The Branch Manager vs The State Of Tamilnadu Rep By The Inspector Of Police, Ccb

Court
Madras High Court

WP Crl.(MD) No. 5788 of 2026
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
DATED: 03-11-2026
CORAM
THE HON'BLE MRS. JUSTICE K. GOVINDARAJAN THILAKAVADI
WP Crl.(MD) No. 5788 of 2026
CNR:{HCMD011435342026}
WMP CRL.(MD) Nos. 1284 and 1285 of 2026
The Branch Manager,
Muthoot Finance Ltd.,
Sri Puram Branch,
Tirunelveli Town,
Tirunelveli District.
..Petitioner
Vs
1. The state of Tamil Nadu Represented by its,
Inspector of Police,
City Crime Branch,
Tirunelveli City.
(Cr. No.08/2026)
2. Esakki Mano
3. Shanmugavel
4. The Regional Manager,
Kosamattam Finance Company,
Sulakshmi Villa,
th th
13/795 E- 30 Street, Shanthi Nagar 30 Street,
Palayamkottai Taluk,
Tirunelveli District.
..Respondents
PRAYER: Writ Petition is filed under Article 226 of the Indian
Constitution, to issue a Writ of Certiorarified Mandamus or any other
st
appropriate writ or direction, to call for the order passed by the 1
respondent under Proceeding No. nil, dated 29.09.2026 and to quash the
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WP Crl.(MD) No. 5788 of 2026
st
same as illegal and further forbear the 1 respondent from seizing the
nd rd
Gold Jewels pledged by the 2 and 3 Respondents herein, which are
pledged with the writ petitioner, in the light of the legally enforceable
Charge created by the petitioner herein and pass such order that this
Court deem fit.
For Petitioner : M/s.K.R.Laxman
For Respondents : Mr.D.Rajaboopathy
Counsel for State of TN (Crl. Side)
for R1
M/s.S.Malaikani for R4
ORDER
The present Writ Petition has been filed challenging the order dated
st
29.09.2026 passed by the 1 respondent and consequently seeking a
st
direction to forbear the 1 respondent from seizing the gold jewels
nd rd
pledged by the 2 and 3 respondents with the petitioner financial
institution.
nd rd
2. The case of the petitioner is that the 2 and 3 respondents had
pledged the gold jewels with the petitioner financial institution and, upon
such pledge, a valid and legally enforceable charge was created in favour
of the petitioner. It is the specific contention of the petitioner that the
jewels were accepted after following the applicable norms and guidelines
prescribed by the Reserve Bank of India and that the pledged transactions
were undertaken in the ordinary course of banking business.
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WP Crl.(MD) No. 5788 of 2026
3. The learned counsel for the petitioner would submit that the
petitioner financial institution cannot be faulted for having accepted the
jewels after following the prescribed banking procedures. It is further
nd rd
contended that the complainant and the 2 and 3 respondents may be
acting in collusion, in as much as the jewels were pledged with the
petitioner financial institution and, simultaneously, a criminal complaint
came to be lodged in respect of the very same jewels. Such a course of
action would result in the complainant and the accused persons enjoying
the benefit of the loan amount as well as the jewels, whereas the
petitioner financial institution would be put to irreparable financial loss.
4. It is further submitted that the criminal proceedings may
ultimately culminate in acquittal, in which event the petitioner financial
institution would be left without adequate protection of its lawful security
st
interest. The 1 respondent, without properly considering the subsisting
pledge created in favour of the petitioner financial institution, is
attempting to seize and take possession of the jewels. Hence, the present
Writ Petition.
5. This Court has carefully considered the submissions made by the
learned counsel for the petitioner and the respondents and perused the
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WP Crl.(MD) No. 5788 of 2026
materials placed on record.
st
6. The question that arises for consideration is whether the 1
respondent can insist upon seizure and delivery of the gold jewels, which
are admittedly under the lawful pledge of the petitioner financial
institution, without duly considering the financial institution’s subsisting
contractual and statutory rights over the pledged property.
7. At the outset, it is to be observed that a pledge is a recognised
form of bailment under Section 172 of the Indian Contract Act, 1872. The
pawnee is entitled to retain the pledged goods until the debt is discharged,
together with interest and necessary expenses, as contemplated under
Section 173 of the said Act. Therefore, once the jewels have been
lawfully pledged with the petitioner financial institution and it has
advanced money against such pledge, the financial institution acquires a
legally enforceable interest in the pledged property. Such interest cannot
be brushed aside or ignored merely because a criminal complaint has
subsequently been lodged in respect of the very same jewels.
