Introduction:

The Madras High Court has called for legislative intervention to strengthen the law relating to attachment and confiscation of properties allegedly acquired through corrupt practices, observing that properties suspected to have been acquired through corruption or disproportionate wealth should be mandatorily secured during the pendency of criminal proceedings. The Court emphasised that unless the law provides for a strong and effective mechanism preventing accused persons from dealing with such properties, the objective of anti-corruption legislation may be substantially weakened.

Justice B. Pugalendhi made the observations while deciding Criminal Appeal (MD) No. 930 of 2025 in V. Thangavel v. The Inspector of Police. The appeal arose from an order passed by the Special Court constituted to try offences under the Prevention of Corruption Act, which had ordered confiscation of properties connected with a corruption case. The properties had subsequently become the subject of challenge before the High Court by persons claiming to be bona fide purchasers.

The criminal proceedings originated from allegations against the first accused, a Sub-Registrar, who was alleged to have accumulated assets disproportionate to his known sources of income. His wife was arrayed as the second accused, and the prosecution alleged that properties had been acquired in the names of both spouses using wealth attributable to corrupt means.

Following trial, the Special Court found the accused couple guilty and sentenced them to five years of rigorous imprisonment along with a fine. In addition to the criminal sentence, the Special Court passed an order under Section 452 of the Code of Criminal Procedure, confiscating the properties concerned.

The confiscation order was challenged by individuals who claimed that they had purchased the properties before registration of the First Information Reports. Their case was that they were bona fide purchasers and that their proprietary interests could not be extinguished through an order passed without giving them an opportunity of being heard.

An important legal issue consequently arose regarding the statutory basis on which the properties could be attached or ultimately confiscated. The appellants contended that the Prevention of Corruption Act, 1988, did not itself provide an applicable mechanism for attachment in the circumstances of the case and that the procedure under the Criminal Law (Amendment) Ordinance, 1944 had not been followed.

The High Court’s decision therefore addressed two interconnected questions. The first concerned the legality of the confiscation order passed by the Special Court in the absence of a prior attachment order under the applicable law. The second, and broader, question concerned whether the existing statutory framework was sufficiently strong to prevent persons accused of corruption from transferring or otherwise dealing with properties allegedly acquired through corrupt means while criminal proceedings remained pending.

The Court ultimately held that the confiscation order could not be sustained because the necessary attachment procedure had not been followed. At the same time, it did not leave the issue there. Taking note of the practical difficulties caused by prolonged criminal proceedings and the possibility of properties being transferred during that period, Justice Pugalendhi urged the Government to amend the Prevention of Corruption Act so that attachment of properties believed to have been obtained through corrupt means or through wealth disproportionate to known sources of income becomes mandatory.

The Court drew attention to other special enactments, including the Narcotic Drugs and Psychotropic Substances Act and the Mines and Minerals legislation, where statutory mechanisms exist to prevent offenders from retaining or dealing with illegally acquired properties. In the Court’s view, corruption is an offence with consequences extending throughout society and therefore warrants an equally effective, if not stronger, response concerning the assets generated from such conduct.

The Court observed that merely placing provisions on the statute book without ensuring that illegally acquired assets can effectively be secured during proceedings would undermine their deterrent purpose. It accordingly expressed the hope that the Government would consider suitable amendments to the Prevention of Corruption Act, 1988.

Arguments of the Parties:

The appellants challenged the confiscation of the properties on several grounds. Their principal contention was that they were bona fide purchasers who had acquired the properties before the registration of the FIRs against the accused persons. According to them, their rights as purchasers could not be defeated by an order passed in criminal proceedings to which they were not properly made parties or heard.

The appellants particularly relied upon the principles of natural justice. They contended that the Special Court had ordered confiscation without providing them an effective opportunity to explain their claim over the properties. Since they asserted an independent interest in the properties as purchasers, the confiscation of those assets without hearing them was argued to be legally unsustainable.

The appellants further questioned the very statutory foundation of the confiscation order. Their argument was that the Prevention of Corruption Act, in the form applicable to the case, did not contain a general provision authorising attachment of properties in the manner adopted by the authorities. The existence of administrative instructions or provisions in the Vigilance Manual, they submitted, could not substitute for a statutory procedure.

The appellants contended that the Vigilance Manual contemplated attachment through the mechanism available under the Criminal Law (Amendment) Ordinance, 1944. However, according to them, the properties in question had not been attached in accordance with that legal framework.

This omission, according to the appellants, was fundamental. If there had been no valid attachment in the first place, the Special Court could not subsequently proceed to confiscate the properties merely because they were alleged to be connected with the offence. The confiscation order, therefore, was argued to be without a proper legal foundation.

The appellants also relied upon the distinction between property that is physically produced before a criminal court or remains in the custody of the court and property that is merely alleged to be connected with an offence. Their contention was that the power under Section 452 of the CrPC could not automatically be extended to every property allegedly connected with criminal conduct.

