This is the Second and Concluding part of the Article published in Tax Sutra in March 2017.
In part I of this article, author discussed principles laid down by SC in AIADMK leader, Ms. Sasikala Natarajan's disproportionate assets case. Author also discussed the principles around the evidentiary value of income-tax returns. In this part II, author is discussing few other principles emanating from SC verdict, like discharging the burden of proof, binding nature of proceedings under other enactments etc.
Burden of Proof - How burdensome?
Dealing with the defense arguments that the prosecution has failed to discharge the burden of proof, the Supreme Court explained that:
The burden of proof of a charge is on the prosecution subject to the defense of insanity and any other statutory exception has been authoritatively proclaimed in Woolmington Vs. The Director of Public Prosecutions, (1935) AC 462, and testified by the following extract:
Throughout the web of the English Criminal Law one golden thread is always to be seen, that it is the duty of the prosecution to prove the prisoner's guilt subject to what I have already said as to the defence of insanity and subject also to any statutory exception. If, at the end of and on the whole of the case, there is a reasonable doubt, created by the evidence given by either the prosecution or the prisoner, as to whether the prisoner killed the deceased with a malicious intention, the prosecution has not made out the case and the prisoner is entitled to an acquittal. No matter what the charge or where the trial, the principle that the prosecution must prove the guilt of the prisoner is part of the common law of England and no attempt to whittle it down can be entertained.”
Nevertheless, the Court followed Shivaji Sahabrao Bobade & Anr. Vs. State of Maharashtra, (1973) 2 SCC 793 in which Hon'ble Krishna Iyer J., in his inimitable expressional felicity cautioned against the dangers of exaggerated affinity to the rule of benefit of doubt as hereunder:
“The dangers of exaggerated devotion to the rule of benefit of doubt at the expense of social defence and to the soothing sentiment that all acquittals are always good regardless of justice to the victim and the community, demand especial emphasis in the contemporary context of escalating crime and escape. The judicial instrument has a public accountability. The cherished principles or golden thread of proof beyond reasonable doubt which runs thro' the web of our law should not be stretched morbidly to embrace every hunch, hesitancy and degree of doubt. The excessive solicitude reflected in the attitude that a thousand guilty men may go but one innocent martyr shall not suffer is a false dilemma. Only reasonable doubts belong to the accused. Otherwise any practical system of justice will then break down and lose credibility with the community. The evil of acquitting a guilty person light heartedly as a learned author (Glanville Williams in 'Proof of Guilt') has sapiently observed, goes much beyond the simple fact that just one guilty person has gone unpunished. If unmerited acquittals become general, they tend to lead to a cynical disregard of the law, and this in turn leads to a public demand for harsher legal presumptions against indicated 'persons' and more severe punishment of those who are found guilty.”
The Court also referred to its own decision in Collector of Customs, Madras & Ors. Vs. D. Bhoormall, [TS-5003-SC-1974-O], where it had observed that in all human affairs, absolute certainty is a myth and the law does not require the prosecution to prove the impossible. It was highlighted that all that was required is the establishment of such a degree of probability that a prudent man may on this basis believe in the existence of the fact in issue. It was exposited that legal proof is thus not necessarily perfect proof and is nothing more than a prudent man's estimate as to the probability of the case.
On this basis, the prosecution was found to have adequately discharged its burden of proof.
Binding nature of proceedings under other enactments - Rule of Estoppel
On the issue of applying the findings emanating from the Income tax proceedings to the impugned case, the Supreme Court relied on the decision of a Constitution Bench of the Court in Iqbal Singh Marwah & Anr. Vs. Meenakshi Marwah & Anr. that there is neither any statutory provision nor any legal principle that the findings recorded in one proceeding may be treated as final or binding in other as both the cases have to be decided on the basis of the evidence adduced therein. On this basis, the Court declined to make any inferences from the completed income tax assessments.
Rendering satisfactory account of disproportionate assets:
On the matter of deciding if the public servant has rendered satisfactory account of pecuniary resources or property disproportionate to his known sources of income, the court referred to its decision in K. Ponnuswamy Vs. State of T.N., (2001) 6 SCC 674, to explain the definition of the word “proved” in Section 3 of the Indian Evidence Act 1872 and also Section 114 thereof. While noting that in terms thereof, a fact is said to be proved when after considering the matters before it, the Court either believes it to exist or considers its existence so probable that a prudent man, under the circumstances of the particular case, ought to act upon this supposition that it exists.
In P. Nallammal & Anr. Vs. State, it was underscored that a public servant cannot escape from the tentacles of Section 13(1)(e) of the 1988 Act, by showing other legally forbidden sources.
