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CASE NO.:

Appeal (crl.) 480 of 2002

PETITIONER:

D.S.P., Chennai

RESPONDENT:

K. Inbasagaran

DATE OF JUDGMENT: 07/12/2005

BENCH:

B.N.Agrawal & A.K. Mathur

JUDGMENT:

J U D G M E N T

A.K. MATHUR, J.

This appeal is directed against an order of the Madras High

Court whereby the Single Bench of the High Court has acquitted

the accused by its order dated 11th July, 2001 passed in Criminal

Appeal No.231/2000. Hence the present appeal has been filed

against the order of acquittal by the Deputy Superintendent of

Police, Chennai.

Brief facts which are necessary for disposal of this appeal

are that the accused-respondent, Mr. K. Inbasagaran was a senior

I.A.S. Officer of the Government of Tamil Nadu who stood

charged for offence punishable under Section 13(2) read with

Section 13(1)(e) of the Prevention of Corruption Act, 1988

(hereinafter to be referred as an "Act") and was found guilty,

convicted and sentenced by the learned Special Judge (XIth

Additional Judge, City Civil Court) at Madras to undergo rigorous

imprisonment for one year and also to pay a fine of Rs. 5,000/-,

in default to undergo Rigorous Imprisonment for three months.

Aggrieved against this Order, the accused preferred an

appeal before the Madras High Court at Chennai and the learned

Single Judge of the Madras High Court acquitted the accused of

the aforesaid charges. Hence, the present appeal filed by the

State of Tamil Nadu through the Deputy Superintendent of

Police, Directorate of Vigilance and Anti-Corruption, Chennai.

The accused, Inbasagaran obtained B.E. Hons. Degree and

joined Indian Navy as an Officer during 1965. Later on he

entered the Indian Administrative Service during 1970 and was

allotted the Tamil Nadu Cadre. During 1982 he went to America

for studies alongwith his wife and children. He worked in

various capacities under the Government of Tamil Nadu, like

Managing Director of Tamil Nadu Chemical Products, Chairman

of Tamil Nadu Leather Corporation and lastly he was appointed

as a Secretary to the Health Department. According to

prosecution on 13th September, 1993 and on 14th September, 1993

there was a raid by the Income-tax Authorities in the house of

the accused. The raid by Income-tax Department yielded a

huge amount of cash amounting to Rs. 30 lakhs, 7 gold biscuits

weighing 819 grams, $1118 and certain documents regarding

purchase of immovable properties and also fixed deposit receipts

of the Bank for Rs. 25,000/- in the name of third parties. The

Income-tax Authorities registered the case but subsequently

they referred the matter on 15.2.1994 to the State Government

to take departmental action against the accused. The

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Government of Tamil Nadu initiated the disciplinary proceedings

against the accused during February, 1994. A parallel criminal

proceedings was also taken by the Department regarding the

assets unearthed at the time of raid by the Income-tax

Department. However, the charges against the accused were

dropped with a warning to the accused in disciplinary proceedings

and the criminal case was also closed on mistake of facts. P.W.

51 S. Ganapathy Iyer an Assistant Commissioner of Income-tax,

Chennai Circle-1 (II), held an inquiry regarding the huge amount

of cash unearthed for the purpose of Income-tax assessment and

came to the conclusion that the said assets belonged to the

accused. On the basis of the inquiry by PW-51, the criminal

case against the accused was reopened as per the Order of the

Special Judge passed in Crl. M.P. No. 7453/1996 on 9.12.1996.

PW-53 Vishwanathan, Deputy Superintendent of Police, V&AC,

Chennai City-1, continued investigation at the instance of the

Special Judge, Madras. This reopening of the case was

challenged by the accused-petitioner by filing Crl. M.P.

6812/1997 before the Madras High Court but it was dismissed by

the Court on 24.2.1998. After the permission by the Special

Judge to reopen the case, the investigation was taken up by the

PW-53, Viswanathan, he issued notice to the accused, his wife

and children to appear before him but they did not appear.

