CRL.A. 993/2002 Page 1 of 18

* IN THE HIGH COURT OF DELHI AT NEW DELHI

% Reserved on : 13.11.2025

Pronounced on : 08.01.2026

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+ CRL.A. 993/2002

TEJ NARAIN SHARMA .....Appellant

Through: Ms. Rebecca M. John, Sr. Adv. with

Mr. Harsh Bora and Mr. Niranjan

Dey, Advs.

versus

STATE OF DELHI .....Respondent

Through: Mr. Pradeep Gahalot, APP for State

CORAM:

HON'BLE MR. JUSTICE MANOJ KUMAR OHRI

JUDGMENT

1. The appeal arises out of the judgment of conviction and order of

sentence rendered by the Special Judge on 27.11.2002 and 29.11.2002

respectively.

Vide the aforesaid, the appellant was found guilty of commission of

offence punishable under Section 7 and 13 (1)(d) read with Section 13 (2) of

Prevention of Corruption Act, 1988 (“PC Act”) and was sentenced to

undergo RI for 2 years and pay a fine of Rs.15,000/-, in default whereof he

would undergo SI for 6 months under both Section 7 as well as Section

13(1)(d) read with Section 13(2) of the PC Act. Both the substantive

sentences were directed to run concurrently; the default sentences, however,

CRL.A. 993/2002 Page 2 of 18

were directed to run one after the other.

His sentence was suspended by this Court on 18.12.2002.

2. The facts in a nutshell, as noted by the Trial Court, are as under:-

“The Prosecution case is that on 31-7-92 one Amar Nath Oberoi (PW8)

came to anti-corruption branch of Government of NCT of Delhi at 9.30

a.m. and complained about demand of bribe from him by officials of

Directorate of Audit, Central revenues including accused T.N. Sharma,

who during those days was employed as a Section officer in the office of

Director General of Audit, Central Revenues, A.G.C.R. Building, New

Delhi. That complaint was reduced into writing (Ex. PW8/A) in the

presence of one independent Government Official R.K. Kaushik (PW-9). It

was alleged by the complainant that he was working as an Accountant in

M/s. Elpar Cables Corporation, 4/19, Gali Bagjchi, Vishwas Nagar,

Shahdara, Delhi and that on 29-7-92 an audit team from Excise Audit

Department, A.G.C.R. consisting of one Audit Officer R.N. Sharma, N.B.

Sharma, Sr. Auditor, Vishwapati, Sr. Auditor and T.N. Sharma (accused),

Section Officer came for the audit of the said firm right from its

establishment. Amar Nath further alleged that he produced the entire

records before that audit team which were checked till 6 p.m. and on 30-

07-92 again those four officials came at 10 a.m. and made further

checking of accounts concerning the Excise and during the checking they

had been getting eatables etc. at the expense of the firm. The complainant

further alleged that at about 6 p.m. on 30-07-92 R.N. Arora, Audit Officer

in from of his three colleagues said that for giving correct audit report Rs.

3000/- per year will have to be paid as bribe and from 1983 till date

amount of Rs. 27,000/- will have to be paid otherwise his factory would be

got sealed and also that in further also Rs. 3000/- per year will have to be

paid otherwise demand notice for a huge amount will also be issued. He

told them that as his employer was not available money would be

arranged by the next day and also that amount will have to be reduced to

which he (R.N Arora) agreed for Rs. 20,000/- as bribe money which

amount was then agreed to be paid on that day i.e. 31-7-92 at 10.30 a.m.

in the office of the firm and for collecting the payment R.N Arora had said

that Section Officer T.N. Sharma would come and will collect the said

amount of Rs. 20,000/- which should be paid to him. It was also alleged by

the complainant that T.N. Sharma also said that he would come on 31-7-

92 at about 10.30 a.m. and would take Rs. 20,000/- which amount should

be kept ready. The complainant alleged in his complaint that he was

against giving and taking of bribe but out of helplessness he had given his

consent for the payment of bribe and that he had no enmity with R.N.

Arora, T.N. Sharma and other audit officers.”

