Section 13(1)(e) PCA | Second FIR for Disproportionate Assets Maintainable If Distinct Offence Alleged : Bombay HC

The Bombay High Court has clarified the legal position on the maintainability of a second First Information Report (FIR) in cases involving disproportionate assets under the Prevention of Corruption Act, 1988. The Court rejected a revision application challenging the rejection of a discharge plea, holding that a second FIR is valid if it alleges a distinct offence with separate ingredients, even if arising from the same investigation.

Background & Facts

The Dispute

The applicant, a public servant, was initially investigated by the Central Bureau of Investigation (CBI) under Section 120(B) of the Indian Penal Code (IPC) read with Sections 13(2) and 13(1)(d) of the Prevention of Corruption (PC) Act, 1988. The investigation stemmed from allegations that the applicant, in conspiracy with others, granted retrospective licences under Sections 58 and 65 of the Customs Act to Export Oriented Units (EOUs), causing a loss to the exchequer. However, the Government of India did not accord sanction for prosecution, leading the CBI to file a Closure Report in the initial case.

During the investigation, the CBI conducted a search at the applicant’s residence in Thane and discovered assets disproportionate to his known sources of income. Consequently, a second FIR was registered on 14.07.2005 under Section 13(1)(e) read with Section 13(2) of the PC Act against the applicant and under Section 109 of the IPC against his wife.

Key Facts

• The applicant was alleged to have amassed wealth amounting to Rs. 54,67,633.06 during the check period from 01.04.2000 to 02.02.2005, which was disproportionate to his known sources of income.
• Cash amounts of Rs. 13,55,050 were recovered from the applicant’s house in Thane, and Rs. 3,97,000 from his official residence in New Delhi.
• Rs. 10,00,000 was found in a locker at Rupee Bank maintained jointly in the name of the applicant’s wife and her mother.
• Rs. 9,00,000 was found in another locker (No. 33) at Oriental Bank of Commerce in the name of the applicant’s wife.
• The applicant’s explanation regarding the source of these funds (e.g., belonging to his father-in-law or wife’s clients) was not accepted at the prima facie stage.
• The applicant’s wife, a Chartered Accountant, claimed an independent source of income, but this was not considered adequately by the investigating officer.
• Investments of Rs. 4,47,000 (applicant), Rs. 2,21,529 (wife), Rs. 26,500 (son Parth), and Rs. 16,500 (son Siddharth) as on 01.04.2000 were not accounted for in the chargesheet.

Procedural History

• 01.02.2005: First FIR registered under Section 120(B) IPC read with Sections 13(2) and 13(1)(d) PC Act at New Delhi.
• Government of India did not accord sanction for prosecution; CBI filed a Closure Report.
• 14.07.2005: Second FIR registered under Section 13(1)(e) read with Section 13(2) PC Act and Section 109 IPC against the applicant and his wife.
• Discharge application filed before the Special Judge, CBI, Rohini Court, Delhi, was rejected.
• Challenge before Delhi High Court: The order rejecting the discharge application was appealed, but the charge was framed during pendency.
• Transfer petition: The applicant approached the Supreme Court to transfer the case from Delhi to Thane, which was allowed.
• Fresh discharge application filed before the CBI Court at Thane was rejected.
• 11.06.2026: Present Criminal Revision Application (No. 316 of 2015) filed before the Bombay High Court against the rejection of the discharge application.

Relief Sought

The applicant sought discharge from the proceedings under Section 13(1)(e) of the PC Act, arguing that:

• The second FIR was not maintainable as it arose from the same investigation.
• The seizure of assets and freezing of bank accounts were illegal and without proper authorisation.
• The income of his wife and sons was not adequately considered.
• The disproportionate assets calculation was flawed and did not account for investments and expenses.

The Legal Issue

The central question before the Court was whether a second FIR registered under Section 13(1)(e) of the PC Act is maintainable when it alleges a distinct offence arising from the same investigation as the first FIR, which was closed due to lack of sanction for prosecution.

Arguments Presented

For the Applicant

• Second FIR is not maintainable: The applicant contended that there is no provision in the Code of Criminal Procedure (CrPC) for filing a second FIR in respect of a cognizable offence noticed during the investigation of the first FIR. The CBI did not obtain permission from the designated court dealing with the first FIR.
• Illegal seizure and freezing: The search and seizure conducted by the CBI at the applicant’s residences in New Delhi and Thane were without proper authorisation. The freezing of bank accounts and lockers was unlawful.
• Disproportionate assets calculation flawed: The investigating officer failed to account for:
  • Investments of the applicant (Rs. 4,47,000), his wife (Rs. 2,21,529), and his sons (Rs. 26,500 and Rs. 16,500) as on 01.04.2000.
  • Expenses of stamp duty for Flat No. D/302, Sarovar Darshan Towers, Thane, which were borne by the builder, not the applicant.
  • The independent income of the applicant’s wife, a Chartered Accountant.
  • The income of his two sons.
• No material to prove guilt: There was no evidence to substantiate the allegations against the applicant.

