Gujarat High Court
Arvind D. Chokshi vs State Of Gujarat on 15 April, 2002
Equivalent citations: (2002)4GLR2862
Author: C.K. Buch
Bench: C.K. Buch
JUDGMENT C.K. Buch, J.
1. Heard Mr. MR Barot learned Senior Counsel with Mr. SG Amin for the applicant and Mr MR Shah learned counsel for respondent no. 2 (Ori. complainant) in extensio.
2. This Criminal Revision Application is preferred by the applicant-Arvind D. Chokshi, who is neither an accused nor a witness of prosecution mentioned in the complaint filed by respondent no. 2. The applicant preferred an application dated 4.4.2001 under sec. 457 of the Code of Criminal Procedure (hereinafter referred to as "CrPC" for short) for the release of goods seized from the applicant by the respondent no. 2 on 28.3.200 before the Ld. Special Judge, City Sessions Court, Ahmedabad in Crime No. RC.2(E)/2001/BS & FC/Mumbai under investigation with C.B.I., Mumbai. After hearing the counsel appearing for the applicant and CBI, learned Special Judge vide order dated 21.5.2001 rejected the application being Criminal Misc. Application No. 662/2001.
3. Being aggrieved and feeling dissatisfied with the order passed by the ld. Special Judge, the present Criminal Revision Application has been preferred.
4. It would be necessary to state some facts at the out set for the convenience and to appreciate the contentions raised by the ld. counsel appearing for the parties. According to the applicant, on 24.3.2001, Mr. M.M. Sharma, Deputy General Manager, State Bank of India, had lodged a criminal case before the Dy.S.P., Central Bureau of Investigation, Mumbai against the accused mentioned therein for the offence punishable under section 120B read with section 409, 406, 420 of IPC and section 13(2) read with section 13(1)(c)(d) of the Prevention of Corruption Act, 1988 alleging that his bank has been defrauded by purchasing gold from it against Banker's cheques which were subsequently returned unpaid. Undisputedly, there is no reference of the present applicant in the complaint nor he has been made accused by the Investigating Agency till today. In pursuance to the investigation in the aforesaid complaint filed on behalf of the State Bank of India (hereinafter referred to as "SBI" for short). On 28.3.2001, Dy.S.P., CBI, Mr. P.P. Mankar and his team seized books of account, bill books, other records and had also seized 387 bars of Gold ( each of 10 Tolas ) weighing 45,139.680 grams, in total, from the house of the applicant, in cash Rs. 5,50,000/ and Rs. 24,00,000/ are seized from the house and shop of the applicant respectively. The details of the goods seized are on record with copy of three different search lists. This search was conducted in pursuance to the investigation in connection with the criminal case registered by CBI mainly against the Proprietor of M/s. K.L. Chokshi, Officials of the Classic Cooperative Bank and Visnagar Nagrik Sahakari Bank Ltd. It is contended by the applicant that he himself is a victim of conspiracy hatched by the promoters and Director of M/s. K.L. Chokshi, group of firms and office bearers of Classic Cooperative Bank Ltd. and he has been defrauded to the tune of Rs. 12 crores. A copy of the complaint filed by the present applicant against Classic Cooperative Bank for various offences punishable under sec. 403, 406, 120B etc. bearing CR No. I-149/2000 in Naranpura Police Station of Ahmedabad, is also on record. As per the complainant, he is active in the business of gold and for his business purpose, was purchasing gold bars from many parties, such as M.M.T.C., Mr. K.L. Chokshi & Co. and other firms and was selling the same to many parties and different Gold Smith. At the time of search, the CBI Officials who were carrying out the search were informed that the Gold Bars in question are the part of 1000 bars purchased by the applicant from MMTC, a Government of India establishment on 23.3.2001 on payment of Rs. 5 crores. Not a single bar of the gold has seized for forming a part of the Gold Bars purchased from K.L. Chokshi & Co. as there were no transactions with K.L. Chokshi after 30.3.2001. The entire stock purchased from KL Chokshi was sold off by the applicant on or before 15.3.2001. The grievance of the applicant is that despite all these informations and details given to the officers and the criminal complaint filed with Naranpura Police Station, the CBI Officials have totally ignored the say of the applicant and the goods has been seized without considering the details of the documents shown. In the application preferred before the Special Judge under sec. 457 of CrPC for release of the goods seized has pointed out number of aspects and circumstances and it is hammered before this Court that on 15.3.2001 there was a meagre balance of gold bar in the stock register of the applicant as the gold previously purchased were sold off. 100 gold bars (Mark credit suissee) purchased from MMTC Ltd. and 100 gold bars appears of the same brand were purchased from Lalji Kanji Soni for business purpose and on 28.3.2001, 387 gold bars were in the stock of the applicant. All these bars are of credit suissee brand. This gold does not form part of one purchased from KL Chokshi & Co. or its other sister concern. The cash found is also not of sale of gold bars which were purchased from KL Chokshi even prior to 13/15.3.2001. After considering the grounds mentioned in paras-8 to 13 of the application filed before the ld. Special Judge and the arguments advanced in support of these grounds, ld. Special Judge rejected the application.
5. I have carefully examined the impugned order passed by the ld. Special Judge. One of the grievance of the applicant before this Court is that many important relevant aspects are neither considered nor discussed by the Ld. Special Judge while dealing with the application preferred by the applicant. Mostly, the ld. Special Judge has mentioned the facts and submissions and he has been carried away with only one aspect that the accused, by hatching conspiracy as cheated the SBI, Overseas Branch, Ahmedabad to the tune of Rs. 47.26 crores, but for pending investigation, has refused to exercise the jurisdiction vested with the Court. It is submitted that though there was no formal search warrant or authority the shop/business premises were searched by the CBI Officials, and without any purpose a huge cash amount has been wrongly seized from two different places. There was no compliance of section 165 of CrPC in "stricto senso". Mandatory directions provided in section 165 of CrPC have not been complied with and, therefore, the entire search and the seizure made thereafter becomes illegal. The ld. Special Judge was convinced that the applicant is the owner of gold bars and the cash seized from the applicant, but on extraneous consideration that respondent no. 2 had arrested three more accused and the present applicant had closed intimacy with K.L. Chokshi and the Chairman of Classic Cooperative Bank Ltd. Mr. Sureshbhai Gadhecha and had not extended full cooperation to the investigation, the request to return the goods was turned down.