CRL.A. 993/2002 Page 3 of 18

3. In view of the above, a trap was laid and on 31.07.1992, 40 GC notes

of Rs.500/- each, totaling Rs.20,000/-, treated with phenolphthalein powder,

were recovered from the right hand of the accused. The washes of both the

hands were taken. The Raid officer prepared Rukka (Ex. PW-10/A) on

which the said FIR under Sections 7/13 PC Act came to be registered in the

Anti-Corruption Branch. During the investigation, the wash bottles were

sent to CFSL, Chandigarh, and on receipt of CFSL report, chargesheet was

filed and charges were framed. The appellant pleaded not guilty and claimed

trial.

4. The prosecution, in support of his case, had examined 11 witnesses in

all. The complaint/Amarnath Oberoi was examined as PW-8; the panch

witness/R. K. Kaushik was examined as PW-9; Tola Ram, the raiding

officer, and Inspector B. M. Sharma, a member of the raiding party, as PW-

10 and PW-11 respectively. B. M. Oza, the sanctioning authority, was

examined as PW-1, Dr. A. K. Singh, the then ACP (Investigation) was

examined as PW-2. The service records of accused were proved through the

testimony of Ved Prakash Budhiraja, examined as PW-3. The prosecution

also examined two officers from the appellant’s office, namely U. C. Gupta

and V. K. Verma as PW-6 and PW-7 respectively. N. K. Prasad (PW-4) was

examined to prove the CFSL report.

5. In his statement under Section 313 Cr.P.C., the appellant admitted

being employed by the Directorate General of Audit during the relevant

time. He denied demanding or accepting bribe from the complainant. He

said that it was not the complainant but one Vijay Kumar Aggarwal who was

looking after the excisable record of the firm and its proprietor had

CRL.A. 993/2002 Page 4 of 18

coordinated the audit. He also took the ground that the inspector of the AC

branch was not authorized to investigate the case under PC Act, 1988.

6. Ms. Rebecca John, learned Senior counsel for the appellant, assailed

the finding of conviction by contending that the prosecution had failed to

prove the case as the demand, as though the demand was alleged to have

been made by one R. N. Arora on 30.07.1992, he was not made an accused.

Mr. R. N. Arora rather appeared as a defence witness and denied the case of

the prosecution. He was not even cross-examined on the aforesaid aspect. It

was next contended that the alleged demand made on 31.07.1992 by the

appellant remained to be conclusively proved in light of the inconsistencies

and contradictions in the statements of witnesses. The complainant has

alleged that the audit was carried out for a period of 9 years and the alleged

demand by R. N. Arora was Rs.3,000/- per year, totaling Rs.27,000/-, which

on request of the complainant was reduced to Rs.20,000/-. The firm came

into existence in 1986 and thus the audit would have been for 6 years, and

not 9 years as claimed. The appellant’s presence at the spot on the day of

incident, i.e. on 31.07.1992, has been justified in light of the testimony of R.

N. Arora, who was examined as a defence witness. There are contradictions

also in the testimony of the complainant as to where he arranged the

purportedly demanded amount from. Learned Senior Counsel also doubted

the credibility of the panch witness by contending that he has admitted to

being a spot witness, having been involved in 5 other cases. The CFSL

report is also sought to be discredited, as the wash samples that were sent

were not the ones that were deposited in the Malkhana. The samples that

were sent to the CFSL were taken out from the almirah of the ACP, Dr. A.

CRL.A. 993/2002 Page 5 of 18

K. Singh. The non-examination of material witnesses, including Vipin

Kwatra, the proprietor of the firm, and other Police Officers who were a part

of the raiding team, was also put forth as a ground for seeking setting aside

of the impugned judgment. Lastly, the sanction granted by the sanctioning

authority was also assailed on ground of non-application of mind, as vital

documents such as the Tehrir and the forwarding letter were not perused by

the sanctioning authority.

7. The contentions made on behalf of the appellant were repelled by the

learned APP for State, who submitted that the demand made by the appellant

stood proved through the testimony of the complainant as well as the panch

witness. The treated notes totaling Rs.20,000/- were recovered from the

hand of the appellant. The recovery witness/Raid Officer Tola Ram, duly

proved the recovery of the same. Vipin Kwatra, the owner of the firm, was

cited as a witness; however, he could not be examined as he expired during

pendency of the trial.

