# STATE OF KARNATAKA v. SELVI J. JAYALALITHA & ORS

- **Citation:** [2017] 5 S.C.R. 525
- **Court:** Supreme Court of India
- **Decided:** 2017-02-14
- **Case number:** Criminal Appeal Nos.300-303 of2017
- **Bench:** Pinaki Chandra Ghose, Amitava Roy
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/state-of-karnataka-v-selvi-j-jayalalitha-ors-32289
- **Pages:** 376

## Headnote

PREVENTION OF CORRUPTION ACT, 1988:
Unique features, purpose of incorporation and its scope -
A
B
Discussed.
C
s.13(1)(e) - Criminal misconduct - Al to A4 entered into a
conspiracy and in furtherance of the same, Al who was a public
servant at the relevant time came into possession of assets
disproportionate to the known sources of her income during the
check period and got the same dispersed in the names of A2 to A4 D
and the firms and the companies involved to hold these on her behalf
with a masked front - Conviction by trial court - Acquittal by High
Court - On appeal, held: The reasoning given by the trial court in
respect of criminal conspiracy and abetment is correct in the face
of the evidence indicating the circumstances of active abetment and
conspiracy by A2 to A4 in the commission of the above ojfences
E
u/s.13(1)(e) of the 1988 Act - This is evident from the circumstances
that Al had executed a General Power of Attorney in favour of A2
in respect of Jaya Publications - The circumstance of executing the
power of attorney in favour of A2 indicated that with a view to
keep herself secured from legal complications, Al executed the said F
power of attorney knowing fully well that under the said powers,
A2 would be dealing with her fonds credited to her account in Jaya
Publications - Constitution of various firms during the check period
was another circumstance establishing the conspiracy between the
parties - 10 firms were constituted on a single day - Jn addition, A2
and A3 started independent concerns and apart from buying G
properties, no other business activity was undertaken by them -
The circumstances proved in evidence undoubtedly established that
these firms were nothing but extentions of Namadhu MGR and Jaya
Publications and they owed their existence to the benevolence of
Al and A2 - These firms and companies were operatingji·om the H
525
526
A
B
c
D
E
F
SUPREME COURT REPORTS
[2017) 5 S.C.R.
residence of Al and it cannot be accepted that she was unaware ol
the same even though she feigned ignorance about the activities
carried on by A2 to A4 - They were residing with Al without any
blood relation between them - Although A2 to A4 claimed 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
Al indicated that, all the accused congregated in the house ol Al
neither for social living nor Al allowed them free accommodation
out of humanitarian concern, rather the facts and circumstances
proved in evidence undoubtedly pointed out that A2 to A4 were
accommodated in the house of Al pursuant to the criminal
conspiracy hatched by them to hold the assets of Al - There was
frequent and spontaneous if!flow of funds from the accounts of A-1
to those of the other co-accused and the .firms/companies involved
which demonstrated the collective culpable involvement al
respondents in the transactions - The judgment of trial court restored
in toto against A2 to A4 - Since A-1 died during pendency ol
appeals, appeals related to her abated.
s. l 3(J)(e) - Interpretation of the expression "satisfactorily
account" in the context of the offence of misconduct uls.5(J)(e) of
Act of 1947 and s.13(J)(e) of Act 1988 -
Word "satisfactorily"
used by the legislature deliberately cast a burden on the accused
not only to offer a plausible explanation as to how he came to
acquire his large wealth but also to satisly the Court that his
explanation was worthy of acceptance.
s.l 3(J)(e) - Probative worth of Income Tax Proceedings qua
lawfulness of the source of income :... IT returns and orders would
not ipso facto either conclusively prove or disprove the charge and
can at best be pieces of evidence which have to be evaluated along
with the other materials on record - Neither the income tax returns
nor the orders passed in the proceedings relatable thereto, either
definitively attest the lawfulness of the sources of income of the
G accused 1•ersons or are of

## Text

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[2017] 5 S.C.R. 525
STATE OF KARNATAKA
v.
SELVI J. JAYALALITHA & ORS.
(Criminal Appeal Nos.300-303 of2017)
FEBRUARY 14, 2017
[PINAKI CHANDRA GHOSE AND AMITAVA ROY, JJ.J
PREVENTION OF CORRUPTION ACT, 1988:
Unique features, purpose of incorporation and its scope -
A
B
Discussed.
C
s.13(1)(e) - Criminal misconduct - Al to A4 entered into a
conspiracy and in furtherance of the same, Al who was a public
servant at the relevant time came into possession of assets
disproportionate to the known sources of her income during the
check period and got the same dispersed in the names of A2 to A4 D
and the firms and the companies involved to hold these on her behalf
with a masked front - Conviction by trial court - Acquittal by High
Court - On appeal, held: The reasoning given by the trial court in
respect of criminal conspiracy and abetment is correct in the face
of the evidence indicating the circumstances of active abetment and
conspiracy by A2 to A4 in the commission of the above ojfences
E
u/s.13(1)(e) of the 1988 Act - This is evident from the circumstances
that Al had executed a General Power of Attorney in favour of A2
in respect of Jaya Publications - The circumstance of executing the
power of attorney in favour of A2 indicated that with a view to
keep herself secured from legal complications, Al executed the said F
power of attorney knowing fully well that under the said powers,
A2 would be dealing with her fonds credited to her account in Jaya
Publications - Constitution of various firms during the check period
was another circumstance establishing the conspiracy between the
parties - 10 firms were constituted on a single day - Jn addition, A2
and A3 started independent concerns and apart from buying G
properties, no other business activity was undertaken by them -
The circumstances proved in evidence undoubtedly established that
these firms were nothing but extentions of Namadhu MGR and Jaya
Publications and they owed their existence to the benevolence of
Al and A2 - These firms and companies were operatingji·om the H
525
526
A
B
c
D
E
F
SUPREME COURT REPORTS
[2017) 5 S.C.R.
