Hiralal Babulal Soni vs The State Of Maharashtra

2025 INSC 266 REPORTABLE

IN THE SUPREME COURT OF INDIA CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO(s)._ 579-580 OF 2012

HIRALAL BABULAL SONI …. APPELLANT

VERSUS

THE STATE OF MAHARASHTRA & ORS. ... RESPONDENTS

WITH

CRIMINAL APPEAL NO(s)._581-583 OF 2012 `

NANDKUMAR BABULAL SONI …. APPELLANT

VERSUS

THE STATE OF MAHARASHTRA & ORS. ETC. ETC. ... RESPONDENTS

WITH

CRIMINAL APPEAL NO(s)._584 OF 2012 Signature Not Verified ` Digitally signed by ARJUN BISHT Date: 2025.02.25

VIJAYA BANK & ANR. …. APPELLANTS 16:41:19 IST Reason: 2

VERSUS

CENTERAL BUREAU OF INVESTIGATION & ORS. ... RESPONDENTS

JUDGMENT

PRASHANT KUMAR MISHRA, J.

1. These criminal appeals are disposed of by this

common order as they are directed against the common

judgment and order dated 16.07.2009 of the High Court of

Judicature at Bombay whereunder the High Court dismissed the

appeal of the appellant/Hiralal Babulal Soni (Criminal Appeal

Nos. 579-580/2012) and the appeal of the appellant/accused

No. 3 namely, Nandkumar Babulal Soni, (Criminal Appeal No.

581-583/2012) whereas the appeals of Mr. S.K. Sheenappa Rai

(accused no.1), Devdas Shetty (accused no.2) and Vijaya Bank

were allowed. We shall later notice the conviction and sentence

awarded by the courts below.

3

2. The offence pertains to commission of fraud by

remittance through fake Telegraphic Transfers1 and subsequent

withdrawals to the tune of Rs. 6,70,00,000/- at Vijaya Bank,

Nasik Branch, Maharashtra.

2.1 On 30.01.1997, one person disclosing as a representative

of M/s. Globe International, a proprietary concern, approached

the bank for opening an account which was not immediately

accepted by the accused no. 1 (S.K. Sheenappa Rai), Branch

Manager as he wanted to verify the documents as there was

difference in signatures. However, since one Surendera

Bhandary, Assistant General Manager, Vijaya Bank, Fort Branch,

Bombay confirmed the letter of introduction issued by him, the

personal presence of the proposed account holder was dispensed

with, and the account was opened.

2.2 It is the case of the prosecution that the documents

submitted at the time of account opening were forged and the

person representing the firm namely, Surendra Jain or the firm

Globe International were fictitious. The account was eventually

opened on 06.02.1997. On 25.04.1997, Nasik Branch received

1 “TT” 4

TT of Rs. 10,00,000/- in the account of Globe International and

thereafter till 28.07.1997, 11 TTs were sent from Delhi issued by

Vijaya Bank, Ansari Road Branch, New Delhi. On 06.08.1997,

Vijaya Bank, Nasik Branch received TT of Rs. 4,00,000/- which

was credited to the account of Globe International. Thus, total

amount of Rs. 6,70,00,000/- was credited in this account.

Simultaneously, with the credit of TT amount, the same was

withdrawn and subsequently, the TTs were found to be bogus

and forged and the entire fraud was committed not only by

accused nos. 1 and 2 but was done with the help of absconding

and unknown persons like Mukesh Shah @ Mayur Desai or Ashok

Agarwal @ Surender Jain and so on. On 12.08.1997, it was found

that no payment of the said TTs was ever made at Vijaya Bank,

Ansari Road Branch, Delhi. On this date, accused no. 1 informed

Vijaya Bank, Fort Branch, Bombay about the fraud and the

payments against 19 demand drafts for a total amount of

Rs.1,61,44,000/- were stopped.

