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CASE NO.: Appeal (crl.)  773 of 2000

PETITIONER: R. Janakiraman                                           

RESPONDENT: State of Tamil Nadu, through CBI, SPE, Madras    

DATE OF JUDGMENT: 04/01/2006

BENCH: S. B. Sinha & R. V. Raveendran

JUDGMENT: J U D G M E N T

RAVEENDRAN, J.

       This appeal is preferred against the judgment dated  21.01.2000 passed by the High Court of Madras dismissing Criminal  Appeal No. 127 of 1993 filed by the Appellant thereby confirming the  judgment dated 25.01.1993 passed by the Special Judge, Madurai in  Calendar Case No.2 of 1987, convicting and sentencing him under  section 5(1)(e) read with section 5(2) of the Prevention of Corruption  Act, 1947 (for short ’the Act’).

2.   The case of prosecution, in brief, was as follows :-  

2.1)    The appellant joined the Southern Railway  on 5.7.1958. He   was promoted as a Permanent Way Inspector and later as Assistant  Engineer on 28.5.1981. The appellant’s family consisted of himself,  his wife and two children.  He had six brothers and three sisters and  had no ancestral properties.   2.2)    On information received that the appellant was corrupt and  had amassed assets disproportionate to his income, R.C. No. 33 of  1986 was registered on 28.5.1986 by the Superintendent, Central  Bureau  of Investigation, Madras.  Chelladurai, Inspector CBI [PW- 23] took up the case for investigation and obtained a warrant for  inspection of the appellant’s house No. 16, North Colony, Railway  Quarters, Dindigul, from the Chief Judicial Magistrate, Chennai. On  29.5.1986, PW-23 along with his party and two independent  witnesses went to the house of the accused.  Appellant was not  present but his son was present. The search was commenced at 8  A.M. The appellant came around 11.30 A.M. and his wife came  around 2.45 P.M. There were three steel almirahs kept in the house  of the appellant and on opening them with the keys provided by the  appellant, a sum of Rs.  2,94,615/- in cash was found in ten different  containers (biscuit tins, briefcases, etc.,) which was seized. Certain  documents were also seized.

2.3)    As per the charge-sheet dated 18.5.1987, the check-period  was 1.5.1976 to 29.5.1986 and the value of the assets held by the  appellant at the beginning of the check period (1.5.1976) was         Rs.13,449/17; and the value of the total assets of the appellant at  the end of the check period (as on 29.5.1986) was Rs. 6,69,852/- as  under:-  

(i) Fixed deposits & NSCs Rs.1,81,688.13 (ii)

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Credit balance in three S/B Accounts  Rs.  47,345.90 (iii) Shares and sundry deposits Rs.    2,085.00 (iv) Household articles Rs.  31,076.00 (v) House at No.10, Swarnapuram, Salem  (with registration expenses of Rs.4302.79) Rs.1,13,042.75 (vi) Cash in hand (recovered during search) Rs.2,94,615.00

Total Rs.6,69,852.78

        The total income earned by the appellant during the check period  was Rs.2,81,497.93 (salary, interest on FDs, interest on bank  balances, house-rent, house rent advance and housing loan) and the  total expenditure incurred for the family during that period was  Rs.88,645.92.  Thus, the maximum likely savings during that period  was Rs.1,92,852.01. Thus, the value of total assets as on 29.5.1986  could not have exceeded Rs.192,852.01 (savings) plus Rs.13,449.17  (assets at the beginning of the check period) in all Rs.2,06,301.18.  By deducting the said amount of Rs. 2,06,301.18 from Rs.  6,69,852/-, the value of the assets acquired by the appellant beyond  his known sources of income was found to be Rs.4,63,551.60. Thus  the charge was that the appellant was in possession of assets of the  value of Rs.4,63,551/60 in excess of his known sources of income  which he could satisfactorily account and thereby he committed an  offence with section 5(1)(e) of the Act punishable under section  5(2).  3)      The explanation offered by the appellant (as gathered from the  statement under Section 313 Cr.P.C., exhibited documents and   written arguments) was as follows :-  (i)     Loans received from PW-11 and PW-15             =       Rs. 2,50,000/-  (ii)    Loans received from brothers and brothers-in-law =      Rs.    40,000/- (iii)   TA received [not taken into account by PW-23]   =       Rs.    25,922/60 (iv)    Bonus received [not taken into account by PW-23]=       Rs.     8,000/- (v)     Excess evaluation by PW-23 of the House at Salem  [taken as Rs. 1,08,740/- as against the   actual cost of construction being Rs.80,000/-]  =       Rs.   28,740/-  

