The State of Madras Vs. A. Vaidyanatha
Iyer  INSC 79 (26 September 1957)
SINHA, BHUVNESHWAR P.
MENON, P. GOVINDA
CITATION: 1958 AIR 61 1958 SCR 580
Appeal by special leave--Order of acquittal
by the High Court--Power of Supreme Court-Presumption-Prevention of Corruption
Act, (II of 1947), s. 4-Constitution Of India, Art. 136.
Respondent, an Income-tax Officer, called an
assessee to his house and took a sum of Rs. 800 from him. Immediately afterwards
a search was made and the respondent, after some evasion, produced the money.
The respondent's defence was that he had taken the money as a loan and not as
illegal, gratification. The Special judge who tried the respondent found him
guilty under s. 16i, Indian Penal Code, and sentenced him to six months simple
imprisonment. On appeal, the High Court acquitted the respondent. The State
obtained special leave and appealed.
Held, that the words used in Art. I36 of the
Constitution show that in criminal matters no distinction can be made as a
matter of construction between a judgment of conviction and one of acquittal.
The Supreme Court will not readily interfere with the findings of fact given by
the High Court but if the High Court (i) A.I.R. (1954) S.C. 680.
581 acts perversely or otherwise improperly
interference will be called for.
The findings of the High Court are halting
and its approach to the case has been erroneous as it disregarded the special
rule of burden of proof under s. 4 Of the Prevention of Corruption Act (II Of
1947). The judgment of the High Court shows that certain salient pieces of
evidence were missed or were not properly appreciated.
In this situation the Supreme Court can
interfere in an appeal by special leave.
Where it is proved that a gratification has
been accepted, the presumption under s4 Of the Prevention of Corruption Act
shall at once arise. It is a presumption of law and it is obligatory on the
Court to raise it in every case brought under s. 4.
The evidence and circumstances in this case
lead to the conclusion that the transaction was not one of loan but of illegal
CRIMINAL APPELLATE JURISDICTION: Criminal
Appeal No. 5 of 1957.
Appeal by special leave from the judgment and
order dated the 6th September, 1955, of the Madras High Court in Criminal
Appeal No. 498 of 1954 and Criminal Revision Case No.
257 of 1955, arising out of the judgment and
order dated the 12th July, 1954 of the Special Judge, Coimbatore in C. C. No. I
H. J. Umrigar, H. R. Khanna and R. H. Dhebar,
for the appellants.
K.g. Krishnaswamy Iyengar and Sardar Bahadur,
for the respondent.
1957. September 26. The following Judgment of
the Court was delivered by KAPUR J.-This is an appeal by the State of Madras
from the judgment and order of the High Court of Madras reversing the judgment
of the Special Judge of Coimbatore and thereby acquitting the respondent who
had been convicted of an offence under s. 161 Indian Penal Code and sentenced
to six months simple imprisonment.
The respondent, Vaidyanatha Aiyer, was at all
material times the Income-tax Officer of Coimbatore and it is not disputed that
he was there in the beginning 582 of June 1951. According to the prosecution
the respondent in the end of September 1951 demanded from K.S. Narayana Iyer
(hereinafter referred to as the complainant) who is a proprietor of a
"Coffee Hotel" called Nehru cafe in Coimbatore with another similar
hotel at Bhavanisagar a bribe of Rs. 1,000.
The complainant had been assessed to income-tax
all along since 1942. During the course of assessment for the year 1950-51 it
was discovered that he had failed to pay advance income-tax. A notice was
therefore issued to him on March 24., 1951 under s. 28 read with s. 18-A (2) of
the Incometax Act. to show cause why a penalty should not be. imposed for
underestimating his income. For the assessment year 195152 also the complainant
in the usual course filed his return on August 11, 1951 and on a notice being
issued to him produced his accounts before the Income-tax Officer on September
27, 1951. He again appeared before him on the 28th and the respondent told him
that the " penalty papers had. not been disposed of and that the accounts
of the current year had also not been gone through " and asked the
complainant to see him at his house on the following morning, which the
complainant did. There he was told by the respondent that if he wanted to have
his return accepted and to be helped in the matter of penalty proceedings he
should pay the respondent Rs. 1,000 as illegal gratification. The complainant
mentioned this fact to his manager and also that he had been told by the
Income-tax Officer that his accounts were unsatisfactory. Because he was asked
to do so the complainant saw the respondent at the latter's house on October 6
or 7 and he asked the complainant if he had brought the money and after some
talk about the assessment the respondent asked the complainant -to pay half the
amount as it was Deepavali time. There is evidence of a defence witness also to
show that towards the end of October 1951, the complainant was seen coming from
the house of the respondent though the prosecution and the defence are not in
accord as to the purpose of this visit.