On the State’s side, the prosecution sought to sustain the action taken by the Special Court. It was submitted that although the Prevention of Corruption Act did not contain a comprehensive provision dealing with attachment of property in the manner contemplated by the appellants, the criminal court possessed powers under Section 452 of the CrPC to deal with property after the conclusion of the trial.

The State also argued that the accused persons were aware that an enquiry into their assets was pending. Despite such knowledge, they had proceeded to alienate the properties. The State characterised those transactions as mala fide and suggested that the subsequent purchasers could not rely upon such transactions to defeat action against assets allegedly acquired through corruption.

According to the State, therefore, the mere absence of a formal attachment order should not prevent the criminal court from protecting the properties from being dealt with, particularly when the accused were conscious of the investigation and the allegations concerning their assets.

The State’s submissions brought into focus the practical difficulty faced by investigating agencies in corruption cases. Criminal proceedings can take considerable time. During that period, if the accused remains free to transfer properties that are alleged to represent the proceeds or fruits of corruption, a conviction at the end of the trial may become less effective from an asset-recovery perspective.

The Court was thus confronted with a situation in which the appellants asserted legally protected property rights and the State sought to preserve assets allegedly connected with corruption. The resolution of that conflict required the Court to remain within the statutory framework while also examining whether the existing framework adequately addressed the practical problem of asset dissipation.

The appellants’ challenge ultimately succeeded on the narrow legal question concerning the validity of the confiscation order. The State’s broader concern regarding preservation of allegedly corruptly acquired assets, however, became the basis for the Court’s observations recommending legislative reform.

Court’s Judgment:

Justice B. Pugalendhi examined the statutory history of attachment and confiscation of properties in corruption cases before determining the validity of the Special Court’s order.

The Court noted that a provision dealing specifically with attachment and confiscation of property had been inserted into the Prevention of Corruption Act with effect from July 26, 2018. Prior to that statutory development, offences punishable under the Prevention of Corruption Act, 1988 were included as scheduled offences under the Criminal Law (Amendment) Ordinance, 1944.

The legal framework under the Ordinance assumed significance because the Special Judge dealing with corruption offences was also empowered to exercise the powers and perform the functions that could be exercised by a District Judge under that enactment.

The Court therefore considered whether the properties in the present case had been subjected to the necessary attachment procedure before the Special Court proceeded to order their confiscation.

The answer was in the negative.

The Court noted that there had been no attachment order under the Criminal Law (Amendment) Ordinance. This omission was critical because confiscation could not be sustained independently of the statutory process governing attachment.

The Court also examined Section 452 of the CrPC, which empowers a criminal court, upon the conclusion of a trial, to make orders concerning property or documents produced before it or in its custody, depending upon the circumstances contemplated by the provision.

The existence of Section 452, however, did not mean that every property allegedly connected with an offence could automatically be confiscated. The Court made an important distinction between property actually produced before the court or in its custody and property that was merely alleged to have some connection with the offence.

The Court observed that the power under Section 452 could not be invoked merely because a property was connected with the offence when the property was neither produced before the court nor in its custody in the manner contemplated by the statutory provision.

This interpretation was particularly relevant in the present case because the properties were immovable assets and there was no valid attachment order under the applicable statutory mechanism.

Consequently, the Special Court’s order confiscating the properties could not be sustained.

The High Court accordingly set aside the confiscation order. However, the Court did not foreclose the possibility of lawful attachment of the properties. Instead, it granted liberty to the investigating agency to approach the appellate court before which the appeal against the conviction of the accused persons was pending and seek appropriate orders for attachment in accordance with law.

This aspect of the decision is significant. The High Court did not hold that properties allegedly acquired through corruption must remain beyond the reach of the authorities simply because the particular confiscation order was legally defective. Rather, it held that the State must follow the statutory procedure prescribed for securing such properties.

The decision therefore illustrates the distinction between the legitimacy of the State’s objective and the legality of the method adopted to achieve it. Preventing accused persons from disposing of assets allegedly acquired through corruption may be a legitimate and important objective. But the exercise of that power must nevertheless have a proper statutory foundation.

The Court then turned to the wider issue that had emerged from the case.

Justice Pugalendhi took note of the delay that frequently occurs in criminal proceedings. Such delay, the Court observed, can have serious consequences where no attachment order has been passed at the relevant stage. In the present case, the absence of attachment had permitted substantial portions of the property to be transferred.

That practical consequence led the Court to consider whether the existing statutory regime was sufficiently effective.

The Court was of the view that necessary amendments should be made to the Prevention of Corruption Act, 1988 so that attachment of properties believed to have been acquired through corrupt means or through amassed wealth disproportionate to known sources of income is made mandatory.