3. During the investigation, the Investigating Officer

recorded the statements of the owner of Jewellary firms i.e. M/s. 5

Chenaji Narsinghji2 and M/s. V.P. Jewellers and thereafter filed

the chargesheet against accused nos. 1 and 2 by mentioning that

further investigation is going on. Later, Central Bureau of

Investigation3 found that most of the DDs were issued in favour

of M/s. CN against the purchase of gold bars and the delivery of

those gold bars were given to accused no. 3 or through him to

Mayur Desai @ Mukesh Shah. CBI found link between

absconding accused Mukesh Shah and accused no. 3 to whom

gold bars were delivered from M/s. CN. On 01.06.2001, a search

was carried out at the shop of accused no. 3 effecting seizure of

205 gold bars and other documents. Thus, chargesheet was filed

against accused no. 1 (S.K.Sheenappa Rai), accused no. 2 (M.

Devdas Shetty), accused no. 3 (Nandkumar Babulal Soni)

whereas accused no. 4 (Mayur Desai @ Mukesh Shah @ M.P. Jain

@ Mukesh Jain) could not be traced and declared proclaimed

offender by the Trial Court on 12.02.2002.

4. The Trial Court framed charges against the accused

persons for offences under Section 120B read with Sections 403,

409, 411, 420, 471, 477A and 109 of the Indian Penal Code,

2 ‘M/s. CN’ 3 ‘CBI’ 6

18604 read with Section 13 (2) read with Section 13 (1) (d) of

the Prevention of Corruption Act, 1988. While the accused nos.

1 and 2 submitted that they are innocent; the account was

opened as per the banking procedure; they have been given a

clean chit in the departmental inquiry conducted by the Vijaya

Bank. The accused no. 3 set up a defence that he has no

connection with either M/s.CN or with Mukesh Shah @ Mayur

Desai and, thus, he is falsely implicated without there being any

evidence against him. He claimed that the seized gold bars are

his property, legally acquired by him. At the end of trial, accused

nos. 1 and 2 were convicted for the offences under Sections

120B, 467, 409, 471, 477A, 403 of the IPC as also under Section

13(1)(d) read with Section 13(2) of the Prevention of Corruption

Act, 1988. Accused No. 1 was also held guilty of the offence

punishable under Sections 403 and 465 read with Section 120B

of the IPC and accused no. 2 was held guilty under Section 403

of the IPC. The accused no. 3 was held guilty of the offence

punishable under Section 120B of the IPC as well as under

Section 411 read with Section 120B of the IPC. The Trial Court

4 ‘IPC’ 7

directed that the muddemal articles consisting of 205 gold bars

be returned to the accused no. 3.

5. While the accused persons preferred separate appeals

challenging their conviction and sentence, the CBI preferred

Criminal Appeal No. 638 of 2006 for challenging that part of the

judgment of the Trial Court by which the gold bars were returned

to accused no. 3. Criminal Appeal No. 363 of 2009 has been

preferred by Hiralal Babulal Soni challenging the order regarding

return of gold bars to accused no. 3.

6. The High Court under the impugned judgment has

allowed the Criminal Appeal preferred by accused nos. 1 and 2

and their conviction and sentence has been set aside. The

Criminal Appeal No. 428 of 2006 preferred by accused no. 3

(Nandkumar Babulal Soni) was dismissed. The Criminal Appeal

No. 363 of 2009 (converted from Criminal Application No. 463 of

2007) preferred by Hiralal Babulal Soni was also dismissed. The

Criminal Appeal No. 638 of 2006 preferred by CBI challenging

the Trial Court’s direction to return 205 gold bars to the accused

no. 3 (Nandkumar Babulal Soni) has been allowed and the

direction is quashed and set aside by the High Court. The 8

property stood confiscated and placed at the disposal of the

State Government.

7. Aggrieved by the High Court’s judgment, accused no.

3 (Nandkumar Babulal Soni) has preferred Criminal Appeal Nos.

581-583 of 2012 challenging his conviction as also seeking

return of 205 gold bars whereas Criminal Appeal No. 579-580 of

2012 has been preferred by Hiralal Babulal Soni and Criminal

Appeal No. 584 of 2012 has been preferred by Vijaya Bank, both

seeking return of gold bars.

Submissions:

8. Mr. Uday Gupta, learned senior counsel appearing for

the appellant(s) has vehemently argued that the appellant is

wrongly convicted for the offence under Section 411 of the IPC

without there being any evidence against him. It is put forth by

him that incomplete chain of circumstantial evidence has been

relied upon for appellant’s conviction which is legally

unsustainable, and the appellant has been convicted only on the

basis of suspicion. According to him, the yawning gap between

the charge for the offence under Section 411 of the IPC and the

evidence adduced by the prosecution. Learned counsel referred 9

to the judgment in the matter of ‘Kamal vs. State (NCT of

Delhi)5.

