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CASE NO.:

Appeal (crl.) 773 of 2000

PETITIONER:

R. Janakiraman

RESPONDENT:

State of Tamil Nadu, through CBI, SPE, Madras

DATE OF JUDGMENT: 04/01/2006

BENCH:

S. B. Sinha & R. V. Raveendran

JUDGMENT:

J U D G M E N T

RAVEENDRAN, J.

This appeal is preferred against the judgment dated

21.01.2000 passed by the High Court of Madras dismissing Criminal

Appeal No. 127 of 1993 filed by the Appellant thereby confirming the

judgment dated 25.01.1993 passed by the Special Judge, Madurai in

Calendar Case No.2 of 1987, convicting and sentencing him under

section 5(1)(e) read with section 5(2) of the Prevention of Corruption

Act, 1947 (for short 'the Act').

2. The case of prosecution, in brief, was as follows :-

2.1) The appellant joined the Southern Railway on 5.7.1958. He

was promoted as a Permanent Way Inspector and later as Assistant

Engineer on 28.5.1981. The appellant's family consisted of himself,

his wife and two children. He had six brothers and three sisters and

had no ancestral properties.

2.2) On information received that the appellant was corrupt and

had amassed assets disproportionate to his income, R.C. No. 33 of

1986 was registered on 28.5.1986 by the Superintendent, Central

Bureau of Investigation, Madras. Chelladurai, Inspector CBI [PW-

23] took up the case for investigation and obtained a warrant for

inspection of the appellant's house No. 16, North Colony, Railway

Quarters, Dindigul, from the Chief Judicial Magistrate, Chennai. On

29.5.1986, PW-23 along with his party and two independent

witnesses went to the house of the accused. Appellant was not

present but his son was present. The search was commenced at 8

A.M. The appellant came around 11.30 A.M. and his wife came

around 2.45 P.M. There were three steel almirahs kept in the house

of the appellant and on opening them with the keys provided by the

appellant, a sum of Rs. 2,94,615/- in cash was found in ten different

containers (biscuit tins, briefcases, etc.,) which was seized. Certain

documents were also seized.

2.3) As per the charge-sheet dated 18.5.1987, the check-period

was 1.5.1976 to 29.5.1986 and the value of the assets held by the

appellant at the beginning of the check period (1.5.1976) was

Rs.13,449/17; and the value of the total assets of the appellant at

the end of the check period (as on 29.5.1986) was Rs. 6,69,852/- as

under:-

(i)

Fixed deposits & NSCs

Rs.1,81,688.13

(ii)

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Credit balance in three S/B Accounts

Rs. 47,345.90

(iii)

Shares and sundry deposits

Rs. 2,085.00

(iv)

Household articles

Rs. 31,076.00

(v)

House at No.10, Swarnapuram, Salem

(with registration expenses of Rs.4302.79)

Rs.1,13,042.75

(vi)

Cash in hand (recovered during search)

Rs.2,94,615.00

Total

Rs.6,69,852.78

The total income earned by the appellant during the check period

was Rs.2,81,497.93 (salary, interest on FDs, interest on bank

balances, house-rent, house rent advance and housing loan) and the

total expenditure incurred for the family during that period was

Rs.88,645.92. Thus, the maximum likely savings during that period

was Rs.1,92,852.01. Thus, the value of total assets as on 29.5.1986

could not have exceeded Rs.192,852.01 (savings) plus Rs.13,449.17

(assets at the beginning of the check period) in all Rs.2,06,301.18.

By deducting the said amount of Rs. 2,06,301.18 from Rs.

6,69,852/-, the value of the assets acquired by the appellant beyond

his known sources of income was found to be Rs.4,63,551.60. Thus

the charge was that the appellant was in possession of assets of the

value of Rs.4,63,551/60 in excess of his known sources of income

which he could satisfactorily account and thereby he committed an

offence with section 5(1)(e) of the Act punishable under section

5(2).

3) The explanation offered by the appellant (as gathered from the

statement under Section 313 Cr.P.C., exhibited documents and

written arguments) was as follows :-

(i) Loans received from PW-11 and PW-15 = Rs. 2,50,000/-

(ii) Loans received from brothers and brothers-in-law = Rs. 40,000/-

(iii) TA received [not taken into account by PW-23] = Rs. 25,922/60

(iv) Bonus received [not taken into account by PW-23]= Rs. 8,000/-

(v) Excess evaluation by PW-23 of the House at Salem

[taken as Rs. 1,08,740/- as against the

actual cost of construction being Rs.80,000/-] = Rs. 28,740/-

(vi) Difference in value of assets as on 1.5.1976

[Rs.63,198.61 claimed by the appellant less

Rs.13,449.17 assessed by PW-23] = Rs. 49,749/44

(vii) Difference in income received during the

check period 1.5.1976 to 29.5.1986

(Rs.3,16,076.30 claimed by the appellant

and Rs.2,81,497.97 assessed by PW-23)

