Falsification of Accounts (Section 477A of IPC)
“Whoever, being a clerk, officer or servant, or employed or acting in the capacity of a clerk, officer or servant, wilfully and with intent to defraud, destroys, alters, mutilates or falsifies any book, electronic record, paper, writing, valuable security or account which belongs to or is in the possession of his employer, or has been received by him for or on behalf of his employer or willfully and with intent to defraud, makes or abets the making of any false entry in, or omits or alters or abets the omission or alteration of any material particular from or in, any such book, electronic record, paper, writing, valuable security or account, shall be punished with imprisonment of either description for a term which may extend to seven years, or with fine, or with both.”
Section 477A deals with the falsification of accounts with intent to defraud. It does not require any deprivation of property. It deals with two types of offences, namely.
(i) Defrauding, altering, destroying, mutilating or falsification of any book or account or electronic record; and
(ii) Making or abetting the making of false entries in the same.
The main ingredients of Section 477-A are:
(1) The person coming within the purview of section 477A must be a clerk, an officer, or a servant, or acting in the capacity of a clerk, an officer, or a servant.
(2) He must willfully and with intent to defraud –
(i) Destroy, alter, mutilate, or falsify any book, electronic record, paper, writing, valuable security, or account which.
(a) Belongs to or is in the possession of his employer; or
(b) Has been received by him for or on behalf of his employer;
(ii) Make or abet the making of any false entry in or omit or alter or abet the omission or alteration of any material particular from or in any such book, paper, writing, valuable security or account.
The offence under Section 477-A is non-cognizable, and warrant should issue. It is bailable, non-compoundable and triable by Magistrate of the first class.
The word ‘wilfully’ as used in Section 477-A meant intentionally or deliberately doing an act.
But from the mere fact that the entries were made ‘wilfully’, it does not necessarily follow that they were made ‘with intent to defraud’. The IPC does not contain any definition of the word ‘intent to defraud’. However, the term ‘intent to defraud’ contains two elements, namely ‘deceit and injury’.
A person is said to deceive another when by practising ‘suggestio falsi’ or ‘suppressio veri’ or both, he intentionally induces another to believe a thing to be true, which he knows to be false or does not believe to be true. ‘Injury’ has been defined in Section 44 of the IPC.
The words ‘clerk, officer or servant’ are intended to include not only persons who are legally so appointed but also those who act in that capacity whatever illegality may taint their appointment, or whether they were under any obligation to perform their duties, or were or were not paid for performing them. So it is immaterial by whatever designation the accused was known as director, partner, manager or secretary, so long as he did perform the duties of a clerk, officer or servant.
The accounts must belong to or be in the possession of his employer, which must be clearly established, for Section 477A is not intended to punish a person for maintaining incorrect or false accounts, but for maintaining false accounts not his own. Where, therefore, it appeared that the accounts the accused was maintaining were of his own property, he was acquitted although their falsity was proved.
The accused must be shown to have destroyed, altered, mutilated or falsified any book etc. If he secrets without destroying it, Section 477-A would appear to be inapplicable. If the accused is charged for falsifying it, it is not sufficient to show that the cash in hand does not tally with the corresponding entry in the accounts, but that the latter is false.
An entry may be falsified by the addition of a new entry as much as by the alteration of an existing entry, or by the omission of an entry which ought to have been, but is not made. Section 477A makes the difference between an entry made and one altered or omitted that in the case of an alteration or omission the entry must be material, but even in the case of adding, additional material would probably determine the ‘intent to defraud’.
Again, such entries might be either manipulated by the accused himself, or their making might be abetted by him. In either case, the accused is equally liable if he intended to defraud by his act or omission, alteration or abetment.
Certain sums of money were received by a person for payment into Government Treasury but he did not enter the sum in the register. After the commencement of inquiry into the matter he made false entries in the register showing that those sums had been paid. Such an act is guilty under Section 477-A.
Falsification of balance-sheet and books of account of a company by a managing director comes under Section 477-A. Removal of new Court-fee stamps from document and substitution in their place of used stamps, with alterations of the figures on them do not fall within the scope of Section 477-A
In State of Punjab v. Rathan Chand [1984 CrLJ NoC 153 (P & H)], the Nazir of special judicial Magistrate’s Court accepted an amount as fine but failed to deposit it in the treasury and made false entries in the Register of Judicial Fines saying that the amount had been deposited, it was held that he was guilty of offences under Ss.409, 467, 468 and 477-A, IPC.
In State of Orissa v. Bishnu Charan Muduli [1985 CrLJ 1573 (Ori)], the accused is a driver and cleaner and changed the number plate of their vehicle which was involved in the crime and also forged the registration book to tally with the changed number plate and repeat the same on the way, it was held that they were guilty of an offence under Section 471, IPC.
In Harnam Singh v. Delhi Administration [AIR 1976 SC 2140], the accused was a goods loading clerk of the Indian Railways. He was prosecuted and convicted for offence under Section 477A, IPC
for falsifying certain entries in the marketing-cum-loading register to show that a certain consignment of cloth from a cotton mills was received on 10 January 1967 though he received on the next day as there was restriction on booking of ‘goods from the next day, i.e., 11 January 1967.
It was the contention of the accused that he had no intention to defraud, as he had made an entry of the date of receiving the goods based on the intimation given by the timekeeper. And in any case, he had put the correct date under his signature in the same register as 11 January 1967.
In accepting his contentions, the Supreme Court said that ‘wilfully’ as used in Section 477-A, meant intentionally or deliberately doing an act. By the mere fact that some entries were made willfully, it need not necessarily imply that the accused did so with the intention to defraud within the meaning of Section 477-A. Appeal Allowed.