COMMISSIONER OF INCOME TAX, RAJAHMUNDRY vs. M/s. Murala Venkateswara Rao AND others

IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI MONDAY, THE TWENTY FOURTH DAY OF MARCH TWO THOUSAND AND TWENTY FIVE PRESENT THE HONOURABLE SRI JUSTICE K.SREENIVASA REDDY CRIMINAL APPEAL NO: 190 OF 2007 Appeal under Section 378(4) of Cr.P.C against the Judgment 02-06-2006 passed in CC.No.20 of 2001, on the file of the Court of the Special Judge for CBI Cases, Visakhapatnam, Visakhapatnam Between: dated District. State, represented by its Inspector of Police Investigation Central Bureau of Special Police Establishment, represented by its Special Public Prosecutor, High Court of A.P. Amaravati. Visakhapatnam at ...Appellant/Complainant AND Mutya Subrahmanyam, S/o.Seetha Rama Murthy, Income Tax Officer, Ward-ll, Vizianagaram. aged 54 years. ...Respondent/Accused :Sri M.Sravan Kumar, Special Public Prosecutor for C.B.I. Counsel for the Respondent :Sri K.Srinivasa Rao The Court made the following: Counsel for the Appellant

APHC010434882007 IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI (Special Original Jurisdiction) MONDAY, THE TWENTY FOURTH DAY OF MARCH TWO THOUSAND AND TWENTY FIVE [3327] PRESENT THE HONOURABLE SRI JUSTICE K SREENIVASA REDDY CRIMINAL APPEAL NO: 190/2007 Between: State Rep. by Inspector of Police CBi ...APPELLANT AND Mutya Subrahmanyam ...RESPONDENT Counsel for the Appellant: 1.M.SRAVAN KUMAR, Spl. PUBLIC PROSECUTOR FOR C.B.I. Counsel for the Respondent: 1.K SRINIVASA RAO The Court made the following:

SRK,J Crl.A.No.190 of 2007 2 JUDGMENT The present Criminal Appeal is preferred by the State, against the Judgment of acquittal, dated 02.06.2006, passed in Calendar Case No.20 of 2001 by the learned Special Judge for CBI Cases, Visakhapatnam (hereinafter referred to, as ‘the learned Special Judge’), whereby the respondent/Accused Officer acquitted of the charges for the offences punishable under Sections 7 and 13 (2) read with Section 13 (1) (d) of the Prevention of Corruption Act, 1988 (for short ‘the Act, 1988’). was 2. The parties are hereinafter referred to, as they were arrayed in the Calendar Case No.20 of 2001 tried before the learned Special Judge. The prosecution case, in brief, is as follows: The source of income of P.W1 for constructing the house, was disputed for the Assessment Years 1997-1998 and 1998-1999 and for those two years, P.W1 was asked to pay an amount of Rs.2.5 lakhs towards tax; that arriong other assessment files, the accused officer, as Income Tax Officer of Ward-ll of Vizianagaram, assessed the income tax returns of P.W1; that P.W1 met the accused officer for several times and requested to reduce 3. (a)

SRK,J Crl.A.No.190 of 2007 3 the tax; that the accused officer with dishonest and fraudulent intention, demanded a bribe of Rs.25,000/- from P.W1 for reducing the tax to be paid in the matter of assessment of his source of income for construction of house; (b) P.W1, having not willing to give bribe, lodged Ex.P1- report on 15.03.2001 to the Superintendent of Police, CBI, Visakhapatnam, who in turn endorsed the report to P.W6-lnspector of Police, Vigilance Enforcement, Srikakulam and ordered for registering the crime and for investigation. Ex.PII is the original FIR vide RC No.8 (A)/2001 registered by P.W6. P.W6 prepared mediators report. Ex.P3 is the First Mediators Report, dated 15.03.2001. Thereafter, trap was laid against the accused officer on 15.03.2001 in the presence of independent witnesses. (c) During the trap proceedings, on 15.03.2001, P.W1 met the accused officer in the presence of P.W2, accompanying witness and requested for reduction of tax. The accused officer enquired P.W1 as to whether he brought the bribe amount and when he replied in affirmative, the accused officer instructed P.W1 to come along with his Auditor viz. E.R.Somayajulu (P.W3).