residence of Al and it cannot be accepted that she was unaware ol
the same even though she feigned ignorance about the activities
carried on by A2 to A4 - They were residing with Al without any
blood relation between them - Although A2 to A4 claimed 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
Al indicated that, all the accused congregated in the house ol Al
neither for social living nor Al allowed them free accommodation
out of humanitarian concern, rather the facts and circumstances
proved in evidence undoubtedly pointed out that A2 to A4 were
accommodated in the house of Al pursuant to the criminal
conspiracy hatched by them to hold the assets of Al - There was
frequent and spontaneous if!flow of funds from the accounts of A-1
to those of the other co-accused and the .firms/companies involved
which demonstrated the collective culpable involvement al
respondents in the transactions - The judgment of trial court restored
in toto against A2 to A4 - Since A-1 died during pendency ol
appeals, appeals related to her abated.
s. l 3(J)(e) - Interpretation of the expression "satisfactorily
account" in the context of the offence of misconduct uls.5(J)(e) of
Act of 1947 and s.13(J)(e) of Act 1988 -
Word "satisfactorily"
used by the legislature deliberately cast a burden on the accused
not only to offer a plausible explanation as to how he came to
acquire his large wealth but also to satisly the Court that his
explanation was worthy of acceptance.
s.l 3(J)(e) - Probative worth of Income Tax Proceedings qua
lawfulness of the source of income :... IT returns and orders would
not ipso facto either conclusively prove or disprove the charge and
can at best be pieces of evidence which have to be evaluated along
with the other materials on record - Neither the income tax returns
nor the orders passed in the proceedings relatable thereto, either
definitively attest the lawfulness of the sources of income of the
G accused 1•ersons or are of any avail to them to satisfactorily account
the di;proportionateness of their pecuniary resources and properties
as mandated by s.13(J)(e) ol the PC Act.
s. J 3(J)(e) -
Gifts received by public servant - Receipt of
huge amount of Rs.2 crores and foreign remittance as presents and
H gi.fis as the Chief Minister of State - Gi.fis as claimed to have been
STATE OF KARNATAKA v. SELVI J. JAYALALITHA & ORS.
527
made to Al were not only prohibited by law, having regard to her
A
office and the role attached thereto, but also constituted an offence
thereunder - Disclosure of such gifts in the income tax returns of
A 1 and the orders of the income tax authorities on the basis thereof,
do not validate the said receipts to elevate the same to lawfit.l income
to repel the charge uls. l 3(l)(e) thereof- Gifts to Al, a public servant
B
in the context of ss.161 to l 65A lPC now integrated into the Act are
visibly illegal and forbidden by law - The endeavour to strike a
distinction between "legal" and "unlawful" as sought to be made
to portray gifts to constitute a lawfill source of income is thus wholly
misconstrued - Penal Code, 1860 - ss.161 to l 65A.
s. l 3(l)(e) - Disproportionate assets -According to respondent
No. 1, as against the jigure of Rs.24.29 crores being the value of
new/additional construction of buildings during the check period,
as computed by the prosecution, her assertion was of Rs.6.52 crores
c
- Prima facie, the plea of the prosecution that in assessing the
expenditure of new/additional buildings, the High Court had not
D
only taken a reduced constructed area of 1668.39 sq. Ji. instead of
2174.69·sqsft., thereby introducing a shortfall of506.3 sqs., it also
applied the rate of Rs.28,0001- per sq. ft. based on the construction
cost of a sentry shed, as the base value to work out the amount of
investments made towards the new/additional buildings/constructions
E
is borne out by the records - The approach of the High Court on
both counts in the face of the evidence on record is not
acceptable - The adoption of Rs.28, 0001- per sq. ft. as the base
value, which was the cost of construction of a sentry shed, per se
was erroneous, having regard to the fact that a sentry shed and the
new/additional constructions/buildings are not comparable.
s.l 3(1)(e) - Addition of Rs.4 crores by High Court towards
income of Jaya Publications and Namadhu MGR to the .figure cited
by the DVAC on account of Scheme deposit - Propriety of- Held:
F
High Court was not justified in allowing an additional sum of Rs.4
crores as income of Jaya Publications merely on the basis of the
G
oral evidence of the 31 witnesses - Moreso, since the accused had
failed to produce the primary documents in original before the
auditors and the income tax authorities in support of scheme
deposit - Trial court had duly considered these factors more
particularly the inordinate delay in submission o,f income tax returns
H
528
SUPREME COURT REPORTS
[2017] 5 S.C.R.
A much after the submission of the charge-sheet, along with the other
attendant circumstances - Testimony of subscribers to the scheme
was also rightly rejected by trial court as they were hardened party
workers.