6. Ld. Special Judge has held that the applicant has tried scuffle the investigation under one pretext or another and when the investigation is at the crucial stage, the muddamal articles cannot be returned unless and until the entire investigation is over.
7. According to the applicant, his statement has been recorded by the CBI officials and till date he has not been interrogated in the capacity of an accused. The applicant in the due course of his business was purchasing gold from MMTC, M/s. Bansali Associates, M/s. K.L. Chokshi and others since last 1 and 1/2 years. IN the usual course of business, the applicant had bonafide purchased gold bars from M/s. KL Chokshi during the relevant period and the payment for the same was made by A/c. payee cheques. The gold bars in question seized during the search from the house of the applicant are part of 1000 gold bars purchased from the MMTC on 23.3.2001 and the payment is made through cheques issued by Indian Overseas Bank. This was informed to the Officials carrying out the search. After the search of the house of the applicant, the Investigating Agency sought further police custody of the main accused in the scam namely Naresh Chokshi. In the said remand application, there is a reference of the gold seized from the present applicant. In that remand application, CBI Officials had prayed that it may permitted to continue with the custody of the gold bars seized. The copy of the application and the order passed by the concerned Judge is on record. I have considered the contents where the joint prayer is made. It is the grievance of the applicant that the permission to retain gold bars seized during the search of the house of the applicant was asked behind the back and the order permitting the Investigating Agency to retain the goods seized is also passed without offering opportunity to applicant.
8. It is inter alia contended that the applicant was not aware about the order passed granting remand and permitting the Investigating Agency to retain the goods till the charge-sheet is submitted, he preferred the application under sec. 457 of CrPC on 1.4.2001 for release of the said goods. After appreciating the detailed arguments, advanced before this Court by the counsel appearing for the parties, I am not in agreement that the order passed by the ld. Special Judge is an arbitrary order. Whether the same is otherwise illegal or contrary to the provisions of CrPC is also a question, which needs scrutiny. The applicant has always posed him as the owner of the goods seized, on the other hand, the Investigating Agency has submitted consistently that this aspect is under scrutiny i.e. investigation. It is absolutely doubtful that the applicant is the owner of the goods seized especially the gold bars. Unless the Investigation is concluded, it would be very early to say that the applicant is the owner of the gold bars seized. I will deal with the cash amount seized from the house and the business premises of the applicant, at a later stage of this order. But it would not be proper or legal to hold that the Ld. Special Judge was bound to accept the say of the present applicant about the gold seized that the same does not form part of the purchase from M/s. KL Chokshi and in the same was purchased from the MMTC. I agree that the applicant is consistent qua this stand is concerned. The type of boxes, size of the gold bars and embossed marking on the each gold bars are shown to the court during the course of arguments and it is attempted that the gold bars seized are of particular mark and quality. Two boxes of such gold bars were purchased from MMTC. Each box carries 200 gold bars as per the stock register, the copy of which is produced at page 75.
9. Ld. counsel appearing for the CBI Mr. MR Shah has tried to point out some irregularity in maintaining the stock register, but without going into the merits of the submissions of the ld. counsel appearing for the CBI Mr. Shah, if the say of the applicant is appreciated as mentioned in the stock register, than the 76 gold bars (credit suissee) (75 + 1 deposited in the court of Surendranagar) were with the applicant on 15.3.2001 and the stock purchased from M/s. KL Chokshi was completely sold off on 15.3.2001. There were no transactions till 23.3.2001 in this brand of gold bars and as per the applicant a fresh stock of 100 gold bars of credit suissee brand were purchased from MMTC. On that day, 223 gold bars were sold. On 26.3.2001, 100 gold bars were purchased from one Lalji Kanji and 275 gold bars were sold. On 27.3.2001, 290 gold bars were sold from the total stock of credit suisse brand gold bars. The stock register indicates that the applicant was dealing with the gold bars of various brands namely; (i) Rand, (ii) suisse, (iii) U.B.S., (iv) credit suisse, (v) commerce bank, (vi) C.P. Kansara, (vii) Johnson Mathai, and (viii) Argour. The copy of the stock register given to the court by the applicant indicates that on 2.3.2001, the applicant was holding the stock of all kinds of gold bars. As per the transactions reflected in the copy of stock register, it transpires that in the evening of 15.3.2001 the applicant was holding total 880 gold bars. 12 gold bars of Swiss brand, 800 gold bars of U.B.S. brand and 76 gold bars as mentioned earlier of credit suisse brand. No substantial purchase since then till 20.3.2001 is reflected in the stock register. On 20.3.2001, the applicant had purchased, as per the stock register, 2000 gold bars of suisse brand from Bhansali Associates, out of which 1993 were sold on the same day, and on 20.3.2001 itself 1000 gold bars of U.B.S. brand were purchased from K.L. Chokshi. All these 1000 gold bars were sold by the applicant on that day. So, as per the stock register, on 20.3.2001 evening, the applicant was hold total stock of 76 + 9 gold bars with him, thereafter on 23.3.2001 he has purchased 1000 gold bars from MMTC, as stated by him. Mr. Shah learned counsel for CBI has tried to point out the adjustment of purchase and sale entries and some irregularities. He has further submitted and has tried to satisfy this court on showing the papers of investigation that the gold bars received by M/s. KL Chokshi by cheating and defrauding the State Bank of India, Overseas Branch, are of the same brand and description which are found during the search and, therefore, they were seized. When there is no specific identification mark on each gold bars, it would be prematured for the Investigating Agency to conclude that the gold bars seized from the house of the applicant is the stock allegedly purchased by him from MMTC and it does not form a part of the gold siphoned away by M/s. KL Chokshi.