(vi)    Difference in value of assets as on 1.5.1976  [Rs.63,198.61 claimed by the appellant less  Rs.13,449.17 assessed by PW-23]                 =       Rs.   49,749/44                                           (vii)    Difference in income received during the       check period 1.5.1976 to 29.5.1986            (Rs.3,16,076.30 claimed by the appellant           and Rs.2,81,497.97 assessed by PW-23)            (Note:The said difference relates to            difference in receipt of interest on fixed deposits)  =       Rs.  34,578.37                                                                         ---------------         Total                                                   =       Rs.4,36,990.41                                                                         -----------------

The appellant submitted that the extent of assets beyond the known  sources of income was not, therefore, Rs.4,63,551/40 as charged,  but only Rs.26,561/-. The appellant contended that a margin of 10%  is permitted and as the unexplained assets were only to an extent of

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Rs.26,561/- which was less than even 10% of the total income, the  courts below committed an error in holding that the assets  possessed by the accused were disproportionate to his known  sources of income, so as to justify the raising of presumption under  Section 5(3).

4.      The special court after considering the evidence came to the  conclusion that even if all other explanations and contentions of the  appellant were accepted, assets to an extent of Rs.3,05,985.39  remained unaccounted and unexplained. It accepted the claim of the  accused that the total of assets as on 29.5.1986 was  Rs.6,41,112.78. It also accepted his claim that the value of assets as  on 1.5.1976 was not Rs.13,449.17 but Rs.63,198.61 (in calculations,  wrongly taken as Rs.73,759/31 by the Special Court). It also  accepted certain other income which had not been taken into  account by PW-23, namely, Travelling Allowance (Rs.25,922.60),  bonus (Rs.8,000/-), interest on FDs (Rs.91,666.25 as against  Rs.57,583.91 considered by PW-23). It further accepted the claim of  the accused that the value of the Salem house was only Rs.80,000/- (as against Rs.1,13,042.79 assessed  by PW-23). It, however,  rejected the explanation relating to loans of Rs. 2,50,000/- allegedly  taken from PWs-11 & 15 and the borrowings aggregating to  Rs.40,000/- from relatives. It held that the prosecution had proved  that the appellant possessed assets in excess of all known sources of  income to an extent of Rs.3,05,985.39 and by raising the  presumption that such assets were procured by illegal means by  misusing his official powers and influence, found him guilty  and  convicted him under section 5(1)(e) read with section 5(2) of the  Act. The appellant was sentenced to undergo imprisonment for one  year and pay a fine of Rs.1,000/- and, in default, to undergo  rigorous imprisonment for four months. The cash recovered  (Rs.2,94,615/-) was ordered to be confiscated.  

5.      Feeling aggrieved, the appellant filed an appeal before the  High Court [Crl. Appeal No. 127 of 1993]. By judgment dated  21.01.2000, the High Court confirmed the conviction and sentence  and dismissed the appeal. In fact, the High Court came to the  conclusion that the value of unaccounted assets was Rs. 4,13,802.16  and not Rs.3,05,985.39 as determined by the Special Court. It  accepted the contention of the  appellant that the value of assets as  on 1.5.1976 (beginning of check period) was Rs.63,198.61 and not  Rs.13,449.17. It, however, rejected the appellant’s claim for certain  additions to the income (which had been accepted by the trial court),  namely, Rs.25,922.60 (travelling allowance), Rs.8,000/- (bonus),  Rs.34,083/- (being part  interest on fixed deposits, that is by taking  the interest earned as only Rs.57,583.91 instead of Rs.91,666.25  claimed by the appellant) and Rs.511/- (S.B. Account interest). It  did not accept his contention that the value of the Salem house was  only Rs.80,000/- and took it as Rs.1,13,042/-, thereby increasing  the assets by an extent of Rs.28,740/-. Consequently, out of  Rs.6,69,852.78 (value of assets as on 29.5.1986), the High Court  deducted Rs.63,198.61 (being the value of assets at the beginning of  check period as claimed by the appellant) and Rs.1,92,852.01  (surplus of income over expenditure during the check period as  determined by it) and concluded that assets of the value of  Rs.413,802.16 remained unexplained.

6.      The said decision is challenged in this appeal by special leave.  The learned counsel for the appellant contended that the High Court  committed a serious error in over-estimating the cost of the Salem  house and by refusing to take note of the following five items of  income during the check period  :-  

(i)     Rs.2,50,000.00  Loans received from PW-11 and PW-15 (ii)    Rs.  40,000.00  Loans received from brothers and brother-

