Interim release of property cannot be cancelled without notice and hearing, violating principles of natural justice and Section 362 CrPC.

The Petitioner purchased a JCB excavator from Opposite Party No. 2 (O.P. 2) in 2018, later releasing it back to O.P. 2's relative for management under a rental agreement

Due to non-payment and refusal to return the machine, the Petitioner lodged an FIR (G.R. Case No. 696/2022)

The JCB was seized, and after O.P. 2’s applications for release were rejected by the Magistrate and Revisional Court, the Magistrate released the vehicle to the Petitioner on 21.08.2023

Subsequently, O.P. 2 filed a cross-complaint alleging the Petitioner used a forged sale deed

Based on a police request alleging fraud and despite no violation of release conditions, the Magistrate passed the impugned order on 02.01.2025, cancelling the Petitioner’s zimanama and directing the vehicle's production without prior notice to the Petitioner

1. Whether the Magistrate could cancel a final interim release order without issuing notice or affording a hearing to the affected party

2. Whether the Magistrate’s order of cancellation amounted to an impermissible review of a final order under Section 362 of the Cr.P.C.

3. Whether the cancellation of interim custody is permissible in the absence of a violation of the terms and conditions of the zimanama

the principles of natural justice, specifically audi alteram partem, establishing that no adverse order can be passed without a prior hearing, as held in M/s Daffodills Pharmaceuticals Ltd. v. State of U.P.

Gurdev Singh v. State of Bihar

Section 362 of the Cr.P.C., 1973, which prohibits a court from altering or reviewing its final judgment or order once signed, except for clerical errors

Section 457 of the Cr.P.C. regarding the procedure for disposal of property

interim release should only be cancelled if conditions are breached or if the order was obtained by fraud proven through due process

the order dated 21.08.2023 was a final judicial order disposing of property custody, and its subsequent cancellation without notice was a "gross violation" of natural justice

The High Court observed that the Magistrate essentially conducted a "mini-trial" on the issue of title and document authenticity—merits already considered previously—which constitutes an illegal review barred by Section 362 Cr.P.C.

The Court found the Magistrate's actions arbitrary because he passed two contradictory orders on the same day: refusing to hand the vehicle to O.P. 2 in one breath, while cancelling the Petitioner's custody in the other, which led to the Investigating Officer handing the vehicle to O.P. 2 anyway

The Court highlighted that the police report of "forgery" is a mere opinion and not a conclusive adjudication, especially since a protest petition is pending

It held that a Magistrate cannot unilaterally cancel a zimanama without following due process and demonstrating a violation of conditions

The Court restored the order dated 21.08.2023, returning custody to the Petitioner. The Magistrate was directed to dispose of the pending protest petition on its merits without being influenced by the quashed order