Minor Discrepancies in Counting/Serial Numbers Do Not Vitiate Seizure of Counterfeit Currency When Chain of Custody Is Intact; Section 108 Customs Statement as Substantive Corroboration for Section 489C IPC
1. Introduction
In CENTRAL BUREAU OF INVESTIGATION v. KULWANT RAI (2026 DHC 40), the Delhi High Court decided a CBI appeal under
Section 378(2)(b) Cr.P.C. challenging an acquittal in a case involving alleged trafficking/possession of
FICNs (Fake Indian Currency Notes) recovered from a passenger arriving at IGI Airport from Bangkok.
The respondent (Kulwant Rai) was intercepted at the Green Channel, searched after notice under Section 102 of the Customs Act, 1962,
and currency notes concealed in socks were recovered. The prosecution alleged offences under Sections 489B and 489C IPC.
A key trial-level controversy concerned counting/serial-number discrepancies noticed when the sealed parcel was examined at
Bank Note Press (BNP), Dewas.
The core issues before the High Court were:
- Whether discrepancies in count and certain serial numbers undermined the seizure and integrity of the case property.
- The evidentiary value of the respondent’s statement under Section 108 of the Customs Act, 1962.
- Whether facts proved trafficking (Section 489B) or only possession (Section 489C).
- When an appellate court may interfere with an acquittal.
2. Summary of the Judgment
The High Court reversed the acquittal in part. It held that the prosecution proved beyond reasonable doubt:
- Recovery of counterfeit notes from the respondent at the airport through consistent eyewitness and panch testimony.
- Chain of custody and non-tampering, as the seals were found intact at BNP and through re-sealing steps documented later.
- Counterfeit nature of the notes based on BNP’s expert report.
However, the Court found no evidence of “selling/buying/receiving/trafficking” to sustain Section 489B IPC.
Consequently, the respondent was convicted under Section 489C IPC and the matter was listed for sentencing.
3. Analysis
3.1 Precedents Cited
This authority was relied upon to explain the purpose and character of statements recorded under
Section 108 Customs Act: customs officers record such statements to “elicit the truth” in customs infringements,
and such statements are distinct from police statements recorded during investigation. The High Court used this to frame Section 108
as a truth-finding statutory mechanism rather than an inherently suspect “police confession” process.
Cited for the proposition that a statement under Section 108 is admissible, and that even a
retracted confession is not barred from reliance under the Evidence Act (subject to judicial caution).
The High Court drew support for treating the respondent’s Section 108 statement as a meaningful incriminating circumstance,
especially because it was not retracted.
(c) Commissioner of Customs (imports), Mumbai v. Ganpati Overseas (2023) 10 SCC 484
This was the judgment’s principal modern anchor on Section 108. The Supreme Court’s articulation—customs officers are not police officers;
Section 108 statements are admissible; but must meet minimum judicial standards and cannot be the product of
duress/coercion—was applied to evaluate voluntariness.
The High Court followed this approach by (i) looking for any material suggesting coercion, (ii) noting the absence of retraction,
and (iii) finding no cross-examination basis to doubt the statement’s genuineness.
Relied upon by the appellant to argue that knowledge/possession are not necessary ingredients for offences under
Sections 489C/489D. While the High Court ultimately convicted under Section 489C, it did so primarily by finding
the seizure, chain of custody, and counterfeit nature proved; the Court’s reasoning focused less on diluting mens rea as a universal rule
and more on rejecting the trial court’s overemphasis on minor discrepancies and accepting the prosecution’s case on “beyond reasonable doubt.”
Cited to caution against an over-expansive, ungrounded “reasonable doubt” that produces unmerited acquittals and undermines criminal justice.
The High Court’s use of the principle is visible in its conclusion that the trial court wrongly discarded “overwhelming evidence” due to
technical/clerical discrepancies.
(f) Trimurth Maroti Kirakan v. State of Maharashtra, (2006) 10 SCC 681
Cited for the standard that the prosecution need not prove the impossible and that proof is a prudent assessment of probabilities, not perfection.
This directly supported the High Court’s acceptance of “human error” in counting/notation as compatible with an otherwise intact chain of custody
and consistent recovery evidence.
3.2 Legal Reasoning
(i) Recovery and Witness Consistency
The Court found the testimony of the customs officers (PW1, PW2) and independent panch witnesses (PW3, PW7) consistent on:
interception, notice under Section 102, personal search, recovery from socks, and preparation of panchnama. Cross-examination did not reveal
material contradictions. This, by itself, established seizure and possession.
