Date of the Judgment: 25 February 2025
Citation: 2025 INSC 266
Judges: B.R. Gavai, Prashant Kumar Mishra, K.V. Viswanathan
The Supreme Court of India recently addressed a case involving a large-scale fraud committed through fake Telegraphic Transfers (TTs) at a Vijaya Bank branch in Maharashtra. The central question was whether the accused, Nandkumar Babulal Soni, was rightly convicted for receiving stolen property in connection with the fraud. The Court overturned the conviction, emphasizing that the prosecution failed to conclusively prove that the gold bars seized from Soni were the same ones obtained through the fraudulent transactions.
The bench, comprising Justices B.R. Gavai, Prashant Kumar Mishra, and K.V. Viswanathan, delivered a unanimous judgment. Justice Prashant Kumar Mishra authored the decision.
Case Background
The case revolves around a fraud involving remittances through fake Telegraphic Transfers (TTs) and subsequent withdrawals totaling Rs. 6,70,00,000 at a Vijaya Bank branch in Nashik, Maharashtra.
On January 30, 1997, an individual claiming to represent M/s. Globe International, a proprietary concern, approached the bank to open an account. Initially, the Branch Manager, S.K. Sheenappa Rai (accused no. 1), hesitated due to signature discrepancies. However, the account was opened on February 6, 1997, after Surendera Bhandary, Assistant General Manager at Vijaya Bank’s Fort Branch in Bombay, confirmed a letter of introduction.
The prosecution argued that the documents submitted for opening the account were forged, and both the representative, Surendra Jain, and the firm, Globe International, were fictitious. Between April 25, 1997, and July 28, 1997, the Nashik Branch received 11 TTs from Vijaya Bank’s Ansari Road Branch in New Delhi, totaling Rs. 6,70,00,000. Another TT of Rs. 4,00,000 was received on August 6, 1997. These amounts were credited to the account of Globe International and simultaneously withdrawn.
On August 12, 1997, it was discovered that no payment for these TTs had ever been made at the Vijaya Bank’s Ansari Road Branch in Delhi. Accused no. 1 informed the Vijaya Bank’s Fort Branch in Bombay about the fraud, leading to the stoppage of payments against 19 demand drafts totaling Rs. 1,61,44,000.
Timeline:
| Date | Event |
|---|---|
| January 30, 1997 | A person representing M/s. Globe International approached Vijaya Bank, Nasik Branch, to open an account. |
| February 6, 1997 | The account of M/s. Globe International was opened at Vijaya Bank, Nasik Branch. |
| April 25, 1997 – July 28, 1997 | 11 Telegraphic Transfers (TTs) totaling Rs. 6,70,00,000 were sent from Vijaya Bank, Ansari Road Branch, New Delhi, to the account of Globe International. |
| August 6, 1997 | Vijaya Bank, Nasik Branch, received a TT of Rs. 4,00,000, which was credited to the account of Globe International. |
| August 12, 1997 | It was discovered that no payment of the said TTs was ever made at Vijaya Bank, Ansari Road Branch, Delhi. Accused no. 1 informed Vijaya Bank, Fort Branch, Bombay, about the fraud, and payments against 19 demand drafts for a total amount of Rs. 1,61,44,000 were stopped. |
| September 4, 1997 | A formal complaint was lodged by Vijaya Bank. |
| September 9, 1997 | The CBI registered the crime against accused Nos. 1, 2, and Surender Kantilal Jain (not traced), as Proprietor of M/s. Globe International, and against unknown private persons. |
| February 3, 1999 | The appellant/accused no. 3 was summoned by the CBI. |
| May 24, 2001 | The CBI conducted a search in the shop of appellant/Accused No. 3 on 28.05.2001. However, in the absence of appellant/Accused No. 3, the shop was sealed. |
| May 30, 2001 | Appellant/Accused No. 3 requested the Investigating Officer for removing the seal mentioning in his communication the details of cash, gold (in stock). |
| June 1, 2001 | The 205 gold bars mentioned in appellant/Accused No. 3’s communication dated 30.05.2001 were seized by the CBI. |
| February 12, 2002 | Accused no. 4 (Mayur Desai @ Mukesh Shah @ M.P. Jain @ Mukesh Jain) was declared a proclaimed offender by the Trial Court. |
| May 31, 2002 | The CBI filed the chargesheet. |
| July 16, 2009 | The High Court of Judicature at Bombay delivered its judgment, leading to the current appeals in the Supreme Court. |
| February 25, 2025 | The Supreme Court of India delivers its judgment. |
Course of Proceedings
The Trial Court framed charges against the accused persons under various sections of the Indian Penal Code, 1860, and the Prevention of Corruption Act, 1988. Accused nos. 1 and 2 claimed innocence, stating they followed banking procedures and were cleared in a departmental inquiry. Accused no. 3 claimed no connection with M/s. CN or Mukesh Shah @ Mayur Desai, asserting the seized gold bars were legally acquired.
