Failure to Conduct Preliminary Enquiry Does Not Vitiate Prosecution When Incriminating Material Emerges from Lawful Search”: Madras High Court Convicts Customs Official in DA Case

If documents seized during lawful search disclose a cognizable offence, preliminary enquiry is not mandatory — In a major judgment delivered Madras High Court (Madurai Bench) reversing the acquittal of a former Customs Superintendent, V. Govindaswamy, and his wife, V. Geetha, for amassing assets disproportionate to known sources of income. Justice K.K. Ramakrishnan held that non-conduct of preliminary enquiry prior to registration of FIR does not vitiate trial, especially when material disclosing a cognizable offence is found during lawful search.
“There was no necessity to conduct a preliminary enquiry in this case when the material collected during search disclosed a cognizable offence… The ratio in P. Sirajuddin v. State of Madras is not applicable.”

The CBI had registered a Disproportionate Assets (DA) case against Govindaswamy (A1) and his wife Geetha (A2) under Section 13(1)(e) r/w 13(2) of the Prevention of Corruption Act, 1988 and Section 109 IPC, alleging that during the check period from 01.01.2002 to 23.02.2012, A1 amassed assets worth ₹1.10 crore, which were 443% disproportionate to his known income.
The Trial Court, however, acquitted both accused on 28.04.2018, holding that (i) the FIR was registered without a preliminary enquiry; (ii) sanction to prosecute was accorded by an unauthorized officer; and (iii) the accused had accounted for the income through oral and documentary evidence.

Trial Judge’s Findings Are Perverse and Contrary to Law

The High Court found the Trial Court’s reasoning flawed on all three major issues:

On Preliminary Enquiry: “CBI recovered ₹2.77 lakhs in cash and numerous incriminating documents during lawful search in a separate corruption case. Thereafter, they registered the present case under RC MA1 2012 A0010. Such action is valid in law.”

Citing the Supreme Court’s decision in CBI v. Thommandru Hannah Vijayalakshmi, the Court ruled: “Preliminary enquiry is not mandatory when materials collected disclose commission of a cognizable offence.”
On Sanction: “PW1, the Additional Commissioner, was competent to remove A1 and was duly authorised under Ex.P9 to accord sanction. The Trial Court’s view that he lacked jurisdiction is clearly perverse.”

The Court found the Trial Judge wrongly accepted defense explanations (such as large cash gifts from relatives, historical rental income, and agricultural proceeds) without corroborative proof.
“The Trial Judge accepted defense evidence without testing its veracity or legal admissibility. The calculation of disproportionate assets was altered on conjecture, not evidence.”
For instance, the Trial Court wrongly included:
•    Rental income from 1989 to 2011
•    Alleged dowry and cash gifts from relatives
•    Unverified agricultural income
The Court concluded that such inclusions artificially inflated the accused’s ‘known sources of income’ and thereby neutralized disproportion without lawful basis.

“Burden Is on Accused to Satisfactorily Account—Not Just Offer a Plausible Explanation”

The Court reiterated that under Section 13(1)(e) of the PC Act: “The expression ‘satisfactorily account’ casts a legal burden on the accused—not just to offer a plausible explanation, but to satisfy the Court that the explanation is worthy of acceptance.”

Relying on a long line of precedents (C.S.D. Swami, Wasudeo Kaidalwar, Awadh Kishore Gupta, J. Jayalalitha, Soundirarasu), the Court held: “Every receipt must have a lawful source and be disclosed in accordance with applicable rules. Income Tax returns or oral claims by relatives are not conclusive unless substantiated with legal and admissible proof.”

The High Court reversed the acquittal and convicted both accused, observing:
“This is a classic case of accumulation of assets by a public servant through illegal means, disguised under the veil of family assistance and unverifiable sources.”
This judgment reaffirms that CBI need not conduct preliminary enquiry when material seized during lawful search points to a cognizable offence, and that defense explanations must withstand strict judicial scrutiny in DA cases.
“The findings of the Trial Court were perverse and contrary to the established legal principles governing DA prosecutions. The accused have failed to satisfactorily account for their wealth.”

Date of Decision: 21 March 2025