Introduction of BNS 321
BNS 321 deals with the offense of dishonestly or fraudulently preventing debts from being made available to creditors. This provision ensures that no individual can hide, divert, or obstruct legal dues that rightfully belong to creditors. By replacing Section 422 of the Indian Penal Code (IPC), the law strengthens creditor protection and promotes fairness in financial dealings. It holds accountable those who deliberately act to block debt repayment, whether for themselves or on behalf of others, thereby safeguarding the integrity of debt settlement processes.
The Bharatiya Nyaya Sanhita (BNS) Section 321 replaces the old Indian Penal Code (IPC) Section 422.
- Introduction of 321 BNS
- What is BNS Section 321 ?
- BNS 321 in Simple Points
- Section 321 BNS Overview
- 321 BNS Punishment
- 321 BNS bailable or not ?
- Bharatiya Nyaya Sanhita Section 321
- BNS Section 321 FAQs
- If you need support with court proceedings or any other legal matters, don’t hesitate to reach out for assistance.
What is BNS Section 321 ?
Under BNS Section 321, any person who dishonestly or fraudulently obstructs the availability of debts or demands for paying obligations either to themselves or to others is considered guilty. The intent behind the act must be to prevent rightful distribution among creditors.

Under Section 321 of the bns act 2023
“Whoever dishonestly or fraudulently prevents any debt or demand due to themselves or to any other person from being made available for the payment of creditors, shall be punished with imprisonment which may extend to two years, or with fine, or with both.”
1. Meaning of Preventing Debts from Creditors
- This section criminalizes acts where a person dishonestly blocks or obstructs debts that should be used for creditor payments.
- The act may involve hiding, transferring, or diverting debts or demands that are legally payable.
- The key focus is fraudulent intention – the offender must act knowingly to deprive creditors of their rightful dues.
- Unlike simple debt default, this section punishes deliberate fraudulent prevention of repayment.
2. Who is Covered?
This law applies to:
- Debtors → who stop their own debts from being available for creditors.
- Third Parties → who prevent debts owed by others from being used for creditor settlement.
- Family Members / Partners → transferring or concealing assets on behalf of the debtor.
- Business Associates → helping to obstruct creditor claims by creating sham transfers.
3. Nature of the Offense
- Bailable → The accused can apply for bail.
- Non-Cognizable → Police need a magistrate’s permission to investigate or arrest.
- Non-Compoundable → The case cannot be settled privately between accused and creditors.
- Triable by Any Magistrate → The case can be heard before any magistrate.
4. Examples of BNS Section 321
- Example 1 – Fraudulent Transfer of Property: A businessman transfers his house to his cousin without payment so that creditors cannot use it for loan recovery. → Punishable under this section.
- Example 2 – Concealing Financial Assets: A shop owner withdraws business funds and hides them in a relative’s account, falsely claiming insolvency to avoid repaying suppliers. → Covered under this section.
- Example 3 – Preventing Partner’s Debt: A person deliberately blocks their partner’s debt settlement by concealing documents or assets. → Also punishable under BNS 321.
5. Punishment under BNS Section 321
- Imprisonment: Up to 2 years.
- Fine: Amount as decided by the court.
- Both: In serious fraudulent cases, imprisonment and fine may be imposed together.
6. Importance of BNS Section 321
- Protects creditors’ rights → ensures debts cannot be fraudulently withheld.
- Deters dishonesty → prevents sham transfers and obstruction of dues.
- Covers wider scope → applies to both the debtor’s and others’ debts.
- Maintains financial trust → strengthens fairness in business and personal transactions.
Section 321 BNS Overview
BNS Section 321 addresses the offense of dishonestly or fraudulently preventing debts or demands from being used to pay creditors. If a person prevents their own or another person’s debts from being lawfully distributed among creditors, they can be punished under this section. The primary aim of this law is to protect creditors’ rights.
10 Key Points of BNS Section 321
1. Core Objective of the Section
BNS Section 321 aims to penalize anyone who dishonestly or fraudulently prevents debts or demands from being made available for creditors. The law ensures creditors’ rights are protected by preventing offenders from using dishonest methods to avoid debt repayment. This includes financial obligations owed by the offender or on behalf of another person. The intention behind the act must be to deceive or deprive creditors of their lawful dues.
2. Intentional Fraud or Dishonesty
For an act to be punishable under this section, it must be carried out with the deliberate intent to defraud or act dishonestly. Actions such as concealing income, transferring assets without adequate consideration, or hiding property to evade creditors fall under this category. Accidental or unintentional mistakes are not considered offenses under BNS Section 321.
3. Protection of Creditor Rights
The primary focus of this section is to protect creditors by ensuring their rightful claims are not denied due to dishonest actions. It prevents individuals from creating fraudulent barriers that obstruct the distribution of assets among creditors. The law emphasizes fairness and accountability in debt management.
4. Applicability to Different Debts or Demands
This section applies to any debts or demands that are legally due. These could include loans, financial obligations, or unpaid dues. It ensures that any monetary demand acknowledged by law as payable is protected from fraudulent interference, making it broad in its scope.