After closing of the investigation, a charge-sheet was filed

before the Special Judge that the accused had committed

offence under Section 13(2) read with Section 13(1)(e) of the

Act on 4.11.1997.

The prosecution examined 53 witnesses as PWs 1 to 53 and

marked & executed documents as Exs. P.1 to P.185.

The accused denied the charges and according to the

accused the assets which had been unearthed during the raid by

the Income tax department was not his assets but they were

the assets of his wife who was running certain companies.

According to him, his wife accompanied him when he went to

America where she worked in a pharmaceutical company and also

as a clerk in State Bank of India and she earned salaries and was

also assessed by Income \026tax Department in America. At the

time of her return from America, she brought cash, video

camera and a computer. Video camera and computer were

revenue earning assets, his wife leased out the video camera for

marriage coverage and earned sufficient monies. She had

started a computer concern under the name and style of Tamil

Nadu Computer Service by incurring a loan of Rs. 2,00,000/- by

Punjab National Bank. The computer centre also generated

funds. It was also stated that apart from this, his wife had

floated three concerns one in the name and style of A.V.J.,

Marketing Service, a proprietory concerned of her own which

was having franchise for sale of hypo-dermic needles in Tamil

Nadu and Andhra Pradesh, another in the name and style of

M/s Southern Rims (P) Ltd. which was manufacturing cycle rims

and another company in the name of M/s Silver Shoes (P) Ltd.

which was manufacturing shoe uppers It was alleged that she

was Director of two companies and amounts of the two

companies were in her possession which she kept in her house.

Out of $1118, $800 belonged to his wife which she had earned as

salary in U.S.A. and $ 318 belonged to his son-in-law, S.

Rajasankar who went to Europe in September, 1988 for which he

obtained F.T.S. of $500 out of which he saved $318. Regarding

the purchase of immovable properties, he stated that for the

purpose of a factory for M/s Silver Shoes (P) Limited, land was

purchased at Vannagaram in the name of Rajasankar who

happened to be the Managing Director of the company with the

funds of the company. Regarding cash of Rs. 30 lakhs

recovered from his house, it was urged that a sum of Rs. 29 lakhs

was unaccounted money obtained by sale of cycle rims and shoe

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uppers by the two companies without bill and that money

belonged to her companies. Regarding Rs. 1 lakh, it was stated

that amount belonged to PW-46 Girish A. Darvey.

It was submitted that he had no proprietary control over

sum of Rs. 30 lakh seized by the Income-tax Department as it

belonged to the unaccounted money of his wife. Regarding Rs.

19 lakhs deposited in various branches of Punjab National Bank in

Karnataka State, it was submitted that all these monies

belonged to the companies owned by his wife and the same was

deposited at the instance of his wife. The accused justified

these unaccounted money by examining himself as D.W.13

alongwith other witnesses as D.Ws. 1 t o 12. including his wife

and had also got the documents exhibited as D.1 to D.99 to

substantiate his allegation.

The Special Judge discussed the evidence on record

and found that the purchase of gold biscuits, US dollars and cash

recovered from the house of the accused belonged the accused

and source of money for the purchase of land also traceable to

the accused. Learned trial court also found that deposit of Rs.

19 lakhs made in various banks in Punjab National Bank at

Bangalore was that of the accused and it was deposited in benami

names. The learned trial court held that assets worth Rs.

54,50,510/- was found in the possession of accused and

accordingly held him guilty as aforesaid.

On appeal by accused, learned Single Judge of the

Madras High Court examined the findings as well as the judgment

of the learned trial Court and came to the conclusion that the

recovery of sum of Rs. 29 lakhs at the house of the accused was

not in exclusive possession of the accused. So far as Rs.1 lakh

found on the dining table is concerned, it belonged to one Girish

Davey who appeared in the witness box as PW 46 and was

representative of pharmaceutical company, Ranbaxy and the

learned Single Judge of the High Court also held that Rs. 1 lakh

kept in plastic bag and two packets of sweets found on the

dining table at the time of raid, belonged to Girish and it does

not belong to the accused. Learned Single Judge also found that

since the entire money has been admitted by his wife who had

come in witness box as DW-12 & admitted that she earned this

money by selling cycle rims and leather shoe uppers without any

bill and this money belonged to her and she had made a clean

breast before the Income tax authority and thereby she had

accepted this unaccounted money being belonging to her.

