2017 (2) TMI 926 - SC - Indian Laws

Possession of disproportionate assets / surplus income by former Chief Minister of the State of Tamil Nadu and the co-accused - Charge under Sections 120B and 109 of Indian Penal Code, 1860 read with Sections 13(1)(e) and 13(2) of the Prevention of Corruption Act, 1988 against A1 confiscation of properties, both movable and immovable as per Trail court set aside by HC 2015 (5) TMI 463 - KARNATAKA HIGH COURT - Held that - The offences at the trial were under Sections 13(1)(e), 13(2) of the Act, Sections 109 and 120B of the Indian Penal Code encompassed within paragraphs 4A and 5 of the Schedule to the Ordinance. These offences were unimpeachably within the contours of the Act and triable by a special Judge thereunder. Having regard to the frame and content of the Act and the limited modifications to the provisions of the Code of Criminal Procedure, in their applicability as occasioned thereby and the authorisation of the special Judge trying the offences thereunder to exercise all the powers and functions invocable by a District Judge under the Ordinance, we are of the opinion that the order of confiscation/forfeiture of the properties standing in the name of six companies, as involved, made by the Trial Court is unexceptionable. In any view of the matter, with the peremptory termination of the criminal proceedings resultant on this pronouncement, the direction of the Trial Court towards confiscation/forfeiture of the attached property, as mentioned therein, is hereby restored and would be construed to be an order by this court as well After analyzing the facts and circumstances of this case and after taking into consideration all the evidence placed before us and the arguments put forward by all the parties, we are of the unhesitant opinion that the impugned judgment and order rendered by the High Court is untenable and is thus set aside. We have considered the facts of this case and in our opinion, the percentage of disproportionate assets as 8.12% as computed by the High Court is based on completely wrong reading of the evidence on record compounded by incorrect arithmetical calculations, as referred to herinabove. In view of the regnant evidence on record, unassailably proving the disproportionateness of the assets, as contemplated in Section 13(1)(e) of 1988 Act, it is inessential as well to resort to any arithmetic to compute the percentage thereof. Noticeably, the respondents accused accepted all the findings of the High Court. We have analyzed the evidence adduced by the parties and we come to the conclusion that A1 to A4 have entered into a conspiracy and in furtherance of the same, A1 who was a public servant at the relevant time had come into possession of assets disproportionate to the known sources of her income during the check period and had got the same dispersed in the names of A2 to A4 and the firms companies involved to hold these on her behalf with a masked front. Furthermore, the the charge of abetment laid against A2 to A4 in the commission of the offence by A1 also stands proved. The Trial Court held that even private individuals could be prosecuted for the offence under Section 109 of I.P.C. and we find that the Trial Court was right in coming to the conclusion relying on the decision of Nallammal (1999 (8) TMI 953 - SUPREME COURT) , wherein it was observed that acquisition and possession by a public servant was capable of being abetted, and observed that Under Section 3 of the 1988 Act, the Special Judge had the power to try offences punishing even abetment or conspiracy of the offences mentioned in the PC Act and in our opinion, the Trial Court correctly held in this matter that private individuals can be prosecuted by the Court on the ground that they have abetted the act of criminal misconduct falling under Section 13(1)(e) of the 1988 Act committed by the public servant. Furthermore, the reasoning given by the Trial Court in respect of criminal conspiracy and abetment, after scrutinizing the evidence of this case, is correct in the face of the overwhelming evidence indicating the circumstances of active abetment and conspiracy by A2 to A4 in the commission of the above offences under Section 13(1)(e) of the 1988 Act. This would be evident from the following circumstances - (i) A1 had executed a General Power of Attorney in favour of A2 in respect of Jaya Publications marked as Ex.P-995. The circumstance of executing the power of attorney in favour of A2 indicates that with a view to keep herself secured from legal complications, A1 executed the said power of attorney knowing fully well that under the said powers, A2 would be dealing with her funds credited to her account in Jaya Publications. (ii) Constitution of various firms during the check period is another circumstance establishing the conspiracy between the parties. It has come in evidence that 10 firms were constituted on a single day. In addition, A2 and A3 started independent concerns and apart from buying properties, no other business activity was undertaken by them. The circumstances proved in evidence undoubtedly establish that these firms are nothing but extentions of Namadhu MGR and Jaya Publications and they owed their existence to the benevolence of A1 and A2 (iii) The aforesaid firms and companies were operating from the residence of A1 and it cannot be accepted that she was unaware of the same even though she feigned ignorance about the activities carried on by A2 to A4. They were residing with A1 without any blood relation between them. (iv) Although A2 to A4 claims to have independent sources of income but the fact of constitution of firms and acquisition of large tracts of land out of the funds provided by A1 indicate that, all the accused congregated in the house of A1 neither for social living nor A1 allowed them free accommodation out of humanitarian concern, rather the facts and circumstances proved in evidence undoubtedly point out that A2 to A4 were accommodated in the house of A1 pursuant to the criminal conspiracy hatched by them to hold the assets of A1. (v) Ex.D.61 reveals that before the Income Tax Authorities, the representative of A1 himself had put forth an argument that ₹ 1 crore was advanced by A1 to Sasi Enterprises towards share capital and further it was submitted that on the security of the said amount, loan was borrowed by A1, and thus she cannot claim noninvolvement with the firms. (vi) The flow of money from one account to the other proves that there existed active conspiracy to launder the illgotten wealth of A1 for purchasing properties in the names of the firms. (vii) The conspiracy among the accused persons is also proved by the evidence of Sub-Registrar, North Beach, Sub-Registrar office-PW.159 and the evidence of PW.71 Radha Krishnan, Horticultural officer. In our opinion, the Trial Court correctly came to the conclusion on such reasoning and we hereby uphold the same. Accordingly, in view of the reasoning recorded hereinabove in the preceding paragraphs, we set aside the judgment and order of the High Court and affirm and restore the judgment of the Trial Court in toto against A2 to A4. However, though in the process of scrutiny of the facts and the law involved and the inextricable nexus of A1 with A2 to A4, reference to her role as well as the evidence pertaining to her had been made, she having expired meanwhile, the appeals, so far as those relate to her stand abated. Nevertheless, to reiterate, having regard to the fact that the charge framed against A2 to A4 is proved, the conviction and sentence recorded against them by the Trial Court is restored in full including the consequential directions. Respondents A2 to A4, in view of this determination and the restoration of their conviction and sentence, would surrender before the Trial Court forthwith. The Trial Court is hereby also ordered to take immediate steps to ensure that the respondents A2 to A4 serve out the remainder of sentence awarded them and take further steps in compliance of this judgment, in accordance with law.