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                               in-law (iii)   Rs.  34,578.37  Interest on deposits (part)  (iv)    Rs.  22,922.60  Travelling allowance received by appellant (v)     Rs.   8,000.00  Bonus received by appellant         -----------------         Rs.3,55,500.97         Rs.  28,740.00  (Excess in the valuation of Salem House taken                                as Rs.1,08,740/- instead of Rs.80,000/-)         -----------------         Rs.3,84,240.97         ----------------- The appellant contended that if these amounts had been taken into  account by the High Court, it would have found that the unexplained  assets or income over expenditure was only Rs.29,561/-, well within  the 10% margin recognized and permitted by this Court. (Reference  may be made to Krishnanand Agnihotri vs  State of MP - AIR  1977 SC 796 \026 wherein this Court held where the value of  unexplained portion  is less than 10% of the total income, it would  not be proper to hold that the assets found in the possession of the  accused were disproportionate to his known sources of income, so as  to justify the raising of the presumption under Section 5(3) of the  Act).The learned counsel for the appellant further submitted that the  findings in favour of the accused cannot be altered in appeal by the  accused against conviction. He pointed out that the trial court had  accepted his claim for additions to income of Rs.22,922.60 (TA),  Rs.8,000/- (Bonus) and Rs.34,578.37 (interest on deposits) and also  reduction in the total value of assets by Rs.28,740/- (in all  aggregating to Rs.94,240/97) and these could not have been  reversed by the High Court in an appeal by the accused.     

7.      After the matter was argued for some time, learned counsel on  both sides agreed that the entire matter boiled down to the  acceptance of the genuineness of the alleged loan of     Rs.2,50,000/-   from PW-11 and PW-15. They agreed that even if the claims of the  appellant relating to Travelling Allowance [Rs.22,922.60/-], Bonus  [Rs.8,000/-], difference in interest on FDs [Rs.34,578.37], and  difference in valuation of the house [Rs. 28,740/-] are accepted, the  appeal will fail if the alleged loan of Rs. 2,50,000/- was not accepted.   If the explanation for Rs.2,50,000/- which is the major chunk of the  unexplained excess (being part of Rs. 2,94,615/- found in cash in  appellant’s house) is not accepted, there may be no need to examine  the correctness of the other items. We will, therefore, first deal with  the alleged loan of Rs. 2,50,000/-.  

8.      The appellant’s case is that he had taken a loan of  Rs.1,25,000/- from PW-11 and another sum of Rs.1,25,000/- from  PW-15  on 24.5.1986 (five days before the search)  and the same  was evident from the promissory notes [Ex. P-64 & P-65], guarantee  letters [Ex.P-66 & P-67], confidential letter [Ex.P-68], equitable  mortgage deed [Ex.P-69] and the entries in the account books of  PW-11 and PW-15 [Ex.P-70  to P-81]. He submits that the said  documentary evidence proved beyond doubt that he had received  Rs.2,50,000/- as loan from PW-11 and PW-15.  

9.      We may briefly refer to the evidence of PW-11 and PW-15 who  were the alleged creditors.  

9.1)    Chandiram (PW-11) stated that he was carrying on money- lending business at Salem in partnership with his mother and three  brothers, from the year 1984 under the name and style of ’Pahlaprai  Sons’; that  Satram Das (PW-15) was his paternal uncle and he was  also doing money lending business under the name and style of  ’Satramdas Mahesh Kumar’; that whenever money was to be lent, he  was taking a promissory note, guarantee letter, confidential form  etc. from the borrower; and that he maintained a promissory note

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book, day book, cash book wherein the transactions were entered by  one Kattanmal, the common Accountant for himself and PW-15. He  further stated that he was a friend and acquaintance of Kasinathan  and Ramchandran (brothers of appellant) as he used to play tennis  with them for about 15 years; that he knew the appellant and his  another brother  Narayanaswamy through Kasinathan and  Ramchandran; that on 30.5.1986, the appellant’s three brothers  came to his office and asked him and PW-15 for a loan of Rs. 2 to  Rs.3 lakhs, stating that the loan was required by their brother  Janakiraman (appellant) in connection with the purchase of a house  at Coimbatore; that he and PW-15 stated that they could not lend  such a big amount; that appellant’s brothers stated that if they (PW- 11 & PW-15) were not able to lend such amount, they may at least  make an ’adjustment entry’ in their account books by showing that a  loan was given on 24.5.1986; that when PW-11 and PW-15 stated  that they had not done such a thing before, the appellant’s brothers  stated that they had come to them with faith and hope and offered  to pay a commission of three to four thousand rupees for merely  making an entry that the said amount was advanced by them to  appellant.

