http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 7  

CASE NO.: Appeal (crl.)  480 of 2002

PETITIONER: D.S.P., Chennai                                        

RESPONDENT: K. Inbasagaran                                         

DATE OF JUDGMENT: 07/12/2005

BENCH: B.N.Agrawal & A.K. Mathur

JUDGMENT: J U D G M E N T  

A.K. MATHUR, J.

       This appeal  is directed against an order of the Madras High  Court whereby the Single  Bench of the High Court has acquitted  the accused  by its order dated 11th July, 2001 passed in Criminal  Appeal No.231/2000. Hence the present appeal has been filed  against the order of acquittal by the Deputy Superintendent of  Police, Chennai.

       Brief facts which are necessary for disposal of this appeal  are that the accused-respondent, Mr. K. Inbasagaran was a senior  I.A.S. Officer of the Government  of Tamil Nadu  who stood  charged for offence  punishable under Section 13(2) read with   Section 13(1)(e) of the   Prevention of Corruption Act,  1988  (hereinafter to be referred as an "Act") and was found guilty,  convicted and sentenced by the learned Special  Judge (XIth  Additional Judge, City Civil Court) at Madras  to undergo rigorous  imprisonment for one year and  also  to pay a fine of Rs. 5,000/-,   in default to undergo Rigorous Imprisonment for  three months.

       Aggrieved against this Order, the accused preferred an  appeal before the Madras High Court at Chennai and the learned  Single Judge of the Madras High Court acquitted the accused  of  the aforesaid charges.   Hence, the present appeal filed by the  State of Tamil Nadu through the Deputy Superintendent of  Police, Directorate of Vigilance and Anti-Corruption, Chennai.    

       The accused,  Inbasagaran obtained B.E.   Hons. Degree and  joined Indian Navy  as an Officer during 1965.  Later on   he  entered  the Indian Administrative Service during 1970 and was  allotted the Tamil Nadu Cadre.   During 1982 he went to America  for  studies  alongwith  his wife and children.  He worked in    various capacities under the Government of Tamil Nadu, like  Managing Director  of  Tamil Nadu Chemical Products,  Chairman  of Tamil Nadu Leather  Corporation and lastly he was  appointed   as a Secretary to the  Health Department.  According to  prosecution on 13th September, 1993 and on 14th September, 1993  there was a raid by the  Income-tax Authorities in the house of  the accused.  The raid  by Income-tax  Department  yielded  a  huge amount of cash amounting to Rs. 30 lakhs, 7 gold biscuits  weighing 819 grams,  $1118  and  certain documents regarding  purchase of immovable properties and also  fixed deposit receipts   of the Bank for Rs. 25,000/-  in the name of third parties.   The  Income-tax Authorities registered the case but subsequently  they referred the matter on 15.2.1994  to  the State Government  to take departmental  action  against the accused.   The

