Gold-holding circulars are no answer to a disproportionate assets charge, Supreme Court rules
A Patna High Court order had quashed a corruption case against a woman because her gold stayed within tax circular limits. Justices K.V. Viswanathan and Arun Palli call that reasoning totally untenable and revive the prosecution.
A Bihar corruption case that stood quashed for six months was revived by the Supreme Court on 2 November 2026. The Patna High Court had ended it on a single idea: the accused woman held no more gold than official circulars allow.
Justice K.V. Viswanathan and Justice Arun Palli, sitting as a bench, found that reasoning “totally untenable” (para 9). Being permitted to hold gold, the bench held, is not the same as explaining how it was acquired.
A 2015 FIR and a 2020 chargesheet
On 11 May 2015, the Vigilance Police Station in Patna registered P.S. Case No. 37 of 2015. It named Phulpari Kumari and her husband for owning assets disproportionate to their known sources of income. The sections invoked were 13(1)(e) read with 13(2) of the Prevention of Corruption Act, 1988.
After sanction was obtained, a chargesheet was filed on 29 July 2020. It named only Ms. Kumari, not her husband.
Cognizance in 2021, quashing in 2026
On 28 January 2021, the Special Judge, Vigilance, Patna took cognizance in Special Case No. 20 of 2015. Ms. Kumari went to the Patna High Court under Criminal Miscellaneous No. 56839 of 2021, seeking to quash that order.
By its order of 14 May 2026, the High Court quashed the cognizance order and the prosecution with it. The State of Bihar appealed, and the Supreme Court granted leave.
The gold circulars at the centre
Before the High Court, Ms. Kumari relied on two documents. One was Instruction No. 1916 dated 11 May 1994. The other was a press release of 1 December 2016 from the Central Board of Direct Taxes, Department of Revenue, Ministry of Finance.
Under them, as the order records the argument, a married woman may possess 500 grams of gold, an unmarried woman 250 grams and a man 100 grams. Her case was that, being entitled to hold gold, she could not be prosecuted under the Act.
The State opposed this “vehemently”. It said the circulars have no application when determining assets disproportionate to known sources of income, or in carrying on a prosecution under the Act.
How the High Court counted the gold
The High Court accepted Ms. Kumari’s stand. In paragraph 6 of its order it held that, calculated by the circular, she did not possess more than 750 grams, which it treated as her permissible limit.
It added that the Vigilance Department had seized the gold erroneously. The department, it said, had also erred in calculating the weight of her gold jewellery and in determining her proportionate assets.
Holding gold versus accounting for it
Akshay Amritanshu appeared for the State and Ranjit Kumar for Ms. Kumari. Mr. Amritanshu submitted that entitlement to possess gold is one thing, and accounting for it when called upon in a Section 13(1)(e) prosecution is a wholly different matter.
Mr. Kumar defended the High Court order. He submitted that there were other aspects which would show the assets were not disproportionate to the known source of income.
What a Section 13(1)(e) accused must do
The bench started from what such a prosecution asks of the accused. She is called upon, it said, to explain the allegations about owning assets disproportionate to her known sources of income.
Showing circulars that permit holding gold to a certain extent does not meet that call. The bench held that merely producing them
“will not amount to accounting for the possession of the said assets.” (para 9)
The order does not look at the gold figures or the Vigilance seizure. It does not rule on whether the assets are in fact disproportionate. It deals only with the one ground on which the High Court quashed the case.
Trial to resume from cognizance
The bench set aside the High Court order. It restored the Special Judge’s cognizance order of 28 January 2021 in Special Case No. 20 of 2015 and directed that the case proceed from that stage.
Mr. Kumar then told the bench that Ms. Kumari wished to argue other aspects. The bench left that open. She is at liberty, it said, to initiate such proceedings as are available in law before the Trial Court.
If she does, those proceedings are to be decided uninfluenced by any observation in the High Court order or in the Supreme Court’s own order.
Order
The Supreme Court granted leave and allowed the appeal. It set aside the Patna High Court order of 14 May 2026 in Criminal Miscellaneous No. 56839 of 2021.
It restored the Special Judge’s cognizance order of 28 January 2021 and directed that Special Case No. 20 of 2015 proceed from that stage. Ms. Kumari may pursue any remedy open to her before the Trial Court. The pending application was disposed of. The order is signed by both judges and dated 2 November 2026.