Therefore, learned Single Judge held that this unaccounted

money did not belong to the accused. So far as the recovery of

the $1118 is concerned, the learned Single Judge found the

explanation satisfactory and his son-in-law has been found to be

guilty by foreign exchange authorities and fined. Likewise, the

learned Single Judge also found the purchase of gold biscuits by

his wife has been properly explained and likewise, the purchase

of the property by the wife from her unaccounted money and

also found that the money belonged to his wife and she has made

a clean breast before the Income-tax Officer. Hence, after

hearing both the parties the learned Single Judge acquitted the

accused and held that the money was not found from the

possession of the accused and it was unaccounted money

belonged to his wife who was dealing with various business and

it was also pointed out that Income-tax authorities had assessed

the money in her account, it was also held that no unaccounted

money has been recovered from the exclusive possession of the

accused, hence learned Single Judge acquitted the accused.

Aggrieved against this, the present appeal was filed by the

State, through Deputy Superintendent of Police, Vigilance.

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We have heard learned counsel for the State as well

as the Respondent-in-person and his counsel. Learned counsel

for the State has taken us through the entire evidence and has

tried to emphasize that the plea taken by the wife of the

accused that the money belonged to her was with a view to

shield her husband and his wife is only a decoy to protect her

husband. She has owned the entire money being the black

money, from her business. And she has accepted that all the

money which had been recovered from her house, the money

which has found deposited in the banks and the immovable

properties which were purchased, was done by her and she

owes the entire responsibility and she had disclosed to the

Income-tax department. The Income-tax department has

assessed all this money in her hands and assessment order has

been passed by the Income-tax Officer and in the appeal it has

been affirmed. In short, in fact all the money which has been

recovered at the house of the accused in cash, in kind and the

documents of properties purchased at various parts in

Karnataka and Tamil Nadu she has owned it. Therefore, the

wife has taken the full responsibility of this black money and

owned the same.

Learned counsel for the State states that the money

belongs to the accused since he was a Secretary to the

Government of Tamil Nadu in the Medical Health Department

and it is alleged that on the relevant date Girish Davay came

with the cash and sweets which were lying on the dining table

and it was recovered from the dining table. In fact this money

was brought for gratification to raise the purchase price of the

medicine, 'Fortwin' which was manufactured by the company of

which Girish Davey was one of the Senior Representative.

Learned counsel for the appellant invited our attention to the

following decisions of this Court.

i. AIR 1960 SC 7 [ C.S.D.Swami v. The State ]

ii. (1981) 3 SCC 199 [ State of Maharashtra v.

Wasudeo Ramchandra Kaidalwar]

iii. AIR 1988 SC 88 [State of Maharashtra v.

Pollonji DarabshawDaruwalla]

iv. (1991) 3 SCC 655 [ K.Veeraswami v. Union of

India & Ors.]

v. (1999) 6 SCC 559 [ P.Nallammal & Anr. V. State

represented by Inspector of Police]

As against this, learned counsel for the respondent as well

as the respondent in person have submitted that the act of

recovery of the money, the deposits in the bank and purchase of

the property is not disputed but the question is whether it was in

the possession of the accused or not?

It was pointed out that in fact all the money

belonged to his wife as she was running three companies and

she had admitted that out of the unaccounted sale of rims of

cycle as well as the leather shoe uppers without bills she

earned this huge wealth and she had owned it. Therefore,

recovery in this raid by Income-tax department cannot be

considered to be from exclusive possession of the accused.

