Judgment GAJENDRAGADKAR, C.J.I.: The short question of law which arises in this appeal is whether the respondent, the State of Uttar Pradesh, is liable to compensate the appellant, M/s. Kasturilal Ralia Ram Jain for the loss caused to it by the negligence of the police officers employed by the respondent. This question arises in this way. The appellant is a firm which deals in bullion and other goods at Amritsar. It was duly registered under the Indian Partnership Act. Ralia Ram was one of its partners. On the 20th September, 1947, Ralia Ram arrived at Meerut by the Frontier Mail about midnight. His object in going to Meerut was to sell gold, silver and other goods in the Meerut market. While he was passing through the Chaupla Bazar with this object, he was taken into custody by three police constables. His belongings were then searched and he was taken to the Kotwali police station. He was detained in the police lock-up there and his belongings which consisted of gold, weighing 103 tolas 6 mashas and 1 ratti, and silver weighing 2 maunds and 6 1/2 seers, were seized from him and kept in police custody. On the 21st September, 1947 he was released on bail, and some time thereafter the silver seized from him was returned to him. Ralia Ram then made repeated demands for the return of the gold which had been seized from him, and since he could not recover the gold from the police officers, he filed the present suit against the respondent in which he claimed a decree that the gold seized from him should either be returned to him, or, in the alternative, its value should be ordered to be paid to him. The alternative claim thus made by him consisted of Rs. 11,075-10-0 as the price of the gold and Rs. 355/- as interest by way of damages as well as future interest. 2. This claim was resisted by the respondent on several grounds. It was urged that the respondent was not liable to return either the gold, or to pay its money value. The respondent alleged that the gold in question had been taken into custody by one Mohammad Amir, who was then the Head Constable, and it had been kept in the police Malkhana under his charge. Mohd. It was urged that the respondent was not liable to return either the gold, or to pay its money value. The respondent alleged that the gold in question had been taken into custody by one Mohammad Amir, who was then the Head Constable, and it had been kept in the police Malkhana under his charge. Mohd. Amir, however, misappropriated the gold and fled away to Pakistan on the 17th October, 1947. He had also misappropriated some other cash and articles deposited in the Malkhana before he left India. The respondent further alleged that a case under Section 409 of the Indian Penal Code as well as S. 29 of the Police Act had been registered against Mohd. Amir, but nothing effective could be done in respect of the said case because in spite of the best efforts made by the police department, Mohd. Amir could not be apprehended. Alternatively, it was pleaded by the respondent that this was not a case of negligence of the police officers, and that even if negligence was held proved against the said police officers, the respondent State could not be said to be liable for the loss resulting from such negligence. 3. On these pleadings, two substantial questions arose between the parties; one was whether the police officers in question were guilty of negligence in the matter of taking care of the gold which had been seized from Ralia Ram, and the second was whether the respondent was liable to compensate the appellant for the loss caused to it by the negligence of the public servants employed by the respondent. The trial Court found in favour of the appellant on both these issues, and since the gold in question could not be ordered to be returned to the appellant, a decree was passed in its favour for Rs. 11,430-10-0. 4. The respondent challenged the correctness of this decree by an appeal before the Allahabad High Court and it was urged on its behalf that the trial Court was in error in regard to both the findings recorded by it in favour of the appellant. These pleas have been upheld by the High Court. 11,430-10-0. 4. The respondent challenged the correctness of this decree by an appeal before the Allahabad High Court and it was urged on its behalf that the trial Court was in error in regard to both the findings recorded by it in favour of the appellant. These pleas have been upheld by the High Court. It has found that no negligence had been established against the police officers in question and that even if it was assumed that the police officers were negligent and their negligence led to the loss of gold, that would not justify the appellant s claim for a money decree against the respondent. The appellant then moved for and obtained a certificate from the said High Court and it is with the said certificate that it has come to this Court by an appeal. On behalf of the appellant, Mr. M. K. Sastri has urged that the High Court was in error in both the findings recorded by it in favour of the respondent. The first finding is one of fact and the second is one of law. 5. In dealing with the question of negligence, it is necessary to refer to the evidence adduced in this case. The material facts leading to the seizure of gold are not in dispute. The only question which calls for our decision on this part of the case is whether the loss of gold can be legitimately attributed to the negligence of the police officers in charge of the police station where the gold and silver had been kept in custody. Ganga Prasad is the first witness to whose evidence it is necessary to refer. He was Class II Officer in Meerut Kotwali at the relevant time. He swears that Mohammad Amir who was in charge of the Malkhana, had fled away to Pakistan without delivering the keys to anyone and without obtaining permission for leaving his post of duty. The Malkhana was accordingly checked and it disclosed that considerable properties kept in the Malkhana were missing on the 26th October, 1947, Gang Prasad returned the silver articles to the appellant. Gold was, however, not found in the Malkhana, and so, it could not be returned to it. Ganga Prasad then refers