NANDKUMAR BABULAL SONI VERSUS THE STATE OF MAHARASHTRA & ORS. ETC CRIMINAL APPEAL NO(s) 579-580 OF 2012:

DATE: 25/02/2025

BENCH: Justice BR Gavai, Justice Prashant Kumar Mishra, and Justice KV Viswanathan

FACTS:

The case pertains to a large-scale fraud involving the fraudulent remittance of funds through fake Telegraphic Transfers (TTs) and subsequent withdrawals amounting to ₹6.7 crores at Vijaya Bank, Nasik Branch, Maharashtra. The fraudulent transactions occurred between April and August 1997, with funds being credited to an account opened under the fictitious name "M/s. Globe International." The prosecution alleged that the fraud was carried out with the involvement of accused bank officials, S.K. Sheenappa Rai (Branch Manager) and M. Devdas Shetty, along with other absconding individuals. Investigations revealed that the funds were withdrawn and converted into gold bars, which were later seized from the premises of accused no. 3, Nandkumar Babulal Soni.

Following a trial, the Trial Court convicted accused nos. 1 and 2 under various sections of the Indian Penal Code (IPC) and the Prevention of Corruption Act, while accused no. 3 was found guilty under IPC Sections 120B and 411. The court also ordered the return of 205 seized gold bars to accused no. 3. On appeal, the Bombay High Court overturned the convictions of accused nos. 1 and 2 but upheld the conviction of accused no. 3. Additionally, the High Court set aside the order returning the gold bars to accused no. 3 and instead confiscated them in favor of the State Government. Aggrieved by this decision, accused no. 3, along with Hiralal Babulal Soni and Vijaya Bank, filed criminal appeals before the Supreme Court, seeking a reversal of the High Court’s ruling and the return of the gold bars.

ISSUES:

The main issues in the case were, whether the property seized by the bank is stolen and also whether the bank is entitled to the possession of the seized gold.

JUDGEMENT WITH REASONING:

Since the identity of the seized gold as stolen property is unproven, Vijaya Bank has no claim to its possession. Thus, Criminal Appeal No. 584 of 2012 is dismissed, without prejudice to any other legal remedies available. Likewise, Criminal Appeal Nos. 579-580 of 2012 by Hiralal Babulal Soni for the return of gold bars are also dismissed.

The court's reasoning for acquitting the appellant, Nandkumar Babulal Soni, was based on the prosecution’s failure to establish a key element of the offence under Sections 120B and 411 of the IPC—namely, the identity of the seized gold bars as stolen property. The Trial Court itself acknowledged the prosecution's inability to prove beyond reasonable doubt that the seized gold was the same as that fraudulently acquired through tainted demand drafts by M/s. Globe International. Given this failure, the appellant could not be held guilty of receiving stolen property, as the prosecution had not covered the evidentiary gap between mere suspicion and conclusive proof. Additionally, the court found that the appellant had not been charged or tried for the first part of the alleged conspiracy concerning fraudulent telegraphic transfers, further weakening the case against him.

Moreover, the High Court’s reliance on Section 106 of the Evidence Act, which placed the burden on the appellant to prove lawful possession of the gold, was found to be misplaced. The court reiterated that it was the prosecution’s duty to establish a prima facie case before shifting any burden to the accused. Given the four-year delay in the recovery of the gold and the lack of clear markings linking it to the alleged fraud, the court held that the prosecution had failed to prove its case beyond a reasonable doubt. Consequently, the appellant’s conviction was set aside, and he was entitled to possession of the seized gold, while the claims of Vijaya Bank and other parties were dismissed due to the prosecution's failure to establish the gold’s stolen status.

ANALYSIS:

The Supreme Court's decision underscores the fundamental principle that the prosecution bears the burden of proving the identity of stolen property beyond a reasonable doubt. In this case, the failure to conclusively establish that the seized gold bars were the same as those acquired through fraudulent transactions led to the rejection of claims by both Vijaya Bank and Hiralal Babulal Soni. The court emphasized that mere suspicion or circumstantial connections were insufficient to establish the gold’s status as stolen property. Furthermore, it found that the High Court had erred in relying on Section 106 of the Evidence Act to shift the burden of proof onto the appellant, reiterating that the prosecution must first establish a prima facie case before requiring the accused to explain their possession. Given the absence of direct evidence linking the gold to the fraudulent scheme and the delay in its recovery, the court concluded that the prosecution had failed to bridge the evidentiary gap necessary to uphold a conviction.

Additionally, the ruling highlights the importance of procedural fairness in criminal cases. The appellant, Nandkumar Babulal Soni, had not been charged or tried for the initial conspiracy involving fraudulent telegraphic transfers, further weakening the case against him. The court recognized that an accused person cannot be convicted merely on the basis of assumptions and procedural shortcuts. By setting aside the appellant’s conviction under Sections 120B and 411 of the IPC, the court reinforced the necessity of concrete evidence in proving criminal liability. Consequently, the appellant was entitled to possession of the seized gold, while the claims of Vijaya Bank and other parties were dismissed due to the lack of definitive proof that the gold was part of the fraudulent transactions. This decision reaffirms the legal principle that in cases involving allegedly stolen property, the burden of proof lies squarely with the prosecution.