(Note:The said difference relates to

difference in receipt of interest on fixed deposits) = Rs. 34,578.37

---------------

Total = Rs.4,36,990.41

-----------------

The appellant submitted that the extent of assets beyond the known

sources of income was not, therefore, Rs.4,63,551/40 as charged,

but only Rs.26,561/-. The appellant contended that a margin of 10%

is permitted and as the unexplained assets were only to an extent of

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Rs.26,561/- which was less than even 10% of the total income, the

courts below committed an error in holding that the assets

possessed by the accused were disproportionate to his known

sources of income, so as to justify the raising of presumption under

Section 5(3).

4. The special court after considering the evidence came to the

conclusion that even if all other explanations and contentions of the

appellant were accepted, assets to an extent of Rs.3,05,985.39

remained unaccounted and unexplained. It accepted the claim of the

accused that the total of assets as on 29.5.1986 was

Rs.6,41,112.78. It also accepted his claim that the value of assets as

on 1.5.1976 was not Rs.13,449.17 but Rs.63,198.61 (in calculations,

wrongly taken as Rs.73,759/31 by the Special Court). It also

accepted certain other income which had not been taken into

account by PW-23, namely, Travelling Allowance (Rs.25,922.60),

bonus (Rs.8,000/-), interest on FDs (Rs.91,666.25 as against

Rs.57,583.91 considered by PW-23). It further accepted the claim of

the accused that the value of the Salem house was only Rs.80,000/-

(as against Rs.1,13,042.79 assessed by PW-23). It, however,

rejected the explanation relating to loans of Rs. 2,50,000/- allegedly

taken from PWs-11 & 15 and the borrowings aggregating to

Rs.40,000/- from relatives. It held that the prosecution had proved

that the appellant possessed assets in excess of all known sources of

income to an extent of Rs.3,05,985.39 and by raising the

presumption that such assets were procured by illegal means by

misusing his official powers and influence, found him guilty and

convicted him under section 5(1)(e) read with section 5(2) of the

Act. The appellant was sentenced to undergo imprisonment for one

year and pay a fine of Rs.1,000/- and, in default, to undergo

rigorous imprisonment for four months. The cash recovered

(Rs.2,94,615/-) was ordered to be confiscated.

5. Feeling aggrieved, the appellant filed an appeal before the

High Court [Crl. Appeal No. 127 of 1993]. By judgment dated

21.01.2000, the High Court confirmed the conviction and sentence

and dismissed the appeal. In fact, the High Court came to the

conclusion that the value of unaccounted assets was Rs. 4,13,802.16

and not Rs.3,05,985.39 as determined by the Special Court. It

accepted the contention of the appellant that the value of assets as

on 1.5.1976 (beginning of check period) was Rs.63,198.61 and not

Rs.13,449.17. It, however, rejected the appellant's claim for certain

additions to the income (which had been accepted by the trial court),

namely, Rs.25,922.60 (travelling allowance), Rs.8,000/- (bonus),

Rs.34,083/- (being part interest on fixed deposits, that is by taking

the interest earned as only Rs.57,583.91 instead of Rs.91,666.25

claimed by the appellant) and Rs.511/- (S.B. Account interest). It

did not accept his contention that the value of the Salem house was

only Rs.80,000/- and took it as Rs.1,13,042/-, thereby increasing

the assets by an extent of Rs.28,740/-. Consequently, out of

Rs.6,69,852.78 (value of assets as on 29.5.1986), the High Court

deducted Rs.63,198.61 (being the value of assets at the beginning of

check period as claimed by the appellant) and Rs.1,92,852.01

(surplus of income over expenditure during the check period as

determined by it) and concluded that assets of the value of

Rs.413,802.16 remained unexplained.

6. The said decision is challenged in this appeal by special leave.

The learned counsel for the appellant contended that the High Court

committed a serious error in over-estimating the cost of the Salem

house and by refusing to take note of the following five items of

income during the check period :-

(i) Rs.2,50,000.00 Loans received from PW-11 and PW-15

(ii) Rs. 40,000.00 Loans received from brothers and brother-

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in-law

(iii) Rs. 34,578.37 Interest on deposits (part)

(iv) Rs. 22,922.60 Travelling allowance received by appellant

(v) Rs. 8,000.00 Bonus received by appellant

-----------------

Rs.3,55,500.97

Rs. 28,740.00 (Excess in the valuation of Salem House taken

as Rs.1,08,740/- instead of Rs.80,000/-)

