Dr Gsc Rao vs Central Bureau Of Investigation And ... on 5 May, 2026

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Allahabad High Court

Dr Gsc Rao vs Central Bureau Of Investigation And ... on 5 May, 2026

1. Heard Mr. Durlabh Kumar Pandey, the learned counsel for petitioner, Mr. Rahul Srivastava, the learned counsel representing respondent-1/CBI and Mr. Ashok Shankar Bhatnagar, the learned counsel representing respondent-2/Punjab National Bank.

2. Present writ petition came up for admission on 29.04.2026 and this Court passed the following order;-

"In view of the facts and circumstances stated hereinabove, it is most respectfully prayed that this Hon'ble Court may graciously be pleased to:

a. Grant fair trial and investigation rights to the petitioner; and b. Issue an appropriate writ, order or direction in the nature of Mandamus, directing the Respondent No. 1 CBI, BS & FC to release the Fixed Deposit Receipts bearing Nos. 663013003293, 663013003310 & 663013003312 amounting to Rs. 1,00,00,000/- (Rupees One Crore Only:, which were furnished by the Petitioner as surety and seized by the Respondent No.-1 in pursuance of the order dated 07.06.2019.

c. Pass any other or further order(s), direction(s) or relief(s) as this Hon'ble Court may deem fit and proper in the facts and circumstances of the case."

3. On the matter being taken up today, Mr. Rahul Srivastava, the learned counsel representing respondent-1/CBI has submitted before us that petitioner had filed a release application under Section 451 Cr.P.C. before the Trial Court. The said application was rejected by the Trial Court, vide order dated 10.07.2018.

4. Feeling aggrieved by the order dated 10.07.2018, petitioner-Dr. G.S.C. Rao approached this Court by means of Criminal Revision No. 2529 of 2018 (G.S.C. Rao Vs. State of U.P. and 2 Others). The said Criminal Revision came to be allowed by this Court, vide order dated 07.03.2019. The operative portion of above order dated 07.03.2019 is relevant for the controversy in hand. Accordingly, the order dated 07.03.2019 is reproduced herein under;-

"Order on Application No. 02 of 2019 This application has been filed by the opposite party No.2 praying for grant of sufficient time to complete their investigation. Earlier this Court by order dated 11.12.2018 directed the C.B.I. to conclude the investigation of present case by 31st January of 2019. This application has been filed praying for further time to complete the investigation since there is involvement of loan account of 5762 farmers and despite best efforts, investigation could not be completed within the time granted by this Court.

Learned counsel for the C.B.I. is granted six months' further time from today to complete the investigation of this case.

This application stands allowed.

Order on Criminal Revision Heard Sri Rohan Gupta holding brief of Sri Kali Gupta, learned Counsel for the revisionist and Sri Gyan Prakash learned Counsel for the C.B.I. This criminal revision has been preferred against the judgment and order dated 10.7.2018 passed by Special Judge, Corruption (C.B.I.), Court No. 1, Ghaziabad, Case No. 2 of 2018, C.B.I. Vs. Simbhaoli Sugar Mills Limited and others, under Sections 120-B read with Section 420 and 409 IPC alongwith Section 13/2 r/w Section 13(1)(d) of Prevention of Corruption Act, 1988, Police Station C.B.I., BS & FC, New Delhi. By the aforesaid order, the court below has rejected the application of the applicant for release of seized assets of the applicant.

The facts of the case in brief are that the first information report dated 22.02.2018 was lodged by the Central Bureau of Investigation (C.B.I. in short), under Section 120-B read with Section 420 and 409 IPC alongwith Section 13/2 r/w Section 13(1)(d) of Prevention of Corruption Act, 1988, Police Station C.B.I., BS & FC, New Delhi. It was alleged in the FIR that various loans were advanced by Oriental Bank of Commerce to the farmers, who supplied cane to M/s Simbhaoli Sugar Mills Limited (hereinafter referred to as the Company), during the period, 25.01.2012 to 13.02.2012. 5762 accounts were opened and disbursement of loan was made, but the entire loan amount was credited to Escrow/Current Account of the Company for distribution of materials like seed, fertilizers, etc., to the farmers. It was alleged that the Company misappropriated the loan amount and diverted the money received from the Bank to other avenues. The loan accounts of borrower farmers were declared as Non-Performing Assets (NPA) on 31.3.2012 and a suit for recovery of Rs.112.94 crores was filed by the Bank before DRT, Lucknow. The company took corporate loan of Rs.110.00 crores from the Oriental Bank of Commerce on 28.01.2015 and liquidated the liability of the farmers' loan in the proceedings before the Debt Recovery Tribunal, Lucknow.

