2015 (5) TMI 463 - HC - Indian Laws

Possession of disproportionate assets / surplus income - known source of income - offence punishable under Section 13(1)(e) read with Section 13(2) of Prevention of Corruption Actand under Section 120-B of Indian Penal Code - Held that - It is well settled law that according to Krishnanand Agnihotri s case 1976 (12) TMI 187 - SUPREME COURT OF INDIA when there is disproportionate asset to the extent of 10% the accused are entitled for acquittal. A circular has been issued by the Government of Andhra Pradesh that disproportionate asset to the extent of 20% can also be considered as a permissible limit. The margin of 10% to 20% of the disproportionate assets has been taken as a permissible limit taking into consideration the inflatory measures. Since the value of apparels and slippers etc. are of insignificant value I did not deduct this amount from the assets of DV AC. The Prosecution has mixed up assets of Accused firms and companies and also added the cost of construction i.e. Rs. 27, 79, 88, 945/- and marriage expenses at Rs. 6, 45, 04, 222/- and valued the assets at Rs. 66, 44, 73, 573/-. If we remove the exaggerated value of cost of construction and marriage expenses the assets will workout at Rs. 37, 59, 02, 466/-.The total income of the Accused firms and companies is Rs. 34, 76, 65, 654/-. Lack of proportion amount is Rs. 2, 82, 36, 812/-. The percentage of disproportionate assets is 8.12%. It is relatively small. In the instant case the disproportionate asset is less than 10% and it is within permissible limit. Therefore Accused are entitled for acquittal. When the principal Accused has been acquitted the other Accused who have played a lesser role are also entitled for acquittal. Decision in the case of KRISHNANAND AGNIHOTRI V/S. STATE OF M.P 1976 (12) TMI 187 - SUPREME COURT OF INDIA followed. In this case the Trial Court has ignored the Income Tax proceedings as minimum evidentiary value. The Trial Court has not appreciated the evidence in a proper perspective. Though the Trial Court in its judgment mentioned that the accused availed loan by the Indian Bank but it has not considered the same as income. Therefore the Trial Court has erred in not considering the loans as income. Even the valuation though disputed by the defence the Trial Court has failed to examine the evidence relating to cost of construction at that relevant time and simply arrived at a conclusion that 20% of the cost has to be reduced without appreciating the evidence placed on record. This 20% reduction is calculated on surmises and conjectures. - Decided in favor of appellant.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment were:

- Whether the accused, particularly A-1, were guilty of acquiring disproportionate assets during the check period from 1.7.1991 to 30.4.1996.

- Whether A-2 to A-4 were parties to criminal conspiracy with A-1 to acquire and possess assets disproportionate to the known sources of income of A-1.

- Whether the confiscation of immovable properties and auctioning of gold and diamond ornaments to make up the deficit of the fine amount was sustainable in law.

2. ISSUE-WISE DETAILED ANALYSIS

Relevant legal framework and precedents:

The Prevention of Corruption Act, 1988, particularly Section 13(1)(e), was the primary legal framework under which the charges were framed. The Act deals with the possession of assets disproportionate to known sources of income by a public servant. The Benami Transactions (Prohibition) Act was also considered, as the prosecution alleged that properties were acquired in the names of others on behalf of A-1.

Court's interpretation and reasoning:

The Court analyzed the evidence presented by the prosecution and the defense, including the income tax returns and other financial documents. The Court noted discrepancies in the prosecution's calculations of disproportionate assets and considered the loans taken by the accused as part of their income. The Court also considered the evidence of gifts received by A-1 and the income from the Kodanadu Tea Estate.

Key evidence and findings:

The prosecution relied on the registration of numerous properties and the involvement of the accused in various business enterprises. However, the Court found that the prosecution failed to prove that A-1's wealth was disproportionate to her known sources of income when considering the loans and other income sources.

Application of law to facts:

The Court applied the principle from Krishnanand Agnihotri v. State of M.P., which allows for a permissible limit of disproportionate assets up to 10%. The Court found that the disproportionate assets were only 8.12% of the total income, which is within the permissible limit.

Treatment of competing arguments:

The Court addressed the prosecution's arguments regarding the alleged benami transactions and found that the prosecution failed to provide sufficient evidence to support these claims. The defense's arguments regarding the inclusion of loans and gifts as income were accepted by the Court.

Conclusions:

The Court concluded that the prosecution failed to prove beyond a reasonable doubt that the accused acquired disproportionate assets. The Court found that the assets were not disproportionate to the known sources of income when considering all the evidence, including the loans and gifts.

3. SIGNIFICANT HOLDINGS

Preserve verbatim quotes of crucial legal reasoning:

"It is well settled law that according to Krishnanand Agnihotri's case, when there is disproportionate asset to the extent of 10%, the accused are entitled for acquittal."

Core principles established:

- The burden of proof lies on the prosecution to establish that the assets are disproportionate to the known sources of income.

- Disproportionate assets within a permissible limit of 10% are not sufficient for conviction under the Prevention of Corruption Act.

Final determinations on each issue:

- The accused were acquitted of all charges as the prosecution failed to prove the disproportionate nature of the assets beyond a reasonable doubt.

- The confiscation of properties was set aside as the Court found no basis for the alleged disproportionate assets.