CourtKutchehry

Supreme Court: Seized Cash in Multi-Victim Fraud Cannot Be Released to One Complainant

Ownership must be decided after full trial; premature release could harm other victims’ claims

Bench sets aside Gujarat High Court order; restores trial court’s decision to retain ₹50 lakh as case property

By Our Legal Correspondent

New Delhi: September 20, 2025: In a significant ruling aimed at protecting the rights of all victims in financial fraud cases, the Supreme Court has held that cash seized from an accused in a multi-victim cheating case cannot be released to just one complainant before the trial concludes.

A bench of Justice Sanjay Karol and Justice Prashant Kumar Mishra delivered the judgment on 18 September 2025, overturning a Gujarat High Court order that had directed the release of ₹50 lakh to a single trader who claimed the money belonged to him.

The Court emphasised that the rightful ownership of seized money — treated as “muddamal” (case property) — can only be determined after considering all evidence and hearing all potential claimants.

Background of the Case

The case began with a complaint filed on 9 April 2022 by Chiragkumar Dilipbhai Natwarlal Modi, a trader from Mahesana, Gujarat. He alleged that the accused, Rajput Vijaysinh Natwarsinh, who ran a proprietary firm named Jay Gopal Trading Company, had purchased castor seeds worth ₹44.53 lakh but failed to make payment.

Several cheques issued by the firm were dishonoured due to insufficient funds. Further investigation revealed that the firm had allegedly defaulted on payments worth ₹3.49 crore to multiple traders.

During the investigation, police seized ₹50 lakh in cash from the accused, treating it as proceeds of crime. The amount was kept in custody as case property under Section 451 of the Code of Criminal Procedure (CrPC), which deals with the disposal of property during trial.

The Dispute Over the ₹50 Lakh

One of the traders, referred to as Respondent No. 2, claimed that the seized cash belonged to him for goods supplied through his firm, Bhadrakali Tobacco. He produced invoices, audit reports, and ledger accounts to support his claim and sought release of the money.

The Trial Court rejected his application, noting that multiple victims were involved and that ownership could only be decided after examining all evidence during trial. The Sessions Court upheld this decision, calling the seized amount “proceeds of crime” and observing that no conclusive proof established the respondent’s exclusive ownership.

However, the Gujarat High Court, relying on the Supreme Court’s earlier ruling in Sunderbhai Ambalal Desai v. State of Gujarat (2002), ordered the release of the cash to the respondent on furnishing a bond equal to the seized amount. The High Court reasoned that keeping the money idle served no purpose when the applicant had shown prima facie entitlement.

Supreme Court’s Reasoning

The Supreme Court disagreed with the High Court’s approach, noting that the Sunderbhai Desai precedent applied to cases where the seized property clearly belonged to the complainant, such as theft or robbery cases.

In this case, the Court said, the money was recovered during an investigation into business transactions involving multiple parties, and the ownership was disputed.

The bench observed:

“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 Court further noted that just because the amount claimed by the respondent matched the seized sum did not prove exclusive ownership. It was entirely possible that the money was linked to other transactions involving other victims.

Legal Provisions Examined

The Court examined Section 451 CrPC, which empowers courts to make orders for the proper custody of property pending trial. It reiterated that interim release of property should be exercised cautiously, especially when ownership is disputed.

The bench also referred to the principle that criminal proceedings must protect the interests of all victims, not just the first or most vocal complainant.

Final Order

The Supreme Court:

Allowed the appeal filed by the accused.
Set aside the Gujarat High Court’s order dated 4 December 2024.
Restored the orders of the Additional Chief Judicial Magistrate, Unjha, and the Additional Sessions Judge, Mehsana (Visnagar), which had refused to release the cash.

The seized ₹50 lakh will remain in court custody until the trial concludes and ownership is determined based on evidence.

Why This Ruling Matters

This judgment reinforces the principle that courts must avoid favouring one claimant in multi-victim fraud cases before the trial ends. It ensures that all victims have an equal opportunity to present their claims and prevents premature release of assets that could prejudice others.

Legal experts say the ruling will guide lower courts in handling seized property in complex fraud cases, especially where multiple parties allege losses.

Case Details

Case Title: Rajput Vijaysinh Natwarsinh v. State of Gujarat & Ors.
Judgment Date: 18 September 2025
Bench: Justice Sanjay Karol, Justice Prashant Kumar Mishra
Sections Invoked: 406 (Criminal Breach of Trust), 420 (Cheating), 120-B (Criminal Conspiracy) of IPC; Section 451 CrPC