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Andhra High Court · body

2025 DIGILAW 1046 (AP)

Manappuram Asset Finance Limited v. State of AP

2025-08-30

HARINATH N.

body2025
ORDER : HARINATH.N, J. 1. The petitioners are aggrieved by the issuance of notices under Section 91 and Section 102 of Cr.P.C., (Section 94 of BNSS) by the investigating officers of various police stations investigating the crimes registered. The petitioners are in the business of extending loans against the mortgage of gold ornaments. 2. The petitioners were issued notices by the investigating officers to produce and hand over the gold ornaments during the course of the investigation. The details of the batch of writ petitions are as follows ; S.No. WP.No. Police Station Crime number Section of Law Complaintfiled by 1. WP.No.25540 of 2023 Bhimunipatnam Police station 253 of 2023 409, 420 of IPC Branch Head, IIFL Finance Ltd., 2. WP.No.28721 of 2023 Bobbili Town Police Station 541 of 2023 457, 380 IPC K.Kavitha Sravanthi alleging theft of her gold ornaments 3. WP.No.25540 of 2023 Bhimunipatnam Police station 253 of 2023 409, 420 of IPC Branch Head, IIFL Finance Ltd., 2. WP.No.28721 of 2023 Bobbili Town Police Station 541 of 2023 457, 380 IPC K.Kavitha Sravanthi alleging theft of her gold ornaments 3. WP.No.26267 of 2023 Bhimunipatnam Police Station 253 of 2023 409, 420 IPC Branch Head, IIFL Finance Ltd., 4 WP.No.23757 of 2024 Sompta Police Station 119 of 2024 303 (2) BNS G.Jeevaratnam alleging theft of gold ornaments 5 WP.No.23656 of 2024 Kovvur Town Police Station 227 of 2024 331 (4) 305(a) BNS K.Ushasri alleging theft of her gold ornaments 6 WP.No25826 of 2024 Alamuru Police Station 212 of 2024 331 (4), 305 BNS J.Maaruthi Sivaram, alleging theft of gold ornaments 7 WP.No.3584 of 2023 Chodavaram Police Station 32 of 2023 454, 380 IPC R.Sasank Bharat alleging theft of gold ornaments 8 WP.No.26080 of 2024 Tadepalli Police Station 474 of 2024 306 BNS M.Sambasiva Rao alleging theft of gold ornaments 9 WP.No.24620 of 2024 Madanapalle Rural Police Station 423 of 2024 Woman missing P.Surendra, alleging missing of woman and also theft of gold ornaments 10 WP.No.8621 of 2024 Guntakal I Town Police Station 5 of 2024 454, 380 IPC D.Rajesh alleging theft of gold ornaments 11 WP.No.9480 of 2024 Muddanur Police Station 286 of 2023 454, 380 IPC P.Viswarupa Achari alleging theft of gold ornaments 12 WP.No.28888 of 2023 Yeleswaram Police Station 267 of 2022 457, 380 IPC G.Chinnarao alleging theft of gold ornaments Jaggampeta Police Station 295 of 2023 457, 380 IPC Satyavathi Rayi alleging theft of gold ornaments Jaggampeta Police Station 296 of 2023 457, 380 IPC Srinivas Bhumadi Kirlampudi Police Station 103 of 2023 457, 380 IPC Kanta Sanyasi Rao alleging theft of gold ornaments Samalkota Police Station 192 of 2023 457, 380 IPC Satyaveni Palacharlla alleging theft of gold ornaments Peddapuram Police Station 120 of 2023 457, 380, 511 IPC P.Satyanarayana Rao alleging theft of gold ornaments Peddapuram Police Station 174 of 2023 457, 380 IPC P.Satyanarayana alleging theft of gold ornaments Yeleswaram Police Station 171 of 2023 457, 380 IPC G.Reddibabu alleging theft of gold ornaments Samalkot Police Station 267 of 2023 457, 380 IPC B.V.V.Satyanara yana alleging theft of gold ornaments Jaggampeta Police Station 194 of 2023 457, 380 IPC S. Srinu alleging theft of gold ornaments Samalkot Police Station 124 of 2023 457, 380 IPC Devi Jyothula alleging theft of gold ornaments Prathipadu Police Station 362 of 2022 457, 380 IPC K.Veerababu alleging theft of gold ornaments Addateegala Police Station 52 of 2022 457, 380 IPC Y.Satyanarayana alleging theft of gold ornaments 13 WP.No.23417 of 2023 Krishnalanka Police Station 459 of 2023 454, 380 IPC N.V.Satyanaraya na Murthy alleging theft of gold ornaments 14 WP.No.9648 of 2024 Vinukonda Police Station 75 and 76 of 2024 457, 380 IPC D.Gangadhara Rao D.Akhilandeswari alleging theft of their gold ornaments 15 WP.No.10424 of 2024 Parawada Police Station 175 of 2024 454, 380 IPC Ch.Ramadevi alleging theft of gold ornaments 16 WP.No.14279 of 2024 Pattabhipuram Police Station 193 of 2024 380 IPC P.Arunkumar alleging theft of gold ornaments 17 WP.No.13928 of 2023 Kavali I Town Police Station 55 of 2023 380 IPC P.Madhu Sudhana Rao alleging theft of gold ornaments 18 WP.No.17065 of 2024 Pendurthy Police Station 270 of 2024 457, 380 IPC M.Jayanth Kumar alleging theft of gold ornaments 19 WP.No. 16467 of 2023 Pedakakani Police Station 232 of 2023 380 IPC K.Samrajyamma alleging theft of gold ornaments 20 WP.No.13944 of 2023 Salur Town Police Station 135 of 2023 454, 380 IPC N.Yogitha Sailaxmi alleging theft of her gold ornaments - 3. Sri.P.Venkateswarlu, learned senior counsel for the petitioners, submits that WP.No.25540 of 2023 be taken as a lead case as the other writ petitions are also similarly placed, as such, a common order can be passed. 