KEDARI LAL Vs. STATE OF MP
Supreme Court of India (Division Bench (DB)- Two Judge)
Appeal (Crl.), 782 of 2011, Judgment Date: Mar 23, 2015
-
The expression "known sources of income" in Section 13(1) (e) of the Act has two elements, first the income must be received from a lawful source and secondly the receipt of such income must have been intimated in accordance with the provisions of law, rules or orders for the time being applicable to the public servant. -
The categories so enumerated are illustrative. Receipt by way of share in the partition of ancestral property or bequest under a will or advances from close relations would come within the expression "known sources of income" provided the second condition stands fulfilled that is to say, such receipts were duly intimated to the authorities as prescribed. -
12. In the instant case, every single amount received by the appellant has been proved on record through the testimony of the witnesses and is also supported by contemporaneous documents and intimations to the Government. It is not the case that the receipts so projected were bogus or was part of a calculated device. The fact that these amounts were actually received from the sources so named is not in dispute. Furthermore, these amounts are well reflected in the Income Tax Returns filed by the appellant. In similar circumstances, the acquisitions being reflected in Income Tax Returns weighed with this court in granting relief to the public servant. In M. Krishana Reddy Vs. State[2]. It was observed in Para 14 :- ".....Therefore, on the face of these unassailable documents i.e. the wealth tax and income tax returns, we hold that the appellant is entitled to have a deduction of Rs.56,240/- from the disproportionate assets of Rs.2,37,842/-." -
There is no absolute embargo or prohibition in the Rules and all that is required is sanction or permission from the Government. -
If the amounts in question, which were duly intimated and are reflected in the Income Tax Return are thus deducted, the alleged disproportionate assets stand reduced to Rs. 37,605, which is less than 10 % of the income of the Appellant. -
We, therefore, set aside the judgment and order in appeal and acquit the appellant of the charges leveled against him. The appeal thus succeeds and is allowed.
Non-Reportable
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO.782 OF 2011
KEDARI LAL .... Appellant
Versus
STATE OF M.P. AND ORS. .... Respondents
J U D G M E N T
Uday Umesh Lalit, J.
1. This appeal seeks to challenge the judgment and order dated
16.12.2010 passed by the High Court of Madhya Pradesh, Bench at Gwalior in
Criminal Appeal No. 58 of 2006 dismissing the appeal and affirming the
judgment of conviction recorded by the Special Judge (Prevention of
Corruption Act) Shiv Puri, Madhya Pradesh in Special Sessions Trial No. 4
of 1996 against the appellant herein.
2. The appellant joined the services of Public Health Engineering
Department of the State of Madhya Pradesh on 15.07.1978 as Assistant
Engineer and thereafter served in various capacities. According to the
prosecution, during the period of 15.07.1978 to 9.02.1994, the appellant
had earned total amount of Rs.3,86, 966/- as public servant but he was
found to be in possession of assets worth Rs.7,97,243/- at the end of that
period and as such he was in possession of assets disproportionate to his
known sources of income to the tune of Rs.4,08,077/-. Accordingly Crime
No. 17 of 1994 was registered on 9.02.1994 by the Special Police
Establishment, Lokayukta Sanghthan for the offence punishable under Section
13(1)(e) read with Section 13(2) of the Prevention of Corruption Act, 1988
(the Act, for short). After conducting appropriate investigation
chargesheet was filed and the appellant was accordingly charged and tried.
3. The prosecution in support of its case examined 10 witnesses. The
defence of the appellant was that:-
(i) On the occasion of his marriage he had received gifts from his in-
laws, (ii) he had received certain sums as and by way of his share in
family partition, (iii) he had received bequest under the will executed by
his mother, and (iv) he had taken loan or advances for purchase of plot and
construction from his relations and friends. It was submitted that every
such receipt was duly intimated by him to the department. The details of
such receipt and intimation as submitted, are as under:-
On 16.04.1984, the appellant got married and had received gifts from his in-
laws such as Fridge, Colour TV, Sofa Set, Almirah, which fact was intimated
to the Department vide letter dated 25.04.1984.
In 1987, in terms of the family partition that took place, an amount of
Rs.1,45,000/- was agreed to be given to the appellant by his father. The
father of the appellant gave an amount of Rs.60,000/- which was intimated
by him to his Department vide letter dated 10.05.1987.
The balance amount was remitted to the appellant vide two Bank Drafts of
Rs.45,000/- and Rs.40,000/- and the same was intimated to the Department
vide letter dated 14.11.1991.