A Constitution Bench of this Court in K. Veeraswami Vs. Union of India & Ors., (1991) 3 SCC 655, It was propounded that once the prosecution proved that the public servant possessed assets dis-proportionate to his known sources of income, the offence of criminal conduct was attributed to him but it would be open to him to satisfactorily account for such dis-proportionality.
Interference by a higher court in an order of acquittal by the lower court;
While underlining the importance of stability in judicial pronouncements, the Court recalled its enunciation in Arunachalam Vs. P.S.R. Sadhanantham & Anr., (1979) 2 SCC 297, that in dealing with an appeal against acquittal, the Court would keep in mind that the presumption of innocence in favour of the accused is reinforced by the judgment of acquittal. It, however, noted as well the caveat that in such an eventuality also, the Court would not abjure its duty to prevent miscarriage of justice by hesitating to interfere where interference is imperative. It was stated that where the acquittal is based on irrelevant ground, or where the High Court allows itself to be deflected by red herrings drawn across the track, or by the evidence accepted by the Trial Court but rejected by the High Court after perfunctory consideration or where the baneful approach of the High Court has resulted in vital and crucial evidence being ignored or for any such adequate reasons, the Court would feel obliged to step in to secure the interest of justice, to appease the judicial conscience as it were.
It also recalled its exposition in State of U.P. Vs. Gokaran & Ors., 1984 Suppl. SCC 482, that when incriminating evidence of a satisfactory character is brushed aside mainly by relying upon a few circumstances which do not detract from the value of such incriminating evidence, it becomes the duty of the Court to interfere with the acquittal in order to redeem the course of justice. It was elaborated that if it is found that the Court below had adopted a hyper technical approach to the entire prosecution case and that the direct ocular evidence cannot be doubted, interference would be warranted.
Holding disproportionate assets-but below 10% - Is it condonable?
Referring to the judgement in Krishnanand Agnihotri v State of Madhya Pradesh AIR 1977 SC 769 the Court observed that the judgment does not advance any proposition that in order to adjudge the disproportionateness of the assets in comparison of the income of a public servant, the margin of 10% is a permissible index of uniform application and acknowledged as a determinant to decide as to whether a public servant charged under Section 13(1)(e) of the 1988 Act can be held guilty of a criminal misconduct contemplated by the statute judged on such benchmark.
Just as an aside, readers might like to know that the bone of contention in Krishnanand Agnihotri (supra) decided over 40 years back was over a mere Rs. 11350/- being the excess of assets over known sources of income!
Gifts on occasions such as Birthdays - Can they be 'known sources of income'?
Dismissing the arguments that gifts or windfall incomes cannot constitute known sources of income, the Court held that the receipt of money or pecuniary resources in order to qualify as income within the meaning of Section 13(1) (e) of the Act, in case of a public servant should essentially be attached to his/her official post and that any windfall or gain of graft, crime or immoral secretions prima facie would not be a receipt from the known sources of his/her income. In the context of the sources of income of a public servant which is the kernel of the offence of criminal misconduct engrafted in Section 13(1)(e) of the Act, the Court referred to its own decision in State of M.P. Vs. Awadh Kishore Gupta & Ors., (2004) 1 SCC 691, in which it observed:
“The phrase “known sources of income” in Section 13(1)(e) [old Section 5(1)(e)] has clearly the emphasis on the word “income”. It would be primary to observe that qua the public servant, the income would be what is attached to his office or post, commonly known as remuneration or salary. The term “income” by itself, is elastic and has a wide connotation. Whatever comes in or is received, is income. But, however, wide the import and connotation of the term “income”, it is incapable of being understood as meaning receipt having no nexus to one's labour, or expertise, or property, or investment and having further a source which may or may not yield a regular revenue. These essential characteristics are vital in understanding the term “income”. Therefore, it can be said that, though “income” is receipt in the hand of its recipient, every receipt would not partake the character of income. Qua the public servant, whatever return he gets from his service, will be the primary item of his income. Other incomes, which conceivably are income qua the public servant, will be in the regular receipt from (a) his property, or (b) his investment.
A receipt from windfall, or gains of graft, crime or immoral secretions by persons prima facie would not be receipt from the “known sources of income” of a public servant.
The noticeable feature of this pronouncement thus is that the explanation offered by the accused to be acceptable has to be one not only plausible in nature and content but also worthy of acceptance.
The court further noted that with the advent of the 1988 Act, and inter alia consequent upon the expansion of the scope of definition of the “public servant” and the integration of Section 161 to 165A IPC in the said statute, the claim of the defense to treat the gifts offered to A1 on her birthday as lawful income, thus cannot receive judicial imprimatur.
Conclusion:
Behind every great fortune, there is a Crime. The immortal words of Balzac are as true today as it has always been in the past. We will all do well to deal with such instant-fortuners (read 'public servants') with discrimination and a touch of judiciousness.
