Supreme Court Asks High Court to Decide If Bank or EPFO Gets First Charge over Defaulter's Assets
30 Aug, 2025
The Supreme Court of India has recently delivered a significant ruling in State of Punjab vs. Gurnam @ Gama Etc., where it set aside a judgment of the Punjab and Haryana High Court that had acquitted two men convicted under the Narcotic Drugs and Psychotropic Substances Act, 1985 (NDPS Act). The apex court, comprising Justice Rajesh Bindal and Justice Augustine George Masih, held that acquittal cannot be based merely on the technical ground that the police officer who provided the information also conducted the investigation. Importantly, the Court emphasized that the precedent relied upon by the High Court has been overruled and remitted the matter back for fresh consideration on merits.
The case dates back to September 20, 2009, when the Punjab Police, acting on secret information, intercepted a truck. Jaswinder Singh was driving the vehicle, while Gurnam Singh alias Gama was found sitting on bags in the cargo area. Upon search, authorities recovered 750 kilograms of poppy husk, a prohibited substance under the NDPS Act.
Following the seizure, First Information Report (FIR) No. 221 of 2009 was registered. After trial, the Additional Sessions Judge convicted both Gurnam Singh and Jaswinder Singh on December 11, 2010. They were sentenced to rigorous imprisonment for 12 years and fined Rs. 1, 00,000 each.
Dissatisfied with the verdict, the convicts filed appeals before the Punjab and Haryana High Court. On December 11, 2018, the High Court set aside their conviction. However, this acquittal was not based on an assessment of the evidence but was solely grounded on the then-prevailing precedent laid down in Mohan Lal v. State of Punjab (2018). In that case, the Supreme Court had held that the informant and investigator cannot be the same person in an NDPS Act case to ensure a fair investigation.
The State of Punjab challenged this decision in the Supreme Court, arguing that subsequent rulings had clarified and overruled the principle in Mohan Lal.
The learned counsel for the appellant, the State of Punjab, contended that the High Court had erred by relying exclusively on the Mohan Lal decision without considering the evidence. He pointed out that in Varinder Kumar v. State of H.P. (2020), a three-judge bench of the Supreme Court had clarified that the principle in Mohan Lal should not automatically lead to acquittals in pending prosecutions under the NDPS Act. The court in Varinder Kumar stressed that each case must be decided on its individual facts.
Furthermore, the State’s counsel highlighted the authoritative ruling of a Constitution Bench in Mukesh Singh v. State (Narcotics Branch of Delhi) (2020). This judgment conclusively overruled Mohan Lal, holding that an investigation under the NDPS Act cannot be declared biased or unfair solely because the informant also acted as the investigating officer.
On the other hand, the respondents’ senior counsel defended the High Court’s order, arguing that it was correct at the time since the law prevailing in 2018 was governed by Mohan Lal. They further contended that any subsequent change in law should not retrospectively impact their acquittal.
The Supreme Court carefully analyzed the arguments. It observed that the High Court had acquitted the respondents solely on the technical principle laid down in Mohan Lal without examining the evidence presented before the Trial Court. While acknowledging that Mohan Lal was the prevailing law when the High Court delivered its judgment, the apex court noted that the legal position has since been clarified.
The Court referred to Varinder Kumar, which specifically warned against using Mohan Lal as a blanket rule for acquittals in NDPS Act cases. Most importantly, it relied on the Constitution Bench decision in Mukesh Singh, which held that the Mohan Lal ruling was “not good law.”
The Supreme Court also rejected the respondents’ objection about retrospective application of the law. It reasoned that courts do not enact new law but only interpret the existing one. Since appeals are a continuation of proceedings, the law as settled today must govern the matter. Thus, the Court made it clear that the High Court’s reliance on a now-overruled precedent could not justify the acquittal.
The Supreme Court concluded that the acquittal granted by the High Court was unsustainable as it was based entirely on a precedent that has been overturned. The Court allowed the State of Punjab’s appeals, set aside the impugned judgment, and remitted the matter back to the Punjab and Haryana High Court for fresh consideration on the merits of the evidence.
Additionally, the Court requested the High Court to expedite the hearing, noting that the original appeals have been pending since 2010. By doing so, the apex court ensured that justice is not delayed further in this long-standing prosecution under the NDPS Act.
This judgment reinforces the principle that technicalities alone cannot defeat the administration of justice in NDPS Act prosecutions. The Supreme Court has made it clear that courts must examine evidence and apply the law as it stands today rather than rely solely on overruled precedents. The ruling is crucial because it restores focus on the merits of the case rather than allowing accused persons to benefit from mere procedural grounds. By remitting the matter for fresh evaluation, the Court has reaffirmed the importance of substantive justice in matters involving serious narcotics offences.
Case details- [STATE OF PUNJAB VS GURNAM @ GAMA ETC. CRIMINAL APPEAL NOS.2836-2837 OF 2025]