1. These Criminal Revision Cases are filed by the Superintendent of Police, Vigilance and Anti-Corruption, Cuddalore, against the order of discharge passed by the learned Chief Judicial Magistrate/Special Judge, Villupuram, passed in Crl.M.P.Nos 374, 375, 383 and 376 of 2004 respectively, dated 21.7.2004 in Spl.Case.No:7 of 2003 discharging the respondents/accused 1 to 5 of the charges made under Sections 13(2) r/w 13(1)(3) of the Prevention of Corruption Act, 1988 and under Section 109 IPC.
2. The brief facts of the case are as follows:
A.1, K.Ponmudi is a public servant held office as a State Minister between 13.5.1996 and 2001. A.2 is his wife. A.3 is his mother-in-law. A.4 and A.5 are his friends. A.3 to A.5 are trustees of one Siga Educational Trust. A final report was filed by Deputy Superintendent of Police, V & AC, Cuddalore against the accused for offences under Sections 13(2) r/w 13(1)(e) of the Prevention of Corruption Act r/w. 109 IPC in Special Case No. 7 of 2003 on the file of the Chief Judicial Magistrate, Special Judge, Villupuram. The prosecution recorded statements of 228 witnesses and 318 documents are relied on and produced before the Court. The cheque period was fixed as 13.5.1996 to 31.3.2002. The allegation against two sons of A.1 and A.2 who were earlier implicated in the FIR have been dropped in the final report. However, final report was filed as against A.1 to A.5 treating the incomes of his wife, A.2, mother-in-law, A.3, and the Trustees of Siga Educational Trust A.3 to A.5 as that of the income of A.1. In the final report the incomes and earnings of A.2, A.3 and the Siga Educational Trust were included as that of the income of A.1. The following is the calculation made by the prosecution in the final report:
4. According to the respondents, the prosecution failed to accept the income of A.2 and A.3 to A.5 when there are materials available on record in the form of income-tax assessment orders. The source of income is known to the Investigating Agency and it has no right to reject the source of income which is by way of donation and which had been admittedly proved by receipts and which had been disclosed by the Trust to the Income Tax Department by their regular returns. There is no evidence to show that the accused 2 to 5 are the benami of the first accused and that the prosecution has failed to place any material to connect the accused 2 to 5 for acquisition of the assets in their names had utilsied the funds of A.1 and thus the initial burden of proof has not been discharged by the prosecuting Agency. When A.1 has sent an explanation that he has nothing to do with the properties acquired by others, the Investigating Agency ought to have given an opportunity to the other accused to explain the source of income for acquisition of their properties which admittedly stand in their names.
5. The respondents/accused filed Crl.M.P.Nos. 374, 375, 383 and 376 of 2004 under Sections 239 Cr.P.C., to discharge them before the Learned chief Judicial Magistrate, Villupuram and the learned Judge allowed the Petitions filed by the respondents/accused on various grounds.
6. It is worth to mention some of the case laws on this subject decided in the following judgements.
7. In Vedagiri, In re 1985 M.L.J (Criminal) 151, it is held as follows:
Under Section 5(1)(e) of the Act, it is not merely the possession of the property disproportionate to the known sources of income that constitute an offence, but it is the failure to satisfactorily account for such possession that makes the possession objectionable and offending the law. In other words, two phases are contemplated in the investigation, firstly the discovery of the existence of property disproportionate to the source of income openly known to the investigation machinery, and secondly the scrutiny of the explanation that the public servant might offer in disclosing other source of legal income or in any other manner. Therefore, for an offence under Section 5(1)(e) of the Act the Investigating Officer has necessarily to satisfy himself that the concerned public servant has not satisfactorily accounted for the possession of pecuniary resources or property, found by the Investigating Officer disproportionate to his own source of income. It is thus obvious that the Investigating Officer should give an opportunity to the person investigated against to explain the disproportion found by him.
8. In Ananda Bezbaruah v. Union of India 1994 Crl.L.J. 12 the Gauhati High Court has held as follows:
It is not mere acquisition of property that constitutes an offence, under the provisions of the Act but its failure to satisfactorily account for makes the possession offending.
Thus where accused was charged with the offence of having resources and property disproportionate to his income and trial court failed to consider and evaluate the income-tax return which clearly established that the property included in the assets of accused and shown to be disproportionate is the wife's property bought from her own resources and should have been excluded from assets of the accused and the income which should have been taken as savings was taken as expenditure thereby overlooking the actual savings and expenditure, which if calculated, showed that income of accused was proportionate to his source of income, inclusion of property of wife, without evaluating the materials on record, which a satisfactorily accounted for the assets disproportionate to income, do not establish the ingredients of the offence and order of framing of charge in such circumstances is liable to be quashed.