9.2)    PW-11 further stated that when he asked them why they  wanted such a specific entry for such amount as on 24.5.1986, they  stated that appellant had already paid such amount as advance to  buy a house at Coimbatore and therefore, they wanted such an entry  to show that the said amount was borrowed by the appellant; that as  they went on pleading, finally PW-11 and PW-15 agreed to help  them; that PW-15 prepared two promissory notes for Rs.1,25,000/-  each showing the dates as 24.5.1986, though the said promissory  notes (Ex. P-64 & P-65 ) were, however, actually  written on  30.5.1986.  One promissory note [Ex. P-64] was executed in favour  of M/s. Satramdas Mahesh Kumar. The other promissory note (Ex. P- 65) was executed in favour of Pahlaprai Sons [partnership firm of  PW-11]. Two guarantee letters were also filled up by Kasinathan [Ex.  P-66 and P-67]; one in favour of M/s. Satramdas Mahesh Kumar and  the other in favour of Pahlaprai Sons. One confidential form [Ex. P- 68] was filled up by Kasinathan. Narayanaswamy signed both  promissory notes and the ’confidential form’. All the three brothers of  appellant signed the guarantee letters. To create a document to  show that the appellant’s house at Salem was also given as security  by way of equitable mortgage for such loan, appellant’s brother  Ramachandran along with PW-11’s clerk went to a stamp vendor to  obtain an ante-dated stamp paper with the date of 23.5.1986 in the  name of the appellant. Thereafter, the appropriate entries were  made in the pronote entry book and in the respective day book and  cash book, showing Rs.1,25,000/- was advanced by the firm of PW- 11 and another Rs.1,25,000/- by the firm of PW-15.  After the  entries were made, the three brothers of the appellant took the  promissory notes, guarantee letters, confidential  form, equitable  mortgage document stating that they will get the signatures of the  appellant and later brought back those documents and delivered  them on 1.6.1986 with the signatures of the appellant. Along with  the said loan documents, they also gave two alleged ’title deeds’,  that is, a certificate showing the ownership of the appellant in regard  to the house at Salem [Ex. P-82] and two electricity bills [Ex. P-83  series]. PW-11 stated that the aforesaid documents were created to  make the lending transaction to appear genuine  even though no  money was advanced.  

9.3)    PW-11 also stated that only on 19th & 20th June, 1986, when  CBI raided his office and house and seized the said documents [Ex.  P-64 to P-83],  he and PW-15 came to know about CBI discovering  cash of about Rs.3 lakhs in appellant’s house on 29.5.1986 and  learnt they were cheated by making them agree to show ’adjustment  entries’ to create evidence of borrowing by the appellant to explain

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away the huge cash. He also stated that his statement (Ex. P-91)  was recorded by one Ramalingam, Assistant Director, Intelligence  Wing of Income Tax Department, Chennai.  Subsequently on  01.8.1986, PW-11 and PW-15 were arrested and released on  personal bonds. They consulted their lawyer in regard to these  transactions and he suggested that they should disclose the real  facts relating to the transactions before a Magistrate at Chennai.  Accordingly, they applied to the Metropolitan Magistrate, Saidapet,  Chennai, to record their statements and they were asked to appear  before Saidapet Metropolitan Magistrate No. IV on 11.8.1986. They  appeared on that date before the said Magistrate and  the Magistrate  asked PW-11 whether he was willing to give a voluntary statement  and also informed him to think over before giving such statement as  such statements might be used against him and gave a day’s time to  him about it. That next day, he appeared before the Magistrate and  Magistrate again gave him a warning and asked whether he was  willing to give a voluntary statement. When he reiterated his desire,  the Magistrate recorded his statement under section 164 Cr.P.C. (Ex.  P-93). Thereafter, he was asked to appear before C.B.I. Inspector  who also recorded his statement. He also stated that he received  summons from C.J.M., Coimbatore on 14.5.1987 and he appeared on  that day and confirmed his statement and the CJM granted pardon.  

9.4)    PW-11 admitted in the cross-examination that merely for  money or friendship, they would not normally make false entries;  that he had sufficient cash balance on 24.5.1986 to advance  Rs.1,25,000/- and that even in his uncle’s accounts, there was  sufficient cash balance to advance Rs.1,25,000/-; that normally the  execution of promissory notes and lending of the amount was  simultaneous; that there was nothing to show that the entries shown  as relating to the lending were really made on 30.5.1986 and not on  24.5.1986. He also stated that though appellant’s brothers agreed to  give commission to him and PW-15, actually no commission was  given to either of them. He also denied that he and PW-15 offered to  give statements under section 164 Cr.P.C. before the Magistrate at  Chennai only under pressure from the CBI. He admitted that the CBI  did not examine them until they gave the statements under section  164 Cr.P.C.  

9.5)    To the similar effect is the evidence of PW-15 [J. Chatram  Doss]. His sworn statement under section 131 of Income Tax Act  recorded by PW-14 is Ex.P-92 and his statement under section 164  Cr.P.C. recorded by the Addl. Metropolitan Magistrate, Chennai is  Ex.P-96.  