9. Mr. A.P. Singh, learned counsel appearing for the

Vijaya Bank/appellant has argued that since the gold bars have

been acquired by using forged TTs/DDs by defrauding the bank,

the gold bars should be returned to the bank. Learned counsel

appearing on behalf of the appellant/Hiralal Babulal Soni has also

prayed that on the basis of evidence on record, appellant/Hiralal

Babulal Soni is entitled for return of the gold bars.

10. Per Contra, Ms. Suhasini Sen, learned counsel for the

respondent (CBI) has argued that there is independent evidence

on record to link the appellant (Accused No. 3) with Mukesh Shah

@ Mayur Desai and the fraudulent transactions. She has also

referred to the statements of PW-22 (Dhiraj Ganeshmal Jain),

PW-26 (Prakash Kumar Deoraj Jain), PW-32 (Ashok Kumar

Bhavarlal Jain) and PW-33 (Chandramohan A. Shetty) (IO). She

would also refer to the evidence regarding the identification of

the gold bars. Learned counsel would sum up the arguments with

submission that the conviction of Accused No. 3 as well as the

5 2023 INSC 678 10

order of the High Court regarding the custody of the gold bars

be upheld.

The nature of fraud – “Telegraphic Transfer”

11. At the relevant time, Vijaya Bank offered a service

facility to all its customers whereby money could be remitted

through the means of “Telegraphic Transfer” (TT). If a customer

desired to remit funds urgently from one place to another, he

could deposit cash and request the remitting branch to send the

amount to the credit of a particular account. Upon receipt of

money, the remitter branch would generate a code which was

then sent via telegram to the concerned branch in which account

of the beneficiary was operational. Upon decoding, the receiving

branch would then credit the amount to the account of the

beneficiary and send “Bank adjustment Requisition Form”

(BARF) to the remitting branch which upon receiving the BARF

would send a credit advice to the receiving branch.

Role of different persons including the accused:

12. One unknown person representing M/s. Globe

International with its sole Proprietor being one Surender Kanti

Lal Jain approached the bank for opening an account. Despite 11

several irregularities in the process of opening of account,

Accused No. 1 (S.K. Sheenappa Rai – acquitted), the Branch

Manager, Vijaya Bank, Nasik Branch allowed the opening of the

account. All the documents presented at the time of opening of

the account were found bogus during the investigation. It was

also found that the firm M/s. Globe International and its

Proprietor Mr. Surender Kanti Lal Jain are fictitious. Mr. Surender

Kanti Lal Jain was never identified or traced nor has been arrayed

as an accused.

13. Accused No. 1 ( S.K. Sheenappa Rai) and Accused No.

2 (M. Devadas Shetty) both officers of the bank allegedly

credited the amount to the account of M/s. Globe International

and also allowed withdrawal of the amount in conspiracy with

Mr. Surender Kanti Lal Jain and Mayurkumar Manubhai Desai @

M.J. Shah @ M.P. Jain @ Mukesh Jain @ Mukesh Shah.

14. Mayurkumar Manubhai Desai @ M.J. Shah @ M.P. Jain

@ Mukesh Jain @ Mukesh Shah was involved in cash withdrawals

of Rs. 98,00,000/- at Vijaya Bank, Nasik Branch.

15. A sum of Rs. 2,59,78,504/- was withdrawn by

preparing demand drafts in favour of M/s. CN and M/s. V.B. 12

Jewellers by Mayurkumar Manubhai Desai @ M.J. Shah @ M.P.

Jain @ Mukesh Jain @ Mukesh Shah. These demand drafts were

honoured by Vijaya Bank, Fort Branch, Mumbai and Tamil Nadu

Mercantile Bank, Mandvi Branch upon withdrawal of the said

amount from the account of M/s. Globe International. The

amount involved in these demand drafts were allegedly used

against purchase of seized gold bars.