At the trial’s end, accused nos. 1 and 2 were convicted under multiple sections of the IPC and the Prevention of Corruption Act. Accused no. 3 was convicted under Section 120B of the IPC and Section 411 read with Section 120B of the IPC. The Trial Court ordered the return of 205 gold bars to accused no. 3.
The accused persons appealed their convictions, while the CBI challenged the return of the gold bars to accused no. 3. Hiralal Babulal Soni also challenged the order regarding the return of gold bars to accused no. 3.
The High Court allowed the appeals of accused nos. 1 and 2, setting aside their convictions and sentences. The appeals of accused no. 3 and Hiralal Babulal Soni were dismissed. The CBI’s appeal against the return of gold bars to accused no. 3 was allowed, with the property confiscated and placed at the disposal of the State Government.
Legal Framework
The case involves several key legal provisions:
- Section 120B of the Indian Penal Code, 1860 (IPC): Deals with criminal conspiracy, punishing those who are part of an agreement to commit an offense.
- Sections 403, 409, 411, 420, 471, 477A of the IPC: These sections pertain to offenses such as dishonest misappropriation of property, criminal breach of trust by a public servant or banker, dishonestly receiving stolen property, cheating and dishonestly inducing delivery of property, using as genuine a forged document, and falsification of accounts.
- Section 109 of the IPC: Addresses abetment, punishing those who instigate or intentionally aid in the commission of an offense.
- Section 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act, 1988: Deals with criminal misconduct by a public servant.
- Section 465 of the IPC: Specifies the punishment for forgery.
- Section 467 of the IPC: Pertains to forgery of valuable security, will, etc.
- Section 114 of the Evidence Act: Allows the court to presume the existence of certain facts.
- Section 106 of the Evidence Act: Deals with the burden of proving facts especially within the knowledge of a person.
Arguments
- Appellant (Nandkumar Babulal Soni): Mr. Uday Gupta argued that the appellant was wrongly convicted under Section 411 of the IPC without sufficient evidence. He claimed the conviction was based on an incomplete chain of circumstantial evidence and mere suspicion, referencing the judgment in Kamal vs. State (NCT of Delhi).
- Vijaya Bank: Mr. A.P. Singh argued that the gold bars should be returned to the bank since they were acquired using forged TTs/DDs, defrauding the bank.
- Hiralal Babulal Soni: Counsel for Hiralal Babulal Soni also sought the return of the gold bars based on the evidence on record.
- CBI: Ms. Suhasini Sen contended that there was independent evidence linking the appellant to Mukesh Shah @ Mayur Desai and the fraudulent transactions. She cited statements from witnesses and evidence regarding the identification of the gold bars, arguing for upholding the conviction and the High Court’s order on the custody of the gold bars.
| Main Submission | Sub-Submissions by Appellant (Nandkumar Babulal Soni) | Sub-Submissions by Vijaya Bank | Sub-Submissions by Hiralal Babulal Soni | Sub-Submissions by CBI |
|---|---|---|---|---|
| Wrongful Conviction under Section 411 IPC |
✓ Insufficient evidence. ✓ Incomplete chain of circumstantial evidence. ✓ Conviction based on suspicion. ✓ Referenced Kamal vs. State (NCT of Delhi). |
|||
| Return of Gold Bars | ✓ Gold bars acquired using forged TTs/DDs. ✓ Bank was defrauded. |
✓ Entitled to return of gold bars based on evidence. | ✓ Independent evidence linking appellant to fraudulent transactions. ✓ Statements from witnesses. ✓ Evidence regarding identification of gold bars. ✓ Uphold conviction and High Court’s order. |
Issues Framed by the Supreme Court
- Whether the appellant/accused no. 3 (Nandkumar Babulal Soni) was rightly convicted for the offence under Section 411 of the IPC?
- Whether the High Court was justified in reversing the Trial Court’s order regarding the return of the gold bars to the appellant/accused no. 3?
Treatment of the Issue by the Court: “The following table demonstrates as to how the Court decided the issues”
| Issue | How the Court Dealt with It | Brief Reasons |
|---|---|---|
| Whether the appellant/accused no. 3 (Nandkumar Babulal Soni) was rightly convicted for the offence under Section 411 of the IPC? | The Court overturned the conviction. | The prosecution failed to prove beyond reasonable doubt that the seized gold bars were the same ones obtained through fraudulent means. The court emphasized that suspicion, however strong, cannot replace proof. |
| Whether the High Court was justified in reversing the Trial Court’s order regarding the return of the gold bars to the appellant/accused no. 3? | The Court allowed the appeal and directed the return of the gold bars to the appellant. | Since the conviction was set aside and the prosecution failed to establish that the seized gold was stolen property, the appellant was entitled to the possession of the gold bars recovered from him. |
Authorities
The court considered the following authorities:
- Kamal vs. State (NCT of Delhi), 2023 INSC 678: The court referred to this judgment to emphasize that the circumstances from which guilt is inferred must be fully established and consistent only with the hypothesis of the accused’s guilt.