B
c
D
E
F
s.13(l)(e) -Addition of Rs.1 crore by High Court towards
income of Super Duper Pvt. Ltd. - This amount is claimed to be
legitimate income of A-3 from his business initially carried on as
proprietor of Super Duper TV and later incorporated as Super Duper
Pvt. Ltd. - Trial Court in contradistinction took pains to examine
the trail of the income claimed by the company and the feasible
investments thereof- It also took note of the huge it?flow and outflow
of cash to and from the accounts of the firms/companies of which
the respondents were partners/directors during the check period so
much so that the income claimed by A3 under t!ps head ceased to
retain its independent identity so as to be accepted 'ds the discernible
earnings of the company for transacting its business activities as a
distinctly separate institution - The summary treatment of the
evidence on this issue by the High Court lacks the desired approach
and, therefore, cannot be sustained - The addition awarded by it of
income of Rs.1 crore to Super Duper T. V. · Pvt. Ltd. thus cannot be
upheld.
s.13(1)(e)-Loan byA-1 toA-2-Addition of Rs.1.53 crores
sought as loan from A-2 and her proprietary firms - Having regard
to the persons and entities involved in the transactions, in the
absence of other convincing evidence, the said receipts/deposits
cannot be accepted to be lawful income as envisioned in s.13(l)(e)
of the Act.
s. l 3(1)(e) - Addition of Rs. 46. 71 lacs as agricultural
income - High Court enhanced the agricultural income of A-1 to
Rs.52.50 lacs - Held: In absence of any independent evidence in
support of this claim, having regard to the state of law that income
tax returns/orders are not automatically binding on the criminal
G court, the effortless acceptance thereof by the High Court was in
disregard to this settled proposition - High Court erred in accepting
. income tax return and orders passed thereon and in adding Rs.46. 71
lakhs under the head of agricultural income.
s.13(l)(e) -Addition of loan amount of Rs.18.17 crore by
H
STATE OF KARNATAKA v. SELVI J. JAYALALITHA & ORS.
High Court - Held: The High Court wrongly totalled the amount to
inflate figures to Rs.24.17 crores which in fact ought to have been
Rs. l 0. 67 crore on correct calculations - Addition of Rs.18.17 crores
as done by High Court was erroneous and not sustainable.
s.J3(l)(e)-A-l s income from three companies - The deposits
and withdrawals represented through the different entries in the
bank accounts suggested multiplication of transactions stemming
from the same corpus - The maze of financial exchanges in fragments
involving different combinations hint at the attempt to inflate
individual and collective income of the respondents - The banking
transactions, though resorted to for proclaiming genuineness thereof.
having regard to the overall factual conspectus did not appear to
be real.
529
A
B
c
s.J3(J)(e) - Expenditure incurred by A-1 in connection with
marriage of A-3 - High Court reduced from Rs.6.45 crores and
accepted the figure of Rs.28.68 lakhs towards expenditure towards
marriage to be share of expense of A-1 - PW-181 Assistant Engineer
D
PWD in his report mentioned inter alia, the areas of the various
pandals together with the decorative attachments and after
accounting for the cost thereof and the price of the furniture used
and the amenities provided, estimated the expenditure to be Rs.5.91
crores towards the pandals and other arrangements to secure the
intended facilities for the couple, guests and other participants -
E
His findings in his report could be construed to be of an expert
witness and further could be used as corroboration for the testimony
of PW200 who indeed had supervised the same works himse(l and
as claimed by the prosecution on the instructions/advise of A2 -
PW200, Chief Engineer, P~D did assert on oath that he was
instructed by A2 to complete the panda/ works as early as
possible - He deposed as well that Al and A2 had inspected the
work by visiting the site about a week prior to the marriage - In the
face of the evidence in particular of the elaborate arrangements at
F
the venues and the expenses incurred on other items associated G
with the event, the Trial Court did not err in not accepting the.figure
of Rs.28.68 lacs as the expenditure incurred by Al on the basis of
her reply to the queries made by the Income Tax Department.
Corruption - It not only has a demoraliSing bearing on those
who are ethical, honest, upright and enterprising, it is visibly H
530
A
B
SUPREME COURT REPORTS
[2017] 5 S.C.R.
antithetical to the quintessential spirit of the jimdamental duty of
every citizen to strive towards excellence in all spheres of individual
and collective activity to raise the nation to higher levels of endeavour
and achievement- Every citizen has to be a partner in this sacrosanct
· mission for a stable, just and ideal social order as envisioned by
our forefathers and fondly cherished by the numerous se(f-effacing
crusaders 9J a free and independent Bharat, pledging their countless
sacrifices and selfless commitments for such cause. (Per Amitava
Roy, J.)
PREVENTION OF CORRUPTION ACT, 1947:
c
s.5(1)(e) - Interpretation of - Held: A bare perusal of clause
(e) of s.5(1) of 1947 Act reveal that the criminal misconduct of the
public servant, as envisaged therein, would ensue if he/she or any
person on his/her behalf was in possession or had, at any point of
time during the period of his/her office, been in possession of
pecuniary resources or property, disproportionate to his/her known
D
sources of income, which the public servant cannot sati!>factorily
account - Significantly, for such misconduct, the possession of the
disproportionate pecuniary resources or property, which the public
servant is unable to satisfactorily account, can be held either by
him/her or any person on his/her behalf is essential - This offence
E
thus, enfolds in its sweep a definitive involvement and role of persons
other than the public servant, either as a abetter or a co-conspirator
in the actualisation of the crime - Consequently, thus such abettors
or co-conspirators or partners in this item of offence, if proved,
cannot escape the legal consequences for their participatory role.
