WP Crl.(MD)/5788/2026 of The Branch Manager Vs The State Of Tamilnadu Rep By The Inspector Of Police, Ccb on 3 November 2026

ORDER

The present Writ Petition has been filed challenging the order dated 29.09.2026 passed by the 1st respondent and consequently seeking a direction to forbear the 1st respondent from seizing the gold jewels pledged by the 2nd and 3rd respondents with the petitioner financial institution.

2. The case of the petitioner is that the 2nd and 3rd respondents had pledged the gold jewels with the petitioner financial institution and, upon such pledge, a valid and legally enforceable charge was created in favour of the petitioner. It is the specific contention of the petitioner that the jewels were accepted after following the applicable norms and guidelines prescribed by the Reserve Bank of India and that the pledged transactions were undertaken in the ordinary course of banking business.

3. The learned counsel for the petitioner would submit that the petitioner financial institution cannot be faulted for having accepted the jewels after following the prescribed banking procedures. It is further contended that the complainant and the 2nd and 3rd respondents may be acting in collusion, in as much as the jewels were pledged with the petitioner financial institution and, simultaneously, a criminal complaint came to be lodged in respect of the very same jewels. Such a course of action would result in the complainant and the accused persons enjoying the benefit of the loan amount as well as the jewels, whereas the petitioner financial institution would be put to irreparable financial loss.

4. It is further submitted that the criminal proceedings may ultimately culminate in acquittal, in which event the petitioner financial institution would be left without adequate protection of its lawful security interest. The 1st respondent, without properly considering the subsisting pledge created in favour of the petitioner financial institution, is attempting to seize and take possession of the jewels. Hence, the present Writ Petition.

5. This Court has carefully considered the submissions made by the learned counsel for the petitioner and the respondents and perused the materials placed on record.

6. The question that arises for consideration is whether the 1st respondent can insist upon seizure and delivery of the gold jewels, which are admittedly under the lawful pledge of the petitioner financial institution, without duly considering the financial institution’s subsisting contractual and statutory rights over the pledged property.

7. At the outset, it is to be observed that a pledge is a recognised form of bailment under Section 172 of the Indian Contract Act, 1872. The pawnee is entitled to retain the pledged goods until the debt is discharged, together with interest and necessary expenses, as contemplated under Section 173 of the said Act. Therefore, once the jewels have been lawfully pledged with the petitioner financial institution and it has advanced money against such pledge, the financial institution acquires a legally enforceable interest in the pledged property. Such interest cannot be brushed aside or ignored merely because a criminal complaint has subsequently been lodged in respect of the very same jewels.

8. It is true that the investigating agency is empowered under the provisions of BNSS, 2023, to seize property in appropriate cases where the statutory requirements are satisfied. However, such power cannot be exercised mechanically or arbitrarily. The investigating agency must establish a reasonable and identifiable nexus between the property sought to be seized and the alleged commission of the offence.

9. In the present case, the petitioner claims that the jewels were accepted after verification and in accordance with the applicable norms. There is no material placed before this Court, atleast at this stage, to demonstrate that the petitioner had knowledge of any alleged criminal activity or had participated in any unlawful transaction while accepting the jewels. The mere registration of a criminal complaint cannot automatically invalidate an otherwise lawful pledge transaction. Equally, the pendency of a criminal investigation cannot, by itself, result in the extinguishment of the lawful security interest created in favour of a financial institution.

10. This Court is also of the view that the apprehension expressed by the petitioner deserves consideration. If the jewels are taken away from the custody of the petitioner without safeguarding its subsisting security interest, the petitioner may be exposed to serious financial prejudice, particularly when the loan amount advanced against the pledged jewels remains unpaid.

11. It is also relevant to note that the criminal proceedings and the contractual rights arising out of the pledge transaction are distinct legal proceedings. The investigating agency is entitled to investigate the allegations and collect relevant evidence. However, such investigation should not be permitted to operate in a manner that unnecessarily defeats the legitimate commercial rights of a third party financial institution, which claims to have acted bonafide in the ordinary course of business.

12. This Court is conscious of the fact that the rights of the complainant and the accused persons, as well as the requirements of a fair investigation, must be protected. However, the same cannot be achieved by mechanically directing the petitioner to surrender the pledged jewels without considering the legal consequences of such action. In the absence of any material establishing that the petitioner was involved in the alleged offence or that the pledge transaction itself was fraudulent, the action of the 1st respondent in seeking to seize the jewels, without considering the subsisting pledge and the statutory rights of the petitioner, cannot be sustained.

13. It is made clear that this Court is not expressing any opinion on the genuineness of the jewels, the allegations made in the criminal complaint or the culpability of the 2nd and 3rd respondents. Those matters are left open to be investigated and decided by the competent authorities in accordance with law.

14. In view of the foregoing discussions, this Court is of the considered opinion that the petitioner has made out a case for interference with the impugned order.

15. Accordingly, the Writ Petition is allowed and the impugned order dated 29.09.2026 is set aside in so far as it seeks to compel the petitioner to surrender or hand over the gold jewels pledged with it, without safeguarding the petitioner's lawful security interest. Consequently, the 1st respondent is restrained from seizing or taking possession of the pledged jewels from the petitioner in the manner contemplated under the impugned order.

16. However, this order shall not stand in the way of the investigating agency proceeding with the investigation in accordance with law, collecting relevant documents, recording statements and establishing the connection, if any, between the pledged jewels and the alleged offence. If the investigating agency is of the opinion that seizure of the jewels is absolutely necessary for the purposes of investigation or trial, it shall approach the competent jurisdictional Court and obtain appropriate orders after placing the relevant materials before such Court. The competent Court shall consider the respective rights of the parties, including the subsisting pledge of the petitioner, independently and in accordance with law. It is further made clear that the petitioner shall preserve the pledged jewels in their present condition and shall not alienate, dispose of or otherwise deal with the jewels contrary to any order that may be passed by the competent Court. Liberty is given to the respondent police to identify the jewels and ascertain whether it has any nexus with the alleged offence and the petitioner shall cooperate for the same.

17. Consequently, connected Miscellaneous Petitions, if any, are closed. 03-11-2026 Index: Yes/No Speaking/Non-speaking order Neutral Citation: Yes/No mar/skn

To

1. The Inspector of Police, City Crime Branch, Tirunelveli City.

2. The Additional Public Prosecutor, Madurai Bench of Madras High Court, Madurai.

K.GOVINDARAJAN THILAKAVADI J. mar/skn WP Crl.(MD) No. 5788 of 2026, WMP CRL.(MD) Nos. 1284 and 1285 of 2026 03-11-2026