In the year 1987, the appellant wanted to purchase a plot of land, for
which he took a loan of Rs.20,000/- from PW-6 Ramji Lal Agarwal, a friend
and resident of the same area, which was intimated to the Department vide
letter dated 03.09.1987.
In the year 1988-1989, the appellant had applied for a construction loan
which had not been sanctioned by the Department till then. To ensure
continuous construction work, he took loans or received gifts from his
close relative, details of which were reflected in his letter to the
department dated 15.12.1989. The details being:-
On 09.09.1988 and 01.04.1989 he received gifts in cash of the amounts
Rs.20,000/- and Rs.15,000/- from his brother PW 7 Brij Narayan and on
03.12.1988 and 10.04.1989 he received gifts of Rs.20,000/- and Rs.15,000/-
in cash from his other brother PW5 Gopal Agarwal.
(ii) Furthermore, he took a loan of Rs.75,000/- from M/S Radhaballabh
Dal Mills, a company in which PW 5 Gopal Agarwal his brother was a partner
and the loan was given through a cheque.
On 17.01.1991 the mother of the appellant passed away leaving behind a will
under which the appellant received an amount Rs.50,672/- which fact was
intimated to the Department vide letter dated 14.11.1991.
In the year 1993, in order to purchase a gun, the appellant took a loan of
Rs.10,000/- from his brother-in-law PW1 Kapoor Chand which fact was
intimated by him to the Department vide letter dated 15.03.1993.
4. The appellant had thus intimated the department on every occasion
that he received any advance or gifts or share in partition or entitlement
by way of bequest. These facts are spoken to by various prosecution
witnesses. Moreover, the appellant had filed his Income Tax Return on
28.09.1992, which clearly reflected the details of the loan transactions
and the amounts that he had received. Copy of the Income Tax Return was
also filed with the department on 5.01.1994, well before the present F.I.R.
was filed on 9.02.1994. The appellant submitted that if these amounts
which were duly intimated and stood reflected in his Income Tax Returns
were to be taken into account, the alleged disproportionate assets would
not be to the tune of Rs.4,08,077/- but would stand reduced to the sum of
Rs.37,605/-.
5. The Trial Court held that the prosecution had established the case
against the appellant and thus by its judgment and order dated 30.12.2005
convicted the appellant under Section 13(1)(e) read with Section 13 (2) of
the Act and sentenced him to suffer 3 years rigorous imprisonment and a
fine of Rs. 15,000 in default whereof to undergo further sentence of
rigorous imprisonment for 1 year.
6. While dealing with Criminal Appeal preferred by the appellant, the
High Court took the view that Rules 14, 17 and 19 of the M.P. Civil
Services (Conduct) Rules, 1965 ("the Rules" for short) prohibit the public
servant from accepting gifts or loan except in the manner prescribed
therein. It was observed that given the expression "known sources of
income" appearing under Section 13(1)(e) of the Act, the income must be
such which was received from lawful source and that it must be in
compliance of the Rules as well. The High Court held disclosure of receipt
of money in the Income Tax Returns was of no assistance to the appellant
unless the Rules were duly complied with. The High Court thus affirmed the
view taken by the Trial Court and dismissed the appeal confirming the
sentence.
7. The correctness of the judgment passed by the High Court is
challenged in this appeal by Special Leave. During the pendency of this
appeal, this court was pleased to direct the release of the appellant on
bail.
8. Appearing in support of the appeal, Mr. Siddharth Luthra, learned
Senior Counsel submitted that every receipt of amount was duly intimated by
the appellant to the department contemporaneously and such amounts were
also reflected in his Income Tax Report, filed well before the initiation
of the prosecution in the instant case. It was further submitted that
after taking into account the amount so intimated, the balance of Rs.
37,605 at best remains unexplained. But such amount being less than 10% of
the total income, the appellant was entitled to the benefit in terms of
decisions of this Court.
9. Mr. C. D. Singh, learned advocate appearing for the State supported
the view taken by the court below. Relying upon the decision of this court
in N. Ramakrishnaiah (D) through LR's Vs. State of A.P.[1], it was
submitted that the loans and gifts received by the petitioner would not
constitute "known sources of income" as defined under Section 13(1) (e) of
the Act.
10. The expression "known sources of income" in Section 13(1) (e) of
the Act has two elements, first the income must be received from a lawful
source and secondly the receipt of such income must have been intimated in
accordance with the provisions of law, rules or orders for the time being
applicable to the public servant. In N. Ramakrishnaiah (Supra), while
dealing with said expression, it was observed:-
"...For the public servant, whatever return he gets of his service, will be
the primary item of his income. Other income which can conceivably be
income qua the public servant will be in the regular receipt from (1) his
property, or (b) his investment."