SRK,J Crl.A.No.190of2007 4 (d) P.W1 made telephone call to P.W3/Auditor informed the direction of the accused officer. Accordingly, P.W1 along with P.W2, who is accompanying witness and P.W3/Auditor and met the accused officer at his office; that the accused officer asked P.W2 to go outside and inquired P.W1 as to whether he brought money; that P.W1 replied in affirmative and took out the tainted currency of Rs.25,000/- from his shirt pocket; that the accused officer signalled with his hand to keep the currency on the table and when P.W1 did so, accused officer pushed the tainted notes with his right hand fingers towards P.W3/Auditor, who sitting before him and directed him to keep the said amount with him; that P.W3/Auditor took the currency notes from the table with his both hands and kept in his left side trouser pocket. currency was (e) The accused officer was caught red-handed when he accepted bribe of Rs.25,000/- from P.W1 given to P.W3/Auditor, who was present along with them for reducing the tax payable by P.W1; that the numbers of the tainted currency notes were tallied with the notes of currency numbers mentioned in pre-trap proceedings under Ex.P3-First Mediators Report, dated 15.03.2001.

SRK,J Crl.A.No.190 of 2007 5 The hand washes of the accused officer and P.W3 (f) were collected and found to be positive for phenolphthalein powder test by the Central Forensic Science Laboratory, Hyderabad. M.01- tainted amount of Rs.25,000/- was seized from his table. After completion of investigation and after receipt of Ex.P10-sanction order, charge sheet was laid. The learned Special Judge took cognizance of the 4. case for the offences under Section 120B of the Indian Penal Code, 1860 (for brevity ‘IPC’) and Sections 7 and 13 (2) read with 13 (1) (d) of the PC Act, 1988. Originally, the Auditor, wz. Eswara Rama Somayajulu 5. of P.W1, at first instance, was arrayed as accused No.2. During the pendency of the case at the stage of examination of accused under Section 239 CrPC, the inspector of Police, CBI filed petition vide Crl.M.P.No.476 of 2001 under Section 306 CrPC read with Section 5 (2) of the PC Act, 1988 to grant tender of pardon to the Auditor. While the said petition was pending, the said Auditor/accused No.2 also filed Crl.M.P.No.14 of 2002 and the learned Special Judge allowed both petitions granting tender of pardon to the Auditor/accused No.2 and rounded off the name of Auditor/accused No.2 in the charge sheet and directed the prosecution to take steps \

SRK,J Crl.A.No.190 of 2007 6 in including the Auditor/ accused No.2 as a witness to the prosecution case. 6. The accused officer was examined under Section 239 CrPC after furnishing copies of the documents. He pleaded not guilty. Charges for the offences under Sections 7 and 13 (1) (d) (ii) read with 13 (2) of the PC Act, 1988 were framed against him, and when the charges were read over and explained to him, in Telugu, he denied the charges and claimed to be tried. To substantiate its case, prosecution examined P.Ws.1 to 8 and got marked Exs.P1 to P14, besides case properties M.Os.1 to 7. During the cross-examination of P.W1, Exs.DI and 7. D2, through P.W5, Exs.D3 and D4, through P.W6, Exs.DS and D6 and through P.W8, Exs.D7 and D8 were marked. After closure of the prosecution side evidence, the accused officer was examined under Section 313 CrPC to explain the incriminating circumstances appearing against him in the evidence of prosecution witnesses. He denied the same. One D.Jagannadham, Income Tax Officer, Visakhapatnam, who worked under the accused officer was examined as D.W1 and through him, Ex,D9 and Exs.CI to C4 were marked on behalf of the defence. r-

SRK,J Crl.A.No.190 of 2007 7 The accused officer during his examination under 8. Section 313 (1) (b) CrPC explained that he felt that P.W1 was intending to pay the amount towards agreed tax remittance; that the prosecution conveniently altered the documents to suite their version and he never directed P.W3 to receive any amount from P.W1; that the prosecution took P.W3 as an approver, who is the culprit as he received the amount from P.W1; that he never demanded any amount from P.W1. Considering the evidence on record, the learned 9. Special Judge found the accused officer not guilty of the offences with which he was charged and accordingly acquitted him. Challenging the same, the State preferred present Criminal Appeal. 10. The learned Special Public Prosecutor for CBI representing the State/appellant contended that there is no dispute with regard to the fact that the respondent/ accused officer was working as Income Tax Officer of Ward-11, Vizianagaram at the relevant point of time of the incident and he was a public servant under Section 2 (c) of the Act, 1988. He further contended that the learned Special Judge acquitted the respondent/accused officer on untenable grounds. The evidence of P.Ws.1, 2 and 3 were discarded due to minor discrepancies which do not go to the root of

