Demand-and-Acceptance First: Supreme Court Restores Acquittal and Clarifies Limits on Reversing PC Act Acquittals and the Value of Phenolphthalein Tests

Case: P. Somaraju v. State of Andhra Pradesh, 2025 INSC 1263

Court: Supreme Court of India (Criminal Appellate Jurisdiction)

Bench: Justice Prashant Kumar Mishra, Justice Joymalya Bagchi

Date: October 28, 2025

Introduction

This decision reaffirms two foundational pillars of criminal jurisprudence in corruption prosecutions: (i) the statutory presumption under Section 20 of the Prevention of Corruption Act, 1988 (PC Act) is triggered only after the prosecution first proves, as foundational facts, demand and acceptance of illegal gratification; and (ii) the strict appellate restraint that governs interference with an acquittal, especially where two views are reasonably possible.

The case arose from a 1997 Anti-Corruption Bureau (ACB) trap against the appellant, then Assistant Commissioner of Labour, Hyderabad, on an allegation that he demanded and accepted a bribe for renewing contract labour licences for three establishments. The trial court acquitted the appellant, finding the prosecution failed to prove demand and acceptance beyond reasonable doubt. The High Court reversed this verdict and convicted the appellant under Sections 7 and 13(1)(d) read with 13(2) of the PC Act. The Supreme Court has now restored the acquittal.

Beyond restating settled law, the Court clarifies the evidentiary insignificance of a negative phenolphthalein “hand-wash” test when neither side alleges physical handling of tainted notes, underscores the need for corroboration of a complainant’s sole testimony in trap cases, disapproves convictions for uncharged conduct, and corrects the High Court’s approach to regulatory powers under the Contract Labour regime.

Summary of the Judgment

The Supreme Court allowed the appeal, set aside the High Court’s conviction, and restored the trial court’s acquittal.
Reversal of acquittal is permitted only where the trial court’s view is perverse, unreasonable, or unsupported by the record; where two reasonable views are possible, the acquittal must stand (double presumption of innocence).
The prosecution failed to prove demand and acceptance; the complainant’s version suffered from material inconsistencies (timing of complaint, misnaming the accused) and lacked corroboration from independent witnesses.
The shadow witness (mediator) was kept outside contrary to instructions; the second mediator was not examined; ACB officers made no further inquiries with office staff or visitors.
The phenolphthalein hand-wash was negative; since neither side alleged the accused handled the notes, the test was neutral, and the High Court erred in using it to draw adverse inferences.
Defence witnesses—‘natural’ visitors to the office—credibly supported the appellant’s explanation that the money was planted during his brief absence; their testimony could not be discarded merely because they had official or professional dealings with him.
The High Court impermissibly convicted on matters not charged (the alleged “Rs. 6,000 balance”); the charge was confined to Rs. 3,000 allegedly demanded and accepted at 5:30 PM on 26.09.1997.
On the regulatory context, the Court observed that deemed renewal and an officer’s power to inspect registers under the Contract Labour framework undercut the High Court’s inferences about motive and “creative procedure.”

Detailed Analysis

Precedents Cited and Their Influence

Chandrappa v. State of Karnataka, (2007) 4 SCC 415: The Court reaffirmed the five-point canonical test for appellate interference with acquittals:
- Full power to reappreciate the evidence remains, but
- Double presumption of innocence post-acquittal restrains interference;
- Interference is warranted only where the trial court’s view is perverse or ignores material evidence;
- If two reasonable views are possible, the acquittal must stand;
- The appellate court must engage with, and displace, the trial court’s reasons.
Application here: The trial court’s reasons—material inconsistencies, lack of independent corroboration, negative hand-wash, and credible defence—were neither perverse nor unsustainable; the High Court failed to address them adequately.
Rajesh Gupta v. State through CBI, 2022 INSC 359: Demand is sine qua non for offences under Section 7 PC Act; presumption under Section 20 arises only after foundational proof of demand and acceptance. Mere recovery of currency notes is insufficient.
Application here: With no reliable proof of demand and acceptance, the statutory presumption could not be invoked. The High Court’s approach inverting this order was legally flawed.
Panna Damodar Rathi v. State of Maharashtra, (1979) 4 SCC 526 and Ayyasami v. State of Tamil Nadu, (1992) 1 SCC 304: Sole testimony of an interested complainant requires corroboration.
Application here: The complainant’s testimony was uncorroborated and internally inconsistent; the shadow witness was absent; a second mediator was not examined.
Mallappa v. State of Karnataka, 2024 INSC 104; Ballu @ Balram @ Balmukund v. State of Madhya Pradesh, 2024 INSC 258; Babu Sahebagouda Rudragoudar v. State of Karnataka, 2024 INSC 320; Constable 907 Surendra Singh v. State of Uttarakhand, 2025 INSC 114:
These reinforce Chandrappa’s restraint and the need for cogent reasons to overturn acquittals.