In part I of this article, author discussed principles laid down by SC in AIADMK leader, Ms. Sasikala Natarajan's disproportionate assets case. Author also discussed the principles around the evidentiary value of income-tax returns. In this part II, author is discussing few other principles emanating from SC verdict, like discharging the burden of proof, binding nature of proceedings under other enactments etc.
Burden of Proof - How burdensome?
Dealing with the defense arguments that the prosecution has failed to discharge the burden of proof, the Supreme Court explained that:
The burden of proof of a charge is on the prosecution subject to the defense of insanity and any other statutory exception has been authoritatively proclaimed in Woolmington Vs. The Director of Public Prosecutions, (1935) AC 462, and testified by the following extract:
Throughout the web of the English Criminal Law one golden thread is always to be seen, that it is the duty of the prosecution to prove the prisoner's guilt subject to what I have already said as to the defence of insanity and subject also to any statutory exception. If, at the end of and on the whole of the case, there is a reasonable doubt, created by the evidence given by either the prosecution or the prisoner, as to whether the prisoner killed the deceased with a malicious intention, the prosecution has not made out the case and the prisoner is entitled to an acquittal. No matter what the charge or where the trial, the principle that the prosecution must prove the guilt of the prisoner is part of the common law of England and no attempt to whittle it down can be entertained.”
Nevertheless, the Court followed Shivaji Sahabrao Bobade & Anr. Vs. State of Maharashtra, (1973) 2 SCC 793 in which Hon'ble Krishna Iyer J., in his inimitable expressional felicity cautioned against the dangers of exaggerated affinity to the rule of benefit of doubt as hereunder:
“The dangers of exaggerated devotion to the rule of benefit of doubt at the expense of social defence and to the soothing sentiment that all acquittals are always good regardless of justice to the victim and the community, demand especial emphasis in the contemporary context of escalating crime and escape. The judicial instrument has a public accountability. The cherished principles or golden thread of proof beyond reasonable doubt which runs thro' the web of our law should not be stretched morbidly to embrace every hunch, hesitancy and degree of doubt. The excessive solicitude reflected in the attitude that a thousand guilty men may go but one innocent martyr shall not suffer is a false dilemma. Only reasonable doubts belong to the accused. Otherwise any practical system of justice will then break down and lose credibility with the community. The evil of acquitting a guilty person light heartedly as a learned author (Glanville Williams in 'Proof of Guilt') has sapiently observed, goes much beyond the simple fact that just one guilty person has gone unpunished. If unmerited acquittals become general, they tend to lead to a cynical disregard of the law, and this in turn leads to a public demand for harsher legal presumptions against indicated 'persons' and more severe punishment of those who are found guilty.”
The Court also referred to its own decision in Collector of Customs, Madras & Ors. Vs. D. Bhoormall, [TS-5003-SC-1974-O], where it had observed that in all human affairs, absolute certainty is a myth and the law does not require the prosecution to prove the impossible. It was highlighted that all that was required is the establishment of such a degree of probability that a prudent man may on this basis believe in the existence of the fact in issue. It was exposited that legal proof is thus not necessarily perfect proof and is nothing more than a prudent man's estimate as to the probability of the case.
On this basis, the prosecution was found to have adequately discharged its burden of proof.
Binding nature of proceedings under other enactments - Rule of Estoppel
On the issue of applying the findings emanating from the Income tax proceedings to the impugned case, the Supreme Court relied on the decision of a Constitution Bench of the Court in Iqbal Singh Marwah & Anr. Vs. Meenakshi Marwah & Anr. that there is neither any statutory provision nor any legal principle that the findings recorded in one proceeding may be treated as final or binding in other as both the cases have to be decided on the basis of the evidence adduced therein. On this basis, the Court declined to make any inferences from the completed income tax assessments.
Rendering satisfactory account of disproportionate assets:
On the matter of deciding if the public servant has rendered satisfactory account of pecuniary resources or property disproportionate to his known sources of income, the court referred to its decision in K. Ponnuswamy Vs. State of T.N., (2001) 6 SCC 674, to explain the definition of the word “proved” in Section 3 of the Indian Evidence Act 1872 and also Section 114 thereof. While noting that in terms thereof, a fact is said to be proved when after considering the matters before it, the Court either believes it to exist or considers its existence so probable that a prudent man, under the circumstances of the particular case, ought to act upon this supposition that it exists.
In P. Nallammal & Anr. Vs. State, it was underscored that a public servant cannot escape from the tentacles of Section 13(1)(e) of the 1988 Act, by showing other legally forbidden sources.
