2025 (5) TMI 395 - SC - Indian Laws

Stamp vendor is a public servant for the purposes of the PC Act or not - conviction of the appellant for offences under Sections 7 and 13(1)(d) read with Section 13(2) of the PC Act. Legislative intent behind the definition of public servant under Section 2(c) of the PC Act - HELD THAT - When the legislature has used such a comprehensive definition of public servant to achieve the purpose of punishing and curbing growing corruption in government and semi-government departments it would be appropriate not to limit the contents of the definition clause by a construction which would be against the spirit of the statute. The definition of public servant therefore deserves a wide and purposive construction. In construing the definition of public servant in Section 2(c) of the PC Act the Court is required to adopt a purposive approach as would give effect to the intention of the legislature. The PC Act was enacted after the repeal of the 1947 Act with the object of dealing with the circumstances contingencies and shortcomings which were noticed in the working and implementation of the 1947 Act. The law relating to prevention of corruption was essentially made to deal with the public servants not as understood in common parlance but as specifically defined in the PC Act. While holding that a deemed university would fall within the ambit of the PC Act a three-Judge Bench of this Court in Mansukhbhai Kanjibhai Shah 2020 (4) TMI 882 - SUPREME COURT observed that it falls upon the courts to interpret provisions of an anti-corruption legislation in a manner to strengthen the fight against corruption. It was further added that in case two views are possible the court should accept the one that seeks to eradicate corruption over the one which seeks to perpetuate it. Whether Stamp Vendors are Public Servants ? - HELD THAT - Sections 13 and 14 stipulate the mode of stamping respectively Section 15 reinforces the effect of non-compliance of the preceding provisions and deems it unstamped. Section 17 provides that all instruments chargeable with duty and executed by any person in India shall be stamped before or at the time of execution. Noncompliance of Section 17 is penalised under Section 62. Section 33 provides that every person who has authority to receive evidence shall impound an instrument which is in their opinion chargeable with duty but appears to be not duly stamped. The procedure laid down by the statute to be followed after such impounding also ensures that there is payment of stamp duty and the exchequer does not incur any revenue loss - Section 35 is of particular significance to the issue before this Court as it renders instruments which are not duly stamped inadmissible in evidence for any purpose and imposes a prohibition on such instruments from being acted upon registered or authenticated. However the bar is removed on payment of duty and the penalty. The Collector again by powers vested in him under Section 40 is authorised to levy penalty. Section 42 reinforces that the purpose of stamping is in payment of duty as once the payment of duty and a penalty is complete the instrument is admissible. The common thread running across the above-mentioned provisions is that the Government desires that the holder of the instrument pays appropriate stamp duty. To fulfil this objective the Government ensures there is sufficient availability of stamps through licensed stamp vendors. It is for this reason the Government remunerates a stamp vendor as he is facilitating the accessibility of stamps on behalf of the Government and thus the role being performed by licensed stamp vendor is nothing short of a highly important public duty essential for ensuring the efficient collection of revenue on behalf of the State. Meaning of Commission under Section 194H of the 1961 Act and Section 2(c)(i) the PC Act - HELD THAT - Where the wording of a statutory provision indicates that the legislature has consciously attributed varying degrees of significance to different interpretative elements such as the nature of the relationship or the duty performed the courts are obliged to adhere to that legislative determination and interpret the provision in a manner that reflects the intended statutory scheme. While interpreting a statute it is essential not only to consider the words used but also to examine the Statement of Objects and Reasons as it provides the background against which the legislation was enacted. The legislature introduced a comprehensive definition of public servant with the intent to punish and curb the menace of corruption. In such circumstances it would be improper to construe the definition in a manner that limits its scope thereby defeating the very essence and purpose of the statute - It is an important rule of interpretation that every interpretation of a statute must be undertaken by considering the statute in its entirety the prior state of the law other statutes in pari materia the general scope and purpose of the legislation and the mischief that the legislature intended to address. Public Duty as the determinant of status of Public Servant - HELD THAT - The case of the appellant has tested positive on both aspects of the definition of a public servant under Section 2(c)(i) of the PC Act. The 1934 Rules envisage that the nascent discount eventually matures