Summary

Issues Involved:
1. Exclusion of certain sums from Annexure II.
2. Cost of acquisition of Mahasubhalakshmi Kalyana Mandapam.
3. Acquisition of shares and machinery by M/s. Anjaneya Printers.
4. Disputed items in Annexure-II.
5. Valuation of properties and construction costs.
6. Income from various sources, including loans and advances.
7. Allegations of conspiracy and abetment.
8. Admissibility and probative value of income tax returns and orders.
9. Application of the Prevention of Corruption Act, 1988 and related legal principles.
10. Role of Special Judge and applicability of the Criminal Law Amendment Ordinance, 1944.

Detailed Analysis:

1. Exclusion of Certain Sums from Annexure II:
The judgment discusses the exclusion of &8377; 28,57,279/- from Annexure II, as the purchase was made prior to the check period. This exclusion was based on the argument that the sum was not relevant to the period under investigation.

2. Cost of Acquisition of Mahasubhalakshmi Kalyana Mandapam:
The defense argued that only &8377; 10 Lakhs was paid to the outgoing partners, while the prosecution claimed &8377; 38,51,000/-. The Trial Court added the whole amount as assets of the accused, but the defense contended that &8377; 28,51,000/- should be excluded.

3. Acquisition of Shares and Machinery by M/s. Anjaneya Printers:
The defense argued that the shares were acquired for &8377; 64,05,000/- and machinery for &8377; 20,16,000/-, totaling &8377; 84,21,000/-. The prosecution's valuation of the machineries was disputed, and the defense sought exclusion of &8377; 20,16,000/-.

4. Disputed Items in Annexure-II:
Several items in Annexure-II were disputed, including:
- Item No. 64: Cash payment for land acquisition.
- Items Nos. 70, 72, and 74: Discrepancies in cash payments.
- Items Nos. 91, 92, and 127: Disputed shares and payments.
- Item No. 159: Cost of Luz Avenue property.
- Items Nos. 168 & 169: Duplication of assets.
- Item No. 173: Acquisition of Indo-Doha Chemicals and Pharmaceuticals Ltd.
- Item Nos. 174, 176, 177, 178, 180, 183, 184, 185, 186, 187, and 188: New/additional constructions and related costs.

5. Valuation of Properties and Construction Costs:
The judgment extensively analyzed the valuation of properties and construction costs, including marbles, granites, and other special items. The Trial Court's assessment was based on detailed scrutiny of the evidence, while the High Court's approach was criticized for being summary and lacking in-depth analysis.

6. Income from Various Sources, Including Loans and Advances:
The defense claimed additional income from various sources, including:
- Agricultural income from grape gardens.
- Loans from banks and private parties.
- Advances received from companies.
- Rental income and sale of properties.
The Trial Court scrutinized these claims, often rejecting them for lack of convincing evidence, while the High Court accepted several claims based on income tax returns and orders.

7. Allegations of Conspiracy and Abetment:
The prosecution alleged that A1 to A4 conspired to acquire assets disproportionate to their known sources of income. The Trial Court found that the evidence supported the charge of conspiracy and abetment, while the High Court's findings were criticized for lacking detailed analysis.

8. Admissibility and Probative Value of Income Tax Returns and Orders:
The judgment emphasized that income tax returns and orders are not binding on criminal courts and must be independently assessed. The High Court's reliance on these documents without independent scrutiny was deemed erroneous.

9. Application of the Prevention of Corruption Act, 1988 and Related Legal Principles:
The judgment discussed the application of Section 13(1)(e) of the Prevention of Corruption Act, 1988, and related legal principles, including the burden of proof and the definition of "known sources of income."

10. Role of Special Judge and Applicability of the Criminal Law Amendment Ordinance, 1944:
The judgment affirmed the Special Judge's authority to exercise powers under the Criminal Law Amendment Ordinance, 1944, and upheld the confiscation/forfeiture of properties as ordered by the Trial Court.

Conclusion:
The appeals were allowed, setting aside the High Court's judgment and restoring the Trial Court's judgment in toto against A2 to A4. The respondents were directed to surrender and serve the remainder of their sentences, with further steps to be taken in compliance with the judgment.