9. In N.P. Lotikar v. C.B.I and 1993 Criminal 2051, the Bombay High Court has held as follows:
I have had occasion to deal elaborately with this aspect of the matter while disposing of Criminal Writ Petn. No. 854 of 1991 in the case of Ishwar Piral Kalpatri v. The State of Maharashtra decided on 16.10.1992. It is unnecessary for me to reproduce the findings recorded in that judgment. Suffice it to say that after discussing the law on the point threadbare, I have held that the sanction order as a document and as a quasi-judicial order, which is the corner-stone of a corruption trial, must be able to stand on its own footing even as far as the conclusions/findings are concerned. In the present case, there is no such finding. As indicated by me earlier, it is common ground that the accused was never given an opportunity to satisfactorily account for. He was never even issued a show cause notice or a memo by either the sanctioning authority or for that matter, by the Investigating Officer. In the absence of such opportunity being afforded to the accused, the question of his failing to satisfactorily account for or not being able to account for just does not arise. I have held in the case cited supra that the rules of natural justice apply as much at this stage of an investigation as they do to the other departmental proceedings and that considering the facts that under Section 5(1)(e) of the Prevention of Corruption Act the inability to satisfactorily account for being the essential gravamen of the charge, that in the absence of the accused being afforded the opportunity to do so, the sanction order itself would stand vitiated. The Supreme Court in a recent decision in the case of State of Haryana v. Bajanlal 1992 Supp (1) SCC 335 : 1992 Cri.L.J. 527, had occasion to observe that it is the failure to satisfactorily account for such possession of pecuniary resources or property which is disproportionate to the known sources of income that is objectionable. It is not merely acquisition that constitutes the offence. Under these circumstances, if one were to presume that the sanctioning authority had done the elementary evalution of the necessary ingredients of the charge under which he was sanctioning a prosecution, he ought to have recorded a finding that the appellant could not satisfactorily account for the assets in question. If the accused had never been asked to account, the conclusion was impossible. This, to my mind, was the fundamental error that has been committed in this case and it is principally on this ground that the sanction order in question will have to be struck down.
While deciding criminal writ petn. No. 854 of 1991, this Court had occasion to deal with another aspect of the law with regard to the procedure that is required to be adopted in relation to an offence under Section 5(1)(e) of the Prevention of Corruption Act. Since the essence of the offence is that the accused could not account for the disproportionate assets or that he failed to account therefor, this Court has taken the view that such inability or failure, which is one of the basic ingredients for holding that an offence has been committed, can be set to have been established only if the accused was called upon to account for and either he did not or could not satisfactorily account for the assets in question. It was held in that decision that the sanctioning authority at the earliest point of time cannot be said to have acted correctly in law in the absence of such an opportunity being afforded to the accused if the authority has accorded sanction for a prosecution. With regard to this aspect of the matter, Shri Johri has advanced an interesting argument which I consider necessary to deal with. It is his contention that regardless of the nature of the discreet enquiries that may be conducted by the Investigating Authority that at the stage when the raid is carried out and the authorities seized from the accused, and from several other areas, incriminating documents or property that the accused must certainly is aware of the fact that investigations into a corruption charge are being carried out. It is the contention of Shri Johri that it is open to the accused to come forward to the investigating agency and to fully account for the property and to convince the agency that there is no ground to proceed further against him. Shri Johri also submitted that similarly it is open to the employee to represent to the sanctioning authority that no sanction ought to be accorded because he could fully account for all the assets that are held against him. Shri Johri submitted that this would be the conduct of an honest public servant against whom the authorities may have wrongly proceeded or may have proceeded on the basis of complaint which they believed to be true and that nothing stops the employee at the point of time from approaching the concerned authorities and accounting for the assets in question. It is the submission of Shri Johri that even if the sanctioning authority or, for that matter, the investigating officer did not formally call up on the accused to account for the assets that nothing prevented the accused himself from accounting for the same instead of waiting until the trial had commenced. On the face of it, this argument is valid and one cannot find fault with it. It is certainly open to an accused person to come forward and to object to the grant of sanction but one does not know the situation in which the accused is placed and the question as to whether such applications or representations made by him would at all receive proper consideration. I am basically concerned with an entirely different aspect of the matter, namely, the obligation or duty that is cast on the prosecuting authority. To my mind, as held in Criminal Writ Petn. No. 854 of 1991, the accused must be asked to account for at a stage prior to the registration of the offence. I have held that once the offence is registered, virtually a point of no return is reached. In that Criminal Writ Petition, where the Investigating Officer asked the accused to account for certain property long after the offence had been registered, a plea was taken up that the petitioner was already in the legal position of a person accused of a serious offence that, therefore, the protection under Article 20 of the Constitution would be available to him and, in any event, he could not and would not make any statement at that point of time as the same may be used against him. I have had occasion there to deal with the parallel proceedings relating to disciplinary enquiries and to point out that prior to the date of commencement of actual action that is customary to issue a memo or a show cause notice asking the accused to answer the proposed charges against him and if no satisfactory explanation is forth coming, it is certainly open to the authorities to proceed. To my mind, there is a distinct advantage in following this procedure because at that stage the time available is extremely short and it would certainly be difficult for the accused to involve himself in the exercise of fabricating evidence or of producing any false materials. If a long period of time elapses , there is ample scope for such cover-up action. Viewed at from this point of view also, it is highly desirable, therefore, that the explanation should be called for at the earliest point of time.
