# STATE BANK OF INDIA v. RAJENDRA KUMAR SINGH & ORS

- **Citation:** [1969] 2 S.C.R. 216
- **Court:** Supreme Court of India
- **Decided:** 1968-09-25
- **Case number:** Criminal Appeal No. 32 of 1965
- **Bench:** J. C. Shah, V. Ramaswam!, A. N. Grover
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/state-bank-of-india-v-rajendra-kumar-singh-ors-4487
- **Pages:** 8

## Headnote

BCode of Criminal Procedure, 1898, Ss. 517 and 520-0rder of the
Court directing return of seized property-If necessary to give party
adversel,y affected notice of hearing and opportunity to be heard-Who
has 'rlght to possess' lVithin the meaning of s. 517.
21 currency notes of Rs. 1,000 each were seized from the Appellant
Bank by the police in the course of an investigation of a case again.st the
C
third respondent of cheating
the
fust and second respondents.
The
seized· currency notes were said to be part of the property obtained by
the third respondent from the other two respondents.
The third respon·
dent was acquitted by the trial court of the offence charged.
In the
course of the trial the appellant made an
application
under
section
517(1) of the Code of Criminal Procedure asking for the delivery of
the currency notes to it on the ground that the appellant was an innocent
D·
third party who had received the said notes without any knowledge or
suspicion 'of their having been involved in the commission of an ... offence.
By its order of 24th April 1962, the' trial court allowed the application
and directed that the currency notes should be returned to the appellant.
Snbseqently an appeal filed by the State' was allowed by the High Court
whii:h set aside the trial court's order of acquittal of the third respondent
and convicted him of the offence charged.
On an application made1 by
the first respondent asking for delivery of the currency notes to him as
E
they belonged to him and the second respondent, the High Court, by an
order of April 5, 1963 directed that the notes be handed over to the
first and second respondents.
In the appeal to this Court, it was contended, inter alia, on behalf of
the appellant that the High Court had reversed the order of the
trial
court directing the return of the currency notes to the appellant without
giving a notice to the appellant. and without giving an opportunity of
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being heard; and that the order of April 5, 1963 was therefore violative
of the principles of natural justice and was illegal.
The contention on
behalf of the respondents was that there was no provision in section 520
of the Code of Criminal Procedure for giving notice to the
affected
parties and the order of the High Court could not be challenged on the
ground that no hearing was given ·to the appellant. It was also contended that the High Court had a discretion under the statute as to whom
the property was to be returned and there was no reason why this Court
G
should interfere with the exercise of discretion by the High Court.
HELD : The appeal must be allowed and the order of the High Court
dated April 5, 1963 set ·aside.
The
seized
currency notes must
be
directed to be returned to the appellant.
(!) Jt is mainfest that the High Court was bound to give notice to
the appellant before reversing the order of the trial court directing the
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disposal of the property under s. 517 of the Code of Crimimrl Procedure.
As no such notice was given to the appellant, the order of the High Court
dated 5th April 1963 is vitiated in law.
Although the statute does not
expressly require a notice to be issued, or a hearing to be given to the
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STATE BANK; v. R. K. SINGH (Ramaswami, J.)
217
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parties adversely affected, there is in the eye of law a necessary .implica·
tion that the parties adversely affected should be heard be!fore the Court
makes an order for return of the seized property. [220 C-D, 221 El
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Cooper v. Wandsworth Board of Works. (1863) 14 C.B.N.S. 180;
Ridge v. Baldwin,
(1963) 2 W.L.R. 935 and Board of High School
and Intermediate Education, U.P. Allahabad v. Ghanshyam Das Gupta
and Ors, A.LR. 1962 S.C. 1110, referred to.
(2) The appellant asserted that it had obtained the currency notes
in the normal course of its business and without any koowledge or suspecion of their having been involved in the eommission of any offenoe
and that the respondents had not alleged fraud or lack of g

## Text

STATE BANK OF INDIA
v.
RAJENDRA KUMAR SINGH & ORS.
September 25, 1968
[J. C. SHAH, V. RAMASWAM! AND A. N. GROVER, JJ.]
BCode of Criminal Procedure, 1898, Ss. 517 and 520-0rder of the
Court directing return of seized property-If necessary to give party
adversel,y affected notice of hearing and opportunity to be heard-Who
has 'rlght to possess' lVithin the meaning of s. 517.