The applicant relied on the following precedents:

• Ashok Kumar Aggarwal v. CBI (2016 SCC OnLine Del 214)
• Nanjappa v. State of Karnataka ((2015) SCC 186)
• State of Goa v. Babu Thomas ((2005) 8 SCC 130)
• Srinivasulu v. State ((2023) 13 SCC 705)
• Madan Mohan Singh v. State (1954 (1) SCC 939)
• Major Som Nath v. UOI (1971 (2) SCC 387)
• Mohd. Aqbai Ahmed v. State (1979(4) SCC 172)
• N.P. Lotlikar v. CBI (1992 SCC OnLine Bom 438)
• Ishwar Piraj Kalpatri v. State (1992 SCC Online Bom 400)
• Tirath Prakash v. State (2001 SCC Online Del 646)
• State v. K. Ponmudi (2006 SCC Online Mad 1596)

For the Respondent (CBI)

• Second FIR is maintainable: The offences under Section 13(1)(e) of the PC Act and Section 120(B) IPC are distinct, with separate ingredients and causes of action. The second FIR was not an outcome of the first FIR but arose from new evidence discovered during the investigation.
• Disproportionate assets established: The applicant amassed assets worth Rs. 54,67,633.06, which were disproportionate to his known sources of income. The recovery of Rs. 13,55,050 from his Thane residence and Rs. 3,97,000 from his New Delhi residence, along with Rs. 19,00,000 from bank lockers, substantiated the allegations.
• No satisfactory explanation: The applicant failed to provide a satisfactory explanation for the source of these funds. The explanation that Rs. 13,00,000 belonged to his father-in-law and Rs. 19,00,000 to his wife’s clients was not acceptable at the prima facie stage.
• Sufficient material for trial: The chargesheet contained adequate material to proceed with the trial. The evidence of the sanctioning authority was partly recorded, and the trial had commenced.
• Well-reasoned order: The Special Judge’s order rejecting the discharge application was well-reasoned and did not warrant interference.

The Court's Analysis

The Court examined the maintainability of the second FIR and the merits of the discharge application. Key observations included:

1. Distinct Offences: The Court held that the offences under Section 120(B) IPC and Section 13(1)(e) PC Act are distinct, with separate ingredients and causes of action. The second FIR was not an outcome of the first FIR but arose from new evidence discovered during the investigation. Thus, the second FIR was maintainable.

   "Both the offences are totally different, having distinct ingredients and different cause of action. Hence, it cannot be said that the present FIR is an outcome of the first FIR and allegations in both the FIRs are same."

2. Opportunity to Explain: The Court noted that the applicant was given an opportunity to explain the source of his assets, and the chargesheet was filed after considering his explanation. The burden of proof under the PC Act (post-2018 amendment) lies on the public servant to satisfactorily account for disproportionate assets.

3. Prima Facie Evidence: The Court observed that Rs. 13,55,050 and Rs. 3,97,000 were recovered from the applicant’s residences, and Rs. 19,00,000 was found in the bank lockers of the applicant’s wife. The applicant’s explanation regarding these funds was not acceptable at the prima facie stage.

   "At this prima facie stage, this explanation cannot be considered."

4. Margin of Error: The Court reiterated the settled legal position that the calculation of disproportionate assets cannot be done with mathematical precision. A reasonable margin of error of up to 10% is allowed for inflation, variance in valuation, and minor omissions. If the disproportion falls within this margin, the charge may be considered groundless.

5. Precedents Distinguished: The Court distinguished the precedents cited by the applicant, holding that the facts of the cited cases were different and not applicable to the present case.

The Verdict

The Bombay High Court rejected the Criminal Revision Application (No. 316 of 2015). The Court upheld the order of the Special Judge, CBI, Thane, rejecting the applicant’s discharge application. The trial was directed to proceed, with the evidence of the sanctioning authority already partly recorded.

What This Means For Similar Cases

Second FIR Maintainable for Distinct Offences

• Distinct Ingredients: A second FIR is maintainable if it alleges a distinct offence with separate ingredients, even if it arises from the same investigation as the first FIR. Practitioners must argue the uniqueness of the offence and the cause of action to justify a second FIR.
• Investigation Discoveries: If new evidence emerges during the investigation of the first FIR, leading to a distinct offence, the investigating agency is not barred from registering a second FIR.

Burden of Proof on Public Servant

• Post-2018 Amendment: Under the amended Prevention of Corruption Act, the burden lies on the public servant to satisfactorily account for disproportionate assets. This shifts the onus to the accused to explain the source of funds or assets.
• Prima Facie Stage: At the discharge stage, the Court will not accept explanations that require detailed evidence. The public servant must provide a clear and satisfactory account of assets at the outset.

Margin of Error in Asset Calculation

• 10% Margin Allowed: Courts allow a 10% margin of error in calculating disproportionate assets to account for inflation, valuation variances, and minor omissions. If the disproportion falls within this margin, the charge may be considered groundless.
• Evidence-Based Calculation: Practitioners must ensure that the calculation of assets and liabilities is thorough and backed by documentary evidence to avoid falling within the disproportionate assets threshold.

Procedural Safeguards

• Authorisation for Search and Seizure: Investigating agencies must ensure that searches, seizures, and freezing of assets are conducted with proper authorisation from the designated court. Any procedural lapse can be challenged at the discharge stage.
• Independent Income Sources: Public servants must maintain clear records of independent income sources (e.g., spouse’s income, gifts, inheritances) to avoid allegations of disproportionate assets.