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The apex court called the seized money “proceeds of crime” and observed that no conclusive evidence established it belonged to the applicant.
During investigation, police seized Rs 50 lakh in cash, treating it as proceeds of crime.
The Supreme Court has set aside a Gujarat High Court order that had directed release of Rs 50 lakh seized during investigation in a business fraud case, ruling that the ownership of the seized cash, treated as muddamal (case property), could not be conclusively determined at this stage.
A Bench of Justice Sanjay Karol and Justice Prashant Kumar Mishra was hearing an appeal by the accused challenging the Gujarat High Court’s judgment dated December 4, 2024, which had ordered release of the seized money in favour of one of the complainants on furnishing a bond. The Court restored the concurrent findings of the Additional Chief Judicial Magistrate, Unjha, and the Additional Sessions Judge, Mehsana (Visnagar), who had earlier refused to release the money.
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The case stemmed from an FIR lodged on April 9, 2022, by a trader, Chiragkumar Dilipbhai Natwarlal Modi, alleging that the accused, running a proprietary firm named Jay Gopal Trading Company, had defaulted in payments for castor seeds worth Rs 44.53 lakh. Several cheques issued by the firm were dishonoured for insufficient funds.
It was further alleged that the firm had defaulted on payments worth Rs 3.49 crore to several other merchants.
During investigation, police seized Rs 50 lakh in cash, treating it as proceeds of crime. A chargesheet was filed under Sections 406 (criminal breach of trust), 420 (cheating) and 120-B (criminal conspiracy) of the IPC, listing 41 witnesses, including the complainant.
One of the traders, respondent no 2, claimed the seized money belonged to him for goods supplied through his concern, Bhadrakali Tobacco. He produced invoices, audit reports and ledger accounts to back his claim and sought release of the money.
The Trial Court declined the request, noting that multiple victims were involved and the rightful ownership of the seized amount was a matter for evidence during trial. The Sessions Court upheld this reasoning, calling the seized money “proceeds of crime” and observing that no conclusive evidence established it belonged to the applicant.
However, the Gujarat High Court, relying on the Supreme Court’s decision in Sunderbhai Ambalal Desai v. State of Gujarat (2002), held that interim custody of seized property should not prejudice the prosecution. It quashed the trial courts’ orders and directed release of the cash to the respondent on furnishing a bond equal to the seized amount.
The High Court reasoned that seizure of cash should not result in keeping it idle when the petitioner had shown prima facie entitlement.
The Apex Court disagreed. It noted that unlike in Sunderbhai Desai, where seized articles clearly belonged to the complainant, here the dispute revolved around business transactions involving several traders.
The Bench held that merely because the amount claimed by respondent no. 2 matched the seized sum did not establish his exclusive right over it. “The appropriate ownership of the sum of money can only be determined after consideration of all evidence and having taken into account the claims and views of all the other persons that the appellant-accused has allegedly played foul with,” the Court observed.
Releasing the cash at this stage, the Court said, would be “unjustified and premature.”
The Supreme Court allowed the appeal, restoring the orders of the Trial Court and Sessions Court. It recorded that pursuant to the High Court’s directions, the respondent had already withdrawn the amount. By its interim order dated July 21, 2025, the Court had directed that the withdrawn sum, along with accrued interest, be deposited with the Registry.
Ordering immediate compliance, the Bench directed that the money be transferred to the custody of the concerned Trial Court. The private respondent must also deposit the original currency notes, if still available, to enable cross-verification with the panchnama drawn earlier. Only after verification would the respondent be permitted to withdraw the deposited amount.
About the Author
Sukriti Mishra, a Lawbeat correspondent, graduated in 2022 and worked as a trainee journalist for 4 months, after which she picked up on the nuances of reporting well. She extensively covers courts in Delhi.
Sukriti Mishra, a Lawbeat correspondent, graduated in 2022 and worked as a trainee journalist for 4 months, after which she picked up on the nuances of reporting well. She extensively covers courts in Delhi.
September 19, 2025, 15:49 IST
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