Law & Policy
Found to Be the Proceeds of Crime: The Property Power Section 107 Gives Without a Remedy
6 October 2026 · 14 min read
A code that allows the State to take property before it has proved anything has to say how the property comes back. Attachment is reversible by nature; the order that follows it need not be. So the question a forfeiture provision answers is not only what a court may take, but what happens to the taking if the case it was founded on fails.
The Bharatiya Nagarik Suraksha Sanhita, 2023 answers it four times over, in four sets of provisions that take a person's property in or because of a criminal proceeding. Each of the four says, in terms, what happens if the taking turns out to be wrong. A fifth provision does not. It is section 107.
What the section does
Section 107 carries the marginal heading "Attachment, forfeiture or restoration of property". Sub-section (1) begins the process in the police station:
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.
Sub-section (2) moves it to the court:
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.
Sub-section (4) permits an order of attachment "in respect of those properties which are found to be the proceeds of crime", and by its proviso permits an ex parte order where the person does not appear or represent his case within the fourteen days. Sub-section (5) permits an interim ex parte attachment with no notice at all, where notice "would defeat the object of attachment or seizure". Sub-section (6) then disposes of the property:
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.
The District Magistrate has sixty days to distribute. Whatever is unclaimed or left over "shall stand forfeited to the Government".
Three features of that sequence should be stated plainly before anything is made of them. It runs during the investigation, on a police application. It reaches a final disposition — the property handed to third parties — without a charge, a trial or a verdict. And the disposition is not discretionary: sub-section (6) says the court "shall" direct it.
The terms the section turns on, and where they are defined
Every operative sub-section after the first uses the phrase "proceeds of crime". Sub-section (2) is triggered by a belief that the properties are proceeds of crime; sub-section (4) attaches those found to be proceeds of crime; sub-section (6) distributes them; sub-section (8) forfeits the residue.
The Sanhita defines the phrase once, in section 111(c). Section 111 opens: "In this Chapter, unless the context otherwise requires". It is the first section of Chapter VIII. Section 107 is in Chapter VII.
So the definition does not reach the section that depends on it. What section 107 has instead is the formula in its own sub-section (1), which is not the same formula. Sub-section (1) speaks of property "derived or obtained, directly or indirectly, as a result of a criminal activity or from the commission of any offence". Section 111(c) defines proceeds of crime as 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". The second extends to the value of the property; the first does not. The second is confined to what a person obtains; the first is not confined at all.
The same is true of the noun. "Property" is defined in section 111(d), for Chapter VIII. Section 2(1), which defines twenty-six expressions "In this Sanhita" in clauses (a) to (z), does not define it; the only other definitions are the local ones in the Explanation to section 497 and in section 498(5), each expressly confined to its own section.
A court applying section 107 is therefore asked to find that a thing the Sanhita does not define for it answers a description the Sanhita states in two different ways in two different chapters, and defines only in the chapter the section is not in.
The notice, and what it asks
Chapter VIII contains the procedure section 107 resembles, and the comparison is useful because the two were drafted into the same enactment. Section 119(1) also works by notice. The difference is in what the notice has to say. The Chapter VIII notice calls on the recipient, within thirty days,
to indicate the source of income, earnings or assets, out of which or by means of which he has acquired such property, the evidence on which he relies and other relevant information and particulars
and then to show cause why the property should not be declared proceeds of crime and forfeited. The recipient is told what the issue is and what would answer it.
The notice under section 107(2) gives fourteen days and asks only "why an order of attachment shall not be made". It does not identify the criminal activity, name the offence, state the material relied on, or indicate what the recipient is expected to establish.
There is a second difficulty with that notice, and it is grammatical. Sub-section (2) directs a notice "upon such person". Sub-section (1) mentions no person. It mentions a police officer, a Superintendent or Commissioner of Police, a Court or Magistrate, and property. The phrase "such person" has no antecedent in the section. Sub-section (3) then contemplates a notice specifying property "as being held by any other person on behalf of such person", which shows the drafter had someone in mind — the owner, or the person in possession. But the section never says who, and never requires him to be the accused, a suspect, or connected with the investigation at all.
The attachment with no terminating event
Sub-section (5) is the interim power:
Notwithstanding anything contained in sub-section (2), if the Court or the Magistrate is of the opinion that issuance of notice under the said sub-section would defeat the object of attachment or seizure, the Court or Magistrate may by an interim order passed ex parte direct attachment or seizure of such property, and such order shall remain in force till an order under sub-section (6) is passed.
Read the last clause against sub-section (6). An order under sub-section (6) is made only where the court "finds the attached or seized properties to be the proceeds of crime". There is no order under sub-section (6) where the court finds the opposite. On the words of sub-section (5), the only event that brings the interim attachment to an end is a finding against the person whose property it is. A finding in his favour is not an event the sub-section provides for.
Chapter VIII has the same power and does not have this problem. Section 117(1) permits seizure or attachment during an inquiry or investigation, and section 117(2) adds:
Any order made under sub-section (1) 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.
An interim attachment under Chapter VIII ceases to have effect in thirty days unless a court confirms it. An interim attachment under section 107 has no outer limit, and nothing in the Sanhita requires the proceeding that would end it ever to be concluded.
Section 117(1) also differs in its reach. It applies to "any property in relation to which such inquiry or investigation is being conducted". Section 107(1) applies to any property the officer believes derived from "a criminal activity or ... any offence", with no requirement that it be the activity under investigation. The forum, though, is fixed by the offence: the application goes to the court having jurisdiction over "the offence". The court is identified by one crime and the property by any.
Distribution, and the word the section could not use
Sub-section (6) distributes the property to "the persons who are affected by such crime". The Sanhita has a defined term for people in that position. Section 2(1)(y) provides that "victim" means "a person who has suffered any loss or injury caused by reason of the act or omission of the accused person".