21 currency notes of Rs. 1,000 each were seized from the Appellant
Bank by the police in the course of an investigation of a case again.st the
C
third respondent of cheating
the
fust and second respondents.
The
seized· currency notes were said to be part of the property obtained by
the third respondent from the other two respondents.
The third respon·
dent was acquitted by the trial court of the offence charged.
In the
course of the trial the appellant made an
application
under
section
517(1) of the Code of Criminal Procedure asking for the delivery of
the currency notes to it on the ground that the appellant was an innocent
D·
third party who had received the said notes without any knowledge or
suspicion 'of their having been involved in the commission of an ... offence.
By its order of 24th April 1962, the' trial court allowed the application
and directed that the currency notes should be returned to the appellant.
Snbseqently an appeal filed by the State' was allowed by the High Court
whii:h set aside the trial court's order of acquittal of the third respondent
and convicted him of the offence charged.
On an application made1 by
the first respondent asking for delivery of the currency notes to him as
E
they belonged to him and the second respondent, the High Court, by an
order of April 5, 1963 directed that the notes be handed over to the
first and second respondents.
In the appeal to this Court, it was contended, inter alia, on behalf of
the appellant that the High Court had reversed the order of the
trial
court directing the return of the currency notes to the appellant without
giving a notice to the appellant. and without giving an opportunity of
F
being heard; and that the order of April 5, 1963 was therefore violative
of the principles of natural justice and was illegal.
The contention on
behalf of the respondents was that there was no provision in section 520
of the Code of Criminal Procedure for giving notice to the
affected
parties and the order of the High Court could not be challenged on the
ground that no hearing was given ·to the appellant. It was also contended that the High Court had a discretion under the statute as to whom
the property was to be returned and there was no reason why this Court
G
should interfere with the exercise of discretion by the High Court.
HELD : The appeal must be allowed and the order of the High Court
dated April 5, 1963 set ·aside.
The
seized
currency notes must
be
directed to be returned to the appellant.
(!) Jt is mainfest that the High Court was bound to give notice to
the appellant before reversing the order of the trial court directing the
H
disposal of the property under s. 517 of the Code of Crimimrl Procedure.
As no such notice was given to the appellant, the order of the High Court
dated 5th April 1963 is vitiated in law.
Although the statute does not
expressly require a notice to be issued, or a hearing to be given to the
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STATE BANK; v. R. K. SINGH (Ramaswami, J.)
217
A
parties adversely affected, there is in the eye of law a necessary .implica·
tion that the parties adversely affected should be heard be!fore the Court
makes an order for return of the seized property. [220 C-D, 221 El
B
c
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F
Cooper v. Wandsworth Board of Works. (1863) 14 C.B.N.S. 180;
Ridge v. Baldwin,
(1963) 2 W.L.R. 935 and Board of High School
and Intermediate Education, U.P. Allahabad v. Ghanshyam Das Gupta
and Ors, A.LR. 1962 S.C. 1110, referred to.
(2) The appellant asserted that it had obtained the currency notes
in the normal course of its business and without any koowledge or suspecion of their having been involved in the eommission of any offenoe
and that the respondents had not alleged fraud or lack of good faith on
the part of the appellant, In the circumstances the High Court shonld
have directed the return of the currency notes to the appellant which
had the "righrto possess" the notes within the language of s. 517 of the
Code of Criminal Procedure. Property in coins and currency
notes
passes by mere delivery and it is the clearest exception to the rule N emo
dat quod non habet, [222 B. CJ
Whistler v. Forster, (1863) 14 C.B.N.S. 257-258, referred to.
CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No.
32 of 1965 .
Appeal by special leave from the judgment and order dated
April 5, 1963 of the Madhya Pradesh High Court, Indore Bench
in Criminal Misc., Case No. 135 of 1962.
Niren De, Solicitor-General, H. L. Anand, I. M. Bhardwaj
and K. B. Mehta, for the appellant.
