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SUPREME COURT OF INDIA
Pinaki Chandra Ghose, Amitava Roy, JJ.
State of Karnataka – Appellant
Versus
Selvi J. Jayalalitha & Ors. – Respondents
Criminal Appeal Nos. 300-303 of 2017 (Arising out of SLP(Crl.) Nos.6117-6120 of 2015)
WITH
K. Anbazhagan – Appellant
Versus
Selvi J. Jayalalitha & Ors. Etc. – Respondents
Criminal Appeal Nos. 304-307 of 2017 (Arising out of SLP(Crl.) Nos.6294-6297 of 2015)
AND
K. Anbazhagan – Appellant
Versus
Indo Doha Chemicals & Pharmaceuticals & Ors. Etc. – Respondents
Criminal Appeal Nos. 308-313 of 2017 (Arising out of SLP(Crl.) Nos.6121-6126 of 2015)
AND
State of Karnataka – Appellant
Versus
Indo Doha Chemicals & Pharmaceuticals Ltd. & Ors. Etc. – Respondents
Criminal Appeal Nos. 314-319 of 2017 (Arising out of SLP(Crl.) Nos.7107-7112 of 2015)
Decided On : 14-02-2017
(a) Indian Penal Code, 1860 – Section 120B – Essential elements – Agreement, common design, common intention, collaboration, connivance, jointness in severalty and coordination – Each conspirator playing his separate part in one integrated and united effort to achieve common purpose – Conspiracy may evelop in successive stages – Separate conspiracy may constitute a general conspiracy – Conspiracy can be proved by circumstantial evidence – Hatched in private and in secrecy – No direct evidence would be readily available – Section 10, Indian Evidence Act, 1872. (Para 154, 155, 156, 157, 161, 165)
(1969) 3 SCC 429; (1970) 1 SCC 696; (2001) 1 SCC 378; (1977) 4 SCC 540; (2003) 3 SCC 641; (1837) 173 ER 502l – Relied upon
AIR 1996 SC 1744 : (1996) 4 SCC 659; (1988) 3 SCC 609; AIR 1963 SC 200 : (1963) 2 SCR 405 – Referred
(b) Indian Evidence Act, 1872 – Section 10 – Conspiracy trial – Standard of evidence – Admissibility of evidence – Loosened standards prevail. (Para 162)
(2001) 7 SCC 596; (2009) 15 SCC 643 – Relied upon
(c) Interpretation of statute – Interpretation which advances the object of the statute should be adopted – Cases under Prevention of Corruption Act, 1988 – Should be decided keeping in view that corruption mothers disorder, destroys societal will to progress, accelerates undeserved ambitions, kills the conscience, jettisons the glory of the institutions, paralyses the economic health of a country, corrodes the sense of civility and mars the marrows of governance – Tracking down corrupt public servants and punishing them is a necessary mandate of the Act. (Para 167, 168, 169)
(2000) 5 SCC 88; (1984) 2 SCC 183; (2013) 4 SCC 642; (2014) 8 SCC 682 – Relied upon
(d) Prevention of Corruption Act, 1988 – Section 13 – Lawfulness of income – Income Tax proceedings – Probative worth of – Orders in I.T. Proceedings not evidence of lawful income – Independent evidence required. (Para 175)
(1969) ITR 194; (1980) Suppl. SCC 13 – Relied upon
(e) Prevention of Corruption Act, 1988 – Section 13(1)(e) – Income tax returns or orders passed in related proceedings do not definitively attest lawfulness of the sources of income of the accused persons – Hence cannot satisfactorily account for their disproportionate pecuniary resources and properties – Orders passed in tax proceedings do not certify or authenticate lawfulness of sources – Not significant vis-à-vis a charge under Section 13(1)(e). (Para 176, 183, 329)
(2005) 4 SCC 370; 1980 Supp. SCC 166; (2014) 11 SCC 709; (1972) 4 SCC 402; (2007) 4 SCC 380(2007) 4 SCC 380 – Relied upon
(2003) 8 SCC 752 – Distinguished
(2008) Crl.L.J. 2433; (1961) 1 SCR 933; (1991) 3 SCC 655; (2012) 1 SCC 10 – Referred
(f) Prevention of Corruption Act, 1988 – Section 13(1)(e) – Corruption cannot be justified in degrees. (Para 187)
(2006) 8 SCC 693; (2014) 8 SCC 682 – Relied upon
(g) Income Tax Act, 1961 – Section 68 – Piercing of corporate veil – Necessary to unravel tax evasion as also to prevent a device to avoid any welfare legislation – Within legal parameters – Determination of a genuine acceptable gift – It should to be seen whether the transactions were only smoke screen/subterfuge to avoid income tax. (Para 192, 195, 196)
1897 AC 22; (1996) 4 SCC 622; (2016) 4 SCC 469; (2007) 6 SCC 21; (1995) Suppl. 2 SCC 453 – Relied upon