The corporate loan of Rs.110.00 crores issued to the Company became NPA on 29.11.2016 due to non-payment of installments by the company. C.B.I. investigated the matter and conducted search of the original premises of the revisionist situated at B-8/24 First Floor, Vasant Vihar, New Delhi on 25.02.2018 and certain articles were seized and search memo was prepared. C.B.I. team seized eight items including Rs.10 lacs in cash, 9500 US dollars and key of bank lockers. On 27.02.2018, locker No. 2278 in HSBC Bank, 47 Greater Kailash-I, New Delhi in joint name of the revisionist and his wife, Mrs. G.R. Lakshmi, was searched and articles like bangles, coins, chains, rings etc., were found in the locker and the same was seized. On the same day, locker No.2 and G-950 in Alaknanda Vaults, East of Kailash, New Delhi in the joint name of his wife, Mrs. G.R. Lakshmi and revisionist was searched and precious gold silver utensils etc., were found. A list of 12 articles were prepared and it was also seized. On 03.4.2018, search of locker No. 259 with Bank of Boarda, Tilak Nagar Branch, Hyderabad in the name of Mrs. G.R. Lakshmi, wife of revisionist, was made and inventory of jewelry and other items found in the locker were prepared. On the same day i.e., 34.2018, locker No. 13/57, at State Bank of India, Vidya Nagar, Hyderabad in the name of Mrs. G.R. Lakshmi, wife of revisionist was searched and 15 items of jewelry were found and inventory of goods was prepared.

Learned counsel for the revisionist has submitted that the revisionist was only Chief Executive Officer of the company and not the Executive Director. His duty was of operation of business and implementation of new projects of the Company. He resigned from the aforesaid post in September, 2013. He was not responsible for financial affairs of the Company. He was not involved in applying for loan or signing any agreement with the bank or sanctioning or disbursement of loan to the farmers. First loan of the company taken during his tenure from the Bank was cleared by the corporate loan of Rs.110.00 crores taken on 28.1.2015. On 28.01.2015, he was not part of the Company. The revisionist is highly qualified professional and income tax payee. After leaving the job of the company, he has formed a private limited company in 2013, known as "Global Canesugar Services Pvt. Ltd." at Delhi. His company is involved in consultancy services to Sugar and allied Industries within India and abroad. He has to make trips to foreign countries and remains for considerable period out of the country. The annual turn over of his company is around Rs.70 crores, out of which more than 50% of the revenue is generated from overseas business. The amount of Rs.10 lacs recovered from his residence was withdrawn from the Bank account for payment of wages/salaries in cash to the labourers on the eve of Holy festival. The amount was withdrawn from the Bank on three different occasions. It was not connected with the loan taken by Simbhaoli Sugar Mills Limited, way back from January to March, 2012. The amount seized is not a case property. 9500 US dollars belong to revisionist, his wife, his unmarried daughter as well as his married son and his wife, who frequently travel abroad and as per the Foreign Exchange Management Act, each person can retain 2000 US dollars at a time and therefore, there was nothing wrong in keeping 9500 UD dollars in family consisting of five members. The seizure of lockers in various Bank shows that they contained mainly old silver, utensils, jewelry and items of silver and gold. The jewelry was given in gifts to the revisionist's daughter -in-law at the time of her marriage in 2012 and other items were Istri Dhan of his wife. The jewelry and other items have been shown in the wealth tax return of the revisionist as well as the revisionist's wife. The entire jewelry and ornaments were kept in the lockers for the purpose of safety and the wife and daughter-in-law of the revisionist requir them for attending the marriage of their relatives and friends often.

