OFFENCES AND PENALTIESCentral

Section 12 of The Coinage Act, 2011

(1)No person shall--
1. (i)use any metal piece as coin whether stamped or unstamped, intended to be used as money except by the authority of the Government, or
2. (ii)melt or destroy any coin, or
3. (iii)use coin other than as a medium of exchange, or
4. (iv)have in his possession, custody or control,--
5. (a)any melted coin, whether in the molten state or in a solid state, or
6. (b)any coin in a destroyed or mutilated state, or
7. (c)coins substantially in excess of his reasonable requirements for the purpose of selling such coins for value other than their face value or for melting or for destroying or for disposing these coins other than as a medium of exchange. Explanation.--For the purposes of determining the reasonable requirements of coins of a person, due regard shall be had to--
  1. (i)his total daily requirements of coins;
  2. (ii)the nature of his business, occupation or profession;
  3. (iii)the mode of his acquisition of coins; and
  4. (iv)the manner in which, and the place at which, such coins are being possessed, held or controlled by him.
(2)Whoever is found to be in possession of any metal or material which contains alloys in the same proportions in which they have been used in the manufacture of any coin shall be presumed, until the contrary is proved, to have contravened the provisions of sub-section (1).
(3)Nothing in this section shall apply--
1. (i)to any person who is found in possession of any metal or scraps or scissel, etc., of nonrecyclable coinage metal, which he may so possess as a result of valid disposal by auctions by a Mint;
2. (ii)to the Mint, Reserve Bank of India and its authorised agents, and suppliers of coins or coin blanks to the extent of orders placed by or under the authority of the Government until their supply or completion of orders placed by the Government;
3. (iii)to any prospective supplier who intends to supply coin or coin blanks as samples against a valid tender documents purchased by him provided that quantity is in reasonable agreement with quantity of samples to be supplied.

Summary

No person is allowed to use any metal piece, whether stamped or unstamped, as money or as a coin unless they have the official authority of the government.
It is strictly illegal to melt or destroy any coin, or to use any coin for any purpose other than as a medium of exchange (which means to buy or trade goods and services).
It is illegal to possess, control, or keep any melted coin (whether in a molten liquid state or as solid metal), or any destroyed or mutilated (which means hacked or severely damaged) coin.
People are prohibited from possessing coins substantially in excess of their reasonable requirements for the purpose of melting, destroying, or selling them above face value.
To determine "reasonable requirements" of coins, the law considers daily coin needs, the nature of a person's business, how they acquired the coins, and where they keep them.
If a person is found with metal containing alloys in the same proportions used in official coins, the law presumes they have broken this rule unless they can prove otherwise.

Practical examples

1In September 2012, Dev is caught running an unlicensed workshop where he melts down one rupee coins to make metal rings for sale. Under Section 12, Dev is violating the law by melting coins and possessing melted coin metal in a solid state.

2Meera, a tea stall owner, keeps a jar containing five hundred coins of various denominations to give change to customers daily. Although this is a large number, the law considers her business nature and daily needs, so her possession is deemed reasonable and legal.

3On a date in 2013, a scrap dealer named Suresh is found with ten bags of copper coins that he purchased above face value to melt down for metal scrap. Because the volume is far beyond his reasonable needs and held for melting, Suresh is in violation of Section 12.

FAQ

1. How does the law determine if the number of coins I possess is "reasonable"?

The law looks at your total daily coin needs, the nature of your business or profession, how you got the coins, and where and how they are stored.

2. Are there exceptions to these strict rules on coin possession and melting?

Yes, exceptions apply to the Mint, the Reserve Bank of India, their authorised agents, suppliers of coins or coin blanks, prospective suppliers providing samples, and anyone who bought non-recyclable coinage metal scrap at an official Mint auction.

Test yourself

Q1.Under Section 12 of The Coinage Act, 2011, which of the following actions is strictly prohibited?

Q2.Under Section 12 of The Coinage Act, 2011, what is the legal presumption if a person is found possessing metal alloy in the exact same proportions used in official coins?

Q3.Under Section 12 of The Coinage Act, 2011, which of the following is NOT considered when determining a person's "reasonable requirements" of coins?

Q4.Under Section 12 of The Coinage Act, 2011, who is exempt from the restrictions on possessing melted or destroyed coins?

Q5.Under Section 12 of The Coinage Act, 2011, is a person allowed to possess coins in excess of their reasonable requirements for the purpose of selling them for more than their face value?

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