Summary
In a bank fraud through forged telegraphic transfers, the Supreme Court acquitted a jeweller convicted under Sections 120B and 411 IPC, holding that once the courts below found that the 205 seized gold bars were not proved to be the gold bought with the fraudulent demand drafts, he could not be convicted, nor could Sections 106 or 114 of the Evidence Act be used to shift the burden to him; the gold was ordered returned to him and the bank's claim was rejected.
Issues
- Whether the conviction of accused no. 3 under Section 411 read with Section 120B IPC could stand when the identity of the seized gold bars as stolen property was not established.
- Whether the courts below could invoke Sections 106 and 114 of the Evidence Act against the accused for failing to prove lawful acquisition of the gold.
- Who was entitled to possession of the seized gold bars: the accused, the bank, or another claimant.
Provisions considered
- Section 411, Indian Penal Code, 1860The prosecution must prove that the stolen property was in the accused's possession, that someone else possessed it before him, and that he knew or had reason to believe it was stolen; none was proved because the seized gold was not shown to be the gold bought with the tainted drafts and knowledge of the fraud was not established. (¶¶ 30, 32, 33, 34, 35)
- Section 120B, Indian Penal Code, 1860The conspiracy conviction fell with the Section 411 charge; the appellant was not even charged or tried for the first part of the conspiracy relating to the fraudulent telegraphic transfers. (¶¶ 30, 35, 38)
- Section 106, Indian Evidence Act, 1872Applying Nagendra Sah v. State of Bihar, the Court held that Section 106 operates only after the prosecution establishes facts from which an inference can be drawn; where the chain of circumstances is incomplete, the accused's failure to explain is irrelevant. (¶¶ 23, 36, 37)
- Section 114, illustration (a), Indian Evidence Act, 1872The High Court's presumption against the accused was held impermissible because the prosecution had failed to discharge its initial burden of proving that the seized gold was the stolen property. (¶¶ 26, 28, 37)
Held
- However strong a suspicion may be, it cannot replace proof beyond reasonable doubt; in a case of circumstantial evidence the circumstances must be fully established and exclude every hypothesis except guilt. (¶ 29)
- Once the Trial Court found that the seized gold bars may or may not be the bars sold to the fictitious firm, and the High Court impliedly accepted that witnesses could not identify them, convictions under Sections 120B and 411 IPC could not be sustained. (¶¶ 30, 31)
- When the prosecution has not proved that the seized gold was the stolen gold, the accused cannot be required to prove lawful acquisition of it. (¶ 31)
- Even if the accused received demand drafts from the absconding co-accused and bought gold with them, the prosecution still had to prove that he knew or had reason to believe the drafts were fraudulently obtained, or that he was part of the conspiracy. (¶¶ 32, 35)
- Sections 106 and 114 of the Evidence Act cannot fill gaps in the prosecution case; a weak defence or failure to substantiate an answer in the statement under Section 313 CrPC cannot become the strength of the prosecution, which must complete the chain of circumstances. (¶¶ 36, 37)
- Since the gold bars were recovered from the acquitted appellant, he is entitled to their possession; the bank, having failed to establish that the seized gold was stolen property, has no claim to it in the criminal proceedings, without prejudice to other remedies available in law. (¶¶ 38, 39, 40)
Result
Criminal Appeal Nos. 581-583 of 2012 allowed; conviction and sentence of accused no. 3 under Sections 120B and 411 IPC set aside and the 205 seized gold bars directed to be handed over to him; appeals of Vijaya Bank and Hiralal Babulal Soni for return of the gold dismissed, leaving other legal remedies open.