Keeping in view the status of the family, the jewelry belonging to them cannot be kept under seizure since they have been deprived of user of the Istri Dhan of their ladies on account of illegal action on the part of C.B.I. The Act of the opposite party No.2 is in contravention of provisions of Section 102 of Cr.P.C. This court should release the goods aforesaid exercising power under Section 451 Cr.P.C. Article 300-A of the Constitution of India provides legal right to the revisionist to hold the properties.

Even if the entire allegations in the FIR is accepted, there is no allegation that loan amount was misappropriated by the Directors of the Company for their personal use. The allegation is that the loan amount was diverted to other avenues in the year 2013. There is no allegation that the aforesaid amount was transferred to the account of the Directors or the revisionist or the amount was withdrawn by the revisionist and from the aforesaid amount, he has purchased the goods seized by the C.B.I. The precondition for seizure under Section 102 (1) Cr.P.C. is not fulfilled since the property in dispute is not alleged to have stolen or found in circumstances which create any suspicion of commission of any offence and does not have any link with the alleged offence being investigated by the C.B.I. The investigation and the trial is confined to the role of the revisionist in diversion of funds by M/s Simbhaoli Sugar Mills Limited of the loan taken by the Oriental Bank of Commerce. Therefore, seizure of the cash and jewelry and other valuable goods of the revisionist is not justified under the facts and circumstances of the case.

Counter affidavit has been filed by C.B.I. repeating the allegations made in the FIR. No legal justification has been made in the counter affidavit for seizure of the disputed cash, jewelry and other items of the revisionist and his wife. It has been stated that the cash of Rs.10 lacs and 9500 US dollars were unjustifiably kept by the revisionist in his house and therefore, it was rightly seized.

Rejoinder affidavit has been filed by the revisionist replying to the averments made in the counter affidavit filed by C.B.I. After hearing rival contentions of the parties, in Basavva Kom Dyamangouda Patil v. State of Mysore, (1977) 4 SCC 358, the Supreme Court dealt with a case in which the recovered ornaments kept in a trunk in the police station were found missing and the owner of the property sought indemnification. The question arose with regard to value of those articles. In that context, the Court observed as under: -

"4. The object and scheme of the various provisions of the Code appear to be that where the property which has been the subject-matter of an offence is seized by the police it ought not to be retained in the custody of the Court or of the police for any time longer than what is absolutely necessary. As the seizure of the property by the police amounts to a clear entrustment of the property to a government servant, the idea is that the property should be restored to the original owner after the necessity to retain it ceases. It is manifest that there may be two stages when the property may be returned to the owner. In the first place it may be returned during any inquiry or trial. This may particularly be necessary where the property concerned is subject to speedy or natural decay. There may be other compelling reasons also which may justify the disposal of the property to the owner or otherwise in the interest of justice. The High Court and the Sessions Judge proceeded on the footing that one of the essential requirements of the Code is that the articles concerned must be produced before the Court or should be in its custody. The object of the Code seems to be that any property which is in the control of the Court either directly or indirectly should be disposed of by the Court and a just and proper order should be passed by the Court regarding its disposal. In a criminal case, the police always acts under the direct control of the Court and has to take orders from it at every stage of an inquiry or trial. In this broad sense, therefore, the Court exercises an overall control on the actions of the police officers in every case where it has taken cognizance."

In Sunderbhai Ambalal Desai v. State of Gujarat (2002) 10 SCC 283, gold ornaments and other articles lying at the police stations were illegally replaced by the police personnel with spurious articles. The Supreme Court examined the scope of Sections 451 and 457 Cr.P.C. and held that Section 451 Cr.P.C. should be exercised expeditiously and judiciously. The observations of the Supreme Court are reproduced hereunder:

"5. Section 451 clearly empowers the Court to pass appropriate orders with regard to such property, such as-- (1) for the proper custody pending conclusion of the inquiry or trial;

(2) to order it to be sold or otherwise disposed of, after recording such evidence as it thinks necessary; (3) if the property is subject to speedy and natural decay, to dispose of the same.

xxx xxx xxx

7. In our view, the powers under Section 451 CrPC should be exercised expeditiously and judiciously. It would serve various purposes, namely:

1. owner of the article would not suffer because of its remaining unused or by its misappropriation;

2. court or the police would not be required to keep the article in safe custody;

3. if the proper panchnama before handing over possession of the article is prepared, that can be used in evidence instead of its production before the court during the trial. If necessary, evidence could also be recorded describing the nature of the property in detail; and

4. this jurisdiction of the court to record evidence should be exercised promptly so that there may not be further chance of tampering with the articles."