SRK,J Crl.A.No.190 of2007 8 the prosecution case. Although P,W2, who the date of the incident, corroborated to the evidence of P.W1 discrepancies in the evidence of material their entire evidence cannot be thrown out accompanied P.W1 on was .sent outside, his evidence is When there are some prosecution witnesses, on such discrepancies, and such part of their testimony which inspires confidence, can be taken into consideration. It is his further submission that Sodium Carbonate test conducted on right hand fingers of the accused officer gave positive result, and there is recovery of tainted currency notes from the accused officer; that seizure of tainted currency notes from the possession of the accused officer is established; that the evidence adduced by the prosecution clearly established the guilt of the accused officer for the offences alleged against him, but the learned Special Judge did not consider these aspects in right perspective and erred in acquitting the accused officer of the offences with which he was charged, and hence, he aside the impugned judgment and convict and prays to set sentence the accused officer. 11. On the other hand, learned counsel for the accused officer contended that there is no corroboration in the evidence of all the prosecution witnesses and their evidence does not connect

SRK,J Crl.A.No.190 of 2007 9 the respondent/accused officer with the offences alleged. He submits that in view of the inconsistent versions in the evidence of P.W1 with regard to demand Of bribe on earlier occasions, it cannot be said that the earlier deniands are proved to be established beyond reasonable doubt. There is no legal evidence to prove either demand or acceptance of the bribe amount by the accused officer: that the prosecution failed to establish the alleged demand or acceptance of illegal gratification by the accused officer, which are necessary ingredients for the offences under Sections 7 and 13 (1) (d) read with 13 (2) of the PC Act, 1988; that mere recovery of tainted currency notes, by itself, does not establish the offences alleged against the accused officer; that the learned Special Judge considered these aspects in right perspective and rightly acquitted him and there are no compelling or substantial reasons to interfere with the judgment of acquittal passed by the learned Special Judge and hence, he prays to dismiss the Criminal Appeal. The point that arises for consideration in the present 12. Criminal Appeal is whether the prosecution is able to bring home the guilt of the respondent/accused officer for the offences under Sections 7 and 13 (1) (d) read with 13 (2) of the PC Act, 1988

SRK,J Crl.A.No.190of 2007 10 beyond reasonable doubt or not, and whether the impugned judgment calls for any interference by this Court? 13. This is an appeal against an Order of acquittal. There is a presumption available under, law that an accused officer is presumed to be innocent unless contrary is proved. That presumption of innocence is further strengthened by an order of acquittal passed by the trial Court. In dealing with the appeals against acquittal, though this Court has full power to re-appreciate the evidence, at the same time, it would be slow in interfering with the order of acquittal because there is a presumption under law that accused officer is presumed tO: be innocent unless contrary is proved and that presumption is further strengthened by the order of acquittal. Unless there are substantial or compelling reasons, this Court will not ordinarily disturb the findings of the trial Court. If the trial Court has given any perverse finding, then it can be a ground to interfere with the order of acquittal. Similarly, if admissible evidence has not been taken into consideration or inadmissible evidence has been looked into for the purpose of arriving at a particular finding, then also it can be said to be a compelling reason to interfere with the same.

