Law & Policy
Before There Is a Verdict: What Section 107 Distributes and Section 498 Waits For
26 September 2026 · 17 min read
A criminal court that has taken possession of property is holding something that belongs to somebody. Which somebody is very often the question the case itself is about, and a code of procedure that is careful on the point will do two things: keep the property safe while the question is open, and decide it only when the question is closed.
The Bharatiya Nagarik Suraksha Sanhita, 2023 does both, in Chapter XXXVI. It also contains a second arrangement, in a Chapter about something else, which does neither.
What the Sanhita does with property in the ordinary course
Chapter XXXVI is headed "Disposal of Property" and works in two stages.
Section 497 governs the case while it is running. Where property is produced before a Criminal Court or a Magistrate "during any investigation, inquiry or trial", the Court "may make such order as it thinks fit for the proper custody of such property pending the conclusion of the investigation, inquiry or trial". Custody, not disposal. The section adds machinery for recording what is being held — a statement of the property within fourteen days, and a photograph or, if necessary, a videograph of it, both usable as evidence later.
Section 498 governs the other end, and it opens with a condition of time: "When an investigation, inquiry or trial in any criminal case is concluded, the Court or the Magistrate may make such order as it thinks fit for the disposal, by destruction, confiscation or delivery to any person claiming to be entitled to possession thereof or otherwise". Three things are attached to that power, and each of them is a provision against the possibility that the order is wrong.
The first is a bond. Sub-section (2) permits delivery to a claimant on condition that he execute a bond "engaging to restore such property to the Court if the order made under sub-section (1) is modified or set aside on appeal or revision". The Court may hand the property over, but it may secure its return first.
The second is delay. Sub-section (4) provides that, except for livestock, perishables, and cases where such a bond has been taken, "an order made under sub-section (1) shall not be carried out for two months, or when an appeal is presented, until such appeal has been disposed of". The order does not operate on the day it is passed.
The third is the appeal. Section 500(1) gives "any person aggrieved by an order made by a Court or Magistrate under section 498 or section 499" an appeal to the Court to which appeals ordinarily lie from convictions by that Court, and sub-section (2) empowers the appellate Court to stay, modify, alter or annul the order.
Read together, the three describe a settled view of what disposing of property is. It waits for the case; it is reversible while an appeal is possible; and it is secured against the possibility of reversal. Nothing in Chapter XXXVI supposes that the question of whose property it is can be answered earlier, or better, than the case answers it.
A section that does not wait
Section 107 stands three hundred and ninety-one sections earlier, in Chapter VII, under the sub-heading "D.—Miscellaneous". The Chapter is headed "Processes to Compel the Production of Things", and the provisions around it deal with summonses to produce documents, search-warrants, the conduct of a search, and the seizure of suspected stolen property. Section 107 is headed "Attachment, forfeiture or restoration of property", and it has eight sub-sections.
Sub-section (1) starts the process outside the Court:
Where a police officer making an investigation has reason to believe that any property is derived or obtained, directly or indirectly, as a result of a criminal activity or from the commission of any offence, he may, with the approval of the Superintendent of Police or Commissioner of Police, make an application to the Court or the Magistrate exercising jurisdiction to take cognizance of the offence or commit for trial or try the case, for the attachment of such property.
The Court is identified by the jurisdiction it would exercise if there were a case — one competent "to take cognizance of the offence or commit for trial or try the case". At the time the application is made there need not be one. The trigger is an investigating officer's belief, and the only filter before it reaches the Court is the approval of a Superintendent or Commissioner of Police.
Sub-section (2) sets the Court's own standard, and with it the timetable:
If the Court or the Magistrate has reasons to believe, whether before or after taking evidence, that all or any of such properties are proceeds of crime, the Court or the Magistrate may issue a notice upon such person calling upon him to show cause within a period of fourteen days as to why an order of attachment shall not be made.
"Whether before or after taking evidence" is the phrase that fixes the character of the section. The Court is expressly authorised to form the belief before any evidence has been taken.