10. In Gunjit Singh v. The State 1996(4) Crimes 1 the Delhi High Court has held as follows:
(i) In a case under Prevention of Corruption Act documents the original sale agreement and letter of attornment seized by prosecution during investigation - At no stage prosecution doubted or disputed genuineness of any of these documents & rather placed reliance on the same - Public Prosecutor had called upon appellant to admit or deny those documents - Documents became authentic & contents thereof became substantive evidence - Observation of trial court that genuineness of these documents was in doubt was erroneous.
(ii)prevention of Corruption Act, 1947-Section 5(1)(e) - Prosecution for appellant, an inspecting Assistant Commissioner of Income Tax, in possession of pecuniary resources disproportionate to his known source of income - Documents produced by prosecution amply proved that appellant by entering into sale transaction of his house had received Rs. 7,50,000/- as advance - That amount if taken into consideration fully accounted for appellant's income - Trial Court was in error to conclude that appellant could not substantiate his plea on basis of documents produced by prosecution - Conviction is unsustainable.
3. The cardinal principles of criminal jurisprudence are (i) that the onus lies affirmatively on the prosecution to prove its case beyond reasonable doubt and it cannot derive any benefit from correctness or falsity of the defence version by proving its case, (ii) that in a criminal case accused must be presumed to be innocent unless proved guilty, and (iii) that the onus of the prosecution never shits.
11. In State of Andhra Pradesh v. J. Satyanarayana JT 2000 (10) SC 430, the Supreme Court has held as follows:
sections 5(1)(e), 5(2) - Conviction under - Disproportionate assets - Only 7% difference between the amount received and assets found - House property claimed to be of wife - Loan transactions and filing of tax return much before even registration of case - Also duly supported by loaners. Held that house property could not be included in the assets of accused and once, it is taken out, High Court was justified in recording acquittal.
12. In Dilawar Balu Kurane v. State Of Maharashtra. reported in 2002 SCC (Cri) 310, the Hon'ble Supreme Court held as follows:
In exercising powers under Section 227 Cr.P.C., the settled position of law is that the Judge while considering the question of framing the charges under the said Section has the undoubted power to sift and weigh the evidence for the limited purpose of finding out whether or not a prima facie case against the accused has been made out; where the materials placed before the court disclose grave suspicion against the accused which has not been property explained the court will be fully justified in framing a charge and proceeding with the trial; by and large if two views are equally possible and the Judge is satisfied that the evidence produced before him gave rise to some suspicion but not grave suspicion against the accused, he will be fully justified into discharge the accused, and in exercising jurisdiction under Section 227 Cr.P.C, the Judge cannot act merely as a post office or a mouthpiece of the prosecution, but has to consider the broad probabilities of the case, the total effect of the evidence and the documents produced before the court but should not make a roving enquiry into the pros and cons of the matter and weigh the evidence as if he was conducting a trial.
13. In Niranjan Singh Karam Singh Pnjabi v. Jitendra Bhimraj Bijja , the Apex Court held as follows:
It seems well settled that at the Sections 227-228 stage i.e., stage of framing the charge, the Court is required to evaluate the material and documents on record with a view to finding out if the facts emerging therefrom taken at their face value disclose the existence of all the ingredients constituting the alleged office. The court may for this limited purpose sift the evidence as it cannot be expected even at that initial stage to accept all that the prosecution states as gospel truth even if it is opposed to common sense or the broad probabilities of the case.