B. C. Mishra and C. P. Lal, for respondents Nos. 1 and 2.
The Judgment of the Court was delivered by
Ramaswami, J. This appeal is brought from the order of the
High Court of Madhya Pradesh dated 5th April, 1963 in Crimi·
nal Miscellaneous Case No. 135 of 1962 under section 520 of
the Code of Criminal Procedure directing the return of 21 cur·
rency notes of the denomination of Rs. 1,000 each to respondents
Rajendra Kumar Singh and Virendra Singh .
The currency notes of the total value of Rs. 21,000 were seiz.•
ed by the Madhya Pradesh Police from the Beawar Branch of the
State Bank of India in the course of an investigation of a case
under sections 420, 406 and 120B of the Indian Penal Code
G
registered in P. S. Thuko Ganj, Indore City as Crime No. 113 of
1961 against Kishan Gopal, the third respondent. It appears that
the third respondent had come into possession of a sum of
Rs. 1,50,000 in Govermnent currency notes by cheating the first
and second respondents.
The currency notes seized from the
appellant were said to be part of the property obtained by Kishan
H
Gopal by the commission of the said offence.
The case of the
appellant was that it had come into possession of the said currency notes in the usual course of its business partly through the
Bank of Rajasthan Limited and partly through the Mahalaxmi
L2SuP CI 69-15
2.18
SUPREME. (;OlJ!lT REPORTS
[1969] 2 S.C.R.
Mills Company Limited without any knowledge that the said currenC) notes had been the subject matter of an offence.
In the
proceedings that followed on the investigation of the said case, the
accused persons including the third respondent were acquitted by
the Court of the Fourth Additional Sessions Judge, Indore in
Sessions Case No, 3 of 1962 by an order made on 24th April,
1962. In the course of tlie trial, the appellant made an application under section 517 ( 1) of the Code of Criminal Procedure
asking for delivery of the aforesaid 21 currency notes to it on the
ground that the said currency notes had been seized by the police
from the appellant and that the appellant was an innocent third
party who had received the said notes without any knowledge or
suspicion of their having been involved in the commission of an
offence.
By his order dated 24th April, 1962 the 4th Additional
Sessions Judge, Indore allowed the application and directed that
the currency notes should be returned to the appellant.
Subsequently, an appeal was filed to the High Court by the State of
Madhya Pradesh being Criminal Appeal No. 205 of 1962. The
appeal was allowed and the High Court set aside the · order of
acquittal of the third respondent and convicted him under sections
420, 406 and 120B of the Indian Penal Code and sentenced to
undergo imprisonment. . The first respondent, Rajendra Kumar
Singh, made an application to the High Court asking for delivery
of the currency notes as they belonged to him and the second respondent and as they had been deprived of the said property by
the third respondent by the commission of the aforesaid offence.
The application was allowed by the High Court by its order dated
5th April, 1963 aild the currency notes were ordered to be handed
over to the first and the second respondents.
The relevant portion
of the order of. the High Court reads as follows :-
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"Now the bulk of the recovered property consists
of Government currency notes either of the denomination of rupees one thousand each or money obtained
after the tender of one thousand rupee notes by Kishan
Gopal. · The position of the recovered money in short
is this:-
Rs.
I. 37, one thousand rupee notes were recovered from the pillow of accused Kishan
Gopal after his arrest amounting to :
37,000
. 2. Money directly traceable to one-thousand
·rupee notes recovered from Dayabhai P.W.
52, with whom it was deposited by accused
. Kishan Gopal and Mst. Tulsabai.
59,500
3: Money recovered from Mst. Tulsabai ihe
sister of accused's cuncubine
10,-000 -
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STATE BANK v. R. K, SINGH (Ramaswami, J.)
219
4. Money in Beawar Bank consisting of two
draits of ten-thousand each; on in the name
of accused Kishan Gopal and the other in
the name of Rukmanibai, his witness for
which the
accused tendered twenty one
thousand rupee notes and one thousand
rupee notes with which he opened an account with his Bank.
21,000
Total:-
1,27,500
This amount (Rs. 1,27,500) is directly traceable
to the conversion of one thousand rupee notes.
We,
therefore, direct it be given to Virendra Singh P.W. l,
and Rajendra Kumar P.W. 73, who shall proportionately
divide it between themselves.
No other order is made
in respect of other property and the parties are left to
establish their claim in Civil Court".
