Adjudication of Title Not Required in Sec 451 Cr.P.C. Interim Custody Applications: Karnataka High Court Rules - 2026-02-13

Beyond Title Disputes: High Court Streamlines Custody of Seized Property

In a significant ruling concerning the procedural handling of seized assets, the Karnataka High Court has clarified that applications for the interim release of properties under Sections 451 and 457 of the Code of Criminal Procedure (Cr.P.C.) are not the venue for complex civil title disputes. Justice Mohammad Nawaz, presiding over the matter, emphasized that the primary objective of these sections is to ensure the preservation of property to prevent decay or neglect while criminal proceedings remain sub judice.

The Case: A Tug-of-War Over Valuables

The dispute arose from a criminal investigation into alleged unauthorized access to a web portal belonging to M/S Reward360 Global Services Pvt. Ltd. , which the company claims resulted in the fraudulent redemption of reward vouchers. The police seized over 5 kilograms of gold, 27 kilograms of silver, a significant cash reserve, and several two-wheelers during the investigation. Both the complainant company and the accused, Sri Bodhuluru Lakshmipathi, petitioned the local Magistrate for the interim custody of these items, but the trial court initially rejected both applications, citing unresolved claims of ownership.

Judicial Analysis: Safeguarding Assets over Ownership

The High Court noted that the Magistrate’s refusal to grant custody, based on the existence of "rival claims," effectively defeated the legislative intent of the Cr.P.C. provisions. Relying on the landmark Supreme Court decision in Sunderbhai Ambalal Desai v. State of Gujarat , the Court held that the legal process should be used to protect the utility and value of seized goods until the trial concludes, rather than leaving them idling in police custody.

Justice Nawaz observed that while further investigation is ongoing under Section 173(8) of the Cr.P.C., this does not provide an absolute bar against releasing property, especially when the seized articles are specifically identifiable.

Key Observations

The judgment offers critical guidance for lower courts in managing similar disputes:

• On the Objective of Custody: "The object and scheme of the various provisions of the Code appear to be that where the property which has been the subject-matter of an offence is seized by the police it ought not to be retained in the custody of the court or of the police for any time longer than what is absolutely necessary."
• On Determining Title: "The Supreme Court further clarified that at the stage of considering an application under Sections 451 or 457 Cr.P.C., the court is not required to conduct a detailed enquiry into title or ownership."
• On the Need for Prompt Action: "To avoid such a situation, in our view, powers under Section 451 CrPC should be exercised promptly and at the earliest."

Decision and Implications

The High Court dismissed the petition filed by the de-facto complainant, citing a lack of prima facie evidence connecting the seized items directly to their specific losses at this stage. Conversely, it granted the accused's petition for interim custody, subject to a stringent regulatory framework.

The Court mandated that before the assets are released, the investigating officer must obtain a valuation report, and the petitioner must execute an indemnity bond for the full value of the seized goods. The order sets a clear precedent: courts should focus on proper safeguards—such as detailed photography, panchanamas, and undertaking bonds—rather than delaying the release of property due to unresolved ownership disputes. This ruling is expected to reduce the burden on public facilities and ensure that assets remain intact and accounted for throughout the duration of criminal trials.

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Disclaimer: This report is based on the judgment of the High Court of Karnataka in Criminal Petition No. 9356/2025 c/w 9844/2025, delivered on February 13, 2026.