In an important judicial ruling concerning the management and interim custody of property seized during narcotic investigations, the Special Court for NDPS cases in Bengaluru allowed an application filed under Section 457 of the Code of Criminal Procedure (Cr.P.C.). The order was delivered by Smt. B.S. Jayashree, XXXIII Additional City Civil and Sessions Judge and Special Judge (NDPS), Bengaluru, in Criminal Miscellaneous Petition No. 7708/2022. The court directed the release of seized cash amounting to Rs. 27,50,000/- to the accused, Balaji C @ Balaji Chakravarthi (Accused No. 2), subject to the execution of an indemnity bond and specified conditions.

Factual Matrix and Case Background

The case originated from a raid conducted on January 15, 2022, by law enforcement officers of Kumaraswamy Layout Police Station (prosecuted through Kumaraswamy PS) near Dayananda Sagar Hospital in Bengaluru. During the operation, police intercepted Accused No. 1, Rahul Sharma, a native of Rajasthan. A personal search of Accused No. 1 led to the seizure of 334 LSD strips valued at approximately Rs. 7,00,000/- along with Rs. 530/- in cash.

Following his arrest, Accused No. 1 gave a voluntary statement implicating Balaji C @ Balaji Chakravarthi as the supplier of the contraband. Based on this disclosure, investigating authorities apprehended Accused No. 2 at his residence in Salem, Tamil Nadu, on January 19, 2021. During the search of his house, police seized cash amounting to Rs. 27,50,000/- under Property Form (PF) No. 11/2021.

During interrogation, prosecution records alleged that the accused had been purchasing narcotics from abroad via dark web applications using cryptocurrency over a two-year period. However, no physical contraband was recovered directly from the personal possession or premises of Accused No. 2 at the time of the cash seizure.

Arguments Advanced by the Petitioner

Represented by advocate Sri G.R., Accused No. 2 moved an application under Section 457 Cr.P.C. seeking interim custody of the seized cash amount of Rs. 27,50,000/-. The defense submitted the following main contentions:

1. Legitimate Source of Funds: The petitioner demonstrated that he is a legitimate jeweler operating in Salem, Tamil Nadu. To substantiate the source of the funds, the petitioner produced his official GST Registration Certificate as the proprietor of a jewelry business along with Income Tax Returns for the assessment year 2020–21, which reflected business holdings in gold and silver articles valued at over Rs. 20,00,000/-.
2. No Recovery of Contraband: The defense emphasized that no narcotic drug or psychotropic substance was recovered from the physical possession of Accused No. 2.
3. Prior Grant of Bail: The petitioner pointed out that the Hon’ble High Court of Karnataka had already granted him regular bail in Criminal Petition No. 4260/2022.
4. Business and Personal Necessity: The petitioner asserted that the cash kept at his residence was intended for day-to-day jewelry business operations and urgent medical treatment for his ailing mother.
5. Completion of Probe: With the investigation completed and the charge sheet filed, the defense argued that physical retention of the currency notes in police custody was no longer required for trial proceedings.

Objections Raised by the Prosecution

The Public Prosecutor strongly opposed the application for interim release of the currency on behalf of the State, raising several legal objections:

1. Proceeds of Crime: The prosecution argued that the seized cash represented proceeds generated from the illegal sale and distribution of narcotic substances under the NDPS Act and was thus liable for ultimate confiscation to the State.
2. Identification During Trial: The State contended that the physical currency was necessary as material evidence for identification purposes during the upcoming trial.
3. Risk of Non-Production: The prosecution expressed apprehension that if the cash were released to the petitioner, it would be spent or dissipated, making its reproduction before the court impossible.

Judicial Reasoning and Precedents Applied

Special Judge Smt. B.S. Jayashree evaluated whether the court had the authority under Section 457 Cr.P.C. to grant interim custody of seized cash and whether the petitioner was entitled to such relief.

Lack of Nexus Between Cash and Illegal Sale

The court observed that while the prosecution claimed the currency was earned through drug trafficking, the investigating agency failed to place any concrete material on record to substantiate that the specific sum of Rs. 27,50,000/- seized from the residence was derived directly from drug transactions. In contrast, the petitioner produced documentary proof—including GST registration and Income Tax filings—establishing an independent, legitimate source of income as a practicing jeweler.

Reliance on Apex Court Jurisprudence

In reaching its conclusion, the Special Court relied upon the landmark Supreme Court judgment in Sunderbhai Ambalal Desai vs. State of Gujarat (AIR 2003 SC 638). In that decision, the Apex Court held that articles or property seized during criminal investigations should not be retained needlessly in police stations or court custody for prolonged periods. The Supreme Court laid down that trial courts ought to exercise powers under Sections 451 and 457 Cr.P.C. to release seized property to legitimate owners by securing adequate indemnity bonds, guarantees, and photographs to protect evidentiary value without causing unnecessary financial hardship.

Applying these principles, the court noted that retaining the currency in police custody served no investigative purpose once the charge sheet had been filed, whereas releasing it under proper safeguards would prevent unnecessary loss while preserving trial integrity.

Terms of the Final Order

Accepting the grounds urged by the petitioner, the court answered the points for consideration in the affirmative and allowed the petition under Section 457 Cr.P.C.

In its order dated September 23, 2022, the Court of the XXXIII Additional City Civil & Sessions Judge & Special Judge (NDPS), Bengaluru, directed that the cash of Rs. 27,50,000/- be released to Balaji C @ Balaji Chakravarthi on interim custody, subject to the following terms:

1. The petitioner shall execute an indemnity bond for a sum of Rs. 27,50,000/- with one solvent surety for the like sum.
2. The Investigating Officer (IO) shall take clear photographs of the currency notes at the time of release and produce the same before the court for record purposes.