In a significant ruling highlighting custodial negligence, the Andhra Pradesh High Court has directed the state government to pay a compensation of approximately ₹7 lakh to a jeweller. This order comes after a substantial quantity of silver and cash, seized from the jeweller and stored as evidence, was stolen from the custody of the Kurnool Taluka police station itself.
The Case of the Missing Seized Silver
The chain of events began back in 2021, when officials from the Kurnool Taluka police station intercepted and confiscated a consignment. The haul consisted of 105 kilograms of pure silver lumps and ₹2 lakh in cash, which were being transported from Hyderabad to Salem. The property belonged to a petitioner who is a jeweller by profession.
Following the seizure, the authorities offered the jeweller an option to pay a fine of ₹35 lakh in lieu of confiscation, calculating the silver's value at ₹66,667 per kilogram. The petitioner challenged this order in the High Court in 2021. While the court granted liberty to seek an appellate remedy, further proceedings were stalled as the relevant GST Tribunal was not yet constituted.
Eventually, in 2023, the jeweller paid a sum of ₹39.20 lakh to the state tax department covering tax, penalty, and fine. Subsequently, the Assistant Commissioner of State Tax ordered the local police to release the seized silver and cash back to the petitioner.
A Bizarre Turn: Theft from Police Custody
In a shocking development, when the jeweller approached the police station to reclaim his property, he was informed that a significant portion of the silver and cash had been stolen from police custody. The theft was allegedly committed by police staff. While some quantities were later recovered from the accused persons and placed in the custody of the Kurnool Judicial Magistrate, a major shortfall remained.
The Judicial Magistrate ordered the release of the recovered items—81.567 kg of silver and ₹10 lakh cash. This was far less than the original seized amount of 105 kg of silver and ₹2 lakh cash. To add to the injustice, the jeweller contended that the returned silver was not of the original purity. Out of the 81.567 kg returned, only 27 kg was 100% pure silver, while 54.567 kg had a purity of just 60%.
Court's Stern Ruling on State Negligence
Hearing the jeweller's plea for compensation, a bench comprising Justices R Raghunandan Rao and T C D Shekhar delivered a sharp rebuke to the state authorities. In its order dated December 31, 2025, the court unequivocally stated, "In the present case, the loss of silver can only be attributable to the negligence of the state, as the silver was stolen from the police station itself."
The bench emphasized that such a substantial loss directly infringed upon the petitioner's fundamental right to carry on trade or business under Article 19(1)(g) of the Constitution. Holding the state responsible for the "sheer negligence" of its officials, the court ruled the jeweller entitled to compensation.
The High Court directed the state to return 23.44 kg of pure silver to the petitioner, with its value calculated at the current market rate. Furthermore, the court stated that an additional cash amount of ₹7.95 lakh held by the authorities should be adjusted against the value of this silver. This adjustment effectively results in a monetary compensation of approximately ₹7 lakh to the aggrieved jeweller for the losses incurred due to the police's failure to safeguard his property.
This ruling underscores the accountability of law enforcement agencies in protecting properties held in their custody and sets a precedent for state liability in cases of custodial negligence.