4. It is submitted that the petitioner company is a leading non-banking financial institution having branches across the country, including various towns in the State of Andhra Pradesh. In all these writ petitions, the petitioners have extended finance after pledging the gold ornaments. It is also submitted that the customers who have pledged gold ornaments have executed loan agreements, and that the pledged gold will be returned to the customers of the petitioner company after repayment of the gold loan, together with interest. 5. It has come to the knowledge of the petitioner-company that some of the gold ornaments which were pledged with the petitioner-company were subject of crime proceeds. The investigating officers of the crimes registered at various police stations issued notices calling upon the petitioner company to produce the gold for investigation purposes. 6. Learned senior counsel further submits that the notices issued by the investigating officers are vague and devoid of any details about disclosing the nature of gold ornaments or the weight of the gold ornaments. In the absence of such details, the investigating officers cannot call upon the petitioner company to produce the gold. It is also submitted that the investigating officers are holding out threats of implicating the officers of the petitioner-company as co-accused in the event the petitioner-company does not comply with the notices issued under Section 91 of Cr.P.C., 7. The learned senior counsel further submits that the criminal cases in which the police are investigating are for the purpose of punishing the accused, not for the recovery of gold. It is also submitted that the petitioner company is a Pawnee and as per Section 173 of the Indian Contract Act. The Pawnee may retain the goods pledged not only for payment of debt or for the interest on the debt, but also for all other expenses relating to the said pledge. 8. The learned senior counsel also submits that the petitioner company would acquire title to the goods pledged in terms of Section 178-A of the Indian Contract Act, 1872 as the Pawnee cannot be held responsible for defect of the title of the Pawnor. 8. The learned senior counsel also submits that the petitioner company would acquire title to the goods pledged in terms of Section 178-A of the Indian Contract Act, 1872 as the Pawnee cannot be held responsible for defect of the title of the Pawnor. It is also submitted that the petitioner, as a Company, is in the business of extending loans by mortgaging the gold. Any customer who obtains a loan by mortgaging gold after entering into a valid agreement will be responsible and liable for repaying the entire loan, together with applicable interest and other charges. It is only after discharge of the loan amount and other charges that the Pawnor can reclaim the gold ornaments. Any event of default - under the terms of the agreements would entitle the petitioner company to auction the gold towards the realisation of the outstanding dues. 9. It is also submitted that the respondent/police authorities were duly informed about the contractual obligation of the Pawnee and Pawnor and that the respondent/police authorities are not justified in issuing the impugned notices calling upon the petitioner-company to deposit/handover the gold ornaments as called upon through the impugned notices. 10. The learned senior counsel places reliance on K.M.Shalima Vs. State of Kerala , [2016 SCC OnLine Ker41332] , and submits that the Pawnee has a right to retain the gold ornaments pending discharge of the loan by the Pawnor. It is also submitted that the learned single Judge of the High Court of Kerala at Ernakulam held that Sections 173 and 178-A of the Indian Contract Act would apply to the petitioner therein. The learned senior counsel places reliance on Muthoot Fincorp Limited Vs. The Station House Officer & Ors, SLP (CRL.)9539 of 2023 , the Hon’ble Supreme Court, while dealing with an SLP filed by Muthoot Fincorp Limited, recorded the undertaking submitted by the petitioner whereby the petitioner undertook to produce the pledged ornaments as and when called by the investigating officer for inspection of the same and also permit taking photographs and making the panchanama. A further undertaking to produce the pledged ornaments before the concerned Court as and when directed by the concerned Court, apart from undertaking not to hand over the pledged ornaments to the pledger or any person representing him or redemption of pledge without permission from the concerned Court and also not to sell the gold or any portion of the same without prior permission of the Court. The learned senior counsel submits that a similar direction be passed in the writ petitions. 11. Sri.T.Sridhar, learned counsel appearing for respondent No.4, submits that the petitioner-company cannot take the shelter of Section 173 and 178-A of the Indian Contract Act as the petitioner cannot claim legal retention of the proceeds of a crime. It is submitted that the gold ornaments, which are in possession of the petitioner company, form the subject of the crime property. The crime property would have to be surrendered to the police, and the police have an unfettered right to seize the same pending investigation. 