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PETITIONER: DELHI ADMINISTRATION

       Vs.

RESPONDENT: S. N. KHOSLA

DATE OF JUDGMENT02/04/1971

BENCH: SIKRI, S.M. (CJ) BENCH: SIKRI, S.M. (CJ) REDDY, P. JAGANMOHAN

CITATION:  1971 AIR 1480            1971 SCR  315  1971 SCC  (1) 872

ACT: 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 "pecuniary advantage".

HEADNOTE: 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) was proved. 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]

JUDGMENT: 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 respondent.

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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  Elec- tronics  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 Act. 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

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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 case. 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 dismissed. K.B.N. Appeal dismissed. 319