HIRALAL BABULAL SONIversusTHE STATE OF MAHARASHTRA & ORS.

                 [2025] 2 S.C.R. 708 : 2025 INSC 266

                         Hiralal Babulal Soni
                                  v.
                   The State of Maharashtra & Ors.
                 (Criminal Appeal No(s). 579-580 of 2012)
                              25 February 2025
               [B.R. Gavai, Prashant Kumar Mishra,*
                     and K.V. Viswanathan, JJ.]


                           Issue for Consideration
       Issue arose as regards the sustainability of the conviction of the
       accused u/s.120B and 411 IPC, when the seized gold bars are not
       the same gold bars linked to the fraudulent transactions.

                                  Headnotes†
       Penal Code, 1860 – ss.120B, 411 rw s.120B – Dishonestly
       receiving stolen property – Criminal conspiracy – Possession
       of stolen property – Commission of fraud by remittance through
       fake Telegraphic Transfers-TT and subsequent withdrawals
       amounting to Rs. 6.7 crores at the Bank – Bank account opened
       for a fictitious firm using forged documents – TTs made and
       said amount credited to the account of the firm and thereafter
       withdrawn by preparing demand drafts in favour of two
       companies – Amount involved in the demand drafts allegedly
       used against purchase of seized gold bars delivered to the
       appellant-accused no. 3 – Search at the shop of accused no. 3
       leading to seizure of 205 gold bars and other documents – Trial
       court convicted two officers of the bank, however acquitted
       by the High Court – Accused no. 3 held guilty of the offence
       punishable u/ss.120B, 411 rw 120B, however directed that
       205 gold bars be returned to the accused no. 3 – High Court
       upheld the conviction of accused no. 3, however quashed
       the direction to return the gold bars to accused no. 3 and the
       property stood confiscated – Challenge to:
       Held: Once the courts below found that the seized gold bars are not
       the same gold bars linked to the fraudulent transactions, conviction
       u/ss.120B and 411 cannot be sustained – On consideration of the
       pre-requisite evidence to bring home the charge u/s.411, even if it
       is proved that the appellant was handed over the demand drafts
       and gold bars were purchased by the appellant from the company,
* Author
[2025] 2 S.C.R.                                                                709

        Hiralal Babulal Soni v. The State of Maharashtra & Ors.


     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 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 been not
     charged and tried for the first part of the offence relating to criminal
     conspiracy vis-à-vis fraudulent TTs – Furthermore, the trial court
     held that the prosecution ought to have produced evidence to show
     that there was a stock of the same brand with the company and out
     of that stock some gold bars with the markings were sold to the so
     called fictitious firm – 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 – Invocation of s.114
     of the 1872 Act not at all permissible since the prosecution failed
     to discharge its initial burden – Prosecution has to prove its case
     beyond all reasonable doubts by positively completing the chain
     of circumstances against the appellant, which the prosecution
     utterly failed – Thus, the conviction and sentence of the accused
     no.3 u/ss.120B and 411 set aside – Since the seized gold bars
     were recovered from the appellant, he is entitled to the possession
     thereof – Seized gold bars be handed over to the appellant – Since
     the identity of the seized property being the stolen property not
     established, the bank not entitled to the possession of the seized
     gold – Evidence Act, 1872. [Paras 30, 35, 37-39]

     Penal Code, 1860 – s.411 – Dishonestly receiving stolen
     property – Charge u/s.411 – Duty of the prosecution to prove:
     Held: Prosecution has to prove that the stolen property was in
     the possession of the accused; that some persons other than the
     accused had possession of the property before the accused got
     possession of it; and that the accused had knowledge that the
     property was stolen property. [Para 32]

                               Case Law Cited
     Trimbak v. State of M.P, AIR 1954 SC 39; Nagendra Sah v. State
     of Bihar (2021) 10 SCC 725 – relied on.
     Kamal v. State (NCT of Delhi), 2023 INSC 678 : [2023] 11 SCR
     49; Mohan Lal v. State of Maharashtra (1979) 4 SCC 751;
     Shiv Kumar v. State of M.P [2022] 7 SCR 493 : (2022) 9 SCC
     676 – referred to.
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                                  List of Acts
       Prevention of Corruption Act, 1988; Penal Code, 1860; Evidence
       Act, 1872.

