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Section 321: Fraudulently Preventing Debt Being Made Available for Creditors

Bharatiya Nyaya Sanhita • Chapter XVII: Of Offences Against Property • Official Statutory Text & Legal Guide

Chapter XVII: Of Offences Against Property
Any Magistrate
Bailable
Non-Cognizable
Formerly Sec 422 IPC
Section 320 All 358 Sections of Bharatiya Nyaya Sanhita Section 322

Legal Commentary & Landmark Judgments: Section 321

Section 321 penalises dishonestly or fraudulently preventing any debt or demand due to oneself or another from being made available according to law for payment of debts.

  • Debt Due to Accused: Accused has a valid actionable debt or claim receivable from a third party.
  • Fraudulent Discharge or Settlement: Fraudulently writing off, releasing, or compromising the debt for a pittance to spite creditors.
  • Injury to Creditors: Depriving official assignees or creditors of lawful recovery assets.
Key Landmark Precedents:
  • Subrata Roy Sahara v. Union of India (2014) 8 SCC 470: The Supreme Court condemned financial machinations aimed at frustrating recovery decrees through simulated debt clearances.
  • Indian Bank v. Satyam Fibres (India) Pvt. Ltd. (1996) 5 SCC 550: Affirmed the inherent power of courts to pierce fraudulent corporate maneuvers designed to defeat financial creditors.
Courtroom Practice & Strategic Litigation Guidance:

Trace books of accounts showing sudden sham write-offs or settlements with sister companies without receipt of actual commercial consideration.

Section 320 All 358 Sections of Bharatiya Nyaya Sanhita Section 322