Orissa High Court Issues Guidelines For Releasing Seized Currency Pending Trial, Says Circulation Will Aid Economy

In an important development, the Orissa High Court has opined that currency notes seized in connection with criminal cases, including economic crimes, can be released in the custody of the accused pending trial of the case after following certain safeguards.

Justice Sibo Sankar Mishra reasoned that money, as a movable property, should not remain stagnant in judicial custody when it can be preserved through alternative means without prejudicing the prosecution's case and hence, observed –

“Thus, allowing the release of the seized currency under appropriate conditions would not only comply with legal precedents but also serve the larger public interest by ensuring that money continues to contribute to the economy rather than remaining unutilized in the custody.”

Background

The petitioner is alleged to have been involved in an illegal money collusion fraud through M/s Infinity Realcon Ltd. by operating various investment schemes without securing the requisite statutory approval from the Reserve Bank of India (RBI). After his arrest on September 26, 2022, officials of the CBI conducted searches at multiple locations during the late hours of that night.

During the search, an amount of ₹15.00 lakh cash was seized from the cupboard of his chamber/exclusive room at Anand Lok Building, Kolkata. Subsequently, the petitioner was granted bail by the Supreme Court. He filed an application under Section 451 read with Section 457 of the CrPC seeking interim custody of seized cash. However, Special Judge (CBI), Court No.1 -cum- the Additional Sessions Judge, Bhubaneswar rejected his application. Therefore, he challenged the rejection order through this criminal revision.

Contentions of Parties

Advocate Debashis Sinha appearing for the petitioner placed reliance on the statutory provisions for interim release of properties under Sections 451 and 457 of the CrPC. He also relied upon the judgment of the Supreme Court in Sunderbhai Ambalal Desai v. State of Gujarat (2002) and order of the Delhi High Court in Manjit Singh v. State (2014).

While the former emphasized that property seized by the police should not be retained unnecessarily and must be released to the rightful owner at the earliest, the latter held that the seized currency notes may be released to the person who, in the opinion of the Court, is lawfully entitled to claim after preparing detailed panchnama of the currency notes with their numbers or denomination; taking photographs of the currency notes; and taking a security bond.

On the other side, Sarthak Nayak, Special Public Prosecutor argued that the aforesaid judgements would only be applicable in the case when the person is lawfully entitled to such currency notes and relied upon the order of the trial Court which categorically recorded that the seized amount was properly not accounted for by the petitioner and the source of seized cash was not clear.

Findings

The Court took note of the fact that the petitioner is alleged to have targeted innocent citizens, exploited them economically and amassed huge wealth, sometimes resulting in cash currency hounding. When application for release of said cash/currency of economic offences of such magnitude, it said, the Courts "become circumspective to release the amount".

“However, the release of money ensures that the seized currency remains in circulation, thereby aiding the national economy. If the money remains stagnant, it serves no practical purpose and fails to contribute to economic activity. Currency is meant to be in circulation to facilitate trade, commerce, and overall economic growth. Keeping large sums of money idle in custody neither benefits the State nor the affected individuals. Instead, it restricts liquidity in the financial system and prevents the owner from utilizing the funds for legitimate purposes,” it observed.

Justice Mishra also referred to a previous order of the High Court in Santosh Kumar Tripathy v. State of Odisha, wherein emphasis was laid on the importance of preserving the evidentiary value of seized currency through colour photographs while ensuring that the currency itself remains available for economic use.

“This principle aligns with broader economic considerations, where unnecessary stagnation of monetary resources can hinder financial fluidity. Releasing the seized cash with proper safeguards, such as the preparation of Panchnamas and photographic documentation, balances both the interests of justice and economic utility.”