-----------------

Rs.3,84,240.97

-----------------

The appellant contended that if these amounts had been taken into

account by the High Court, it would have found that the unexplained

assets or income over expenditure was only Rs.29,561/-, well within

the 10% margin recognized and permitted by this Court. (Reference

may be made to Krishnanand Agnihotri vs State of MP - AIR

1977 SC 796 \026 wherein this Court held where the value of

unexplained portion is less than 10% of the total income, it would

not be proper to hold that the assets found in the possession of the

accused were disproportionate to his known sources of income, so as

to justify the raising of the presumption under Section 5(3) of the

Act).The learned counsel for the appellant further submitted that the

findings in favour of the accused cannot be altered in appeal by the

accused against conviction. He pointed out that the trial court had

accepted his claim for additions to income of Rs.22,922.60 (TA),

Rs.8,000/- (Bonus) and Rs.34,578.37 (interest on deposits) and also

reduction in the total value of assets by Rs.28,740/- (in all

aggregating to Rs.94,240/97) and these could not have been

reversed by the High Court in an appeal by the accused.

7. After the matter was argued for some time, learned counsel on

both sides agreed that the entire matter boiled down to the

acceptance of the genuineness of the alleged loan of Rs.2,50,000/-

from PW-11 and PW-15. They agreed that even if the claims of the

appellant relating to Travelling Allowance [Rs.22,922.60/-], Bonus

[Rs.8,000/-], difference in interest on FDs [Rs.34,578.37], and

difference in valuation of the house [Rs. 28,740/-] are accepted, the

appeal will fail if the alleged loan of Rs. 2,50,000/- was not accepted.

If the explanation for Rs.2,50,000/- which is the major chunk of the

unexplained excess (being part of Rs. 2,94,615/- found in cash in

appellant's house) is not accepted, there may be no need to examine

the correctness of the other items. We will, therefore, first deal with

the alleged loan of Rs. 2,50,000/-.

8. The appellant's case is that he had taken a loan of

Rs.1,25,000/- from PW-11 and another sum of Rs.1,25,000/- from

PW-15 on 24.5.1986 (five days before the search) and the same

was evident from the promissory notes [Ex. P-64 & P-65], guarantee

letters [Ex.P-66 & P-67], confidential letter [Ex.P-68], equitable

mortgage deed [Ex.P-69] and the entries in the account books of

PW-11 and PW-15 [Ex.P-70 to P-81]. He submits that the said

documentary evidence proved beyond doubt that he had received

Rs.2,50,000/- as loan from PW-11 and PW-15.

9. We may briefly refer to the evidence of PW-11 and PW-15 who

were the alleged creditors.

9.1) Chandiram (PW-11) stated that he was carrying on money-

lending business at Salem in partnership with his mother and three

brothers, from the year 1984 under the name and style of 'Pahlaprai

Sons'; that Satram Das (PW-15) was his paternal uncle and he was

also doing money lending business under the name and style of

'Satramdas Mahesh Kumar'; that whenever money was to be lent, he

was taking a promissory note, guarantee letter, confidential form

etc. from the borrower; and that he maintained a promissory note

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book, day book, cash book wherein the transactions were entered by

one Kattanmal, the common Accountant for himself and PW-15. He

further stated that he was a friend and acquaintance of Kasinathan

and Ramchandran (brothers of appellant) as he used to play tennis

with them for about 15 years; that he knew the appellant and his

another brother Narayanaswamy through Kasinathan and

Ramchandran; that on 30.5.1986, the appellant's three brothers

came to his office and asked him and PW-15 for a loan of Rs. 2 to

Rs.3 lakhs, stating that the loan was required by their brother

Janakiraman (appellant) in connection with the purchase of a house

at Coimbatore; that he and PW-15 stated that they could not lend

such a big amount; that appellant's brothers stated that if they (PW-

11 & PW-15) were not able to lend such amount, they may at least

make an 'adjustment entry' in their account books by showing that a

loan was given on 24.5.1986; that when PW-11 and PW-15 stated

that they had not done such a thing before, the appellant's brothers

stated that they had come to them with faith and hope and offered

to pay a commission of three to four thousand rupees for merely

making an entry that the said amount was advanced by them to

appellant.

9.2) PW-11 further stated that when he asked them why they

wanted such a specific entry for such amount as on 24.5.1986, they

stated that appellant had already paid such amount as advance to

buy a house at Coimbatore and therefore, they wanted such an entry

to show that the said amount was borrowed by the appellant; that as

they went on pleading, finally PW-11 and PW-15 agreed to help

them; that PW-15 prepared two promissory notes for Rs.1,25,000/-

each showing the dates as 24.5.1986, though the said promissory

notes (Ex. P-64 & P-65 ) were, however, actually written on

30.5.1986. One promissory note [Ex. P-64] was executed in favour

of M/s. Satramdas Mahesh Kumar. The other promissory note (Ex. P-

65) was executed in favour of Pahlaprai Sons [partnership firm of

PW-11]. Two guarantee letters were also filled up by Kasinathan [Ex.

