The Telangana High Court has held that the mere pendency of a customs appeal against an acquittal cannot be a ground to withhold the return of a surety amount furnished for securing bail.
The bench of Justice J. Sreenivas Rao directed the return of a Fixed Deposit Receipt (FDR) worth ₹2 lakh to a surety who had stood guarantee for an accused in a Customs Act prosecution that culminated in acquittal.
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The petitioner had furnished a surety of ₹2,00,000 in favour of an accused who was facing prosecution under Sections 132 and 135(1)(ii) of the Customs Act, 1962. The accused was tried before the Special Court for Economic Offences, Hyderabad, in C.C. No. 71 of 2021. Following a full-fledged trial, the Special Court acquitted the accused by judgment dated June 30, 2025.
While acquitting the accused, the Special Court directed that the bail bonds would stand cancelled after expiry of the appeal period and required the accused to execute a personal bond of ₹10,000 under Section 437-A of the Code of Criminal Procedure to secure his presence in the event of an appeal.
Subsequently, the surety approached the Special Court seeking return of the FDR deposited as surety. However, the application was rejected on the ground that the Customs Department had already filed a criminal appeal challenging the acquittal and that the appeal was pending.
Before the High Court, the petitioner argued that he was not an accused in the case but merely a surety and that the continuation of appellate proceedings against the acquitted accused could not justify retention of his deposited security. He contended that once the trial had concluded and the accused had complied with the requirement of executing a personal bond under Section 437-A CrPC, the purpose of the surety stood exhausted.
The Customs Department did not dispute the factual position regarding the furnishing of the surety and the acquittal of the accused. It only pointed out that a criminal appeal against the acquittal remained pending before the appellate court.
The court observed that the petitioner was only a surety holder and had no independent role in the prosecution. The Court noted that the accused had already been acquitted after trial and had executed the personal bond mandated under Section 437-A CrPC.
The Court specifically held that the pendency of an appeal against acquittal does not impede a surety from seeking release of the amount deposited for securing bail. According to the Court, the Special Court erred in rejecting the application solely because the prosecution’s appeal was pending.
Emphasising that the surety amount continued to remain with the trial court despite fulfilment of its purpose, the Court found that the petitioner was entitled to its return.
Allowing the criminal petition, the High Court set aside the order dated February 12, 2026 passed by the Special Court and directed the trial court to return the FDR for ₹2,00,000 to the petitioner after obtaining the necessary authorisation and completing procedural formalities.
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