10. It is submitted by Mr. Shah that State Bank of India, Overseas Branch has been defrauded for a very huge amount. Present case covers investigation qua stock of gold and for the stock of silver is concerned, the officers of the CBI, Gandhinagar are investigating that part of the offence i.e. offence committed qua silver and the Investigating Agency has found out links between the present applicant and accused Mr. Naresh Chokshi and the present applicant has been charge-sheeted with KL Chokshi and others. Filing of the charge-sheet by CBI in the said case instituted on the complaint from Punjab National Bank is not relevant and ld. Counsel Mr. MR Barot has rightly submitted that the act of filing the said charge-sheet in a case with CBI Gandhinagar cannot be looked into by this Court and the present case has to be decided on its own merits. He has also submitted that an application to discharge the present applicant is already moved in the competent court and the same is pending. The Court is in agreement with this submission of Mr. Barot, however, with this back ground, the finding recorded by the ld. Sessions Judge shall have to be appreciated wherein it has been held that pending investigation, there should not be any disposal or disbursement of goods seized. At present the gold seized is lying in the safety locker of a nationalized bank. If the Investigating Agency is able to establish the link or is able to bring reasonable good evidence either direct or indirect by which it can be reasonably inferred that the muddamal seized from the house of the applicant are not "the gold bars" purchased from MMTC and/or the stock of gold bars seized from the applicant is or may be of the stock taken away from State Bank of India, Overseas Branch, than in that eventuality, the goods would become muddamal of a criminal case. At that point of time, on availability of the papers of investigation and the statements recorded, the Investigating Agency may treat the present applicant either as witness or can join him as an accused. It is not a matter of dispute that there were closed tie between the applicant and M/s. KL Chokshi. The thick business relationship is reflected in the papers of investigation and even on the document produced and shown to the Court by the present applicant including the copy of the stock register. It is not the say of the present applicant that he is a bonafide purchasers with value without notice, but he claims to be the owner of the goods stating that it is a part of his fresh purchase on 23.3.2001 from MMTC, a Government Undertaking. It may not be a matter of much relevance at the trial but it is important to note that though out during the month of March, 2001, the applicant had never purchased a single gold bars from MMTC till 23.3.2001 and especially of Mark Credit Suissee. It is not even brought before the Court that any immediate preceding month i.e. in the month of February, 2001, the applicant had purchased gold from MMTC of credit suisse brand. The scam of Madhavpura Cooperative Bank followed by collapse of other cooperative bank as one fact is brought to the notice of this Court in reference to deteriorated financial strength of the Classic Cooperative Bank but it would not be proper to accept each submissions made by Mr. Barot as gospel truth. The clue given to the CBI Officials by the accused Naresh Chokshi has led the Officials to the present search and seizure. The say of Mr. Barot is not acceptable because of the complaint filed against the Classic Cooperative Bank by present applicant and indirectly against M/s. K.L. Chokshi, the accused Naresh Chokshi has anemically tried to involve the present applicant and under enthusiasm to seize large stock of gold bars an innocent trader has been raided. The written complaint against the officers of Classic Cooperative Bank was filed on 27.3.2001 at about 13.15 hrs. There is no direct allegation against the present applicant. The careful reading of the complaint, on the contrary, indicates that the complainant has tried to put a curtain favouring M/s. KL Chokshi pointing out some irregularity and wrong committed by the officials of Classic Cooperative Bank. The explanation of not filing the complaint immediately or in couple of hours or a days since 16.3.2001, speaks volumes but it would not be proper to comment upon further because it may prejudice either party, but the fact remains that this complaint is not against M/s. KL Chokshi or family members of Mr. K.L. Chokshi. The papers of investigation shows that the clue was available with the Officials of CBI much prior to the date of complaint filed by the applicant i.e. prior to 27.3.2001. One of the document shows that accused Naresh Chokshi had given the relevant clue on 26.3.2001. Total 3 places were to be raided on the information available to the CBI Officials. It is in the papers of investigation that total three places were raised and from one i.e. resident and office premises of the applicant, a huge cash and 387 gold bars were searched out and seized. It is possible that the same may be part of trade stock of the applicant but equally it may be the part of stock of gold bars purchased or received from KL Chokshi from the stock taken away by cheating the State Bank of India, Overseas Branch.
11. On 1.3.2001, the applicant had total stock of 10804 gold bars as per the copy of the stock register produced by him. A the rough calculation indicates that approximately 55000 gold bars were purchased till 22.3.2001. Approximately more than 80% of the gold bars were purchased during this period seems to have been purchased from M/s. KL Chokshi. This stock has been sold or eroded off to only 88 gold bars. On 22.3.2001, the stock was of 88 gold bars on hand and on 23.3.2001 1000 gold bars were purchased from MMTC. It is on record that from these transactions, the CBI has found out that two different parties shown to be based at Rajkot are fictitious or are not found genuine i.e. Varahi Jwellors and Sumati Corporation, mentioned in para-11 of the reply affidavit. When an element of book adjustment is piping out from the stock register and in turn from other documents, the big difference of quota purchased from and by M/s. KL Chokshi whether becomes relevant is the question needs detail investigation. It is true that the investigation is on since more than one year approximately but when the application claiming goods u/s. 457 CrPC was moved before the ld. Special Judge the investigation was old by only one week, and the finding recorded should be appreciated in that perspective. Even on the date of the order passed by the Ld. Special judge, the investigation was old by 1 and 1/2 months approximately. So, ld. Special Judge is absolutely correct in holding that till the investigation is completed, it would not be legal or proper to return the goods to the applicant on any condition especially when the goods is claimed under the entitlement mentioned in section 457 of CrPC. Seizure of the property during the search has to be brought to the notice of the Court. The statutory obligation on the part of the seizing agency is to intimate such seizure to Court and showing the intention to retain it simultaneously would not create any illegality by itself. I am afraid that it is obligatory on the part of the Investigating Agency that it cannot retain the goods seized unless permitted by the court. Such agency can retain the seized goods till agency itself decides to return it back to the persons from whom the same is seized or such agency may held entitled for custody of the goods seized till passing of other appropriate order. Such an order or decision may be conditional but I am not in agreement with the say of Mr. Barot that the rejection of the application by the ld. Special Judge would become bad in law only on the count that the Investigating Agency has expressed its desire to retain the goods with a remand prayer, till the date of filing of the charge-sheet.
12. Delay in completing the investigation is a valid point advanced but inadequacy of the officers with the department, sensitivity of the offence, need of expert from the available force and the other complexity arising during investigation shall have to be considered by the Court while dealing with, such or similar fact situation like cases of bank scam, share market scam or scam in the field of Diamond and Bullion business or the fraud played by the Financial Companies/institutions or any other big companies. It may take some more time in completion of investigation. Value of the gold seized and retained by the Investigating Agency is important and the same can be said to be a national wealth, but on appreciation of figures of sale and purchase of the gold bars between 1.3.2001 and 22.3.2001, it cannot be said to be a big stock in trade so far as the present applicant is concerned. Though the ld. Special Judge has not discussed this aspect but on examination of facts brought to the notice of this Court, I am not convinced that the prohibitory orders passed by the Ld. Special Judge needs any interference by holding that the ld. Special Judge has not considered facts correctly so far as gold bars are concerned.