Legal Reasoning

1) Foundational facts must precede the Section 20 presumption

The Court reiterates that demand and acceptance must be proved before any presumption under Section 20 can arise. Here, key gaps in the prosecution case—complainant’s inconsistent timing (claiming he wrote the complaint on the morning of 25.09.1997 though the alleged demand occurred that evening), misnaming the accused (“Rama Raju” vs “Somaraju”), and absence of an observing shadow witness—meant the foundational facts were not established.

2) The phenolphthalein “hand-wash” test was neutral, not exculpatory or inculpatory

The High Court treated the negative hand-wash as a circumstance favouring the defence which clever public servants could circumvent by directing victims to drop money in drawers. The Supreme Court corrects the premise: neither side claimed the accused touched the notes; the complainant himself said he placed them directly in the drawer. When handling is not alleged, a negative hand-wash is simply neutral. Relying on it to infer guilt is a non sequitur. The Court emphatically reminds that “suspicion, however strong, cannot take the place of proof.”

3) The complainant’s solitary account was uncorroborated and weakened by procedural lapses

The mediator (PW-2) was instructed to observe the interaction but was kept outside by the complainant, contrary to the DSP’s explicit instructions; consequently he could not attest to demand or acceptance.
The second mediator (Balaji) was not examined at all.
ACB officers did not examine other staff or visitors present; crucially, they elicited no explanation for breaching shadow-witness protocol.
These omissions strike at the heart of demand-and-acceptance and were not engaged with by the High Court.

4) Defence evidence from ‘natural’ witnesses was wrongly discarded

DW-1 (a union leader) and DW-2 (an advocate) independently corroborated the appellant’s explanation that he briefly left for the toilet while the complainant entered and remained alone; both located one another at the scene and described consistent sequences of movement. Cross-examination did not expose inherent improbability. The High Court rejected their testimony on the flawed premise that, as persons visiting in an official or professional capacity, they might oblige the accused. The Supreme Court clarifies that such a category-based rejection is untenable—natural witnesses cannot be disbelieved merely due to their professional or official dealings with the accused.

5) Convicting for uncharged conduct is impermissible

The charge was confined to an alleged demand and acceptance of Rs. 3,000 at about 5:30 PM on 26.09.1997. The High Court effectively treated an alleged earlier “balance” of Rs. 6,000 as part of the guilt narrative, although there was no such charge or allegation in the chargesheet. The Supreme Court finds merit in the appellant’s submission that he was convicted for a case he was not asked to meet—an elementary violation of fair trial.

6) Regulatory context under the Contract Labour framework undermined the High Court’s inference of motive

The Court notes that:

Where a renewal application is made in time, the licence stands deemed renewed during pendency; it was common practice that contractors did not repeatedly visit to collect licences.
The Assistant Commissioner of Labour has power to require inspection of registers/documentation to verify compliance; the appellant had issued written notices (20.09.1997) for inspection. Characterising this as a “creative procedure” to exert control, as the High Court did, was unsustainable.

This context supports the trial court’s view that the complainant’s narrative of a bribe demand for “renewal” was inherently doubtful.