F
CODE OF CRIMINAL PROCEDURE, 1973:
s.452 - Invocation of s.452 by special judge under PC Act to
order confiscation/for.f'eiture of the properties otherwise attached
under the Criminal Law Amendment Ordinance, 1944 - Permissibility
of - Held: Permissible - In terms of s.5(6), Special Judge is
. G authorised to exercise all powers and/unctions exercisable by a
District Judge under the Ordinance - Jn the instant case, the o.f)ences
at the trial were u/ss.13(1)(e), 13(2) of the PC Act, ss.109 and 120B
!PC encompassed within paragraphs 4A and 5 of the Schedule to
the Ordinance - These offences were unimpeachably within the
contours of the PC Act and triable by a special Judge thereunder -
H
STATE OF KARNATAKA v. SELVI J. JAYALALITHA & ORS.
531
Therefore, the order of confiscation/forfeiture of the properties A
standing in the name of six companies, as involved, made by the
trial court is sustainable - Criminal Law Amendment Ordinance,
1944.
CRIMINAL LAW:
Conspiracy - Proof of - Held: A conspiracy can be proved B
by circumstantial evidence as having regard to the nature of the
offending act, no direct evidence can be expected.
CONSTITUTION OF INDIA:
Art.136 - Scope of interference with an order of acquittal/ C
conviction under Art.136 of the Constitution - Held: Once the
Appellate Court comes to the conclusion that the view taken by the
lower court was clearly unreasonable, then that by itself would be
a compelling reason for interference - It is a courts duty to convict
a guilty person when the guilt is established beyond reasonable
doubt, no less than it is its duty to acquit the accused when such D
guilt is not so established.
EVIDENCE ACT, 1872:
s.45 - Expert opinion/evidence - Probative. worth of - Held:
An expert is one who has made a subject upon which he speaks or . E
renders his opinion, a matter of particular study, practice or
observation and has a special knowledge thereof- His knowledge
must be within the recognized field of expertise and he essentially
has to be qualified in that discipline of study - It has been
propounded that an expert is not a witness of fact and its evidence
is really of an advisory character and it is his duty to furnish to the
Judge/Court the necessary scientific criteria for testing the accuracy
of the conclusions so as to enable the Judge/Court to .form his/its
independent judgment by the application of such criteria to the
facts proved by the evidence - By virtue of s.45 of the Evidence Act
1872, which makes the opinion of an expert admissible, not only an
expert must possess necessary special skill and experience in his
discipline, his opinion must be backed by reason and has to be
examined and cross-examined to ascertain the probative worth
thereof - The evidentiary value of the opinion of an expert depends
F
G
on the facts upon which it is based and also the validity of the
process by which the conclusion has been reached - The Court is
H
532
SUPREME COURT REPORTS
(2017] 5 S.C.R.
A not to subjugate its own judgment to that of the expert or delegate
its authority to a third party but ought to assess the evidence of the
expert like any other evidence.
B
c
D
BENAMI TRANSACTIONS:
Courts are usually guided by the following circumstances:
The source from which the purchase money came; The nature of
possession of the property, after the purchase; Notice, if any. for
giving the transaction a benami colour; The position of the parties
and the relationship, if any, between the claimant and the alleged
benamdar; The custody of the title-deeds after the sale; and The
conduct of the parties concerned in dealing with the property ajter
the sale.
PENAL CODE, 1860:
s.109 - Private individual can also be prosecuted/or offence
uls.109.
INTERPRETATION OF STATUTES:
Anti-corruption laws - Any interpretation of the provisions of
anti-corruption laws has to be essentially pwposive, in .fi1rtherance
of its mission and not in retrogression thereof (Per Amitava Roy, J.)
E
Allowing the appeals, the Court
HELD: Per Pinaki Chandra Ghose, J.:
F
G
H
1.1.
The Prevention of Corruption Act, 1947
Section 5 defined criminal misconduct by a public servant.
Noticeably, by Section 6 of Act 40 of 1964 i.e. the Anti Corruption
Law (Amendment) Act, 1964, amongst others, the following
insertion by way of clause (e) was incorporated in Section 5.
"if he or any person on his behalf is in possession or has, at
any time during the period of his office, been in possession,
for which the public servant cannot satisfactorily account,.
of pecuniary resources or property disproportionate to his
known sources of income.".
A bare perusal of clause (e) of Section 5(1) of 1947 Act would
reveal that the criminal misconduct of the public servant, as
envisaged therein, would ensue if he/she or any person on his/
STATE OF KARNATAKA v. SELVI J. JAYALALITHA & ORS.
533
her behalf was in possession or had, at any point of time during A
the period of his/her office, been in possession of pecuniary
resources or property, disproportionate to his/her known sources
B
of income, which the public servant cannot satisfactorily account.
Significantly, for such misconduct, the possession of the
disproportionate pecuniary resources or property, which the
public servant is unable to satisfactorily account, can be held
either by him/her or any person on his/her behalf. This offence
thus; enfolds in its sweep a definitive involvement and role of
persons other than the public servant, either as a abettor or a coconspirator in the actualisation of the crime. Consequently, thus
such abettors or co-conspirators or partners in this item of C
offence, if proved, cannot escape the legal consequences for their
participatory role. [Paras 139, 140) [742-F-H; 743-A-CI
K. Anbazhagan v. Superintendent of Police and others
120031 s Suppl. SCR 610 : (2004) 3 sec 767 -
referred to.