P-66 and P-67]; one in favour of M/s. Satramdas Mahesh Kumar and

the other in favour of Pahlaprai Sons. One confidential form [Ex. P-

68] was filled up by Kasinathan. Narayanaswamy signed both

promissory notes and the 'confidential form'. All the three brothers of

appellant signed the guarantee letters. To create a document to

show that the appellant's house at Salem was also given as security

by way of equitable mortgage for such loan, appellant's brother

Ramachandran along with PW-11's clerk went to a stamp vendor to

obtain an ante-dated stamp paper with the date of 23.5.1986 in the

name of the appellant. Thereafter, the appropriate entries were

made in the pronote entry book and in the respective day book and

cash book, showing Rs.1,25,000/- was advanced by the firm of PW-

11 and another Rs.1,25,000/- by the firm of PW-15. After the

entries were made, the three brothers of the appellant took the

promissory notes, guarantee letters, confidential form, equitable

mortgage document stating that they will get the signatures of the

appellant and later brought back those documents and delivered

them on 1.6.1986 with the signatures of the appellant. Along with

the said loan documents, they also gave two alleged 'title deeds',

that is, a certificate showing the ownership of the appellant in regard

to the house at Salem [Ex. P-82] and two electricity bills [Ex. P-83

series]. PW-11 stated that the aforesaid documents were created to

make the lending transaction to appear genuine even though no

money was advanced.

9.3) PW-11 also stated that only on 19th & 20th June, 1986, when

CBI raided his office and house and seized the said documents [Ex.

P-64 to P-83], he and PW-15 came to know about CBI discovering

cash of about Rs.3 lakhs in appellant's house on 29.5.1986 and

learnt they were cheated by making them agree to show 'adjustment

entries' to create evidence of borrowing by the appellant to explain

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away the huge cash. He also stated that his statement (Ex. P-91)

was recorded by one Ramalingam, Assistant Director, Intelligence

Wing of Income Tax Department, Chennai. Subsequently on

01.8.1986, PW-11 and PW-15 were arrested and released on

personal bonds. They consulted their lawyer in regard to these

transactions and he suggested that they should disclose the real

facts relating to the transactions before a Magistrate at Chennai.

Accordingly, they applied to the Metropolitan Magistrate, Saidapet,

Chennai, to record their statements and they were asked to appear

before Saidapet Metropolitan Magistrate No. IV on 11.8.1986. They

appeared on that date before the said Magistrate and the Magistrate

asked PW-11 whether he was willing to give a voluntary statement

and also informed him to think over before giving such statement as

such statements might be used against him and gave a day's time to

him about it. That next day, he appeared before the Magistrate and

Magistrate again gave him a warning and asked whether he was

willing to give a voluntary statement. When he reiterated his desire,

the Magistrate recorded his statement under section 164 Cr.P.C. (Ex.

P-93). Thereafter, he was asked to appear before C.B.I. Inspector

who also recorded his statement. He also stated that he received

summons from C.J.M., Coimbatore on 14.5.1987 and he appeared on

that day and confirmed his statement and the CJM granted pardon.

9.4) PW-11 admitted in the cross-examination that merely for

money or friendship, they would not normally make false entries;

that he had sufficient cash balance on 24.5.1986 to advance

Rs.1,25,000/- and that even in his uncle's accounts, there was

sufficient cash balance to advance Rs.1,25,000/-; that normally the

execution of promissory notes and lending of the amount was

simultaneous; that there was nothing to show that the entries shown

as relating to the lending were really made on 30.5.1986 and not on

24.5.1986. He also stated that though appellant's brothers agreed to

give commission to him and PW-15, actually no commission was

given to either of them. He also denied that he and PW-15 offered to

give statements under section 164 Cr.P.C. before the Magistrate at

Chennai only under pressure from the CBI. He admitted that the CBI

did not examine them until they gave the statements under section

164 Cr.P.C.

9.5) To the similar effect is the evidence of PW-15 [J. Chatram

Doss]. His sworn statement under section 131 of Income Tax Act

recorded by PW-14 is Ex.P-92 and his statement under section 164

Cr.P.C. recorded by the Addl. Metropolitan Magistrate, Chennai is

Ex.P-96.