14. Mr. S. Ashok Kumar, learned senior counsel appearing for the accused would contend that on 23.8.2003, A.1 was called upon by the Investigating Officer to account for the quantum arrived at by him. A.1 has sent a reply which is reproduced hereunder:
The Notice is motivated, biased, illegal, contrary to the known procedure of Criminal Jurisprudence and mala fide.
Equally the holding of Saraswathi has nothing to do with me, as she is an independent income tax assessee and as such, the tacking of the properties of Saraswathi to my holdings is arbitrary, fanciful and without any basis. The said Saraswathi is possessed of vast extent of properties both agricultural and non agricultural and they have been purposefully left out in tee Annexure statement-I for reasons best known to you.
So far as my wife Visalakshi is concerned admittedly she is an income tax assessee and a separate legal identity generating a decent income and possessed of properties prior to the cut of period and doing independently business and her holdings cannot be tacked on to my holdings. The properties owned by her are her separate properties and I have nothing to do with the same. Hence the allegation that the properties of Tmt. Visalakshi is acquired by me is equally incorrect, false and motivated.
You have stated that you have computed the statements on the basis of statements on the basis of statements of witnesses and scrutiny of documents and there is no reference with regard to the link expected to connect me with any crime. If the statements are made available I shall be able to explain.
The methodology adopted by you to ascertain the income, expenses, the value of the holdings and the ultimate determination of the savings are all incorrect and arbitrary. It is a sheer guesswork. Indeed you have inflated the expenses and reduced the income to suite your own convenience.
The clubbing of the income and expenses of my wife with my income and expenses is a wrong approach because she is an independent income tax assessee doing independent business.
Furthermore you have arbitrarily without any basis included the assets of Siga Educational Trust to my holding. The expenses which are not incurred by me were also included and it is not known on what basis you have worked out the ultimate value of the disproportionate asset. If the statements of witnesses connecting the finding from my source, I shall be able to send a detailed reply. Since your statement is as vague as anything and based on a false notion, I totally deny the same as false and incorrect. My assets are proportionate to my known source of income.
15. A perusal of the reply dated 10.10.2003 sent by A.1 would show that he has denied the allegation that A.2 to A.5 are not the benamies and he has nothing to do with the Trust in which A.3 to A.5 are the Trustees and that A2 and A.3 have independent income which has been assessed by the Income-tax Department and he has nothing to do for the properties owned by his wife and mother-in-law and clubbing the income and expenditure of his wife and mother-in-law along with his income and also the assets of Siga Educational Trust as his income and asset has been contested by A.1.
16. When A.1 has disowned the assets owned by A.2 to A.5, particularly stating that they have got independent source of income and that they are not his benamies, it is the duty of the Investigating Officer to send a questionnaire to A.2 to A.5 to account for the quantum of assets at their hands. But, unfortunately, the Investigating Officer, has failed to issue a notice to A.2 to A.5 to account for the quantum of assets in their hands. A.1 has categorically stated that A.2 is wife and A.3 is his mother-in-law and are having independent source of income and Siga Educational Trust in which A.3 to A.5 are trustees have received donations from various persons which have been accounted in the Income-tax Returns and also accepted by the Income-tax Department.
17. According to A.1, no income of A.2 to A.5 has been concealed and income of A.2 to A.5 has been fully shown in the Income-tax Returns submitted by them. Such Income-tax Returns were submitted even prior to the registration of the case. Such returns cannot be considered as false because vouchers have been produced and accounts have been produced and the same has been assessed by the Income-tax Department. and income tax has also been paid. The prosecution is also not definite with regard to the reasons as to why A.2 to A.5 should be treated as benamies of A.1 or to hold that A.2 to A.5 have no independent source of income.
18. The assets which admittedly, do not belong to Accused 1 and owned by individuals having independent source of income which are assessed under the Income Tax Act, were added as the assets of Accused-1. Such a procedure adopted by the prosecution is not only unsustainable but also illegal. An independent and unbiased scrutiny of the entire documents furnished along with the final report would not make out any ground for framing of charge as against any of the accused persons. The methodology adopted by the prosecution to establish the disproportionate assets with reference to the known source of income is absolutely erroneous. The clubbing of the properties of other accused is absolutely erroneous. The accused cannot be asked to explain the source of income of others with reference to the properties standing in their names and which belong to them over which the accused has no claim or control. The accused 3,4 and 5 are not the owners of the properties owned by Siga Educational Trust. The trust is the absolute owner of the properties and the trustees can never be called as absolute owners of the properties. The theory of Benami is totally alien to the concept of trust and it is not legally sustainable to array the accused 3 to 5 as holders of the properties or that they are the benamies of the accused. The benami transaction has to be proved by the prosecution by producing legally permissible materials of a bona fide character which would directly prove the fact of benami and there is a total lack of materials on this account and hence the theory of benami has not been established even remotely by any evidence. On a prima facie evidence it is evident that the other accused are possessed of sufficient funds for acquiring their properties and that A.1 has nothing to do with those properties and that he cannot be called upon to explain the source of income of the acquisition made by other persons.