Therefore, in light of the judicial precedents, the Court was inclined to order the release of the seized amount of cash to the tune of ₹15.00 lakhs (Fifteen Lakhs) in favour of the petitioner, subject to certain conditions that ensure both the integrity of the investigation and the smooth conclusion of trial. The Court proposed following broad safeguards before releasing the currency notes in the custody of the accused/petitioner –

1. Preparation of a Detailed Panchnama – A formal record (Panchnama) of the seized cash shall be prepared under the supervision of the trial court, documenting essential details such as the total amount, denominations, serial numbers (where feasible), and other relevant particulars.
2. Preservation of Colour Photographs – High-resolution colour photographs of the seized currency shall be taken to ensure that its physical attributes are recorded for evidentiary purposes. These photographs shall be signed by the investigating officer, the accused petitioner, and two independent witnesses before being placed on record.
3. Security for the Released Amount – To balance the interests of justice and financial security, the petitioner shall be required to furnish a bank guarantee equivalent to 50% of the seized amount (i.e., ₹7.50 lakh) which shall remain valid until the conclusion of the trial. Additionally, the petitioner shall also secure the remaining 50% (i.e., ₹7.50 lakh) through the indemnification of any immovable property or other financial security, to the satisfaction of the trial court, as an assurance against potential liabilities arising from the case.
4. Undertaking of Compliance – The petitioner shall submit an affidavit affirming that the released amount shall remain available for restitution if required by the court at a later stage, and that any misuse or misappropriation of the released amount shall lead to immediate legal consequences.

Before parting, the Bench also remarked that similar course of action may be adopted by trial Courts in identical cases, keeping in mind the demand and need in different cases.

Release of seized material other than cash

The court also said that not only cash but also other materials which are seized, appropriate action must be taken by the authorities and courts below to do the needful and dispose of the items unless necessary to be in custody. It went on to cull out following principles regarding disposal of the seized article in form of broader guidelines which includes that:

1. Courts and investigating authorities must ensure that seized property is not retained indefinitely without valid legal justification. It is imperative to take steps for its prompt release or disposal unless required for an ongoing investigation or trial.

2. In cases involving seized currency, courts may consider its release upon fulfilment of the following conditions:

     High-resolution colour photographs should be taken for permanent record-keeping.

     A detailed panchnama should be prepared and signed by the investigating officer, the claimant, and other relevant parties and/or witnesses.

     Appropriate conditions or security bonds should be imposed to ensure compliance. If immediate release is not feasible, the cash must be deposited in a nationalized     bank to prevent stagnation and contribute to the economy. Keeping cash in judicial or police custody for extended periods serves no practical purpose

3. Bank deposits and/or fixed deposits may be released against similar or varied amount of property securities or bank guarantee made by the accused petitioner, as per the direction of the competent authorities or court.

4. Vehicles that remain impounded in police stations deteriorate in value and become unfit for use; hence and authorities must ensure verifying ownership and allowing release to the rightful owner upon submission of a security bond and valid proof of ownership. If a vehicle cannot be immediately returned, it should be stored in a secure facility instead of being left exposed to damage. 

5. Precious items such as gold, silver, and gemstones should not be kept in police custody for extended periods. Instead, they should be stored in proper lockers or bank lockers under court supervision. 

6. Perishable goods such as food and agricultural produce must be handled on a priority basis to prevent spoilage. Courts may consider immediate release to the rightful owner, if legally permissible or auctioning or distribution through government agencies, in cases where the goods have no direct claimant

Role of the Courts and Investigating Authorities

The guidelines also includes the role that courts and investigating authorities play which includes that Magistrates should take proactive measures to ensure that seized property is not retained for an extended period without justification. Court directives for the return or disposal of property should be issued without undue delay.

The high court further said that Investigating officers must regularly report on seized property and seek judicial orders for its appropriate handling.A system of periodic review and compliance checks should be established to prevent excessive backlog and mismanagement of seized assets.

"By implementing aforementioned structured guidelines, courts and law enforcement agencies can ensure that seized property is managed in a manner that is efficient, legally sound, and beneficial to both the justice system and society at large," the court underscored.

The Registry was directed to transmit a copy of the judgment to all District Courts, Special Courts, and other subordinate Courts as well as investigating agencies for the purpose of guidance.

Case Title: Lakshman Srinivasan v. Republic of India (CBI)

Case No: CRLREV No. 660 of 2024

Date of Judgment: April 10, 2025

Counsel for the Petitioner: Mr. Debashis Sinha, Advocate

Counsel for the Respondent: Mr. Sarthak Nayak, Special Public Prosecutor -cum- Retainer Counsel (CBI)

Citation: 2025 LiveLaw (Ori) 65

Click Here To Read/Download Order