Sec 27A NDPS Act| Mere Possession Of Cash Can't Imply Drug Money: Punjab & Haryana High Court Says Specific Nexus Under Law Must Be Proved

Reasserting that currency issued by the sovereign cannot be labelled “drug money” without substantive proof, the Punjab & Haryana High Court has held that the burden squarely rests on the investigating agency to establish a specific and demonstrable nexus between seized cash and illicit drug trafficking before invoking Section 27A or the forfeiture provisions of the NDPS Act.Section 27A NDPS Act is a provision that penalizes individuals involved in financing illicit drug trafficking or harboring offenders."There is no statutory presumption that mere possession of cash indicates involvement in illicit traffic. Since possession of legal tender money is, in principle, a lawful and neutral act, any attribution of criminality to such possession must rest upon credible evidence signifying a plausible and proximate nexus between the seized money and the alleged offence. A contrary presumption would be against the principles of fairness, reasonableness, and proportionality, and would violate Article 21 of the Constitution of India, because it would reverse the burden of proof in a manner not sanctioned by the statute," said the judge.The Court further added, "When the possession of the legal tender is inherently lawful, any contrary presumption of culpability in respect of such money would offend Article 21 of the Constitution unless supported by a specific statutory basis or tangible evidence of a plausible nexus with illicit traffic."The observation was made while allowing together two petitions—one for anticipatory bail filed by Sukhchain Masih and the other for regular bail filed by Amit Sharma @ Veeru. Interim protection had earlier been granted in both cases. Masih was implicated solely on the basis of the disclosure statement of a co-accused, arrested with 5 grams of heroin and ₹1000 allegedly termed as “drug money”. Amit Sharma was arrested on 23.07.2025 after allegedly throwing a plastic packet containing 21 grams of heroin and ₹1000. The Court highlighted that, "Keeping money, issued by a Sovereign, can never be an offence unless a statute makes it so or the tender itself has expired. Money is a legal tender―Cash is, however, narrower than money."India Not Yet Cashless Economy, Cash Presence Is Routine; Proximity to Narcotics Cannot Automatically Convert It Into “Drug Money”The Court observed that, "We are not yet a completely cashless economy, and almost everyone, as a rule and not as an exception, would keep currency notes with them, whether at home or while travelling. To label any discovered value proximate to narcotics as “drug money,” and then often leap to §27A, by giving an incorrect interpretation by analogy to the statute's structure, would be contrary to its scope."It further added that, there is no prohibition on keeping money on one's person, and several statutes explicitly affirm its ordinary use. For instance, Section 269SS of the Income-tax Act, 1961 allows loans, deposits, or specified sums up to ₹20,000 to be taken or accepted in cash. Given the functions money serves—as a medium of exchange, unit of account, and store of value, it is a necessary and routine feature of personal and commercial existence that individuals carry or control some amount of it, whether as cash, deposit balances, or accessible digital value."In India's contemporary financial ecosystem, where digital payments, mobile wallets, and CBDC apps coexist with cash, the law thus recognizes both actual and constructive possession of money as legitimate, integral aspects of economic agency, unified by their ultimate convertibility into sovereign legal tender," said the Court.Section 27A Targets Organised, Profit-Driven Drug Networks—Not Casual Users or Street-Level PeddlingThe Court said placing the word “financing” inside this continuum shows that Section 27A is designed to tackle the networked, profit-driven activity, and not the edges of consumption or ad-hoc street peddling. The mischief Parliament targeted was financial/organisational enablers of drug crime. "Judicial construction must suppress financiers/harbourers, not inflate liability onto end-users or casual sellers. The genus is organised illicit traffic; the drug dependents, subsistence-levels, end-consumers, or personal-use dealings are outside that genus. The most effective and legally consistent way to define "drug money" is the "proceeds of crime" generated from illicit traffic in the NDPS Act and includes the substituted assets where the original proceeds are converted or intermingled. Drug money is the value that feeds drug crime," it added.Section 27A Applies Only to Structural Support of Drug Networks, Not Isolated TransactionsThe Court pointed that lack of evidence of "financing illicit traffic" would militate strongly against the application of Section 27A. "It must be confined to conduct that demonstrates sustained or structural support for the trafficking network, rather than mere transactional-level procurement or consumption. If there is...

Sec 27A NDPS Act| Mere Possession Of Cash Can't Imply Drug Money: Punjab & Haryana High Court Says Specific Nexus Under Law Must Be Proved

LIVELAW NEWS NETWORK

Tags