into a form of remuneration. Further the purpose of securing stamp duty fortifies the motive behind the efforts of the Government to remunerate stamp vendors. Thus the appellant at the relevant time was being remunerated by the Government. Undoubtedly the appellant was discharging a duty in which both the State and the public have an interest which nonetheless brings him within the ambit of a public servant as defined under the PC Act. Legality of appellant s conviction - HELD THAT - It is well-settled that mere recovery of tainted money by itself is insufficient to establish the charges against an accused under the PC Act. To sustain a conviction under Sections 7 and 13(1)(d) of the Act respectively it must be proved beyond reasonable doubt that the public servant voluntarily accepted the money knowing it to be a bribe. The courts have consistently reiterated that the demand for a bribe is sine qua non for establishing an offence under Section 7 of the PC Act - A five-Judge Bench of this Court in Neeraj Dutta v. State (Government of NCT of Delhi) 2022 (12) TMI 1490 - SUPREME COURT (LB) categorically held that an offer by bribe-giver and the demand by the public servant have to be proved by the prosecution as a fact in issue for conviction under Sections 7 and 13(1)(d)(i) and (ii) of the PC Act. Mere acceptance of illegal gratification without proof of offer by bribe-giver and demand by the public servant would not make an offence under Sections 7 and 13(1)(d)(i) and (ii) of the PC Act. Thus mere possession and recovery of tainted currency notes from a public servant in the absence of proof of demand is not sufficient to establish an offence under Sections 7 and 13(1)(d) of the PC Act respectively. Consequently without evidence of demand for illegal gratification it cannot be said that the public servant used corrupt or illegal means or abused his position to obtain any valuable thing or pecuniary advantage in terms of Section 13(1)(d) of the PC Act. It is noted that only two currency notes were recovered both of which had been smeared with phenolphthalein powder. Notably even accepting the prosecution s case for the sake of argument the appellant was lawfully entitled to receive Rs. 10/- for the stamp paper irrespective of any demand for bribe. Since the Rs. 10/- note itself was tainted it becomes difficult to determine whether the change in the colour of the solution was triggered by the handling of the Rs. 10/- note or the Rs. 2/- note. Hence the mere turning of the solution pink cannot by itself establish the acceptance of illegal gratification. Presumption under Section 20 of the PC Act - HELD THAT - Undoubtedly the presumption under Section 20 arises once it is established that the public servant accepted the gratification. However in determining whether such acceptance occurred the totality of the evidence led at the trial must be appreciated. The evidence led by the prosecution the suggestions made by the defence witnesses if any the entire record is required to be considered. Only if the cumulative effect of all the evidence is such that the sole possible conclusion is that the public servant accepted the gratification can it be said that the prosecution has established its case beyond reasonable doubt - the prosecution has failed to establish beyond all reasonable doubt the demand of bribe and its acceptance in a trap laid by the ACB. In such circumstances there is no question of a presumption under Section 20. Consequently it is compelled to conclude that it would be entirely illegal to uphold the conviction of the appellant under Sections 13(1)(d)(i) and (ii) read with Section 13(2) of the Act. Conclusion - i) The legislature has used a comprehensive definition of public servant to achieve the purpose of punishing and curbing the growing menace of corruption. Keeping this intention of the legislature in mind we are of the view that the definition of public servant as defined under the PC Act should be given a purposive and wide interpretation so as to advance the object underlying the statute. ii) It is the nature of duty being discharged by a person which assumes paramount importance when determining whether such a person falls within the ambit of the definition of public servant as defined under the PC Act. iii) Stamp vendors across the country by virtue of performing an important public duty and receiving remuneration from the Government for the discharge of such duty are undoubtedly public servants within the ambit of Section 2(c)(i) of the PC Act. iv) In the case at hand the appellant was eligible for receiving discount on the purchase of stamp papers owing to the license that he was holding. Further the discount is traceable to and is governed by the 1934 Rules framed by the State Government. Thus the appellant without a doubt could be said to be remunerated by the government for the purposes of Section 2(c)(i) of the PC Act. v) The prosecution has failed in establishing the allegation of demand for illegal gratification and acceptance thereof beyond reasonable doubt. Therefore the conviction of the appellant for the offences under Section 7 and 13(1)(d) read with Section 13(2) of the PC Act cannot be sustained and is thus liable to be set aside. The conviction and sentence of the accused as awarded by the Trial Court and affirmed by the High Court is set aside - Appeal allowed.