12. The 4th respondent in WP.No.25540 of 2023 is a representative of IIFL Finance Limited, and the other unofficial respondents resorted to committing a crime, which led to the registration of a crime by IIFL Finance Limited. The learned counsel for the 4th respondent further submits that the High Court of Telangana, in WP.No.37182 of 2021 and batch of writ petitions, dismissed the writ petitions filed by the petitioners therein. It is submitted that similar prayers were sought, whereby notices issued under Sections 91 and 102 of Cr.P.C. were under challenge. The learned Judge dismissed the writ petitions by holding that the respondent/ police/ investigating officers were given liberty to seize gold articles from the petitioners by complying with the procedure under Section 102 Cr. P.C, 13. It is also submitted by the learned counsel for respondent No. 4 that the gold ornaments under mortgage to the petitioners would have to be considered as crime property under Section 114 of the Indian Evidence Act. It is submitted that the petitioner company is duty-bound to ascertain the source of possession of the gold ornaments before pledging them. It is also submitted that the petitioner-company's extension of the gold loan by pledging gold ornaments is supported by an agreement. It is submitted that the petitioner company is duty-bound to ascertain the source of possession of the gold ornaments before pledging them. It is also submitted that the petitioner-company's extension of the gold loan by pledging gold ornaments is supported by an agreement. Any defect in the title for the gold pledged would entitle the petitioner company to take steps for recovery of the outstanding dues by invoking the jurisdiction of the competent Court or invoking the dispute resolution clause as per the recitals of the agreement(s). 14. The learned Government Pleader appearing for the State submits that various police stations received complaints regarding the theft of gold, and upon receipt of such complaints, crimes were registered. During the course of the investigation, it has come to the knowledge of the investigating officers that the crime property was mortgaged with the petitioner company (companies) by the accused. It is the statutory duty of the police to investigate the crimes registered. - 15. It is also submitted that it is the bounden duty of the State to investigate the registered crimes, and the interests of the victims who lost their gold would have to be protected. 16. Heard the learned senior counsel appearing for the petitioner-company(companies), learned counsel appearing for the 4th respondent and the learned Government Pleader for the State. Perused the material on record. 17. The short point for consideration in the batch of writ petitions is Whether a direction as sought by the petitioners seeking to set aside the impugned notice(s) issued under Sections 91 and Section 102 of Cr.P.C., can be issued by exercising the jurisdiction under Article 226 of the Constitution of India ? 18. In the present batch of writ petitions, WP Nos. 25540 of 2023 and 26267 of 2023, are filed by representatives of a finance company alleging that their own employees are involved in misappropriating gold ornaments belonging to customers and subsequently subjecting them to mortgage with the petitioners. In WP.No.28888 of 2023, the petitioner is challenging the notices issued under Section 91 of the Cr.P.C. in as many as 12 FIRs registered in various police stations, all of which are registered for offences under Section 380 of the IPC and Sections 454 and 457 of the IPC. All the complainants had reported house breaking and theft of valuables, including gold ornaments. All the complainants had reported house breaking and theft of valuables, including gold ornaments. Those gold ornaments were mortgaged by the accused with the petitioner company. - 19. In all the other writ petitions, the complainants are individuals who have complained of housebreaking and theft/robbery of their gold ornaments. The complainants have detailed the description and approximate weight of the gold ornaments in their respective complaints. 20. The police have registered complaints, and after apprehending the accused, the investigating officers are informed about the mortgage of the gold ornaments with the petitioner company (companies) by the accused. In furtherance of the investigation, the investigating officer has rightly issued notices under Section 91 and 102 of the Cr.P.C. to the petitioners to produce the gold ornaments, as they are crime property. The investigating officer would have to complete investigation and also deposit the crime property before the competent Magistrate Court. 