Section 517 of the Code of Criminal Proced4,re states :
"517. ( 1 ) When an inquiry or a trial in any Criminal
Court is concluded, the Court may make such
order as it thinks fit for the disposal by destruction, confiscation, or delivery
to any person
claiming to be entitled to possession thereof or
otherwise of any property or document produced before 'it or in its custody or regarding which
any offence appears to have been committed, or
which has been used for the commission of any
offence.
( 2) When a High Court or a Court of Session makes
such order and cannot through its own officers
conveniently deliver the property to the person
entitled thereto, such Court may direct that the
order be carried into effect by the District
Magistrate.
Section 520 provides as follows :-
"Any Court of appeal, confirmation, reference or .
revision may direct any order under section 518, section
518 or section 519 passed by a Court subordinate
thereto, to be stayed pending consideration by the former.:
Court, and may modify, alter or annul such order '<lnd '
made any further orders that may be just" ..
221)
SUPREME COURT REPORTS
(1969) 2 S.C.R.
In support of this appeal, it was contended in the first place
that the High Court had reversed the order of the Sessions Judge
directing the return of the currency notes without giving a notice
to the appellant and without giving an opportunity to it for being
heard.
The argument was stressed that there was a violation of
the principle of natural justice and the order oi the High Court
dated 5th April, 1963 was illegal.
It was, however, contended
on behalf of the respondents that there was no provision in section
520 of the Code of Criminal Procedure for giving notice to the
affected parties and the order of the High Court cannot be challenged on the ground that no hearing was given to the appellant.
In our opinion, there is no warrant or justification for the argument advanced' on behalf of the respondents. It is true that the
statute does not expressly require a notice to be issued, or a hearing to be given to the parties adversely affected.
But though the
statute is silent and does not expressly require issue of any notice
there is in the eye of law a necessary implication that the party
adversely affected should be heard bfore the Court makes an order
for return oi the seized property. The principle is clearly stated
in the leading case of Cooper v. Wandsworth Board of Works(').
In that case section 7 6 of the Metropolis Local Amendment Act,
1855 authorised the District Board to demolish the building if it
had been constructed by the owner without giving notice to the
Board of his intention to build.
The statute laid down no procedure for the exercise of the power of demolition, and, therefore,
the Board demolished the house in exercise of the above power
without issuing a notice to the owner of the house.
It was held
by the Court of Common Pleas that the Board was liable in damages for not having given notice oif their order before they proceeded to execute it. Erle, C.J. held that the power was subject to
a qualification repeatedly recognised that no man is to be deprived
of his property without his having an opportunity of being heard
and that this had been applied to "many exercises of power which
in common understanding would not be at all a more judicial
proceeding than would be the act of the district board in ordering
a house to be pulled down''. Willes, J. said that the rule was "of
universal application and founded upon the plainest principles of
justice" and Byles, J. said that "although there are no positive
words in a statute requiring that the party shall be heard, yet the
justice of the common law will supply the omission of the legislature." The same principle has been reaffirmed in a recent case
Ridge v. Baldwin (2). In that case, section 191 of the Municipal
Corporations Act, 1881 provided that a watch coll1ll1ittee may at
any time suspend or dismiss any borough constable whom they
think negligent in the discharge of his duty, or otherwise unfit for
the same.
The appellant, who was the chief constable o;f a
(J) (1863) 14 C.B.N.S. 180.
(2) (1963) 2 W.L.R. 935.
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STATE BANK v. R. K, SINGH (Ramaswami, J,)
221
borough police force, was dismissed by the watch committee on
the ground that he was negligent in the discharge of his duties as
chief constable.
He brought an action against the members of
the watch committee by stipulating that his dismissal was illegal
and ultra vires the powers.
It was held by the House of Lords
that the decision of the watch committee was ultra vires because
they dismissed the appellant on the ground of neglect of duty and
as such they were bound to observe the principles of natural justice by informin1t him of the charges made against him and giving
him an opportunity of being heard.