Sub-section (3) requires a copy of the notice to go to any person shown as holding the property on the noticee's behalf. Sub-section (4) permits the order of attachment after considering the explanation and hearing the person, with a proviso that if he does not appear or represent his case within the fourteen days, "the Court or the Magistrate may proceed to pass the ex parte order". Sub-section (5) permits attachment or seizure by an interim ex parte order with no notice at all, where the Court is of the opinion that issuing one "would defeat the object of attachment or seizure".
Then the section stops being about attachment. Sub-section (6):
If the Court or the Magistrate finds the attached or seized properties to be the proceeds of crime, the Court or the Magistrate shall by order direct the District Magistrate to rateably distribute such proceeds of crime to the persons who are affected by such crime.
Sub-section (7) gives the District Magistrate sixty days to carry that out, himself or through a subordinate. Sub-section (8) provides that where there are no claimants, or none ascertainable, or a surplus is left, "such proceeds of crime shall stand forfeited to the Government".
There is no reference anywhere in the eight sub-sections to a charge, a conviction, or the conclusion of anything. The finding that triggers permanent disposal is a finding about the property, and sub-section (2) has already said when it may be made.
The term the section runs on
Sub-sections (2), (4), (6), (7) and (8) all turn on one expression: "proceeds of crime". Everything the section does after the police officer's application is governed by it.
The Sanhita defines the expression once. Section 111 opens: "In this Chapter, unless the context otherwise requires,—" and provides at clause (c) that "proceeds of crime" means any property derived or obtained directly or indirectly, by any person as a result of criminal activity (including crime involving currency transfers) or the value of any such property.
Section 111 is the first section of Chapter VIII. Section 107 is in Chapter VII. The definition is expressly confined to the Chapter it opens, and section 107 is not in that Chapter.
The general definition clause does not fill the gap. Section 2(1) defines twenty-eight expressions across clauses (a) to (z) — "bail", "charge", "complaint", "inquiry", "investigation", "offence", "police report", "victim" and the rest. "Proceeds of crime" is not among them. Neither is "property".
Section 2(2) supplies one further route: "Words and expressions used herein and not defined but defined in the Information Technology Act, 2000 (2 of 2000) and the Bharatiya Nyaya Sanhita, 2023 shall have the meanings respectively assigned to them in that Act and Sanhita." The Bharatiya Nyaya Sanhita, 2023 does not use the expression "proceeds of crime" anywhere in its text. Its section 111, on organised crime, speaks of "proceeds of any organised crime" — a different phrase, in a different setting, and not a definition of anything.
So section 107 operates on a term for which the Sanhita supplies a definition in the following Chapter and, by the opening words of section 111, withholds it from this one.
The section's own sub-section (1) states a formula of its own: property "derived or obtained, directly or indirectly, as a result of a criminal activity or from the commission of any offence". But that formula governs the police officer's belief at the application stage, not the Court's finding under sub-sections (2), (4) and (6) — and it is not the same set of words as section 111(c). Section 111(c) has no counterpart to "or from the commission of any offence"; sub-section (1) has no counterpart to "(including crime involving currency transfers) or the value of any such property". Whether the section is to be read with the definition notwithstanding the words that exclude it, with the sub-section (1) formula carried forward, or with no definition at all, is not a question the text answers.
Two machineries, three sections apart
The Chapter that holds the definition also holds a complete attachment-and-forfeiture procedure. Its heading says so: "Reciprocal Arrangements for Assistance in Certain Matters and Procedure for Attachment and Forfeiture of Property". Between it and section 107 stand three sections — 108, 109 and 110.
Section 115(1) provides: "Where a Court in India has reasonable grounds to believe that any property obtained by any person is derived or obtained, directly or indirectly, by such person from the commission of an offence, it may make an order of attachment or forfeiture of such property, as it may deem fit under the provisions of sections 116 to 122 (both inclusive)." Sub-section (2) allows the Court to send such an order abroad where the property is in a contracting State; sub-section (3) deals with the converse, a request from a contracting State, forwarded by the Central Government.