SRK,J Crl.A.No.190 of 2007 :ii 'W- On this aspect, it is pertinent to refer to a decision in Harbans Singh & another v. the State of Punjab\ wherein it is held as follows: (paragraph No.8) 14. “The question as regards the correct principles to be applied by a Court hearing an appeal against acquittal of a person has engaged the attention of this Court from the very beginning. In many cases, especially the earlier ones, the Court has in laying down such principles emphasized the necessity of interference with an order of acquittal being based only on ‘compelling and substantial reasons’ and has expressed the view that unless such reasons are present in an Appeal, Court should not interfere with an order of acquittal (Vide Suraj Pal Singh v. The State, 1952 SCR 193: (AIR 1952 SC 52); Ajmer Singh v. State of Punjab, 1953 SCR 418: (AIR 1953 SC 459). The use of the words, ‘compelling reasons’ embarrassed some of the High Courts in exercising their jurisdiction in appeals against acquittals and difficulties occasionally arose as to what this Court had, meant by the words ‘compelling reasons’. In later years the Court has often avoided emphasis on ‘compelling reasons’ but nonetheless adhered to the view expressed earlier that before interfering in appeal with an order of acquittal a Court must examine not only questions of law and fact in all their aspects but must also closely and carefully examine the reasons which impelled the lower courts to acquit the accused and should interfere only if satisfied, after such examination that the conclusion reached by the lower court that the guilt of the person has not been proved is unreasonable. ’’ 15. The first charge framed against the respondent/ accused officer is that he, being a public servant i.e. Income Tax Officer, Ward-ll, Vizianagaram, accepted or obtained a sum of Rs.25,000/- from P.W1 on 15,03.2001 as gratification other than AIR 1962 SC 439.

V' SRK,J Crl.A.No.190 of 2007 12 legal remuneration as a motive or reward for showing official favour of reducing the tax to be paid in the matter of assessment to his of income for his house construction for the Assessment sources Years 1997-98 and 1998-99, in exercise of his official functions and thereby committed an offence punishable under Section 7 of the Act, 1988. The second charge is that he, by means of corrupt or illegal means or by otherwise abusing his position as public servant, obtained for himself pecuniary advantage to an extent of Rs.25,000/- from P.W1 on the same date stated in the first charge and thereby committed an offence under Section 13 (1) (d) (ii) of the PC Act, 1988 punishable under Section 13 (2) of the PC Act, 1988. In order to attract an offence under Section 7 of the PC Act, 1988, the necessary ingredients to be established are that the accused officer is a public servant and that he accepted or obtained gratification other than legal remuneration and the gratification was to do an official favour. Under Section 13 (1) (d) (ii) of the PC Act, 1988, if a public servant, by corrupt or illegal means or by otherwise abusing his position as public servant, obtains for himself or for any other person any valuable thing or pecuniary advantage, he is guilty 16.

SRK,J Crl.A.No.190 of 2007 13 of criminal misconduct punishable under Section 13 (2) of the Act, 1988. The respondent/accused officer was working as Income Tax Officer, Ward-ll, Vizianagaram at the relevant point of time of the incident. There is no dispute that he was a public servant within the meaning of Section 2 (c) of the PC Act, 1988. 17. Ex.PIO is the order issued by P.W4, Commissioner of Income Tax- according sanction to prosecute the II, Visakhapatnam respondent/accused officer. The evidence of P.W.4 substantiates the same. Coming to evidence, P.W.1, who set the criminal law motion by lodging Ex.PI-report, he deposed that during the 1997 he constructed a slab building consisting of ground floor 18. into year and first floor at Garbham; that his Auditor one Gokavarapu Venkata Raju, mistakenly valued the building at Rs.3,25,000/-. He further deposed that during the year 1999 one Income Tax Officer from Vizianagaram visited his house and inspected the building and after about two or three moriths thereafter, he received a notice from the Income Tax Office, Vizianagaram valuing the building at Rs.7,46,000/- and as such P.W1 was liable to pay the income tax. '■f 4

SRK,J Crl.A.No.190 of 2007 14 that he got valued the building through one Engineer viz. Sarma of Visakhapatnam, who got it valued at Rs.4,68,000/- and after furnishing all the documents, P.W1 was issued a notice to pay income tax for a sum of Rs.1,76,000/-; that on preferring appeal before the Assistant Commissioner of Income Tax, Visakhapatnam, the matter was remanded to the Income Tax Officer, Ward-ll, Vizianagaram with a direction to assess the value and at that relevant point of time, the respondent/accused officer was working as Income Tax Officer, Ward-ll, Vizianagaram. 19. P.W1 further deposed=that he expressed his inability to pay Rs.1,76,000/- as he incurrec^ private debts for construction of the said building, for which, the accused officer stated that he had to accept all those sources, P.W1 had to pay him a bribe of Rs.25,000/-. It is his further evidence that on 12.03.2001 the accused officer told him that 15*'' was the last date given by him and that if P.W1 brought Rs.25,000/- bribe amount, the tax would be accepted at Rs. 1,10,000/- or else, the income tax of Rs.2,26,000/- would be collected together with interest. In the cross-examination of P.W1 deposed that the accused officer demanded the bribe in the month of February, 2001. But, a perusal of the statement of P.W1 recorded under Section 161 CrPC, he