(2009) 310 ITR 75 (P&H); (2010) 327 ITR 424 (P&H); (2014) 369 ITR 471 (P&H); (2009) 318 (AT) 394 (ITAT [Mum]) – Cited with approval
(h) Prevention of Corruption Act, 1988 – Section 13(1)(e) r/w Section 68, Income Tax Act, 1961 –A receipt claimed as a gift – From undisclosed sources – Subjected to income tax – Would not be sufficient to hold that it was from a lawful source – Apparent and real income. (Para 198, 200)
(i) Prevention of Corruption Act, 1988 – Section 13 – While applying Section 13, attributes of offences contained in erstwhile Sections 161 to 165A (since repealed), IPC cannot be totally disregarded. (Para 202)
(1986) 2 SCC 716 – Relied upon
(j) Criminal jurisprudence – Burden of proof and benefit of doubt – Absolute certainty being a myth not required to be proved – Proof beyond reasonable doubt only a guideline – Only the degree of probability has to be established. (Para 204, 205, 206)
(1935) AC 462; (1973) 2 SCC 793; (1974) 2 SCC 544; (1978) 4 SCC 161; (2014) 4 SCC 747 – Relied upon
(k) Issue-Estoppel – Parties in two proceedings as well as fact-in-issue must be identical. (Para 208)
(1975) 3 SCC 742; (2005) 4 SCC 370 – Relied upon
(l) Prevention of Corruption Act, 1988 – Section 13 – “Satisfactorily” – Casts a burden on the accused to offer a plausible and acceptable explanation as to acquisition of wealth. (Para 211, 217, 221)
(1960) 1 SCR 461; (1963) Suppl. 2 SCR 724; (1981) 3 SCC 199; (2001) 6 SCC 674; (2008) 17 SCC 83 – Relied upon
(m) Prevention of Corruption Act, 1988 – Section 13 – Income – Receipt in the hand of its recipient – But every receipt is not income – Qua public servant – Remuneration from service and regular receipt from (a) his property, or (b) his investment – A receipt from windfall, or gains of graft, crime or immoral secretions – Not receipt from “known sources of income” of a public servant.” (Para 216)
(2004) 1 SCC 691; (1999) 6 SCC 559; (1966) 3 SCR 736 – Relied upon
(n) Constitution of India – Article 136 – Order of acquittal/ conviction – Scope and need of interference – When evidence accepted by trial court rejected perfunctorily by High Court, or crucial evidence ignored without any reason – If impugned judgment fraught with serious and substantial error of law and legal infirmities or is unreasonable – Compelling reason to interfere. (Para 222, 223, 231)
(1989) 2 SCC 425; (1984) 1 SCC 446; (2003) 11 SCC 271; (2013) 12 SCC 796; 1984 Suppl. SCC 482; (1976) 4 SCC 158; (2007) 4 SCC 415; AIR 1934 PC 227 (2); (2014) 9 SCC 365; AIR 1962 SC 439 – Relied upon
(o) Evidence Act 1892 – Section 45 – Evidence of expert – Advisory – To furnish necessary scientific criteria for testing accuracy of his conclusions enabling the Judge/Court to form his/its independent judgment by the application of such criteria to the facts proved by the evidence – Accused cannot be convicted on basis of expert opinion without any corroboration. (Para 236)
(1976) 1 SCC 542; (1980) 1 SCC 460; (1999) 7 SCC 280; (2009) 9 SCC 709 – Relied upon
(p) Prevention of Corruption Act, 1988 – Section 13(1)(e) – Hearsay evidence can be used to corroborate substantive evidence. (Para 236)
(2003) 11 SCC 241 – Relied upon
(q) Prevention of Corruption Act, 1988 – Section 13(1)(e) – Disproportionateness of assets – Margin of 10% in comparison of income of a public servant – Not a permissible index of uniform application, although a determinant to decide whether a public servant can be held guilty of a criminal misconduct. (Para 239)
(2003) 11 SCC 241 – Relied upon
(r) Criminal trial – Precedent – Income tax returns/orders passed thereon – Not final and binding on a criminal court – At best only relevant and always subject to independent appraisal of court on merits – High Court accepting the returns as binding on criminal court – Not permissible. (Para 253, 255)
(s) Prevention of Corruption Act, 1988 – Section 11(1)(e) – Income – Loans – Respondnets collaborating in obtaining and transacting loans other than fron banks – High Court erroneously considering incomes beyong check period, total loans sanctioned instead of disbursed – Inflating the total income of respondents by Rs.18,17,46,000/- – Not sustainable. (Para 256, 272)
