Manappuram Finance Ltd., Vs the State of Karnataka

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NC: 2026:KHC:11264 WP No. 11039 of 2025

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HC-KAR

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 20^TH DAY OF FEBRUARY, 2026

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BEFORE

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THE HON'BLE MR. JUSTICE SACHIN SHANKAR MAGADUM WRIT PETITION NO. 11039 OF 2025 (GM-RES)

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BETWEEN:

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1 . MANAPPURAM FINANCE LTD., A COMPANY INCORPORATED UNDER THE COMPANIES ACT, 1956 HAVING REGISTERED OFFICE AT MANAPURAM HOUSE, A.O. VALAPAD TRISSUR DISTRICT, KERALA-680 567 HAVING ONE OF ITS BRANCH AT VAJARAHALLI, THALAGATUPURA REP BY ITS AREA HEAD THE AUTHORISED OFFICER GANESAN .C

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...PETITIONER

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(BY SRI. ANISH JOSE ANTONY, ADVOCATE)

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Digitally signed by AL BHAGYA Location: HIGH COURT OF KARNATAKA

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AND:

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1 . THE STATE OF KARNATAKA BY ITS SECRETARY

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HOME DEPARTMENT, VIDHANA SOUDHA BENGALURU- 560 001.

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2 . THE STATION HOUSE OFFICER/ INVESTIGATION OFFICER GOVINDRAJNAGAR POLICE STATION 18^TH CROSS ROAD, VIJAYNAGAR BENGALURU, KARNATAKA-560 040.

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…RESPONDENTS

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(BY SRI. RAHUL RAI, HCGP FOR R1 AND R2)

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2 - NC: 2026:KHC:11264 WP No. 11039 of 2025

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HC-KAR

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THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO CALL FOR THE RECORDS IN CRIME NO 18/2025 REGISTERED BY THE GOVINDRAJNAGAR POLICE STATION PENDING BEFORE THE HONBLE 24^TH ADDITIONAL CHIEF JUDICIAL MAGISTRATE, BANGALORE AND QUASH ENDORSEMENTS/ORDER MADE BY THE HON'BLE 24^TH ADDITIONAL CHIEF JUDICIAL MAGISTRATE IN ANNEXURE-H, PF No. 21/2025 AND ANNEXURE-J, PF No. 15/2025 TO AN EXTEND OF PERMITTING THE 2^ND RESPONDENT, GOVINDRAJNAGAR POLICE STATION FOR RELEASING THE GOLD ARTICLES IN THE INTEREST OF JUSTICE AND EQUITY AND ETC.

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THIS WRIT PETITION COMING ON FOR FURTHER HEARING, THIS DAY ORDER WAS MADE THEREIN, AS UNDER:

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CORAM: HON’BLE MR. JUSTICE SACHIN SHANKAR MAGADUM

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ORAL ORDER

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Captioned petition is filed seeking for issuance of a writ of certiorari to quash the endorsements/order permitting respondent No.2 to release the gold articles and

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further to direct respondent No.2 to restore the gold articles seized from the petitioner or in the alternative to keep the gold articles in the safe custody of the Court.

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2. Facts leading to the case are as under:

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The petitioner, a Non-Banking Financial Company having more than 4,500 branches across India, has

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HC-KAR

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approached this Court assailing the action of the Investigating Officer and the consequential order by which interim custody of gold ornaments seized from the petitioner has been handed over to respondent No.2 (complainant) without issuing notice to or hearing the petitioner, who asserts a lawful lien based on pledge.

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The petitioner is engaged in the business of advancing loans against pledge of gold ornaments. On 16.01.2025, the petitioner advanced a loan to one Subhash S. after accepting gold ornaments as pledge.

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Subsequently, a complaint came to be

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registered, culminating in Crime No.18/2025 for the offence punishable under Section 305 of the Bharatiya Nyaya Sanhita, 2023.

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During the course of investigation, the police

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issued notice to the petitioner and on 29.01.2025 seized 85.9 grams of gold ornaments, which were assigned P.F. Nos.15/2025 and 21/2025.

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NC: 2026:KHC:11264 WP No. 11039 of 2025

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HC-KAR

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It is not in dispute that the seized gold was in

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the lawful custody of the petitioner as a pledgee at the time of seizure. However, the Investigating Officer / trial Court has proceeded to grant interim custody of the said

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gold ornaments to respondent No.2 – the complainant, without affording any opportunity of hearing to the petitioner.

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The short question that arises for consideration

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is:

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"Whether interim custody of seized gold

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ornaments can be granted to the complainant

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without notice to and hearing the petitionerNBFC, which claims a lawful possessory right by way of pledge?"

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The law governing custody of seized property is

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well settled. Sections 451 and 457 of the Code of Criminal

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NC: 2026:KHC:11264 WP No. 11039 of 2025

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HC-KAR

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Procedure (and the corresponding scheme under the Bharatiya Nagarik Suraksha Sanhita) mandate that:

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(i) Custody of seized property is a judicial determination, not an administrative act;

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(ii) The Court must consider who is entitled to possession pending trial;

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(iii) All persons claiming an interest in the property must be heard before passing an order of custody.

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9. In Sunderbhai Ambalal Desai v. State of

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Gujarat, (2002) 10 SCC 283 , the Hon’ble Supreme Court held that the Magistrate must exercise judicious discretion while granting custody of seized property and that such orders cannot be passed mechanically or arbitrarily, particularly where competing claims exist.

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NC: 2026:KHC:11264 WP No. 11039 of 2025

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HC-KAR

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In Multani HanifbhaiKalubhai v. State of

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Gujarat, (2013) 3 SCC 240, the Hon'ble Supreme Court categorically ruled as under:

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“When rival claims are made over seized property, the Magistrate must afford an opportunity of hearing to all claimants before passing orders under Sections 451 or 457 Cr.P.C.”

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The Hon'ble Supreme Court has further clarified in General Insurance Council v. State of A.P., (2007) 12 SCC 354, that seizure by police does not extinguish civil or contractual rights, and that custody orders must protect such rights until adjudicated in accordance with law.

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A pledgee, in law, has a special property and possessory right in the pledged goods. This right cannot

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HC-KAR

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be defeated or ignored by a unilateral order of interim

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custody, particularly when the pledgee is not even heard.

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The criminal Court, at the stage of interim custody, does not decide title but only determines who should retain possession pending proceedings, and such determination must follow principles of natural justice.

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In the present case, it is an admitted position

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that:

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(i) The gold ornaments were seized

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from the petitioner-NBFC, not from the complainant;

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(ii) The petitioner asserts a lawful lien

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and possessory right arising out of pledge;

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(iii) Interim custody has been handed

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over to respondent No.2 without notice to or hearing the petitioner.

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HC-KAR

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Such a course of action is ex facie illegal and contrary to the settled law laid down by the Hon’ble Supreme Court. The Investigating Officer or the Magistrate could not have unilaterally granted interim custody to the complainant ignoring the petitioner’s claim.

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The impugned order, therefore, suffers from violation of principles of natural justice, non-application of mind, and jurisdictional error, warranting interference by this Court under Article 226 of the Constitution of India.

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