583 The Circle Inspector, Munisami P. W. 12,
claims to have received complaints while at Madras about the respondent being
corrupt and his " indulging in corrupt practices".
He then came to Coimbatoreandgot into touch with
the complainant and asked him if he had paid any bribe to the respoiident.
The complainant mentioned to the Inspector
about the demand of a bribe by the respondent. At the instance of the Inspector
the complainant appeared before the Tehsildar-Magistrate who recorded his
statement P-17 wherein the whole story of the demand of the bribe has been set
out. The Inspector then gave ten one hundred currency notes -to the complainant
after their numbers were taken down in Ex. P 17. The complain ant then went to
the office of the accused but no money was accepted on that day because the
respondent had received an anonymous letter Ex. P-18 warning, him of the trap
which was being laid by the Malayalam people. The respondent naturally got very
annoyed with the complainant and sent him. away. The same evening the
complainant was told that he was required to go to the house of the respondent
on the following morning which he did at 8 a. m. The respondent told him that
he should take no notice of the anonymous letter which must have been sent by
his enemies and asked him to pay some money. The complainant paid a sum of Rs.
200 which on his return he entered in his kacha account book which the High
Court has rejected without sufficient reason. On the evening of November 15,
the complainant again went to the house of the respondent and the latter told
him that he would pass final orders and that money should be paid. The record,
P-7 and P-7 (a), shows that an order was dictated on November 13 although there
is no proof or even indication that the complainant knew about it. The
complainant was given 8 one hundred rupee notes by the Inspector and the
complainant paid them to the respondent on the morning of November 17 at the
latter's house. On this occasion the complainant accompanied by his manager P. W.
14 had gone towards the house of the respondent along with the Magistrate and
Circle Inspector and Venkates, lyer 584 P. W. 14 in a car which was stopped
three or four blocks away from the house of the respondent and only the
complainant and his manager went into the respondent's house and paid the
money. Two or three minutes later the Inspector P. W. 12 and the Magistrate P.
W. 13 and one Sesha Ayyar who had joined the party en route also came into the
house on receiving the signal from the complainant. They disclosed their
identity to the respondent and told him that they had information that he had
received Rs. 800 from the complainant as illegal gratification and asked him to
produce the money which he had received from the complainant. The respondent
did not say anything and got up from the chair on which he was sitting and
tried to go into the house but was prevented from doing so by the Inspector and
he then produced the money from the folds of his dhoti. While the mahazar was
being prepared the respondent said that he bad received this money as a loan
from the complainant who denied this and said it had been paid as a bribe. A
telegram was then sent to the Superintendent of Special Police Establishment
and under his orders a case was registered and the investigation was then taken
up by a Deputy Superintendent of Police who searched the house of the
respondent on November 19 but no pronote seems to have been received or taken
into possession on that date. A pronote with four anna stamps affixed was later
produced in the court by the respondent on July 17,1952 during the course of
his statement under s. 342 Criminal Procedure Code but it was not mentioned to
the Magistrate P. W. 13 by the respondent.
The charge against the respondent was that he
had obtained from the complainant Rs. 800 as gratification other than legal
remuneration as a motive for the reward for showing favour to him in the
exercise of official functions and had thereby committed an offence punishable
under s. 161 of the Indian Penal Code read with a. 4 of the Prevention of Corruption
Act (Act II of 47).
The explanation of the respondent was that be
mentioned to the complainant about his money difficulties 585 when accidentally
he met him on the road towards the end of August or beginning of September 1951.