to the investigation carried our against Mohd. Amir for an offence of misappropriation and his evidence shows that Mohd. Gold was, however, not found in the Malkhana, and so, it could not be returned to it. Ganga Prasad then refers to the investigation carried our against Mohd. Amir for an offence of misappropriation and his evidence shows that Mohd. Amir had absconded, and since the police department was unable to apprehend him from Pakistan, the investigation in question became ineffective. According to this witness, the silver and gold of the appellant had not been attached in his presence. He admits that the goods of the appellant remained in the Malkhana of the Kotwali. No list of these goods was forwarded to any officials. This witness further added that valuables are generally kept in the wooden box and the key is kept by the officer in charge of Malkhana. The gold and silver articles seized from the appellant had not been kept in that box in his presence. He could not explain why the said gold and silver articles were not kept in the Treasury. 6. The next witness is Mohd. Umar. He was Sub-Inspector II in the Kotwali in September, 1947. He swears to the seizure of the gold and silver articles from Ralia Ram and deposes to the fact that they were not kept in the Malkhana in his presence. Both the arrested persons and the seized articles were left in charge of the Head Constable who had been instructed by Mohd. Umar to keep the goods in the Malkhana. This witness admitted that no list was prepared of the seized goods and he was not able to say whether proper precautions were taken to safeguard the goods in the Malkhana. 7. The third witness is Agha Badarul Hassan. He was station officer of the police station in question in September, 1947. He swears that it was a routine requirement that every day in the morning one Sub-Inspector had to inspect the Malkhana under his order. He knew that Ralia Ram had been kept in the lock-up and his articles were kept in the Malkhana, but he added that in his presence these articles were neither weighed nor kept in the Malkhana. He claims to have checked up the contents of the Malkhana, but he conceded that he had made no note about this check in the Diary. He purported to say that when he checked the Malkhana, gold and silver were there. He claims to have checked up the contents of the Malkhana, but he conceded that he had made no note about this check in the Diary. He purported to say that when he checked the Malkhana, gold and silver were there. He kept the valuables in the Malkhana without any further instructions from the officers, and he was not present when they were kept in the box. This witness claims that valuables are not sent by the police officers to the Treasury unless they got orders to that effect. That is the whole of the material evidence bearing on the question of negligence of the police officers. 8. In appreciating the effect of this evidence, it is necessary to refer to some of the relevant provisions in regard to the custody of the goods seized in the course of police investigation. Section 54(1)(iv) of the Code of Criminal Procedure provides that any police officer may, without an order from a Magistrate and without a warrant, arrest any person in whose possession anything is found which may reasonably be suspected to be stolen property and who may reasonably be suspected of having committed an offence with reference to such thing. It is under this provision that Ralia Ram was arrested at midnight. It was apprehended by the police officers that the gold and silver articles which he was carrying with him might be stolen property, and so, his arrest can be said to be justified under Section 54(1)(iv). Section 550 confers powers on police officers to seize property suspected to be stolen. It provides, inter alia, that any police officer may seize property which may be suspected to have been stolen; and so, gold and silver in the possession of Ralia Ram were seized in exercise of the powers conferred on the police officers under S. 550 of the Code. After Ralia Ram was arrested and before his articles were seized, he was searched and such a search is justified by the provisions of S. 51 of the Code. Having thus arrested Ralia Ram and searched his person and seized gold and silver articles from him under the respective provisions of the Code, the police officers had to deal with the question of the safe custody of these goods. Section 523 provides for the procedure in that behalf. Having thus arrested Ralia Ram and searched his person and seized gold and silver articles from him under the respective provisions of the Code, the police officers had to deal with the question of the safe custody of these goods. Section 523 provides for the procedure in that behalf. It lays down, inter alia, that the seizure by any police officer of property taken under S. 51 shall be forthwith reported to a Magistrate, who shall make such order as he thinks fit respecting the disposal of such property or the delivery of such property to the person entitled to the possession thereof, or, if such person cannot be ascertained, respecting the custody and production of such property. These are the relevant provisions of the Code in respect of property seized from a person who has been arrested on suspicion that he was carrying stolen property. 9. That takes us to the U. P. Police Regulations. Chapter XIV of these Regulations deals with the custody and disposal of property. Regulation 165 provides a detailed procedure for dealing with the disposal of movable property of which the police takes possession, it is not necessary to refer to these provisions it would be enough to state that these provisions indicate that when property is seized by the police officers, meticulous care is required to be taken for making a proper list of the property seized, describing it, weighing it, and taking all reasonable steps to ensure its safety. Clause (5) of Regulation 165 provides that when the property consists of gold, silver, jewellery or other valuables, it must be sent in a sealed packet after being weighed, and its weight must be noted in the general diary and on the list For Citation : AIR 1965 SC 1039