Seized Vehicles: SC Says Courts Must Look Beyond Registration Certificates Before Granting Interim Custody

The Supreme Court has held that interim custody of seized vehicles is not automatically granted to the person whose name appears on the registration certificate. A court must assess who is best entitled to possession based on the material facts, including evidence of funding, admitted course of dealings and any existing undertakings between the parties, Court said.

A Bench of Justices Sanjay Karol and Augustine George Masih said the power of the court under Sections 451 and 457 of the Code of Criminal Procedure (CrPC) [corresponding to Sections 497 and 503 of the Bharatiya Nagarik Suraksha Sanhita (BNSS)] to grant interim custody is a judicial discretion meant to prevent waste, misuse or deterioration of property pending trial.

Court also clarified that exercise of this power at the interim stage does not amount to an adjudication of title or ownership and should not be treated as a final expression of opinion on the merits of rival claims regarding misappropriation or forgery.

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Why did the Supreme Court deny interim custody based only on the registration certificates?

Court was dealing with an appeal filed by Krishnan Narayana against the common judgment and order dated September 18, 2025 passed by the High Court of Andhra Pradesh at Amaravati. The high court had dismissed the petition filed by the appellant and allowed the petition filed by M/s Earth Stein Private Limited, granting the respondent company interim custody of one Bolero City Pick-up, three excavators and one Ashok Leyland Tipper, pending resolution of the criminal cases between the parties.

The appellant was a director of M/s Pure Minerals, a company involved in quarrying granite. He was also a director of the respondent company, with an 80% shareholding. The subject vehicles were purchased in the name of M/s Pure Minerals between 2014 and 2022.

The appellant claimed that on May 31, 2023, he had visited the house of S R Kumar, owner of M/s Parakrish Mineral Enterprises Pvt Ltd, a company from which certain amounts were due to him towards the supply of granite. He alleged that Kumar, along with T Arivudainambi and G Thirgunanam, intimidated him and obtained his signatures on blank papers, which were subsequently used to forge his resignation from the respondent company on June 16, 2023.

He further alleged that on August 31, 2023, the respondents committed criminal trespass into the granite factory of M/s Pure Minerals and forcibly took away the subject vehicles. An FIR was registered on September 17, 2023 based on his complaint.

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The respondents, on the other hand, alleged that the appellant had misappropriated Rs 1,73,11,894 from the respondent company and used the amount to purchase the subject vehicles in the name of M/s Pure Minerals, with himself as the authorised owner. A counter FIR was lodged in this regard, and a charge sheet was subsequently filed. The matter was pending before the trial court.

The police seized the vehicles from the granite factory of the respondent company on February 7, 2025.

After the trial court rejected the pleas seeking release of the vehicles, both parties approached the high court, which granted interim custody to the respondent company.

What is the scope of the court's power to grant interim custody?

The Supreme Court said Sections 451 and 457 CrPC empower the court to decide who is best entitled to interim possession of seized property.

"The language used in these provisions makes it clear that the court is vested with the power to grant custody to whomsoever it deems fit i.e. the court has the discretion to determine who is best entitled to possession of the property," the Bench said.

Court noted that the use of the words "possession" and "custody" makes clear that the court does not adjudicate title at this stage, but merely grants interim possession with the object of preventing decay and diminution in the value of the property.

Referring to Sunder Bhai Ambalal Desai v. State of Gujarat (2002), the Bench said the limited object of these provisions is to ensure that property seized during criminal proceedings does not suffer waste, misuse or deterioration and remains available for production before the court when required.

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"The exercise of this power requires the court to make only a prima facie assessment of who is best entitled to possession, having regard to the nature of the property, the circumstances of seizure and the material placed before it," the Bench said.

It added that this exercise does not comprise an adjudication of ownership, which generally falls within the domain of a competent civil forum.

What factors favoured the respondent company?

The Supreme Court noted that the appellant's case rested almost entirely on the registration certificates standing in the name of his company.

"We are unable to accept that this circumstance, by itself, is determinative. Registration is a relevant factor, but it is evidentiary and not conclusive of entitlement to interim possession," the Bench said.

Court found that several circumstances, taken cumulatively, weighed against the appellant's claim to interim custody.

First, the registration certificates were weakened by the fact that criminal proceedings remained pending against the appellant alleging misappropriation of funds from the respondent company's accounts for the very purpose of acquiring the vehicles in the name of his own company.

Court also noted that the vehicles were seized from the operational site of the respondent company, where they had continued to be used pursuant to a written undertaking executed by the appellant himself. While the appellant did not dispute the existence of the undertaking, he alleged that it had been forged.

Another significant factor was that the hypothecation instalments payable to Shriram Finance Ltd towards the loans taken for the vehicles had admittedly been paid from the account of the respondent company, and not by the appellant in his individual capacity.

"If the vehicles were, as claimed, the personal property of the appellant, there is no explanation forthcoming as to why the financial burden of servicing the loan secured over them was borne by the respondent company," the Bench said.

Court said this circumstance, along with the appellant's undertaking permitting the respondent company to retain and operate the vehicles until settlement of accounts, considerably weakened his claim of exclusive individual entitlement and lent credence to the respondent's case of continued beneficial use and control.

Continued possession, EMI payments and undertaking outweigh registration certificates

Court held that the circumstances favouring the respondent company, namely its continued possession of the vehicles, the admitted payment of EMI instalments and the undertaking on record, outweighed the circumstances favouring the appellant, namely the registration certificates.

Dismissing the appeal, the Bench held that M/s Earth Stein Private Limited had been rightly granted interim possession of the vehicles.

Court, however, clarified that its observations were confined to the question of interim custody and should not be construed as an expression of opinion on the merits of the rival claims regarding ownership, misappropriation, or the validity of the resignation and share transfer. Those issues would be independently determined in the pending appropriate proceedings.

Case Title: Krishnan Narayana Vs State of Andhra Pradesh And Ors Etc

Bench: Justices Sanjay Karol and Augustine George Masih 

Date of Judgment: July 24, 2026