The complainant offered to lend him Rs 1,000/-. At that time he was not aware
that the complainant had an assessment pending before him. It was the
complainant who told him on November 15 when he met him again that the
anonymous letter was the "'work of his enemies" and promised to
advance the loan as previously promised and he also suggested that the respondent
should execute a pronote for Rs. 1,000 which would be attested by Venkatesa
Ayyar to which he (the respondent) was agreeable. The complainant paid Rs. 800
on the morning of November 17 and promised to pay Rs. 200 in the evening. The
respondent had the pronote ready and offered to hand it over in the morning but
the complainant said he would take it when " he left the house ".
The learned Special Judge accepted the story
of the prosecution and after a careful analysis of the evidence found the
respondent guilty of the offence charged and sentenced him to -six months
On appeal being taken to the High Court the
learned Single Judge reversed the judgment and acquitted the respondent.
It will be convenient to give here the main
findings of the learned judge in his own words:
(i)" It is true that at the time when
the money was accepted by The accused, the proceedings in relation to
assessment of income tax on P. W. 8 were pending before the accused.
Naturally, therefore, if in such
circumstances, the accused should receive money from an assessee, the suspicion
is readily aroused that the money must have been paid only as an illegal
gratification. On going through the judgment of the learned trial Judge, I
formed the impression that he was totally influenced by such suspicion."
(ii)" The result is that if the version of P. W. 8 and that of the accused
are balanced, the probability seems to tilt the scale in favour of the accused's
version. In any case, the evidence is not enough to show that the explanation
offered by the accused 586 cannot reasonably be true, and so, the benefit of
doubt must go to him." (iii)" But this was not a case of ordinary
lendee, but an Income-tax Officer whose favour was needed by the lender.
(iv)"Evidence shows that in November,
1951, the accused was in need of a sum of Rs. 1,000 and, for that purpose, has
asked P.W. 8 for a loan." (v)" In my view, the evidence does not
necessarily make out a case that the accused must have accepted the money only
as a bribe. " (vi)" I do not therefore feel certain that the taking
of a loan with an obligation to repay it with interest, would fall within the meaning
of the term I gratification'. " The extent of the power of the Supreme
Court to interfere with a judgment of acquittal was raised before us by the
respondent's counsel and it was contended that the jurisdiction exercised by
this court under Art. 136 was the same as that exercised by the Judicial
Committee of the Privy Council and reliance was placed on a minority judgment
by Venkatarama Aiyar J. in Aher Raja Khima v. The State Of Saurashtra(1) where
the learned judge after discussing the various Privy Council judgments and
quoting a passage from the judgment of this court in Pritam Singh v. The
" The preceding article referred to in
the opening passage is clearly article 134. Article 134(1) confers a right of
appeal to this court in certain cases, in terms unqualified, on questions both
of fact and law, and if the scope of an appeal under Article 136 is to be
extended likewise to questions of fact, then article 134(1) would become superfluous.
It is obvious that the intention of the Constitution in providing for an appeal
on facts under Article 134(1)(a) and (b) was to exclude it under Article 136,
and it strongly supports the conclusion reached in Pritam Singh v. The State
(3)that like the Privy Council this Court would not function as a further court
of appeal on facts in criminal cases. " (I) 2 S.C.R. 1285, 1301.
(2)  S.C.R. 453, 458, 587 The State of
Madhya Pradesh v. Ramakrishna Ganpatrao Limsey (1) was also referred to by
counsel for the respondent and it was contended that the Supreme Court should
not interfere with the order of the High Court merely on the ground that it
took a different view of the facts. That was an appeal which had been brought
on a certificate by the High Court and not by Special Leave of this Court. That
judgment was considered by a Constitution Bench in State of Madras v.
Gurviah Naidu & Co., Ltd. (2) and S. R.
Das, Acting C.J., delivering the judgment of the court pointed out that that
was a decision of a bench of three judges and not of a Constitution bench and
the observation that there was no provision corresponding to s. 417 of the
Criminal Procedure Code only emphasised that this Court should not in appeal by
Special Leave interfere with the order of acquittal passed by the High Court merely
for correcting errors of fact or of law. Gurviah Naidu's case (2) was an appeal
against a judgment of acquittal and this court reversed the judgment saying:"
In our view, the High Court erred in holding that the prosecution had failed to
establish their case and in acquitting the accused.