That definition is anchored to an accused person. At the stage section 107 operates there need not be one: the section begins with an officer "making an investigation" and nowhere requires a charge, an arrest or a named suspect. The defined term presupposes the thing the section proceeds without, which is why the section does not use it. The phrase it uses instead carries no definition and no identified crime — "such crime" refers back to the crime inside the undefined phrase "proceeds of crime", which refers back to "a criminal activity or ... any offence" in sub-section (1).
What follows is practical rather than semantic. The District Magistrate is directed to distribute, within sixty days, to a class the order must identify, under a provision that supplies no test for membership of it and no procedure for claiming. Sub-section (8) assumes claimants will come forward, since it deals with the case where none can be ascertained. Nothing in the section says how they are to be invited.
What the rest of the Sanhita does in the same situation
Four other sets of provisions in the Sanhita take a person's property in or because of a criminal proceeding. Each of those takings is at least as serious as an attachment, and each carries something section 107 does not.
| Provisions | What they permit | What they provide against error |
|---|---|---|
| Sections 85–89, property of a proclaimed person | Attachment, and the property at the disposal of the State Government if he does not appear | Claims and objections by third parties for six months (s. 87(1)); a suit within one year if disallowed (s. 87(4)); release on his appearance (s. 88(1)); no sale for six months (s. 88(2)); restoration within two years to a person who proves he did not abscond (s. 88(3)); an express appeal against refusal to restore (s. 89) |
| Sections 98–99, forfeited publications | A declaration by the State Government, by notification stating its grounds, that every copy is forfeited | Application to the High Court within two months, heard by a Special Bench of three Judges (s. 99) |
| Chapter VIII, sections 111–124 | Attachment, and forfeiture to the Central Government | Defined "proceeds of crime" and "property" (s. 111); a notice stating what must be answered (s. 119); an express finding (s. 120(1)); interim seizure of no effect unless confirmed in thirty days (s. 117(2)); fine in lieu of forfeiture, on payment of which the property "shall stand released" (s. 121(3)); post-notice transfers ignored and, on forfeiture, void (s. 122); an Administrator to manage the property (s. 118) |
| Sections 497–505, disposal of property | Custody and disposal, and the property at the disposal of the State Government where no claimant appears | Delivery on a bond "engaging to restore such property to the Court if the order ... is modified or set aside on appeal or revision" (s. 498(2)); the order not carried out for two months, or until an appeal is disposed of (s. 498(4)); a six-month proclamation for unknown claimants (s. 503(2)); an express appeal (s. 504(2)) |
| Section 107 | Attachment during investigation, a finding of proceeds of crime, and distribution to persons affected | — |
Section 107 contains no release provision, no restoration provision, no fine in lieu, no clause touching transfers, no bond to restore on reversal, no stay of the distribution, and no appeal.
On the last of these the Sanhita is explicit. Section 413 provides that no appeal lies from a 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". Chapter XXXI then provides appeals from convictions, from acquittals, against sentence, and against an order requiring security for keeping the peace or good behaviour. It provides none against an order of attachment or distribution. The Sanhita does provide one against the comparable order under section 504(1), by which property passes to the State Government for want of a claimant. It provides none against an order under section 107(6), by which property passes out of the owner's hands altogether. What is left is revision, which the High Court exercises "in its discretion" under section 442(1), and the inherent powers saved by section 528 — neither an appeal, and neither a rehearing on the facts.
The missing restoration is the one the section's own heading draws attention to. The marginal note reads "Attachment, forfeiture or restoration of property". Forfeiture appears in sub-section (8). Restoration appears nowhere in the body. If the distribution in sub-section (6) is the restoration the heading means, then the only restoration the section provides for is restoration to someone other than the person whose property was taken.
Where the section sits
Placement is not an argument, but it records a choice. Section 107 is in Chapter VII, headed "Processes to compel the production of things", in the part of that chapter headed "Miscellaneous", between a police officer's power to seize suspected stolen property and a Magistrate's power to direct a search in his presence. The chapter immediately following is headed, in terms, "Reciprocal arrangements for assistance in certain matters and procedure for attachment and forfeiture of property".
That the drafter had Chapter VIII's machinery in view is not a matter of inference. Section 86 confers a power to seek the identification, attachment and forfeiture of a proclaimed person's property through a court or authority abroad, and directs that it be done "in accordance with the procedure provided in Chapter VIII". The Sanhita knows how to borrow that procedure. Section 107 does not borrow it.
What the section leaves to be settled elsewhere
Section 107 is doing something a code of criminal procedure can sensibly want done. Property offences leave people out of pocket while the prosecution runs its course, and a provision that returns the proceeds to them without waiting for the trial to end addresses a real and old complaint. This note is not an argument that the power should not exist, and it is not an opinion on the section's validity, which is not a question the text alone can answer.
It is an argument about completeness. The section moves a final determination about property to the investigation stage and does not carry over the protections that attend the same determination everywhere else in the same enactment. Those omissions are not omissions of principle; each has a model within a few pages. A definition of proceeds of crime is in section 111(c). A notice that tells the recipient what to answer is in section 119(1). An outer limit on an ex parte attachment is in section 117(2). A release on reversal is in section 121(3). An appeal against an order putting a person's property beyond his reach is in sections 89 and 504(2).
If they are not supplied by amendment, they will have to be supplied by construction — one provision at a time, in revisions and writ petitions brought by people whose property has already been handed to someone else. That is the slower course, and it is the one the section as drafted makes necessary.
Authored by Eshan Kumar Gupta, Advocate, Hon'ble Allahabad High Court, Lucknow Bench.