SRK,J Crl.A.No.190 of 2007 15 Stated that the accused officer demanded bribe in the month of January, 2001. Indeed, P.W1 in his cross-examination deposed that he does not remember as to when the accused officer demanded the bribe of Rs.25,0p0/- for the first time. The evidence of P.W.1 further goes to show that on 20. 15.03.2001 at about 11.00 a.m. when he met the accused officer in his office, he replied affirmatively Thechhaanu’, for which, the accused officer did not ask him to give and P.W1 also did not volunteer to give the bribe amount to the accused officer. P.W1 admitted in his cross-examination that he did not mention in his report under Ex.PI that the accused officer promised him to levy a tax of Rs.1,10,000/- or tax on Rs.1,10,000/- as provided, if he pays the bribe amount as demanded by him. With regard to subsequent demands made by the accused officer, there is no convincing and cogent evidence from P.W1. The entire evidence of P.W1 does not reveal as to on what date or the day the accused officer demanded P.W1 to pay the bribe of Rs.25,000/- for reducing the income tax. In the cross- examination of P.W1, P.W1 deposed that during February, 2001 on a working day and during the office working hours, he met the 21.

SRK,J Crl.A.No.190 of 2007 16 accused officer at about 10.30 a.m., but he does not remember the day. These are the material omissions and contradictions which to the root of the case and further, such evidence suffers from infirmity. There is material contradiction in the evidence of P.W1 with regard to earlier demand s^id to have made by the AO. Therefore, the version spoken by P!W1 is not corroborated with any independent witness. go In this case, it is pertinent to refer the Judgment of the Hon’ble Apex Court in Hari Dev Sharma vs. State (Delhi Administrationf, wherein it was held thus (paragraph No.3); “The High Court on appeal preferred by the appellant before us did not accept the prosecution case on the first two charges on the ground ihdt it would be unsafe to hold on the bare testimony of the complainant that Rs.20 had been paid to the appellant as alleged. Apparently, the High Court looked upon the complainant as a witness not to be believed unless his evidence was corroborated by other evidence. The High Court however accepted the other part of the prosecution case that the appellant had been caught while accepting Rs. 70 as bribe from the complainant One circumstance which appears to have impressed the learned Judge was that the complainant was being harassed by various objections raised on his application ever since 1964 when the property was purchased. It appears however that 22. ^ (1977) 3 Supreme Court Cases 352.

SRK,J Crl A.No.190 of 2007 17 the appellant started dealing with the file only from July 1966, and the earliest of the notes made by him on the file was dated July 20, 1968. Admittedly, the complainant met the appellant for the first time on January 29, 1969 and, that being so, it is difficult to hold that the objections raised prior to this date were calculated to put pressure on the complainant. It is hardly reasonable to think that the appellant could anticipate what in fact followed. Besides, the appellant could not have been responsible for any objection raised between 1964 and July 1966. But the main difficulty we feel in accepting the prosecution case arises out of the fact that the High Court disbelieved the part of it which, according to the prosecution, was the genesis of the case. Having disbelieved the story that the appellant had asked for a bribe of Rs.lOO of which Rs.20 was paid in advance, we do not think the High Court could reasonably proceed on what was left qf the prosecution case to affirm the order of the conviction passed by the trial court. The prosecution case was one integrated story which the trial court had accepted, If the High Court did not find it possible to accept a vital part of the story, it is difficult to see how the other part, which did not stand by itself, could be accepted. It was not the prosecution case that Rs 70 which was recovered from the appellant was the amount that the appellant had asked for from the complainant. This was a new case made by the High Court. Undoubtedly there are circumstances in this case, which are highly suspicious against the appellant, but the High Court having disbelieved an essential part of the prosecution case on which the other part was dependant, we do not consider it r

