Supreme Court clarifies property disposal under Section 452 CrPC: BSNL vs. Suryanarayanan (2018)

Date of the Judgment: 13 December 2018

Citation: 2018 INSC 1092

Judges: Dr. Dhananjaya Y. Chandrachud, J., M.R. Shah, J.

When a criminal trial concludes, what happens to the property seized during the investigation? The Supreme Court of India recently addressed this question, clarifying the principles for disposing of such property under Section 452 of the Code of Criminal Procedure, 1973 (CrPC). The core issue revolves around whether the property should be returned to the person from whom it was seized, or to someone who can demonstrate a valid claim of title. This judgment provides significant guidance on how courts should handle competing claims over seized property.

The Supreme Court bench comprised of Justice Dr. Dhananjaya Y. Chandrachud and Justice M.R. Shah. The judgment was authored by Justice Dr. Dhananjaya Y. Chandrachud.

Case Background

The case began with a First Information Report (FIR) lodged on 4 February 1992, concerning the theft of copper wires and lead sleeves, valued at Rs. 8,31,300/-, from the godown of the Telecom Department in Ernakulam. The stolen goods were allegedly sold to the first respondent, Suryanarayanan, who owned Surya Metals.

On 21 February 1992, the police seized 5,060 kgs of copper lead alloy moulds from Suryanarayanan. An order was passed on the same day by the Magistrate, handing over interim custody of the seized alloy moulds to the appellant, Bharat Sanchar Nigam Limited (BSNL), under Section 451 of the CrPC.

A criminal case (No. 433 of 1993) was registered against several individuals for offences under Sections 457, 381, 461, 462, and 411 read with Section 34 of the Indian Penal Code, 1860. Suryanarayanan was cited as a witness (CW-10) in this case.

The Trial Court acquitted all the accused on 30 April 1999. Following the acquittal, Suryanarayanan filed an application under Section 452 of the CrPC, seeking the release of the seized alloy moulds. The State’s appeal against the acquittal was dismissed on 19 January 2006. The Judicial Magistrate rejected Suryanarayanan’s application on 31 August 2006, directing him to prove his title to the property in a civil court. This order was upheld by the Sessions Court on 13 March 2007.

The High Court reversed these orders on 21 February 2008, directing the seized property to be returned to Suryanarayanan, citing the principle that property should be restored to the person from whom it was seized. BSNL then appealed to the Supreme Court.

Timeline:

Course of Proceedings

The Trial Court acquitted all the accused in the criminal case. Following this, Suryanarayanan applied under Section 452 of the CrPC for the release of the seized alloy moulds. The Judicial Magistrate rejected this application, stating that while interim custody was given to BSNL, Suryanarayanan had filed his application much later, and he had to prove his title in a civil court. The Sessions Court upheld this decision, noting the lack of evidence that the material belonged to Suryanarayanan.

The High Court reversed the Sessions Court’s decision, stating that since the goods were seized from Suryanarayanan, they should be returned to him, as BSNL had not asserted any claim over the property. The High Court relied on the principle laid down in N. Madhavan vs. State of Kerala [(1979) 4 SCC 1], that property should be restored to the person from whom it was seized. This led to BSNL filing an appeal in the Supreme Court.

Legal Framework

The case primarily revolves around Sections 451 and 452 of the Code of Criminal Procedure, 1973 (CrPC), which deal with the custody and disposal of property during and after a criminal trial.

Section 451 of the CrPC states:

“451. Order for custody and disposal of property pending trial in certain cases. When any property is produced before any Criminal Court during any inquiry or trial, the Court may make such order as it thinks fit for the proper custody of such property pending the conclusion of the inquiry or trial, and, if the property is subject to speedy and natural decay, or if it is otherwise expedient so to do, the Court may, after recording such evidence as it thinks necessary, order it to be sold or otherwise disposed of.”

This section empowers the court to make orders for the proper custody of property produced before it during an inquiry or trial. It also allows for the sale or disposal of property that is subject to decay or if it is expedient to do so.

