Bank Fraud and Gold Seizure: Supreme Court Acquits Accused and Orders Return of Gold

The case of Hiralal Babulal Soni & Ors. vs. State of Maharashtra & Ors. is a complex legal battle involving allegations of fraud, misappropriation of funds, and possession of stolen property. The Supreme Court was tasked with determining the guilt of the accused in a large-scale banking fraud involving the fraudulent remittance of Rs. 6.7 crore and the subsequent seizure of 205 gold bars. The verdict of the Court set a significant precedent in cases related to fraud detection, wrongful accusations, and the standards of proof required for conviction.

Background of the Case

The case revolves around a fraudulent scheme where funds were transferred through fake Telegraphic Transfers (TTs) and later withdrawn from Vijaya Bank, Nasik Branch. The alleged fraud involved key accused individuals, including bank officials and private individuals who were accused of conspiring to withdraw money fraudulently. The key developments of the case are as follows:

On January 30, 1997, a person representing M/s. Globe International approached Vijaya Bank to open an account, but the bank manager initially refused due to discrepancies in documents.
On February 6, 1997, the account was opened after confirmation from an Assistant General Manager of Vijaya Bank’s Fort Branch, Bombay.
Between April and August 1997, Rs. 6.7 crore was transferred into the account through 12 fraudulent TTs.
On August 12, 1997, the fraud was discovered, and payments for 19 demand drafts worth Rs. 1.61 crore were stopped.
Investigations revealed that the TTs were forged, and the funds had been misappropriated through a network of individuals.

Legal Proceedings

The Central Bureau of Investigation (CBI) conducted an investigation and filed charges against several individuals, including bank officials and private persons, for offences under:

Sections 120B, 403, 409, 411, 420, 467, 471, and 477A of the Indian Penal Code (IPC).
Sections 13(1)(d) and 13(2) of the Prevention of Corruption Act, 1988.

During the trial, bank officials were accused of facilitating fraudulent transactions, while private individuals were charged with benefiting from the fraud. The trial court convicted some accused while acquitting others. The gold seized during the investigation was ordered to be returned to one of the accused.

Petitioner’s Arguments

The appellant, Nandkumar Babulal Soni, argued that he was wrongly convicted under Section 411 IPC (possession of stolen property) and Section 120B IPC (criminal conspiracy). His primary defenses included:

There was no direct evidence linking him to the fraudulent TTs.
The seized 205 gold bars were legally acquired and did not constitute stolen property.
The prosecution failed to establish that the gold bars were linked to the fraudulent transactions.
The trial court relied on circumstantial evidence and assumptions rather than concrete proof.

Respondent’s Arguments

The CBI contended that:

The accused was directly linked to the fraudulent withdrawal of funds.
The seized gold bars were purchased using proceeds from fraudulent TTs.
The accused failed to explain the source of the gold, strengthening the prosecution’s case.
Section 106 of the Evidence Act applied, shifting the burden onto the accused to prove his innocence.

Supreme Court’s Observations

The Supreme Court scrutinized the entire case and found several inconsistencies in the prosecution’s case. The key observations included:

There was no conclusive proof that the seized gold bars were linked to the fraudulently obtained funds.
“Suspicion, however strong, cannot take the place of proof beyond reasonable doubt.”
The prosecution had failed to bridge the gap between the fraudulent TTs and the acquisition of the gold bars.
Since the gold bars were not definitively proven to be stolen, the appellant could not be convicted under Section 411 IPC.
Acquittal of co-accused bank officials weakened the prosecution’s conspiracy theory.

Final Judgment

The Supreme Court allowed the appeals of the accused and overturned their conviction. The key rulings were:

The conviction of Nandkumar Babulal Soni under Sections 120B and 411 IPC was set aside.
The seized 205 gold bars were ordered to be returned to the accused.
Vijaya Bank’s claim to the seized gold was dismissed.
The Court ruled that the prosecution failed to establish guilt beyond a reasonable doubt.

The Court further emphasized:

“It is settled law that however strong a suspicion may be, it cannot take the place of proof beyond reasonable doubt.”

Conclusion

This judgment is significant in reinforcing the legal principle that suspicion and circumstantial evidence alone cannot be the basis for a criminal conviction. It highlights the necessity of concrete proof when prosecuting individuals for financial fraud and conspiracy. By acquitting the accused and ordering the return of gold bars, the Supreme Court has reaffirmed the high standard of proof required in criminal cases involving allegations of financial misconduct.

Petitioner Name: Hiralal Babulal Soni & Ors..
Respondent Name: State of Maharashtra & Ors..
Judgment By: Justice B.R. Gavai, Justice Prashant Kumar Mishra, Justice K.V. Viswanathan.
Place Of Incident: Nasik, Maharashtra.
Judgment Date: 25-02-2025.

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