Kiran Raj

The Supreme Court has set aside the conviction of Nandkumar Babulal Soni in a case concerning fraudulent telegraphic transfers at Vijaya Bank, Nasik Branch, Maharashtra. The Court also directed that 205 seized gold bars be returned to Soni, ruling that the prosecution failed to establish their identity as stolen property. The judgment overturns the decision of the Bombay High Court, which had upheld Soni's conviction under Sections 120B and 411 of the Indian Penal Code, 1860 (IPC). The Supreme Court ruled that suspicion, however strong, cannot replace proof beyond a reasonable doubt.

The case involved fraudulent remittance of Rs. 6.7 crore through fake telegraphic transfers (TTs) to a fictitious entity, M/s. Globe International. Investigations led to the prosecution of multiple individuals, including bank officials and Soni, on allegations of conspiracy and misappropriation. The trial court had convicted the accused, but the High Court later acquitted the bank officials while upholding Soni's conviction and directing that the seized gold bars be confiscated by the state. The Supreme Court, however, found the evidence against Soni insufficient, ordering the return of the gold bars to him.

The prosecution alleged that the fraud involved the illegal transfer of Rs. 6.7 crore through 12 fraudulent TTs between February and August 1997. The transactions were credited to an account opened under the name of M/s. Globe International at Vijaya Bank’s Nasik Branch. It was later discovered that the account holder, Surender Kantilal Jain, and the firm itself were fictitious.

The investigation revealed that the TT amounts were promptly withdrawn and used to purchase gold bars from M/s. Chenaji Narsinghji (M/s. CN) and M/s. V.B. Jewellers. The case was initially filed against bank officials S.K. Sheenappa Rai (Branch Manager) and M. Devdas Shetty, accused of allowing the fraudulent account to be opened and facilitating withdrawals. The Central Bureau of Investigation (CBI) later charged Nandkumar Babulal Soni under Sections 120B (criminal conspiracy) and 411 (dishonestly receiving stolen property) of the IPC, alleging that he was involved in the fraudulent transactions and received stolen gold bars.

During the trial, the prosecution relied on circumstantial evidence, including the statements of witnesses from the jewelry trade and banking sector. The trial court convicted all three accused, sentencing them under the IPC and the Prevention of Corruption Act, 1988. The trial court also ordered that the seized gold bars be returned to Soni. However, on appeal, the Bombay High Court acquitted the bank officials while upholding Soni's conviction and directing that the gold bars be confiscated.

The Supreme Court extensively examined the evidence and found inconsistencies in the prosecution's case. The Court observed that "it is necessary for the prosecution to establish beyond reasonable doubt that the seized gold bars were directly linked to the fraudulent transactions." The Court noted that while there was evidence of fraudulent TTs and gold purchases, "the prosecution failed to conclusively establish that the specific gold bars seized from Soni were part of the stolen property."

Furthermore, the Supreme Court examined that "mere possession of valuable property does not automatically indicate culpability under Section 411 IPC unless the prosecution can establish knowledge of its stolen nature." The Court also found that the trial court's reliance on circumstantial evidence was insufficient to meet the threshold of criminal conviction.

Addressing the invocation of Section 106 of the Evidence Act, the Court stated that "the burden of proof must primarily rest with the prosecution to establish the essential ingredients of the offense, and only after meeting that threshold can the defense be called upon to explain its possession of the disputed property."

The Supreme Court, after examining the evidence, ruled that:

• "The conviction of Nandkumar Babulal Soni under Sections 120B and 411 IPC is set aside."

• "Since the seized gold bars were recovered from Soni, he is entitled to their possession."

• "The 205 gold bars (Article 2) shall be handed over to Soni."

• "Vijaya Bank’s claim over the seized gold bars is rejected, as there is no direct evidence linking them to the bank’s financial losses."

• "The decision of the Bombay High Court directing confiscation of the gold bars to the state government is reversed."

The Supreme Court concluded that the prosecution failed to establish a direct link between the seized gold and the fraudulently acquired funds. It held that conviction in criminal cases must be based on evidence that excludes all reasonable doubt, stating that "the distance between ‘may’ and ‘must’ is very vast, and the prosecution in this case could not achieve that level of proof."

Case Title: Hiralal Babulal Soni v. The State of Maharashtra & Ors.

Case Number: 2025 INSC 266; Criminal Appeal Nos. 579-580 of 2012, Criminal Appeal Nos. 581-583 of 2012, Criminal Appeal No. 584 of 2012

Bench: Justice B.R. Gavai, Justice Prashant Kumar Mishra, Justice K.V. Viswanathan

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