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 7  

Government of Tamil Nadu initiated the disciplinary proceedings  against the accused during February, 1994.  A parallel criminal   proceedings was also taken by the Department regarding  the   assets  unearthed at the time of raid by the  Income-tax   Department.  However, the charges against the  accused were  dropped  with a warning to the accused in disciplinary proceedings  and the criminal case was also  closed on  mistake of facts.   P.W.  51 S. Ganapathy Iyer  an Assistant Commissioner of Income-tax,  Chennai Circle-1 (II),  held   an inquiry regarding the huge amount  of cash unearthed for the purpose of Income-tax assessment and   came  to the conclusion  that the  said assets belonged to the  accused.   On the basis of the  inquiry by PW-51, the criminal  case against the accused was reopened   as per  the Order of the  Special Judge passed in Crl. M.P. No. 7453/1996 on 9.12.1996.    PW-53 Vishwanathan, Deputy Superintendent of Police, V&AC,  Chennai City-1, continued investigation  at the instance of the   Special Judge, Madras. This reopening of the case was   challenged by the  accused-petitioner by filing  Crl. M.P.  6812/1997 before the Madras High Court but it was dismissed by   the Court on 24.2.1998.   After  the permission by the Special  Judge to reopen the case, the investigation was taken up by the  PW-53, Viswanathan, he issued notice to the  accused, his wife  and children to appear before him but they did not appear.    After closing  of the investigation, a charge-sheet was filed   before the Special  Judge that the accused  had  committed  offence under Section 13(2) read with Section 13(1)(e) of the   Act on 4.11.1997.           The prosecution examined 53 witnesses as PWs  1 to 53 and  marked  & executed  documents as Exs. P.1 to P.185.  The accused denied the charges and  according to the  accused the assets  which had been unearthed during the raid by  the  Income tax  department was not his assets but  they were   the  assets of his wife who was running certain companies.    According to him,  his wife accompanied him  when  he went to  America  where she worked in a pharmaceutical company  and also  as a clerk in State Bank of India and  she earned salaries and was  also assessed by Income \026tax Department in America.   At the  time of her return from America,  she brought cash, video  camera and a computer.   Video camera and computer were  revenue earning assets, his wife leased out the video camera for  marriage coverage  and earned  sufficient monies. She had  started a computer  concern   under the name and style of Tamil  Nadu Computer Service by incurring a loan of  Rs. 2,00,000/- by  Punjab National Bank.   The computer centre also generated   funds.   It was also stated  that apart from this,  his wife had  floated three concerns one  in the name and style of A.V.J.,   Marketing Service, a proprietory concerned of  her own which  was having franchise for sale  of hypo-dermic needles in Tamil  Nadu and Andhra Pradesh,  another in the  name  and  style of  M/s Southern Rims (P) Ltd. which was manufacturing cycle rims   and  another company  in the name of M/s Silver Shoes (P) Ltd.  which was manufacturing shoe uppers    It was alleged that she  was Director  of  two companies and  amounts of the two  companies were in her possession which she kept in her house.    Out of $1118, $800 belonged to his wife which she had earned as   salary  in U.S.A. and $ 318 belonged to his son-in-law, S.  Rajasankar who went to Europe in September, 1988 for which he  obtained F.T.S.  of $500 out of which he saved $318.   Regarding  the purchase of immovable properties, he stated that  for the  purpose of a factory for M/s Silver Shoes (P) Limited,  land was  purchased  at Vannagaram in the name of Rajasankar who  happened to  be the Managing Director of the company with the  funds of the  company.   Regarding  cash of Rs. 30 lakhs  recovered from his house, it was urged that a sum of Rs. 29 lakhs  was unaccounted money obtained by sale of cycle rims and shoe

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 7  

uppers by the two companies without bill and  that  money  belonged to her companies.  Regarding Rs. 1 lakh,  it was stated   that amount  belonged to PW-46  Girish A. Darvey.

It was submitted that he had no proprietary  control over  sum of Rs. 30 lakh seized by the Income-tax  Department as it  belonged to the  unaccounted  money of his wife.   Regarding Rs.  19 lakhs deposited in various branches of Punjab National Bank in  Karnataka State,  it  was  submitted that all these monies  belonged to the companies owned by his wife and the same was  deposited at the instance of his wife.   The accused justified  these unaccounted money by  examining himself as D.W.13  alongwith other  witnesses as D.Ws. 1 t o 12.  including his wife  and  had also got the  documents exhibited as D.1 to D.99 to  substantiate his allegation.

       The  Special Judge discussed the evidence  on record  and found that the purchase of  gold biscuits, US dollars and cash  recovered from  the house of the accused belonged the accused  and source of money  for the purchase of land also traceable to   the accused.   Learned trial court also found that deposit of Rs.  19 lakhs made in various banks in Punjab National Bank at  Bangalore was that of the accused  and it was deposited in benami  names.  The  learned trial court held that assets worth Rs.  54,50,510/-  was found in the possession of accused and  accordingly held  him guilty as aforesaid.