(ii) Section 108 Statement as Corroborative and Voluntary
The Court treated the respondent’s Section 108 statement (Ex.PW1/A) as admissible and reliable because:
- No evidentiary foundation of duress/coercion was established.
- The statement was not retracted; the duress plea surfaced only at argument stage.
- Internal details (including naming “Kuldeep Singh”) were partially verifiable and thus supported voluntariness.
Importantly, the Court did not present Section 108 as an automatic “confession equals conviction” rule; instead, it used it to
corroborate recovery and context, consistent with the Supreme Court’s insistence on fairness and minimum judicial standards.
(iii) Discrepancies in Count/Serial Numbers and Chain of Custody
The trial court’s acquittal rested largely on BNP’s letter noting: one note short in each denomination and certain serial-number mismatches.
The High Court reframed the legal significance of these discrepancies:
- The sealed parcel bore Customs seal “6” and was received at BNP with seal intact.
- BNP returned it re-sealed; the CBI sought court permission, opened it in recorded proceedings, recounted, re-sealed, and sent it back.
- BNP’s clarification letter confirmed intact seals and matching specimen impressions, supporting non-tampering.
- Serial-number anomalies were plausibly attributable to clerical repetition/misnotation rather than substitution of case property.
On this basis, the Court held that minor discrepancies cannot negate a proved recovery of the bulk notes and cannot justify discarding the
prosecution’s entire case when the chain of custody is otherwise intact and expert opinion confirms counterfeit nature.
(iv) Differentiating Section 489B and Section 489C IPC
The Court drew a clear evidentiary boundary:
- Section 489B requires proof of selling/buying/receiving/trafficking (a transactional element).
- Section 489C is directed at possession of counterfeit currency with requisite culpability.
While possession and counterfeit nature were proved, the record did not establish actual trafficking activities by the respondent.
Therefore, conviction was limited to Section 489C.
(v) Appellate Interference with Acquittal
The Court acknowledged the restraint principle—acquittals are not to be lightly disturbed—but held that this was an exceptional case where
the trial court’s approach led to an unreasonable rejection of reliable evidence based on minor discrepancies.
3.3 Impact
-
Chain-of-custody jurisprudence (FICN cases): The decision strengthens the proposition that counting/serial-number errors,
when explained and when seals and movement of case property are proved, will not by themselves collapse the prosecution case.
-
Section 108 Customs statements in criminal trials: The judgment consolidates the post-Ganpati Overseas approach:
admissible and usable, but assessed for voluntariness and fairness. Non-retraction and corroboration can substantially enhance probative value.
-
Charging/conviction discipline under Sections 489B/489C: Investigators and prosecutors may treat this as a caution to
distinctly prove “trafficking” for Section 489B rather than assuming possession alone will suffice.
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Appeals against acquittal: It illustrates the High Court’s readiness to intervene where acquittal is driven by
hyper-technical evaluation inconsistent with the evidentiary record.
4. Complex Concepts Simplified
-
FICN: Fake Indian Currency Notes—notes that resemble legal tender but are not printed/issued by the authorized authority.
-
Panchnama: A contemporaneous record of search/seizure prepared in the presence of independent witnesses (“panch”),
used to support authenticity of recovery.
-
Green Channel (Customs): An exit route indicating “nothing to declare”; crossing it can be relevant when assessing conduct.
-
Chain of custody: Proof showing who handled the case property, when, and in what sealed condition, ensuring it was not tampered with.
-
Section 108 Customs Act statement: A statement recorded by a customs officer empowered to summon a person to give evidence/produce
documents; admissible, but must be voluntary and fairly recorded.
-
Section 489B vs 489C IPC: 489B targets dealing/trafficking in counterfeit currency; 489C targets possession with culpable intent/knowledge.
-
Reasonable doubt: Not every discrepancy is a “reasonable doubt”; it must be substantial enough to make guilt genuinely uncertain.
5. Conclusion
The Delhi High Court’s decision is significant for two practical rules: (i) minor counting/serial-number discrepancies do not
dismantle a counterfeit-currency prosecution when seals, documentation, and expert confirmation establish an intact chain of custody;
and (ii) a Section 108 Customs Act statement, when shown to be voluntary and unretracted, can materially corroborate the prosecution case.
Equally, the Court’s careful limitation of conviction to Section 489C reinforces that courts will insist on proof of the specific
transactional element before sustaining Section 489B. The judgment thus tightens evidentiary evaluation in FICN matters while maintaining
doctrinal clarity between possession and trafficking offences.