IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE R.BASANT FRIDAY, THE 23RD JANUARY 2009 / 3RD MAGHA 1930 Crl.MC.No. 5047 of 2008() ------------------------- CMP.935/2008 of JUDL. MAGISTRATE OF FIRST CLASS-II, HOSDRUG .................... PETITIONER(S): PETITIONER ------------------------- SATHAR K.M. AGED 33 YEARS, S/O.MOIDEENKUNHI,RESIDING AT EYYALA HOUSE, BENDICHAL, THEKKIL VILLAGE, CHENGALA, KASRAGOD DISTRICT. BY ADV. SRI.T.K.VIPINDAS RESPONDENT(S): RESPONDENTS -------------------------- 1. STATE OF KRLA REPRESENTED BY PUBLIC PROSECUTOR HIGH COURT OF KERALA, REPRESENTING SHO BEKAL. 2. SHARAFUDDEEN P.P. S/O.ABDUL RAHIMAN, AGED 20 YEARS, RESIDING AT DENDICHAL, THEKKIL, KASARAGOD DISTRICT. 3. UNION OF INDIA REPRESENTED BY ASSISTANT DIRECTOR OF INCOME TAX (INVESTIGATION) 8TH FLOOR, AYAKAR BHAVAN, MANANCHIRA, KOZHIKODE. ADV. SRI.JOSE JOSEPH, SC, FOR INCOME TAX FOR R3 R1 BY PUBLIC PROSECUTOR SRI. P.A. SALIM THIS CRIMINAL MISC. CASE HAVING COME UP FOR ADMISSION ON 23/01/2009, A/W. CRMC 368 OF 2009, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: R. BASANT, J. - - - - - - - - - - - - - - - - - - - - - - Crl.M.C.Nos. 5047 of 2008 & 368 of 2009 - - - - - - - - - - - - - - - - - - - - - - Dated this the 23rd day of January, 2009 O R D E R In these Crl.M.Cs. the petitioners assail the common order passed by the learned J.F.M.C.-II, Hosdrug, under which an amount of Rs.14 lakhs in the custody of the court was ordered to be released to the first respondent herein. The parties are being referred to in this order in the manner in which they are ranked in Crl.M.C. 5047 of 2008. 2. The second respondent in Crl.M.C.5047 of 2008 is the nephew of the petitioner. He is the petitioner in Crl.M.C. 368 of 2009. The second respondent was allegedly carrying an amount of Rs. 14 lakhs in his possession. While so, he was intercepted by the police on reasonable suspicion. Currency of Rs.14 lakhs was seized. It was produced before the Magistrate. Investigation was conducted. Investigation instilled satisfaction in the mind of the police that no offence has been committed in respect of such cash found in the possession of the 2nd respondent and Crl.M.C.Nos. 5047 of 2008 & 368 of 2009 2 seized by the police. That fact was reported to the learned Magistrate. While so, both the petitioner and the third respondent in Crl.M.C.5047 of 2008 had staked claims before the learned Magistrate for release of the amount. The learned Magistrate by the impugned order came to the conclusion that not the petitioner, but the third respondent is entitled for release of the amount. Accordingly the learned Magistrate proceeded to pass the impugned order. 3. The learned counsel for the petitioner submits that no offence whatsoever has been committed in respect of the currency seized. The police have already reported it. Authorities under the Foreign Exchange Management Act, by Annex.1 order produced in Crl.M.C. 368 of 2009 have come to the conclusion that no offence under the FEMA has been committed. In these circumstances the amount seized was liable to be returned to the petitioner. Even assuming that the Income Tax Department has a case that the amount is liable to be proceeded against, without any fetter to their right to proceed against the petitioner, the second respondent or the amount, the amount must have been ordered to be released to the petitioner subject to appropriate conditions. Even after release of the amount to the possession of the Crl.M.C.Nos. 5047 of 2008 & 368 of 2009 3 petitioner, the Income Tax Authorities have the requisite power under Section 132 of the Income Tax Act to proceed against the amount in the possession of the petitioner. In these circumstances it was not necessary at all to direct that the amounts be released to the third respondent. 4. Notice was given to the third respondent, who has entered appearance. According to the third respondent the third respondent wants to enquire about the source of the currency seized. The third respondent has to ascertain whether there is any liability to pay tax or penalty in respect of that amount. Until then, the amount may not be released to the petitioner and the third respondent may be permitted to retain the amount, contends the counsel for the third respondent. 5. The learned counsel for the petitioner submits that the amount may be released to the petitioner subject to any appropriate terms and conditions. On the directions of the learned Magistrate or on the basis of valid directions, if any, issued by the Income Tax Authorities, the petitioner shall produce the amount before such court/authority. He is willing to offer bank guarantee also for the amount, it is submitted. Crl.M.C.Nos. 5047 of 2008 & 368 of 2009 4 6. Having considered all the relevant circumstances, I find merit in the prayer of the learned counsel for the petitioner. First of all I note that no one has a case so far that any offence or indiscretion has been committed in respect of the cash seized. Annex.1 order produced in Crl.M.C.368 of 2009 indicates that atleast the authority, which passed that order, had come to the conclusion that the amount belongs to the petitioner, that he had handed over the same to the second respondent and that no offence has been committed in respect of that cash. I am, in these circumstances, satisfied that the person best entitled to keep possession of the amount is the petitioner himself. Of course, appropriate conditions can be imposed to ensure that the amount shall be available for the third respondent to proceed against, if that be found necessary. 7. In the result: a) These Crl. M.Cs. are allowed. b) The impugned common order is set aside. c) It is directed that the amount of Rs.14 lakhs seized by the Bakel police in Crime No.135 of 2008 and produced before the learned Crl.M.C.Nos. 5047 of 2008 & 368 of 2009 5 J.F.M.C.-II, Hosdrug shall forthwith be released to the petitioner in Crl.M.C.5047 of 2008 on the following terms and conditions. i) He shall produce bank guarantee for the said amount of Rs.14 lakhs from any nationalised bank. ii) He shall execute a bond undertaking to produce the amount before the learned Magistrate as and when directed or before the authorities under the Income Tax Act as and when a valid direction is issued to produce such amount. iii) The bank guarantee shall be valid for a period of one year. If proceedings are not completed within such period, the petitioner shall revive such guarantee for further periods to be fixed by the court. iv) The third respondent shall now produce the amount before the learned Magistrate forthwith, whereupon the same shall be released to the petitioner, if he complies with the above conditions. (R. BASANT) Judge tm