1.2 The Prevention of Corruption Act, 1988
The 1947 Act was succeeded by a new version of anti
corruption law in the form of the Prevention of Corruption, 1988,
which seeks to consolidate and amend the law relating to the
prevention of corruption and for matters connected therewith.
The Statement of Objects and Reasons of this statute, referred
to the provisions in Chapter IX of the Indian Penal Code, dealing
with public servants and those who abet the offences mentioned
therein, by way of criminal misconduct. The provisions in the
Criminal Law Amendment Ordinance, 1944 enabling attachment
of ill gotten wealth, obtained through corrupt means, was also
adverted to. The Bill was clearly contemplated to incorporate all
these provisions with necessary modifications, so as to make
those more effective in combating corruption amongst public
servants. With that end in view, the ambit of "public servant"
was sought to be expanded. Additionally, the offences hitherto
enumerated in Sections 161 to 165A IPC were recommended to
be incorporated in the legislation with enhanced penalties. Finality
D
E
F
G
of the order of the Trial Court upholding the grant of sanction for
prosecution and provision for day to day trial of cases were also
integrated as few other unique features of the initiative. [Paras H
534
SUPREME COURT REPORTS
[2017] 5 S.C.R.
A
142, 143) (743-E-F, H; 744-A-C)
B
c
1.3 Sections 7 to 12 of the Act correspond to Section 161
to 165A of the Indian Penal Code, thereby integrating the offences
in the legislation to be tried by a special forum as envisaged.
Resultantly, Sections 161 to 165A have been effaced from the
Indian Penal Code for obvious reasons. Explanation to Section
13(i)(e) makes it limpid that the known sources of income of the
public servant, to satisfactorily account the pecuniary resources
or the property otherwise alleged to be disproportionate thereto,
has to be from a lawful source and further that the receipt thereof
had been intimated in accordance with the provisions of any law,
rule or orders for the time being applicable to him/her, as the
case may be. This prescription indubitably emphasizes the
lawfulness or legitimacy of the income to enable the public servant
to satisfactorily account for the pecuniary resources or property
otherwise imputed to be disproportionate thereto. Not only the
D Act entertains presumption against the public servant, in the
eventualities as comprehended in Section 20 of the Act, it is
clarified in Section 28 that nothing in the statute would exempt
any public servant from any proceeding which might apart from
the Act, be instituted against him or her. Section 29, amongst
E
F
G
H
others has substituted in paragraph 4A of the Ordinance, an
offence punishable under the 1988 Act, in lieu of the offence
under Section 5 of the 1947 Act. [Para 1531 (747-B-El
Mohd. Husain Umar Kochra Etc. v. K.S. Dalipsinghji
and Another Etc. (1969] 3 SCR 130 : (1969) 3 SCC
429 - referred to.
2. CONSPIRACY
A conspiracy can be proved by circumstantial evidence as
having regard to the nature of the offending act, no direct evidence
can be expected. [Para 161) (750-D-El
Saju v. State of Kerala [2000) 4 Suppl. SCR 621:
(2001) 1 SCC 378; Noor Mohammad Mohd. Yusuf
Momin v. State of Maharashtra [1971) 1 SCR 119 :
(1970) 1 SCC 696; Yash Pal Mittal v. State of Punjab
[1978) 1 SCR 781 : (1977) 4 SCC 540; Ram Narayan
Popli v. Central Bureau of Investigation [2003) 1 SCR
STATE OF KARNATAKA v. SELVI J. JAYALALITHA & ORS.
535
119 : (2003) 3 SCC 641; Firozuddin Basheeruddin &
A
Ors. v. State of Kera/a (2001) 7 SCC 596; Mir Nagvi
Askari v. Central Bureau of Investigation [20091 13
SCR 124 : (2009) 15 SCC 643 - relied on.
Regina v. Murphy (1837) 173 ER 502 - referred to.
3. Approach of Court in PC Cases
The history of the enactment of the 1947 Act was traced in
*R.S. Nayak and a caveat was sounded to the effect that whenever
a question of construction arises upon ambiguity or if two views
B
are possible of a provision of an anti corruption law (then Act
1947), it would be the duty of the Court to adopt that construction C
which would advance the object underlying the statute, namely
to make effective the provision for the prevention of bribery and
corruption and at any rate not to defeat it. It was underscored
that procedural delays and technicalities of law should not be
permitted to defeat the object sought to be achieved by the statute D
and the overall public interest and the social object is to be borne
in mind while interpreting the various provisions thereof and in
deciding cases under the same. [Para 1671 (752-A-CI
*R.S. Nayak v. A.R. Antulay (198412SCR495: (1984)
2 SCC 183; State of MP. & Ors. v. Ram Singh (2000(
E
1 SCR 579 : (2000) 5 SCC 88; Niranjan Hemchandra
Sashittal & Am: v. State of Maharashtra [2013] 4 SCR
767 : (2013) 4 SCC 642; Subramanian Swamy v.
