Property Seized Due To Dispute Must Be Released To Rightful Owner If Not Needed For Logical Conclusion Of Trial: Allahabad High Court

The Allahabad High Court has held that where the property seized by an investigating agency is not needed for the logical conclusion of trial/ litigation, the same must be released in favour of the rightful owner. It held that who is the rightful owner of the property so seized must be decided based on preponderance of probabilities.

Holding that no person can be deprived of his/her property without the authority of law, Justice Sanjay Kumar Pachori held,

“when the property, so seized by the investigating agency, need not physically remain with the prosecution to bring the trial or litigation, relating to or connected with the seized property, to its logical conclusion, then the seized property shall be released to the rightful owner, or the person who is entitled thereto. As to who is the rightful owner or the person entitled to the possession of the property shall be guided by the proof based on preponderance of the probabilities.”

Factual Background

Indian Currency amounting to Rs. 1,87,00,000/- was recovered from one Sachin Sharma during investigation of Case Crime No. 46 of 2022 registered at Police Station Chetganj, District Varuna. The investigation was at the behest of the Opposite Party No.2. Applicant, Waeem Riaz, pleaded that the currency was his property and sought release of the same by application under Section 457 (Procedure by police upon seizure of property) read with Section 451 (Order for custody and disposal of property pending trial in certain cases) of Cr.P.C.

The application was rejected by the Magistrate with an observation that the applicant was the real owner of the currency seized. Criminal revision against this order was also dismissed.

Meanwhile, the Income Tax Department also filed a release application on grounds that since it was unaccounted cash, the Court did not have power to decide the objections of the assesee under Section 132 of the Income Tax Act in proceedings under Sections 457 and 451 CrPC. This application was also rejected and the criminal revision against the order was also dismissed.

Applicant challenged order the passed by Additional Sessions Judge/Special Judge (POCSO Act), Court No. 2, Varanasi, in Criminal Revision No. 422 of 2022 (Waseem Riaz vs. State of U.P.) whereby the Revisional Court affirmed the order dated 13.10.2022 passed by Additional Civil Judge (Senior Division)/Judicial Magistrate, Court No. 2, Varanasi on an application under Section 457 read with Section 451 of Cr.P.C for release of the Indian currency.

Counsel for applicant argued that once the ownership was not disputed and the investigation had been completed as per the prosecution, there was no reason to detain the currency.

High Court Verdict

The Court observed that the opposite party no.2, informant, gave his consent for release of cash in favour of the applicant. It further observed that the applicant had filed the release application in capacity of the son of the owner of the firm Kamal Sarees who was also his father.

Perusing Section 102 of CrPC, the Court observed that seizures made under Section 102 of CrPC were different from seizures made under other enactments. It observed that Section 102 empowers Police Officers to seize any property found under circumstances creating suspicion of the commission of any offence. The Court held that word “any” before property and offence gave wide powers to the Police Officer to cover offence under any Act.

Section 102(3) of CrPC mandates that such seizure be reported to Magistrate forthwith. The Court observed that once the seizure is reported to the Magistrate, he/she would have to pass orders regarding the property seized.

“In terms of Section 457 of the Cr.P.C., whenever a property is seized by any police officer and is reported to the Magistrate, the Magistrate is empowered to make such orders as he thinks fit in respect of disposal of the property or the delivery of such property to the person entitled to the possession thereof. In cases where such person cannot be ascertained, the Magistrate can pass orders in respect of the custody and production of such property.”

The Court observed that in Sunderbhai Ambalal Desai Vs. State of Gujarat, the Supreme Court held that application for release of perishable goods, narcotics, contraband, vehicles, cash and ornaments under Section 451 CrPC must be decided expeditiously and judiciously as it would prevent the owner from suffering because of it being misused or being misappropriated. It further held that the evidence regarding the property can be recorded promptly to avoid tampering and its production in Court.

The Apex Court held that

“11. Valuable Articles and Currency Notes With regard to valuable articles, such as golden or sliver ornaments or articles studded with precious stones, it is submitted that it is of no use to keep such articles in police custody for years till the trial is over. In our view, this submission requires to be accepted. In such cases, the Magistrate should pass appropriate orders as contemplated under Section 451 Cr.P.C. at the earliest.”

Justice Pachori held that property not required for the logical conclusion of the case must be returned to the owner. It was held that the release of property to an owner will not determine title and the same can be contested before the Civil Court.

Observing that recovery memo of the currency had been prepared and that no other person had claimed ownership over the seized currency, the Court directed interim release of the currency in favour of the applicant subject to conditions imposed.

Case Title: Waseem Riaz v. State of U.P. and Another [APPLICATION U/S 482 No. - 29865 of 2024 ]

Appearances: Manish Tiwary, Senior Counsel assisted by Atharva Dixit and Pranav Tiwary, counsels for the applicant, Gaurav Mahajan, counsel for Income Tax Department, Vedant Agarwal, counsel for opposite party no. 2 and Sri Tej Bhan Singh, A.G.A for State.

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