Discovery of fraud and investigation:

16. The accused no. 1 became suspicious of the

transactions taking place in the account of M/s. Globe

International. On 12.08.1997, he informed Vijaya Bank, Fort

Branch, Mumbai about the fraud and the resultant payment

against 19 demand drafts amounting to Rs. 1,61,44,000/- was

stopped. On this date, there was a balance of Rs. 1,53,27,178/-

in the account of M/s. Globe International, as against the total

credit amount through 12 TTs amounting to Rs. 6,70,00,000/-.

The bank initiated departmental proceedings against the

accused nos. 1 and 2. However, subsequently, both of them were

exonerated of all the charges.

13

17. On 04.09.1997, a formal complaint was lodged by

Vijaya Bank and on 09.09.1997, the CBI registered the crime

against the accused Nos. 1, 2 and Surender Kantilal Jain (not

traced) as Proprietor of M/s. Globe International and against

unknown private persons. The appellant/accused no. 3 was

summoned by the CBI after 1½ years i.e. on 03.02.1999.

However, he denied his involvement in the alleged crime. After

nearly 4 years i.e. 24.05.2001, the CBI conducted a search in

the shop of appellant/Accused No. 3 on 28.05.2001. However, in

the absence of appellant/Accused No. 3, the shop was sealed.

On 30.05.2001, appellant/Accused No. 3 requested the

Investigating Officer for removing the seal mentioning in his

communication the details of cash, gold (in stock). The 205 gold

bars mentioned in appellant/Accused No. 3’s communication

dated 30.05.2001 were later on seized by the CBI on

01.06.2001. The details of 205 gold bars were as under:

(i) 110 T.T. bars of ARY make;

(ii) 30 T.T. bars of HARMONY make;

(iii) 57 T.T. bars of Johnson Mathew make;

(iv) 06 T.T. bars of Credit Suisse make;

(v) 02 T.T. bars of PAMP Suisse make;

14

18. The CBI filed the chargesheet on 31.05.2002

whereupon the charges were framed, trial was conducted, and

all the three accused were convicted by the Trial Court as

mentioned infra. However, the High Court acquitted the Accused

Nos. 1 and 2 but convicted the appellant/Accused No. 3 in

Criminal Appeal Nos. 581-583 of 2012 for offence under Section

120B IPC and Section 411 IPC read with Section 120B IPC.

ANALYSIS:

19. There being no appeal by the CBI challenging the

acquittal of the Accused Nos. 1 and 2 by the High Court, our

discussion would confine to the case against appellant/Accused

No. 3 only.

20. The prosecution sought to prove the charges against

the appellant/Accused No. 3 on the basis of evidence of PW-19-

Praveen Champalal Jain (who was working with the firm Babulal

Soni Bhutajilal Soni), PW-21- Bhavarlalji Jawaratrai Jain (owner

and partner of M/s. CN), PW-22- Dhiraj Ganeshmal Jain

(Manager of M/s. CN), PW-26- Prakash Kumar Devraj Jain

(Manager of M/s. CN), PW-32-Ashok Kumar Bhavarlal Jain

(owner of M/s. V.B. Jewellers) and PW-33-Chandramohan A. 15

Shetty (Investigating Officer). To establish the identity of the

gold bars, the prosecution examined PW-24 (Manish Srivastav),

PW-25 (Sudhakar Tamhane), PW-27 (Dr. Piyush Bhansali), PW-

29 (Bien Nanavati) and PW-31 (Vinod Kumar Niranjanlal Jain).

21. The Trial Court having noted that the charge against

appellant/Accused No. 3 is mainly for receiving dishonestly

stolen property, recorded a finding in Para 94 of the judgment

that the prosecution admittedly, have not brought any evidence

against appellant/Accused No. 3 in respect of the first part of the

conspiracy i.e. receipt and coding, decoding of TTs. The evidence

of the aforementioned witnesses on the charge of conspiracy

revolves around Mukesh Shah @ Mayur Desai (absconding), who

purchased the gold bars along with appellant/Accused No.3. It

is said that Mukesh Shah delivered the demand drafts to the

appellant/Accused No.3 and appellant/Accused No.3 in turn

delivered the said drafts to M/s. CN. The Trial Court mainly relied

on Exhibit 119, a letter written by PW-26 (Prakash Jain) to the

CBI on 02.01.2002 giving details of the markings of gold bars

which were sold to M/s. Globe International. In this letter,

endorsement was made to the appellant/Accused No.3 basing 16

which the Trial Court inferred that if appellant/Accused No.3 was

not at all connected with the gold bars why letter was endorsed

to him. Interestingly, the Trial Court has noted that the witnesses

belonging to the jewellery firm have in their evidence denied any

link of appellant/Accused No.3 with M/s. Globe International.