8. The complainant/Amarnath Oberoi was examined as PW-8. He

deposed that he was working as an accountant in M/s Elpar Cables

Corporation Limited and an audit was carried out by the Audit Officers from

AGCR Excise, Audit Department. In this regard, the appellant along with R.

N. Arora from the said department visited his office premises and asked him

to produce account books of the firm. R. N. Arora also told him that the firm

had been in existence for the last 9 years and the witness was asked to give

Rs.3,000/- per year in exchange for giving a complete and correct report of

their firm , and thus the total demand of Rs.27,000/- was made. The witness

further deposed that as his employer was not present, R. N. Arora, on the

CRL.A. 993/2002 Page 6 of 18

witness’ asking, reduced the amount to Rs.20,000/-. The complainant was

also told by R. N. Arora that the appellant would come on the next day to

receive the agreed amount. As the complainant was not happy with the

demand, on 31.07.1992, he went in the morning to the AC Branch and

lodged a complaint (Ex. PW-8/A). He narrated the instructions and

demonstrations given to him in the pre-trap proceedings. He stated that he,

along with the raiding party, reached his office situated at the first floor at

about 10.30 AM. The appellant came to his office at about 11.15 AM and

asked/demanded money. The complainant asked him to give the audit

report. The appellant, however, asked the complainant to give the money

first. The treated GC notes were accepted by the accused by his right hand.

The accused started counting the money. The panch witness, who was

sitting in the office of the complainant, stepped out and gave the pre-

arranged signal to the members of the raiding party. The bribe amount was

recovered by Inspector Tola Ram and the serial numbers on the notes were

tallied with the pre-raid report (Ex. PW-8/B) and seized vide seizure memo

(Ex. PW-8/C). The notes were exhibited as Ex. P-1 to Ex. P-40. The

complainant further deposed that the hand wash was collected and the

accused was arrested.

In cross-examination, the complainant admitted that the firm came

into existence in the year 1986. He further deposed that audit was to be

conducted since the date of existence till the year 1992. The owner of the

firm, Vipin Kwatra, expired on 02.08.2001. It was R. N. Arora, who was the

head of the audit team, who had demanded money in the evening of

30.07.1992. At that time, Vipin Kwatra was out of station. The audit team

CRL.A. 993/2002 Page 7 of 18

had conducted inspections on 29.07.1992 and 30.07.1992 and prepared draft

notes for preparation of the final audit report. He denied the suggestions that

R. N. Arora had not demanded bribe amount from him or that R. N. Arora

had not told him that the accused would come on the next date to receive the

agreed amount. He denied the suggestion that the records were not made

available to the audit team. He also denied the suggestion that the owner was

fearful of legal action on account of irregularities in the records and not

maintaining proper records. He denied the suggestion that a false complaint

was lodged to ward off legal action on account of an adverse audit report.

The complainant stated that he neither withdrew the amount from the

account of the firm nor did he have that much cash in hand. He stated that he

arranged the said amount from his own sources and friends. The said amount

was borrowed from 2 friends, namely Rakesh Kapoor and Anil Oberoi. He

denied the suggestion that no conversation as stated by him had taken place.

He further denied the suggestion that he and his employer had snatched the

audit draft and rough notes from the hand of the accused. A suggestion was

given that the accused had reported the incident to the department as well as

the police, and the witness denied having any knowledge about the same.

9. The panch witness R. K. Kaushik, examined as PW-9, stated he was

the head of the office, CSI, Technical Education and on 31.07.1992, he was

deputed as a panch witness in ACB. The statement of the complainant was

recorded in his presence. He also deposed about the pre-trap proceedings.

He further deposed that the accused came at about 11.15 AM and talked

with the complainant. The complainant asked if he had brought the audit

report, on which the accused told him that the audit report would come in his

CRL.A. 993/2002 Page 8 of 18

favour, and demanded the settled amount/money. The complainant took out

the cash from the left upper pocket of his shirt and gave the same to the

accused, who took the notes with his right hand and then counted the same

with both hands. The witness came out of the office and gave the pre-

arranged signal. The money was recovered from the hands of the accused,

the numbers on the notes were tallied, and the notes were seized. Both the

hands of the appellant were washed in separate solutions, which turned pink,

and were thereafter transferred into two bottles each. The bottles were

exhibited as Ex. P-41 to P-44, sealed and marked as Ex. RHW-I, II and

LHW-I, II. Seal after use was handed over to the witness, which he returned

after 3-4 days.