A Constitution Bench of this Court in K. Veeraswami Vs. Union of India & Ors., (1991) 3 SCC 655, It was propounded that once the prosecution proved that the public servant possessed assets dis-proportionate to his known sources of income, the offence of criminal conduct was attributed to him but it would be open to him to satisfactorily account for such dis-proportionality.
Interference by a higher court in an order of acquittal by the lower court;
While underlining the importance of stability in judicial pronouncements, the Court recalled its enunciation in Arunachalam Vs. P.S.R. Sadhanantham & Anr., (1979) 2 SCC 297, that in dealing with an appeal against acquittal, the Court would keep in mind that the presumption of innocence in favour of the accused is reinforced by the judgment of acquittal. It, however, noted as well the caveat that in such an eventuality also, the Court would not abjure its duty to prevent miscarriage of justice by hesitating to interfere where interference is imperative. It was stated that where the acquittal is based on irrelevant ground, or where the High Court allows itself to be deflected by red herrings drawn across the track, or by the evidence accepted by the Trial Court but rejected by the High Court after perfunctory consideration or where the baneful approach of the High Court has resulted in vital and crucial evidence being ignored or for any such adequate reasons, the Court would feel obliged to step in to secure the interest of justice, to appease the judicial conscience as it were.
It also recalled its exposition in State of U.P. Vs. Gokaran & Ors., 1984 Suppl. SCC 482, that when incriminating evidence of a satisfactory character is brushed aside mainly by relying upon a few circumstances which do not detract from the value of such incriminating evidence, it becomes the duty of the Court to interfere with the acquittal in order to redeem the course of justice. It was elaborated that if it is found that the Court below had adopted a hyper technical approach to the entire prosecution case and that the direct ocular evidence cannot be doubted, interference would be warranted.
Holding disproportionate assets-but below 10% - Is it condonable?
Referring to the judgement in Krishnanand Agnihotri v State of Madhya Pradesh AIR 1977 SC 769 the Court observed that the judgment does not advance any proposition that in order to adjudge the disproportionateness of the assets in comparison of the income of a public servant, the margin of 10% is a permissible index of uniform application and acknowledged as a determinant to decide as to whether a public servant charged under Section 13(1)(e) of the 1988 Act can be held guilty of a criminal misconduct contemplated by the statute judged on such benchmark.
Just as an aside, readers might like to know that the bone of contention in Krishnanand Agnihotri (supra) decided over 40 years back was over a mere Rs. 11350/- being the excess of assets over known sources of income!
Gifts on occasions such as Birthdays - Can they be 'known sources of income'?
Dismissing the arguments that gifts or windfall incomes cannot constitute known sources of income, the Court held that the receipt of money or pecuniary resources in order to qualify as income within the meaning of Section 13(1) (e) of the Act, in case of a public servant should essentially be attached to his/her official post and that any windfall or gain of graft, crime or immoral secretions prima facie would not be a receipt from the known sources of his/her income. In the context of the sources of income of a public servant which is the kernel of the offence of criminal misconduct engrafted in Section 13(1)(e) of the Act, the Court referred to its own decision in State of M.P. Vs. Awadh Kishore Gupta & Ors., (2004) 1 SCC 691, in which it observed:
“The phrase “known sources of income” in Section 13(1)(e) [old Section 5(1)(e)] has clearly the emphasis on the word “income”. It would be primary to observe that qua the public servant, the income would be what is attached to his office or post, commonly known as remuneration or salary. The term “income” by itself, is elastic and has a wide connotation. Whatever comes in or is received, is income. But, however, wide the import and connotation of the term “income”, it is incapable of being understood as meaning receipt having no nexus to one's labour, or expertise, or property, or investment and having further a source which may or may not yield a regular revenue. These essential characteristics are vital in understanding the term “income”. Therefore, it can be said that, though “income” is receipt in the hand of its recipient, every receipt would not partake the character of income. Qua the public servant, whatever return he gets from his service, will be the primary item of his income. Other incomes, which conceivably are income qua the public servant, will be in the regular receipt from (a) his property, or (b) his investment.
A receipt from windfall, or gains of graft, crime or immoral secretions by persons prima facie would not be receipt from the “known sources of income” of a public servant.
The noticeable feature of this pronouncement thus is that the explanation offered by the accused to be acceptable has to be one not only plausible in nature and content but also worthy of acceptance.
The court further noted that with the advent of the 1988 Act, and inter alia consequent upon the expansion of the scope of definition of the “public servant” and the integration of Section 161 to 165A IPC in the said statute, the claim of the defense to treat the gifts offered to A1 on her birthday as lawful income, thus cannot receive judicial imprimatur.
Conclusion:
Behind every great fortune, there is a Crime. The immortal words of Balzac are as true today as it has always been in the past. We will all do well to deal with such instant-fortuners (read 'public servants') with discrimination and a touch of judiciousness.
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