Property Suspected To Be Proceeds Of Crime Can't Be Released To Third Party During Pendency Of Trial: J&K&L High Court

The Jammu & Kashmir and Ladakh High Court has held that a third party cannot seek release of property seized during investigation merely because he is not an accused in the criminal case.The Court observed that where the seized property has the potential of constituting the proceeds of crime and may ultimately become liable to confiscation upon proof of the offences at trial, its release during the pendency of the proceedings would be impermissible. The Court further held that the interests of such a claimant can adequately be protected by directing the property to remain invested in an interest-bearing fixed deposit till conclusion of the trial. The Court was hearing a petition challenging two orders passed by the Chief Judicial Magistrate, Srinagar refusing to release the proceeds of a Fixed Deposit Receipt (FDR) created from a demand draft of ₹4 lakh seized during investigation of an FIR registered by the then Vigilance Organisation Kashmir (now Anti-Corruption Bureau).A Bench of Justice Sanjay Dhar observed,“....the bank draft which has now been converted into an FDR and which is being sought to be released by the petitioner has the potential of being the proceeds of crime in case the offences are proved after the trial of the case. In that eventuality the amount is liable to be confiscated.” The case arose out of FIR registered by the Vigilance Organisation Kashmir after receiving information regarding the alleged illegal sale of question papers of the MD/MS Entrance Examination. During investigation, the investigating agency allegedly found that huge amounts had been collected from aspiring candidates through bank drafts in consideration of supplying copies of the entrance examination question papers before the examination. One such demand draft of ₹4 lakh had been prepared by Dr. Shugufta, the petitioner's wife, in favour of one of the accused persons and was subsequently seized from the premises of the accused during investigation. In 2005, the trial Court granted interim custody of the demand draft to the petitioner with the condition that he would neither encash it nor seek disbursement of the amount without further orders of the Court. Subsequently, on the petitioner's request, the Magistrate directed that the amount be converted into a Fixed Deposit Receipt in the petitioner's name while specifically directing that neither the principal amount nor the interest accruing thereon could be withdrawn till conclusion of the trial. Later, the petitioner filed another application seeking release of the FDR amount together with accrued interest, which came to be dismissed by the Chief Judicial Magistrate. Before the High Court, the petitioner contended that he was neither an accused in the criminal case nor was the amount lying in the FDR connected with the commission of any offence. It was argued that since the demand draft had merely been seized during investigation, its release would not prejudice the trial. The petitioner also pleaded financial hardship, submitting that he had taken loans from the bank and was in urgent need of the money. The respondents opposed the petition, maintaining that the seized demand draft formed part of the material collected during investigation into the alleged examination paper leak and had a direct nexus with the allegations contained in the charge-sheet. Court's Observation's:Adjudicating the matter, Justice Dhar noted that the charge-sheet alleged that doctors intending to appear in the MD/MS Entrance Examination had paid substantial sums through bank drafts to the accused persons in advance with the promise of obtaining copies of the entrance examination question papers before the scheduled examination. The Court further noticed that Dr. Shugufta, from whose account the impugned demand draft had been prepared, was herself one of the prospective candidates for the examination. In light of the foregoing, the Court declined the petitioner's prayer for release, reasoning that the subject instrument, a bank draft subsequently converted into a Fixed Deposit Receipt constitutes prima facie tainted property. The Bench observed that the amount retains the inherent character of potential proceeds of crime, contingent upon the eventual adjudication of guilt at trial. Should the prosecution succeed in establishing the offences beyond reasonable doubt, the said sum would ipso facto become liable to forfeiture under the applicable statutory regime.Rejecting the petitioner's contention that the amount had no connection with the alleged offences, the Court held that such an argument was "absolutely misconceived". The Bench further observed that the petitioner's interests had already been adequately safeguarded by the earlier order directing conversion of the demand draft into an interest-bearing FDR. It noted that if the prosecution ultimately failed to establish the alleged offences, the petitioner would become entitled not merely to the principal amount but also to the interest...

Property Suspected To Be Proceeds Of Crime Can't Be Released To Third Party During Pendency Of Trial: J&K&L High Court

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Property Suspected To Be Proceeds Of Crime Can't Be Released To Third Party During Pendency Of Trial: J&K&L High Court

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