SRK,J CrI.A.No. 190 of 2007 18 safe to sustain the conviction of the appellant. Accordingly, we allow the appeal and set aside the order of conviction and sentences passed against ihe appellant. ” Even as per the evidence of P.W1, he did not question the accused officer as to why he'birpught his Auditor. A perusal of evidence of P.W1 further goes to show that when he made telephone to his Auditor i.e. P.W3, he was reluctant to come to the office of the accused officer on the pretext that he was having busy schedule, but when P.W3 was informed that the accused officer would not discuss about the issue of P.W1, unless P.W3 comes to his office, doubts the version of P.W1, for the reason that P.W3 and the accused officer are not known persons to each other. Even as per the evidence of P.W3, it discloses that P.W3 had not kept the amount if he had known that the said amount was paid towards bribe, as he kept the amount in his trouser with an intention to give it back to P.W1, but not to the accused officer. 23. 24. In this regard, the evidence of P.W2, who is the accompanying witness, is to the effect that, soon after he along with P.WI entered into the office of the accused officer, the accused officer questioned P.W1 as to who P.W2 was? It is the further evidence of P.W2 that when P.WI introduced P.W2 as his cousin.

SRK,J Crl.A.No.190 of 2007 19 the accused officer asked P.\N2 to go out and accordingly, he went outside to visitors’ room and sat there. A perusal of the evidence of P.W1, nothing has been elicited in his cross-examination to connect the respondent/accu sed 25. officer with the offences alleged with regard to either demand or acceptance of the alleged illegal gratification by him. P.W1 is the material prosecution witness who set the criminal law into motion. P.W2, who allegedly accompanied P.W1 on the trap when the respondent/accused officer allegedly demanded and accepted Rs.25,000/-, his evidence is only hearsay, as he was not present at the place and he was asked to wait outside the office at visitors’ room. The remaining material prosecution witness is P.W3, Auditor, who evidence does not corroborate the evidence of P.W1. The evidence of entire material prosecution witnesses does not elicit anything to connect the respondent/accused officer with the alleged offences. 26. Coming to the other evidence available on record. P.W4, Commissioner of Income Tax, Visakhapatnam. His evidence is to the effect that on perusal of Mediators Reports and statements of witnesses for according prosecution sanction against the

SRK,J CrI.A.No. 190 of 2007 20 accused officer, he issued Ex. P10-Sanction Order to the Visakhapatnam. CBI, 27. P.W6, who worked ,3s Inspector of Police, CBI Visakhapatnam, at the relevant point of time of the incident, deposed about registration of Ex.P11-FIR based on Ex.P1 report, preparation of pre-trap proceedings, conducting of trap, seizure of tainted currency notes and conducting chemical test to the right and left hand fingers of respondent/accused officer and P.W3 and preparation of post-trap proceedings. He also deposed about conducting of investigation and seizure of material objects. P.W8 conducted further investigation in the case. After receipt of sanction order, he laid the charge sheet. He 28. In the case on hand, to prove the alleged demand by respondent/accused officer, the prosecution examined P.Ws.1, 2 and 3. They are material prosecution witnesses. None of the material prosecution evidence is corroborated with each other and it does not support the prosecution version as regards the demand and acceptance by the respondent/accused officer. Earlier demands are integral part of subsequent demand and acceptance. The evidence of other witnesses does not incriminate anything as

SRK,J Crl.A.No.190 of 2007 21 against the respondent/accused officer as regards the alleged demand for doing official favour and acceptance of illegal gratification other than ^legal remuneration by respondent/accused officer. Therefore, this Court has no hesitation to hold that the prosecution failed to establish the earlier demands the made by AO. There cannot be any dispute that the prosecution case 29. is one integrated story. However, in view of the aforesaid discussion, it is difficult to accept a vital part of the story i.e. earlier demands made by the AO, which is the genesis of the case. In the absence of the same, the other part of the prosecution story did not stand by itself and the same is also not acceptable. The only other circumstance available is the recovery of the tainted currency notes from the possession of the respondent/accused officer. It is settled that mere possession and recovery of the currency notes from the accused without proof of demand will not bring home the offence under Section 7 of the PC Act, 1988. Further, even if recovery of tainted money from the respondent/accused officer is accepted, mere recovery of money by itself may not be sufficient to show that the money was received as an illegal gratification by the respondent/accused officer from 30.

