Release of seized pledged gold assets allowed on bank guarantee, with search seizure upheld as not illegal.

Seized gold ornaments and pledge documents in a search case were directed to be released on furnishing bank guarantee for the full assessed value of the assets. The Court noted that the business was found to be engaged in unaccounted gold-loan transactions and treated the seized ornaments as undisclosed investment. It recognised that a pledgee has possession and a special property right in pledged articles, and declined to treat the seizure as illegal merely because third-party ownership was asserted. As no assessment had yet been completed under the search procedure, release was allowed subject to adequate security protecting the Department's interest.

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Issues: Whether the gold ornaments and pledge documents seized in search proceedings were liable to be released to the petitioner on furnishing security.

Analysis: The petitioner's business was found to be carrying on unaccounted gold-loan transactions and the seized ornaments represented undisclosed investment. A pledgee has possession and a special property right in the pledged articles, and the Department's seizure of such assets under search powers could not be treated as illegal on the claim that the ornaments belonged to third parties. Since no assessment had yet been completed under the special procedure applicable to search cases, the Court balanced the interests of the Department by requiring adequate security equivalent to the value of the seized assets.

Conclusion: The seized gold ornaments and connected pledge papers were ordered to be released in favour of the petitioner on furnishing bank guarantee for the full assessed value of the seized assets.

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