10)     The evidence of PW-11 and PW-15 are clear and categorical  that Rs.2,50,000/- was not advanced to appellant on 24.5.1986 or  any other date and that documents (Ex.P-64 to P-69) and the entries   (Ex.P-70 to P-81) were created only on 30.5.1986 to help appellant  to explain the huge cash found in his possession. Nothing has been  elicited in the cross-examination to disbelieve their evidence. The  learned counsel for the appellant, however, referred to the following  factors and contended that the evidence of PW-11 and PW-15 that  they had not lent any amount to appellant, should be rejected as not  trustworthy in view of the following:-  

i)      Such evidence being contrary to the very documents  executed in favour of PW-11 and PW-15 (Ex.P-64 to P- 69) and the entries made in the books of PW-11 and PW- 15 (Ex.P-70 to P-81), should be excluded having regard  to section 92 of the Evidence Act, 1872.

ii)     The documents executed by the appellant [Ex.P-64 to P- 69] showed that they were all executed on 24.5.1986  and that Rs.2,50,000/- in all was advanced by PW-11

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and PW-15 to appellant on 24.5.1986. The entries in the  account books of PW-11 and PW-15 (Ex.P-70 to P-81))  also demonstrated this position. Further, a deed creating  mortgage by depositing of title deed was also executed  on 24.5.1986 (Ex.P-69) on a stamp paper purchased in  the name of appellant on 23.5.1986 and this clearly  showed that there was a lending transaction on  24.5.1986 itself. PW-11 had also specifically admitted  that neither he nor PW-15 will make any adjustment  entries only for the sake of money or friendship.  

iii)    PW-11 and PW-15 have made false statements under  Section 164 Cr.P.C. to support the prosecution case at  the instance of CBI who apparently applied threats  through the officer of the Income Tax Department (PW- 14). As PW-11 and PW-15 were residents of Salem,  there was absolutely no need for them to go over to  Chennai to make the statement under section 164  Cr.P.C. before the Magistrate. The fact that they were  made at Chennai shows that it was done at the instance  of CBI whose main office was situated at Chennai.  

iv)     PW-11 and PW-15 were granted pardon in view of the   statements made under section 164 Cr.P.C. and such   statements by co-accused/accomplices cannot be relied  upon to hold the appellant guilty.  

11.     The contention that evidence of PW-11 and PW-15 are contrary  to the documentary evidence [Ex.P-64 to P-81] and therefore,  should be excluded under section 92 of Evidence Act, 1872 is not  tenable.   

11.1)     In Tyagaraja Mudaliyar vs. Vedathani [AIR 1939 PC 70],  the Privy Council observed that oral evidence is admissible to show  that a document executed by a person was never intended to  operate as an agreement, but was brought into existence solely for  the purpose of creating evidence about some other matter.  

11.2)     In Krishna Bai vs. Appasaheb [AIR 1979 SC 1880], this  Court observed : "..........when there is a dispute in regard to the  true character of a writing, evidence de hors the document can be  led to show that the writing was not the real nature of the  transaction, but was only an illusory, fictitious and colourable device  which cloaked something else, and that the apparent state of affairs  was not the real state of affairs."  11.3)      We may next refer to the following observations in  Gangabai vs. Chhabubai [1982 (1) SCC 4] interpreting section  92:-  "11..............Section 91 of the Evidence Act provides that when  the terms of a contract, or of a grant, or of any other  disposition of property, have been reduced to the form of a  document, and in all cases in which any matter is required by  law to be reduced to the form of a document, no evidence shall  be given in proof of the terms of such contract, grant or other  disposition of property, or of such matter, except the document  itself, Sub-section (1) of Section 92 declares that when the  terms of any contract, grant or other disposition of property, or  any matter required by law to be reduced to the form of a  document, have been proved according to the last section, no  evidence of any oral agreement or statement shall be admitted,  as between the parties to any such instrument or their  representatives in interest, for the purpose of contradicting,  varying, adding to, or subtracting from, its terms. And the first  proviso to Section 92 says that any fact may be proved which  would invalidate any document, or which would entitle any

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person to any decree or order relating thereto; such as fraud,  intimidation, illegality, want of due execution, want of capacity  in any contracting party, want or failure of consideration, or  mistake in fact or law. It is clear to us that the bar imposed  by sub-section (1) of Section 92 applies only when a  party seeks to rely upon the document embodying the  terms of the transaction. In that event, the law declares that  the nature and intent of the transaction must be gathered from  the terms of the document itself and no evidence of any oral  agreement or statement can be admitted as between the  parties to such document for the purpose of contradicting or  modifying its terms. The sub-section is not attracted when  the case of a party is that the transaction recorded in the  document was never intended to be acted upon at all  between the parties and that the document is a sham.  Such a question arises when the party asserts that there was a  different transaction altogether and what is recorded in the  document was intended to be of no consequence whatever. For  that purpose oral evidence is admissible to show that the  document executed was never intended to operate as an  agreement but that some other agreement altogether,  not recorded in the document, was entered into between  the parties."  (emphasis supplied)

11.4)     The above view was reiterated in Ishwar Dass Jain vs.  Sohan Lal [2000 (1) SCC 434] and it was held that the bar under  section 92(1) would arise only when the document is relied upon,  but, at the same time, its terms are sought to be varied and  contradicted.  