(t) Prevention of Corruption Act, 1988 – Section 11(1)(e) r/w section 13(1)(e) – Gift – Copy of bank draft of Rs.2,15,000/- produced – Record of collectors being office bearers of Party as also donors not produced – Banking transactions resulting in the draft proved – Source of fund remaining obscure – Trial court rightly holding that such huge amount of domestic and foreign gifts cannot constitute a lawful source of income – Accepting such gifts an offence being prohibited u/s 13(1)(e) – a (Para 273, 284, 287, 289, 290)
(1988) 2 SCC 602 – Relied upon
(1976) 1 SCC 241 – Referred
(1992) 4 SCC 45; (2015) 14 SCC 505 – Distinguished.
(1987) 1 SCC 279 117; (2000) 6 SCC 338; (1994) Crl.L.J. 12; JT 2000 (10) SC 430; (2006) 1 SCC 420; (1999) 7 SCC 280; (1979) 4 SCC 725; (2004) 3 SCC 767 – Referred
(u) Prevention of Corruption Act, 1988 – Section 13(1)(e) r/w Section 269(SS), Income Tax Act, 1961 – Rental and other income in excess of 20000 paid in cash – Violative of Section 269(SS) – Cannot be construed as lawful income. (Para 295)
(v) Prevention of Corruption Act, 1988 – Section 13(1)(e) – DVAC quantifying income of respondent as 6,15,900/- – Respondent claimimng it to be Rs.95,92,776/- – Not discharging onus of proving the same – High Court reversing finding of trial court – Non-application of mind, (Para 300)
(w) Criminal trial – Mere marking of documents wthout objection from prosecution – Not an authentical or proof of contents thereof – Needs to be proved by better evidence. (Para 322)
(x) Prevention of Corruption Act, 1988 – Section 13(1)(e) – Income tax return filed belatedly – Not annexing relevant documents – Profit and loss account submitted after filing of charge sheet – Attempt to cover up income under shiweld of deposit scheme – No details of scheme given in income tax return – Courts below rightly concluding against source of such income – High Court even then accepting addition of income of Rs.4 crores to Jaya Publications – Not sustainable. (Para 324, 327)
(y) Prevention of Corruption Act, 1988 – Section 13(1)(e) – Income of Super Duper T.V. Pvt. Limited – Receipt books etc. as regards subscription of Rs.5000/- per subscriber produced – However investment, cost of equipment supplied to subscribers and other costs not shown – Amount of Rs.1,00,00,000/- claimed can not be accepted as income of the firm. (Para 337)
(z) Prevention of Corruption Act, 1988 – Section 13(1)(e) – Return of Wealth tax paid in excess – Does not certify lawfulness of the wealth in respect of which tax was paid – Not acceptable as valid income. (Para 338)
(aa) Prevention of Corruption Act, 1988 – Section 13(1)(e) – Foreign gifts – Money coming by way of bank cheques and paid through process of banking transaction – By themselves no certificate of authenticity – Transaction apparent but not real – Not lawful income. (Para 342, 343)
(2007) 6 SCC 21 – Relied upon
(ab) Prevention of Corruption Act, 1988 – Section 13(1)(e) – Deposits and withdrawals under different entries in bank accounts – Multiplication of transactions stemming from the same corpus – Fragmentary financial exchanges involving different combinations – An attempt to inflate individual and collective income of respondents – Banking transactions resorted to for proclaiming genuineness thereof – Not real. (Para 347)
(ac) Foreign Exchange Bonds (Immunities and Exemptions) Act, 1991 – Sction 3 – Immunities in relation to foreign remittances – Avaialble fot tax purposes – Not against prosecution for any offence punishable under penal laws including Prevention of Corruption Act 1988. (Para 356)
(ad) Prevention of Corruption Act, 1988 – Section 13(1)(e) – Assets – High Court assessing new or additional construction of buildings at Rs.22,53,92,344/- as against Rs.5,10,54,060/- assessed by trial court – High Court adopting lower rate of per square and also reducing the constructed area by considering only 17 items out of 21 – Wholly erroneous. (Para 428, 441)
(ae) Prevention of Corruption Act, 1988 – Section 13(1)(e) – Expenditure – On marriage – High Court reducing sum of Rs.6,45,04,222/- as fixed by the DVAC to Rs.28,68,000/- – Drop of Rs.6,16,36,222/- – Assessment of High Court summary and sketchy – Held unacceptable (Para 478, 480)