Contrary to this, the Trial Court recorded a finding in para 103

that on the basis of this letter no inference can be drawn that

the gold bars sold to M/s. Globe International were of the

markings mentioned in the letter.

22. The Trial Court has also referred to the evidence of

PW-32 (Ashok Kumar Jain) who was declared hostile. This

witness gave a statement to the CBI about business relations

between appellant/Accused No.3 and M/s. CN. However, he did

not support the prosecution and in cross-examination he stated

that he was compelled by the CBI to make such statement.

Another important witness is PW-26 (Prakash Jain). However, he

too was declared hostile. The Trial Court recorded that the entire

evidence of these three hostile witnesses is conspicuously silent

about the appellant/Accused No.3 and proceeded to infer that

they did not want to support the prosecution. Basing on the 17

evidence of hostile witnesses, the Trial Court concluded the

following:

“108. Conversion of money into gold bars itself brings accused no. 3 near to the offence. If conversion would have been into land or savings certificates then that would have been a remote circumstance. Accused No. 3 is a jeweller and his family is in the same profession. In the evidence of PW-21 Bhawarlal Jawartaj and PW-26 Prakash Jain, they have stated that Mukesh Shah was a new party. Hence there is reasonable ground to believe that the dealings of gold bars through Nandlal Soni (Accused No. 3) was easily accessible and workable.”

RECEIPT OF STOLEN PROPERTY BY APPELLANT/ACCUSED NO. 3

23. For proving the charge under Section 411 IPC against

the appellant/accused no. 3, the prosecution relied on Section

106 of the Evidence Act to say that the appellant/accused no.3

having been found in possession of 205 gold bars, it was for him

to explain the source of acquisition. The Trial Court examined the

witnesses i.e. PW-24 (Manish Srivastav), PW-25 (Sudhakar

Tamhane), PW-27 (Dr. Piyush Bhansali), PW-28 (Anichandra

Mahadeorao Bhujade), PW-29 (Biren Vinodchandra Nanavati)

and PW-31 (Vinodkumar Niranjanlal Jain). The prosecution tried

to establish the negative fact that the gold claimed was not 18

purchased from the brother of appellant/accused no. 3 i.e.

Ambalal Soni who was also examined as defence witness. On the

contrary, appellant/accused no. 3 set up a defence firstly, that

there is a delay of four years in finding out the property though

the name of appellant/accused no. 3 was already disclosed to

the police much earlier, secondly, appellant/accused no. 3

himself is a jeweller and, thirdly, the gold bars are not proved to

be the same stolen property due to the difference of markings.

24. The Trial Court discussed the statements of the above

witnesses and the documentary evidence in detail and observed

thus in para 115:

“115. Letter Exh 119 was given by Chenajee Narsingjee to CBI in 2002. At that time the prosecution was aware that the gold bars which are seized and produced before the court are of different brands. Prosecution ought to have been produced evidence to show that there was a stock of the same brands with Chenajee Narsinghjee and out of that stock some gold bars with markings of Harmony Suisse, Johnson Mathew, Arya were sold to Globe International. In the absence of this evidence and especially due to delay of four years in the recovery of the property the base of its identification is found weak and the degree of proof required is higher. The possibility of mistaken identification cannot be ruled out.” 19

25. Having said so, as extracted above, the Trial Court

proceeded to hold in para 120 that the property Article 2 (seized

gold bars) before the Court is not proved as the same property

which was sold by M/s. CN to M/s. Globe International. However,

surprisingly, the trial court concluded that, the fact that the gold

was sold through fraudulent demand drafts from M/s. CN to M/s.

Globe International, it can be held that appellant/accused no. 3

has received stolen property with knowledge. It was held that

gold bars found with him may be a stolen property or he might

have handed over to the absconding accused Mukesh Shah or

any other accused. It was also held that after receiving the stolen

property, it may change the hands, so accused may not have

entertained the property but the fact that he has received the

property is proved beyond reasonable doubt. Therefore, the

evidence brought forth by the prosecution is sufficient to hold

that accused is guilty under Section 120B and 411 of the IPC.