Section 452 of the CrPC states:

“452. Order for disposal of property at conclusion of trial. (1) When an inquiry or trial in any Criminal Court is concluded, the Court may make such order as it thinks fit for the disposal, by destruction, confiscation or delivery to any person claiming to be entitle to possession thereof or otherwise, of any property or document produced before it or in its custody, or regarding which any offence appears to have been committed, or which has been used for the commission of any offence. (2) An order may be made under sub- section (1) for the delivery of any property to any person claiming to be entitled to the possession thereof, without any condition or on condition that he executes a bond, with or without sureties, to the satisfaction of the Court, engaging to restore such property to the Court if the order made under sub- section (1) is modified or set aside on appeal or revision.”

This section deals with the disposal of property after the conclusion of a trial. It allows the court to order the destruction, confiscation, or delivery of property to a person claiming to be entitled to its possession. The court can also impose conditions on the delivery of the property.

The Supreme Court emphasized that the function of the court under Section 452 is judicial and must consider the entitlement claimed by the person seeking possession of the property. The court also noted that a claim of title to the seized goods is a relevant consideration.

Arguments

Arguments by BSNL (Appellant):

• BSNL argued that the Magistrate had correctly evaluated the facts. The Divisional Engineer (Telecom) (PW-3) had consistently stated that BSNL suffered a theft of the material, which was obtained from the General Manager (Stores), Calcutta.
• The material was of a nature that could not be purchased from the open market.
• Officers of the Telecom Department (PWs 1, 2, 4, and 5) identified the seized material as the stolen goods.
• Suryanarayanan did not take any steps to assert his claim of title until the disposal of the criminal case.
• Possession of the goods was handed over to BSNL on 21 February 1992.
• The principle in Madhavan (supra), which states that goods should be restored to the person from whom they were seized, is generally applied. However, it should not override the title of the original owner from whose custody the theft occurred. The person from whose custody the goods have been seized does not have title.
• BSNL was not a party to the proceedings that led to the High Court’s order.

Arguments by Suryanarayanan (Respondent):

• Suryanarayanan argued that the principle laid down in Madhavan (supra) is the governing position in law.
• He also relied on the decision in Pushkar Singh vs. State of Madhya Bharat & Ors. [AIR 1953 SC 508], which held that upon acquittal, money seized from the accused and belonging to him must be returned to the accused, not the complainant.
• The High Court’s view is consistent with the position in law, and no interference is warranted.

Submissions Table

Issues Framed by the Supreme Court

The Supreme Court considered the following issue:

1. Whether the High Court was correct in directing the return of the seized goods to the first respondent based on the principle that the property should be restored to the person from whom it was seized, without considering the claim of title asserted by the appellant.

Treatment of the Issue by the Court:

Authorities

The Supreme Court considered the following authorities:

Judgment

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

• The Supreme Court distinguished the case of N. Madhavan vs. State of Kerala [(1979) 4 SCC 1], stating that the principle of restoring property to the person from whom it was seized applies only when there is no dispute or doubt that the property belongs to that person. The Court clarified that the person from whose custody the goods have been seized does not have title.
• The Supreme Court distinguished the case of Pushkar Singh vs. State of Madhya Bharat & Ors. [AIR 1953 SC 508], noting that in that case, the money was found to belong to the accused, which was not the case here.

What weighed in the mind of the Court?

The Supreme Court’s decision was influenced by several factors. The Court emphasized that the function under Section 452 of the CrPC is judicial and requires due regard to the entitlement claimed by the person seeking possession. The Court found that the High Court had erred by focusing solely on the source of seizure without considering the claim of title asserted by BSNL. The Court noted that the Magistrate had correctly observed that BSNL had presented evidence that the goods were stolen from its godown and were not available in the open market. The Court also highlighted that Suryanarayanan had not provided any evidence to support his claim of title.

Sentiment Analysis of Reasons Given by the Supreme Court:

Fact:Law Ratio

Logical Reasoning Flowchart:

The court reasoned that while the general principle is to restore property to the person from whom it was seized, this principle does not apply when there is a dispute about ownership. The court emphasized that the function under Section 452 is judicial and requires consideration of the entitlement claimed by the person seeking possession. The court found that the High Court had erred by focusing solely on the source of seizure without considering the claim of title asserted by BSNL.

