Court Cannot Release Seized Cash to One Complainant in Multi-Victim Cheating Case: SC

A bench of Justices Sanjay Karol and Prashant Kumar Mishra set aside the Gujarat High Court’s December 4, 2024 judgment, which had allowed an application for the release of ‘muddamal,’ i.e., a cash amount of Rs 50,00,000, seized during the investigation in a cheating case.

"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, in business," the bench said.

The court added that the evidence presented by the respondent to establish his claim over the amount must be considered by the trial court, and only thereafter can a proper decision be reached.

"At this stage, therefore, releasing the muddamal would be unjustified and premature," the bench said.

The bench was hearing an appeal filed by accused appellant Rajput Vijaysinh Natwarsinh and examined Section 451 of the Code of Criminal Procedure, which forms part of Chapter XXXIV, titled ‘Disposal of Property.’

The court referred to Sunderbhai Ambalal Desai v. State of Gujarat (2002), which held that if material on record indicates that seized articles (gold, jewellery, or cash) belonged to the complainant at whose house theft, robbery, or dacoity occurred, the articles should be handed over to the complainant.

While the High Court had correctly cited this judgment, the Supreme Court noted it had failed to appreciate its holding in the facts and circumstances of the present case.

"We say so for the reason that the money in question was recovered as part of an investigation in which the exchange of money is the subject matter of controversy," the bench said.

The dispute involved money paid to the complainant and other firms in the course of business.

The court observed that respondent No. 2 had produced documents before the High Court showing that the proprietary firm, through the appellant-accused, owed him or his concern Rs 50,00,000.

"However, it is entirely possible that the said sum of money was part of some other transaction. Simply because the amount owed to him matches the amount recovered does not establish that he is the only claimant to the said amount," the bench said.

The court upheld the view of the Additional District and Sessions Judge, Mehsana, that the direct ownership of the amount by the complainant could not be conclusively established.

The Supreme Court allowed the appeal, set aside the High Court’s judgment, and restored the orders of the lower courts.

According to the facts of the case, one Chiragkumar Dilipbhai Natwarlal Modi lodged a complaint with PS Unava, District Mahesana, on April 9, 2022, alleging that the appellant-accused ran a proprietary firm, Jay Gopal Trading Company, and had conducted business with him worth Rs 44,53,714 in castor seeds on different dates. Cheques issued in respect of this amount were returned due to insufficient balance.

It was further alleged that the company had done business with other concerns totaling Rs 3,49,07,073 (including the complainant’s payment) and had similarly failed to pay the amounts due. The police completed their investigation and filed a charge sheet on June 5, 2022, under Sections 406, 420, and 120-B of the Indian Penal Code.