Court holds confiscation proceedings invalid due to violation of natural justice, emphasizes importance of considering lawful income sources including agricultural income, and sets precedent on abatement and discharge in corruption-related asset confiscation.
In a significant judgment dated August 29, 2026, the Patna High Court, presided over by Justice Chandra Shekhar Jha, quashed the confiscation order issued against Smt. Lalita Devi and her late husband, a former public servant, under the Bihar Special Courts Act, 2009. The case, arising from Vigilance P.S. Case No. 12 of 1995, involved allegations of acquisition of disproportionate assets during the check period from February 1963 to May 1989.
The Court scrutinized the confiscation proceedings initiated against the appellant and her late husband, who served as a Superintending Engineer in the Public Health Engineering Department, Government of Bihar. The proceedings culminated in an order dated September 30, 2016, confiscating movable and immovable properties valued at over Rs. 22 lakh. However, the High Court found multiple legal infirmities in the process and substance of the confiscation order.
Key issues addressed included:
1. Initiation of Confiscation Proceedings Post-Death of Public Servant:
The Court held that initiating confiscation proceedings after the death of the public servant violates principles of natural justice. Since the deceased could not participate in the inquiry or defense, the proceedings effectively abated upon his death on March 31, 2016. The confiscation order passed six months later was thus declared invalid. The Court relied on Supreme Court precedents, including U. Subhadramma v. State of Andhra Pradesh and State of Bihar through Vigilance v. Sudha Singh, which emphasize that prosecution and ancillary proceedings cannot continue against a deceased accused.
2. Status of Co-accused Upon Discharge:
The appellant, Lalita Devi, had been discharged from criminal proceedings in 2009, a discharge that attained the status of acquittal since it was not challenged further. The Court reiterated the legal position that discharge is a pre-trial termination due to lack of evidence and stands at a higher pedestal than acquittal. Consequently, reliance on her statements or evidence in confiscation proceedings was impermissible, leading to the invalidation of the confiscation order that depended on such material.
3. Consideration of Lawful Income Sources, Especially Agricultural Income:
The deceased public servant had disclosed agricultural income from inherited ancestral land, confirmed by revenue authorities through confidential reports. Similarly, the appellant had her own agricultural income, rental income, and had declared these in income tax returns. The Court criticized the confiscation authority for disregarding these lawful income sources, violating Section 35 of the Indian Evidence Act (and Section 29 of the Bharatiya Sakshya Adhiniyam, 2023), which recognizes public records as relevant evidence. The Court underscored the need for meticulous juxtaposition of known lawful income against assets acquired, referencing authoritative Supreme Court judgments such as Nirankar Nath Pandey v. State of U.P. and Kedari Lal v. State of M.P..
4. Inclusion of Assets Acquired Beyond the Check Period:
Properties and assets acquired after the check period were erroneously included in the confiscation assessment. The Court held that such assets are protected under Section 16 of the Bihar Special Courts Act, 2009, and cannot be confiscated. This included certain immovable properties sold before the initiation of confiscation proceedings and constructed parts of property beyond the relevant period.
5. Procedural and Evidentiary Lapses:
The Court found that the Authorized Officer passed the confiscation order relying on incomplete and unverified information, failing to consider defense evidence and valuation disputes raised by the appellant. The mandatory affidavit supporting grounds for confiscation lacked completeness, and requisite opportunities for fair hearing were deficient, violating the principles of natural justice and procedural mandates under the Act and Rules.
The judgment ultimately set aside the confiscation order, holding that the confiscation proceeding, initiated posthumously and reliant on incomplete evidence, was void ab initio. The Court stressed that any confiscation order must be founded on sound reasoning, fair inquiry, and a comprehensive consideration of all relevant evidence, including lawful income sources.
This ruling reinforces the sanctity of natural justice in confiscation proceedings under anti-corruption laws and clarifies that proceedings must abate upon the death of the accused public servant. It also affirms that discharged co-accused enjoy protection akin to acquitted persons, limiting the scope of confiscation actions against them.
The decision is expected to have a far-reaching impact on vigilance and anti-corruption enforcement, ensuring stricter adherence to procedural fairness and evidentiary standards.
Bottom Line:
Confiscation proceedings under the Bihar Special Courts Act, 2009, initiated after the death of the public servant, are invalid as they lack the opportunity for a fair inquiry and violate principles of natural justice. Discharge of a co-accused amounts to acquittal, and confiscation orders relying on incomplete or unverified income sources are liable to be annulled.
Statutory provision(s):
Bihar Special Courts Act, 2009 Sections 13, 14, 15, 16, 19; Indian Evidence Act, 1872 Section 35; Bihar Special Courts Rules, 2010 Rules 11, 13, 14, 15, 17; Prevention of Corruption Act, 1947 Section 5(2) read with Section 5(1)(e) (corresponding to Sections 13(1)(e) and 13(2) of the 1988 Act); Penal Code, 1860 Section 107.
Smt. Lalita Devi v. State of Bihar, (Patna) : Law Finder Doc Id # 2972614
