Madurai HC Gives Police 4 Weeks To Identify Crime-Linked Gold, Release Verified Third-Party Jewellery Subject To Magistrate Orders

The petitioner, who operated a pawn-broking business as “Sri Amirtham Finance,” was arrayed as A3 in a case concerning approximately 3,590 grams of gold ornaments allegedly entrusted by the complainant.

The police alleged that approximately 2,860 grams passed through the petitioner’s establishment and that some ornaments were re-pledged with financial institutions.

Acting under Section 106 of the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS), the police instructed the institutions to prevent redemption or release of the ornaments.

The petitioner challenged the blanket restraint, arguing that it also affected jewellery belonging to independent customers, and sought consideration of his representation to lift the freeze.

The police opposed the petition, citing discrepancies in pledge records and ornaments still unaccounted for.

Section 106 of the BNSS empowers the investigating agency to seize property, but that power is subject to statutory safeguards, including forthwith reporting the seizure to the jurisdictional Magistrate.

Its exercise must be reasonable, proportionate, and confined to the requirements of the investigation.

The Court cited no precedent; it applied these statutory safeguards alongside the principle that the rights of innocent third parties should not be sacrificed merely because property passed through an accused person’s establishment.

The investigation raised matters requiring verification, including the alleged movement of ornaments through the petitioner’s business, discrepancies in pledge entries, and ornaments said to remain unaccounted for.

The Court therefore declined to order an unconditional release of all ornaments.

However, because the restraint also affected potentially unrelated customer property, it held that a blanket freeze could not continue indefinitely without identification of the property linked to the offence.

It directed a transaction-wise and customer-wise reconciliation of records and required any continued restraint to be supported by relevant material and appropriate orders from the jurisdictional Magistrate.

Ornaments specifically connected with the offence are to remain under restraint subject to law and Magistrate’s orders; restraint over ornaments found to belong to independent customers and unconnected with the offence is to be lifted, subject to any lawful Magistrate’s order.

The financial institutions must cooperate, and the petitioner must not deal with ornaments identified as connected with the crime except under orders of the competent Court.