SRK,J Crl.A.No.190 of 2007 22 P.W1 for doing an official favour. Therefore the prosecution failed to prove the demand and in the absence of evidence to show that the money was paid as illegal gratification mere recovery of money, is not sufficient to convict the respondent/accused officer for the offences punishable under Sections 7 13(1)(d) of the PC Act, 1988. and 13(2) read with 31. In P. Satyanarayana, Murthy District Inspector of Police and Anr.? the Hon'ble Apex Court held that V. mere possession and recovery of currency notes from an accused officer without proof of demand would not establish Section 7 Section 13(1)(d)(i) & (ii) of the PC Act, as well as 1988. It has been propounded that in the absence pif any proof of demand for illegal gratification, the use of corrupt or illegal means or abuse of position as a public servant to obtain any valuable thing or pecuniary advantage cannot be held to be proved. The proof of demand , thus, an indispensable essentiality and of permeating mandate for an offence under Sections 7 and 13 of the has been held to be PC Act, 1988. Dealing with the same, the Court observed as under; The proof of demand of illegal gratification, gravamen of the offence under Sections 7 and 13(1)(d)(i)&(ii) of thus, is the "(2015) 10 see 152

SRK,J Crl.A.No.190 of 2007 23 the Act and in absence thereof, unmistakably the charge therefore, would fail. Mere acceptance of any amount allegedly by way of illegal gratification or recovery thereof de hors the proof of demand, ipso facto, would thus not be sufficient to bring home the charge under these two sections of the Act. As a corollary, failure of the prosecution to prove the demand for illegal gratification would be fatal and mere recovery of the amount from the person accused of the offence under Sections 7 or 13 of the Act would not entail his conviction thereunder." The said principle was reiterated by the Hon’ble Apex Court in Mukhtiar Singh (since deceased) through his Legal Representative v. State of Punjab"^, as under:- "23. The proof of demand of illegal gratification, thus, is the gravamen of the offence under Sections 7 and 13(1)(d)(i) and (ii) of the Act and in absence thereof, unmistakably the charge therefor, would fail. Mere acceptance of any amount allegedly by way of illegal gratification or recovery thereof, de hors the proof of demand, ipso facto, would thus not be sufficient to bring home the charge under these two sections of the Act. /As a corollary, failure of the prosecution to prove the demand for illegal gratification would be fatal and mere recovery of the amount from the person accused of the offence under Sections 7 and 13 of the Act would not entail his conviction thereunder." ''(2017) 8 Supreme Court Cases 136

SRK J Crl.A.No.190of2007 24 In C.M. Sharma u. State of Andhra Pradesh etc.,^ the 32. Hon’ble Apex Court held as under: “In support of the submission reliance has been placed on a decision of this Court in the case of Panalal Damodar Rathi v. State of Maharashtra (1987) Suppl. SCC 266 and our attention has been drawn to the following paragraph of the judgment: “26. Therefore, the very foundation of the prosecution case is shaken to a great extent. The question as to the handing over of any bribe and recovery of the sahie from the accused should be considered along with other material circumstances one of which is the question whether any demand was at all made by the appellant for the bribe. When it is found that no such demand was made by the accused and the prosecution has given a false story In that regard, the court will view the allegation of payment of the bribe to and recovery of the same from the accused with suspicion." In Sura] Mai v. State (Delhi Admn ), (1979) 4 SCC 725 this Court took the view that (at SCC p. 727, para 2) mere recovery of tainted money divorced from the circumstances under which it is paid is not sufficient to convict the accused when the substantive evidence in the case is not reliable. The mere recovery by itself cannot prove the charge of the prosecution against the accused, in the absence of any evidence to prove payment of bribe or to show that the accused voluntarily accepted the money knowing it to be bribe. Another decision on which reliance is placed is the decision of this court in the case of State of Maharashtra v. Dyaneshwar ®LAWS (SC) 2010 11 84

SRK,J Crl.A.No.190of 2007 25 Laxman Rao Wankhede, (2009) 15 SCC 200 in which it has been held as: “16. Indisputably, the demand of Illegal gratification is a sine qua non for constitution of an offence under the provisions of the Act. For arriving at the conclusion as to whether all the ingredients of an offence viz. demand, acceptance and recovery of the amount of illegal gratification have bebn satisfied or not, the court must take into consideration the facts and circumstances brought on the record in their entirety. ” From the judgments referred to above, it is clear that the Hon’ble Apex Court has categorically held that, in order to prove a charge under Sections 7 and 13 of the PC Act, 1988, the prosecution has to establish by proper proof, the demand and acceptance of illegal gratification: The Hon’ble Apex Court held that till that is accomplished, the accused officer should be considered to be innocent. The proof of demand of illegal gratification, thus, is the gravamen of offence under Sections 7 and 13 (1) (d) (i) and (ii) of the PC Act, 1998 and in the absence thereof, unmistakably the charge, therefore, would fail. The Hon’ble Apex Court went on to hold that mere acceptance of any amount allegedly by way of illegal gratification or recovery thereof, de hors proof of demand, ipso facto, would thus not be sufficient to bring home the charge under aforesaid two sections. 33.