8. It is true that the investigating agency is empowered under the
provisions of BNSS, 2023, to seize property in appropriate cases where
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WP Crl.(MD) No. 5788 of 2026
the statutory requirements are satisfied. However, such power cannot be
exercised mechanically or arbitrarily. The investigating agency must
establish a reasonable and identifiable nexus between the property sought
to be seized and the alleged commission of the offence.
9. In the present case, the petitioner claims that the jewels were
accepted after verification and in accordance with the applicable norms.
There is no material placed before this Court, atleast at this stage, to
demonstrate that the petitioner had knowledge of any alleged criminal
activity or had participated in any unlawful transaction while accepting
the jewels. The mere registration of a criminal complaint cannot
automatically invalidate an otherwise lawful pledge transaction. Equally,
the pendency of a criminal investigation cannot, by itself, result in the
extinguishment of the lawful security interest created in favour of a
financial institution.
10. This Court is also of the view that the apprehension expressed
by the petitioner deserves consideration. If the jewels are taken away
from the custody of the petitioner without safeguarding its subsisting
security interest, the petitioner may be exposed to serious financial
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WP Crl.(MD) No. 5788 of 2026
prejudice, particularly when the loan amount advanced against the
pledged jewels remains unpaid.
11. It is also relevant to note that the criminal proceedings and the
contractual rights arising out of the pledge transaction are distinct legal
proceedings. The investigating agency is entitled to investigate the
allegations and collect relevant evidence. However, such investigation
should not be permitted to operate in a manner that unnecessarily defeats
the legitimate commercial rights of a third party financial institution,
which claims to have acted bonafide in the ordinary course of business.
12. This Court is conscious of the fact that the rights of the
complainant and the accused persons, as well as the requirements of a fair
investigation, must be protected. However, the same cannot be achieved
by mechanically directing the petitioner to surrender the pledged jewels
without considering the legal consequences of such action. In the absence
of any material establishing that the petitioner was involved in the alleged
offence or that the pledge transaction itself was fraudulent, the action of
st
the 1 respondent in seeking to seize the jewels, without considering the
subsisting pledge and the statutory rights of the petitioner, cannot be
sustained.
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WP Crl.(MD) No. 5788 of 2026
13. It is made clear that this Court is not expressing any opinion on
the genuineness of the jewels, the allegations made in the criminal
nd rd
complaint or the culpability of the 2 and 3 respondents. Those matters
are left open to be investigated and decided by the competent authorities
in accordance with law.
14. In view of the foregoing discussions, this Court is of the
considered opinion that the petitioner has made out a case for interference
with the impugned order.
15. Accordingly, the Writ Petition is allowed and the impugned
order dated 29.09.2026 is set aside in so far as it seeks to compel the
petitioner to surrender or hand over the gold jewels pledged with it,
without safeguarding the petitioner's lawful security interest.
st
Consequently, the 1 respondent is restrained from seizing or taking
possession of the pledged jewels from the petitioner in the manner
contemplated under the impugned order.
16. However, this order shall not stand in the way of the
investigating agency proceeding with the investigation in accordance
with law, collecting relevant documents, recording statements and
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WP Crl.(MD) No. 5788 of 2026
establishing the connection, if any, between the pledged jewels and the
alleged offence. If the investigating agency is of the opinion that seizure
of the jewels is absolutely necessary for the purposes of investigation or
trial, it shall approach the competent jurisdictional Court and obtain
appropriate orders after placing the relevant materials before such Court.
The competent Court shall consider the respective rights of the parties,
including the subsisting pledge of the petitioner, independently and in
accordance with law. It is further made clear that the petitioner shall
preserve the pledged jewels in their present condition and shall not
alienate, dispose of or otherwise deal with the jewels contrary to any
order that may be passed by the competent Court. Liberty is given to the
respondent police to identify the jewels and ascertain whether it has any
nexus with the alleged offence and the petitioner shall cooperate for the
same.
17. Consequently, connected Miscellaneous Petitions, if any, are
closed.
03-11-2026
Index: Yes/No
Speaking/Non-speaking order
Neutral Citation: Yes/No
mar/skn
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WP Crl.(MD) No. 5788 of 2026
To
1. The Inspector of Police,
City Crime Branch,
Tirunelveli City.
2. The Additional Public Prosecutor,
Madurai Bench of Madras High Court,
Madurai.
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WP Crl.(MD) No. 5788 of 2026
K.GOVINDARAJAN THILAKAVADI J.
mar/skn
WP Crl.(MD) No. 5788 of 2026,
WMP CRL.(MD) Nos. 1284 and 1285 of 2026
03-11-2026
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