11.5)   In Parvinder Singh vs. Renu Gautam [2004 (4) SCC 794],  this Court observed :-  "The rule as to exclusion of oral by documentary evidence  governs the parties to the deed in writing. A stranger to the  document is not bound by the terms of the document and is,  therefore, not excluded from demonstrating the untrue or  collusive nature of the document or the fraudulent or illegal  purpose for which it was brought into being. An enquiry into  reality of transaction is not excluded merely by availability of  writing reciting the transaction.  

11.6) We may cull out the principles relating to section 92 of the   Evidence Act, thus :- i)      Section 92 is supplementary to section 91 and corollary  to the rule contained in section 91.  

ii)     The rule contained in section 92 will apply only to the  parties to the instrument or their successors-in-interest.  Strangers to the contract (which would include the  prosecution in a criminal proceeding) are not barred from  establishing a contemporaneous oral agreement  contradicting or varying the terms of the instrument. On  the other hand, section 91 may apply to strangers also.  

iii)    The bar under section 92 would apply when a party to  the instrument, relying on the instrument, seeks to  prove that the terms of the transaction covered by the  instrument are different from what is contained in the  instrument. It will not apply where anyone, including a  party to the instrument, seeks to establish that the  transaction itself is different from what it purports to be.  To put it differently, the bar is to oral evidence to  disprove the terms of a contract, and not to disprove the  contract itself, or to prove that the document was not  intended to be acted upon and that intention was totally

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different.  

Applying the aforesaid principles, it is clear that the bar with section  92 will apply to a proceeding inter-parties to a document  and not to  a criminal proceeding, where the prosecution is trying to prove that  a particular document or set of documents are fictitious documents  created to offer an explanation for disproportionate wealth. Oral  evidence can always be led to show that a transaction under a  particular document or set of documents is sham or fictitious or  nominal, not intended to be acted upon.  

12.     The contention that a statement under Section 164 Cr.P.C. of  an accomplice/co-accused cannot be used as evidence against an  accused, on the facts of this case, is rather misleading. It is no doubt  well-settled that in dealing with a case against an accused person,  the Court cannot start with the confession of a co-accused and it  must begin with other evidence adduced by the prosecution and  after it has formed its opinion with regard to the quality and effect of  such evidence, it is permissible to turn to the confession in order to  lend support or assurance to the conclusion of guilt which the court  is about to reach on the other evidence, vide Haricharan vs. State  of Bihar [1964 (6) SCR 623] and Dagdu & Ors. Vs. State of  Maharastra [1977 (3) SCC 68].  But in this case, the statements  made by PW-11 & PW-15 before the Magistrate at Chennai are not  the only evidence on which reliance is placed. It is used more as a  corroboration. We may also note that PW-11 and PW-15 were not  ’co-accused’ or ’accomplices’ or ’abettors’ of the appellant in regard  to the charge of disproportionate assets. They came into the picture,  only after appellant’s house was raided, in an effort by the appellant  to explain the cash found to an extent of Rs. 2,50,000/-.  

13.     The contention that Ex.P-64 to P-69 and the entries in account  books (Ex.P-70 to P-81) bear the date 24.5.1986 and therefore, they  cannot be relied upon to show that the documents were executed  and entries were made on 30.5.1986 is untenable. PW-11 and PW- 15 clearly and categorically explained the circumstances in which  those documents came into existence on 30.5.1986. Several  circumstances probabilise  their statements. We may refer to them  briefly :-  

i)      There is no evidence to show that the appellant was  negotiating for purchase of any property at Coimbatore or that  he wanted money for purchase of such property. Neither the  particulars of such property at Coimbatore nor the terms of  such sale have been disclosed.  

ii)     The stamp paper on which the alleged mortgage by deposit of  title deeds (Ex. P-69) is of the value of Rs.7/-. It shows that  stamp paper was sold to appellant on 23.5.1986. The case of  the appellant is that the said stamp paper was purchased at  Salem on 23.5.1986. But the stamp paper shows that it was  sold by stamp vendor named P.K. Nagaraja Rao at Karur,  which is a town far away from Salem where PW-11 and PW-15  carried on their business, and far away from Dindigul where  appellant was residing. It is unimaginable that a person  residing in Dindigul and proposing to borrow an amount from  persons carrying on business at Salem would go to Karur to  purchase  a stamp paper of Rs.7/-. On the other hand, it fully  supports the evidence of PW-11 that the appellant’s brothers  wanted an ante-dated stamp paper on 30.5.1986 and PW-11  sent his clerk along with the appellant’s brothers to the Bazar  to procure such ante-dated stamp paper from some stamp  vendor at Salem who apparently kept a stock of such stamp  papers illegally and sold them.  