       On appeal by accused, learned  Single Judge of the  Madras High Court examined the findings as well as the judgment  of  the learned trial Court   and came to the conclusion that  the  recovery of sum of Rs. 29 lakhs at the house of the accused was  not  in  exclusive possession  of the accused.   So far as Rs.1 lakh   found on the dining table  is concerned, it belonged to one  Girish  Davey who appeared  in the witness box as PW 46 and was  representative of pharmaceutical company, Ranbaxy    and the  learned  Single Judge of the High Court also held  that Rs.  1 lakh  kept in plastic bag  and  two packets of sweets  found on the  dining table at the time of raid,  belonged to Girish  and it does  not belong to the accused.   Learned Single Judge also found that  since the entire money has been admitted by his wife who had  come in witness box  as DW-12 & admitted  that  she  earned this  money by  selling cycle rims and leather shoe uppers without any  bill  and  this money belonged to her and  she had  made a clean  breast before the Income tax authority and thereby she had  accepted this  unaccounted money being belonging  to her.    Therefore, learned Single Judge held that this  unaccounted  money did not  belong to the accused.  So far as the recovery of  the $1118  is  concerned, the learned Single Judge  found the  explanation satisfactory and his son-in-law has been found  to be  guilty by foreign exchange authorities and fined. Likewise, the  learned Single Judge also found the purchase of gold biscuits by  his wife  has been properly explained and  likewise, the purchase  of the property by the wife from her unaccounted money and   also found that the money  belonged to his wife and she has made  a clean breast   before the Income-tax Officer.  Hence, after  hearing both the parties the learned Single Judge acquitted the  accused and held that the money was not found from the  possession of  the accused  and it was unaccounted  money   belonged  to  his wife who was  dealing with  various business and  it was also pointed out that  Income-tax authorities had assessed  the money in her account, it was also held that no unaccounted  money has been recovered from the exclusive possession of the  accused, hence learned Single Judge acquitted the accused.  Aggrieved against this,  the present appeal was filed  by the  State, through Deputy Superintendent of Police, Vigilance.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 7  

       We have heard learned counsel for the State as well  as  the Respondent-in-person and his counsel.   Learned counsel  for  the State has taken us through  the entire  evidence  and has  tried to emphasize that  the plea  taken by the wife of the  accused  that the money belonged to her was  with a view to  shield her husband  and his wife is only a decoy to protect her  husband.   She has owned the entire money being  the black  money, from her business.   And she has accepted that all the  money  which had been recovered from her house, the money  which has  found deposited in the banks and the  immovable  properties which were  purchased,   was done by her  and she  owes the entire responsibility and  she had disclosed to the   Income-tax department.  The  Income-tax department has  assessed all this money in her hands  and assessment   order has  been passed by the Income-tax Officer and in the appeal it has  been affirmed.    In short, in fact all the  money which has been  recovered at the house of the accused in cash, in kind and the  documents  of  properties  purchased at various parts in  Karnataka and Tamil Nadu  she has owned it.   Therefore, the  wife has taken the full responsibility of this black money and  owned the same.         Learned counsel  for the State  states that the money  belongs to   the accused since he  was  a Secretary to the  Government of Tamil Nadu  in the Medical Health Department  and it is alleged that  on the relevant date  Girish Davay  came  with the cash  and sweets which were lying on the  dining table  and it was recovered from the dining table.  In fact this money  was brought for gratification to raise the purchase  price of the  medicine,  ’Fortwin’ which was manufactured by the company of   which Girish Davey  was one of  the  Senior Representative.   Learned counsel for the appellant invited our attention to the  following decisions of this Court. i.      AIR 1960 SC 7 [ C.S.D.Swami v. The State ] ii.     (1981) 3 SCC 199 [ State of Maharashtra v.  Wasudeo   Ramchandra Kaidalwar]

iii.    AIR 1988 SC 88 [State of Maharashtra v.  Pollonji DarabshawDaruwalla]

iv.     (1991) 3 SCC 655 [ K.Veeraswami v. Union of  India & Ors.]

v.      (1999) 6  SCC  559 [ P.Nallammal & Anr. V. State                             represented by Inspector of Police]

As against this, learned counsel for the respondent as well  as the respondent in person have submitted  that the act of  recovery of the money,  the deposits in the bank and purchase of  the property is not disputed but the question is whether it was in  the possession of the accused or not?          It was pointed out that  in fact  all the money  belonged  to  his wife  as she was running three companies and  she had admitted that out of  the unaccounted  sale of rims of  cycle    as well as  the leather shoe uppers without bills she  earned this huge  wealth and she had owned it.  Therefore,  recovery in this raid  by  Income-tax department cannot  be  considered to be  from exclusive  possession of the accused.   Specially  when the wife who has come in witness box as DW-12  and  accepts  it that she has earned  all  this money by sale of  goods without bill.      

