The section contemplates that the offender must have in his possession any forged or counterfeit currency-note or bank-note. He must either have knowledge or he must have reason to believe that the same is forged or counterfeit. He must have intention to use the same as genuine or that it may be used as genuine.
This section should be read along with sections 242, 243 and 259 of the Code, and preparation to commit a crime has been made an offence by this provision. It is clear from the language of this section that mere possession of forged or counterfeit currency-note or bank-note does not make one guilty under this section.
But where certain dollar bills were recovered from the possession of the accused concealed in between the refill and the outer cover of a flask and he could not provide a satisfactory explanation about their presence there, a presumption against him could be drawn and this section would be attracted.
Where, however, the accused was caught while changing a counterfeit two rupee currency note, and ninety-nine more such notes were recovered from him, and he explained that he had received them from a person to whom he had sold tamarind, and the appearance of the notes did not suggest easily that they were counterfeit, the accused could not be convicted under this section.
Abdul Fakirsaheb Mamtule v. State of Maharashtra, was a case relating to possession of and trafficking in forged and counterfeit currency-notes by the accused. The witnesses had admittedly received fake currency-notes from the accused and fake notes were recovered from the possession of the accused also. The accused pleaded that he had no knowledge that the notes were forged as he was using money given to him by his brother (the absconding accused) for construction of his house.
The Bombay High Court observed that the accused was not a layman and cannot be said to be not used to see currency-notes of Rs. 100 denomination. In all incidences fake notes were found in mixture with genuine notes. It cannot be inferred that the accused had reason to believe that notes in his possession were fake.
The Court, therefore, did not interfere with the conviction of the accused but ruled that considering his age and also the fact that fourteen years had passed since the incident, it would be proper to reduce the sentence of rigorous imprisonment for seven years to simple imprisonment for three years.
In Umashanker v. State of Chhattisgarh, the Supreme Court observed that the mens rea of the offences under sections 489-B and 489-C is “knowing or having reason to believe that the currency-notes or bank-notes are forged or counterfeit.” Buying or receiving from another person or otherwise trafficking in or using as genuine or also possessing or even intending to use any forged or counterfeit currency-notes or bank-notes is not sufficient to make out a case under section 489-C in the absence of mens rea.
The accused who was an eighteen year old student at the time of the incident was alleged to have paid fake currency-note of Rs. 100 to a shopkeeper. Thirteen more such notes were received from him. The requisite mens rea was not proved. Mens rea cannot be presumed. No specific question with regard to the currency-note being fake was put to the accused. The accused was, therefore, entitled to acquittal.
In Vijayan v. State of Kerala, the informant stated that even at the first blush he was convinced that currency notes found in possession of the accused were counterfeit as these were different in colour. The Kerala High Court held that the accused had full knowledge that these were counterfeit and so he was guilty under section 489-C.
In Golo Mandla Rama Rao v. State of Jharkhand, the accused persons were in possession of counterfeit currency notes. They had the requisite mens rea to use them as genuine. The Jharkhand High Court held that they are liable to be convicted under sections 489-C and 489-B. Section 120-B was not proved. The accused in whose possession the machinery and instruments used for printing of these notes were found were rightly convicted under section 489-A and 489-D of the Code.
In K. Hasim v. State of Tamilnadu, the Supreme Court observed that under this section possession and knowledge that currency-notes were counterfeit are necessary and this section is not restricted to Indian currency-notes alone.
The offence under this section is cognizable, bailable and non-compoundable, and is triable by court of session.