10) The evidence of PW-11 and PW-15 are clear and categorical

that Rs.2,50,000/- was not advanced to appellant on 24.5.1986 or

any other date and that documents (Ex.P-64 to P-69) and the entries

(Ex.P-70 to P-81) were created only on 30.5.1986 to help appellant

to explain the huge cash found in his possession. Nothing has been

elicited in the cross-examination to disbelieve their evidence. The

learned counsel for the appellant, however, referred to the following

factors and contended that the evidence of PW-11 and PW-15 that

they had not lent any amount to appellant, should be rejected as not

trustworthy in view of the following:-

i) Such evidence being contrary to the very documents

executed in favour of PW-11 and PW-15 (Ex.P-64 to P-

69) and the entries made in the books of PW-11 and PW-

15 (Ex.P-70 to P-81), should be excluded having regard

to section 92 of the Evidence Act, 1872.

ii) The documents executed by the appellant [Ex.P-64 to P-

69] showed that they were all executed on 24.5.1986

and that Rs.2,50,000/- in all was advanced by PW-11

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and PW-15 to appellant on 24.5.1986. The entries in the

account books of PW-11 and PW-15 (Ex.P-70 to P-81))

also demonstrated this position. Further, a deed creating

mortgage by depositing of title deed was also executed

on 24.5.1986 (Ex.P-69) on a stamp paper purchased in

the name of appellant on 23.5.1986 and this clearly

showed that there was a lending transaction on

24.5.1986 itself. PW-11 had also specifically admitted

that neither he nor PW-15 will make any adjustment

entries only for the sake of money or friendship.

iii) PW-11 and PW-15 have made false statements under

Section 164 Cr.P.C. to support the prosecution case at

the instance of CBI who apparently applied threats

through the officer of the Income Tax Department (PW-

14). As PW-11 and PW-15 were residents of Salem,

there was absolutely no need for them to go over to

Chennai to make the statement under section 164

Cr.P.C. before the Magistrate. The fact that they were

made at Chennai shows that it was done at the instance

of CBI whose main office was situated at Chennai.

iv) PW-11 and PW-15 were granted pardon in view of the

statements made under section 164 Cr.P.C. and such

statements by co-accused/accomplices cannot be relied

upon to hold the appellant guilty.

11. The contention that evidence of PW-11 and PW-15 are contrary

to the documentary evidence [Ex.P-64 to P-81] and therefore,

should be excluded under section 92 of Evidence Act, 1872 is not

tenable.

11.1) In Tyagaraja Mudaliyar vs. Vedathani [AIR 1939 PC 70],

the Privy Council observed that oral evidence is admissible to show

that a document executed by a person was never intended to

operate as an agreement, but was brought into existence solely for

the purpose of creating evidence about some other matter.

11.2) In Krishna Bai vs. Appasaheb [AIR 1979 SC 1880], this

Court observed : "..........when there is a dispute in regard to the

true character of a writing, evidence de hors the document can be

led to show that the writing was not the real nature of the

transaction, but was only an illusory, fictitious and colourable device

which cloaked something else, and that the apparent state of affairs

was not the real state of affairs."

11.3) We may next refer to the following observations in

Gangabai vs. Chhabubai [1982 (1) SCC 4] interpreting section

92:-

"11..............Section 91 of the Evidence Act provides that when

the terms of a contract, or of a grant, or of any other

disposition of property, have been reduced to the form of a

document, and in all cases in which any matter is required by

law to be reduced to the form of a document, no evidence shall

be given in proof of the terms of such contract, grant or other

disposition of property, or of such matter, except the document

itself, Sub-section (1) of Section 92 declares that when the

terms of any contract, grant or other disposition of property, or

any matter required by law to be reduced to the form of a

document, have been proved according to the last section, no

evidence of any oral agreement or statement shall be admitted,

as between the parties to any such instrument or their

representatives in interest, for the purpose of contradicting,

varying, adding to, or subtracting from, its terms. And the first

proviso to Section 92 says that any fact may be proved which

would invalidate any document, or which would entitle any

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person to any decree or order relating thereto; such as fraud,

intimidation, illegality, want of due execution, want of capacity

in any contracting party, want or failure of consideration, or

mistake in fact or law. It is clear to us that the bar imposed

by sub-section (1) of Section 92 applies only when a

party seeks to rely upon the document embodying the

terms of the transaction. In that event, the law declares that

the nature and intent of the transaction must be gathered from

the terms of the document itself and no evidence of any oral

agreement or statement can be admitted as between the

parties to such document for the purpose of contradicting or

modifying its terms. The sub-section is not attracted when

the case of a party is that the transaction recorded in the

document was never intended to be acted upon at all

between the parties and that the document is a sham.

Such a question arises when the party asserts that there was a

different transaction altogether and what is recorded in the

document was intended to be of no consequence whatever. For

that purpose oral evidence is admissible to show that the

document executed was never intended to operate as an

agreement but that some other agreement altogether,

not recorded in the document, was entered into between

the parties." (emphasis supplied)

11.4) The above view was reiterated in Ishwar Dass Jain vs.

Sohan Lal [2000 (1) SCC 434] and it was held that the bar under

section 92(1) would arise only when the document is relied upon,

but, at the same time, its terms are sought to be varied and

contradicted.

