2025 (4) TMI 1645 - HC - Indian Laws

Seeking release of cash seized by the CBI during investigation - cash currency hounding - involvement in an illegal money collusion fraud through M/s Infinity Realcon Ltd. by operating various investment schemes without obtaining the requisite statutory approval from the Reserve Bank of India - HELD THAT - When application for release of said cash/currency of economic offences of such magnitude the Courts become circumspective to release the amount. However the release of money ensures that the seized currency remains in circulation thereby aiding the national economy. If the money remains stagnant it serves no practical purpose and fails to contribute to economic activity. Currency is meant to be in circulation to facilitate trade commerce and overall economic growth. Keeping large sums of money idle in custody neither benefits the State nor the affected individuals. Instead it restricts liquidity in the financial system and prevents the owner from utilizing the funds for legitimate purposes. In Santosh Kumar Tripathy v. State of Odisha 2025 (2) TMI 1178 - ORISSA HIGH COURT this Hon ble Court recognized the importance of preserving the evidentiary value of seized cash through colour photographs while ensuring that the currency itself remains available for economic use. This principle aligns with broader economic considerations where unnecessary stagnation of monetary resources can hinder financial fluidity. Releasing the seized cash with proper safeguards such as the preparation of Panchnamas and photographic documentation balances both the interests of justice and economic utility allowing the release of the seized currency under appropriate conditions would not only comply with legal precedents but also serve the larger public interest by ensuring that money continues to contribute to the economy rather than remaining unutilized in the custody. This Court is inclined to direct the release of the seized amount of Rs.15.00 lakhs to the accused petitioner subject to certain conditions that ensure both the integrity of the investigation and the smooth conclusion of trial - It is well established that money as a movable property should not remain stagnant in judicial custody when it can be preserved through alternative means without prejudicing the prosecution s case. In the lights of the judgements cited the release of seized cash should be considered while ensuring that its evidentiary value is duly preserved which can be used for trial. Conclusion - i) Section 451 clearly empowers the court to pass appropriate orders with regard to such property such as (1) for the proper custody pending conclusion of the inquiry or trial; (2) to order it to be sold or otherwise disposed of after recording such evidence as it thinks necessary; (3) if the property is subject to speedy and natural decay to dispose of the same. ii) The Court allowed the revision petition and set aside the order rejecting the release of Rs. 15 lakhs seized cash directing its release to the accused petitioner subject to strict conditions to safeguard the investigation and trial integrity. The revision petition is allowed.

Summary

The core legal questions considered in this judgment include:

1. Whether the seized cash amounting to Rs. 15 lakhs, recovered during the investigation of a criminal case, should be released to the accused petitioner pending trial under the provisions of Sections 451 and 457 of the Criminal Procedure Code, 1973 (Cr.P.C.).

2. The scope and exercise of judicial discretion under Sections 451 and 457 Cr.P.C. regarding custody, disposal, and release of seized property during the pendency of inquiry or trial.

3. The applicability and interpretation of relevant judicial precedents, including the Supreme Court's ruling in Sunderbhai Ambalal Desai v. State of Gujarat and the Delhi High Court's decision in Manjit Singh v. State, on the release of seized currency notes.

4. The balancing of interests between safeguarding the integrity of the investigation and trial and the economic utility of currency seized during criminal proceedings.

5. The broader principles and guidelines for the management, custody, release, or disposal of various categories of seized property, including cash, vehicles, precious articles, narcotics, perishable goods, firearms, electronic devices, and miscellaneous items.

Issue-wise Detailed Analysis

1. Release of Seized Cash under Sections 451 and 457 Cr.P.C.

Legal Framework and Precedents: Sections 451 and 457 Cr.P.C. empower courts to make appropriate orders regarding the custody and disposal of property produced before them or seized by police. Section 451 allows courts to order custody or disposal of property pending trial, including sale or other disposal if the property is perishable. Section 457 governs police procedure upon seizure, including delivery of property to entitled persons subject to conditions or security.

The Supreme Court in Sunderbhai Ambalal Desai v. State of Gujarat emphasized that seized property should not be retained longer than necessary, and courts have the power to release property to rightful owners with appropriate safeguards. The Delhi High Court in Manjit Singh v. State laid down procedural safeguards for releasing seized currency, including detailed panchnama, photographic evidence, security bonds, and allowing the released currency to be used during trial.

Court's Interpretation and Reasoning: The Court acknowledged the petitioner's contention that a portion of the seized cash was from legitimate sources such as bank withdrawals, loans from a professional friend, accumulated widow pension, and gifts from relatives. The petitioner claimed custodianship of the money for emergency medical and family expenses, justifying the cash's presence in the office.

However, the Trial Court had rejected the release application on the ground that the petitioner failed to properly account for the seized cash and the source of the money was unclear, raising suspicion about its legality.

The Court recognized the gravity of the offences, involving massive illegal deposit schemes and financial misappropriation amounting to hundreds of crores, with the petitioner implicated in a conspiracy to defraud investors. Given the ongoing investigation and the serious nature of the charges, the Court noted the need for circumspection in releasing seized currency.

Nonetheless, the Court balanced the competing interests by observing that keeping large sums of money idle in judicial custody neither benefits the State nor the accused and restricts liquidity in the economy. It emphasized the economic rationale that currency should remain in circulation to facilitate trade and growth.

