Custody of Seized Property in Criminal Cases: Supreme Court Ruling in BSNL vs. Suryanarayanan

The case of Bharat Sanchar Nigam Limited (BSNL) vs. Suryanarayanan & Anr. addresses a significant legal question regarding the custody and disposal of seized property in criminal cases. The Supreme Court was tasked with determining whether the seized goods should be returned to the party from whom they were taken or to the entity that originally claimed ownership.

The case arose from an alleged theft of copper wire and lead sleeves from the godown of the Telecom Department in Ernakulam. The goods were later found in the possession of the respondent, who was running a metal business. The primary legal issue was whether the seized property should be restored to the person from whom it was taken or whether the rightful owner should be determined through civil litigation.

Background of the Case

The dispute originated when an FIR was lodged on February 4, 1992, alleging the theft of 10,285 kilograms of copper wire and 62 lead sleeves valued at Rs. 8,31,300 from the BSNL godown in Ernakulam. Key developments in the case were:

The police recovered 5,060 kilograms of copper lead alloy moulds from the respondent’s business premises.
The Judicial Magistrate granted interim custody of the seized goods to BSNL under Section 451 of the Code of Criminal Procedure (CrPC).
A criminal case was registered against several accused, including the respondent.
On April 30, 1999, the trial court acquitted all accused.
After the acquittal, the respondent filed an application under Section 452 of the CrPC, seeking the return of the seized property.
The Magistrate rejected the respondent’s request and directed him to approach a civil court to establish ownership.
The Sessions Court upheld this decision, but the High Court reversed it, ordering the return of goods to the respondent.
BSNL appealed against this decision in the Supreme Court.

Legal Issues Considered

The Supreme Court considered the following key legal questions:

Who is entitled to the seized property under Section 452 of the CrPC after an acquittal?
Should the seized property be returned to the person from whom it was confiscated or to the original owner?
Does the right to possession override the issue of ownership in cases where criminal charges are dismissed?
Can a Magistrate direct claimants to prove ownership in a civil court before releasing seized property?

Arguments by the Appellant (BSNL)

The counsel for BSNL argued:

“The seized property belonged to BSNL and was stolen from its godown.”
“The Magistrate and Sessions Court correctly held that the respondent must prove ownership in a civil court before the property is released.”
“The goods in question were not available in the open market, proving that they were the stolen property of BSNL.”

Arguments by the Respondent

The respondent contended:

“The seized goods were taken from my premises, and under established legal principles, they should be returned to me.”
“The High Court correctly ruled that the property should be given back to the person from whom it was seized.”
“There was no direct evidence linking the seized goods to BSNL.”

Supreme Court’s Observations and Judgment

The Supreme Court, comprising D.Y. Chandrachud and M.R. Shah, set aside the High Court’s ruling and restored the decision of the lower courts. The Court ruled:

“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 that person, overriding the claim of genuine title asserted by a third party.”

The Court further held:

Entitlement postulates a right, and the function exercised by the court under Section 452 is judicial in nature.
The original owner of the property must be considered before releasing goods to the person from whom they were seized.
Since the respondent had not provided sufficient proof of ownership, the Magistrate was correct in directing him to seek remedy through a civil suit.
BSNL had consistently maintained that the seized property was stolen from its godown, and the nature of the goods supported its claim.

Impact of the Judgment

The Supreme Court’s decision has significant implications:

It clarifies that the rightful owner, not just the last possessor, must be considered when returning seized property.
It upholds the principle that ownership disputes over criminally seized goods should be adjudicated through civil litigation if there is any ambiguity.
It reinforces the view that an acquittal in a criminal case does not automatically entitle a person to claim possession of seized property.

Final Decision

The Supreme Court quashed the High Court’s order and upheld the Magistrate’s ruling that the respondent must establish ownership in a civil suit. The Court also allowed BSNL to auction the goods while preserving a sample for any future legal proceedings.

“The respondent must prove his title in a civil court. BSNL shall preserve a sample of the goods but is permitted to auction the rest, with the proceeds being subject to the outcome of any civil litigation.”

This ruling provides a clear legal framework for handling cases where seized property ownership is disputed, ensuring that rightful owners have an avenue to claim their property while preventing wrongful possession.

Petitioner Name: Bharat Sanchar Nigam Limited.
Respondent Name: Suryanarayanan & Anr..
Judgment By: Justice Dhananjaya Y. Chandrachud, Justice M.R. Shah.
Place Of Incident: Ernakulam, Kerala.
Judgment Date: 13-12-2018.

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