In cross-examination, he was asked if the complainant had gone alone

or with his employer, to which he answered that the complainant was alone.

He stated that the complainant had told him that the complainant had

arranged Rs.20,000/- from his employer. The witness stated that he did not

recall if the briefcase carried by the appellant and the documents lying in it

were seized by the RO. He stated that it was possible that the accused was

having rough audit notes. He denied the suggestion that the accused had

asked him to return the rough notes from the complainant. Suggestions were

given that no such talk as stated by him had taken place in the office of the

complainant. In response to suggestions regarding how many other raid

proceedings he had taken part in, the witness initially stated that he had done

so on two occasions and then said that he had gone to the ACB as panch

witness about 5 times.

10. Tola Ram, the Raid Officer was examined as PW-10. He deposed

CRL.A. 993/2002 Page 9 of 18

about the complainant coming to ACB office on 31.07.1992, giving the

complaint, and producing 40 GC notes of Rs.500/- each, as well as other

pre-raid proceedings. He further deposed that on receiving the pre-

determined signal from the panch witness at about 11.20 AM, he along with

other raiding party members rushed to first floor and recovered the tainted

GC notes from the right hand fist of the accused. The numbers of the

recovered notes were compared with the numbers noted in the pre-raid

report and the same were tallied. He deposed as to washing of the

appellant’s hands, the solutions turning pink, and the same being sealed in

labelled bottles.

In cross examination, he admitted it to be correct that in the

complaint, the complainant had alleged that it was R. N. Arora who had

demanded bribe amount from the complainant. He further stated that he did

not make any efforts to arrest R. N. Arora. He further stated that he did not

enquire as to from where the complainant had arranged Rs.20,000/-. A

suggestion was given that the accused was manhandled and rough audit

notes were also snatched. The suggestion was denied. He also denied having

knowledge that the appellant had reported the same to his department and to

local police.

11. Inspector B. M. Sharma, examined as PW-11, stated that though he

had accompanied the raiding team, he had remained seated in the vehicle. At

about 1.45 PM, custody of the accused was handed over to him by the Raid

Officer Tola Ram. He prepared the site plan (Ex. PW-1/A) at the instance of

complainant and the panch witness; and also arrested the accused. He

further stated that he deposited the case property consisting wash bottles

CRL.A. 993/2002 Page 10 of 18

marked RHW-II and LHW-II along with GC notes in the Malkhana, and

handed over the 2 wash bottles marked RHW-I and LHW-I to ACP Dr. A. K.

Singh along with sample seal. The said bottles were duly sealed with the seal

of BMS. The same were kept by the ACP in his office almirah, which was

sealed with the seal of AR. The key to the almirah was kept by the ACP. On

03.08.1992, he again visited the office of the ACP and in his presence, the

ACP de-sealed and unlocked the almirah, and handed over the two wash

bottles, i.e. RHW1 and LHW1, along with the sample seal intact, to him, and

the same were deposited in CFSL. He collected the CFSL report (Ex. PW-

4/A).

In cross-examination, he stated that the complaint was against one R.

N. Arora and the demand was also stated to have been made by him. He

recorded the statement of R. N. Arora in case diary on 14.08.1992. He

denied the suggestion that any tampering of the case property took place

while it was in his custody.

12. Dr. A. K. Singh was examined as PW-2. He also stated that Inspector

B. M. Sharma handed over to him two exhibit bottles marked LH1 and RH1

along with sample seal, which were kept in his office almirah, and the same

was sealed with the seal of AR. He kept the key, and the seal was handed

over to the Inspector. On 03.08.1992, he de-sealed and unlocked the

almirah, and the case property was handed over to Inspector B. M. Sharma

for depositing in CFSL. He stated that the case property during this time was

not tampered with and remained intact.

13. The next relevant witness was N. K. Prasad (PW-4), who exhibited

the CFSL report as Ex. PW-4/A.