This case negatives the contention that under
Art. 136 interference by this court with findings of High Courts in judgments
of acquittal is not intended. Even in State of Madhya Pradesh v. Ramakrishna
Ganpatrao (1) Mahajan J. was of the opinion that the Supreme Court can
interfere where the High Court "acts perversely or otherwise improperly or
has been deceived by fraud. " In Pritam Singh v. The State (3) Fazl Ali J.
after a careful examination of Art. 136 along with the preceding articles
stated the scope of the appeal under Art. 136 to be:" Generally speaking,
this court will not grant special leave, unless it is shown that exceptional
and special circumstances exist, that substantial and grave injustice has been
done and that the case in question (i) A.I.R. 1954 S.C. 20.
(2) A.I.R. 1956 S.C. 158, 161.
75 (3)  S.C.R. 453. 458.
588 presents features of sufficient gravity
to warrant a review of the decision appealed against.
Even the Privy Council in laying down the
permissible limits for review in criminal matters included things " so
irregular or so outrageous as to shock the very basis of justice ". See
Mohinder Singh v. The King (1).
An instance of this principle is the decision
of the Privy Council in Stephen Seneviratne v. The King (2) which will be
discussed later in this judgment and which has been approved of by this court.
Interpreting the following words of s. 205 of
the Government of India Act, 1935, "any judgment, decree or final order of
a court " and " it shall be the duty of every High Court in British
India to consider in every case ", Lord Thankerton in King Emperor v.
Sibnath Bannerji (3) said :-"The purpose of the provision is to confer a
right of appeal in every case that involves a substantial question of law as to
the interpretation of the Act or of any Order in Council made thereunder.
" One of the questions for decision in that case was whether an appeal lay
in cases of habeas corpus. Lord Thankerton there observed :
" In the absence of an express exception
of habeas corpus cases, and having in view the terms and purpose of the
section, their Lordships are unable to limit tile terms of the section by mere
construction so as to exclude these cases from its operation. " In Art.
136 the use of the words " Supreme Court may in its discretion grant
special leave to appeal from any judgment, decree, determination, sentence or
order in any cause or matter passed or made by any court or tribunal in the
territory of India " show that in criminal matters no distinction can be
made as a matter of construction between a judgment of conviction or acquittal.
In Bhagwan Das v. The State of Rajasthan(4) the following, observation of the
Judicial Committee of the Privy Council in Stephen Seneviratne v. The King(2)
at p. 299:
(1) (I932) L.R. 59 I.A. 233, 235.(3) (1945)
L.R. 72 I.A. 241, 255.
(2) A.I.R. 1936 P.C. 289.(4) A.I.R. 1957 S.C.
589 ".. ...... there are here no grounds
on the evidence, taken as a whole, upon which any tribunal could properly as a
matter of legitimate inference, arrive at a conclusion that the appellant was
guilty....... " was quoted with approval and after an examination of all
the facts and circumstances of the case the Supreme Court reversed the judgment
of conviction by the High Court under Art. 136. The question for decision in
the present case is whether it falls within the limits laid down in the abovementioned
cases. This court will not readily interfere with the findings of fact given by
the High Court but if the High Court acts perversely or otherwise improperly
interference will be called for.
The findings of the High Court in the present
case are, to say the least, halting, and the approach to the whole question has
been such that it falls within what Mr. Justice Mahajan in State of Madhya
Pradesh v. Ramakrishna Ganpatrao (1) described as " acting perversely or
otherwise improperly ". Although the learned High Court Judge has in the
beginning of the judgment mentioned the presumption which arises under s. 4 of
the Prevention of Corruption Act (II of 1947), the following passage in the
" in any case, the evidence is not
enough to show that the explanation offered by the accused cannot reasonably be
true, and so, the benefit of doubt must go to him, " is indicative of a
disregard of the presumption which the law requires to be raised under s. 4.
