Mere Possession Of Large Amount Of Cash Is Not An Offence U/S 98 Of Karnataka Police Act: High Court

The Karnataka High Court has said that mere possession of a large amount of cash without valid documents does not, by itself, constitute an offence under Section 98 of the Karnataka Police Act.

“To establish an offence under this provision, it must be demonstrated that the property in question is either stolen or fraudulently obtained,” it said.

A single judge, Justice Hemant Chandangoudar observed thus while allowing a petition filed by one R Amarnath who was found in possession of a sum of Rs.8,38,250, without any valid documents to substantiate its lawful possession during the 2019 Lok Sabha Elections.

The petitioner had approached the court seeking to quash the prosecution initiated against him. The court on going through the records noted that the offence punishable under Section 98 of the Act is a non-cognizable offence. As per the provisions of Section 155(2) of the Code of Criminal Procedure, 1973, when the police seek to investigate a non cognizable offence, it is mandatory for them to obtain prior permission from a Magistrate before initiating any investigation.

It said, “However, in the present case, the investigation was conducted by the police without obtaining the requisite order under Section 155(2) of Cr.P.C. This non compliance with the statutory requirement renders the investigation as well as the consequent cognizance of the alleged offences legally untenable and vitiated.”

Referring to Section 98 which reads as “Whoever is found in possession of, conveys in any manner, or offers for sale or pawn, anything which there is reason to believe is stolen property or property fraudulently obtained, shall, if he fails to satisfactorily account for such possession or act to the satisfaction of the Magistrate, be punished with imprisonment upon conviction.”

The court said “In the present case, the materials on record, including the charge sheet, do not indicate that the complainant had any reasonable belief or suspicion that the cash found in possession of the petitioner was stolen property or was fraudulently obtained.”

It added “In the absence of any such allegation or reasonable suspicion on record, the essential ingredients required to establish the commission of an offence under Section 98 of the Act are conspicuously absent. Therefore, allowing the proceedings to continue would amount to an abuse of the process of law.”

Appearance; Advocate Rohan Kothari for Petitioner.

HCGP M V ANOOP KUMAR for R1.

Citation No: 2025 LiveLaw (Kar) 170

Case Title: R Amarnath AND State of Karnataka

Case No: CRIMINAL PETITION NO. 50 OF 2024

Click Here To Read/Download Order