Delhi Administration Vs. S. N. Khosla
 INSC 107 (2 April 1971)
SIKRI, S.M. (CJ) SIKRI, S.M. (CJ) REDDY, P.
CITATION: 1971 AIR 1480 1971 SCR 315 1971 SCC
Prevention of Corruption Act, 1947--S.
5(1)(b) and (d)- Officer obtaining goods on credit without paying for the same.
-If amounts to obtaining valuable thing without consideration or obtaining
The respondent, an income tax officer
obtained goods on credit from several shops without paying for the same. He was
prosecuted and convicted under s. 5(2) of the Prevention of the Corruption Act,
1947. The High Court held that no offence under cl. (b) or cl. (d) of s. 5(1)
Dismissing the appeal to this Court,
HELD : There was consideration for the
obtaining of goods on credit and it cannot, be said that an officer if the.
obtains, goods on credit, even if he does not
intend to pay is obtaining a valuable thing without consideration. The case may
be different if it is proved that there was an agreement with the trader that.
the trader would not demand the money and the officer would not pay. There is
no evidence to sustain such an inference in this case. [317C] The words
'pecuniary advantage' are of wide amplitude; but even so in the-context of s.
5(1) (d) obtaining goods on credit cannot be held to amount to obtaining
pecuniary advantage. If there is an agreement between the officer and the
trader that the officer is not expected to pay for the goods this would amount
to obtaining pecuniary advantage.
It does not appear that there was any
suggestion that the respondent obtained the credit only because he was an
income tax officer. [317E]
CRIMINAL APPELLATE JURISDICTION: Criminal
Appeal No. 236 of 1966.
Appeal by special leave from the judgment and
order dated December 24, 1965 of the Punjab High Court, Circuit Bench at Delhi
in Criminal Appeal No. 16-D of 1964.
Debobrata Mukherjee, O. P. Malhotra and R. N.
Sachthey, for the appellant.
C. K. Daphtary and H. K. Puri, for the
The Judgment of the Court was delivered by
Sikri, C.J--The basic facts in this appeal, by special leave, are not in
dispute and the only question involved is whether on 316 the facts, as found,
the respondent should be convicted under Section (5) (2) of the Prevention of
Corruption Act, 1947 (hereinafter referred to as the Act). The respondent has
been acquitted by the High Court (Dulat, J.).
The relevant facts are as follows The
respondent was an Income-tax officer for about ten years from December, 1950 to
September, 1960. While he was posted at Amritsar during the year 1954-55 he
obtained on credit petrol from a petrol pump and the bill came to Rs. 151. It
is stated that the respondent did not pay this bill. Later, he was posted at
Delhi from 1955 to 1958 and at Delhi he obtained goods on credit from M/s
Empire Stores and during the period of about three years he purchased goods
worth Rs. 2,876.20. These bills the respondent has also not paid. He also
purchased goods on credit from M/s Sylco, who are cloth merchants as well as
tailors. To them he owed Rs. 1,8 53 10 and he also has not paid this bill. He
owed Rs. 71. 7 5 to M/s Electronics Limited. He purchased a refrigerator from
M/s Oriental Radio Corporation at a concession of 'Rs. 150' The respondent
admitted his liability. According to. the prosecution all this amounted to
obtaining valuable things without consideration or for consideration which the
respondent knew to, be inadequate.
The learned Special Judge found that the
respondent had means to pay during the relevant period and he did not
deliberately pay. From this he drew the inference that the respondent never
intended to make the payment. He relied on the fact that the period of
limitation to recover these amounts had expired. According to the Special Judge
these contracts were per se illegal and void under Section 23 of the Contract
It was urged before the High Court that when
a person obtained goods on credit he did not obtain them without consideration
and assuming that be did not really intend to pay, even when he promised to
pay, he might be cheating the creditor but the transaction was not without
consideration for there was a clear promise to pay. The High Court held that
clause (b) of sub-section (1) of Section 5 of the Prevention of- Corruption Act
did not contemplate the case of a purchase on credit accepted as a valid
promise by the giver or the creditor. The High Court was accordingly unable to
agree with the learned Special Judge that the obtaining of these goods was
without consideration within the meaning of Section (5) (1) (b) of the Act.
The High Court next considered Clause (d) of
Section 5 (1) of' the Act. The High Court differed from the learned Special
Judge and held that the credit sales were not illegal transactions It was urged
before the High Court that if the respondent never intended 317 to pay for the
goods he purchased from the various shops then the respondent obviously
cheated, those shopkeepers.
and since cheating- was certainly illegal, it
must be held that the respondent obtained goods by 'illegal means' and that
would be an offence under Section 5(1) (d) of the Act.
The High Court, however, felt convinced that
Clause (d) of Section 5(1), although it did literally seem to cover the
transactions, was not designed or intended to cover such cases.
In our opinion the High Court was quite right
in holding that no offence had been committed under Section 5 (1) (b) of the
Act. It seems to us that there was consideration for the obtaining of goods on
credit and it cannot be said that an officer, if he obtains goods on credit,
even if he does not intend to pay, is obtaining a valuable thing without
consideration. The case may be different if it is proved that there was an
agreement with the trader that the trader would not demand the money and the
officer would not pay, and the bill and the reminders sent would be merely a
formality. There is no evidence to sustain such an inference in this particular
Coming to Section 5 (1) (d), the question
arises whether the respondent had obtained any pecuniary advantage. There is no
doubt that the words "pecuniary advantage" are of wide amplitude but
even so in the context of Section 5 (1) (d) obtaining goods on credit cannot be
held to amount to obtaining pecuniary advantage. As we have said, if there is
an agreement between the officer and the trader that the officer is not
expected to pay for the goods then there is no doubt that this would amount to
obtaining pecuniary advantage, but if there is no such agreement and the
officer does not pay it cannot be said that he has obtained any pecuniary
advantage. He does not act in any manner different from a nonofficial who
obtains things on credit and then refuses to pay. In this case P. W. 13, Mukand
Lal, partner of M/s. Empire Stores, who appeared as a prosecution witness,
stated that the firm allowed the respondent credit sales in his capacity as a
known customer and all their customers got credit facilities. He further said
that the firm allowed customers fairly long terms of credit. They usually
avoided going to court for the recovery of their dues, and they got payment
from their customers of dues whose recovery had become barred by time.
He also added that the firm still expected
that the amounts standing against the respondent would be paid by him. It does
not appear that there was any suggestion that the respondent obtained this
credit only because he was an Income-tax Officer. Firms give credit to officers
not because they are officers but because they know that they are persons with
fixed salaries from which the bills could be realised. If we were to hold
otherwise it would be impossible for any officer to go to a shop and 318 obtain
credit for if he did not pay within a reasonable-time a charge. could be levied
against him under Section 5 (1) (d) of the Act. In our view the High-Court was
right in holding that offence under Section 5 (1) (d) had not been proved.
In the,. result the appeal fails and-is
K.B.N. Appeal dismissed.