The Supreme Court rejected the High Court’s interpretation of Madhavan (supra), clarifying that the principle of restoring property to the person from whom it was seized applies only when there is no dispute about their ownership. The court emphasized that a claim of title to the seized goods is a relevant consideration while passing an order under Section 452 of the CrPC.

The Supreme Court also considered the argument that BSNL did not move an application under Section 452 of the CrPC. The Court held that the issue was whether the first respondent had established a claim of entitlement to the property. The Court found that the first respondent had failed to do so.

The Court noted that the Magistrate had correctly observed that BSNL had presented evidence that the goods were stolen from its godown and were not available in the open market. The Court also highlighted that Suryanarayanan had not provided any evidence to support his claim of title. Therefore, the Court concluded that the High Court was in error in directing the return of the goods to the first respondent.

The Court also noted that the goods were made over to BSNL in 1992 and that nearly 26 years had elapsed. The Court saw no reason to require BSNL to hold the goods indefinitely. The Court allowed BSNL to sell the goods by auction, subject to preserving a sample for any future civil proceedings. The proceeds from the sale would be subject to the orders of the civil court.

The key reasons for the decision are:

• The High Court erred in applying the principle in Madhavan (supra) without considering BSNL’s claim of title.
• Suryanarayanan failed to establish a claim of entitlement to the seized goods.
• BSNL had presented evidence that the goods were stolen from its godown and not available in the open market.
• The function under Section 452 is judicial and requires consideration of the entitlement claimed by the person seeking possession.

“The words “may make such order as it thinks fit” in the section, vest the court with a discretion to dispose of the property in any of the three modes specified in the section. But the exercise of such discretion is inherently judicial function. The choice of the mode or manner of disposal is not to be made arbitrarily, but judicially in accordance with the sound principles founded on reason and justice, keeping in view the class and nature of the property and the material before it.”

“Normally the Court would, following the discharge or acquittal of the accused, restore the property to the person from whose custody it was taken. A departure from this rule of practice is not lightly made when there is no dispute or doubt that the property which was seized from the custody of the accused belongs to him.”

“Where a claim is made before the court that the property does not belong to the person from whom it was seized, Section 452 does not mandate that its custody should be handed over to the person from whose possession it was seized, overriding the claim of genuine title which is asserted on behalf of a third party.”

Key Takeaways

• When claiming seized property under Section 452 of the CrPC, it is essential to establish a clear title to the property, not just possession.
• The principle of restoring property to the person from whom it was seized applies only when there is no dispute about their ownership.
• Courts must exercise their judicial function under Section 452 by considering all claims of entitlement to the property.
• If there are conflicting claims of entitlement, the court may relegate the parties to a civil court to prove their rights.

Directions

The Supreme Court directed the following:

• The seized goods were to remain in the custody of BSNL.
• BSNL was permitted to sell the goods by auction, subject to preserving a sample for any future civil proceedings.
• The proceeds from the sale would be subject to the orders of the civil court in any suit that may be instituted by Suryanarayanan.
• Suryanarayanan was relegated to the civil court to establish his claim and title to the goods.

Specific Amendments Analysis

There was no discussion about any specific amendments in the judgment.

Development of Law

The ratio decidendi of this case is that under Section 452 of the CrPC, when disposing of property after the conclusion of a criminal trial, the court must consider the claim of title to the property and not just the source from which the property was seized. The Supreme Court clarified that the principle of restoring property to the person from whom it was seized, as stated in Madhavan (supra), applies only when there is no dispute about the ownership of the property. This judgment clarifies the scope of Section 452 of the CrPC and provides guidance on how courts should handle competing claims over seized property.

Conclusion

The Supreme Court allowed the appeal filed by BSNL, setting aside the High Court’s order. The Court clarified that while the general principle is to restore seized property to the person from whom it was seized, this principle does not apply when there is a dispute about ownership. The Court held that the function under Section 452 of the CrPC is judicial and requires consideration of the entitlement claimed by the person seeking possession. The Court relegated Suryanarayanan to a civil court to establish his title to the seized goods. This judgment provides important guidance on how courts should handle competing claims over seized property under Section 452 of the CrPC.