Madras High Court Overturns Acquittal, Convicts Customs Officers for Bribery as 'Reward'

Madurai: In a significant ruling, the Madurai Bench of the Madras High Court has overturned a trial court's acquittal and convicted four individuals, including former Customs and Central Excise officers, in a nearly two-decade-old bribery case. The court found the accused guilty of demanding and accepting a bribe as a 'reward' for an already favourable appellate order and conspiring to conceal the tainted money.

The judgment, pronounced by Justice K.K. Ramakrishnan on March 4, 2025 (conviction) and April 21, 2025 (sentence), came in a criminal appeal filed by the Central Bureau of Investigation (CBI) challenging the acquittal recorded by the II Additional District Judge for CBI Cases, Madurai, on June 6, 2016.

Case Background

The case originated from a complaint by Mr. Sathyamurthy , managing partner of Balaji Steel, Pudukottai. His company faced a penalty of Rs. 4,77,292 from the Excise Assistant Commissioner. An appeal before the Commissioner of Customs and Central Excise (Appeals), Trichy, (where the accused worked) resulted in the penalty being reduced to Rs. 1,00,000.

The prosecution alleged that G. Elangovan (A1) , then Superintendent, called the complainant on February 14, 2006, demanding Rs. 20,000 as a 'reward' for the reduced penalty order passed by A.D. Khadtare (A2) , the Commissioner of Appeals. The demand was reiterated on February 20, 2006, after the order was officially received by the complainant's office.

Following a complaint, the CBI laid a trap on February 21, 2006. During the trap, A1 allegedly accepted the bribe amount from the complainant (PW10), who was accompanied by an official witness (PW12). According to the prosecution, the money was then passed from A1 to A2, then to S.X. Jayaraj (A3) , another Superintendent, and finally to M. Ramesh Kumar (A4) , a contingent employee, to be screened. The CBI team intercepted the accused, and phenolphthalein tests on the hands of A1, A2, A3, and A4, as well as the pant pockets of A1, A2, and A3, yielded positive results (turned pink). The tainted currency was eventually recovered from A4.

Trial Court Acquittal and CBI Appeal

The trial court had acquitted all four accused, primarily holding that the demand was not proved, and certain discrepancies, including those related to a 'window cover' allegedly containing the money, created doubt about the prosecution's case.

The CBI, in its appeal, argued that the demand was clearly proved through the complainant's testimony, call detail records (CDR), and an electronic recording (Ex.C1) made during the trap. They contended that the recovery of tainted money from A4, coupled with the positive phenolphthalein tests and the sequence of events, conclusively established the guilt of the accused. The CBI argued that the trial judge's findings were perverse and based on irrelevant considerations, failing to appreciate that accepting a bribe as a 'reward' for a past act is also an offence under Section 7 of the Prevention of Corruption Act, 1988 (PC Act).

Defence Arguments

The defence counsel for the respondents argued that there was a delay in filing the complaint, mere recovery of money is not sufficient without proving demand, and the electronic evidence (Ex.C1) was not admissible or sufficient for conviction. They also contended that A3 and A4 had no role in demanding or accepting the bribe, and the money was recovered under duress amidst discrepancies in the recovery process. They emphasized the limited scope of interference by the High Court in an appeal against acquittal, arguing that the trial court's view was a plausible one based on the evidence. The 'functus officio' argument was also raised, suggesting that since the appellate order was already passed and dispatched, the officers were no longer in a position to render service related to it.

High Court's Analysis and Findings

Justice K.K. Ramakrishnan meticulously reviewed the evidence, including the testimonies of prosecution witnesses (PW10, PW11, PW12, PW20 - TLO) and the electronic recording (Ex.C1).

The court specifically rejected the defence's argument that demand was not proved, citing the complainant's evidence, CDRs, and the transcribed conversation in Ex.C1.

> The Court noted, "From the perusal of Ex.C.1, it is clear that the demand was proved, acceptance was proved... when un impeachable evidence is available, the learned trial judge ought to have convicted the accused."

Significantly, the court addressed and dismissed the 'functus officio' argument, relying on Supreme Court precedents which hold that accepting illegal gratification as a 'reward' for an act already done falls squarely within the ambit of Section 7 of the PC Act.

> Citing Venkatasubbiah Vs Emperor , Mohinder Lal Bagai , and Manikrao Abaji Thonge , the Court reiterated, "The term “reward” in the phrase [motive or reward] is manifestly intended to apply to a past service... even if the illegal gratification is received after the official act is done, yet, it will constitute an offence under section 161 of the Penal Code, 1860 (now Section 7 of PC Act)." The Court added, citing Supreme Court cases like Mahadev Dhanappa Gunaki and S.C. Goel , that having contact with the complainant after passing the order and receiving a bribe amounts to an offence.

The court found the passing of money from A1 to A2, A2 to A3, and A3 to A4, culminating in the recovery from A4, as clearly proved through the evidence of PW12, PW20, and the positive phenolphthalein tests on all accused. The failure of the accused to explain the presence of tainted money and the positive test results further strengthened the prosecution's case.

Criticizing the trial court's approach, the High Court observed that the trial judge "misreading the entire evidence gave the perverse finding that there was no official relationship after the delivery of the order" and "allowed himself to be beset with fanciful doubts and rejected the creditworthy evidence... for slender reasons". The court highlighted that the trial judge "magnified every minute irrelevant fact and made mountain out of a molehill" leading to a miscarriage of justice.

> The judgment quoted Supreme Court observations on avoiding "misplaced sympathy" for "white collar criminals" and the need for strenuous action against economic offenders.

The court concluded that the prosecution had proved the charges beyond reasonable doubt and found "substantial and compelling reasons" to interfere with the acquittal, stating that the evidence led to the "only possible view of conviction."

Conviction and Sentence

Setting aside the acquittal, the High Court convicted the accused under various sections:

• A1 to A4: Guilty under Section 120-B IPC (criminal conspiracy) read with Section 201 IPC (causing disappearance of evidence), Section 511 IPC (attempt), Section 7 PC Act (accepting gratification), and Section 13(2) read with Section 13(1)(d) PC Act (criminal misconduct).
• A3 and A4: Guilty under Section 511 read with Section 201 IPC.
• A1 to A3: Guilty under Section 7 PC Act and Section 13(2) read with Section 13(1)(d) PC Act.

During the sentencing hearing on April 21, 2025, the accused pleaded for minimum sentence citing their age (ranging from 42 to 74), health issues, and family circumstances.

The court, balancing sympathy with the need to deter white-collar crime, sentenced the accused to undergo rigorous imprisonment:

• All four accused (A1-A4) received 2 years RI and a fine of Rs. 25,000 each under Section 120-B IPC r/w PC Act sections.
• A3 and A4 received 1 year RI and a fine of Rs. 5,000 each under Section 511 r/w 201 IPC.
• A1 to A3 received 2 years RI and a fine of Rs. 25,000 each under Section 7 PC Act.
• A1 to A3 received 2 years RI and a fine of Rs. 25,000 each under Section 13(2) r/w 13(1)(d) PC Act.

All substantive sentences were ordered to run concurrently. The period already undergone by the accused will be set off. The court noted that Special Leave Petitions against the conviction order had been filed before the Supreme Court, which allowed the High Court to proceed with sentencing but suspended the sentence for three weeks from April 8, 2025.

The judgment underscores the principle that accepting bribes as a 'reward' for past official acts constitutes a serious offence under corruption laws and highlights the appellate court's power to correct perverse findings leading to unmerited acquittals, particularly in cases of white-collar crime.