(af) Prevention of Corruption Act, 1988 – Section 13(1)(e) r/w section 120B, Indian Penal Code, 1860 – Companies of which A1 and A2 were partners existing from before check period – Having no significant business activity – Havinh not sufficient funds to acquire properties as amassed during check period – A3 and A4 nonimated directors in 1994 – Original directors resigning – A3 and A4 resigining at the end of check period – Acquisitions made in the names of newly formed or acquired firms/companies and the two existing firms i.e. M.S. Jaya Publications and Sasi Enterprises of which A1 and A2 were partners – About 50 Bank accounts opened – Accused persons availing services of common auditors/accountants – A1 and A2 agents for each other as partners of the two firms – A2 also the attorney of A1 – Not only A1 was aware of all transactions but on several occasions, the registrations thereof performed at her residence without seal of firms – Lifting the corporate veil – Trial court rightly deducing that the acquisitions of the properties by A3 were out of the funds diverted from the accounts either of A1 or A2 and A3 and A4 did not invest any fund with regard thereto. (Para 497, 502, 504, 506, 507, 510, 521, 522)
1897 AC 22 – Relied upon
(1963) 50 ITR 1 (SC) – Referred
(ag) Prevention of Corruption Act, 1988 – Section 4(3) – Trial of offences under the Act along with with non-Act offences – Sole public servant dying after commencement of proceedings – Proceedings will not vitiate – Special Judge will still have jurisdiction – Instantly appeals against A1 abating on her death – Even then, held, A2 to A4 liable to be convicted and sentenced in the manner as held by Trial Judge. (Para 541)
(2014) 11 SCC 724 – Relied upon
Per Amitava Roy, J.
(ah) Interpretation of statute – Anti corruption laws – Has to be essentially purposive – Innovative nuances of evidential inadequacies, processual infirmities and interpretational subtleties, artfully advanced in defence, otherwise intangible and inconsequential – Ought to be conscientiously cast aside with moral maturity and singular sensitivity to uphold the statutory sanctity. (Para 4)
Facts of the case:
Trial court had convicted the respondents u/s 120B and 109, IPC and Sections 13(1)(e) and 13(2) of the Prevention of Corruption Act, 1988.
The High Court allowed the appeals thereagainst and acquitted the respondents.
Finding of the Court:
Impugned judgment is not sustainable.
Result:
Judgment of High Court set aside, and that of trial court restored.
Key Points: - Criminal conspiracy requires an agreement, common design, and common intention, and can be proved by circumstantial evidence as it is typically hatched in secrecy (!) (!) (!) (!) . - Orders in income tax proceedings are not evidence of lawful income; independent evidence is required to account for wealth under the Prevention of Corruption Act (!) (!) . - Corruption cannot be justified in degrees, and the interpretation of anti-corruption laws must be purposive to uphold statutory sanctity (!) (!) . - The burden of proof lies on the accused to offer a plausible and acceptable explanation for the acquisition of wealth once the prosecution establishes disproportionate assets (!) (!) . - Expert evidence is advisory in nature and cannot be the sole basis for conviction without corroboration (!) . - Hearsay evidence is admissible in conspiracy trials to corroborate substantive evidence (!) . - If a sole public servant dies after the commencement of proceedings, the Special Judge retains jurisdiction to convict other accused persons for non-PC Act offences (!) . - The corporate veil may be pierced to determine if transactions are a subterfuge for tax evasion or to avoid welfare legislation (!) (!) . - Money received from foreign countries through banking channels does not inherently certify the authenticity or lawfulness of the income (!) . - The judgment of the High Court was set aside, and the conviction and sentence imposed by the trial court were restored (!) .
