Interim custody of seized currency may be granted despite pending tax proceedings, with safeguards to protect revenue interests.

Seized currency retained in police custody should ordinarily be released on interim custody when further retention is unnecessary, provided adequate safeguards protect investigation and adjudication. The Court held that pending income-tax proceedings and a notice under the Income-tax Act did not justify continued withholding at an early stage, because seized property must be dealt with expeditiously and judiciously under the Code of Criminal Procedure. Release on supurdgi was therefore permitted subject to a bank guarantee and other conditions securing the Revenue's interest.

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Issues: Whether the seized currency was liable to be released in favour of the petitioner on interim custody despite pendency of income-tax proceedings and the seizure having been made under the Code of Criminal Procedure, 1973.

Analysis: The Court held that the power to deal with seized property should be exercised expeditiously and judiciously, and that currency notes and other valuable articles should not be retained in police custody longer than necessary. The legislative intent underlying interim custody provisions permits release of property where continued retention is unnecessary, subject to safeguards such as proper security and a bond to secure production or recovery, if required. The pendency of assessment proceedings and the issuance of notice under the Income-tax Act did not justify continued withholding of the currency when the matter remained at an early stage and the property was lying in police custody.

Conclusion: The seized currency was ordered to be released to the petitioner on supurdgi subject to furnishing a bank guarantee and other conditions protecting the Revenue's interest.

Ratio Decidendi: Seized property, including currency notes, should ordinarily be released on appropriate interim custody when its further retention is unnecessary, provided adequate safeguards are imposed to protect the interests of investigation and adjudication.

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