11.5) In Parvinder Singh vs. Renu Gautam [2004 (4) SCC 794],

this Court observed :-

"The rule as to exclusion of oral by documentary evidence

governs the parties to the deed in writing. A stranger to the

document is not bound by the terms of the document and is,

therefore, not excluded from demonstrating the untrue or

collusive nature of the document or the fraudulent or illegal

purpose for which it was brought into being. An enquiry into

reality of transaction is not excluded merely by availability of

writing reciting the transaction.

11.6) We may cull out the principles relating to section 92 of the

Evidence Act, thus :-

i) Section 92 is supplementary to section 91 and corollary

to the rule contained in section 91.

ii) The rule contained in section 92 will apply only to the

parties to the instrument or their successors-in-interest.

Strangers to the contract (which would include the

prosecution in a criminal proceeding) are not barred from

establishing a contemporaneous oral agreement

contradicting or varying the terms of the instrument. On

the other hand, section 91 may apply to strangers also.

iii) The bar under section 92 would apply when a party to

the instrument, relying on the instrument, seeks to

prove that the terms of the transaction covered by the

instrument are different from what is contained in the

instrument. It will not apply where anyone, including a

party to the instrument, seeks to establish that the

transaction itself is different from what it purports to be.

To put it differently, the bar is to oral evidence to

disprove the terms of a contract, and not to disprove the

contract itself, or to prove that the document was not

intended to be acted upon and that intention was totally

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different.

Applying the aforesaid principles, it is clear that the bar with section

92 will apply to a proceeding inter-parties to a document and not to

a criminal proceeding, where the prosecution is trying to prove that

a particular document or set of documents are fictitious documents

created to offer an explanation for disproportionate wealth. Oral

evidence can always be led to show that a transaction under a

particular document or set of documents is sham or fictitious or

nominal, not intended to be acted upon.

12. The contention that a statement under Section 164 Cr.P.C. of

an accomplice/co-accused cannot be used as evidence against an

accused, on the facts of this case, is rather misleading. It is no doubt

well-settled that in dealing with a case against an accused person,

the Court cannot start with the confession of a co-accused and it

must begin with other evidence adduced by the prosecution and

after it has formed its opinion with regard to the quality and effect of

such evidence, it is permissible to turn to the confession in order to

lend support or assurance to the conclusion of guilt which the court

is about to reach on the other evidence, vide Haricharan vs. State

of Bihar [1964 (6) SCR 623] and Dagdu & Ors. Vs. State of

Maharastra [1977 (3) SCC 68]. But in this case, the statements

made by PW-11 & PW-15 before the Magistrate at Chennai are not

the only evidence on which reliance is placed. It is used more as a

corroboration. We may also note that PW-11 and PW-15 were not

'co-accused' or 'accomplices' or 'abettors' of the appellant in regard

to the charge of disproportionate assets. They came into the picture,

only after appellant's house was raided, in an effort by the appellant

to explain the cash found to an extent of Rs. 2,50,000/-.

13. The contention that Ex.P-64 to P-69 and the entries in account

books (Ex.P-70 to P-81) bear the date 24.5.1986 and therefore, they

cannot be relied upon to show that the documents were executed

and entries were made on 30.5.1986 is untenable. PW-11 and PW-

15 clearly and categorically explained the circumstances in which

those documents came into existence on 30.5.1986. Several

circumstances probabilise their statements. We may refer to them

briefly :-

i) There is no evidence to show that the appellant was

negotiating for purchase of any property at Coimbatore or that

he wanted money for purchase of such property. Neither the

particulars of such property at Coimbatore nor the terms of

such sale have been disclosed.

ii) The stamp paper on which the alleged mortgage by deposit of

title deeds (Ex. P-69) is of the value of Rs.7/-. It shows that

stamp paper was sold to appellant on 23.5.1986. The case of

the appellant is that the said stamp paper was purchased at

Salem on 23.5.1986. But the stamp paper shows that it was

sold by stamp vendor named P.K. Nagaraja Rao at Karur,

which is a town far away from Salem where PW-11 and PW-15

carried on their business, and far away from Dindigul where

appellant was residing. It is unimaginable that a person

residing in Dindigul and proposing to borrow an amount from

persons carrying on business at Salem would go to Karur to

purchase a stamp paper of Rs.7/-. On the other hand, it fully

supports the evidence of PW-11 that the appellant's brothers

wanted an ante-dated stamp paper on 30.5.1986 and PW-11

sent his clerk along with the appellant's brothers to the Bazar

to procure such ante-dated stamp paper from some stamp

vendor at Salem who apparently kept a stock of such stamp

papers illegally and sold them.

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iii) The creation of an equitable mortgage by depositing

documents other than title deeds is not valid or permissible.