CRL.A. 993/2002 Page 11 of 18

14. The prosecution examined B. N. Oza, the Director General of Audit,

Central Revenue, AGCR building, New Delhi, as PW-1. He deposed that he

had gone through the allegations contained in the police file and the judicial

file sent to him, and had granted sanction for prosecution after considering

the allegations.

In cross-examination, he admitted it to be correct that a memo was

issued to R. N. Arora, as there were allegations against him for demand of

bribe. R. N. Arora had submitted a reply, which is exhibited as Ex. PW-

1/DD. A representation was also received on behalf of the accused, a copy

of which was exhibited as Ex. PW-1/DE. He was given the suggestion that

he had wrongly mentioned in the sanction order that the demand of

Rs.20,000/- was made by appellant on 30.07.1992 because he did not apply

his mind and mechanically granted the sanction in terms of the draft

sanction order, which was denied. He admitted to not calling the appellant or

R.N. Arora before granting the sanction. He admitted that there was “draft”

written on the order which was later removed, but denied that the sanction

order was a mere copy of the draft sanction order.

15. The defence also put forth two witnesses. DW-1 was Ct. Upender

Rao, who brought the notification dated 15.03.1999 vide which the

Inspectors of the AC Branch were authorised to investigate the case under

the provisions of the PC Act, 1988, and the same was exhibited as Ex. DW-

1/1. He also brought one FIR No. 12/1999, which was exhibited as Ex. DW-

1/B, wherein one Vipin Kumar is the complainant.

16. R. N. Arora was examined as DW-2. He deposed that he was working

as the Audit Officer while the appellant was the Section Officer, Accounts,

CRL.A. 993/2002 Page 12 of 18

in the office of DGACR. They were to conduct audit of M/s. Elphar Cable

Corpn. for a period of 6 years, from 1986-87 to 1991-92. The team had 4

members. The team went to the premises of the firm on 29

th

and 30

th

July

1992. The audit could not be finished as some vital documents were stated

to be in the custody of Vipin Kwatra, the proprietor of the firm, who was out

of station at the time and was expected to come back by the evening of

30.07.1992, which did not happen. Since the witness was occupied on the

next day, he asked the appellant to visit the premises to verify records and

collect copies of some documents. The appellant visited the premises on

31.07.1992 on his directions for official work. The appellant had been

allowed to retain the rough draft of the local audit report. He got to know

that the appellant was trapped by the complainant in the present case. The

appellant informed the department in writing that official documents like

LAR had been snatched away and requested the department to lodge a

report. DW-2 had replied to the department memo that he had instructed the

appellant to visit the premises and denied having demanded any money.

In cross examination, he was given no suggestions as to him making

the initial demand of money.

17. I have heard the learned counsel for the parties and gone through the

record.

18. To establish an offence under Section 7 or 13 of the PC Act, the

factum of prior demand for illegal gratification by the public servant has to

be proved as a fact in issue. Mere proof of acceptance would not by itself be

sufficient and proof of demand is a sine qua non for securing a conviction

under Sections 7 and 13 (1)(d) (i) and (ii) of the PC Act. A gainful reference

CRL.A. 993/2002 Page 13 of 18

can be made to the decision in B. Jayaraj v. State of Andhra Pradesh

1

, where

the Supreme Court has categorically observed that:-

“8. … Mere possession and recovery of the currency notes from the

accused without proof of demand will not bring home the offence

under Section 7. The above also will be conclusive in so far as the offence

under Section 13(1)(d)(i) and (ii) is concerned as in the absence of 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 established.”

19. The Constitution Bench later affirmed the aforesaid decision in the

case of Neeraj Dutta Vs. State (Govt. of NCT of Delhi)

2

and held that:-

"88. What emerges from the aforesaid discussion is summarised as under:

88.1 (a) Proof of demand and acceptance of illegal gratification by

a public servant as a fact in issue by the prosecution is a sine qua non in

order to establish the guilt of the accused public servant under Sections 7

and 13(1)(d)(i) and (ii) of the Act.

