Facts of the Case

The petitioner challenged the order passed by the learned S.D.J.M., Puri, whereby the seized scrap copper wires were directed to be released in his favour. However, the release was made subject to the condition that the petitioner deposit cash security of Rs. 21,50,580, representing the alleged unpaid GST amount.

According to the FIR, the petitioner, being the consignor of the seized scrap copper wires, was alleged to have prepared forged documents in the name of M/s S.S. Metal Overseas for trading in copper waste and scrap with the intention of evading payment of GST.

Aggrieved by the onerous condition requiring cash security for release of the seized goods, the petitioner invoked the inherent jurisdiction of the High Court under Section 482 Cr.P.C.

Issues Involved

  1. Whether the Trial Court was justified in directing deposit of cash security equivalent to the alleged unpaid GST for release of seized goods.
  2. Whether such a condition amounted to an unreasonable and onerous restriction resulting in virtual denial of relief.
  3. Whether property security could be accepted in place of cash security while releasing seized property under Section 457 Cr.P.C.

Petitioner's Arguments

  • The petitioner contended that he was the consignor of the seized scrap copper wires.
  • Although the Trial Court allowed release of the goods, it imposed an excessively burdensome condition by directing deposit of cash security amounting to Rs. 21,50,580.
  • It was argued that such a condition was unreasonable, contrary to law, and effectively defeated the relief granted by the order of release.

Respondent's Arguments

  • The State submitted that the petitioner had allegedly failed to pay GST on the seized goods.
  • It was further alleged that forged documents had been prepared in relation to the consignment.
  • In view of these allegations, the State argued that the Trial Court was justified in directing deposit of cash security equivalent to the unpaid GST before releasing the seized goods.

Court Findings

The High Court observed that although the allegations related to non-payment of GST and preparation of forged documents, the Trial Court had already decided to release the seized scrap copper wires in favour of the petitioner.

The Court held that requiring the petitioner to deposit cash security of Rs. 21,50,580 was an unreasonable and onerous condition. The Court reiterated the settled legal principle that any condition imposed for release of seized property which is so burdensome as to amount to virtual denial of relief should be avoided.

The High Court found that the interests of justice could adequately be protected by directing the petitioner to furnish property security instead of insisting upon cash security.

Accordingly, the impugned order was modified to this extent.

 

Court Order

The Criminal Miscellaneous Case was partly allowed.

The High Court:

  • Set aside the impugned order insofar as it required deposit of cash security of Rs. 21,50,580.
  • Directed the learned S.D.J.M., Puri to accept property security for the like amount.
  • Directed release of the seized scrap copper wires upon furnishing such property security and subject to such other conditions as the Trial Court considered appropriate in the facts and circumstances of the case.

Important Clarification

  • Courts should avoid imposing conditions that are so onerous that they effectively deny the relief granted.
  • While considering release of seized property under Section 457 Cr.P.C., courts may substitute cash security with property security where appropriate.
  • Mere allegations relating to GST evasion do not automatically justify insistence on heavy cash deposits when alternative security can sufficiently safeguard the interests of justice.
  • The decision reinforces the principle that judicial discretion in granting interim custody of seized property must be exercised reasonably and proportionately.

Sections Involved

  • Section 457 of the Code of Criminal Procedure, 1973 (Cr.P.C.)
  • Section 482 of the Code of Criminal Procedure, 1973 (Cr.P.C.)
  • Allegations relating to non-payment of GST and use of forged documents under the GST laws (as referred to in the FIR).

Link to download the order -https://www.mytaxexpert.co.in/uploads/1783942507_937compressed.pdf

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