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iii)    The creation of an equitable mortgage by depositing  documents other than title deeds is not valid or permissible.  We extract below the contents of Ex.P-69  :-   

"On this day, 24th of May, 1986, I have deposited with  you on 23.5.1986, the undermentioned title deeds  belonging to my property namely (1) one plot with  terraced house \026 site bearing (S. No. 8/3) Plot No.10, in  Swarnapuri Extention, Salem - 636 004, with intent by it  in respect of the amount due to you under the pronote  executed by me on for Rs.2,50,000/- with interest at  24% per annum thereon.  

Equitable mortgage in favour of M/s Satramdas Mahesh  Kumar and M/s Pahlaprai Sons, 43-D, First Agaharam,  Salem.  

(R. Janakiraman) Signature  

Details of title deeds handed over for the purpose of  equitable mortgage above said :

Copy of the sale deed in my favour dated ................ Copy of the loan sanction from the Railway Board.

Copy of the sale deed given because original is with  Railways.  

Dated : 24.5.1986 at Salem               (R. Janakiraman)                                                   Signature  ’Sd : Narayana Swamy’

Equitable mortgage is created by depositing the original title deeds.  But in this case, the original title deeds are not deposited. Not even  the two documents referred in Ex. P-69 are deposited. What are  deposited (Ex. P-82 and P-83) were not title deeds but only a  certificate issued by the Swarnapuri Cooperative House Building  Society Ltd., dated 1.2.1984 certifying the appellant is owner of Plot  No. 10, Swarnapuri Extension (Ex.P-82) and two receipts issued by  Tamil Nadu Electricity Board showing that the appellant had paid  some electricity charges (Ex.P-83). PW-11 and PW-15 being  experienced money-lenders, if really were lending Rs.2,50,000/-,   would have certainly insisted upon original title deeds or at least the  documents mentioned in Ex.P-69 being deposited. This shows that  the equitable mortgage was also a ’make-believe’ and not real.  

14.     The recovery of Rs.2,94,115/- in cash from the steel almirahs  of the appellant is not disputed. The appellant does not disown the  amount but admits that it belongs to him. His explanation as to how  he obtained the said money is clearly unacceptable. The persons  from whom he allegedly borrowed the said money, Rs.2,50,000/-,  have denied having lent the said amount. We, therefore, find no  error in the concurrent findings of the trial court and the High Court  that the appellant had not borrowed the said amount from PW-11  and PW-15 and that the same was part of the ill-gotten money  acquired as illegal gratification.  

15.     The appellant having failed to satisfactorily account for the  assets beyond his known sources of income to the said extent of  Rs.2,50,000/-, is guilty of an offence under section 5(1)(e) of the  Act. In view of our said finding, it is really unnecessary to examine  the other disputed amounts namely alleged loan from brothers and

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brothers-in-law (Rs.40,000/-), travelling allowance [Rs. 22,922/60],  bonus [Rs.8,000/-], difference in interest on fixed deposits   [Rs.34,578/37]; and difference in cost of construction (Rs.28,740/-).  We may, however, refer to two other questions on which arguments  were advanced by the learned counsel for the appellant.  

16.  The first relates to his argument that finding in his favour  recorded by the Trial Judge cannot be altered  to his detriment, in  his appeal against conviction. He referred to four items (travelling  allowance, bonus, difference in interest on Fixed Deposits and  difference in cost in valuation of the house) on which the High Court  had reversed the findings of the Special Judge in his favour.  Reliance is placed on the decision of this Court in the State of  Andhra Pradesh vs. Thadi Narayana [1962 (2) SCR 904].

16.1)  We will refer to the facts as also the principles laid down in  Thadi Narayana (supra) to show that they are inapplicable to the  case in hand. In that case, the accused was tried for offences under  sections 302 and 392 Indian Penal Code. The Sessions Judge  acquitted the accused under sections 302 and 392 IPC but convicted  her under section 411 IPC. The accused appealed to the High Court  against the conviction under section 411 IPC. The State did not  appeal against the acquittal in respect of the charges under sections  302 and 392 IPC. The High Court while setting aside the order of  conviction under section 411 IPC also set aside the order of  acquittal under sections 302 and 392 IPC and ordered a retrial on  the original charges. This Court held that while exercising power  under section 423(1)(b) of the old Code of Criminal Procedure   [corresponding to section 386(b) of the new Code] in an appeal  against conviction, the High Court had no jurisdiction to set aside  the order of acquittal passed in favour of the accused by the  Sessions Judge (in respect of the offences under sections 302 and  392 IPC). It was pointed out that as section 423(1)(b) of Cr.P.C.  was confined to appeals  against the orders of conviction and  sentence, what falls for decision in such appeals is only the  conviction and sentence and matters incidental thereto; and if the  order of acquittal is not challenged in an appeal and if the High  Court does not take action in exercise of its powers of revision, the  order of acquittal becomes final and cannot be challenged indirectly  in an appeal by the accused against the order of conviction and  sentence. It was held :-