21. The petitioners would enter into loan agreements with their customers while depositing the gold ornaments. This Court requested the learned counsel appearing for the petitioners to submit one set of the standard documentation for obtaining a gold loan and the operating guidelines for extending the loans. The relevant documentation is submitted. 22. As seen from the said documents, an undertaking to the effect that the Pawnor is the absolute owner and possessor of the gold ornaments which are mortgaged. It is also stated in the undertaking by the Pawnors that they would take on the entire liability and would be liable to repay the total outstanding amount, together with interest and applicable charges, in the event it comes to the knowledge of the Finance Company that the Pawnor does not have legal title to the gold ornaments. The loan policy also mandates the petitioner to conduct proper due diligence on their customers and ensure ownership of the gold in line with relevant regulatory norms. The loan policy of the petitioner company also suggested that the Branch Head/Manager ensure proper verification and collect additional confirmation regarding ownership and possession of gold ornaments. Documents such as proof of inheritance and proof of purchase would have to be verified. Additionally, the Branch Head/Branch Manager would have to issue a certificate confirming that proper due diligence was conducted to establish ownership, as part of the customer due diligence process, which would also have to be preserved along with the loan application form. 23. Documents such as proof of inheritance and proof of purchase would have to be verified. Additionally, the Branch Head/Branch Manager would have to issue a certificate confirming that proper due diligence was conducted to establish ownership, as part of the customer due diligence process, which would also have to be preserved along with the loan application form. 23. The persons who are accused of committing theft have devised a new method of liquidating the stolen property. The accused, by layering the gold ornaments as a mortgage property, are liquidating the crime proceeds. The manner in which the proceeds of crime are dealt with by the accused, who executes loan agreements and creates a contractual obligation between a Pawnee and a Pawnor, cannot come to the rescue of the petitioners. The petitioners, as companies, are authorised to extend gold loans and would have to devise their own methods of safeguards to mitigate the legal consequences of pledging stolen property. 24. The petitioners would have to invoke the appropriate clause of the agreement for dispute resolution and recover the outstanding dues from the Pawnor. The Pawnor would have no legal right to create a lien on the stolen property, and the Pawnee cannot also endorse stamping of validity by pledging the stolen property. These issues would be considered by the trial Court deciding the cases on the merits. Insofar as the challenge before this Court to the impugned notices issued by the investigating officers is concerned, this Court cannot interfere in the process of investigation. The investigating officers would have to be given a free hand in completing the investigation. 25. The plight of the victims who lost their gold should be kept in mind by the Courts. The victims have complained of theft/robbery from their homes. The personal jewellery of the victims was stolen by the accused. During the course of the investigation, the investigating officer has gathered evidence regarding the pledging of crime property by the petitioners. To complete the investigation, the investigating officers exercised their powers under Section 91 and 102 Cr.P.C. and called upon the petitioners to produce the gold ornaments. The said notices ought not to be interfered with. 26. The petitioners have a remedy of recovery from the customers who executed the loan agreements. To complete the investigation, the investigating officers exercised their powers under Section 91 and 102 Cr.P.C. and called upon the petitioners to produce the gold ornaments. The said notices ought not to be interfered with. 26. The petitioners have a remedy of recovery from the customers who executed the loan agreements. Whereas, the victims whose property was the subject of theft would be left remediless if this Court interferes with the investigation and interdicts the notices issued by the investigating officers. 27. The observations of the Hon’ble Supreme Court in SLP (CRL.) 4351 of 2022 permitting the appellants to make an application under Sections 451 and 457 of Cr.P.C., before the learned Magistrate and the learned Magistrate was further directed to entertain the application and pass necessary orders. The further directions of Hon’ble Supreme Court in SLP (CRL) 9539 of 2023, whereby the additional affidavit filed by the appellants undertaking to produce the pledged ornaments as and when called by the investigating officer and also produce them before the trial Court as and when directed by the learned Magistrate and the other undertaking of the appellant was taken on record. These orders would not come to the aid of the petitioners, as in those cases, the investigating officer already deposited the property before the Magistrate Court, and the facts of those cases are entirely different and distinct from the facts on hand in the batch of above writ petitions. 