Impact and Prospective Implications

A) For PC Act prosecutions and trap operations

Shadow witness protocol matters: The absence of an observing mediator is a serious infirmity; unless convincingly explained, it may be fatal to proving demand and acceptance.
Phenolphthalein tests are contextual: A negative hand-wash is not exculpatory or inculpatory where handling is not alleged. Prosecutors must avoid over-reliance on recovery and chemical tests without proving demand and acceptance.
Corroboration of complainant’s testimony: Courts will look for independent corroboration; failure to examine key mediators or other available witnesses will weigh heavily against the prosecution.
Precise charging: Prosecutions must align charges with the factual theory; convictions cannot rest on uncharged conduct (e.g., earlier or “balance” payments).
Documentation integrity: Fair and transparent recording at the scene, and preservation of all relevant statements (including exculpatory material), are crucial—suppression or omissions can undermine credibility.

B) For appellate practice

Double presumption of innocence: High Courts must give cogent reasons that directly engage with the trial court’s findings before reversing an acquittal.
“Two reasonable views” rule: Where the defence version is plausible and consistent with the record, interference is unwarranted.

C) For labour regulation context

Deemed renewal and inspection powers: The Court’s remarks reinforce that deemed renewal under Rule 29 of the Contract Labour (Regulation and Abolition) Central Rules and an officer’s inspection powers are statutory—not “creative procedures.”
Inference of motive: Courts must avoid imputing corrupt motives to routine regulatory acts, especially where documented notices exist and the statutory scheme supports the official’s conduct.

Complex Concepts Simplified

Section 7, PC Act: Prohibits a public servant from taking gratification other than legal remuneration. To convict, the prosecution must prove a demand for and acceptance of illegal gratification.
Section 13(1)(d) read with Section 13(2), PC Act: Criminal misconduct by obtaining valuable thing or pecuniary advantage by corrupt or illegal means or by abusing position. Proof of demand/acceptance is central in trap cases.
Section 20, PC Act (Presumption): A legal presumption that a gratification accepted by a public servant is a bribe. This presumption arises only after the prosecution first proves demand and acceptance.
Phenolphthalein “hand-wash” test: A chemical test turning pink when tainted currency contact leaves residue on hands. Its evidentiary value depends on facts—if handling is not alleged, a negative result is neutral.
Shadow witness: An independent observer (often a mediator) who accompanies the complainant to observe and later corroborate demand and acceptance. Keeping the shadow witness outside without explanation weakens the case materially.
Double presumption of innocence: An acquitted accused enjoys the basic presumption of innocence plus the reinforcement of a trial court’s acquittal; appellate courts must exercise restraint.
“Two reasonable views” doctrine: If the evidence reasonably supports two interpretations, the one favouring the accused (the acquittal) must prevail on appeal.

Conclusion

The Supreme Court’s decision in P. Somaraju robustly re-centres the law of trap cases on first principles: proof of demand and acceptance is indispensable; recovery and chemical tests are not substitutes. It underscores the evidentiary role of independent corroboration via mediators and other witnesses, warns against convictions for uncharged conduct, and reinvigorates the discipline of appellate restraint after acquittals. The Court also restores balance to regulatory context, recognising deemed renewal and the legitimacy of inspection powers under the Contract Labour framework.

Key takeaways:

Demand-and-acceptance are the bedrock of PC Act trap prosecutions; the Section 20 presumption follows, it does not lead.
Phenolphthalein evidence is only as probative as the factual theory; a negative hand-wash where handling was never alleged proves nothing either way.
Independent corroboration through shadow witnesses and mediators is critical; unexplained departures from protocol erode credibility.
Defence testimony by ‘natural’ witnesses cannot be discarded solely due to their official or professional proximity; credibility turns on consistency and plausibility.
Appellate courts must carefully engage with trial court reasoning; where two views are reasonably possible, acquittals must not be disturbed.

In sum, the decision strengthens fair-trial guarantees in corruption cases without hobbling legitimate anti-corruption efforts. It invites investigative rigor: prove the foundational facts with reliable, independent corroboration, and convictions will endure; rely on suspicion or procedural shortcuts, and they will not.