Director, Central Bureau of Investigation & Am: [2014[
6 SCR 873 : (2014) 8 SCC 682 - relied on.
4. Probative worth of Income Tax Proceedings qua
lawfulness of the source of income
F
Even assuming that. the income tax returns, the proceedings in
connection therewith and the decisions rendered therein are
r_elevant and admissible in evidence as well, nothing as such, turns G
thereon definitively as those do not furnish any guarantee or
authentication of the lawfulness of the source(s) of income, the
pith of the charge levelled against the respondents. It is the plea
of the defence that the income tax returns and orders, while
proved by the accused persons had not been objected to by the
prosecution and further it (prosecution) as well had called in H
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evidence the income tax returns/orders and thus, it cannot object
to the admissibility of the records produced by the defence but
even if such returns and orders are admissible, the probative
value would depend on the nature of the information furnished,
the findings recorded in the orders and having a bearing on the
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charge levelled. In any view of the matter however, such returris
and orders would not ipso facto either conclusively prove or
disprove the charge and can at best be pieces of evidence which
have to be evaluated along with the other materials on record.
Noticeably, none of the respondents has been examined on oath
in the case in hand. Further, the income tax returns relied upon
by the defence as well as the orders passed in the proceedings
pertaining thereto have been filed/passed after the charge-sheet
had been submitted. Significantly, there is a charge of conspiracy
and abetment against the accused persons. In the overall
perspective therefore neither the income tax returns nor the
orders passed in the proceedings relatable thereto, either
definitively attest the lawfulness of the sources of income of the
accused persons or are of any avail to them to satisfactorily account
the disproportionateness of their pecuniary resources and
properties as mandated by Section 13(l)(e) of the Act. [Para
176) [755-A-Fl
Commissioner of Income Tax, U.P. v. Devi Prasad
Vishwanath Prasad, (1969) ITR 194; Anantharam
Veerasinghaiah & Co. v. C.I. T., Andhra Pradesh
[1980) SCR 618 : (1980) Suppl. SCC 13; Iqbal Singh
Marwah & Am: v. Meenakshi Marwah & Am: [20051
2 SCR 708 : (2005) 4 SCC 370; CIT Patia/a v. Piara
Singh [1980) SCR 1122 : 1980 Supp. SCC 166; State
of Tamil Nadu by Inspector of Police Vigilance and
Anti-Corruption v. N. Suresh Rajan & Ors. [2014) I
SCR 135 : (2014) 11 SCC 709; Commissioner of
Income Tax, Gujarat v. S.C. Kothari [1972[ 1 SCR
950 : (1972) 4 SCC 402; Vishwanath Chaturvedi v.
Union of India & Ors. [2007) 3 SCR 448 : (2007) 4
sec 380 - relied on.
State of M.P. v. Shambhu Dayal Nagar [2006[ 8 Suppl.
SCR 319 : (2006) 8 SCC 693 - referred to.
STATE OF KARNATAKA v. SELVI J. JAYALALITHA & ORS.
537
Gower - Modern Company Law - 4th Edn. (1979)
A
(page 137); Company Law by Pennington - 5th Edition
1985 at page 53; American Professor L. Maurice
Wormser in his article "Piercing the veil of corporate
entity" - referred to.
5. Gift, if Lawful Source of Income for a holder of Public
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Office:
This Court in * R.S. Nayak case amongst others dealt with
the distinctive features of Sections 161 and 165 of the Indian
Penal Code. It enunciated that under the former Section, a
present is taken by a public servant as a motive or reward for c
abuse of office but under the latter, the question of motive or
reward is wholly immaterial and acceptance of a valuable thing
without consideration or with inadequate consideration from a
person who has or is likely to have any business to be transacted
is forbidden because though not taken as a motive or reward for
showing any official favour, it is likely to influence the public D
servant to show official favour to the person giving such valuable
thing. With the advent of the Act 1988, Sections 161 to 165A
have been omitted from the Code as those have been essentially
engrafted in the said Statute and thus the essence and spirit
thereof seemingly have a bearing on the constituents of Section
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13 of the Act. This would comport to the Statement of Objects &
Reasons of the legislation, which envisaged widening of the scope
of the definition of the expression "public servant" and
incorporation of the offences under Sections 161 to 165A in the
Act. As a corollary, while applying Section 13 thereof in the facts
of the given case, the attributes of the offences contained in
erstwhile Sections 161 to 165A of the IPC cannot be totally
disregarded.
[Paras 201, 2021 [765-D-F, H; 766-A-BI
Yash Pal Goel v. Commissioner of Income Tax (Appeals)
(2009) 310 ITR 75 (P&H); Smt. Kusumlata Thakral
v. Commissioner of Income Tax (Appeals) (2010) 327
ITR 424 (P&H); Commissioner of Income Tax I'.
Sandeep Goyal (2014) 369 ITR 471 (P&H); Income
Tax Officer v. Mukesh Bhanubhai Shah (2009) 318
(AT) 394 (ITAT IMuml); Sumati Dayal v.
Commissioner of Income Tax, Bangalore 119951 2 SCR
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1173 : (1995) Suppl. 2 SCC 453 - referred to.