13. The cash amount of Rs. 29,50,000/ is concerned, the say of CBI officer is that most of the amount is the out come of the sale of the golds purchased and/or received from M/s. KL Chokshi.
14. The applicant - Arvindkumar Chokshi has claimed that the cash has been properly accounted but the same is without any details thereof. During the course of oral arguments, Mr. MR Barot, learned Senior Counsel has tried to provide computer statement from a cash book for the purpose and of the period between 1.3.2001 to 20.3.2001. If any finding is recorded on the basis of this statement, than it would amount to receiving the document in evidence pertaining to a case under investigation by the CBI. However, for the sake of argument, if it is accepted that these details were given to the Searching Officer, even than it can be inferred that most of the amount has been collected from Gold Bullion sales. On 9.3.2001 the cash on hand was about Rs. 15 lacs and odd. There were no transactions on 10.3.2001 and 11.3.2001. Thereafter on sales of gold bullion within 4 days, the cash on hand had reached to Rs. 30,00,000/ and odd. It is important to mention that even as per this cash book entries provided by the applicant, though the applicant was dealing with his business on Saturday, there are no entries in the cash book on 10.3.2001 and after 15.3.2001 till 20.3.2001. The whole cash has been retained by the applicant from 15.3.2001 till the date of search. The applicant is holding the current account in Indian Overseas Bank, Ashram Road, Ahmedabad bearing account No. 2291. The reasons to retain this much cash on hand without, or in absence of any formal transaction has not been satisfactorily explained even before this Court, and I agree too, that Mr. Barot has tried to explain that cash of this much amount on hand to a big trader cannot be said to be a large sum. Searching Officer has stated that this holding of cash is without any details and the fact of having no cash transaction after 16.3.2001, the amount of Rs. 12,00,000/ and odd. remains unaccounted. As Cooperative Bank of City of Ahmedabad and in the State of Gujarat were sinking and the account holders of Cooperative Banks were rushing to receive their cash amount back from their respective accounts, the applicant may have opted to retain cash on hand, is one of the attempts made to explain contingency by the applicant before this Court. It would have been very premature on the part of the Special Judge on the day on which the impugned order has been passed, to hold that the cash amount seized by the CBI Officials is the consideration amount of genuine sales, therefore, the entire amount should be returned to the applicant. This Court is supposed to examine the legality and propriety of the order. The element of perversity or apparent error if is brought to the notice of this Court, then only this Court can exercise its revisional jurisdiction, but the applicant has failed in doing so. The stage of investigation today would not be a matter of much relevance. The relevant period so far as this Court is concerned, would be the period between the date of search and seizure and date of pronouncement of the order passed by the ld. Special Judge. Each entry as submitted by Mr. MR Shah in the cash book shall have to be cross checked. The fact that CBI has not lodged any formal claim qua the goods seized would not add strength to the case of the present applicant. The so called ambiguity in the complaint and the absence of details of nature and quantum of gold taken out from State Bank of India, Overseas Branch, also would not held the applicant. From the papers of investigation, it is amply clear that SBI had delivered, during the fraudulent transactions, gold bars of same brand weight and purity to KL Chokshi. So, the attempts to retain the goods till the investigation is complete or for some longer period made by the CBI should not be viewed as lack of bonafide. Therefore, the time spent in the investigation or the alleged delay also would not help the applicant. Ultimately, the powers vested with the Court is discretionary in nature and this discretion has to be exercised judiciously. When the Court is suppose to decide a point judiciously, the finding must be arrived at objectively. Subjective satisfaction of one fact that if the goods seized is returned to the applicant that he would be able to retain the same or similar goods to the court as and when asked would not twilt the balance in favour of such applicant. The word "entitlement" reflected in section 457 of CrPC, therefore is very relevant and important. It would be convenient to refer the relevant section 457 of CrPC, which reads as under:
"457. Procedure by police upon seizure ofproperty.-(1) Whenever the seizure ofproperty by any police officer is reported to a Magistrate under the provisions of this Code, and such property is not produced before a Criminal Court during an inquiry or trial, the Magistrate may make such order as he thinks fit respecting the disposal of such oroperty or the delivery of such property to the person entitled to the possession thereof, or if such person cannot be ascertained, respecting the custody and production of such property.
(2) If the person so entitled is known, the Magistrate may order the property to be delivered to him on such conditions (if any) as the Magistrate thinks fit and if such person is unknown, the Magistrate may detain it and shall,in such case, issue a proclamation specifying the articles of which such property consists, and requiring any person who may have a claim thereto, to appear before him and establish his claim within six months from the date of such proclamation."
15. Under subsection (1) three courses were open for the ld. Special Judge, namely to make such order as he thinks fit (i) respecting the disposal of the property, or (ii) to deliver a such property to the person entitled to the possession thereof, or (iii) if such person cannot be ascertained, to pass an order respecting the custody and production of such property. I agree that when a claim is made for the property under sec. 457 than there should not be indefinite postponement. If there is scope to hold enquiry on entitlement, when there are rival contentions or there is a question as to who is entitle to the possession of the property than to order such inquiry. The word "entitled" occurring in section 457 of CrPC refers to legal entitlement as regard to right "to have" and it lays on heavy burden on the Presiding Officer to ascertain the question of proper custody. The Ld. Special Judge, in absence of rival claims had no reason to hold inquiry. This is not a case of unknown owner but the entitlement of the applicant was seriously disputed by the Investigating Agency. On the contrary, a favourable order at initial stage of investigation, if passed, than the effect of return of such goods may give rise to a reasonable belief or presumption qua the ownership of the property so returned in favour of the person to whom the same has been returned. The Investigating Agency has tried to unearth the bank scam worth Rs.. 47-48 crores and for one part, the CBI Gandhinagar has charge-sheeted the accused persons including the present applicant. It is told that there are number of complaints against the management of Classic Cooperative Bank Ltd. Even the SBI Officials are and may be the suspects of the scam. In this fact situation, the return of gold bars or any goods or cash seized at earlier state of investigation would have been illegal and unwarranted. Even today, the release of goods seized if ordered, than the same could be said to be an order passed as "via media" and not in proper exercise of judicial discretion.