Summary

1. ISSUES PRESENTED and CONSIDERED

The Court considered two core legal questions:

a. Whether a licensed stamp vendor falls within the ambit of "public servant" as defined under Section 2(c)(i) of the Prevention of Corruption Act, 1988 (PC Act); and

b. If so, whether the conviction of the appellant for offences under Sections 7 and 13(1)(d) read with Section 13(2) of the PC Act is sustainable on merits.

2. ISSUE-WISE DETAILED ANALYSIS

a. Whether a licensed stamp vendor is a "public servant" under Section 2(c)(i) of the PC Act

Relevant legal framework and precedents: Section 2(c)(i) of the PC Act defines "public servant" to include "any person in the service or pay of the Government or remunerated by the Government by fees or commission for the performance of any public duty." The Court emphasized the legislative intent behind the PC Act, which replaced the 1947 Act to broaden the definition of "public servant" to curb corruption not only in government departments but also in semi-governmental authorities and bodies entrusted with public duties. The Court referred to authoritative precedents including State of Gujarat v. Mansukhbhai Kanjibhai Shah and State of M.P. v. Ram Singh, which underscored a purposive and wide interpretation of "public servant" to advance the anti-corruption objectives of the statute.

Court's interpretation and reasoning: The Court held that the definition of "public servant" under Section 2(c)(i) comprises three independent categories: persons in the service of the Government; persons in the pay of the Government; and persons remunerated by fees or commission by the Government for performing any public duty. The focus is on the nature of the duty performed rather than the mode of appointment or the precise nature of remuneration.

Key evidence and findings: The Court examined the Delhi Province Stamp Rules, 1934 ("1934 Rules") which regulate the licensing and remuneration of stamp vendors. Under Rule 28(xx) and Rule 34, licensed stamp vendors are entitled to a discount on the purchase of stamp papers from the treasury, which constitutes their remuneration. The Court found that this discount is a form of commission or fee paid by the Government for performing the public duty of vending stamps, which are essential for legal transactions and revenue collection.

Application of law to facts: Since the appellant was licensed under the 1934 Rules and entitled to a discount (remuneration) from the Government for vending stamps, and since vending stamps is a public duty in which the State and public have an interest, the appellant qualified as a "public servant" under Section 2(c)(i) of the PC Act.

Treatment of competing arguments: The appellant relied on the decision in Ahmedabad Stamp Vendors Association which held that stamp vendors are independent dealers and not agents of the Government, arguing that the discount cannot be considered commission or remuneration under the PC Act. The Court distinguished that decision, noting it was in the context of the Income Tax Act and Section 194H, and did not consider the PC Act's definition or legislative intent. The Court rejected the narrow interpretation of "commission" and emphasized the broader anti-corruption purpose of the PC Act.

