IN THE HIGH COURT OF ALLAHABAD
Desai, J.
PURSHOTTAM DAS BANARSIDAS - Appellant
Versus
STATE THROUGH HARSHAD RAI NATWARLAL - Respondents
Criminal Ref. 147 Of 1951
Decided On : 10/16/1951
CRIMINAL PROCEDURE CODE - SECTION 523 - DISPOSAL OF PROPERTY SEIZED - PERSON ENTITLED TO POSSESSION - INNOCENT PURCHASER - RIGHT TO POSSESSION - DUTY OF MAGISTRATE.
Fact of the Case:
The applicant, a pawnbroker, advanced Rs. 16,000 to a forger who had obtained possession of 240 bags of white zira from the railway by presenting a forged railway receipt. The forger absconded after collecting the money. The railway reported the matter to the police, who seized the goods from the applicant's godown. The police submitted a final report to the Magistrate, seeking his orders regarding the disposal of the goods. The Magistrate ordered the goods to be delivered to the railway, holding that the railway was the aggrieved party and that the goods should be restored to it because it had been wrongfully dispossessed of them.
Finding of the Court:
The Magistrate's order was set aside on the ground that it was not passed under any provision of the Criminal Procedure Code. The Court held that the property was not seized under Section 51, 550, or any other provision of the Code that would authorize the Magistrate to pass an order for its disposal. The Court further held that the Magistrate had no jurisdiction to pass an order under Section 523 because the property was not seized on suspicion of having been stolen or found under suspicious circumstances.
Issues: 1. Whether the Magistrate had jurisdiction to pass an order under Section 523 of the Criminal Procedure Code? 2. Whether the applicant was entitled to possession of the goods as an innocent purchaser?
Ratio Decidendi: 1. The Court held that the Magistrate did not have jurisdiction to pass an order under Section 523 because the property was not seized on suspicion of having been stolen or found under suspicious circumstances. The Court interpreted Section 523 to apply only to property seized under Section 550, which authorizes the police to seize property that may be alleged or suspected to have been stolen or found under circumstances that create suspicion of the commission of an offense. 2. The Court held that the applicant was entitled to possession of the goods as an innocent purchaser. The Court distinguished between stolen property and property obtained by fraud, holding that the latter is not "stolen property" and that an innocent purchaser of such property acquires a good title.
Final Decision: The Magistrate's order was set aside, and the Court directed the police to restore the goods to the applicant.
( 1 ) THIS is a reference by the Additional District Magistrate, Kanpur recommending that an order passed by the Special Railway Magistrate, First Class, Kanpur purporting to act under Section 523, Criminal P. C. be set aside. The learned Additional District Magistrate, who I must say, has written a well-reasoned and sound order has not recommended that another order be passed instead, but his intention does seem to be that another order be passed by this Court.
( 2 ) THERE is no dispute about the facts which are as follows:
( 3 ) MESSRS. Harshad Eai Natvar Lal who are opposite party before me, consigned 240 bags of white zira from Unjha railway station to self at Kanpur. The railway receipt was sent by them to the Bank of Baroda at Kanpur with instructions to deliver it to Messrs. Baldeo Das Sita Ram of kanpur on their paying RS. 30,000, the price of the goods. Messrs. Baldeo Das Sita Ram took time in finding the necessary money and in the meantime some one, who remains unknown and untraced, forged a railway receipt and on its strength took delivery of the goods from the railway at Kanpur. The forger then pawned the goods with Messrs Parsbotam Das Benarsi Das of kanpur, the applicant before me, who on the security of the goods, advanced to him Rs. 16,000. The forger after collecting Rs. 16,000 absconded. In the meantime the Bank of Baroda presented the genuine railway receipt at the Kanpur railway station for the goods and then it was discovered that the delivery had been taken on a forged receipt. The railway reported the matter to the police who started investigation. The police traced out the goods in the godown of the applicant and seized them. After investigation the police came to the conclusion that the applicant had acted bona fide in taking possession of the goods from the forger. As the forger remained untraced, the police submitted a final report to the learned Magistrate and sought his orders regarding the disposal of the goods. The learned Magistrate ordered them to be delivered to the railway. That order was passed without hearing the applicant who, on hearing about it, made an application to the learned Magistrate for reconsidering it. The learned Magistrate heard the parties and by his order under revision refused to alter his earlier order. The learned magistrate observed : "that delivery of the goods was taken from the railway by practising fraud upon it, that the railway was the aggrieved party and that the goods be restored to it because it has been wrongfully dispossessed of them. " he accepted the contention of the opposite party that the forger had no title to the goods and could pass no better title to the applicant. Messrs Harshad Rai Natvar Lal and the railway have joined hands and it is Messrs Harshad Rai Natvar Lal who have appeared before me to oppose the reference. The learned Additional District Magistrate is of the opinion that when it is not made out that the applicant had committed any offence, the goods should have been restored to him and not to the railway.
( 4 ) BEFORE I can decide whether the order of the learned Magistrate is correct or not I must find out whether the order could be passed under Section 523 or any other provision of the Code. Sections 516a to 526 deal with the powers of Courts in the matter of disposal of property. Any order to be passed by a criminal Court must come under one or another of the sections. Any order that does not come under any of these sections is not an order passed under the Code. What order should be passed by a Court depends upon the section under which it passes the order. Under which section it should pass the order depends upon the circumstances in which the property was seized or produced before it.
( 5 ) WHEN a police officer arrests a person, whether under a warrant or without warrant, the police officer may search him and place in safe custody all articles recovered from his possession; section 51, Criminal P. C. If the arrested perso
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