Possession of Counterfeit Currency Without Explanation Is Sufficient to Infer Knowledge and Intent — Delhi High Court Upholds Conviction

“Police Testimony Cannot Be Disregarded Merely for Lack of Public Witnesses; Courts Must Scrutinise, Not Reject” —  In a detailed and legally significant decision rendered, the Delhi High Court upheld the conviction of two individuals under Section 489C of the Indian Penal Code, for possessing counterfeit currency, while modifying the sentence from 3 years to 6 months of simple imprisonment, citing the long delay in disposal, age of the accused, and mitigating circumstances.

Justice Rajneesh Kumar Gupta dealt with an appeal filed against the order of conviction and sentence passed by the Additional Sessions Judge (North), Tis Hazari Courts, Delhi, wherein the appellants were sentenced to three years’ simple imprisonment with a fine of ₹10,000 each for the possession of twenty counterfeit ₹500 currency notes, found during a 2008 raid at Chandni Chowk.

While sustaining the conviction, the Court held that “possession of counterfeit currency without any explanation of its origin or a credible denial of recovery is sufficient to infer knowledge and intention to use the same as genuine.”

“Section 489C IPC Attracts Where Possession is Coupled With Knowledge or Reason to Believe the Notes Are Fake” — Conviction Upheld

At the core of the appeal was the question whether the conviction under Section 489C IPC could be sustained despite the absence of independent public witnesses, and whether the necessary mens rea (guilty mind) was established in the absence of direct evidence.

The Court, after thoroughly examining the testimonies of the police officials, held:

“From the evidence of the Prosecution on record, it stands proved that 12 counterfeit currency notes were recovered from the possession of the Appellant-Aashim and 8 counterfeit currency notes were recovered from the possession of the Appellant-Mehtab Jahan.”

“Now, the burden was on the Appellants to explain their innocence, with regard to their lack of knowledge about such currency notes, being fake. However, the defence of the Appellants was that, these currency notes were planted upon them and no recovery was effected from them, but this defence is without any merit.”

The Court placed reliance on the judgment in V.K. Jain v. CBI, 2015 (3) JCC 1944, to hold that:

“Knowledge and intention are the state of mind which cannot be proved by direct evidence and have to be inferred from the attending circumstances. Possession of counterfeit currency about which there is a denial simplicitor accompanied with no attempts at explaining as to how the appellant came into possession of such currency is sufficient to infer such requisite knowledge which would attract the mischief of Section 489C of the Indian Penal Code.”

Thus, the High Court found the conviction legally sound and declined to interfere with the findings of guilt.

“Police Evidence Alone Can Sustain Conviction If Found Credible” — Court Applies Kalpnath Rai Doctrine

The appellants had challenged the recovery on the ground that no public witnesses were included in the alleged raid, and all witnesses were interested police officials, whose version was inherently suspect.

Rejecting this argument, the Court relied on the principle laid down in Kalpnath Rai v. State, (1997) 8 SCC 732, observing:

“There can be no legal proposition that evidence of police officers, unless supported by independent witnesses, is unworthy of acceptance… If the evidence of the police officer is found acceptable it would be an erroneous proposition that court must reject the prosecution version solely on the ground that no independent witness was examined.”

“Prudence dictates that their evidence needs to be subjected to strict scrutiny and as far as possible corroboration of their evidence in material particulars should be sought.”

Upon applying this standard, the Court found the testimonies of PW-4 SI Surender Singh, PW-10 Ct. Rajnikant, and PW-11 Inspector Raj Kumar to be credible, consistent and unshaken in cross-examination.

The Court also noted that the expert opinion from Currency Note Press, Nashik, confirmed that the currency notes were forged, thus completing the chain of evidence.

“Burden of Explaining Innocent Possession Lies on Accused Under Section 106 Evidence Act” — High Court Emphasises Presumption of Mens Rea from Circumstances

The Court noted that both accused had simply denied recovery under their Section 313 Cr.P.C. statements, and offered no plausible explanation for possession of the notes. This was held to be a critical omission, attracting the operation of Section 106 of the Evidence Act, which states that when a fact is especially within the knowledge of a person, the burden of proving that fact is upon him.

Quoting from V.K. Jain, the Court observed: “If a person is found to be in possession of counterfeit currency and chooses not to give any explanation for such counterfeit currency and denies altogether the recovery which defence is ultimately found to be false, the only inevitable inference could be that he had reasons to believe that the currency notes were counterfeit.”

“17 Years Have Passed Since The Incident — Sentencing Must Account For Delay, Mitigating Circumstances, and Period Undergone”

While sustaining the conviction, the Court was mindful of the inordinate delay in the conclusion of the proceedings. The offence occurred in 2008, and conviction came in 2012, while the appeal was finally decided in 2025 — a 17-year delay in total.

The appellants also submitted that:

• Aashim was 39 years old, and

• Mehtab Jahan was 68 years old at the time of the appeal.

Taking these mitigating factors into account, the Court held:

“The present case relates to an incident which had occurred 17 years ago, while the impugned judgment itself was delivered nearly about 13 years ago… After considering the facts of the case and the mitigating circumstances, the interest of justice would be served, if the Appellants are sentenced to Simple Imprisonment for a period of six months and a fine of ₹10,000/- each, and in default of the payment of fine, to undergo SI for a period of 15 days with a benefit of Section 428 Cr.P.C.”

Thus, the sentence was reduced from 3 years to 6 months, and the benefit of set-off under Section 428 CrPC was granted for time already spent in custody.

Conviction Upheld, Sentence Reduced to Six Months

Summing up the matter, the Court concluded: “In view of the above discussion, the conviction of the Appellants by the Trial Court does not warrant any interference by this Court and it is maintained and upheld… The appeal is disposed of with the modification in the impugned Order on Sentence, as stated above.”

“A copy of this judgment be communicated to the concerned Trial Court as well as to concerned Jail Superintendent forthwith for necessary information and compliance.”

The judgment balances the seriousness of the offence with judicial compassion, acknowledging the decade-long pendency, and affirms the principle that mere delay in appeal cannot erase criminal liability, but may warrant sentence recalibration.

Date of Decision: 09 September 2025