16. The word "entitled" also occurs in subsection 2 of section 457 of CrPC, but the provisions of subsection 2 can help the applicant only if it is accepted that he is the "person so entitled". The question of imposing conditions only would arise when the court decides to hand over or deliver the property to a person entitled. So, the say of Mr. Barot that the applicant is ready to tender the same gold bars, i.e. of same weight and purity, and to furnish solvent surety of some reasonable amount would not put any weight in case of the present applicant because the claim is made at very early stage of enquiry/investigation. When the Ld. Special Judge was doubtful, considering the resistance by the Investigating Agency, about the entitlement of the applicant. The silence by the Ld. Special Judge in this regard i.e. conditional return etc. would not by itself make the order bad in law. One good reason if found for recording the rejection of the application than a scope to take some different view in such or similar matter would not help the revisioner because this Court is concerned with the legality and validity of the order. It would be difficult to agree that the order is non-speaking or an unreasoned order. The impugned order is short and simple order but at the same time there is no over simplification. When it was not possible for the ld. Special Judge to record the positive finding in favour of the applicant, without negativing the contentions, the impugned order is passed and the ld. Special Judge, for short, has said that the applicant should wait till completion of the investigation and this finding is a correct legal finding.
17. Mr. Barot ld. Senior Counsel has explained well the method and practice adopted by the Bullion merchants in sale and purchase of gold bars, the status of MMTC, fact of paying the amount by way of challan for purchase of stock of 1000 gold bars on 23.3.2001 etc. and also the bill of leading and its entries in the books of account, invoices, delivery note in reference to relevant dates i.e. 23.3.2001 and 30.3.2001. He has also explained that how a box of 200 pieces of gold bars is being packed and delivered by MMTC or any trader dealing with the Company products. The identification of mark on the boxes and the details given by the manufacturer on each of such boxes has also been explained. He has submitted that the Investigating Officer should be directed to keep both the boxes taken away while carrying search and seizure of gold bars. This details does not strengthen the case of the applicant and it would not be appropriate to any direction to the Investigating Officer while exercising the revisional jurisdiction in reference to an application made under sec. 457 of CrPC before the lower court. Any adverse inference or presumption against the Investigating Agency at this stage, if drawn, would be misplaced and on such surmises no direction is required to be issued to the Investigating Agency, unless otherwise is proved or brought on record, to the contrary, it should be believed that the goods seized has been retained as it is.
18. Other important argument advanced by Mr. Barot is in reference to the provisions of sec. 165 of CrPC, that the applicant is not named in the FIR as an accused nor reference as a witness at relevant point of time and there was no reason for CBI officials to search the house of the applicant. As discussed earlier, it is difficult to believe at this stage that the applicant was targeted because of jealous information given by one of the accused from KL Chokshi. No search or seizure is made under an enthusiasm so that the Investigating Agency can boast to have recovered large number of gold bars in a bank scam, and knowing it that the applicant being a reputed big trader, the house and business premises of applicant was targeted. There was no reason for the officers to search this premises and so the same is illegal from all angles. The mandatory provisions of sec. 165 has been grossly violated. Placing reliance on the decision of this Court in the case of The New Swadeshi Mills of Ahmedabad Ltd. vs. S.K. Rattan & Ors., reported in 9 GLR p. 364, it is argued that the recovery made in lieu of illegal search is bad and on such recovery the articles seized or recovered cannot be retained by the Investigating Agency and same shall have to be returned to that very person. Referring to para-6,7, and 8 of the decision, it is submitted that the conditions laid down before instituting search are mandatory and conditions must be strictly complied with. Before search, there must be a reasonable ground. A "ground to suspect"cannot be said to be reasonable a ground for the purpose. On mere suspicion no search can be made nor any seizure can be inflicted. Analyzing sub section 5 of sec. 165 of CrPC, the Full Bench of this Court has held that the action by Police in seizing books is invalid. In the cited decision, this Court was exercising the jurisdiction vested under Article 226 of Constitution of India on a petition moved by the New Swadeshi Mills Ltd., Ahmedabad against the respondents, Superintendent of Police, Central Bureau of Investigation, Special Police Establishment, New Delhi i.e. CBI- Fraud Squad and the orders passed under sec. 165 of CrPC, was under challenge and it was prayed that the order be quashed and the respondent-authority should be directed to return the documents seized and removed from the premises of petitioner New Swadeshi Mills Ltd. The facts of the cited case are materially different. There cannot be any dispute as to interpretation or the nature of the scheme provided under sec. 165 of CrPC. According to Mr. Barot, whenever a police officer making an investigation with a reasonable ground for believing that anything necessary for the purpose of investigating into any offence for which he is authorized to investigate may be found in any place within the limits of police station of which, he is in-charge, and according to his opinion, such things requires to be obtained without any undue delay than such officer shall have to record in writing the grounds of his belief and specifying in such writing, so far as possible, the thing for which search is to be made. In present case, no such formality was observed. It would be beneficial to refer para-6 of the decision wherein it is observed that:-
"The section, while prescribing the conditions uses the words "has reasonable grounds for believing". Those words are words of significance because they indicate the nature and character of the grounds for the belief which a police officer must entertain before he takes the other steps necessary for him to take before he could institute a search in the property belonging to another. Those grounds of his belief have to be recorded by the police officer in writing and what he has recorded, he sent to the Magistrate does not constitute what has been stated in the section as reasonable ground for believing, that would undoubtedly be an infirmity which would have an important bearing in considering whether the search instituted by the police officer would or could not be considered to be a valid search. In the first place, the word "to believe" must be distinguished from the word "to suspect". "To believe" a fact is to regard that fact as true; whereas "to suspect" would imply a readiness to believe but without sufficient data. It would introduce to some extent, an element of imagination or conjecture. The words "reasonable grounds for believing" included three concepts by the use of the three words (1) reasonable, (2) grounds; and (3) believing. The use of the word 'grounds' indicates the existence of a basis or a foundation for justification and by the addition of the word 'reasonable' it further implies that the basis must be such as would be rational or agreeable to reason. The word 'to believe' cannot be as we have seen above, equated with the considered together with the true meaning of the words that constitute the sentence would mean: (1) that the conclusion arrived at should not be a mere suspicion, but must be such as is regarded as true by the person making it, (2) that such a conclusion or belief must have a basis and a foundation; and (3) that such a basis which may be described as grounds must be reasonable."
