Bharatiya Nyaya Sanhita, 2023
Section 320
Dishonest or fraudulent removal or concealment of property to prevent distribution
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 shall not be less than six months but which may extend to two years, or with fine, or with both.
Why this exists
Debtors sometimes try to defeat their creditors by quietly transferring away assets before a court can order those assets shared out to pay debts. This section protects the basic fairness of debt recovery and insolvency processes by punishing deliberate, dishonest attempts to put property out of creditors' reach.
Common misconceptions
- Myth: Selling or gifting your own property is always legal, no matter why you do it.
Fact: If you sell or give away property specifically to cheat people you owe money to, and don't get a fair price, it becomes a criminal offence, not just a civil dispute.