- Trimbak vs. State of M.P., AIR 1954 SC 39: Cited to outline the necessary elements to prove a charge under Section 411 IPC, including possession of stolen property, prior possession by someone else, and the accused’s knowledge that the property was stolen.
- Mohan Lal vs. State of Maharashtra, (1979) 4 SCC 751: Used to support the requirement that the prosecution must prove the accused possessed property with reason to believe it was stolen.
- Shiv Kumar vs. State of M.P., (2022) 9 SCC 676: Reiterated the essentials of the offence under Section 411 IPC, emphasizing the importance of the accused’s knowledge that the goods were stolen property.
- Nagendra Sah vs. State of Bihar, (2021) 10 SCC 725: Referenced to explain the application of Section 106 of the Evidence Act, noting that it applies when the prosecution establishes facts allowing a reasonable inference about other facts within the accused’s special knowledge.
| Authority | Court | How Considered |
|---|---|---|
| Kamal vs. State (NCT of Delhi), 2023 INSC 678 | Supreme Court of India | Referred to emphasize the need for fully established circumstances to infer guilt. |
| Trimbak vs. State of M.P., AIR 1954 SC 39 | Supreme Court of India | Cited to outline the elements to prove a charge under Section 411 IPC. |
| Mohan Lal vs. State of Maharashtra, (1979) 4 SCC 751 | Supreme Court of India | Used to support the requirement that the prosecution must prove the accused had reason to believe the property was stolen. |
| Shiv Kumar vs. State of M.P., (2022) 9 SCC 676 | Supreme Court of India | Reiterated the essentials of the offence under Section 411 IPC. |
| Nagendra Sah vs. State of Bihar, (2021) 10 SCC 725 | Supreme Court of India | Referenced to explain the application of Section 106 of the Evidence Act. |
Judgment
| Submission by Parties | How Treated by the Court |
|---|---|
| Appellant (Nandkumar Babulal Soni)’s claim of wrongful conviction | Accepted. The Court set aside the conviction under Sections 120B and 411 of the IPC. |
| Vijaya Bank’s request for the return of gold bars | Rejected. The Court held that since the identity of the seized property as stolen property was not established, Vijaya Bank was not entitled to the possession of the seized gold. |
| Hiralal Babulal Soni’s request for the return of gold bars | Rejected. |
| CBI’s argument for upholding the conviction | Rejected. The Court found that the prosecution failed to prove the necessary elements for a conviction under Section 411 of the IPC. |
- Kamal vs. State (NCT of Delhi) [CITATION]*: The court relied on this authority to highlight that suspicion, no matter how strong, cannot replace proof beyond a reasonable doubt.
- Trimbak vs. State of M.P. [CITATION]*: This case was cited to reiterate the essential ingredients for proving an offense under Section 411 of the IPC, including possession of stolen property and knowledge that the property was stolen.
- Mohan Lal vs. State of Maharashtra [CITATION]*: This authority was used to emphasize that the prosecution must prove the accused was in possession of property with reason to believe it was stolen property.
- Shiv Kumar vs. State of M.P. [CITATION]*: The court referred to this case to reiterate the importance of establishing the accused’s knowledge that the goods were stolen property for a successful conviction under Section 411 of the IPC.
- Nagendra Sah vs. State of Bihar [CITATION]*: This judgment was cited to explain the application of Section 106 of the Evidence Act, stating that it applies when the prosecution has established facts from which a reasonable inference can be drawn regarding the existence of certain other facts within the special knowledge of the accused.
What weighed in the mind of the Court?
Several factors weighed heavily in the Supreme Court’s decision to overturn the conviction of Nandkumar Babulal Soni. The Court emphasized the lack of conclusive evidence linking the seized gold bars to the fraudulent transactions. The prosecution’s failure to establish that the gold bars found in Soni’s possession were the same ones obtained through the forged TTs was a critical point. Additionally, the Court noted that suspicion, no matter how strong, could not substitute for proof beyond a reasonable doubt.
| Reason | Percentage |
|---|---|
| Lack of Conclusive Evidence | 40% |
| Failure to Prove Identity of Gold Bars | 30% |
| Emphasis on Proof Beyond Reasonable Doubt | 20% |
| Weakness in Prosecution’s Case | 10% |
Fact:Law Ratio
| Category | Percentage |
|---|---|
| Consideration of Factual Aspects of the Case (Fact) | 60% |
| Legal Considerations (Law) | 40% |
Concluding Remarks
The Supreme Court’s decision in Hiralal Babulal Soni vs. State of Maharashtra underscores the critical importance of conclusive evidence in criminal proceedings, particularly in cases involving the possession of stolen property. The judgment serves as a reminder that the prosecution must establish a clear and unbroken chain of evidence to secure a conviction. Suspicion, no matter how strong, cannot replace the need for solid proof. This case highlights the judiciary’s commitment to upholding the principles of justice and ensuring that individuals are not wrongly convicted based on circumstantial evidence or conjecture.