Conviction under Sections 489-B and 489-C IPC requires proof of knowledge that currency notes are counterfeit.

On December 22, 2005, the Appellant arrived at the State Bank of India, Akaltara branch, to deposit ₹50,000 into his father’s account and ₹1,51,000 into his uncle’s account

The cashier (PW-3) observed that the color of some notes faded upon contact with water; subsequently, an ultraviolet machine identified 161 notes as counterfeit

The Appellant was convicted by the Session Judge, Janjgir Champa, under Sections 489(B) and 489(C) of the IPC and sentenced to three years and two years of rigorous imprisonment, respectively

In his Section 313 CrPC statement, the Appellant’s uncle (Jatashankar) claimed he received the money from contractors in Kolkata and handed it to the Appellant to deposit, asserting they believed the notes were genuine

The Appellant challenged the conviction on the grounds that the prosecution failed to prove he had knowledge or intent regarding the counterfeit nature of the currency

Whether the mere possession and attempt to deposit counterfeit currency notes are sufficient to constitute an offense under Sections 489(B) and 489(C) IPC in the absence of evidence regarding mens rea?

Whether the prosecution established beyond reasonable doubt that the Appellant knew or had "reason to believe" that the currency notes were forged or counterfeit?

The Court applied Sections 489(B) and 489(C) of the Indian Penal Code (IPC), which criminalize using and possessing forged or counterfeit currency notes, respectively

The core legal principle applied is that mens rea—defined as "knowing or having reason to believe" the notes are counterfeit—is an essential ingredient for conviction

The Court relied on M. Mammutti v. State of Karnataka, which established that conviction is improper if the prosecution fails to prove the accused's knowledge of the forgery

It further cited Umashanker v. State of Chhattisgarh, emphasizing that these penal provisions are not intended to punish "unwary possessors" and that trial courts cannot "presume" mens rea merely from the fact of possession

The High Court observed that while the prosecution successfully proved the seizure of 161 counterfeit notes from the Appellant, it failed to provide any evidence regarding the Appellant's subjective knowledge or intent.

The Court noted that the testimony of the bank officials (PW-2, PW-3, PW-4) and the handwriting expert (PW-9) only confirmed the physical act of attempted deposit and the nature of the notes, but did not address the Appellant's state of mind

Crucially, the Court highlighted the co-accused's statement that the money was provided to the Appellant for deposit as a routine transaction, which reinforced the possibility that the Appellant was an "unwary possessor"

Following the precedent in Umashanker, the Court held that the Trial Court erred by substituting a "presumption" of knowledge for actual proof.

The Court concluded that without independent evidence showing the Appellant had a reason to suspect the notes were fake, the statutory requirement of mens rea remained unsatisfied

Consequently, the appeal was allowed, and the judgment of conviction and order of sentence dated July 24, 2007, was set aside

The Appellant was acquitted of charges under Sections 489-B and 489-C of the IPC

Under Section 481 of the BNSS 2023, the Appellant was directed to furnish a personal bond of ₹25,000 to remain effective for six months to ensure appearance in the event of an appeal to the Supreme Court