THE SUPREME COURT RULES ON MONEY LAUNDERING AND OWNERSHIP DISPUTE BASED ON CIRCUMSTANTIAL EVIDENCE.
The judgment in the case of Nandkumar Babulal Soni v. The State of Maharashtra & Ors., arising out of Criminal Appeal Nos. 579-580, 581-583, and 584 of 2012 was delivered by a Division Bench of the Supreme Court of India comprising Hon’ble Justice B.R. Gavai, Justice Prashant Kumar Mishra and Justice K.V. Viswanathan on February 25, 2025. The case primarily deals with a large-scale banking fraud at Vijaya Bank, Nasik Branch, involving fraudulent Telegraphic Transfers (TTs) totaling ₹6.7 crores and subsequent money laundering through gold purchases. It also addresses the rightful ownership of 205 seized gold bars and the evidentiary standards required to convict an accused under Section 411 IPC for receiving stolen property.
Facts of the Case
The case involves a large-scale banking fraud at Vijaya Bank, Nasik Branch, Maharashtra, where fraudulent remittances totaling ₹6.7 crores were made through fake Telegraphic Transfers (TTs) and subsequently withdrawn On January 30, 1997. An individual posing as a representative of M/s. Globe International approached Vijaya Bank to open an account. Despite document discrepancies, the account was opened on February 06, 1997, following verification by Surendra Bhandary, AGM of Vijaya Bank, Fort Branch between April 25, 1997 and August 06, 1997, multiple fake TTs were credited to the account, and the funds were withdrawn. The fraudulent scheme was linked to several accused, including absconding individuals Mukesh Shah @ Mayur Desai and Ashok Agarwal @ Surender Jain.
On June 01, 2001, the CBI conducted a search and seized 205 gold bars from the shop of Accused No. 3, Nandkumar Babulal Soni, who was allegedly involved in laundering the fraudulent funds. Accused No. 4, Mukesh Shah, remained untraceable and was declared a proclaimed offender. The trial court framed charges under various sections of the Indian Penal Code (IPC) and the Prevention of Corruption Act, convicting multiple accused, while the High Court later acquitted some and modified the judgment regarding the confiscation of gold bars.
Main Issues
- Whether Accused No. 3 (Nandkumar Babulal Soni) was guilty under Section 411 IPC for dishonestly receiving stolen property.
- Whether the 205 seized gold bars were directly linked to the fraudulent transactions.
- Who had the rightful ownership of the confiscated gold bars—Accused No. 3, Vijaya Bank, or the State Government.
Contentions by Both Parties
Arguments by the Appellants
Accused No. 3 (Nandkumar Babulal Soni) contended that his conviction under Section 411 IPC was based on circumstantial evidence and mere suspicion. He argued that the Prosecution failed to conclusively prove that the gold bars were acquired through fraudulent means. He also claimed that the gold legally belonged to him.
Vijaya Bank argued that fraud was committed against the bank and that the seized gold bars should be returned to them as compensation.
Hiralal Babulal Soni also claimed ownership of the gold bars based on his alleged legal rights over them.
Arguments by the Respondents (CBI)
The CBI maintained that there was strong circumstantial evidence linking Accused No. 3 to the fraudulent transactions.
Several witness testimonies (PW-22, PW-26, PW-32, and PW-33) supported the claim that the gold bars were purchased using fraudulently withdrawn funds.
The CBI justified the High Court’s decision to confiscate the gold bars for the State Government, as the Accused failed to provide legitimate proof of ownership.
Judgment
The Trial Court convicted Accused Nos. 1, S.K. Sheenappa Rai, the Branch Manager of Vijaya Bank, Nasik Branch, Accused No 2, M. Devadas Shetty and another bank officer, under multiple IPC sections and the Prevention of Corruption Act, while Accused No. 3 (Nandkumar Babulal Soni) was convicted under Sections 120B (criminal conspiracy) and 411 (dishonestly receiving stolen property) IPC. The Court ordered the return of the 205 gold bars to Accused No. 3.
The High Court later acquitted Accused Nos. 1 and 2 but upheld the conviction of Accused No. 3. It overturned the Trial Court’s order regarding the seized gold bars and directed their confiscation for the State Government.
On Appeal before the Apex Court, the Court found that the Prosecution failed to establish beyond a reasonable doubt that the seized gold bars were directly linked to the fraudulent transactions. The Court also noted that the Prosecution could not prove that Accused No. 3 had knowledge of the gold’s illegal origins. Given these shortcomings, the Supreme Court set aside the conviction of Accused No. 3 under Section 411 IPC and ordered the return of the 205 gold bars to him. The claims made by Vijaya Bank and Hiralal Babulal Soni over the gold were dismissed.
Conclusion
The judgment highlights the necessity of conclusive evidence in criminal cases, particularly in cases involving circumstantial evidence. The Supreme Court emphasized that suspicion alone was insufficient for conviction, and the Prosecution must establish a clear link between alleged crimes and recovered assets. As a result, Accused No. 3 was acquitted, and the gold bars were returned to him.
Baddam Parichaya Reddy
Associate
The Indian Lawyer & Allied Services
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