Case Note & Summary
The case involved a dispute over the return of 21 currency notes of Rs. 1,000 each, seized by the police from the appellant, State Bank of India, during an investigation into a cheating case against the third respondent. The third respondent was alleged to have obtained a large sum in currency notes from the first and second respondents by cheating. The police traced a portion of that money to the appellant bank. The appellant claimed to have acquired the notes in the normal course of business, without knowledge of any offence. During the trial, the appellant applied under Section 517(1) of the Code of Criminal Procedure, 1898, for return of the notes. The trial court acquitted the accused and ordered the notes to be returned to the appellant on 24 April 1962. Subsequently, the State appealed, and the High Court set aside the acquittal and convicted the third respondent. Thereafter, the first respondent applied to the High Court for delivery of the notes. By order dated 5 April 1963, the High Court directed the notes to be handed over to the first and second respondents, without giving any notice to the appellant bank. The appellant appealed to the Supreme Court. The main legal issues were: (1) whether the High Court was required to give notice and an opportunity of hearing to the appellant before reversing the trial court’s order under Section 520; and (2) whether the appellant had a 'right to possess' the currency notes under Section 517, so as to be entitled to their return. The appellant argued that the High Court’s order was made in violation of natural justice. The respondents contended that the statute did not expressly require notice and the High Court had discretion in the matter. The Supreme Court, relying on principles from English and Indian precedents, held that though the statute is silent, there is an implied requirement that parties adversely affected must be heard before an order for disposal of property is made. The High Court’s failure to hear the appellant rendered the order illegal. On the second issue, the Court observed that property in coins and currency notes passes by mere delivery and forms an exception to the rule nemo dat quod non habet. The appellant, as an innocent holder for value, had the right to possess the notes. Consequently, the appeal was allowed, the High Court’s order was set aside, and the currency notes were directed to be returned to the appellant.
Headnote
A) Criminal Procedure - Natural Justice - Right to Hearing Before Disposal of Property - Code of Criminal Procedure, 1898, Sections 517 and 520 - The High Court reversed the trial court's order directing return of currency notes to the appellant bank without giving notice or hearing. The court held that even though the statute does not expressly require notice, there is a necessary implication that parties adversely affected should be heard before making an order for return of seized property. The order of the High Court was violative of natural justice and was set aside. (Paras Not mentioned) B) Criminal Procedure - Disposal of Property - Right to Possess - Code of Criminal Procedure, 1898, Section 517 - The appellant bank claimed the currency notes as an innocent holder for value in the normal course of business. The Supreme Court held that property in coins and currency notes passes by mere delivery, and the appellant had the 'right to possess' under section 517, even as against the original owners who were defrauded. The High Court should have directed return to the appellant. (Paras Not mentioned)
Issue of Consideration
Whether the High Court was required to give notice and opportunity of hearing to the appellant before reversing the trial court's order for return of seized property under Section 520 of the Code of Criminal Procedure, 1898?; Whether the appellant bank had the right to possess the currency notes within the meaning of Section 517?
Final Decision
Appeal allowed. High Court's order dated 5th April 1963 set aside. Currency notes directed to be returned to the appellant (State Bank of India).
Law Points
- Legal points not extracted
- natural justice requires hearing before order for return of property
- Section 517 CrPC 1898
- Section 520 CrPC 1898
- property in currency notes passes by delivery
- right to possess includes innocent holder for value
