Division bench of Chief Justice Bhaskar Bhattacharya and Justice J B Pardivala observed that the action of the Election Commission is "ultra vires" as it violates personal privacy and fundamental rights of the citizen.
The court said search and seizure should not take place unless there is some specific input of money being transferred to influence the voters.
The court was hearing a set of PILs filed, including one filed by Gujarat Chamber of Commerce and Industry, against the EC where crore of rupees, bullion and jewellery in transit have been seized by the authorities.
EC has deployed 587 static surveillance teams (SSTs) and 182 flying squads throughout the state to check vehicles and people and have so far seized Rs 22.56 crore unaccounted money, of which Rs 22.20 crore has been handed over to the I-T department.
EC earlier used to seize bullion and jewellery in transit also. But after six members of one SST were arrested for forcibly taking away silver bricks from an employee of Rajasthan traders in the name of search and seizure recently, the EC had directed its SSTs and flying squads not to seize bullion and jewellery.
There was a lot of resentment in the business community of the state regarding EC's cash seizure drive and industry bodies like GCCI and ASSOCHAM had represented to the highest levels against it.
After pronouncement of the judgement, Election Commission's counsel Percy Kavina requested stay on this order as the EC would like to challenge it in higher forum, but the bench declined it.