The same principle was
applied by this Court in Board of HiRh School and Intermediate Education, U.P., Allahabad v. Ghanshyam Das Gupta and
Ors. (1). It was held in that case that an examination committee
of the Board of Secondary Education in Uttar Pradesh was acting
quasi-judicially when exercising its power under rule 1 ( 1) of
Chapter VI of the Regulations dealing with cases of examinees
using unfair means in examination hall and the principle of natural justice which require that the examinee must be heard, will
apply to the proceedings before the Committee. Though there
was nothing express one way or the other in the Act or the Regulations casting a duty on the committee to act judicially, where no
opportunity whatever was given to the examinee to give an explanation and present their case before the Committee, the Resolution of the committee cancelling their results and depriving them
from appearing at the next examination was defective. Applying
the principle to the present case it is manifest that the High Court
was bound to give notice to the appellant before reversing the
order of the Sessions Judge directing the disposal of the property
under s. S 17 of the Code of Criminal Procedure.
As no such
notice was given to the appellant, the order of the High Court
dated Sth April, 1963 is vitiated in law.
The next question which arises in this appeal is whether the
High Court was justified on merits in ordering the currency notes ·
to be returned to respondents 1 and 2. It was argued by Mr.
Mishra that the High Court had a discretion under the statute as
to whom the pronertv was to be returned and there was no reason
why this Court should interfere with such exercise of discretion by
the High Court.
We are unable to accent this ar!!ument. It is
true that sections Sl 7 and 520 of the Code of Criminal Procedure
confer a discretion on the Hi!!h Court as regards the disposal of
the oroperty seized or produced before it or regarding which any
offence was said to have been committed. But as we shall presently show the High Court has not exercised its discretion accordin!! to proper legal orinciole and its order is hence liable to be set
aside.
It was stated by Mr. Mishra that the question involved in
(!) A.T.R. 1962 S.C. 1110.
2_22
. SUPREME COURT REPORTS
[1969] 2 S.C.R .
this ·case is whether as to which out of two innocent parties should
suffer, viz., the person who lost the property due to the criminal
act of another or the person to whom the property
(currency
notes) had been delivered in the normal course of its business. It
is.not, however, correct to say that respondents 1 and 2 are equa 11 y
innocent because respondents 1 and 2 had admittedly handed over
the currency notes to respondent No. 3 "for the criminal purpose
of duplication".
It was indeed urged on behalf of the appellant
that respondents 1 and 2 ·had entered into a criminal conspiracy
with respondent No. 3 for 'duplicating' the currency notes.
In
any event, we are satisfied that the High Court was in error in
directing the return of the currency notes to respondents 1 and 2.
The reason is that the property in coins and currency notes passes
by mere delivery and it is the clearest exception to the rule N emo
dat quod non habat.
This exception was engrafted in the interest
of commercial necessity.
But the exception only applies if the
transferee of the coin. or currency notes takes in good faith for
value and without notice of a defect in the title of the transforor.
The rule is stated by Wills J. in Whistler· v.
Forster(')
as
follows:-
"The general rule of law is undoubted, that no one
can transfer a better title than he himself possesses :
Nemo dat quod non habat. To this there are some
exceptions; one of which arises out of the rule of the law
m~rchant as to negotiable instruments.
These, being
pairt of the currency, are subject to the same rule as
money : and if such an instrument be transferred in
good faith, for value, before it is overdue, it becomes
available in the hands of the holder, notwithstanding
fraud which would render it unavailable in the hands of
a. previous holder."
In the present case the appellant asserted that it had obtained
the currency notes in the normal course of its business and without
any knowledge or suspicion of their having been involved in the
commission of any offence. The respondents have not alleged
fraud or lack of good faith on the part of the appellant.
The
appellant hence contended that the property in the currency notes,
passed in its favour by mere delivery and the appellant "had a
right to possess' the currency notes within the meaning of s. 517
of the Code of Criminal Procedure. We do not wish to express
any concluded opinion in this case on the ultimate question of
liability for payment of the money as between the appellant on the
one hand and respondents 1 and 2 on the other. But we are of
·opinion . that in the circumstances of this case the High Court
should have directed the return of the said currency notes to the
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(!) (1863) 14 C.B.N.S. 257-258,
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STATE BANK v. R. K. SINGH (Ramaswami, J.)
223
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appellant which had the "right to possess" the currency notes
within the language of s. 517 of the Code of Criminal Procedure.
B
We accordingly allow this appeal, set aside the order of the
High Court dated April 5, 1963 and direct that the 21 currency
notes of the denomination of Rs. 1000 each seized by the Madhya
Pradesh Police should be returned to the appellant.
R.K.P.S. ·
Appeal allowed.