The Court referred to its recent decision in a similar case, where it directed release of seized cash subject to preservation of evidentiary value through colour photographs and other safeguards.

Key Evidence and Findings: The petitioner's explanation regarding the source and custodianship of the money was noted but found insufficient at the trial level. The investigation revealed the petitioner's involvement in large-scale fraudulent schemes and misappropriation of funds, with the case still under investigation.

Application of Law to Facts: The Court applied the principles from Sunderbhai Ambalal Desai and Manjit Singh to the facts, concluding that the release of seized cash is permissible if proper safeguards are imposed to preserve evidentiary value and secure the interests of justice.

Treatment of Competing Arguments: While the prosecution stressed the unclear source and ongoing investigation to oppose release, the Court found that these concerns could be addressed through conditions such as panchnama, photographic documentation, security bonds, and indemnity. The Court rejected the notion that seized cash must remain stagnant merely due to the gravity of the offence.

Conclusions: The Court directed release of the Rs. 15 lakhs seized cash to the petitioner subject to the following conditions:

• Preparation of a detailed panchnama recording denominations, serial numbers, and particulars of the cash.
• Preservation of high-resolution colour photographs signed by investigating officer, accused, and witnesses.
• Furnishing of a bank guarantee for 50% of the amount and indemnification of immovable property or financial security for the remaining 50%.
• Submission of an affidavit undertaking compliance and availability of the amount for restitution if required.

2. Broader Guidelines for Disposal and Management of Seized Property

Legal Framework and Precedents: The Court drew upon Sections 451, 452, and 457 Cr.P.C., as well as judicial pronouncements including the Supreme Court's rulings and High Courts' decisions, to formulate comprehensive principles for handling seized property.

Court's Interpretation and Reasoning: The Court emphasized the importance of avoiding indefinite retention of seized property, which wastes public resources and may cause loss of value or utility. It highlighted the need for timely disposal or release, consistent with the investigation and trial requirements.

Key Guidelines Established:

• General Principles: Courts and authorities must ensure prompt release or disposal of seized property unless legally justified to retain it.
• Seized Cash: Release subject to detailed panchnama, photographic evidence, security bonds; if not released, deposit in nationalized banks to prevent stagnation.
• Bank Deposits/Fixed Deposits: May be released against securities unless attachment/confiscation proceedings are ongoing.
• Vehicles: Early release to rightful owners with security bonds; secure storage if immediate release not feasible; auction or disposal if unclaimed or linked to crime.
• Precious Articles: Stored in secure lockers; release upon verification and bond; preserved if ownership disputed or essential evidence.
• Liquor and Narcotics: Samples collected for forensic analysis; remainder destroyed promptly with court approval.
• Perishables: Priority handling to avoid spoilage; immediate release or auction/distribution if no claimant.
• Firearms and Explosives: Stored in armouries; returned if lawful ownership proven; destroyed or forfeited if linked to crime.
• Electronic Devices and Digital Evidence: Forensic copies created; chain of custody maintained; released if not crucial to case.
• Miscellaneous Property: Returned if identifiable owner exists; otherwise auctioned or disposed of after reasonable time.
• Role of Courts and Authorities: Proactive judicial oversight; regular reporting by investigating officers; time-bound reviews to prevent backlog.

Treatment of Competing Arguments: The Court acknowledged concerns about preserving evidence and ensuring justice but balanced them against economic considerations and the rights of rightful owners to avoid undue hardship.

Conclusions: The Court promulgated these guidelines to be followed by courts and law enforcement agencies across jurisdictions to ensure efficient, legally sound, and socially beneficial management of seized property. The Registry was directed to circulate the judgment to subordinate courts and relevant enforcement agencies for guidance.

Significant Holdings

"Section 451 clearly empowers the court to pass appropriate orders with regard to such property, such as: (1) for the proper custody pending conclusion of the inquiry or trial; (2) to order it to be sold or otherwise disposed of, after recording such evidence as it thinks necessary; (3) if the property is subject to speedy and natural decay, to dispose of the same."

"The object and scheme of the various provisions of the Code appear to be that where the property which has been the subject-matter of an offence is seized by the police it ought not be retained in the custody of the court or of the police for any time longer than what is absolutely necessary."

"Keeping large sums of money idle in judicial custody neither benefits the State nor the affected individuals. Instead, it restricts liquidity in the financial system and prevents the owner from utilizing the funds for legitimate purposes."

"The release of seized cash should be considered while ensuring that its evidentiary value is duly preserved, which can be used for trial."

"A formal record (Panchnama) of the seized cash shall be prepared... High-resolution colour photographs... Security for the Released Amount... Undertaking of Compliance..."

"Courts and investigating authorities must ensure that seized property is not retained indefinitely without valid legal justification... The disposal process should adhere to the provisions of Sections 451, 452, and 457 of the Criminal Procedure Code and be guided by established judicial precedents."

"By implementing aforementioned structured guidelines, courts and law enforcement agencies can ensure that seized property is managed in a manner that is efficient, legally sound, and beneficial to both the justice system and society at large."

Final Determinations:

The Court allowed the revision petition and set aside the order rejecting the release of Rs. 15 lakhs seized cash, directing its release to the accused petitioner subject to strict conditions to safeguard the investigation and trial integrity. It also issued comprehensive guidelines for the management and disposal of seized property of various kinds, emphasizing timely release, preservation of evidentiary value, economic considerations, and judicial oversight.