Learned counsel for the respondent  also submitted that  

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 7  

under Section 132(4)  of the Income-tax Act, the order of the  Income Tax Officer has been confirmed in appeal and all money  owned by the wife has been assessed against her.    It was also  submitted that finding of Income Tax authority and confession  of  DW-12  Vijaya Inbasgaran have been accepted.  Therefore, it  is a judicial finding and  on the same a criminal prosecution   cannot  be lodged.   In support thereof learned counsel  for the  respondent invited out attention in the case of  K.C. Builders  and another  Vs. Assistant Commissioner of Income Tax    Reported in (2004) 2 SCC 731.    We have heard both the learned counsel at length. The  basic question  that emerges in the present case is whether  the  accused could be saddled with all the unaccounted money at his  hand or not.  It is the admitted position that both the husband  and wife were living together.  The wife was running three  concerns though those concerns were running in loss.  Yet she  could manage to earn black money by selling goods without bills  and amassed this wealth without disclosing the  same  to the  Income-tax authority and when the raid was conducted she  disclosed the unaccounted money and accepted herself for being  assessed by the Income-tax Department. Therefore, in this  context,  the question arises whether  the joint possession of the  premises by the husband and wife  and the unaccounted money  which has been recovered from the house could be said to be in  exclusive possession of the accused.  There is no two opinion in  the matter that the initial burden  has to be discharged by the  prosecution. The prosecution in order to discharge  that burden  has examined the Investigating Officer, P.W.53- Shri  Viswanathan, D.S.P. (Investigation). P.W.53- Viswanathan has  collected all the materials from various places and he has given  the details of his investigation. He has also supported the  recoveries which have been made by the Income-tax Department.   He in his statement, has also deposed that some money was  deposited at various branches of Punjab National Bank at  Bangalore and he has examined all the Senior Managers of Punjab  National Bank to show that various amounts were deposited in  their Banks and the prosecution has also produced them in the  witness box to substantiate their allegation as P.Ws.22, 23, 24,  25, 26 and 32. He has also examined the persons against whose  names  those amounts were deposited in  the witness box.  He has  also examined the Income-tax Officer as P.W.14, P.W.44 \026  Assistant Director of Income-tax (Investigation) and P.W.51-  S.  Ganapathy Iyer.  By this evidence the prosecution has established  that the money was recovered at the house of the accused as well  as various purchases of immovable properties made by the wife of  the accused.   The prosecution has tried to establish that all the  moneys which had been recovered from the house of the accused,  various deposits in the Punjab National Bank at various places  through the influence of the Regional Manager of Punjab National  Bank and the recovery of the gold ornaments as well as the  recovery of foreign exchange i.e. dollars belong to accused. Thus,  the prosecution has tried to establish that all the moneys  belonged to the accused and after taking sanction, prosecution  was launched against the accused. There is  no two opinion in the  matter that the initial burden lies on the prosecution.  In the  case of C.S.D.Swami v. The State reported in AIR 1960 SC 7,  this Court has taken the view that in Section 5(3) of the  Prevention of Corruption Act, 1947 a complete departure has  made from the criminal jurisprudence still initial  burden lies on  the prosecution and in that context it has been observed as  follows :

               " Section 5 (3)  does not create a new  offence but only lays down a rule of evidence,  enabling  the court to raise a presumption of