5. Punishments for the Offense
The section prescribes the following punishments for those found guilty:
- Imprisonment: Up to 2 years, depending on the severity of the offense.
- Fine: An amount determined by the court based on the case specifics.
- Both: In severe cases, both imprisonment and fine can be imposed. This ensures a strong deterrent against such fraudulent acts.
6. Legal Classification of the Offense
The offense under this section is categorized as:
- Non-cognizable: Police need magistrate approval to begin an investigation.
- Bailable: Accused individuals can secure bail.
- Non-compoundable: Cases cannot be resolved through mutual agreement between parties and must be adjudicated in court.
7. Covers Offender’s and Others’ Debts
The law applies to acts of dishonesty involving both the offender’s debts and the debts of others. For example, if someone prevents a debt due to their business partner from being distributed to creditors, they will also be liable under this section. It emphasizes accountability for actions taken on behalf of others as well.
8. Role of Magistrates in Trials
Offenses under this section are triable by any Magistrate, ensuring that cases are accessible for legal proceedings without requiring higher court involvement. This simplifies the process and ensures speedy justice. It also reflects the seriousness of the offense while maintaining jurisdiction at the magistrate level.
9. Examples of Dishonest Acts
Common acts covered under this section include
- Transferring assets to relatives or friends without proper compensation to evade creditor claims.
- Concealing financial assets such as cash, property, or bank accounts to avoid them being used for debt repayment. Such actions aim to defraud creditors intentionally.
10. Importance of Section 321
BNS Section 321 plays a crucial role in maintaining fairness and trust in financial dealings. It acts as a deterrent against fraudulent practices that harm creditors. By penalizing dishonest individuals, it ensures that financial obligations are honored and protects the legal rights of creditors. This fosters a fair and transparent financial environment.
Examples of BNS Section 321
Example 1: Fraudulent Transfer of Property
Ramesh, a businessman, took a loan of ₹10 lakh from multiple creditors to expand his business. However, when his creditors started demanding repayment, Ramesh transferred ownership of his house to his cousin, Suresh, without any monetary exchange. By doing this, Ramesh attempted to conceal his assets and avoid paying his creditors. Upon investigation, the court found Ramesh guilty under BNS Section 321 for dishonestly preventing his property from being used to settle his debts. He was punished with imprisonment and a fine.
Example 2: Hiding Financial Assets
Priya, who runs a clothing store, owed ₹5 lakh to several suppliers. To avoid repaying the debt, Priya withdrew all the money from her business bank account and deposited it into her brother Arjun’s account. She claimed that she had no funds left to pay her creditors. However, the creditors filed a case, and the investigation revealed Priya’s dishonest act of hiding her financial assets to prevent repayment. Under BNS Section 321, Priya was held accountable for fraudulently preventing the creditors’ dues and was punished with imprisonment and a fine.
321 BNS Punishment
- Imprisonment: Up to 2 years.
- Fine: Amount decided at the court’s discretion.
- Combination: Both imprisonment and fine, depending on the severity of the offense.

321 BNS bailable or not ?
This offense is bailable, meaning the accused has the right to seek bail and avoid detention before or during the trial.
Comparison: BNS Section 321 vs IPC Section 422
Section | Offense | Punishment | Bailable / Non-Bailable | Cognizable / Non-Cognizable | Trial By |
---|---|---|---|---|---|
BNS Section 321 | Dishonestly or fraudulently preventing any debt or demand (own or others’) from being made available for the payment of creditors. | Imprisonment up to 2 years, or fine, or both. | Bailable | Non-Cognizable | Any Magistrate |
IPC Section 422 (Old) | Dishonestly or fraudulently preventing any debt or demand (own or others’) from being made available for the payment of creditors. | Imprisonment up to 2 years, or fine, or both. | Bailable | Non-Cognizable | Any Magistrate |
BNS Section 321 FAQs
What does BNS Section 321 prohibit?
It prohibits dishonest or fraudulent actions that prevent debts from being used to pay creditors.
What is the punishment under this BNS Section 321?
Punishment includes up to 2 years of imprisonment, a fine, or both.
Is BNS Section 321 bailable?
Yes, offenses under this section are bailable.
Who can try offenses under BNS Section 321?
Any Magistrate has the jurisdiction to try cases under this section.
Is it a cognizable offense?
No, it is non-cognizable, meaning the police cannot arrest without prior permission from a magistrate.
Conclusion
BNS Section 321 plays a crucial role in protecting creditors’ rights by penalizing dishonest acts that prevent debt repayment. Whether by concealing assets, transferring property without consideration, or obstructing payments, such fraudulent actions are punishable with imprisonment of up to 2 years, a fine, or both. The offense is bailable and non-cognizable, ensuring legal fairness while still giving creditors a remedy against fraud. By modernizing and replacing IPC Section 422, this provision strengthens trust in financial transactions and reinforces accountability in debt management. For anyone facing such disputes, seeking timely legal support can help safeguard their rights and ensure justice.
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