19. The necessity of recording reasons provide safeguard to the subject, and object both so that he can avoid unjustified interrupt. The reasons for search must be provided i.e. the say recorded by the officer, who intends to make search to the person concerned. If this formality is not observed than requirement of recording of reasons would become illusive. Mr. Barot has hammered that subsection 1 of sec. 165 of CrPC should be read in reference of subsection 5 of the very section. This Court in the above cited decision, in para-7 of the judgment has observed that:
"Such an intention of the Legislature is clear from the provisions of sub-sec. (5) of sec. 165 which provides that copies of any record made under sub-sec. (1) or sub-sec. (3) shall forthwith be sent to the nearest Magistrate empowered to take cognizance of the offence and the owner or occupier of the place searched shall on application be furnished with a copy of the same by the Magistrate."
20. Belief which is based on reasonable grounds can be said to be a reasonable belief according to the standards of a reasonable man. If the facts of present case, available on record are considered, than it can be reasonably inferred that the search was carried out on the information received by the Investigating Agency for which the agency has relevant records in its possession and with a clue provided by one of the accused who was on police remand namely Jignesh @ Jagdish N. Chokshi. Main submission of Mr. Barot is based on the say that no statutory formality provided under sec. 165 of CrPC had been undergone by the CBI officials. There was no record as to the so-called reasonable belief of the officer who has made search and inflicted seizure and has criticized the impugned order saying that the ld. Special Judge ought not to have observed that provisions contained in sec. 165 of CrPC have been "scrupulously followed." This court has no much concerned with the language used by the Ld. Special Judge. Precise concerned is with the finding recorded and reasons assigned for. Mr. MR Shah learned counsel has submitted that the accused/or applicant is not entitled to peruse the papers of investigation but bunch of papers were offered to the ld. Special Judge by the CBI. The record of proceedings made under sec. 165(1) of CrPC was shown to the ld. Special Judge. It is submitted by Mr. Shah that some grievance about the genuineness of this very document was also raised and, therefore, the original document was shown to the Ld. Special Judge and according to Mr. Shah the original is still with the Special Court. Mr. Barot learned senior counsel was not aware about this fact and, therefore, only an application being Criminal Misc. Application No. 1909 of 2002 was moved to this Court. It was clarified by Mr. Shah ld. counsel for CBI that though legal formality as contemplated under sec. 165 of CrPC has been observed, however, a formal detailed panchanama which normally are being drawn by local police has not been drawn by CBI. The CBI has its own methods of investigation, and directions issued from the Highest officers and provided under the manual followed by CBI is being complied with and in the present case, as per the format, the proceedings under sec. 165 of CrPC are drawn. Zerox copy of such record has been shown and tendered before this court. One copy has been supplied to the ld. counsel appearing for applicant. This document is in two parts. On careful consideration of this document, it can reasonably inferred that the requirement under sec. 165(1) has been complied with. The further intimation as provided in subsection 3 of sec. 165 is also on the same side of paper on which the reasons recorded under subsection 1 of sec. 165. In writing, dates and rubber stamp, on both the parts of this document indicates that it would be too early or premature to say that the mandatory requirements of sec. 165 of CrPC were not complied with, on the contrary, this is a one page document, and at the bottom, there is an endorsement made by one Chokshi Dharmendra Arvindkumar. The endorsement says "seen." This endorsement has been made at 11.00AM. In response of the query, Mr. Barot has accepted the endorsement and the signature being the signature of one of the son of applicant-Arvindkumar. He has also not disputed the date and time of the endorsement obtain. But Mr. Barot has tried to clarify that in the bottom part of the documents, the endorsement has been obtained. So, it can be presumed that the requirement under sub-sec. 3 of section 165 has been complied with and not u/s. 165(1) of CrPC. The officer could have taken similar endorsement on the first half of this very document and it is doubtful that this part of the document was fully written and the blanks were filled in at that relevant point of time. So far as this submission is concerned, it would not be proper to comment upon as this court is not supposed to analyse the evidence or papers of inquiry while dealing with revision application. It seems that because of similar set of argument, ld. Special Judge must have recorded his satisfaction as to the compliance of the mandatory requirement of sec. 165 of CrPC. It is not necessary to refer subsection 1, 3 or 5 of Section 165 of CrPC, so the above referred decision of this Court would not help the present applicant because in the cited case, on facts, the court was satisfied that the mandatory conditions provided under sec. 165 of CrPC were not complied with. Here facts are otherwise. The details of search list is also satisfactorily recorded. There is no even over writing. Genuineness of search list has not been challenged. Some discrepancy or absence of minute details even if establish in such cases would not affects adversely to the ultimate findings.
21. The decision of the Apex Court in the case of Commissioner of Commercial Taxes vs. Ramkish Shrikishan Jhaver, reported in AIR 1968 SC Page 59. After referring para-17 and 19 of the judgment, Mr. Barot has submitted that where the search is illegal, seizure on account of such search becomes illegal and void and the property so seized needs to be returned. The Apex Court was dealing with a case under Madras General Sales Tax Act, one residential accommodation was searched, where the Magistrate had not applied mind to the question of or requirement for issuing warrant. The safeguards under sec. 165 of CrPC was not followed and, therefore, it was decided that anything recovered and confiscated on the basis of this defective warrant must be returned. In the present case, no defective warrant has been issued nor anything is confiscated. As discussed earlier, it is difficult to accept that the provisions of sec. 165 of CrPC has not been complied with. So, this decision would not help the present applicant. It is also important that the ld. Special Judge has not rejected the say of the applicant in toto. In reality, the order passed is an order of postponement of the decision with regard to return of the goods seized till completion of investigation. The question of confiscation of the property was not before the ld. Special Judge. Before the Apex Court, in the cited decision, the entire set of facts were available and the authority had reached to a conclusion that the property seized required to be confiscated to the State.
22. Other decision relied by Mr. Barot is reported in AIR 1985 SC p. 989 in the case of Dr. Pratap Singh and anr. vs. Director of Enforcement, Foreign Exchange Regulation Act and ors. While dealing with the scope of section 165 of CrPC, the Apex Court has observed that:
"In this case, however, as the documents and other materials have been sealed under the warrant of authorization issued under sec. 132A of the Income Tax Act, the Enforcement Directorate may legitimately close the proceedings. We cannot move backward and conclude that if no further proceedings are taken, at the inception the search was malafide or for reasons irrelevant or extraneous to the exercise of power. The contention therefore, must be rejected. Having examined all the limbs of the submission, we find no merits in the contention that the issuance of search warrant was illegal or the search was illegal."
