The Nedungadi Bank, Ltd. vs The Collector of Malabar

Horwill, J.—Kunnath Sankaran Ezhuthassan found a bangle, sold it for Rs. 1,000, and deposited portions of that sum in three banks. The

Courts below have held that the Crown is entitled to recover the sums of money deposited in the banks; and the question raised in these petitions is

whether those findings are correct.

The argument of the learned Sessions Judge is that u/s 4 of the Treasure Trove Act a person who finds property valued at more than ten rupees

is bound to give notice to the Colector, that u/s 20 of the Act such property vests in the Government, that as the same rule would apply to any

property into which the treasure trove had been converted, it would follow that the money realised by the sale of the bangle also belonged to the

Government, and that therefore the money that was deposited with the three banks is Government money which the Government is entitled to

recover. I think the learned Sessions Judge was right in saying that the produce of the sale of the bangle was Government money; but if any person

takes Government money and deposits it in a bank or even if he uses that money for purchasing articles, the money ceases to be Government

money when it changes hands. For example, if a person steals a note from a Government Treasury and purchases articles in the bazaar with it, then

even though the note can be traced and is recovered from the person who sold goods to the accused, the Government would not be entitled to

recover that note; for title in currency notes passes as it changes hands. The moment the stolen currency note comes into the hands of any person

who takes it without knowledge of the theft, the holder becomes the owner of that note. The claim of the Government to the value of the note is

naturally weaker still if the actual note cannot be identified. The Government''s case with regard to a deposit in the bank is even worse; for not only

is the money into which the bangle was converted not capable of being traced; but when it is deposited in the bank it becomes a part of the assets

of the bank, the banker becoming a debtor for that amount to the accused.

The Crown cannot therefore claim in criminal proceedings the refund of the money deposited in the banks out of the proceeds of the sale of the

bangle. In re The Collector of Salem (1873) 7 M.H.C.R. 233 is a very old case which deals with the claim of the original owner to a stolen

currency note which was traced to a person into whose hands it came without notice that it was stolen; and it was held that the property in the note

passed by mere delivery. This case was followed in K. Srinivasamoorthi Vs. Narasimhalu Naidu, in which Curgenven, J., says:

The petitioner received the note in all good faith, and the title is not so much doubtful as pretty evidently with him, as property to a currency note

passes by mere delivery.

He refers to In re The Collector of Salem (1873) 7 M.H.C.R. 233 and In re Pandharinath Pundlik I.L.R.(1915) 40 Bom. 186.

The petitions are therefore allowed and the moneys taken from the banks will be returned.