6. Burden of proof and benefits of doubt
That the burden to prove a charge is on the prosecution
subject to the defence of insanity and any other statutory
exception. That proof beyond reasonable doubt is only a guideline
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and not a fetish and that a guilty man cannot get away with it
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because truth suffers from infirmity, when projected through
human processes. [Paras 203, 2061 [766-C; 767-FI
Shivaji Sahabrao Bobade & Anr. v. State of
Maharashtra [1974) 1 SCR 489 : (1973) 2 SCC 793;
Collector of Customs, Madras & Ors. v. D. Bhoormall
[1974) 3 SCR 833 : (1974) 2 SCC 544; lnder Singh
& Anr. v. State (Delhi Administration) [19781 3 SCR
393 : (1978) 4 SCC 161; Ashok Debbarma alias Achak
Debbarma v. State of Tripura [20141 4 SCR 287 :
(2014) 4 sec 747 - relied on.
Woolmington v. The Director of Public Prosecutions
(1935) AC 462 - referred to.
7. Interpretation of the expression "satisfactorily account"
in the context of the offence of misconduct under Section 5(l)(e)
E
of Act of 1947 and Section 13(l)(e) of Act 1988
This Court in **C.S.D. Swami v. The State held that the test
of plausible explanation was inapplicable, as under this statute,
the accused person was required to satisfactorily account for the
possession of the pecuniary resources or property
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disproportionate to its own sources of income and that the word
"satisfactorily" used by the legislature deliberately did cast a
burden on the accused not only to offer a plausible explanation
as to how he came to acquire his large wealth but also to satisfy
the Court that his explanation was worthy of acceptance. [Para
G 211] [768-F-G; 769-B)
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**C.S.D. Swami v. The State [1960) 1 SCR 461;
M Narayanan Nambiar v. State of Kera/a [19631
Suppl. 2 SCR 724; State of Maharashtra v. Wasudeo
Ramchandra Kaidalwar [1981) 3 SCR 675 : (1981) 3
SCC 199; K. Ponnuswamy v. State of T. N. [20011 1
STATE OF KARNATAKA v. SELVI J. JAYALALITHA & ORS.
Suppl. SCR 97 : (2001) 6 SCC 674; P. Nallammal &
Anr: v. State [1999] 1 Suppl. SCR 135 : (1999) 6 SCC
559; K. Veeraswami v. Union of India & Ors. [19911 3
SCR 189 : (1991) 3 SCC 655; V.D. Jhingan v. State
of
Uttar
Pradesh
[19661
3
SCR
736;
N. Ramakrishnaiah (dead) through LRs. v. State of
Andhra Pradesh [20081 14 SCR 733 ; (2008) 17 SCC
83; State of MP. v. Awadh Kishore Gupta & Ors. [20031
5 Suppl. SCR 672 : (2004) 1 SCC 691 - relied on.
Ravinder Singh v. State of Haryana [1975] 3 SCR
453 : (1975) 3 sec 742 - referred to.
8. Scope of interference with an order of acquittal/conviction
under Article 136 of the Constitution of India
In *** Ramaiah @ Rama v. State of Kanataka, this Court
held that once the Appellate Court comes to the conclusion that
539
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the view taken by the lower court was clearly unreasonable, then D
that by itself would be a compelling reason for interference. It
was highlighted that it is a court's duty to convict a guilty person
when the guilt is established beyond reasonable doubt, no less
than it is its duty to acquit the accused when such guilt is not so
established. [Para 231] [777-D, F-GI
***Ramaiah @Rama v. State of Kanataka 12014] 7
SCR 995 : (2014) 9 SCC 365; State of Uttar Pradesh
v. Chet Ram & Ors. (1989) 2 SCC 425; Arunachalam
v. P.S.R. Sadhanantham & Anr: [19791 3 SCR 482 :
(1979) 2 SCC 297; State of Maharashtra v.
Narsinghrao Gangaram Pimple, (1984) 1 SCC 446;
State of Punjab v. Karnail Singh [20031 2 Suppl.
SCR 593 : (2003) 11 SCC 271; Mritunjoy Biswas v.
Pranab alias Kuti Biswas & Anr: [2013] 7 SCR 1105 :
(2013) 12 SCC 796; State of U.P. v. Gokaran & Ors.,
1984 Suppl. SCC 482; Mst. Dalbir Kaur & Ors. v.
State of Punjab [1977] 1 SCR 280 : (1976) 4 SCC
158; Chandrappa & Ors. v. State of Karnataka [20071
2 SCR 630 : (2007). 4 SCC 415; Shea Swarup v. R.
Emperor AIR 1934 PC 227 (2); K. Gopal Reddy v.
State of Andhra Pradesh (1979( 2 SCR 265 : (1979)
1 sec 355 - relied on.
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Harbans Singh & Am: v. State of Punjab AIR 1962
SC 439 : [19621 Suppl. SCR 104 - referred to.
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9. Benami transactions:
There has to be either some direct evidence or strong
circumstantial evidence to raise an inference that the property
alleged to be benami had been purchased with the funds/
resources of someone other than the person in whose name the
property is shown in the document. In the instant case, there
was also a charge of conspiracy and abetment and, therefore, the
factors as above would have to be tested on the anvil of the overall
circumstances to ascertain as to whether a reasonable inference
therefrom can be drawn of a benami transaction as alleged. This
is more so as by the very nature of the offence of conspiracy, the
activities in connection therewith are expectedly hatched in
secrecy. (Paras 233, 234) [777-G; 778-G-H; 779-A-BI
Jaydayal Poddar (deceased) through L.Rs. & Am: v.
Mst. Bibi Hazara 119741 1 SCR 70 : (1974) 1 SCC 3
- relied on.