Valuable articles and currency notes With respect to the valuable articles and currency notes, the Supreme Court held as under:

"11. With regard to valuable articles, such as, golden or silver ornaments or articles studded with precious stones, it is submitted that it is of no use to keep such articles in police custody for years till the trial is over. In our view, this submission requires to be accepted. In such cases, the Magistrate should pass appropriate orders as contemplated under Section 451 CrPC at the earliest.

12. For this purpose, if material on record indicates that such articles belong to the complainant at whose house theft, robbery or dacoity has taken place, then seized articles be handed over to the complainant after: (1) preparing detailed proper panchnama of such articles;

(2) taking photographs of such articles and a bond that such articles would be produced if required at the time of trial; and (3) after taking proper security.

13. For this purpose, the court may follow the procedure of recording such evidence, as it thinks necessary, as provided under Section 451 Cr.P.C. The bond and security should be taken so as to prevent the evidence being lost, altered or destroyed. The court should see that photographs of such articles are attested or countersigned by the complainant, accused as well as by the person to whom the custody is handed over. Still however, it would be the function of the court under Section 451 CrPC to impose any other appropriate condition.

14. In case, where such articles are not handed over either to the complainant or to the person from whom such articles are seized or to its claimant, then the court may direct that such articles be kept in bank lockers. Similarly, if articles are required to be kept in police custody, it would be open to the SHO after preparing proper panchnama to keep such articles in a bank locker. In any case, such articles should be produced before the Magistrate within a week of their seizure. If required, the court may direct that such articles be handed back to the investigating officer for further investigation and identification. However, in no set of circumstances, the investigating officer should keep such articles in custody for a longer period for the purposes of investigation and identification. For currency notes, similar procedure can be followed."

In this case, If ultimately it is proved that the offences have been committed by the revisionist, he would have to pay fine equivalent to or to the extent of acquisition in excess of his source of income as per Section 16 of the Prevention of Corruption Act.

In the instant case, the properties have been seized by C.B.I. applying the Code of Criminal Procedure. The seizures have been reported to the court attracting the provisions of Section 451 Cr.P.C. The question is whether he is entitled to seek release of the property, the issue is to be decided by this Court.

As per the law, the issue is to be dealt with applying Section 451 and 457 Cr.P.C. It is to be seen whether seizure will disentitle the accused revisionist to seek interim custody of the cash and his goods.

A plane reading of Sections 17 and 18 of Provision of Corruption Act shows that it only confers the power of seizure, but does not confer power to attach or defreeze without warrant or order of the court. The Apex Court in case of Sunderbhai Ambalal (supra) has elaborately dealt with this issue and cautioned the courts below to consider the request for grant interim custody expeditiously, lest, the object of the procedural law is defeated.

Accused is not disputing seizure of gold and silver articles nor its value. He is also not disputing cash recorded from him. Therefore, even if the articles are released to the accused, prosecution will not be impacted adversely because seizure is on record and everything is documented. Such documentary evidence is receivable without even proof as envisaged under Section 294 Cr.P.C. and prosecution can certainly resort to this provision and obtain consent of the accused to mark it in evidence. That will solve the prosecution problem. Even if the accused is found guilty, he will be liable to suffer sentence to forfeit the property or the amount being the value of the articles in excess of the known source of income.

I do not wish to extract the observation of the Apex Court in the case of Sunderbhai Ambalal Desai again, but the dictum of that decision has to be applied to the facts of this case. Applying the said dictum, I am satisfied with the revisionist had made out a case of release of the property which the learned trial judge erroneously rejected.

In the result, revision succeeds. The applications filed by the revisionist is allowed subject to following conditions:-

1. The trial Judge shall direct the prosecution to give an inventory and photographs of the articles seized. The inventory and photographs shall be verified by the investigating agency, bank and the revisionist.