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 7  

guilt in certain circumstances- a rule which is a  complete departure from the established  principle of criminal jurisprudence that the  burden always lies on the prosecution to prove  all the ingredients of the offence charged, and  that the burden never shifts on to the accused  to disprove the charge framed against him. Therefore, the initial burden was on the prosecution to establish  whether  the accused has acquired the property  disproportionate   to his  known source of income or not.  But at the same time it  has been held  in a case  of  State of M.P.  Vs.  Awadh Kishore  Gupta and Others  reported in (2004) 1 SCC 691  that accused  has to account satisfactorily the money received in his hand and  satisfy the court that his explanation was worthy  of acceptance.  In order to substantiate the plea taken by the accused that all  the moneys which had been received belonged to his wife and in  support thereof he has examined as many as 13 witnesses  including himself, his wife and his son-in-law. D.W. 12 is the wife  of the accused. She has deposed that the entire money belonged  to her. She has admitted the raid on her house and she has also  admitted that she has amassed  the wealth by selling cycle rims  and leather products  without any bill and out of the money  amassed by her she had persuaded her husband to deposit the  same at various Banks. She has come forward and admitted  the  recovery of the foreign exchange at her house and she has  accounted for the same. She has also admitted the recovery of  the gold ornaments at her house and she has explained that she  has purchased those gold ornaments. She has also submitted that  some real estate was purchased out of self earning as well as the  loan from the mother of the son-in-law and some contribution was  made by the son-in-law and the son-in-law has also admitted.  Likewise, D.W.8 - her son-in-law, Thiru S.Rajasankar also  appeared in the witness box and admitted that he has also saved  certain foreign exchange when he had gone on various visits  abroad.  He has also admitted to have carried some money to be  deposited in the Bank.  The accused has also come forward  in the  witness box as D.W.13 and has deposed that all the moneys  belonged to his wife and when he came to know about the   unaccounted money at his house, he gave his piece of mind to her.  He has admitted that on one or two occasions money was carried  by himself to be deposited  in the account in Punjab National Bank  and   some money was also deposited on account of some of the   members of the family by P.W.8,  S. Rajasankar, son-in-law.    Therefore, under these circumstances, the respondent has  explained the possession of unaccounted money.           Now, in this background, when the accused has come  forward with the plea that all the money which has been  recovered from his house and purchase of real estate  or the  recovery of the gold and other deposits  in the Bank,  all have  been owned by his wife, then in that situation how can all these  recoveries of unaccounted money could be laid in his hands. The  question is when the accused has provided  satisfactorily   explanation that all the money belonged to his wife and she has  owned it and the Income-tax Department has assessed in her  hand,  then  in  that  case, whether he could be charged under the Prevention of Corruption Act.  It is true that when there is joint  possession between the wife and husband, or father and son and  if some of the members of the family are involved in amassing  illegal wealth,  then unless there is categorical evidence to  believe, that this can be read in the hands of the husband or as  the case may be,  it cannot be fastened on the husband or head  of family.  It is true that the prosecution in the present case has  tried its best to lead the evidence to show that all these moneys  belonged to the accused but when the wife  has fully owned the  entire money and the other wealth earned by her by not showing

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 7  

in the Income-tax return and she has accepted the whole  responsibilities, in that case, it is very difficult to hold the  accused guilty of the charge. It is very difficult to segregate   that how much of wealth belonged to the husband and how much  belonged to the wife. The prosecution has not been able to  lead  evidence to establish that some of the money could be held in the  hands of the accused. In case of joint possession it is very  difficult when one of the persons accepted the entire  responsibility. The wife of the accused has not been prosecuted  and it is only the husband who has been charged being the public  servant.  In view of the explanation given by the husband  and  when it has been substantiated by the evidence of the wife, the  other witnesses who have been produced on behalf of the  accused coupled with the fact that  the entire money has been  treated in the hands of the wife and she has owned it and she has  been assessed by the Income-tax Department, it will not be  proper to hold the accused guilty under the prevention of  Corruption Act as his explanation appears to be plausible and  justifiable. The burden is on the accused to offer plausible  explanation and in the present case, he has satisfactorily  explained that the whole money which has been recovered from  his house does not belong to him and it belonged to his wife.  Therefore, he has satisfactorily accounted for the recovery of  the unaccounted money. Since the crucial question in this case  was of the possession and the premises in question was jointly  shared by the wife and the husband and the wife having accepted  the entire recovery at her hand, it will not be proper to hold  husband guilty.  Therefore, in these circumstances, we are of the  opinion that the view taken by the High Court appears to be  justified and there are no compelling circumstances to reverse  the order of acquittal.  Hence, we do not find any merit in this  appeal and the same is dismissed.