The Supreme Court of India, in a judgment delivered on September 18, 2025, has ruled that releasing seized case property (muddamal), specifically a cash amount of Rs. 50,00,000, was “unjustified and premature” when ownership of the money is a matter of evidence to be decided at trial. A bench comprising Justice Sanjay Karol and Justice Prashant Kumar Mishra set aside a Gujarat High Court order that had permitted the release of the cash to a witness in an ongoing cheating and criminal breach of trust case.
Case Background
The matter originated from a First Information Report (FIR) lodged on April 9, 2022, by Chiragkumar Dilipbhai Natwarlal Modi. The complaint alleged that Rajput Vijaysinh Natwarsinh, through his proprietary firm Jay Gopal Trading Company, had conducted business in castor seeds worth Rs. 44,53,714 and that cheques issued for this amount were dishonoured due to insufficient funds. The complaint further alleged that the appellant’s company had engaged in similar transactions with other businesses, resulting in a total outstanding amount of Rs. 3,49,07,073.
Following an investigation, the police filed a chargesheet on June 5, 2022, under Sections 406 (criminal breach of trust), 420 (cheating), and 120-B (criminal conspiracy) of the Indian Penal Code, 1860. During the investigation, a cash amount of Rs. 50,00,000 was seized.
Proceedings in Lower Courts
Respondent No. 2, who was listed as a witness for the prosecution, filed an application before the Additional Chief Judicial Magistrate, Unjha, seeking the release of the seized Rs. 50,00,000. He claimed the amount was owed to his concern, Bhadrakali Tobacco, by the appellant’s company and produced a bill, audit report, and ledger account to support his claim.
The Trial Judge, on August 1, 2023, rejected the application, observing that with multiple witnesses and complainants alleging cheating, it was a “matter of evidence as to whom the muddamal be handed over at this stage and hence, it does not appear to be proper and just to take any decision regarding muddamal.”
This decision was upheld by the Additional Sessions Judge, Mahesana, in a criminal revision application. The Sessions Judge, in an order dated December 30, 2023, noted, “The investigating Officer has seized the above amount during the investigation as proceeds of crime money… It is the subject matter of evidence as to who lost how much amount from amongst the victims.”
High Court’s Decision
Respondent No. 2 then approached the High Court of Gujarat, which, in a judgment dated December 4, 2024, quashed the orders of the lower courts. The High Court, relying on the Supreme Court’s decision in Sunderbhai Ambalal Desai v. State of Gujarat, held that the interim custody of the cash could be released to the petitioner, stating that “no prejudice is likely to be caused to the prosecution.” The High Court directed the release of the cash on the condition of furnishing a personal bond of an equivalent amount and ordered that a detailed panchnama of the currency notes be prepared.
Supreme Court’s Analysis and Final Order
The appellant-accused challenged the High Court’s order before the Supreme Court. The apex court, after hearing the parties, agreed that while the High Court had correctly referred to the Sunderbhai Ambalal Desai case, it had “failed to appreciate its holding in the attending facts and circumstances of the instant case.”
The Supreme Court reasoned that the ownership of the seized money was a central issue in the criminal case. The bench observed that the documents produced by Respondent No. 2 were not conclusive proof of his claim to that specific sum. The judgment stated, “Simply because the amount owed to him matches the amount recovered does not establish that he is the only claimant to the said amount.”
The Court concluded that the rightful owner could only be determined after a thorough examination of evidence from all parties involved. “The appropriate ownership of the sum of money can only be determined after consideration of all evidence and having taken into account the claims and views of all the other persons that the appellant-accused has allegedly played foul with, in business,” the bench held. “At this stage, therefore, releasing the muddamal would be unjustified and premature.”
Consequently, the Supreme Court allowed the appeal, setting aside the Gujarat High Court’s judgment and restoring the orders of the trial court and the Additional Sessions Judge. The Court further directed that the amount, which had already been withdrawn by the respondent pursuant to the High Court’s order, be transferred to the custody of the concerned Trial Court. The respondent was also directed to deposit the original currency notes with the Trial Court, if still available.
