“Seized Currency Should Not Remain Stagnant: Circulation Will Aid Economy”: Orissa High Court Issues Guidelines for Release of Cash Pending Trial
Isabella Mariam
The High Court of Orissa Single Bench of Justice Sibo Sankar Mishra allowed the release of ₹15 lakhs seized during investigation, subject to detailed safeguards to preserve evidentiary value and ensure compliance with trial requirements. The Court directed the release of the cash to the accused petitioner on furnishing security and submitting necessary undertakings. It further laid down a structured set of legal and administrative guidelines concerning the management, custody, and disposal of seized property including cash, vehicles, digital devices, and contraband.
The petitioner filed a criminal revision petition under Section 397 read with Section 401 of the Criminal Procedure Code, 1973, now corresponding to Section 442 read with Section 438 of the Bharatiya Nagarik Suraksha Sanhita, 2023. The petition challenged the order dated 14.08.2024 passed by the Special Judge (CBI), Court No.1-cum-Additional Sessions Judge, Bhubaneswar, in Crl. Misc. Case No. 32 of 2024 arising from RC.30/S/2014-Kol dated 05.06.2014, which rejected the petitioner’s application under Sections 451 and 457 CrPC for release of cash seized during investigation.
The petitioner was accused in an investigation conducted by the Central Bureau of Investigation (CBI) involving allegations of financial fraud and economic offences linked to illegal investment schemes allegedly operated through M/s Infinity Realcon Ltd. The schemes were stated to be unregulated and carried out without Reserve Bank of India approval.
Following his arrest on 26.09.2022, the CBI conducted multiple searches at the petitioner’s office, prior residences, and current residence. During the search at his office at Anand Lok Building, Kolkata, ₹15 lakhs in cash was recovered from a cupboard in his exclusive chamber. The petitioner was subsequently granted bail by the Hon’ble Supreme Court vide order dated 03.10.2023 in SLP No. 9318/2023.
The petitioner’s counsel contended that the seized cash was lawfully held. It was submitted that ₹4.5 lakhs came from bank account withdrawals of the petitioner and his spouse; ₹4 lakhs was a loan from a close associate; and the rest included accumulated widow pension of the petitioner’s mother and monetary gifts from relatives. The justification was that the amount was stored in the office for use in case of medical emergencies, given the proximity to hospitals.
The petitioner relied on Sections 451 and 457 of CrPC, 1973, which empower courts to order custody or disposal of property during investigation or trial, and for release to the person entitled to possession.
The petitioner further relied on the Supreme Court decision in Sunderbhai Ambalal Desai v. State of Gujarat (2002) 10 SCC 283. The judgment noted the statutory authority under Section 451 CrPC for courts to release seized property when it is not required for trial, and emphasized that prolonged judicial or police custody of seized articles must be avoided.
The petitioner also cited Basavva Kom Dyamangouda Patil v. State of Mysore (1977) 4 SCC 358, where the Supreme Court held that the police and courts act as custodians and that unnecessary retention of property should be avoided. Further, Manjit Singh v. State, 2014 SCC OnLine Del 4652, was cited in support of procedural safeguards—such as panchnama preparation, photographic documentation, and execution of bonds—when releasing seized currency.
The petitioner contended that seized cash, being movable property, should be preserved in a manner that permits its circulation without affecting evidentiary value. It was argued that the currency could be returned on compliance with judicially established safeguards.
The CBI, represented by its Special Public Prosecutor, opposed the application. It was submitted that the source of the ₹15 lakh seized was not properly accounted for and that its legal origin remained doubtful. The Trial Court had noted that the money was stored without clear justification and was not proven to be legally earned.
The CBI further submitted that the case against the petitioner arose out of orders passed by the Hon’ble Supreme Court in W.P.(C) Nos. 401/2013 and 413/2013, based on FIR No. 82 dated 14.05.2013. Investigation revealed that M/s Infinity Realcon Ltd. had amassed ₹565 crores from the public between 2009 and 2014 through unauthorized deposit schemes, of which ₹343 crores remained unpaid.
It was alleged that the petitioner had conspired with the directors of the company and facilitated the formation of shell credit co-operative societies to bypass regulatory scrutiny. The petitioner was reported to have received ₹4.15 crores from the company without documentation and allegedly misappropriated ₹3.93 crores for personal use.
