In a significant ruling, the Karnataka High Court has clarified that mere possession of a large amount of cash without valid documentation does not automatically constitute an offence under Section 98 of the Karnataka Police Act. The court emphasized that for an offence to be established under this section, there must be reasonable belief or suspicion that the cash is stolen or fraudulently obtained.
Justice Hemant Chandangoudar delivered the verdict while allowing a criminal petition filed by R Amarnath. The petitioner had approached the High Court seeking to quash criminal proceedings initiated against him under Section 98 of the Karnataka Police Act. He was found in possession of ₹8,38,250 during the 2019 Lok Sabha elections, without any valid documents to prove lawful possession.
The incident took place on April 2, 2019, when the police, during a routine election check, intercepted the petitioner’s vehicle at a check post. Upon inspection, they discovered the cash and initiated prosecution under Section 98 of the Act.
The High Court observed,
The mere possession of a large amount of cash without valid documents does not, by itself, constitute an offence under Section 98 of the Act. To establish an offence, it must be shown that the property in question is stolen or fraudulently obtained.
The court further pointed out a critical legal lapse in the investigation process. It noted that Section 98 of the Karnataka Police Act deals with non-cognizable offences. According to Section 155(2) of the Code of Criminal Procedure, police officers are required to obtain prior permission from a Magistrate before investigating non-cognizable offences.
However, in the present case, the investigation was conducted by the police without obtaining the requisite order under Section 155(2) of Cr.P.C. This non-compliance with the statutory requirement renders the investigation as well as the consequent cognizance of the alleged offences legally untenable and vitiated, the court said.
The provision under Section 98 reads:
Whoever is found in possession of, conveys in any manner, or offers for sale or pawn, anything which there is reason to believe is stolen property or property fraudulently obtained, shall, if he fails to satisfactorily account for such possession or act to the satisfaction of the Magistrate, be punished with imprisonment upon conviction.
Justice Chandangoudar found that the materials on record, including the charge sheet, lacked any indication that the complainant had reasonable belief or suspicion that the seized cash was either stolen or fraudulently acquired.
“In the absence of any such allegation or reasonable suspicion on record, the essential ingredients required to establish the commission of an offence under Section 98 of the Act are conspicuously absent. Therefore, allowing the proceedings to continue would amount to an abuse of the process of law,” the court held.
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Consequently, the High Court quashed the entire proceedings pending in C.C. No. 976/2019 before the Principal Civil Judge and JMFC, Challakere, against the petitioner.
Citation: 2025 LiveLaw (Kar) 170
Case Title: R Amarnath vs. State of Karnataka
Case No.: Criminal Petition No. 50 of 2024
Appearance: Advocate Rohan Kothari for Petitioner; HCGP M V Anoop Kumar for Respondent-State