23. The above finding has been recorded as it was argued that if there was no justification for issuing warrant, the search under the authority of such a warrant would be illegal and the respondents no. 1 to 4 were bound to return the document. Referring to para-15 of the above judgment, Mr. Barot has submitted that method and jurisdiction for search including some deviation becomes relevant and the provisions of sec. 165(1) of the CrPC is not incorporated by pen and ink but the expression so far as may be used in subsection (2) of sec. 37 of Foreign exchange Regulation Act, should be interpreted to mean that broadly the procedure relating to search has enacted in section 165 of CrPC shall be followed. Mr. Barot has also placed reliance on a decision in the case of Naba Kumar Das vs. State of West Bengal, reported in AIR 1974 SC P. 777. This decision is cited with a view to strengthen the argument based on the say that there is discrepancy between the articles seized from the applicant and the gold siphoned off by KL Chokshi. The Apex Court was dealing with the case of stolen article discovered from the accused's shop were "four bronze churis", but the Circle Inspector mentioned as "four brass bangles" in the seizure memo. These articles were not kept under seal. Circle Inspector tried to give explanation that he committed a mistake in describing the articles. In that case, the Apex Court acquitted the accused rejecting the sole testimony of that officer.
24. In the present case, this Court is not satisfied that any deviation has been made by the Search Officer before entering into the search of the house of the applicant nor there is any discrepancy between the property mentioned in the search list prepared and article taken away from State Bank of India. If the complaint filed by the State Bank of India is silent and does not describe type of gold bars or silver taken away under the fraud, it would be premature to say that these so-called vagueness in the complaint is a mistake in describing the articles. In such cases, financial institutions like Nationalized Bank are able to produce the details to the Investigating Officer. It is true that in some papers of investigation, it is mentioned that KL Chokshi has sold the bold bars to Arvindkumar-applicant and they had business relations but this word "sold" would not help the applicant at this stage, considering the nature of the claim and the ground for entitlement. It is not the case at this stage of the applicant that he is a bonafide purchaser with value without notice. On the contrary, the say of the applicant is that this gold is part of bars purchased from MMTC on 23.3.2001.
25. It is argued that the gold is a national wealth, and the same can be utilized. The applicant is the only claimant and on stringent conditions it can be given to him. The State Bank of India has not claimed any part of the property seized by the CBI Officials but these are the grounds which cannot help the applicant at this stage.
26. Mr. MR Shah has tried to point out that some material entries in the books of account etc. of applicant does not tally with the books of account seized from KL Chokshi. Mr. Barot has tried to explain that the applicant is a genuine trader and a trader who has played a fraud of very large sum cannot be equated. He might have put anything in his books of account, but the fact remains that CBI has to resolve this aspect. I would not like to refer the same document shown to me from the papers of investigation, but it clearly reveals that this conflict in the entry is not that simple as submitted by Mr. Barot. Cases where a movable property or cash etc. are to be siphoned off more than one set of book of more than one person/firm some time are found relevant and important. This needs an experts eye.
27. On the other hand, the criminal case filed for the amount of Rs. 5 crores at a later stage and the fact that the cheque allegedly written on 8.3.2001 was not deposited in any bank and the same was tendered to the Classic Cooperative Bank Ltd. knowing it fully well that the Bank had been practically closed, raises serious doubt. This transaction also indicative of adjustment and the same may give a sharp turn to the prosecution. It is rightly argued that some time gap or realisation of amount through a Shroff may not very relevant, however, this can be investigated. Placing reliance on a decision in the case of Ram Prakash Sharma vs. State of Haryana, reported in AIR 1978 p. 1282, it is submitted that though the Court has power to dispose of the property seized by the police, but not yet produced before the Court it does not mean that the Special Judge must always release that property to the persons from whom the it has been recovered, especially when the stage of investigation has not by-passed the stage of suspicion. The investigation, if is not over and the charge sheet is yet to be filed, the Court should not consider the claim of such entitlement. It would be beneficial to quote para-4 of the decision where the Apex Court has said:
"4. Section 457 covers the facts of the present case. The police have recovered a considerable sum of money from the appellant and the money is stated to be seized in connection with an offence registered against an accused person, namely Shri Bansi Lal. Whether the appellant himself will be a witness or an accused is not possible to state at the present moment according to the counsel for the State. Be that as it may, the situation is squarely covered by S. 457 CrPC. However, the fact that the court has power to dispose of property seized by the police but not yet produced before the court does not mean that the Special Judge must always release such property to the person from whom the property has been recovered, especially when the stage of case is in suspicion, the investigation is not over and charge sheet has not yet been laid. The Court has to be circumspect in such a situation before releasing the property. While we reverse the decision of the courts below that the Special Judge had no power to release the seized property , we should not be taken to mean that whenever the claimant asks for the property back, he should be given back the said property. That has to be decided on its own merits in each case and the discretion of the court has to be exercised after due consideration of the interests of justice including the prospective necessity of the production of these seized articles at the time of the trial. If the release of the property seized will, in any manner, affect or prejudice the course of justice at the time of the trial, it will be a wise discretion to reject the claim for return."
28. This ratio can squarely be applied to the present case. The other decision of this Court in the case of Chandrakant Kishanchand Thakwani vs. State of Guajrat, reported in 1993(2) GLH p. 973 wherein this Court has discussed about the ambit of powers of Magistrate for disposal of muddamal under sec. 457 of CrPC. It has been held that it is a discretionary powers where the Magistrate is of the opinion that the property is required to be retained for the purpose of investigation and for future use at the time of enquiry or trial, the Magistrate can refuse to release the muddamal. When such an order has been passed than the same cannot be interfered with. Para-14 of the said decision would further buttress the impugned order as the finding arrived at is after referring about five decisions brought to the notice of the ld. Judge. Para-14 of the decision says that:-
"On plain reading of the provision contained in Section 457, it cannot be said that the Magistrate has no power to allow the seized property to remain in the custody of the police officer pending investigating. As a matter of fact, if he is of the opinion that the property is required to be retained for the purpose of investigation and for future use at the time of the enquiry or trial, the property cannot be released as can be seen from the decision in the case of Ram Prakash Sharma vs. State of Haryana (supra)."
