Financier Cannot Claim Interim Custody Of Vehicle Seized Under NDPS Act; Only Registered Owner Or Agent Entitled: Madhya Pradesh High Court

"The Apex Court has repeatedly and deliberately used the phrase 'owner of the vehicle and/or his agent'. It is patently clear from the binding precedent that only the owner of the vehicle or the agent of the owner is entitled to claim Supurdagi of a vehicle seized in connection with an NDPS offense." Madhya Pradesh High Court, in a significant ruling dated 18 September 2026, held that a financier-company cannot be granted interim custody (Supurdaginama) of a vehicle seized under the NDPS Act, 1985, as the right to such custody is strictly limited to the registered owner or their authorized agent.

A bench of Justice Jai Kumar Pillai observed that criminal courts cannot be utilized as forums to enforce civil loan agreements or repossession clauses.

The revisionist, a finance company, sought interim custody of a vehicle seized in connection with a case under Section 8/18 of the NDPS Act, where 7 kg of opium was recovered from the occupant. While the vehicle was registered in the name of Respondent No. 2, the petitioner-company claimed ownership rights based on a hypothecation/loan agreement due to the borrower’s default in EMI payments. The Special Judge (NDPS Act), Neemuch, rejected the plea, citing that the financier is not the registered owner.

The primary question before the court was whether a financier, by virtue of a hire-purchase agreement and default in loan repayment, possesses the legal locus to claim interim custody (Supurdagi) of a vehicle seized under the NDPS Act. The court was also called upon to determine if a criminal court can adjudicate upon contractual rights of repossession between a financier and a borrower during the pendency of a criminal trial.

Scope of Interim Custody under BNSS

The court reiterated that the power to grant interim custody under Sections 497 and 503 of the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS) must be exercised within the parameters of settled criminal jurisprudence. It clarified that a criminal court is not the appropriate forum to execute the terms of a civil contract. The existence of a default clause in a loan agreement creates civil rights that must be pursued through appropriate civil or arbitral proceedings, rather than through criminal revision petitions.

Strict Interpretation of Ownership

The bench emphasized that while a financier’s interest is protected by the endorsement of hypothecation on a vehicle’s registration certificate, this does not equate to statutory ownership for the purpose of criminal proceedings. The court held that such an endorsement serves solely to secure the financial interest of the lender and does not transfer the title of the vehicle in a manner that overrides the registered owner's status in the eyes of criminal law.

Binding Precedent on Seized Conveyances

The court relied heavily on the Supreme Court’s decision in Bishwajit Dey v. State of Assam (2025), which categorized vehicles seized under the NDPS Act based on the involvement of the owner. The High Court observed that the Supreme Court deliberately limited the entitlement of Supurdagi to the "owner and/or his agent." Since the petitioner-company fell into neither category, it lacked the necessary locus standi to claim the vehicle, regardless of whether the registered owner had violated the terms of the loan agreement.

"A criminal court exercising jurisdiction under Sections 497 and 503 of the BNSS is not the appropriate forum to execute the terms of a civil contract or a loan agreement."

No Relief for Financiers in NDPS Cases

The court further noted that the argument regarding the vehicle’s decay in police premises, while valid in a general sense, cannot override the statutory and judicial mandates governing NDPS seizures. The court explicitly stated that the alleged violation of a loan agreement by the borrower constitutes a civil dispute which does not automatically empower a criminal court to intervene by reallocating possession of the case property to a financier.

Finding no perversity, patent illegality, or jurisdictional error in the trial court’s order, the High Court upheld the dismissal of the application for interim custody. The court concluded that the Special Judge had correctly applied the prevailing law in denying the financier’s plea, thereby affirming that the financier must seek redress through civil channels rather than the criminal justice system.

Date of Decision: 18 September 2026