We extract below the contents of Ex.P-69 :-

"On this day, 24th of May, 1986, I have deposited with

you on 23.5.1986, the undermentioned title deeds

belonging to my property namely (1) one plot with

terraced house \026 site bearing (S. No. 8/3) Plot No.10, in

Swarnapuri Extention, Salem - 636 004, with intent by it

in respect of the amount due to you under the pronote

executed by me on for Rs.2,50,000/- with interest at

24% per annum thereon.

Equitable mortgage in favour of M/s Satramdas Mahesh

Kumar and M/s Pahlaprai Sons, 43-D, First Agaharam,

Salem.

(R. Janakiraman)

Signature

Details of title deeds handed over for the purpose of

equitable mortgage above said :

Copy of the sale deed in my favour dated ................

Copy of the loan sanction from the Railway Board.

Copy of the sale deed given because original is with

Railways.

Dated : 24.5.1986 at Salem (R. Janakiraman)

Signature

'Sd : Narayana Swamy'

Equitable mortgage is created by depositing the original title deeds.

But in this case, the original title deeds are not deposited. Not even

the two documents referred in Ex. P-69 are deposited. What are

deposited (Ex. P-82 and P-83) were not title deeds but only a

certificate issued by the Swarnapuri Cooperative House Building

Society Ltd., dated 1.2.1984 certifying the appellant is owner of Plot

No. 10, Swarnapuri Extension (Ex.P-82) and two receipts issued by

Tamil Nadu Electricity Board showing that the appellant had paid

some electricity charges (Ex.P-83). PW-11 and PW-15 being

experienced money-lenders, if really were lending Rs.2,50,000/-,

would have certainly insisted upon original title deeds or at least the

documents mentioned in Ex.P-69 being deposited. This shows that

the equitable mortgage was also a 'make-believe' and not real.

14. The recovery of Rs.2,94,115/- in cash from the steel almirahs

of the appellant is not disputed. The appellant does not disown the

amount but admits that it belongs to him. His explanation as to how

he obtained the said money is clearly unacceptable. The persons

from whom he allegedly borrowed the said money, Rs.2,50,000/-,

have denied having lent the said amount. We, therefore, find no

error in the concurrent findings of the trial court and the High Court

that the appellant had not borrowed the said amount from PW-11

and PW-15 and that the same was part of the ill-gotten money

acquired as illegal gratification.

15. The appellant having failed to satisfactorily account for the

assets beyond his known sources of income to the said extent of

Rs.2,50,000/-, is guilty of an offence under section 5(1)(e) of the

Act. In view of our said finding, it is really unnecessary to examine

the other disputed amounts namely alleged loan from brothers and

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brothers-in-law (Rs.40,000/-), travelling allowance [Rs. 22,922/60],

bonus [Rs.8,000/-], difference in interest on fixed deposits

[Rs.34,578/37]; and difference in cost of construction (Rs.28,740/-).

We may, however, refer to two other questions on which arguments

were advanced by the learned counsel for the appellant.

16. The first relates to his argument that finding in his favour

recorded by the Trial Judge cannot be altered to his detriment, in

his appeal against conviction. He referred to four items (travelling

allowance, bonus, difference in interest on Fixed Deposits and

difference in cost in valuation of the house) on which the High Court

had reversed the findings of the Special Judge in his favour.

Reliance is placed on the decision of this Court in the State of

Andhra Pradesh vs. Thadi Narayana [1962 (2) SCR 904].