Significantly, the Trial Court observes in the same breath in the

following words in Para 120:

“120. However, the gold bars i.e. Article 2 may be or may not be the same gold bars which were sold by Chenajee Narsinghjee to Mr. Mukesh of Globe International. The distance between may 20

and not is very vast and prosecution has to cover that distance to reach the destination of must, however, the prosecution in this case could not achieve that level of proof.”

FINDINGS BY THE HIGH COURT:

26. While addressing the charge of commission of fraud

the High Court observed that circumstantial evidence does not

establish the guilt of the accused nos. 1 and 2 in committing

fabrication of the documents and, therefore, the conclusions

drawn by the Trial Court on this aspect are erroneous. In respect

of the charge against the appellant/accused no. 3 his statement

recorded under Section 313 of the Code of Criminal Procedure,

1973, particularly his answer (to question no. 133 regarding the

seizure of 205 gold bars from him) that these were legally

acquired by him, the High Court proceeded to examine as to

whether he has proved lawful acquisition of the gold bars and

eventually concluded that the appellant/accused no. 3 has failed

to prove his case about the acquisition of the seized gold from

DW-1 (Ambalal), owner of M/s. Babulalji Bhutaji Soni. The

finding was recorded despite observing that the witnesses PW-

19, PW-21, PW-22, PW-26 and PW-32 have not fully supported 21

the prosecution and have stated that against the demand drafts

drawn in the name of M/s. CN and M/s. V.B. Jewellers, the gold

was delivered to Mukesh Shah. It is also noted that M/s. CN was

admittedly dealing with the appellant/accused no. 3 and the

letter written by M/s. CN was endorsed to the appellant/accused

no. 3 and further that the witnesses relating to M/s. CN have

stated before the court that the gold which forms muddemal

property was not the one which was sold by the said firm to

Mukesh Shah of M/s. Globe International against the tainted

demand drafts.

It seems, the High Court was impressed with the fact that

at the time of search, the appellant/accused no. 3 resisted the

CBI by wrongfully confining its officers. Basing this, the High

Court observed that the act of resisting the police from taking

search is not consistent with the innocence of the

appellant/accused no. 3 and that if he had substantiated his case

of lawful acquisition of gold, failure of the witnesses connected

with M/s. CN to identify the seized gold would have become

relevant as there is no description of gold except for quantity

and weight in the bills under which the gold was allegedly sold 22

to M/s. Globe International. The High Court proceeds to conclude

that basing above evidence and finding; notwithstanding the

delay in seizure, the clause (a) of Section 114 of the Evidence

Act will have to be invoked.

27. While dismissing Hiralal’s appeal for return of seized

gold bars to him, basing an ex-parte decree in his favour, the

High Court reasoned that in the ex-parte decree the State was

not a party and there is no proof that Hiralal has acquired the

seized gold bars. The High Court, thus, dismissed the appeal

preferred by the appellant/accused no. 3 as well as Hiralal while

the appeal of the CBI against return of seized gold bars to the

appellant/accused no. 3 has been allowed.

28. The circumstances considered by the courts below to

sustain the appellant’s conviction under Section 411 and 120B

of the IPC can be summarised as follows:

(i) CBI officials were resisted at the time of search and

seizure in the appellant’s jewellery shop;

(ii) Letter issued by M/s. Chenaji Narsinghji to CBI

(Exhibit-119) containing an endorsement in favour of

the appellant;

23

(iii) Gold purchased by utilizing demand drafts drawn on

the account of M/s. Globe International was stolen

property;

(iv) The appellant have business relations with M/s.

Chenaji Narsinghji and M/s. V.B. Jewellers;

(v) The appellant failed to substantiate his defence set up

in his accused statement while answering question no.

133.

(vi) The appellant having failed to substantiate his

defence, clause (a) of Section 114 of the Evidence Act

will have to be invoked;

(vii) The evidence of handing over of demand drafts by the

appellant to M/s. Chenaji Narsinghji and M/s. V.B.

Jewellers and taking delivery of gold bars (finding by

the Trial Court).

