Indian Penal Code, 1860
Section 423
repealedDishonest or fraudulent execution of deed of transfer containing false statement of consideration
Whoever dishonestly or fraudulently signs, executes or becomes a party to any deed or instrument which purports to transfer or subject to any charge any property, or any interest therein, and which contains any false statement relating to the consideration for such transfer or charge, or relating to the person or persons for whose use or benefit it is really intended to operate, shall be punished with imprisonment of either description for a term which may extend to two years, or with fine, or with both.
Why this exists
Property transfer documents rely on accurate statements of consideration (the price paid) and true beneficiaries to ensure transparency, especially for tax purposes, creditor claims, and legal title. This section punishes those who falsify such documents dishonestly, since fraudulent property deeds can be used to defraud creditors, evade taxes, or hide the real ownership of assets from courts and authorities. Under the Bharatiya Nyaya Sanhita, 2023, this corresponds to Section 320.
How courts read it
Courts look at whether the document contains a demonstrably false statement about the consideration paid or the true beneficiary, and whether the person who executed or signed it did so with dishonest or fraudulent intent, often in connection with attempts to defeat creditors or hide true ownership.
Common misconceptions
- Myth: Only the buyer or seller who benefits from the false document can be punished.
Fact: This section punishes anyone who dishonestly signs, executes, or becomes a party to such a document, which can include witnesses or facilitators who knowingly participate in the fraud.