Sub-section (1) is not conditioned on any foreign element, and section 116(1) sets out two separate doors into the machinery: the Court directs a tracing officer either "under sub-section (1), or on receipt of a letter of request under sub-section (3) of section 115" — the first of those references naming no section, but answering on the face of it to section 115(1). On the words used, the Chapter's machinery is available to a Court in India acting on its own belief about property in India, and not only on a foreign request.
So the two powers begin from very nearly the same sentence — property derived or obtained, directly or indirectly, from the commission of an offence — and then diverge in everything attached to it.
Sections 116 to 122 provide for a police officer not below the rank of Sub-Inspector to trace and identify the property under the Court's directions; for a seizure or attachment order by that officer which "shall have no effect unless the said order is confirmed by an order of the said Court, within a period of thirty days of its being made"; for the appointment of the District Magistrate or his nominee as an Administrator to receive and manage the property; for a notice of forfeiture giving the person affected thirty days to indicate "the source of income, earnings or assets, out of which or by means of which he has acquired such property"; for a recorded finding whether the properties are proceeds of crime; for forfeiture "to the Central Government free from all encumbrances"; and for the avoidance of transfers made after the order or the notice.
It also provides a way back. Section 121 allows the Court, where the source of only part of the property has not been proved, to give the person affected the option of paying a fine equal to the market value of that part, and sub-section (3) provides that on payment "the Court may, by order, revoke the declaration of forfeiture under section 120 and thereupon such property shall stand released."
Section 107 has none of this. No tracing officer, no confirmation within thirty days, no Administrator, no requirement that the notice tell the person what he has to explain, no fine in lieu, no revocation, no release. Its notice period is fourteen days rather than thirty. Its finding is expressly available before evidence. And its outcome is not custody by an Administrator pending something else; it is distribution by the District Magistrate within sixty days.
Nothing in either provision says which of the two is to be used, or that one is subject to the other, or what follows if both are invoked over the same property.
What the heading promises
The marginal heading of section 107 is "Attachment, forfeiture or restoration of property". Attachment is in sub-sections (1) to (5). Forfeiture is in sub-section (8). Restoration is in the heading.
The word is not idle elsewhere in the Sanhita. Section 88 is headed "Release, sale and restoration of attached property", and deals with property attached because its owner has been proclaimed. Sub-section (1): "If the proclaimed person appears within the time specified in the proclamation, the Court shall make an order releasing the property from the attachment." Sub-section (3) allows a person whose property has passed to the State Government to come forward within two years, prove that he did not abscond and had no notice of the proclamation, and have the property — or the net proceeds of its sale, less costs — delivered to him. Section 89 gives him an appeal against a refusal to deliver it.
Section 87, in the same group, deals with the third person. Any person other than the proclaimed person may prefer a claim or objection to the attachment within six months; it must be inquired into; and sub-section (4) provides that a person whose claim has been disallowed "may, within a period of one year from the date of such order, institute a suit to establish the right which he claims in respect of the property in dispute".
So when the Sanhita attaches the property of an absconder — a person who, by definition, is keeping away from the Court — it provides release on his appearance, delivery back on proof that the proclamation never reached him, an appeal against refusal, a claim procedure for third parties, and a civil suit if the claim fails. When it forfeits property under Chapter VIII, it provides an Administrator, a thirty-day notice that tells the person what he has to prove, and a priced route to revocation and release.
When it distributes property on a police application in a domestic investigation, it provides that the distribution be completed within sixty days, and says nothing about what happens if the finding was wrong.
Section 107 does not mention the discharge of the accused, the closure of the investigation, an acquittal at trial, or the case that never reaches a court at all. By the time any of those occurs, the sixty days in sub-section (7) have long run, and the property is with persons the section does not require to give it back.
Who receives it
Sub-section (6) directs distribution "to the persons who are affected by such crime". The Sanhita has a defined term for the person a crime is committed against. Section 2(1)(y): "victim" means a person who has suffered any loss or injury caused by reason of the act or omission of the accused person, and includes the guardian or legal heir of such victim. Sub-section (6) does not use it. "Persons who are affected by such crime" is a different and wider formulation, and it is defined nowhere in the Sanhita.