Specially when the wife who has come in witness box as DW-12

and accepts it that she has earned all this money by sale of

goods without bill.

Learned counsel for the respondent also submitted that

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under Section 132(4) of the Income-tax Act, the order of the

Income Tax Officer has been confirmed in appeal and all money

owned by the wife has been assessed against her. It was also

submitted that finding of Income Tax authority and confession

of DW-12 Vijaya Inbasgaran have been accepted. Therefore, it

is a judicial finding and on the same a criminal prosecution

cannot be lodged. In support thereof learned counsel for the

respondent invited out attention in the case of K.C. Builders

and another Vs. Assistant Commissioner of Income Tax

Reported in (2004) 2 SCC 731.

We have heard both the learned counsel at length. The

basic question that emerges in the present case is whether the

accused could be saddled with all the unaccounted money at his

hand or not. It is the admitted position that both the husband

and wife were living together. The wife was running three

concerns though those concerns were running in loss. Yet she

could manage to earn black money by selling goods without bills

and amassed this wealth without disclosing the same to the

Income-tax authority and when the raid was conducted she

disclosed the unaccounted money and accepted herself for being

assessed by the Income-tax Department. Therefore, in this

context, the question arises whether the joint possession of the

premises by the husband and wife and the unaccounted money

which has been recovered from the house could be said to be in

exclusive possession of the accused. There is no two opinion in

the matter that the initial burden has to be discharged by the

prosecution. The prosecution in order to discharge that burden

has examined the Investigating Officer, P.W.53- Shri

Viswanathan, D.S.P. (Investigation). P.W.53- Viswanathan has

collected all the materials from various places and he has given

the details of his investigation. He has also supported the

recoveries which have been made by the Income-tax Department.

He in his statement, has also deposed that some money was

deposited at various branches of Punjab National Bank at

Bangalore and he has examined all the Senior Managers of Punjab

National Bank to show that various amounts were deposited in

their Banks and the prosecution has also produced them in the

witness box to substantiate their allegation as P.Ws.22, 23, 24,

25, 26 and 32. He has also examined the persons against whose

names those amounts were deposited in the witness box. He has

also examined the Income-tax Officer as P.W.14, P.W.44 \026

Assistant Director of Income-tax (Investigation) and P.W.51- S.

Ganapathy Iyer. By this evidence the prosecution has established

that the money was recovered at the house of the accused as well

as various purchases of immovable properties made by the wife of

the accused. The prosecution has tried to establish that all the

moneys which had been recovered from the house of the accused,

various deposits in the Punjab National Bank at various places

through the influence of the Regional Manager of Punjab National

Bank and the recovery of the gold ornaments as well as the

recovery of foreign exchange i.e. dollars belong to accused. Thus,

the prosecution has tried to establish that all the moneys

belonged to the accused and after taking sanction, prosecution

was launched against the accused. There is no two opinion in the

matter that the initial burden lies on the prosecution. In the

case of C.S.D.Swami v. The State reported in AIR 1960 SC 7,

this Court has taken the view that in Section 5(3) of the

Prevention of Corruption Act, 1947 a complete departure has

made from the criminal jurisprudence still initial burden lies on

the prosecution and in that context it has been observed as

follows :

" Section 5 (3) does not create a new

offence but only lays down a rule of evidence,

enabling the court to raise a presumption of

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guilt in certain circumstances- a rule which is a

complete departure from the established

principle of criminal jurisprudence that the

burden always lies on the prosecution to prove

all the ingredients of the offence charged, and

that the burden never shifts on to the accused

to disprove the charge framed against him.

Therefore, the initial burden was on the prosecution to establish

whether the accused has acquired the property disproportionate

to his known source of income or not. But at the same time it

has been held in a case of State of M.P. Vs. Awadh Kishore

Gupta and Others reported in (2004) 1 SCC 691 that accused

has to account satisfactorily the money received in his hand and

satisfy the court that his explanation was worthy of acceptance.