The relevant words of this section are:
" Where in any trial of an offence
punishable under s. 161 ................it is proved that an accused..........
person has accepted................ any gratification (other than legal
remuneration).........from any person,it shall be presumed unless thecontrary
is proved that he accepted .................. that gratification as a motive or
reward such as is mentioned in the said section 161
......................." Therefore where it is proved that a gratification
has been accepted, then the presumption shall at once arise (i) A.1.R. 1054
590 under the section. It introduces an
exception to the general rule as to the burden of proof in criminal cases and
shifts the onus on to the accused. It may here be mentioned that the
legislature has chosen to use the words' shall presume' and not 'may presume',
the former a presumption of law and latter of fact. Both these phrases have
been defined in the Indian Evidence Act, no doubt for the purpose of that Act,
but s. 4 of the Prevention of Corruption Act is in part materia with the
Evidence Act because it deals with a branch of law of evidence, e.g.,
presumptions, and therefore should have the same meaning. " Shall
presume" has been defined in the Evidence Act as follows:
" Whenever it is directed by this Act
that the Court shall presume a fact, it shall regard such fact as proved unless
and until it is disproved. " It is a presumption of law and therefore it
is obligatory on the court to raise this presumption in every case brought
under s. 4 of the Prevention of Corruption Act because unlike the case of
presumptions of fact, presumptions of law constitute a branch of jurisprudence.
While giving the finding quoted above the learned judge seems to have disregarded
the special rule of burden of proof under s. 4 and therefore his approach in
this case has been on erroneous lines.
The judgment also shows that certain salient
pieces of evidence were missed or were not properly appreciated.
At the time when the penalty notice was
issued under s. 28 of the Income-tax Act the respondent was not the Income-tax
Officer at Coimbatore but by June 6, he had been posted at Coimbatore and the
note on the Penalty File dated June 6,1951:
"put up proposal to I.A.C. for levy of
standard penalty," was made by him. Although this proposal was made on
June 6, 1951, it is not clear as to what final orders were passed in these
proceedings and when. At least there is nothing to indicate that any intimation
was given to the complainant in regard to this matter. The complainant has
stated on oath as P.W. 8:591 " I alone went to the accused on 28th
September, 1951. He then told me that the penalty paper was not disposed of and
that the accounts for the current year had not also been gone through." On
the day following this the respondent asked the complainant for illegal
gratification of Rs. 1,000. Counsel for the respondent contended that there was
no occasion for the respondent to say anything about the penalty proceedings
because as far as he was concerned the recommendation had already been made by
him but the real question is whether the complainant was told as to what had
happened or had any knowledge of this. He states that he had none and there is
nothing to indicate that he bad.
The respondent has then stated that the
complainant was known to him since 1942 when he, the respondent, was the Head
Clerk of the Appellate Assistant Commissioner of Income-tax and that is the
reason why towards the end of August or the beginning of September when be
casually met the complain. ant on the road, he told him that he was in
financial difficulties and the complainant offered him a loan of Rs. 1,000 to
be returned in easy installments and that he did not know at that time that the
complainant was an assessee before him. This statement of the respondent has
-been accepted by the High Court without considering the following important
facts. Notice was issued to the complainant and he filed his return on August
11, 1951. The notice must have been issued to the complainant under a. 22(2) of
the Income-tax Act by the respondent himself as he was at that time the
Income-tax Officer. So it is difficult to believe his statement about his not
knowing that the complainant was an assessee before him and it is improbable
that the respondent would mention his financial troubles to a more or less
casual acquaintance who has neither been shown to be a banker, nor a money
lender nor a wealthy person. The complainant has stated that he visited the
respondent on 6th or 7th October, 1951, when he asked him if he had brought the
money. The complaint replied that he had no money to spare as he had purchased
a house 592 and he also asked him if the respondent had finished the
assessment. The latter's reply was that he would look into the matter and also
told him that the complainant might pay half the amount (of the illegal
gratification) before the deepavali time.. This statement the respondent has
denied but the statement of the complainant as to his having no money as he had
purchased a house has not been seriously challenged in cross-examination.