29. The fact that in case of a complaint instituted on behalf of the Punjab National Bank, the present applicant has been charge-sheeted may not be legally relevant but this Court cannot shut its eye while appreciating the say of the CBI Official that he had reasons to believe so as to make search the house etc. of applicant qua gold siphoned by KL Chokshi. This becomes important and relevant when thick business tie between the present applicant and KL Chokshi is not a matter of much controversy. Normally, when a discretionary relief has been granted or refused, the revisioner should not be enthusiastic in getting reverse of the finding. The decision of the Apex Court in the case of State of Maharashtra vs. Natwarlal Damodardas Soni reported in AIR 1980 SC p. 593 is also important where the Apex Court has held that even for the sake of argument, "it is accepted or assumed that the search was illegal than also it will not affect the validity of the seizure and further investigation by customs authority." Mr. MR Shah has submitted that the cited decision by Mr. Barot reported in AIR 1985 p. 898,on the contrary helps him i.e. other side. By referring para-13, 14, 15 and 17, it is submitted that the ratio of this decision goes against the applicant. The irregularity in not sending the report would not vitiate the first part of procedure done in accordance with the mandate of sec. 165 of CrPC and, therefore, only the Apex Court has held accordingly in the case of State of Maharashtra (supra). It is submitted by Mr. Shah that failure on the part of the applicant in getting the certified copy from the court of the report submitted under sec. 165 of CrPC would not be sufficient to raise a cloud of doubt on the genuineness of the report shown to the ld. Special Judge and to this Court when it bears undisputed signature and endorsement of a son of the applicant. It is likely that the Superintendent, Record Branch might have not meticulously enquired about the receipt of such report. The language of the endorsement made by the concerned Clerical Staff is also ambiguous. For short, it would be imprudent to say at this stage on the strength of the endorsement that made by the Record Branch, no record was sent under sub-section(1) of Sec. 165 of CrPC. I agree that the decision reported in AIR 1985 SC p. 989 (supra) in connection with a customs case and the language, to some extent is different than sec. 165 of CrPC. But, this difference in language does not go to the root of the ratio propounded by the Apex Court. Same is the situation with the case under N.D.P.S. Act. In a recent decision, in the case of Khet Singh vs. Union of India, reported in 2002 AIR SCW p. 1308, the Apex Court has considered the scheme of section 165 of CrPC. In para-16 of the said decision, the Apex Court has observed that:
"Law on the point is very clear that even if there is any sort of procedural illegality in conducting the search and seizure, the evidence collected thereby will not become inadmissible and the Court would consider all the circumstances and find out whether any serious prejudice had been caused to the accused. If the search and seizure was in complete defiance of the law and procedure and there was any possibility of the evidence collected likely to have been tampered with or interpolated during the course of such search or seizure, than, it could be said that the evidence is not liable to be admissible in evidence."
30. Many exhaustive submissions are made before this Court by the ld. counsel appearing for the parties and both the ld. counsel have tried to use their own logic on various facts emerging from the record as well as from the impugned order. Having considered the facts from all angles and the case law established, the court is in full agreement with the finding recorded by the ld. Special Judge and, therefore, this revision application requires to be dismissed.
31. Before parting with the order, I would like to mention that Mr. Barot has tried to point out that the guidelines regarding the preparing panchnama in case of precious matters has been given in a decision by this Court and no such formal panchanama in present case has been drawn by the Investigating Agency. This ignorance has resulted into serious prejudice. In the aforesaid discussion, the implied reply is available but as this submission is made during the course of dictation of judgment it would not be justified to deal with the submission in details, but it can be commented that this also would not help the applicant in getting property release at pending the investigation stage.
32. The costs assessment formula normally adopted by the Chartered Accountant or Costs Accountants where in number of cases, the principle LIFO/FIFO very popular in the field of service jurisprudence is followed. Mr. Barot has submitted that applying this principle, this Court can held that the gold bars were available at the residence of the applicant was from the last stock purchased by him and the stock sold by the applicant should be presumed to have been sold from previous purchase i.e. the stock purchased from KL Chokshi. Mr. MR Shah has strongly resisted this submission as the same has been advanced at the fake end and in the midst of the dictation of the judgment and he has submitted that he is not supposed to respond this submission and this Court should totally ignore this aspect. Say of Mr. Shah being absolutely legal and as per the settled practice of this Court, but when this submission if is to be used against the respondent only than the say of Mr. Shah should be given proper weightage. Zerox copy, in support of this submission supplied by Mr. Barot would not help the applicant in getting the goods released because this principle is to be followed while preparing valuation or inventory. So, while assessing the valuation, the costs of inventory should be prepared by using the first in first out principle. It would not any way help the applicant. This formula is normally used to have the farest possible approximation to the costs incurred in bringing the item in inventory to their present location and condition. This Court is neither concerned with the valuation or to the property which is to be evaluated. Material part of the goods seized is cash and gold bullion, having particular mark weight and purity standard. The Court decline to entertain both these submissions, however, with a view to see that the applicant may feel that justice is being done and his all says are considered and entertained. This should not be treated as precedent.
33. For the aforesaid reasons, I do not find any merits in this petition. Hence, this petition for release of the goods seized by the CBI, Mumbai is hereby rejected. At this stage, I am not inclined to pass any comments as to the status of the applicant because the investigation is yet on. So the request to release the goods by setting aside the order under challenge on certain conditions obviously would not survives. If this Court otherwise thought it fit to handover the goods especially the gold bars to the applicant only than the relevant conditions could have been worked out. So, this submission has not been accepted. The relief which was prayed before the ld. Special Judge was a discretionary relief, the same is rightly rejected. The date of seizure of the goods, date of the application made before the ld. Special Judge, date of hearing and the decision takes me to a conclusion that there is no perversity or illegality in the order. Hence, this revision application is dismissed.
34. Considering the lapse of period between the rejection of the application by the ld. Special Judge and this day, the applicant can approach the trial court for cash seized from the house and business premises of the applicant as there is no question of identity of currency Notes. If such an application is made, than it should be heard and decided on merits denovo without being influenced by the rejection of similar prayer by the ld. Special Judge and this Court after hearing the CBI. It is always open for the applicant to approach the trial court for release of goods on filing of the charge-sheet or on completion of investigation.