88.2 (b) In order to bring home the guilt of the accused, the

prosecution has to first prove the demand of illegal gratification and the

subsequent acceptance as a matter of fact. This fact in issue can be proved

either by direct evidence which can be in the nature of oral evidence or

documentary evidence.

88.3 (c) Further, the fact in issue, namely, the proof of demand and

acceptance of illegal gratification can also be proved by circumstantial

evidence in the absence of direct oral and documentary evidence.

88.4 (d) In order to prove the fact in issue, namely, the demand and

acceptance of illegal gratification by the public servant, the following

aspects have to be borne in mind:

(i) if there is an offer to pay by the bribe giver without there being

any demand from the public servant and the latter simply accepts the offer

and receives the illegal gratification, it is a case of acceptance as per

Section 7 of the Act. In such a case, there need not be a prior demand by

the public servant.

(ii) On the other hand, if the public servant makes a demand and

the bribe giver accepts the demand and tenders the demanded gratification

which in turn is received by the public servant, it is a case of obtainment.

In the case of obtainment, the prior demand for illegal gratification

emanates from the public servant. This is an offence under Section

1

(2014) 13 SCC 55

2

(2023) 4 SCC 731

CRL.A. 993/2002 Page 14 of 18

13(1)(d)(i) and (ii) of the Act.

(iii) In both cases of (i) and (ii) above, the offer by the bribe giver

and the demand by the public servant respectively have to be proved by the

prosecution as a fact in issue. In other words, mere acceptance or receipt

of an illegal gratification without anything more would not make it an

offence under Section 7 or Section 13(1)(d), (i) and (ii) respectively of the

Act."

20. The Court may, when the foundational facts have been proved by

relevant oral and documentary evidence, raise a presumption of fact while

considering whether demand of illegal gratification has been proved by the

prosecution or not. Needless to state that this presumption of fact is subject

to rebuttal by the accused. This presumption is different from the one

provided for in Section 20 of the Act. While the former presumption is

discretionary in nature, the latter is a mandatory presumption. The

Constitution Bench of the Supreme Court in Neeraj Datta (supra) holds:-

“88.5. (e) The presumption of fact with regard to the demand and

acceptance or obtainment of an illegal gratification may be made by a

court of law by way of an inference only when the foundational facts have

been proved by relevant oral and documentary evidence and not in the

absence thereof. On the basis of the material on record, the court has the

discretion to raise a presumption of fact while considering whether the

fact of demand has been proved by the prosecution or not. Of course, a

presumption of fact is subject to rebuttal by the accused and in the

absence of rebuttal presumption stands.”

21. In order to attract Section 7 of the PC Act, the production has a

bounden duty to prove beyond reasonable doubt that there was a demand for

gratification and not a simple demand of money. The presumption under

Section 20 is invoked only when the demand and acceptance of bribe is

proved. In the absence of proof of demand or request from the public servant

for a valuable thing or pecuniary advantage, the offence under Section

13(1)(d) cannot be held to be established [Ref. A Subair vs. State of

CRL.A. 993/2002 Page 15 of 18

Kerala

3

]. Further, the word “obtained” used in Section 13(1)(d) of the PC

Act has been interpreted as securing or gaining (something) as the result of

request or effort. In case of “obtainment”, the initiative vests in the person

who receives, and in that context a demand or request from him will be a

primary requisite for an offence under Section 5(1)(d) [now Section

13(1)(d)] of the Act [Ref. C.K. Damodaran Nair vs. Govt. of India

4

].

22. Since the inception of the case, from the written complaint (Ex. PW-

8/A) to the complainant’s deposition in Court, it has been the consistent

stand of the prosecution that the initial demand was made by R. N. Arora.

The first big question which arises in the mind of this Court is that if the

initial demand was made by R. N. Arora, why were no criminal proceedings

ever initiated against him. Curiously, R. N. Arora, instead of being an

accused, appeared as defence witness DW-2. No question was put to him as

to him making the initial demand.