                               List of Keywords
       Dishonestly receiving stolen property; Criminal conspiracy;
       Commission of fraud by remittance through fake Telegraphic
       Transfers; Fictitious firm; Forged documents; Demand drafts;
       Seizure of 205 gold bars; Return of 205 gold bars; Confiscation;
       Suspicion; Proof beyond reasonable doubt; Demand drafts obtained
       through fraudulent process; Mistaken identification; Prosecution
       failed to discharge initial burden; Chain of circumstances; Duty of
       the prosecution to prove charge u/s. 411 IPC.

                              Case Arising From
       CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No(s).
       579-580 of 2012
       From the Judgment and Order dated 16.07.2009 of the High Court
       of Bombay in CRLA No. 363 of 2009 and CRLA No. 638 of 2006
       With
       Criminal Appeal No(s). 581-583 and 584 of 2012

                           Appearances for Parties
       Advs. for the Appellants:
       Uday Gupta, Sr. Hiren Dasan, Chand Qureshi, Mrs. Shivani Lal,
       Mujahid Ahmad, Harish Dasan, Rajive Ranjan, Raj Kumar Yadav,
       Dhirendar Kumar Verma, Mrs. Arpana Soni, Chand Qureshi, Mrs.
       Shivani Lal, Mujahid Ahmad, Harish Dasan, Rajive Ranjan, Raj Kumar
       Yadav, Dhirendar Kumar Verma, Mrs. Arpana Soni, A. P. Singh,
       Naman Saraswat, Tavinder Sidhu, M/S. M. V. Kini & Associates.
       Advs. for the Respondents:
       Upmanyu Tewari, Mrs. V. D. Khanna, Mahesh Kumar, Akshay
       Kumar Sharma, Ms. Devika Khanna, Ms. Suhasini Sen, Mukesh
       Kumar Maroria, Sachin Sharma, Chinmayee Chandra, Siddhant
       Kohli, Vinayak Sharma, Aaditya Aniruddha Pande, Siddharth
       Dharmadhikari, Shrirang B. Varma, Bharat Bagla, Sourav Singh,
       Aditya Krishna, Ms. Preet S. Phanse, Adarsh Dubey, Uday Gupta,
       Sr. Hiren Dasan, Chand Qureshi.
[2025] 2 S.C.R.                                                        711

            Hiralal Babulal Soni v. The State of Maharashtra & Ors.


                   Judgment / Order of the Supreme Court

                                  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.
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 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


1    “TT”
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                 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. 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,




2    ‘M/s. CN’
3    ‘CBI’
[2025] 2 S.C.R.                                                           713

             Hiralal Babulal Soni v. The State of Maharashtra & Ors.


       471, 477A and 109 of the Indian Penal Code, 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 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


4    ‘IPC’
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       Court. The 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
       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



5    2023 INSC 678
[2025] 2 S.C.R.                                                        715

        Hiralal Babulal Soni v. The State of Maharashtra & Ors.


     would sum up the arguments with submission that the conviction of
     Accused No. 3 as well as the 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 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.
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                          Supreme Court Reports


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. 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.
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;
[2025] 2 S.C.R.                                                     717

           Hiralal Babulal Soni v. The State of Maharashtra & Ors.


     (iv) 06 T.T. bars of Credit Suisse make;
     (v)    02 T.T. bars of PAMP Suisse make;
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. 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
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                          Supreme Court Reports


       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 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 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
[2025] 2 S.C.R.                                                          719

        Hiralal Babulal Soni v. The State of Maharashtra & Ors.


     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 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.”
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
720                                                         [2025] 2 S.C.R.

                          Supreme Court Reports


       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 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 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
[2025] 2 S.C.R.                                                         721

            Hiralal Babulal Soni v. The State of Maharashtra & Ors.


     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 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;
     (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.
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       (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 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 and prosecution has
[2025] 2 S.C.R.                                                           723

         Hiralal Babulal Soni v. The State of Maharashtra & Ors.


     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 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


6   (1979) 4 SCC 751
7   (2022) 9 SCC 676
724                                                          [2025] 2 S.C.R.

                         Supreme Court Reports


          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 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 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
[2025] 2 S.C.R.                                                            725

         Hiralal Babulal Soni v. The State of Maharashtra & Ors.


     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 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 the prosecution. The prosecution has to prove its case


8   (2021) 10 SCC 725
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                               Supreme Court Reports


       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 come in the way of other remedies, if
    any, as may be available in law to the parties.
40. Similarly, the Criminal Appeal Nos. 579-580 of 2012 preferred by
    Hiralal Babulal Soni seeking return of gold bars is also dismissed.

       Result of the case: Appeals disposed of.



       †
           Headnotes prepared by: Nidhi Jain