28. The petitioners are registered, authorized and regulated by the Reserve Bank of India for conducting their business as non-banking financial institutions. This would not entitle the petitioners to mortgage a theft property or a crime property and claim protection under Sections 173 and 178-A of the Indian Contract Act. The petitioners can invoke those provisions of law against their customers in the event of any dispute between them. In cases where the petitioners are informed that a crime property is subject to a mortgage, the petitioners would not be entitled to ratify the theft or crime by executing an agreement with the accused. 29. The petitioners ought to have ample safeguards in place while extending gold loans. In cases where the petitioners are informed that a crime property is subject to a mortgage, the petitioners would not be entitled to ratify the theft or crime by executing an agreement with the accused. 29. The petitioners ought to have ample safeguards in place while extending gold loans. In the above batch of cases, the petitioners cannot challenge the issuance of notices under Section 91 and 102 Cr.P.C., as they have no vested legal right to obstruct the investigation by claiming protection under Section 173 and 178-A of the Indian Contract Act. The petitioners also cannot claim to be victims, as they have an effective and alternative remedy of initiating appropriate proceedings for the recovery of the entire loan amount, together with all other applicable interest and charges. 30. That apart, the objection raised by the learned senior counsel that the impugned notices are bereft of any details is concerned, the relevant details relating to the loan agreement and other details relating to the ornaments pledged are already mentioned in the notices. The petitioners can correlate the ornaments pledged with the Customer ID and the agreement number. 31. The consequences of this Court setting aside the notices under Sections 91 and 102 of Cr.P.C. would give the petitioners a free run to sell off the gold ornaments and appropriate the proceeds towards their outstanding loan account. In such a scenario, the victims would lose their gold and be at the receiving end, with no respite or remedy. 32. That being said, it is the statutory duty of the police to complete the investigation by recovering the stolen property to the extent possible and depositing it before the concerned jurisdictional Magistrate for safe custody. It would be open for the claimants to claim the gold ornaments for interim custody by filing the appropriate petitions under Sections 451 and 457 of the Cr.P.C. before the jurisdictional Magistrate. Upon receipt of such petitions, the learned Magistrate would have to deal with them in accordance with the law. It is left open for the investigating officers to take the necessary steps to secure the crime property at the earliest to complete the investigation. Several crimes were reported about 2-3 years ago, and the victims were left in a lurch, denied access to their gold ornaments. It is left open for the investigating officers to take the necessary steps to secure the crime property at the earliest to complete the investigation. Several crimes were reported about 2-3 years ago, and the victims were left in a lurch, denied access to their gold ornaments. In any household, the woman would have emotional bonding with their jewellery and at times the jewellery is passed on from generation to generation. 33. The family gold ornaments carry sentimental value, cultural significance and are symbols of emotional inheritance. The property belonging to the complainants is now in the custody of the petitioners. The said custody is due to the accused pledging gold ornaments. Thus, the complainants would have the primary right and interest to claim interim custody over the same. At the same time, the petitioners can invoke the dispute resolution clause of the loan agreements and initiate recovery proceedings against the customers who have defaulted. Granting any order in favour of the petitioners by interdicting the impugned notices would be counterproductive for the actual victims and their claim over the gold ornaments. 34. As such, this Court is of the considered view that the writ petitions filed challenging the impugned notices issued under Sections 91 and 102 Cr.P.C. deserve to be dismissed. 35. Accordingly, the writ petitions are dismissed. As a sequel, miscellaneous petitions pending, if any, shall stand closed.