High Court Cannot Re-Appreciate Evidence Under Section 482 CrPC To Upset Concurrent Findings On Interim Custody Of Seized Funds: Karnataka High Court

"High Courts are not the Revisional Courts to re-analyse and re-interpret the evidence on record and upset the concurrent findings rendered by the trial Courts." Karnataka High Court, in a significant ruling dated March 25, 2026, held that a High Court exercising its inherent jurisdiction under Section 482 of the Criminal Procedure Code (CrPC) cannot re-analyse evidence to overturn concurrent factual findings of lower courts regarding the interim custody of seized funds.

A bench of Justice M. Nagaprasanna observed that when the proceeds of a financial fraud are traced to an accused's bank account, trial courts are entirely justified in releasing the frozen amount to the defrauded complainant upon strict conditions pending the conclusion of the trial.

The dispute arose when the complainant company was allegedly defrauded of Rs. 1.17 crores in an elaborate scam involving the international supply of a chemical fluid. The complainant was induced to transfer substantial advance payments to multiple bank accounts, including one belonging to the petitioner, M/s. Mahi Enterprises. Upon realizing the fraud, an FIR was lodged, leading the police to freeze the petitioner's bank account which contained over Rs. 1.12 crores. The Magistrate Court subsequently allowed the complainant's application for interim custody of the seized funds under Sections 451 and 457 of the CrPC while rejecting the petitioner's plea to defreeze the account, a decision which was later affirmed by the Revisional Court.

The primary question before the court was whether the bank account of an accused, which allegedly contains the proceeds of a financial fraud, could be defrozen at the interim stage of the investigation. The court was also called upon to determine whether the High Court could interfere with concurrent orders of the trial and revisional courts granting interim custody of the seized funds to the defrauded complainant.

Examining the email trails and transaction records, the court noted that the petitioner had clearly received a portion of the defrauded amount at the specific behest of the prime accused. The bench agreed with the lower courts that the petitioner's account held the proceeds of the crime, making the freezing of the account a necessary step to protect the victim and prevent the dissipation of evidence.

"Therefore the fact that the amount which is deposited in the account of the petitioner being proceeds of the crime cannot be ruled out."

The petitioner attempted to rely on prior High Court judgments where frozen accounts belonging to third parties were defrozen because those account holders were never arrayed as accused. The bench explicitly distinguished these precedents, emphasizing that in the present case, the petitioner was not merely an innocent third-party account holder caught in the crossfire, but was actively arrayed as an accused in the crime.

"But unlike the said case in this case the account does not belong to third party, but account belong to the petitioner and the said amount was ordered to be released in favour of the defacto complainant."

Relying heavily on the Supreme Court's pronouncement in Bir Singh v. Mukesh Kumar (2019), Justice Nagaprasanna delineated the strict boundaries of the High Court's inherent powers. The court reiterated that unless there is a glaring jurisdictional error or absolute perversity in the lower courts' findings, the High Court must refrain from acting as a second appellate authority to re-evaluate the evidence.

"It is well settled that in exercise of revisional jurisdiction under Section 482 of the Criminal Procedure Code, the High Court does not, in the absence of perversity, upset concurrent factual findings."

"There is no warrant of interference with the orders which are rendered on cogent reasons."

The court found no legal infirmity in the Magistrate's decision to entrust the seized funds to the complainant at the interim stage. The bench noted that the lower court had sufficiently safeguarded the interests of all parties by requiring the complainant to execute an indemnity bond and provide local sureties, ensuring the money could be swiftly recovered and returned if the trial ultimately favored the accused.

"In that light, no fault can be found at the hands of the concerned Courts, as the concerned Courts have imposed certain conditions that in the event of the complainant losing the case, he shall re-deposit the entire amount before the concerned Court."

Concluding that the concurrent findings of the lower courts were based on sound reasoning and strong evidential backing, the High Court declined to exercise its inherent jurisdiction to undo the defreezing orders. The criminal petitions filed by the accused were consequently rejected, and the interim release of the frozen funds to the complainant was upheld.

Date of Decision: 25 March 2026