In order to substantiate the plea taken by the accused that all

the moneys which had been received belonged to his wife and in

support thereof he has examined as many as 13 witnesses

including himself, his wife and his son-in-law. D.W. 12 is the wife

of the accused. She has deposed that the entire money belonged

to her. She has admitted the raid on her house and she has also

admitted that she has amassed the wealth by selling cycle rims

and leather products without any bill and out of the money

amassed by her she had persuaded her husband to deposit the

same at various Banks. She has come forward and admitted the

recovery of the foreign exchange at her house and she has

accounted for the same. She has also admitted the recovery of

the gold ornaments at her house and she has explained that she

has purchased those gold ornaments. She has also submitted that

some real estate was purchased out of self earning as well as the

loan from the mother of the son-in-law and some contribution was

made by the son-in-law and the son-in-law has also admitted.

Likewise, D.W.8 - her son-in-law, Thiru S.Rajasankar also

appeared in the witness box and admitted that he has also saved

certain foreign exchange when he had gone on various visits

abroad. He has also admitted to have carried some money to be

deposited in the Bank. The accused has also come forward in the

witness box as D.W.13 and has deposed that all the moneys

belonged to his wife and when he came to know about the

unaccounted money at his house, he gave his piece of mind to her.

He has admitted that on one or two occasions money was carried

by himself to be deposited in the account in Punjab National Bank

and some money was also deposited on account of some of the

members of the family by P.W.8, S. Rajasankar, son-in-law.

Therefore, under these circumstances, the respondent has

explained the possession of unaccounted money.

Now, in this background, when the accused has come

forward with the plea that all the money which has been

recovered from his house and purchase of real estate or the

recovery of the gold and other deposits in the Bank, all have

been owned by his wife, then in that situation how can all these

recoveries of unaccounted money could be laid in his hands. The

question is when the accused has provided satisfactorily

explanation that all the money belonged to his wife and she has

owned it and the Income-tax Department has assessed in her

hand, then in that case, whether he could be charged under the

Prevention of Corruption Act. It is true that when there is joint

possession between the wife and husband, or father and son and

if some of the members of the family are involved in amassing

illegal wealth, then unless there is categorical evidence to

believe, that this can be read in the hands of the husband or as

the case may be, it cannot be fastened on the husband or head

of family. It is true that the prosecution in the present case has

tried its best to lead the evidence to show that all these moneys

belonged to the accused but when the wife has fully owned the

entire money and the other wealth earned by her by not showing

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in the Income-tax return and she has accepted the whole

responsibilities, in that case, it is very difficult to hold the

accused guilty of the charge. It is very difficult to segregate

that how much of wealth belonged to the husband and how much

belonged to the wife. The prosecution has not been able to lead

evidence to establish that some of the money could be held in the

hands of the accused. In case of joint possession it is very

difficult when one of the persons accepted the entire

responsibility. The wife of the accused has not been prosecuted

and it is only the husband who has been charged being the public

servant. In view of the explanation given by the husband and

when it has been substantiated by the evidence of the wife, the

other witnesses who have been produced on behalf of the

accused coupled with the fact that the entire money has been

treated in the hands of the wife and she has owned it and she has

been assessed by the Income-tax Department, it will not be

proper to hold the accused guilty under the prevention of

Corruption Act as his explanation appears to be plausible and

justifiable. The burden is on the accused to offer plausible

explanation and in the present case, he has satisfactorily

explained that the whole money which has been recovered from

his house does not belong to him and it belonged to his wife.

Therefore, he has satisfactorily accounted for the recovery of

the unaccounted money. Since the crucial question in this case

was of the possession and the premises in question was jointly

shared by the wife and the husband and the wife having accepted

the entire recovery at her hand, it will not be proper to hold

husband guilty. Therefore, in these circumstances, we are of the

opinion that the view taken by the High Court appears to be

justified and there are no compelling circumstances to reverse

the order of acquittal. Hence, we do not find any merit in this

appeal and the same is dismissed.