2025 (2) TMI 1105 - SC - Indian Laws

Seizure of Gold bars - stolen property linked to fraudulent transactions involving M/s. Globe International - Conviction of Accused No. 3 (Nandkumar Babulal Soni) under Sections 120B and 411 of the IPC - Acquittal of the Accused - HELD THAT - In the case at hand the Trial Court has held in para 120 that whether the gold bars which were sold by M/s. CN to Mr. Mukesh Shah of M/s. Globe International are the same or not has not been proved beyond reasonable doubt. It is held by the Trial Court that the distance between may and must is very vast and prosecution has to cover that distance to reach the destination of must however the prosecution in this case could not achieve that level of proof. With this finding of the Trial Court it is surprising as to how the appellant can be convicted for committing offence under Sections 120B and 411 of the IPC. Once the courts below have found that the seized gold bars (Article 2) are not the same gold bars conviction under Sections 120B and 411 of the IPC cannot be sustained. The High Court impliedly held that witnesses connected with M/s CN have failed to identify the seized gold. However in the opinion of the High Court the same is not relevant because the appellant has failed to prove lawful acquisition of gold. It is failed to understand when the prosecution has failed to prove the identity of seized gold as being the same gold which were sold by M/s. CN to M/s. Globe International how the appellant is liable to prove lawful acquisition of gold vis - vis the stolen gold. In Mohan Lal vs. State of Maharashtra 1979 (4) TMI 178 - SUPREME COURT this Court held that the prosecution has to prove that the accused was in possession of property which he had reason to believe that it was stolen property. Conclusion - In view of the fact that the identity of the seized property being the stolen property has not been established Vijaya Bank is not entitled to the possession of the seized gold. Appeal dismissed.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal issues considered in the judgment include:

(a) Whether the conviction of Accused No. 3 (Nandkumar Babulal Soni) under Sections 120B and 411 of the IPC was justified based on the evidence presented.

(b) Whether the seized gold bars were proven to be stolen property linked to fraudulent transactions involving M/s. Globe International.

(c) The applicability of Section 106 of the Evidence Act concerning the burden of proof on the accused to explain the possession of the gold bars.

(d) The rightful possession of the seized gold bars and whether they should be returned to Accused No. 3, Vijaya Bank, or Hiralal Babulal Soni.

2. ISSUE-WISE DETAILED ANALYSIS

(a) Conviction of Accused No. 3 under Sections 120B and 411 of the IPC

- Relevant legal framework and precedents: Sections 120B (criminal conspiracy) and 411 (dishonestly receiving stolen property) of the IPC. The prosecution must prove the accused's knowledge or belief that the property was stolen.

- Court's interpretation and reasoning: The Court emphasized that suspicion, however strong, cannot replace proof beyond reasonable doubt. The prosecution failed to establish a conclusive link between the seized gold bars and the fraudulent transactions.

- Key evidence and findings: The Trial Court noted the absence of evidence linking Accused No. 3 to the initial conspiracy involving TTs. Hostile witnesses and lack of identification of the gold bars weakened the prosecution's case.

- Application of law to facts: The Court found that the prosecution did not meet the burden of proof required to establish that the gold bars were stolen property under Section 411.

- Treatment of competing arguments: The defense argued the lack of evidence and the incomplete chain of circumstantial evidence. The prosecution relied on the accused's failure to explain possession under Section 106 of the Evidence Act.

- Conclusions: The Court concluded that the conviction of Accused No. 3 was unsustainable due to insufficient evidence and lack of proof beyond reasonable doubt.

(b) Identification of the Seized Gold Bars as Stolen Property

- Relevant legal framework and precedents: Section 411 of the IPC requires proof that the accused knew or believed the property was stolen.

- Court's interpretation and reasoning: The Court noted that the prosecution failed to prove that the seized gold bars were the same as those involved in the fraudulent transactions. The identification of the gold bars was not established beyond reasonable doubt.

- Key evidence and findings: The Trial Court acknowledged the delay in recovery and the absence of evidence linking the seized gold bars to the fraudulent transactions.

- Application of law to facts: The Court found that the prosecution did not establish the identity of the gold bars as stolen property, thus failing to meet the requirements of Section 411.

- Treatment of competing arguments: The defense argued the lack of evidence for identification, while the prosecution relied on circumstantial evidence and the accused's failure to explain possession.

- Conclusions: The Court held that the identity of the gold bars as stolen property was not proven, rendering the conviction under Section 411 unsustainable.

(c) Applicability of Section 106 of the Evidence Act

- Relevant legal framework and precedents: Section 106 of the Evidence Act pertains to facts within the special knowledge of the accused.

- Court's interpretation and reasoning: The Court emphasized that Section 106 applies only when the prosecution has established a prima facie case. The prosecution's failure to establish the identity of the gold bars precluded the application of Section 106.

- Key evidence and findings: The prosecution did not present evidence to prove the gold bars were part of the fraudulent transactions, undermining the invocation of Section 106.

- Application of law to facts: The Court found that the prosecution did not meet its initial burden, making the accused's failure to explain possession irrelevant.

- Treatment of competing arguments: The defense argued that the prosecution's failure to establish a prima facie case negated the need for the accused to explain possession.

- Conclusions: The Court concluded that Section 106 was inapplicable due to the prosecution's failure to establish a prima facie case.

(d) Rightful Possession of the Seized Gold Bars

- Relevant legal framework and precedents: The rightful possession of seized property depends on establishing its identity as stolen property.

- Court's interpretation and reasoning: The Court found that the identity of the gold bars as stolen property was not established, entitling Accused No. 3 to possession.

- Key evidence and findings: The High Court's decision to confiscate the gold bars was based on the appellant's failure to prove lawful acquisition, which the Court found irrelevant due to the prosecution's failure to prove the gold bars were stolen.

- Application of law to facts: The Court directed the return of the gold bars to Accused No. 3, as the prosecution did not prove them as stolen property.

- Treatment of competing arguments: The defense argued for the return of the gold bars due to the lack of evidence proving them as stolen, while the prosecution sought confiscation based on circumstantial evidence.

- Conclusions: The Court ordered the return of the gold bars to Accused No. 3, dismissing the appeals of Vijaya Bank and Hiralal Babulal Soni.

3. SIGNIFICANT HOLDINGS

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

- "The prosecution has to prove its case beyond all reasonable doubts by positively completing the chain of circumstances against the appellant, which the prosecution has utterly failed in the present case."

- The Court set aside the conviction and sentence of Accused No. 3 under Sections 120B and 411 of the IPC, directing the return of the seized gold bars to him.

- The Court dismissed the appeals of Vijaya Bank and Hiralal Babulal Soni, affirming that the identity of the seized gold bars as stolen property was not established.