In a case where several offences are charged against an  accused person the trial is no doubt one; but where the  accused person is acquitted of some offences and convicted of  others the character of the appellate proceedings and their  scope and extent is necessarily determined by the nature of the  appeal preferred before the Appellate Court. If an appeal is  preferred against an order of acquittal by the State and no  appeal is filed by the convicted person against his conviction it  is only the order of acquittal which falls to be considered by the  Appellate Court and not the order of conviction. Similarly, if an  order of conviction is challenged by the convicted person but  the order of acquittal is not challenged by the State, then it is  only the order of conviction that falls to be considered by the  Appellate Court and not the order of acquittal. Therefore the  assumption that the whole case is before the High Court when  it entertains an appeal against conviction is not well-founded  and as such it cannot be pressed into service in construing the  expression "alter the finding".

It was further held that the expression ’alter the finding’ in section  423(1)(b)(2) [corresponding to section 386 (b) (ii) of the new  Code] has only one meaning, and that is alter the finding of  conviction and not the finding of acquittal. This Court then

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proceeded to consider the question as to what are the kinds of  cases in which the power to ’alter the finding’ can be exercised,  thus: -

"The answer to this question is furnished by the provisions of s.  236, 237 and 238. Section 236 deals with cases where it is  doubtful what offence has been committed, Sec. 237 with cases  where a person may be charged with one offence and yet he  can be convicted of another, and s. 238 with cases where the  offence proved includes the offence charged and another  offence not so charged. Where a person is charged with a  major offence, such as for instance under s. 407 of the Indian  Penal Code, he may be convicted either of that offence or of a  minor offence, as for instance under s. 406. That is the result  of s. 238 of the Code. Now, if a trial court charges, and  convicts an accused person of, an offence under s. 407 and  sentences him the Appellate Court may alter the finding of guilt  of the accused from s. 407 to s. 406 and in that case it may  retain the same sentence or reduce it. It is, however, clear that  in exercising the power conferred by s. 423(1)(b)(2) the  sentence imposed on an accused person cannot be enhanced,  and that may mean that the conviction of a minor offence may  not be altered into that of a major offence. In our opinion,  therefore, the power conferred by s. 423(1)(b)(1) is intended  to be exercised in cases falling under ss. 236 to 238 of the  Code. We would accordingly hold that the power conferred by  the expression "alter the finding" does not include the power to  alter or modify the finding of acquittal. The finding specified in  the context means the finding as to conviction, and the power  to alter the finding can be exercised in cases like those which  we have just indicated."

16.2)  The facts of this case are completely different. The Special  Judge convicted and sentenced  the appellant under section 5(1)(e)  read with section 5(2) of the Act. In an appeal by the accused  against the said conviction and sentence, the High Court neither  modified the finding of guilt under Section 5(1)(e) nor the sentence  under Section 5(2). All that it has done is while affirming the finding  of guilt recorded by the Special Judge in regard to the  disproportionate wealth, to recalculate the exact amount of  disproportionate wealth with reference to the evidence, which is   permissible under section 386(b)(ii) which provides that the  appellate court may, in an appeal from a conviction, alter the  finding, maintaining the sentence. If an appellate court may alter  the finding of guilt of the accused from one section to another, while  maintaining the sentence, we see no reason why the extent of the  offence should not be changed in an appeal against conviction. We  are, therefore, of the view that the High Court did not exceed its  jurisdiction in exercising the power of appeal under section 386 IPC.  

17.     The second question is in regard to the claim of the appellant  that travelling allowance should be treated as income. The appellant  submitted that he had received, in all, a sum of Rs.22,922.60 as  travelling allowance during the check period and the said amount  should be taken under the head  of receipt/income during that  period. This Court in C.S.D. Swami v. The State [AIR 1960 SC 7]  has held that prosecution would not be justified in concluding that  travelling allowance was also a source of income (for the purpose of  ascertaining the income from known sources during the check  period) as such allowance is ordinarily meant to compensate the  officer concerned for his out-of pocket expenses incidental to the  journeys performed by him for his official tour/s. As traveling  allowance is not a source of income to the Government servant but  only a compensation to meet his expenses, the prosecution while  calculating the sources of income during the check period,  need not

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take it into account as income. However, it is open to the  Government servant to let in evidence to show that he had in fact  saved something out of the travelling allowance. It is for the court  then to accept or not whether there was such actual saving. But the  question of automatically considering the entire travelling allowance  as a source of income does not arise. In this case, as the appellant  did not lead any specific evidence to show that he had made any  savings from out of the travelling allowance, the claim for inclusion  of TA in income, is untenable.  

18.     The appeal has no merit and is, accordingly, dismissed.