Punishment for Not Returning Money Mistakenly Deposited in Your Account

Balasahana Suresh
Mistaken deposits, often called “wrong credit” or “accidental transfers”, happen when money is transferred to the wrong bank account. While it may seem tempting to keep the money, indian law is clear that it belongs to the sender, and keeping it can have serious legal consequences.

1. Legal Position in India

Indian Penal Code (IPC) Provisions

Section 405 – criminal Breach of Trust

If you knowingly keep someone else’s money without permission, you can be accused of criminal breach of trust.

Punishment: Up to 3 years of imprisonment, a fine, or both.

Section 406 – Punishment for criminal Breach of Trust

If convicted, the offender can data-face imprisonment and fines.

Section 420 – Cheating

In some cases, if it is considered intentional deception, it may fall under cheating.

Punishment: Imprisonment up to 7 years, plus a fine.

Banking Regulations

  • Banks can reverse wrong transfers under the Reserve bank of India (RBI) guidelines.
  • If the money is not returned voluntarily, the bank may initiate recovery proceedings against the account holder.
  • RBI rules allow the bank to debit the mistakenly credited amount from your account without prior consent if the error is confirmed.
2. Civil Liability

Even if criminal proceedings are not initiated, the person whose money was mistakenly credited can file a civil suit to recover it. This could lead to:

  • Repayment of the full amount
  • Interest for the period you withheld the money
  • Legal costs, including lawyer fees
3. Practical Consequences

  • Banks routinely freeze the account if the wrong credit is reported and recovery is pending.
  • Negative banking history: Refusal to return money can affect your credibility with banks.
  • Police complaints: The rightful owner can file a complaint at the local police station.
4. Ethical and Legal Advice

Immediately inform the bank if you receive a wrong deposit.

Do not withdraw or spend the money — doing so could amount to theft or criminal breach of trust.

Cooperate with the bank to return the funds to the rightful owner.

Keep records of communication with the bank for protection against false claims.

Summary Table

Situation

Possible Consequence

Withholding money knowingly

Criminal breach of trust (3 years) / Cheating (7 years)

Bank recovery action

Money debited from your account

Civil suit by sender

Repayment + interest + legal fees

Ignoring bank notice

Account freeze, legal action

Bottom Line

Keeping money that was mistakenly deposited into your account is considered illegal under indian law. The law can punish you criminally (IPC Sections 405, 406, 420) and civilly, and banks have the authority to recover the funds directly.

The safest approach: Notify the bank immediately and return the funds.

 

Disclaimer:

The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of any agency, organization, employer, or company. All information provided is for general informational purposes only. While every effort has been made to ensure accuracy, we make no representations or warranties of any kind, express or implied, about the completeness, reliability, or suitability of the information contained herein. Readers are advised to verify facts and seek professional advice where necessary. Any reliance placed on such information is strictly at the reader’s own risk.

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