29. It is settled law that however, strong a suspicion may

be, it cannot take place of proof beyond reasonable doubt. This

Court in “Kamal vs. State (NCT of Delhi)” (supra) has held

thus:-

“18. It can thus be seen that this Court has held that the circumstances from which the 24

conclusion of guilt is to be drawn should be fully established. It has been held that the circumstances concerned “must or should” and not “may be” established. It has been held that there is not only a grammatical but a legal distinction between “may be proved” and “must be or should be proved”. It has been held that the facts so established should be consistent only with the hypothesis of the guilt of the accused, that is to say, they should not be explainable on any other hypothesis of the guilt of the accused, that is to say, they should not be explainable on any other hypothesis except that the accused is guilty. It has been held that the circumstances should be of a conclusive nature and tendency and they should exclude every possible hypothesis except the one sought to be proved, and that there must be a chain of evidence so complete so as not to leave any reasonable ground for the conclusion consistent with the innocence of the accused and must show that in all human probability the act must have been done by the accused.

19. It is a settled principle of law that however strong a suspicion may be, it cannot take place of a proof beyond reasonablele doubt. In the light of these guiding principles, we will have to consider the present case.”

30. In the case at hand, the Trial Court has held in para

120 that whether the gold bars which were sold by M/s. CN to

Mr. Mukesh Shah of M/s. Globe International are the same or not

has not been proved beyond reasonable doubt. It is held by the

Trial Court that the distance between may and must is very vast 25

and prosecution has to cover that distance to reach the

destination of must, however, the prosecution in this case could

not achieve that level of proof. With this finding of the Trial Court,

it is surprising as to how the appellant can be convicted for

committing offence under Sections 120B and 411 of the IPC.

Once the courts below have found that the seized gold bars,

(Article 2) are not the same gold bars, conviction under Sections

120B and 411 of the IPC cannot be sustained.

31. Similarly, the High Court impliedly held that witnesses

connected with M/s CN have failed to identify the seized gold.

However, in the opinion of the High Court, the same is not

relevant because the appellant has failed to prove lawful

acquisition of gold. We fail to understand, when the prosecution

has failed to prove the identity of seized gold as being the same

gold which were sold by M/s. CN to M/s. Globe International,

how the appellant is liable to prove lawful acquisition of gold vis-

à-vis the stolen gold.

32. In order to bring home the charge under Section 411

of the IPC, it is the duty of the prosecution to prove (i) that the

stolen property was in the possession of the accused; (ii) that 26

some persons other than the accused had possession of the

property before the accused got possession of it and (iii) that the

accused had knowledge that the property was stolen property

(See: ‘Trimbak vs. State of M.P’- AIR 1954 SC 39).

33. In “Mohan Lal vs. State of Maharashtra”6, this

Court held that the prosecution has to prove that the accused

was in possession of property which he had reason to believe

that it was stolen property.

34. In “Shiv Kumar vs. State of M.P.”7 this Court

reiterated the essentials of the offence under Section 411 of the

IPC:

“9. Assailing the legality of the guilty verdict against the appellant, Mr Lav Kumar Agrawal, the learned counsel would submit that the essential ingredients of Section 411 IPC offence are not at all made out as the prosecution has failed to adduce any evidence to show that the accused had knowledge that the seized articles were stolen from the looted truck. It is, therefore, argued that unless the knowledge of the accused on the nature of the articles sold by them is established, his conviction under Section 411 IPC cannot be sustained in law.

13. In this case, although recovery of items was made, the prosecution must further establish the

6 (1979) 4 SCC 751 7 (2022) 9 SCC 676 27

essential ingredient of knowledge of the appellant that such goods are stolen property.

Reliance solely upon the disclosure statement of accused Raju alias Rajendra and Sadhu alias Vijaybhan Singh will not otherwise be clinching, for the conviction under Section 411 IPC.

16. To establish that a person is dealing with stolen property, the “believe” factor of the person is of stellar import. For successful prosecution, it is not enough to prove that the accused was either negligent or that he had a cause to think that the property was stolen, or that he failed to make enough inquiries to comprehend the nature of the goods procured by him. The initial possession of the goods in question may not be illegal but retaining those with the knowledge that it was stolen property, makes it culpable.