The Court reasoned that a strong statutory mechanism for securing allegedly corruptly acquired assets would have a genuine deterrent effect. If officials accused of corruption remain capable of enjoying, transferring or otherwise dealing with properties allegedly generated from corrupt practices during prolonged proceedings, the ultimate criminal prosecution may fail to achieve its full preventive and deterrent purpose.

The Bench therefore urged the Government to consider an amendment that would prevent the relevant properties from being dealt with during the pendency of proceedings.

The Court’s observations were not limited to the facts of the individual appeal. It considered the broader societal consequences of corruption and compared the anti-corruption framework with other special statutes.

The Court referred to special legislation such as the Narcotic Drugs and Psychotropic Substances Act and the Mines and Minerals legislation, under which mechanisms exist for attachment and confiscation of properties in appropriate circumstances. These enactments demonstrate the legislative approach of preventing persons accused of serious offences from retaining the economic benefits arising from unlawful activity.

Against that background, the Court questioned why corruption should not receive equally strong treatment.

The Bench observed that corruption and corrupt practices must be treated with particular seriousness because their impact is not confined to an individual victim or a single transaction. Corruption can affect public administration, government resources, public confidence and the functioning of institutions.

The Court therefore stated that mandatory attachment and confiscation mechanisms are essential to combat what it described as the pervasive vice of corruption.

The reasoning was also linked to the concept of deterrence. Criminal law does not merely punish past wrongdoing; in appropriate circumstances, it also seeks to discourage future violations. Where corruption enables an official to accumulate substantial wealth and retain the benefits of that wealth even while criminal proceedings continue, the punitive consequences may not provide the intended deterrent effect.

The Court accordingly stressed that the law should ensure that properties suspected to have been obtained through corrupt means are effectively secured rather than allowing the accused to freely deal with them until the conclusion of a potentially prolonged trial.

The Bench stated that only strong and deterrent measures prescribed within the statutory framework could enable the Government to effectively undertake attachment of such properties and prevent officials from enjoying properties allegedly obtained through corrupt means.

At the same time, the Court recognised the limits of judicial power. Rather than itself creating a new mandatory attachment regime, the Bench called upon the legislature and the Government to undertake the necessary statutory exercise.

This distinction is important. Courts interpret and enforce existing law, while the creation of a comprehensive new statutory mechanism ordinarily falls within the legislative domain. The High Court therefore expressed its considered view that the Prevention of Corruption Act required strengthening and left it to the Government to introduce suitable amendments.

The Court also warned of the consequences of having provisions that are ineffective in practice. If properties can be transferred during the pendency of proceedings because the legal framework does not mandate timely attachment, the eventual confiscation process may become difficult or even ineffective.

In that sense, the Court’s recommendation was directed not merely at increasing punishment but at ensuring that the economic consequences of corruption are addressed at an earlier stage.

The judgment also preserves the importance of due process. The present case itself demonstrates why property-related powers must be exercised strictly according to law. The High Court set aside the confiscation because the required attachment procedure had not been followed. The State was nevertheless given liberty to seek attachment before the competent appellate court in accordance with law.

Thus, the judgment does not endorse automatic deprivation of property without safeguards. Rather, it calls for a clear statutory mechanism under which attachment can be undertaken mandatorily, subject to the procedures and protections prescribed by law.

The Court’s approach balances two competing considerations: the need to prevent dissipation of allegedly corrupt assets and the need to ensure that property rights are interfered with only through legally authorised procedures.

Ultimately, the High Court allowed the criminal appeal to the extent of setting aside the confiscation order passed by the Special Court. The appellants succeeded because the confiscation lacked the necessary statutory foundation in the absence of a valid attachment order under the applicable law.

At the same time, the investigating agency was granted liberty to approach the appellate court, where the appeal against the conviction was pending, for appropriate orders concerning attachment in accordance with law.

More significantly, Justice Pugalendhi used the case to highlight a perceived legislative gap and called for amendments to the Prevention of Corruption Act. The Court expressed the hope that the Government would take the initiative to introduce suitable amendments making attachment of properties allegedly obtained through corruption or disproportionate wealth mandatory.

The judgment in V. Thangavel v. The Inspector of Police, Criminal Appeal (MD) No. 930 of 2025, therefore carries significance beyond the fate of the particular properties involved. It underlines that anti-corruption enforcement cannot be effective merely through conviction and imprisonment if the financial benefits allegedly generated by corruption can be transferred or preserved during years of litigation.

The Court’s central message is that the law must be capable of reaching the economic fruits of corruption while simultaneously respecting statutory procedure and principles of fairness. A conviction may punish the offender, but securing the property allegedly acquired through corrupt means can be equally important to ensure that corruption does not remain financially rewarding.

By calling for mandatory attachment, the Madras High Court has placed the issue before the Government fo legislative consideration. The Court’s observations ultimately re