The categories so enumerated are illustrative. Receipt by way of share in
the partition of ancestral property or bequest under a will or advances
from close relations would come within the expression "known sources of
income" provided the second condition stands fulfilled that is to say, such
receipts were duly intimated to the authorities as prescribed.
11. We have gone through Rules 14, 17 and 19 of the Rules. Rule 14 lays
down that a government servant on occasions such as weddings, anniversaries
or religious functions may accept gifts up to certain limit, if he makes a
report of such fact to the Government within a period of one month. Sub
Rules (4) and (5) provide inter alia, that in any other case, the
government servant shall not accept any gift without the sanction of the
Government and if the gift exceeds Rs. 2000, except through an account
payee cheque. Rule 17 deals with investment, lending and borrowing and
provides inter alia that Government Servant may give to, or accept from a
relation or a personal friend, a purely temporary loan. Rule 19 lays down
that the government servant must intimate the details of property inherited
or acquired by the Govt. Servant. There is no absolute embargo or
prohibition in the Rules and all that is required is sanction or permission
from the Government.
12. In the instant case, every single amount received by the appellant
has been proved on record through the testimony of the witnesses and is
also supported by contemporaneous documents and intimations to the
Government. It is not the case that the receipts so projected were bogus or
was part of a calculated device. The fact that these amounts were
actually received from the sources so named is not in dispute.
Furthermore, these amounts are well reflected in the Income Tax Returns
filed by the appellant. In similar circumstances, the acquisitions being
reflected in Income Tax Returns weighed with this court in granting relief
to the public servant. In M. Krishana Reddy Vs. State[2]. It was observed
in Para 14 :-
".....Therefore, on the face of these unassailable documents i.e. the
wealth tax and income tax returns, we hold that the appellant is entitled
to have a deduction of Rs.56,240/- from the disproportionate assets of
Rs.2,37,842/-."
Similarly in D.S.P Chennai Vs. K. Ibasagarain[3], the fact that the
money was treated in the hands of the wife of the public servant and that
she was assessed by the Income Tax Department was taken note of while
accepting the explanation given by the public servant.
13. If the amounts in question, which were duly intimated and are
reflected in the Income Tax Return are thus deducted, the alleged
disproportionate assets stand reduced to Rs. 37,605, which is less than 10
% of the income of the Appellant. In Krishnanand Vs. State of Madhya
Pradesh[4] and in M. Krishna Reddy (Supra), this court had granted benefit
to the public servants in similar circumstances. We respectfully follow
said decisions.
14. In our view there is no violation of Section 13(1)(e) read with
Section 13(2) of the Act. We, therefore, set aside the judgment and order
in appeal and acquit the appellant of the charges leveled against him.
The appeal thus succeeds and is allowed. The appellant is already on bail.
The bail bonds shall stand discharged.
.............................J.
(Dipak Misra)
.............................J.
(Uday Umesh Lalit)
New Delhi,
March 23, 2015
ITEM NO.1D COURT NO.12 SECTION IIA
S U P R E M E C O U R T O F I N D I A
RECORD OF PROCEEDINGS
Criminal Appeal No(s). 782/2011
KEDARI LAL Appellant(s)
VERSUS
STATE OF M.P. Respondent(s)
Date : 23/03/2015 This appeal was called on for pronouncement of
judgment today.
For Appellant(s) Mr. Sidharth Luthra, Sr. Adv.
Ms. Sopriya Uneja, Adv.
Ms. Shradha Karol, Adv.
Mr. Vipin Kumar Saxena, Adv.
Mr. Rajeev K. Sinha, Adv.
Mr. Anoop Kr. Srivastav, Adv.
For Respondent(s) Mr. C. D. Singh, Adv.
Mr. Darpan Bhuyan, Adv.
Hon'ble Mr. Justice Uday Umesh Lalit pronounced the non-reportable
judgment of the Bench comprising Hon'ble Mr. Justice Dipak Misra and His
Lordship.
The appeal is allowed. The appellant is already on bail. The bail
bonds shall stand discharged in terms of the signed non-reportable
judgment.
(R.NATARAJAN) (SNEH LATA SHARMA)
Court Master Court Master
(Signed non-reportable judgment is placed on the file)
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[1] 2008 (17) SCC 83
[2] 1992(4) SCC 49
[3] 2006 (1) SCC 420
[4] 1977 (1) SCC 816