"Rateably" implies a ratio, and a ratio requires figures. The section does not say against what the distribution is to be rated — the loss each person proves, the loss each person claims, or something else — and it does not provide for those figures to be established. Sub-section (8) refers to "claimants", and to a claimant being "ascertainable", but no sub-section says how a claim is to be made, to whom, within what time, or on what material. None provides for a person who says the property is his, and not the proceeds of any offence, to be heard after the order under sub-section (6) is passed. Section 87, dealing with the far narrower case of an absconder's attached property, provides all of it.
Sub-section (8) forfeits the residue "to the Government". Section 120(3), performing the same function in Chapter VIII, forfeits it to "the Central Government". "Government" is not among the twenty-eight expressions defined in section 2(1).
The appeal
Section 413 states the rule: "No appeal shall lie from any judgment or order of a Criminal Court except as provided for by this Sanhita or by any other law for the time being in force". A proviso gives the victim a right of appeal against an order acquitting the accused, convicting for a lesser offence, or imposing inadequate compensation.
Nothing in the Sanhita provides an appeal against an order under section 107. Section 500 provides one against orders under sections 498 and 499, naming them. Section 89 provides one against refusal to restore an absconder's attached property. Section 495 provides one against orders under section 491. Section 107 is named in none of them — and, so far as the text goes, it is named nowhere else in the Sanhita at all. No other section refers to it.
What remains is revision. Section 438(1) allows the High Court or a Sessions Judge to call for and examine the record of any proceeding before an inferior Criminal Court "for the purpose of satisfying itself or himself as to the correctness, legality or propriety of any finding, sentence or order", and to direct that execution of the order be suspended meanwhile. Section 442 confers the High Court's powers of revision, exercisable "in its discretion". Section 528 preserves the inherent powers of the High Court.
Those are real remedies, and they are not the same thing as an appeal. Revision is discretionary, and section 438(2) bars it "in relation to any interlocutory order passed in any appeal, inquiry, trial or other proceeding" — which leaves the character of an attachment order under section 107(4), passed during an investigation, as a question that has to be argued before the merits can be reached. An order of distribution under sub-section (6) is not interlocutory in any obvious sense; but by the stage at which it can be challenged, the sixty days in sub-section (7) have begun to run, and nothing in the section suspends them.
What that leaves
Section 107 is not a small provision. It authorises a Criminal Court, on the application of a police officer during an investigation, on a belief the section permits it to form before any evidence is taken, after fourteen days' notice or on an ex parte order where notice would defeat the object, to find that property is the proceeds of crime and to direct that it be distributed away within sixty days. It does this using a term the Sanhita defines only for the Chapter that follows, inside a Chapter headed "Processes to Compel the Production of Things", under the sub-heading "Miscellaneous", with a marginal note promising a restoration the text does not contain.
The Sanhita's three other property provisions supply what this one omits, and they supply it to people with weaker claims on it. The proclaimed absconder gets a release, a delivery back, a claim procedure for third parties and an appeal. The person whose property is forfeited under Chapter VIII gets an Administrator, a thirty-day notice that tells him what to prove, and a priced route to revocation. The person whose property is disposed of at the end of a trial gets a two-month hold, a bond securing its return, and an appeal to the Court that hears appeals from convictions.
The person whose property is distributed under section 107 gets fourteen days.
Which means the fourteen days are the whole of it. Everything such a person would ordinarily expect to say at a later stage — that the property was lawfully acquired, that it belongs to somebody else, that the offence alleged has nothing to do with it, that there is as yet no police report and may never be one — has to be said inside the reply to the show-cause notice, because the section provides no later stage at which it can be said and no provision that returns the property if it is eventually established. The order under sub-section (4) is not an interim step in a process that will reconsider it. On the text, it is the only step there is.
Authored by Eshan Kumar Gupta, Advocate, Hon'ble Allahabad High Court, Lucknow Bench.