23. Even the sanction order (Ex. PW-1/A) is conspicuously bereft of any

mention of R. N. Arora. The draft and the final sanction order goes so far as

to state that it was the appellant who had demanded money on 30.07.1992,

which has never been the prosecution case. The DCP’s letter to the

sanctioning authority dated 10.08.1994 (Ex. PW-1/DA) seeking sanction

clearly mentions that on 30.07.1992, R. N. Arora had made the demand. The

sanction order is not dated. PW-1, in his cross examination, has admitted

that there was “draft” written on the order, which was later removed. The

sanction order appears to have been made without any application of mind

to the specific facts of the present case.

3

(2009) 6 SCC 587

CRL.A. 993/2002 Page 16 of 18

24. The complainant has deposed that the initial demand was made by R.

N. Arora on 30.07.1992. He has not stated that the said demand was made in

the presence of the appellant. He has also not stated that there was any overt

act on the part of the appellant which would show that he was also aware of

the demand. He has deposed that the initial demand of Rs.27,000/- was

made on the basis of Rs.3,000/- per year since the last 9 years, which was

the time since when the firm was in existence. However, in cross

examination, he admitted that the firm only came into being in 1986, i.e.

only 6 years ago, and the audit was to be conducted from 1986 till 1992.

25. There is also a discrepancy as to the source of the money used in the

trap proceedings. The complainant has deposed that he borrowed the amount

from two friends, Rakesh Kapoor and Anil Oberoi; however, the panch

witness has deposed that the complainant told him that he had arranged the

sum from his employer, i.e., Vipin Kwatra.

26. Coming now to the panch witness/PW-9. He has deposed that the

appellant was carrying a briefcase, which was checked by the RO after the

raid and the same was found to contain some official documents. He

admitted the possibility that the appellant had rough audit notes. He also

admitted that he had gone to ACB on duty as panch witness 5 times, and

that AC people used to write for departmental action against panch

witnesses who did not depose as per the version recorded by AC Inspector.

This raises a strong possibility of the panch being a stock witness.

27. As per the testimony of the panch witness/PW-9, the hand wash of the

appellant was stored in 4 bottles, marked LHW-I, II and RHW-I, II. PW-11

4

(1997) 9 SCC 477

CRL.A. 993/2002 Page 17 of 18

deposed that he deposited RHW-II and LHW-II in the Malkhana; however,

LHW-I and RHW-I were deposited in the office almirah of ACP, Dr. A. K.

Singh. It was these samples which were sent to CFSL. In his cross

examination, Dr. A. K. Singh admitted that his office was not a notified

Malkhana. Neither any entry was made nor were any independent witnesses

present at the time of deposit and withdrawal of the case property, thus

introducing a break in the chain of custody. The CFSL Report (Ex. PW-4/A)

does not contain any methodology or explanation for the result.

28. Strongly hurting the prosecution case is the examination of R. N.

Arora, who was stated to have made the initial demand, as defence witness

DW-2. No effort was made to discredit his creditworthiness on this account.

He deposed that they were authorised to conduct audit for a period of 6

years and that the appellant was directed by him to visit the premises on the

date of raid for official work. He had, in his possession, the rough draft of

local audit report. The appellant had informed the department in writing that

these official documents were snatched by the assessee and he requested

them to lodge a report. The panch witness has confirmed that some official

documents were present in the briefcase of the appellant. However, the same

were not exhibited in the trial.

29. The prosecution case, in the present instance, has suffered death by a

thousand cuts. The blatantly apparent attempt at saving R. N. Arora, the

mechanical sanction order, the logic of demand for 9 years of audit not

making sense when the firm was in existence only for 6 years, the

discrepancy in the source of the large amount arranged for the trap, the

panch witness being a stock witness for the ACB, the break in chain of

CRL.A. 993/2002 Page 18 of 18

custody for the hand wash solutions, the FSL report not recording its

methodology, and the credibility of the defence taken by the appellant, duly

supported by the testimony of R. N. Arora, though not being fatal on their

own, have cumulatively acted to shroud the prosecution case in doubt. The

benefit of the doubt must be extended to the appellant.

30. Consequently, the appellant is acquitted of all charges. The judgement

of conviction and order on sentence are set aside.

31. The appellant’s bail bonds are cancelled and sureties discharged.

32. A copy of this judgement be communicated to the concerned Jail

Superintendent as well as to the Trial Court.

MANOJ KUMAR OHRI

(JUDGE)

JANUARY 08, 2026

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