10. PROBATIVE WORTH OF EXPERT EVIDENCE
An expert is one who has made a subject upon which he
speaks or renders his opinion, a matter of particular study,
practice or observation and has a special knowledge thereof. His
knowledge must be within the recognized field of expertise and
he essentially has to be qualified in that discipline of study. It has
been propounded that an expert is not a witness of fact and his
evidence is really of an advisory character and it is his duty to
furnish to the Judge I Court the necessary scientific criteria for
testing the accuracy of the conclusions so as to enable the Judge/
Court to form his/its independent judgment by the application of
such criteria to the facts proved by the evidence. Referring to
Section 45 of the Evidence Act 1892, which makes the opinion of
G an expert admissible, it has been underlined th at not only an expert
must possess necessary special skill and experience in his
discipline, his opinion must be backed by reason and has to be
examined and cross-examined to ascertain the probative worth
thereof. That it would be unsafe to convict the person charged
H
STATE OF KARNATAKA v. SELVI J. JAYALALITHA & ORS.
541
on the basis of expert oprn1on without any independent A
corroboration has also been indicated. It has been held that the
evidentiary value of the opinion of an expert depends on the facts
upon which it is based and also the validity of the process by
which the conclusion has been reached. The decisions underline
that the Court is not to subjugate its own judgment to that of the
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expert or delegate its authority to a third party but ought to assess
the evidence of the expert like any other evidence. [Para 2351
1779-C, D-H; 780-Al
Mahmood v. State of U.P. (1976) 1 SCC 542; Chatt
Ram v. State of Haryana (1980) 1 SCC 460; State of
H.P. v. Jai Lal & Ors. [19991 2 Suppl. SCR 318 :
(1999) 7 SCC 280; Ramesh Chandra Agrawal v.
Regency Hospital Limited & Ors. 12009j 14 SCR 424 :
(2009) 9 sec 709; Dayal Singh & Ors. V. State ol
Uttaranchal [20121 10 SCR 157 : (2012) 8 SCC 263
- relied on.
State of H.P. v. Jai Lal [19991 2 Suppl. SCR 318 :
(1999) 7 sec 280 - referred to.
11. Hears.ay evidence can be used to corroborate
substantive evidence. [Para 2361 [780-Bj
Pawan Kumar v. State of HmJ'ana [20031 1 Suppl.
SCR 710: (2003) 11 SCC 241; Krishnanand Agnihotri
v. The State of Madhya Pradesh, AIR 1977 SC 769 :
(1977) 1 sec 816 - referred to.
12. The respondent Al has been charged with the offence
of conspiracy as well as criminal misconduct under Section 13(l)(e)
read with Section 13(2) of the PC Act and A2 to A4 in particular,
of conspiracy and abetment in the commission of the above
offence under the Act. There are basically four broad heads for
scrutiny: (1) Income (2) Expenditure (3) Assets (4) Conspiracy
and abetment.
!Para 2401 1781-E-H; 782-A-BI
12.1 INCOME:
It was urged on behalf of Rl/ Al that her claim of income of
Rs.52,50,000/- under head of Agriculture income stood proved
wholly on the basis of the relevant income tax returns and the
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[2017] 5 S.C.R.
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evidence and had thereby enhanced the income of Al under this
head to Rs.52,50,000/- by adding Rs.46,71,600/- to the sum of
Rs.5, 78,340/- mentioned by the DVAC. In absence of any
independent evidence in support of this claim, having regard to
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the state of law that income tax returns/orders are not
automatically binding on a criminal court, the effortless acceptance
thereof by the High Court is in disregard to this settled legal
proposition. Thereby the High Court has accorded unassailable
primacy to such income tax returns/orders and have made those
final and binding on the criminal court without any appreciation
of the legal postulations that income tax returns/orders passed
thereon are not binding on criminal court and that the facts
involved are to be proved on the basis of independent evidence
and that the income tax returns/orders are only relevant and
nothing further.
[Paras 254, 255) [786-D-Hl
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12.2 LOANS:
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The second additional head of income involved by the
respondents constituted loans in addition to the bank loans cited
by DVAC as taken note of by the High Court
to add
Rs.18,17,46,000 to the income of the respondents. This item of
income significantly is suggestive of the ·collective orientation of
the respondents qua the charge as one corporate unit. The tone
and tenor of the contents of the applications for loan and the
composition of the firms/companies availing the benefit thereof,
suggest that the respondents were in collaboration with each other
in the transactions which demonstrate their combined
involvement therein. As the impugned judgment of the High
Court revealed, it referred to generally the testimony of PW 182
and PW 259 and had observed that the respondents had borrowed
loans from the banks as well as from the private parties which
however were not taken into consideration. While noting the
G loans availed by the respondents from different firms .and
companies, as named therein, the High Court did, however limit
itself only to the loans borrowed from the nationalised banks but
wrongly totalled the amounts to inflate figure to Rs.24,17,31,274/-
which in fact ought to have been Rs.10,67,31,224/- on a correct
arithmetic.
The
High
Court,
thereafter,
adjusting
H
STATE OF KARNATAKA v. SELVl J. JAYALALITHA & ORS.
543
Rs.5,99,85,274/-, i.e. the income quantified by the DVAC
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added Rs.18,17,46,000/-
(Rs.24,17,31,274 - Rs.5,99,85,274) to
the income of the respondents.