The CBI also noted that the investigation remained ongoing under Section 173(8) CrPC and that charges had been preliminarily framed for offences involving large-scale public fraud and misappropriation.
The Court recorded that “when application for release of said cash/currency of economic offences of such magnitude, the Courts become circumspective to release the amount. However, the release of money ensures that the seized currency remains in circulation, thereby aiding the national economy.”
The Court stated: “If the money remains stagnant, it serves no practical purpose and fails to contribute to economic activity. Currency is meant to be in circulation to facilitate trade, commerce, and overall economic growth.”
It further recorded: “Keeping large sums of money idle in custody neither benefits the State nor the affected individuals. Instead, it restricts liquidity in the financial system and prevents the owner from utilizing the funds for legitimate purposes.”
The Court cited its earlier decision in Santosh Kumar Tripathy v. State of Odisha (CRLMC No. 2631 of 2023), where it was held: “The trial court is directed to release the seized cash deposited by the I.O. in the court in favour of the petitioner by preserving color photographs of the currency notes. It is open for the trial court to impose any other condition as deemed fit and proper.”
The Court observed that “releasing the seized cash with proper safeguards, such as the preparation of Panchnamas and photographic documentation, balances both the interests of justice and economic utility.”
It further stated: “Money, as a movable property, should not remain stagnant in judicial custody when it can be preserved through alternative means without prejudicing the prosecution’s case.”
The Court also observed: “The release of seized cash should be considered while ensuring that its evidentiary value is duly preserved, which can be used for trial.”
The Court directed that the seized amount of ₹15 lakhs be released to the petitioner, subject to safeguards ensuring integrity of evidence and protection of public interest. It ordered:
“A formal record (Panchnama) of the seized cash shall be prepared under the supervision of the trial court, documenting essential details such as the total amount, denominations, serial numbers (where feasible), and other relevant particulars.”
“High-resolution colour photographs of the seized currency shall be taken to ensure that its physical attributes are recorded for evidentiary purposes. These photographs shall be signed by the investigating officer, the accused petitioner, and two independent witnesses before being placed on record.”
“The petitioner shall be required to furnish a bank guarantee equivalent to 50% of the seized amount (i.e., ₹7.50 lakh) which shall remain valid until the conclusion of the trial. Additionally, the petitioner shall also secure the remaining 50% (i.e., ₹7.50 lakh) through the indemnification of any immovable property or other financial security, to the satisfaction of the trial court.”
“The petitioner shall submit an affidavit affirming that the released amount shall remain available for restitution if required by the court at a later stage, and that any misuse or misappropriation of the released amount shall lead to immediate legal consequences.”
The Court further directed that similar procedure may be applied in future cases where release of cash or other property is sought. It laid down a structured set of principles and issued detailed guidelines to all trial courts and investigating authorities.
It stated: “Courts and investigating authorities must ensure that seized property is not retained indefinitely without valid legal justification… The disposal process should adhere to the provisions of Sections 451, 452, and 457 of Cr.P.C. and be guided by established judicial precedents.”
In relation to cash, it held: “If immediate release is not feasible, the cash must be deposited in a nationalized bank to prevent stagnation and contribute to the economy.”
The Court also provided detailed procedures for handling vehicles, gold, electronic devices, liquor, narcotics, perishable goods, and digital evidence. It stated that seized vehicles should not be left to deteriorate in police custody and that digital evidence must be preserved with forensic integrity.
Finally, the Court directed that: “The Registry of this Court is advised to transmit a copy of this judgment to all District Courts, Special Courts, and other subordinate courts. Additionally, copies may also be forwarded to the Director General of Police, Odisha Police Headquarters, and all other law enforcement agencies, including the State Vigilance Directorate, Excise Department, Forest Department, and other investigating agencies, for the purpose of guidance.”
The criminal revision was accordingly allowed.
Advocates Representing the Parties:
For the Petitioner: Mr. Debashis Sinha, Advocate
For the Respondents: Mr. Sarthak Nayak, Special P.P.-Cum-Retainer Counsel (CBI)
Case Title: Lakshman Srinivasan v. Republic of India (CBI)
Case Number: CRLREV No. 660 of 2024
Bench: Justice Sibo Sankar Mishra
[Read/Download order]