17. …………Moreover, the appellant in usual course, sold utensils in his shop and nothing is unnatural about him possessing such household articles, as seized from him.”

35. When the pre-requisite evidence to bring home the

charge under Section 411 of the IPC is considered in the present

case, even if it is proved that the appellant was handed over the

demand drafts by Mr. Mukesh Shah and gold bars were

purchased by the appellant from M/s. CN and M/s. V.B. Jewellers,

still it was necessary for the prosecution to prove that the

appellant either had knowledge or reason to believe that the

demand drafts had been obtained through fraudulent process to 28

make the gold bars as stolen property in the hands of the

appellant or that the appellant was part of the conspiracy.

Moreover, the appellant has not been charged and tried for the

first part of the offence relating to criminal conspiracy vis-à-vis

fraudulent TTs.

36. Yet another aspect of the case which needs

consideration is invocation of Section 106 of the Evidence Act by

the courts below. Under Section 106 of the Evidence Act if

certain facts are established, a reasonable inference can be

drawn regarding existence of certain other facts which are within

the special knowledge of the accused. On this, we may profitably

refer to this Court’s judgment in “Nagendra Sah vs. State of

Bihar”8

“22. Thus, Section 106 of the Evidence Act will apply to those cases where the prosecution has succeeded in establishing the facts from which a reasonable inference can be drawn regarding the existence of certain other facts which are within the special knowledge of the accused. When the accused fails to offer proper explanation about the existence of said other facts, the court can always draw an appropriate inference.

23. When a case is resting on circumstantial evidence, if the accused fails to offer a reasonable explanation in discharge of burden 8 (2021) 10 SCC 725 29

placed on him by virtue of Section 106 of the Evidence Act, such a failure may provide an additional link to the chain of circumstances. In a case governed by circumstantial evidence, if the chain of circumstances which is required to be established by the prosecution is not established, the failure of the accused to discharge the burden under Section 106 of the Evidence Act is not relevant at all. When the chain is not complete, falsity of the defence is no ground to convict the accused.”

37. Significantly, the Trial Court has held that in para 115

that the prosecution ought to have produced evidence to show

that there was a stock of the same brand with M/s. CN and out

of that stock some gold bars with markings of Harmony Suisse,

Johnson Mathew, Arya were sold to M/s. Globe International. In

the absence of this evidence and especially due to delay of four

years in the recovery of the property the very basis of its

identification is found shattered, and the possibility of mistaken

identification cannot be ruled out. With this finding of the Trial

Court, invocation of Section 114 of the Evidence Act is not at all

permissible since the prosecution has failed to discharge its

initial burden. The weakness in the defence or the appellant’s

failure to substantiate the fact while answering question (no.

133) in his accused statement cannot become the strength of 30

the prosecution. The prosecution has to prove its case beyond

all reasonable doubts by positively completing the chain of

circumstances against the appellant, which the prosecution has

utterly failed in the present case.

38. For all the aforestated reasons, we are inclined to

allow the appeals preferred by the appellant/accused no. 3

(Nandkumar Babulal Soni). Accordingly, Criminal Appeal Nos.

581-583 of 2012 preferred by the appellant-Nandkumar Babulal

Soni are allowed. His conviction and sentence under Sections

120B and 411 of the IPC is set aside. Since the seized gold bars

were recovered from the appellant-Nandkumar Babulal Soni, he

is entitled to the possession thereof. Therefore, we direct that

the seized gold bars- 205 in number (Article 2) be handed over

to the appellant- Nandkumar Babulal Soni.

39. In view of the fact that the identity of the seized

property being the stolen property has not been established,

Vijaya Bank is not entitled to the possession of the seized gold.

Accordingly, Criminal Appeal No. 584 of 2012 preferred by Vijaya

Bank stands dismissed. We, however, make it clear that the

findings are for the purpose of the criminal appeal and will not 31

come in the way of other remedies, if any, as may be available

in law to the parties.

Similarly, the Criminal Appeal Nos. 579-580 of 2012

preferred by Hiralal Babulal Soni seeking return of gold bars is

also dismissed.

………………………………………J. (B.R. GAVAI)

………………………………………J. (PRASHANT KUMAR MISHRA)

………………………………………J. (K.V. VISWANATHAN)

NEW DELHI;

FEBRUARY 25, 2025