SRK,J Crl.A.No.190 of 2007 26 In State of Punjaby.iMadan Mohan Lai Verma^, the 34. Hon’ble Supreme Court held that^ mere receipt of the amount by the accused is not sufficient ot efsten guilt, in the absence of any evidence with regard to demand and acceptance of the amount as illegal gratification’. It is appropriate to incorporate paragraph No.7 of the said judgment, which reads thus: "7. The law on the issue is welfsettled that demand of illegal gratification is sine qua non for constituting an offence under the 1988 Act. Mere recovery of tainted money is not sufficient to convict the accused when substantive evidence in the case is not reliable, unless there is evidence to prove payment of bribe or to show that the money was taken voluntarily as a bribe. Mere receipt of the amount by the accused is not sufficient to fasten guilt, in the absence of any evidence with regard to demand and acceptance of the amount as illegal gratification. Hence, the burden rests on the accused to displace the statutory presumption raised under Section 20 of the 1988 Act, by bringing on record evidence, either direct or circumstantial, to establish with reasonable probability, that the money was accepted by him, other than as a motive or reward as referred to in Section 7 of the 1988 Act. While invoking the provisions of Section 20 of the Act, the court is required to consider the explanation offered by the accused, if any, only on the touchstone of preponderance of probability and not on the touchstone of proof beyond all reasonable doubt. However, before the accused is called upon to ® 2013(3) MU (CrI) 565

SRK,J Crl.A.No.190of 2007 27 explain how the amount in question was found in his possession, the foundational facts must be established by the prosecution. The complainant is an interested and partisan witness concerned with the success of the trap and his evidence must be tested in the same way as that of any other interested witness. In a proper case, the court may look for independent corroboration before convicting the accused person." In view of the aforesaid facts and settled proposition of 35. law, it is unsafe to place an implicit reliance on the evidence adduced by the prosecution fpr convicting the respondent/accused officer. There is no legal evidence to find the respondent/accused officer guilty of the charges under Sections 7 and 13 (2) read with 13 (1) (d) of the PC Act, 1988 leveled against him. / In view of the foregoing discussion, this Court no hesitation to hold that the prosecution failed to establish its case against the respondent/accused officer for the offences under Sections 7 and 13 (2) read with 13 (1) (d) of the PC Act, 1988, beyond reasonable doubt, and the respondent/accused officer is entitled to acquittal. The trial Court considered these aspects in right perspective and acquitted the respondent/accused officer of the charges levelled against him. There are no compelling or 36.

Jj SRK,J Crl.A.No.190of2007 28 substantial reasons to interfere with the impugned judgment. The appeal is devoid of merit. 37. In the result, the Criminal Appeal is dismissed, confirming the Judgment dated 02.06.2006, passed in Calendar Case No.20 of 2001 by the learned Special Judge for CBI Cases, Visakhapatnam. As a sequel, pending miscellaneous petitions, if any, in the Criminal Appeal shall stand closed. Sd/- M RAMESH BABU DEPUTY REGISTRAR //TRUE COPY// SECTION OFFICER To, 1. The Special Judge for CBI Cases, Visakhapatnam, Visakhapatnam District. (With records) 2. The Inspector of Police, CBI, Special Police Establishment, Visakhapatnam, Visakhapatnam District. 3. Two CCs to the Special Public Prosecutor for C.B.I, High Court of Andhra Pradesh at Amaravati [OUT] 4. One CC to Sri K.Srinivasa Rao, Advocate [OPUC] 5. The Section Officer, Criminal Section, High Court of Andhra Pradesh at Amaravati 6. Three CD Copies BSV nm Si; m m a

I HIGH COURT DATED:24/03/2025 JUDGMENT CRLA.No.190 of 2007 DISMISSING THE CRIMINAL APPEAL