The complainant had been asked to produce the
accounts and be did produce them on September 27. The notes made by the
respondent in P-7 and P-7(a) show that the accounts of the complainant were not
being accepted in regard to Coimbatore Hotel. The portion of the order was :"
All the defects that are usual in hotel accounts exist here." In regard to
Bhavanisagar hotel the note stated: :-" Purchases are not fully supported
and sales are reckoned from till takings." On October 1, 1951, the
assesses had filed his written statement and also some other documents. Nothing
more seems to have been done till November 7, when the relevant part of the
note on the file is:
"I have been keeping this in order to
compare the results with other nearby hotels." As to why no enquiries
could be made in the whole of this period is not clear from the assessment
record and it ]ends support to the prosecution case that the respondent was
making approaches to the complainant to get money from him.
The respondent during the pendency of
assessment proceedings of the complainant allowed the complainant to visit him
at his house and even paid visit to his cafe. Even according to the findings of
the High Court the complainant was "needing the favours" of the
respondent who on his own showing was himself in dire need of a thousand rupees
as he had succeeded in collecting only a thousand rupees by November2, and
needed twice that amount for his son's premium or security as he chooses to
call it. No importance was attached to this aspect of the case by the learned
593 judge of the High Court. In our opinion the learned trial judge correctly
appreciated this part of the prosecution case and his judgment is not, as tile
High Court has said, coloured by nere suspicion.
On November 6, 1951, Circle Inspector
Munisami contacted the complainant and arrangement was made for Rs. 1,000 to be
paid by the complainant to the respondent and the money was actually taken by
the complainant and offered to the respondent on November 8 which the
respondent did not accept as he had received an anonymous letter Ex. P-18 which
was dated November 6, 1951 in which the respondent had been warned that
Malayalam people were attempting to "ruin him".
In spite of this warning the respondent
continued to have truck with the complainant and actually accepted Rs. 800 from
him. It is true that when soon after the money was paid and the Inspector P. W.
12 and the Magistrate P.W. 13 arrived at the house of the respondent and asked
him about this money he stated that he had taken it as a loan but in the
context it assumes a different complexion. The statement of the Magistrate P.W.
13 was:" While the mahazar. was being prepared the accused volunteered and
told me that he had received the 800 rupees as a loan from P.W. 8-the
complainant." This witness had also stated that when he went into the
verandah of the house, he asked the respondent whether he had received an
illegal gratification from the complainant and also asked him to produce the
money. The accused did not say anything but got up from the chair and tried to
go inside the house which he was prevented from doing by the Inspector P. W.
12. The witness added:
" The accused was seen trembling and
meddling with something under the towel. I asked the accused to remove the
The accused removed the towel. I saw some
bulging at his waist in the dhoti be was wearing. I asked him again to produce
the currency notes. He produced them from the folds of the dhoti be was
wearing. When producing the currency notes the accused did not say
anything." 594 No real cross-examination was directed against these portions
of the statement of the Magistrate P.W. 13 nor has the High Court correctly
appreciated them or given them due weight. The respondent produced before the
Special First Class Magistrate on July 11, 1952, an unsigned promote for Rs.
1,000 executed by him in favour of the complainant.
That promote was not found in the house when
the search was made by the Deputy Superintendent of Police on November 19,
1951, and it is not explained why the promote should have been made for Rs.
1,000 when actually the amount paid was only Rs. 800 and why the respondent
offered to give this promote to the complainant without receiving full
These salient features of the case do not
seem to have been properly appreciated or given due weight to by the High Court
and in our opinion the learned judge's approach to the question whether the sum
of Rs. 800 was an illegal gratification or a loan is such that the judgment
falls within the words of Mahajan J. in Ramakrishna's case (1), i.e. that the
High Court has acted perversely or otherwise improperly.
The evidence and the circumstances lead to
the conclusion that the transaction was not one of loan but illegal gratification.
In view of the finding that the sum of Rs.
800 was a bribe and not a loan it is not necessary to consider whether in this
case the loan would be an illegal gratification within s. 4 of the Prevention
of Corruption Act (II of 1947) or not.
We would, therefore, allow this appeal, set
aside the judgment and order of the High Court of Madras and restore that of
the Special Judge of Coimbatore convicting the respondent of the offence he was
charged with. The respondent must surrender to his bail bond.