JUDGMENT :
Pinaki Chandra Ghose, J.
1. Leave granted.
2. These appeals project a challenge to the judgment and order dated 11.5.2015 rendered by the High Court of Karnatka in the appeals preferred by the respondents herein, thereby acquitting them of the charge under Sections 120B and 109 of Indian Penal Code, 1860 (for short “IPC”) read with Sections 13(1)(e) and 13(2) of the Prevention of Corruption Act, 1988 (for short “1988 Act”) as framed against them and also resultantly setting-aside the order of the Trial Court for confiscation of properties, both movable and immovable, of the concerned firms, as mentioned therein. In the meantime, after the conclusion of the arguments, the respondent No.1 expired and, thus in law, the appeals against her have abated. Nevertheless, in view of the gamut of the imputations and the frame-work of the charges as well as the nature of the evidence, oral and documentary, available on records, reference to her role and involvement, based thereon in collaboration with other respondents would have to be essentially examined. The respondents-accused would hereinafter be referred to as respondents/accused/A1/A2/A3/ A4, as the case may be, contingent on the context.
3. Charges were framed against A1 – former Chief Minister of the State of Tamil Nadu and the co-accused viz. A2, A3 and A4 (respondents herein), for commission of the alleged offences punishable under Section 13(1)(e) read with Section 13(2) of the 1988 Act and further under Section 120-B and Section 109 of IPC. It is the case of the prosecution that A1 (since deceased) was the Chief Minister of Tamil Nadu from 24th June, 1991 till 13th May, 1996. Prior to this, she was a member of the Rajya Sabha from April, 1984 till 27th January, 1989 and further she was a member of Tamil Nadu Legislative Assembly from 27th January, 1989 till 30th January, 1991. She also acted in the films during 1964-1972. Facts reveal that she was the daughter of late Smt. N.R. Sandhya, who also acted in films during 1960’s. Smt. N.R. Sandhya died in the year 1971 and by virtue of her mother’s Will dated 01.11.1971, A1 became the owner of the following properties viz.,
(i) Land and building at No.36, Poes Garden, Chennai-86;
(ii) House at Plot No.36, Door No.8/3/1099 in Sri Nagar Officer’s Colony at Hyderabad City;
(iii) Lands totally measuring 10.20 acres in Sy.No.52 and Sy.No.50 of Jeedimetla village and Sy. No.93/1 of Pet Basheerabad Village in Metchal Taluk in Ranga Reddy Dist. of Andhra Pradesh with Grape Garden, Farm House and Servants quarters;
(iv) Land in Sy.No.93/2 to the extent of 3.15 acres in Pet Basheerabad village in Andhra Pradesh;
In addition to the above properties, A1 was also in possession of –
(v) Agricultural land measuring 3.43 acres in Cheyyur Taluk now in Anna Dist. (as per Doc. No.4564/81, dt.16.12.1981 of SRO North Madras);
(vi) An old Ambassador car and an old Contessa car;
(vii) A new Maruti car bearing registration No.TMA-2466 worth Rs.60,435/- and
(viii) Company shares.
Thus, the assets which were in the possession of A1 up to 1987 were found to be worth only Rs.7.5 lakhs. Besides, she also claimed to have possessed balance in her bank accounts to the extent of Rs.1 lakh and certain items of jewellery.
4. A2 – Tmt. Sasikala Natarajan is the wife of one Mr. M. Natarajan who had joined Government service as a Publicity Assistant in the Department of Information and Public Relation, Government of Tamil Nadu, in the year 1970 and thereafter promoted in succession eventually as Deputy Director in the year 1986 in the same department. He tendered his resignation from Government service on 1st November, 1988 which was
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