19. Further more, the FIR had been registered originally as against A.1 his wife Visalakshi and his two sons Ashok Sigamani and Gowtham Sigamani. As stated above, the two sons had generated income to the tune of Rs. 23,45,800/= from India Cements and a sum of Rs. 12,43,621/= from Aircel. In order to reduce the income they had been dropped. But with a view to increase the value of the assets they have included A.3 to A.5, viz., Saraswathi, Manivannan and Nanthagopal who are the trustees of Siga Educational Trust so that the value of the assets could be enhanced by Rs. 2 crores and odd. Admittedly the accused are not possessed of the properties standing in the name of Trust and controlled by the Accused A.3 to A.5. The trust is an independent legal entity assessed to income tax and owning the properties. Only to boost the value of the assets the prosecution belatedly arrayed the Trustees of the Trust as accused 3 to 5 in order to foist a false case as against A.1.
20. From the detailed analysis of the orders passed by the learned Chief Judicial Magistrate, Villupuram, it is clear that prosecution has deliberately omitted to show certain amounts as income got by way of loan by the individual accused, but, at the same time, taken into consideration the payments made to such creditors as expenditure. This has been done purposely to boost the expenses and to enhance the value of disproportionality of the known source of income.
21. Learned Chief Judicial Magistrate has gone into every aspect of the matter viz., considered the documents meticulously and rightly came to the conclusion that the prosecution has failed to assess the total income of the individual accused in a fair manner. All the properties acquired b A.2 and A.3 in their individual capacity acquired out of their own income have been shown in the Income Tax Returns, which fact the prosecution also knows and also available in the records of the prosecution. The prosecution has no justification or reason to disregard those income tax returns to disallow such income while filing the final report. The documents now available on record also would clearly disprove the claim of benami transaction.
22. On a reading of the discussion in the discharge orders, passed by the learned Chief Judicial Magistrate, Villupuram, it is clear that the prosecution instead of establishing the link between the assets acquired by the accused an the individual income earned by A.1, have clubbed the income of A.2, A.3 and Siga Educational Trust which income are assessed to income tax even prior to the filing of the final report and there is no acceptable evidence to club all these incomes to be considered as income of A.1.
23. Learned Special Public Prosecutor challenged the order of learned Chief Judicial Magistrate mainly on the ground that the learned Judge ought not to have entered upon the process of evaluating the evidence by going with merits or credibility of the materials at this stage to discharge the accused. But, it is the settled law that while exercising power under Section 239 Cr.P.C., the Court has the undoubted power to weigh and sift the materials for the limited purpose of finding out whether a prima facie case has been made out. The Court cannot act merely as a Post Office or mouth piece of the prosecution but has to consider the broad probabilities of the case, the total effect of the materials and documents produced before the Court. In the instant case while submitting the final report several important documents related to the income tax returns of the accused have been produced before the court below. The trial court in the order under revisions has elaborately considered the documents collected during the course of investigation and produced by the prosecution itself which were available at the time of argument for framing charges. Admittedly the documents related to income tax returns are pertaining to the period prior to filing of final report.
24. It is not fair on the part of the Investigating Officer to suppress materials which may be favourable to the accused. The prosecution cannot, at its sweet will and pleasure either choose or suppress materials collected during investigation to suit its convenience to lure the Court to frame charges against the accused. Therefore, the trial court analysing the materials and documents that were made available at the stage of framing charges and on their face value arrived at the right conclusion that charges could not be framed against the respondents/accused.
25. In view of the well settled position of law as has been enunciated by the various Courts in the decisions referred earlier and for the reasons stated above, I hold that the there is no concrete materials to frame charges as against the accused and the expenditures are within the known sources of income of the individual accused as found by the trial court and therefore no interference is called for with the orders of discharge passed by the learned Chief Judicial Magistrate, Villupuram in Crl.M.P.Nos: 374, 375, 383 and 376 of 2004, dated 21.7.2004 in Spl.Case.No:7 of 2003.
26. In the result, these Criminal Revision Cases are dismissed. Consequently, connected Crl.M.Ps are also dismissed.
Prevention of Corruption Act