intending to prevent, or knowing that it was likely to prevent, the distribution of that property according to law among the creditors of the accused or of any other person

Punishment Under Section 421 IPC

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 ⓘ

Dishonest or fraudulent removal or concealment of property to defeat creditors carries imprisonment of either description up to two years, or fine, or both.

Example of Section 421 IPC

In 2017 in Surat, Jignesh defaulted on large loans taken from several banks for his diamond-polishing unit, and insolvency proceedings were initiated to distribute his assets among his creditors. Before the receiver could take possession, Jignesh dishonestly removed his laser-cutting machines and transferred his stock of polished gems to his friend Paresh without adequate consideration. Jignesh acted with the intention of preventing that property from being distributed according to law among his creditors. Jignesh is punishable under Section 421 IPC.

When Section 421 IPC Does Not Apply

  • The debtor sold or transferred the assets in good faith for full and adequate market consideration.
  • The person moved or stored the goods for routine business operations or safekeeping without any dishonest or fraudulent intent.
  • The disposition of property was not intended and was not known to be likely to prevent lawful distribution among creditors.
  • The person had no creditors whose legal right to distribution of property was affected by the transfer.

Section 421 IPC in the BNS

Section 421 IPC is now covered under Section 320 BNS.

Section 421 IPC corresponds to Section 320 BNS. While the elements of the offence regarding fraudulent transfer or concealment of property without adequate consideration remain unchanged, Section 320 BNS introduces a minimum term of imprisonment where imprisonment is awarded, specifying a term which shall not be less than six months but which may extend to two years, or with fine, or with both. Under Section 421 IPC, no statutory minimum period of imprisonment was prescribed.

View detailed comparison (IPC 421 vs BNS 320) →

FAQs on Section 421 IPC

What does Section 421 IPC punish?▼

Section 421 IPC punishes dishonest or fraudulent removal, concealment, or transfer of property without adequate consideration to prevent its legal distribution among creditors.

What punishment is prescribed under Section 421 IPC?▼

The punishment is imprisonment of either description for a term which may extend to two years, or with fine, or with both.

Is Section 421 IPC bailable and cognizable?▼

Under the First Schedule to the Code of Criminal Procedure, 1973, an offence under Section 421 IPC is non-cognizable and bailable, triable by any Magistrate.

Can an offence under Section 421 IPC be compounded?▼

Compounding under Section 320(1) CrPC is allowed by the creditors who are affected thereby, without requiring permission from the court.

What is the role of consideration under Section 421 IPC?▼

A transfer or delivery of property constitutes an offence only if made without adequate consideration; a bona fide sale for fair market value does not violate Section 421 IPC.

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

Sources: Bare Act Text, Indian Penal Code, 1860 · Last updated: 16 Oct 2026 ·