2. Release the goods, including currency notes and USD, from seizure to the revisionist on furnishing solvent sufficient surety to the extent of the value of the property and currency including US Dollar and also furnish a bond undertaking not to sell and produce the property, as and when required by the trial court or any other court, except the currency notes and US Dollars.

4. The revisionist shall not sell the property seized but shall be free to use them.

The judgment and order dated 10.7.2018 passed by Special Judge, Corruption (C.B.I.), Court No. 1, Ghaziabad, is hereby set aside.

This Criminal Revision is allowed."

5. In compliance of above order dated 07.03.2019, the Trial Judge passed an order dated 07.06.2019, whereby seized goods and articles were directed to be released in favour of petitioner on the following conditions, which are evident from the penultimate paragraph of the order dated 07.06.2019. Accordingly, the same is extracted herein below;-

"?????? ???? ???????? ?? ???? ?? ??????? ??? ????? ??? ?? ?? ?? ??? ?? ????????? ???? ???? ?? ?? ?? ?? ???? ????? ?? ????? ????????? ????? ??? ?? ?? ??? ?? ?? ????? ? ???????????? ????? ??? ?? ?? ?? ???????? ?? ?????? ???? ?? ???? ???? ??? ????? ???? ?? ?? ?? ?????? ???????? ?? ??? ???? ???????? ?? ???????? ?? ???????? ??? ??? ????? ?? ????? ???? ????? ?? ??? ???????? ?? ????? ??? ???? ?? ??? ?????? ?????? ????? ?? ??? ?? ??? ???????? ?? ????? ?? ????? ????? ??? ??? ???? ?????? ????? ?? ?????? ?????? ???? ???????? ?? ??????? ?????? ?? ??????? ???? ?? ??????? ??? ?? ??? ???????? ????? ?? ???? ??? ?????? ?? ???? ???? ??? ???????????? ???? ?? ??????? ????? ????????? ?? ?????"

6. On the above premise, Mr. Rahul Srivastava, the learned counsel representing respondent-1/CBI contends before us that security to the tune of Rs. One crore by way of fixed deposit was furnished by the petitioner himself in compliance of order dated 07.06.2019. Simply on the ground that the investigation has not yet concluded, petitioner cannot seek release of the security furnished by him in compliance of order dated 07.06.2019. The proper course for the petitioner was to approach this Court challenging the FIR on the ground that since a period of 8 years has rolled by and the investigation has not yet been brought to it's logical conclusion, therefore, the FIR itself be quashed by this Court or to seek modification of above order by approaching the Apex Court. Since the security was furnished by the petitioner in compliance of an order passed by this Court pursuant to which, the Trial Court demanded security from petitioner, therefore, the principle of estopple by conduct shall come into play and the petitioner shall be estopped from pleading that because the investigation has not been concluded, thereafter, the security be released. It is also contended by the learned counsel for CBI that in the garb of this writ petition, the petitioner is seeking modification of the order dated 07.03.2019, which is otherwise not maintainable. As such, the present writ petition is liable to be dismissed.

7. When confronted with above, the learned counsel for petitioner could not overcome the same.

8. Having heard the learned counsel for petitioner, Mr. Rahul Srivastava, the learned counsel representing respondent-1/CBI, Mr. Ashok Shankar Bhatnagar, the learned counsel representing respondent-2/Punjab National Bank and upon perusal of record, we find that the objections raised by Mr. Rahul Srivastava, the learned counsel representing respondent-1/CBI in opposition to present writ petition are clearly borne out from the record. Since the security release of which is being prayed for by petitioner was furnished by petitioner himself pursuant to an order dated 07.06.2019, which order was passed by the Trial Court in compliance of an earlier order dated 07.03.2019 passed by this Court, we find that the ground taken for release of the security furnished by petitioner himself pursuant to above order is wholly misconceived.

9. As a result, the present writ petition fails and is liable to be dismissed.

10. It is, accordingly, dismissed.

(Padam Narain Mishra,J.) (Rajeev Misra,J.) May 5, 2026 Vinay

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Allahabad High Court