Conclusions: The Court concluded that licensed stamp vendors are public servants within the meaning of Section 2(c)(i) of the PC Act because they are remunerated by the Government (via discount) for performing a public duty (vending stamps).

b. Sustainability of the appellant's conviction under Sections 7 and 13(1)(d) read with Section 13(2) of the PC Act

Relevant legal framework and precedents: Sections 7 and 13(1)(d) of the PC Act criminalize acceptance and obtainment of illegal gratification by a public servant for showing favour or disfavour in relation to official acts. The Court reiterated the settled principle that proof of demand and acceptance of illegal gratification is essential for conviction. Mere recovery of tainted money or acceptance without proof of demand or offer is insufficient. The Court relied on the recent authoritative pronouncement in Neeraj Dutta v. State which clarified that either an offer accepted by the public servant or a demand made by the public servant accepted by the bribe-giver must be proved beyond reasonable doubt.

Court's interpretation and reasoning: The Court scrutinized the evidence of the complainant, panch witness, Raid Officer, and Investigating Officer. It noted inconsistencies and material gaps, particularly the panch witness's failure to recall any demand of Rs. 12/- and the Raid Officer's admission that he did not hear the demand or acceptance of the excess Rs. 2/-. The Court also observed the unexplained delay in calling the Investigating Officer to the scene and the fact that the tainted notes were recovered from the register rather than directly from the appellant's person. The presence of the Rs. 10/- note smeared with phenolphthalein complicated the inference of acceptance of illegal gratification.

Key evidence and findings: The panch witness, who was close to the transaction, could not confirm the demand of Rs. 12/-. The Raid Officer did not witness the demand or acceptance. The Investigating Officer was not present at the time of arrest or search. The recovery of the tainted money was from the register and not from the accused's person. The prosecution failed to produce any other witness to corroborate the demand. The inconsistencies weakened the prosecution's case.

Application of law to facts: Given the lack of clear and cogent evidence of demand and acceptance of illegal gratification, the prosecution failed to discharge the burden of proof beyond reasonable doubt. The Court held that without proof of demand, the offence under Sections 7 and 13(1)(d) cannot be established.

Treatment of competing arguments: The appellant argued that the prosecution failed to prove the demand and acceptance and pointed to procedural irregularities and inconsistencies in evidence. The Court accepted these arguments and emphasized that conviction cannot rest on mere recovery of tainted money without proof of demand or offer. The prosecution's reliance on the presumption under Section 20 of the PC Act was rejected as it arises only after acceptance is proved.

Conclusions: The Court concluded that the conviction under Sections 7 and 13(1)(d) read with Section 13(2) of the PC Act was unsustainable due to failure to prove demand and acceptance beyond reasonable doubt.

3. SIGNIFICANT HOLDINGS

"The legislature has used a comprehensive definition of 'public servant' to achieve the purpose of punishing and curbing the growing menace of corruption. Keeping this intention of the legislature in mind, we are of the view that the definition of 'public servant' as defined under the PC Act should be given a purposive and wide interpretation so as to advance the object underlying the statute."

"It is the nature of duty being discharged by a person which assumes paramount importance when determining whether such a person falls within the ambit of the definition of public servant as defined under the PC Act."

"Stamp vendors across the country, by virtue of performing an important public duty and receiving remuneration from the Government for the discharge of such duty, are undoubtedly public servants within the ambit of Section 2(c)(i) of the PC Act."

"Mere possession and recovery of tainted currency notes from a public servant, in the absence of proof of demand, is not sufficient to establish an offence under Sections 7 and 13(1)(d) of the PC Act respectively."

"The proof of demand of illegal gratification is the gravamen of the offence under Sections 7 and 13(1)(d)(i) and (ii) of the Act and in absence thereof, unmistakably the charge therefor would fail."

"The presumption under Section 20 arises once it is established that the public servant accepted the gratification. However, in determining whether such acceptance occurred, the totality of the evidence led at the trial must be appreciated."

Final determinations:

- The appellant, as a licensed stamp vendor remunerated by the Government through discount for performing a public duty, is a "public servant" under Section 2(c)(i) of the PC Act.

- The prosecution failed to prove the demand and acceptance of illegal gratification beyond reasonable doubt.

- Consequently, the conviction and sentence under Sections 7 and 13(1)(d) read with Section 13(2) of the PC Act were set aside and the appellant was acquitted.