Krishnan Narayana v. State of Andhra Pradesh and Ors.
Background
The appellant, a director of M/s Pure Minerals and a former director/80% shareholder of the respondent company M/s Earth Stein Private Limited, claimed several vehicles (a pick-up, three excavators, and a tipper) registered in his company's name were forcibly taken by the respondent's associates in 2023, while the respondent company alleged the appellant had misappropriated over Rs.1.73 crore of its funds to buy those very vehicles and had since resigned as director. Cross-FIRs were lodged, one of which was closed as a "mistake of fact" and later reopened, leading police to seize the vehicles from the respondent company's premises in 2025. The trial court denied both sides' pleas for interim custody, but the Andhra Pradesh High Court granted interim custody of the vehicles to the respondent company, prompting this appeal.
Decision Breakdown
The Supreme Court held that under Sections 451 and 457 CrPC, a court granting interim custody of seized property does not decide ownership. It only makes a prima facie assessment of who is best entitled to possession, to prevent the property from decaying or being misused. The appellant's case rested almost entirely on the vehicles' registration certificates being in his company's name, but the Court held this factor, while relevant, is not conclusive, especially since the appellant faced pending criminal proceedings alleging he used the respondent company's funds to buy the vehicles, had executed an undertaking allowing the respondent company to retain and use them until accounts were settled, had encashed a cheque for his share transfer without explanation, and the loan EMIs on the vehicles were being paid from the respondent company's account. Weighing these circumstances cumulatively, the Court upheld the High Court's order and dismissed the appeal, while clarifying that this ruling on interim custody does not decide the underlying disputes about ownership, misappropriation, or the validity of the resignation, which remain to be tried.
Lesson Learnt
In disputes over interim custody of seized property, courts look beyond who holds formal registration or title: actual possession, use, financial responsibility (like loan payments), and written undertakings between the parties carry real weight, and an interim custody order is not a final word on ownership.