16.1) We will refer to the facts as also the principles laid down in

Thadi Narayana (supra) to show that they are inapplicable to the

case in hand. In that case, the accused was tried for offences under

sections 302 and 392 Indian Penal Code. The Sessions Judge

acquitted the accused under sections 302 and 392 IPC but convicted

her under section 411 IPC. The accused appealed to the High Court

against the conviction under section 411 IPC. The State did not

appeal against the acquittal in respect of the charges under sections

302 and 392 IPC. The High Court while setting aside the order of

conviction under section 411 IPC also set aside the order of

acquittal under sections 302 and 392 IPC and ordered a retrial on

the original charges. This Court held that while exercising power

under section 423(1)(b) of the old Code of Criminal Procedure

[corresponding to section 386(b) of the new Code] in an appeal

against conviction, the High Court had no jurisdiction to set aside

the order of acquittal passed in favour of the accused by the

Sessions Judge (in respect of the offences under sections 302 and

392 IPC). It was pointed out that as section 423(1)(b) of Cr.P.C.

was confined to appeals against the orders of conviction and

sentence, what falls for decision in such appeals is only the

conviction and sentence and matters incidental thereto; and if the

order of acquittal is not challenged in an appeal and if the High

Court does not take action in exercise of its powers of revision, the

order of acquittal becomes final and cannot be challenged indirectly

in an appeal by the accused against the order of conviction and

sentence. It was held :-

In a case where several offences are charged against an

accused person the trial is no doubt one; but where the

accused person is acquitted of some offences and convicted of

others the character of the appellate proceedings and their

scope and extent is necessarily determined by the nature of the

appeal preferred before the Appellate Court. If an appeal is

preferred against an order of acquittal by the State and no

appeal is filed by the convicted person against his conviction it

is only the order of acquittal which falls to be considered by the

Appellate Court and not the order of conviction. Similarly, if an

order of conviction is challenged by the convicted person but

the order of acquittal is not challenged by the State, then it is

only the order of conviction that falls to be considered by the

Appellate Court and not the order of acquittal. Therefore the

assumption that the whole case is before the High Court when

it entertains an appeal against conviction is not well-founded

and as such it cannot be pressed into service in construing the

expression "alter the finding".

It was further held that the expression 'alter the finding' in section

423(1)(b)(2) [corresponding to section 386 (b) (ii) of the new

Code] has only one meaning, and that is alter the finding of

conviction and not the finding of acquittal. This Court then

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proceeded to consider the question as to what are the kinds of

cases in which the power to 'alter the finding' can be exercised,

thus: -

"The answer to this question is furnished by the provisions of s.

236, 237 and 238. Section 236 deals with cases where it is

doubtful what offence has been committed, Sec. 237 with cases

where a person may be charged with one offence and yet he

can be convicted of another, and s. 238 with cases where the

offence proved includes the offence charged and another

offence not so charged. Where a person is charged with a

major offence, such as for instance under s. 407 of the Indian

Penal Code, he may be convicted either of that offence or of a

minor offence, as for instance under s. 406. That is the result

of s. 238 of the Code. Now, if a trial court charges, and

convicts an accused person of, an offence under s. 407 and

sentences him the Appellate Court may alter the finding of guilt

of the accused from s. 407 to s. 406 and in that case it may

retain the same sentence or reduce it. It is, however, clear that

in exercising the power conferred by s. 423(1)(b)(2) the

sentence imposed on an accused person cannot be enhanced,

and that may mean that the conviction of a minor offence may

not be altered into that of a major offence. In our opinion,

therefore, the power conferred by s. 423(1)(b)(1) is intended

to be exercised in cases falling under ss. 236 to 238 of the

Code. We would accordingly hold that the power conferred by

the expression "alter the finding" does not include the power to

alter or modify the finding of acquittal. The finding specified in

the context means the finding as to conviction, and the power

to alter the finding can be exercised in cases like those which

we have just indicated."

16.2) The facts of this case are completely different. The Special

Judge convicted and sentenced the appellant under section 5(1)(e)

read with section 5(2) of the Act. In an appeal by the accused

against the said conviction and sentence, the High Court neither

modified the finding of guilt under Section 5(1)(e) nor the sentence

under Section 5(2). All that it has done is while affirming the finding

of guilt recorded by the Special Judge in regard to the

disproportionate wealth, to recalculate the exact amount of

disproportionate wealth with reference to the evidence, which is

permissible under section 386(b)(ii) which provides that the

appellate court may, in an appeal from a conviction, alter the

finding, maintaining the sentence. If an appellate court may alter

the finding of guilt of the accused from one section to another, while

maintaining the sentence, we see no reason why the extent of the

offence should not be changed in an appeal against conviction. We

are, therefore, of the view that the High Court did not exceed its

jurisdiction in exercising the power of appeal under section 386 IPC.

17. The second question is in regard to the claim of the appellant

that travelling allowance should be treated as income. The appellant

submitted that he had received, in all, a sum of Rs.22,922.60 as

travelling allowance during the check period and the said amount

should be taken under the head of receipt/income during that

period. This Court in C.S.D. Swami v. The State [AIR 1960 SC 7]

has held that prosecution would not be justified in concluding that

travelling allowance was also a source of income (for the purpose of

ascertaining the income from known sources during the check

period) as such allowance is ordinarily meant to compensate the

officer concerned for his out-of pocket expenses incidental to the

journeys performed by him for his official tour/s. As traveling

allowance is not a source of income to the Government servant but

only a compensation to meet his expenses, the prosecution while

calculating the sources of income during the check period, need not

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take it into account as income. However, it is open to the

Government servant to let in evidence to show that he had in fact

saved something out of the travelling allowance. It is for the court

then to accept or not whether there was such actual saving. But the

question of automatically considering the entire travelling allowance

as a source of income does not arise. In this case, as the appellant

did not lead any specific evidence to show that he had made any

savings from out of the travelling allowance, the claim for inclusion

of TA in income, is untenable.

18. The appeal has no merit and is, accordingly, dismissed.