Madras High Court
The State Represented By vs M.R.K.Panneerselvam on 25 April, 2025
Author: P.Velmurugan
Bench: P.Velmurugan
Crl.R.C.Nos.583 to 585 of 2016
IN THE HIGH COURT OF JUDICATURE AT MADRAS
RESERVED ON : 03.01.2025
PRONOUNCED ON : 25.04.2025
CORAM:
THE HONOURABLE MR. JUSTICE P.VELMURUGAN
Crl.R.C.Nos.583 to 585 of 2016
The State represented by
The Inspector of Police,
Vigilance & Anti-Corruption,
Cuddalore
(Crime No.8/2011) . ..Petitioner in all the Revisions
Vs.
M.R.K.Panneerselvam ...Respondent in Crl.R.C.No.583/16
P.Kathiravan ...Respondent in Crl.R.C.No.584/16
P.Senthamizhselvi ...Respondent in Crl.R.C.No.585/16
Prayer in all the Revisions: Criminal Revision Cases filed under Section 397
read with Section 401 of Cr.P.C. to set aside the common order passed by
the learned Special Judge/Chief Judicial Magistrate, Cuddalore, in
Crl.M.P.Nos.146, 147 and 148 of 2013 in Spl.S.C.No.03 of 2012, dated
03.02.2016.
1/50
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For Petitioner : Mr.J.Ravindran, AAG, Assisted by
Mr.S.Vinoth Kumar,
Govt. Advocate (Crl.Side)
– in all the RCs
For Respondents : Mr.R.Singaravelan, Senior Advocate
for Mr.C.Prakasam
in Crl.R.C.Nos.583 to 585/2016
******
COMMON ORDER
All these criminal revisions have been filed by the State against the
order of the learned Special Judge / Chief Judicial Magistrate, Cuddalore,
whereby, all the respondents were discharged from the case against them in
Spl.C.Nos.03 of 2012. Since all the criminal revisions arise out of the
common order passed by the learned Special Judge, they are disposed of by
this common order.
2 Based on the information received by the authorities, a case
was registered in Cr.No.08 of 2011 against Mr.M.R.K.Panneerselvam, for
the offence under Section 13(2) r/w 13(1)(e) of the Prevention of
Corruption Act, 1988, (in short 'the PC Act'). After completing
investigation, charge sheet was laid against Mr.M.R.K.Panneerselvam, his
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wife and his son arraying them as A1 to A3 and the same was taken on file
in Spl.C.No.3 of 2012 alleging that Mr.M.R.K.Panneerselvam, who is A1,
while serving as the Member of Legislative Assembly during the period
between 15.04.2006 and 21.03.2011, had acquired and had been in
possession of pecuniary resources and properties in his name and in the
name of his family members far beyond his known source of income and A2
and A3 who are wife and son of A1, abetted the first accused to commit the
said offence.
3 Pending the above case, the respondents herein have filed
separate petitions in Crl.M.P.Nos.146 to 148 of 2013 under Section 239
Cr.P.C. seeking discharge. The learned Special Judge, Cuddalore, after
hearing the respective counsel, by a common order dated 03.02.2016
allowed all the petitions and discharged the respondents/A1 to A3.
4 Aggrieved over the order of the learned Special Judge,
discharging all the accused, the State has preferred these criminal revisions
before this Court.
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5 Learned Additional Advocate General assisted by the learned
Government Advocate (Crl.Side) would submit that
Mr.M.R.K.Panneerselvam-A1, was a Minister for Backward Classes
Welfare, Government of Tamilnadu, during the period from 13.05.1996 to
14.05.2001 and subsequently he was also holding a post of Member of
Legislative Assembly during the period from 2006 to 2011. During the
period between 15.04.2006 to 21.03.2011 he had been in possession of
pecuniary resource and properties in his name and in the name of his family
members far beyond his known source of income. During the relevant point
of time, A1 was a public servant within the meaning of Section 2(c) of the
PC Act. The available materials viz. the statements recorded from the
witnesses and documents collected during investigation would go to show
that there are legal and consistent evidence to prove that the properties and
pecuniary resources held by the accused had been acquired by illegitimate
source.
5.1 The trial Court wrongly calculated the income of A1 on the
higher side from the agricultural land and other business. The first accused,
on behalf of other accused, while offering his explanation to the final
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opportunity notice, did not produce any tangible satisfactory material to
indicate that A2 and A3 were having sufficient independent income to
acquire the massive amount of assets standing in their names. Further it is
for the accused to establish that the purchase of assets is lawful and from
and out of known sources, but in the present case there is no evidence to
show that A2 had acquired the property standing in her name from the
source of her parent either before or after marriage and during the entire
period of her acquisition of property A1 alone was the earning member of
the family.
5.2 The learned trial Judge erroneously made a finding that the
income tax returns filed by the accused are legal documents and the income
of all the accused had been assessed by filing separate income tax return
and per which, there is no disproportionate assets as alleged by the
prosecution. Further, the learned trial Judge erroneously arrived at a
conclusion that the clubbing of properties can be possible only in the way as
shown in Sections 60 and 64 of the Income Tax Act. But, the provisions of
Income Tax Act are only for computing the return of assessee and concern
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of income tax authorities is only tax the income of a person without any
evasion and it is not their duty to analyse whether the income is from lawful
or unlawful source. Only the provisions of PC Act will go into the question
of whether the income of public servant is lawful or unlawful. Therefore the
finding of the learned trial Judge is incorrect.
5.3 The trial Court erroneously made a finding that assets and
income of Deivasigamani, who is the paternal uncle of A1 had been added
to the assets of A1, but he has not been added as an accused. It is to be
noted that since A1's income, expenditure and acquisition of properties are
interwoven with the properties of Deivasigamani and prosecution has taken
them into consideration. Further since the said Deivasigamani did not
possess any assets disproportionate to the known source of his income, he
has not been added as an accused. Therefore discharge of the accused on the
ground of non inclusion of the said person as accused, is unsustainable.
5.4 The Special Court erroneously concluded that prosecution did
not seek clarification from A1 to A3, but the fact is that the investigating
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officer issued final opportunity notice to all the three accused and A1 alone
responded by giving clarification for himself and on behalf of other
accused, which also duly considered by the investigating officer.
5.5 The trial Court making an analysis of evidence and the
question of reliability, entered into a calculation and charted the table of
calculation and arrived at a finding that there is no disproportionate assets
as alleged by the prosecution, which is not permissible under law and is not
sustainable. In this regard prosecution placed reliance on the following
decisions of the Hon'ble Supreme Court:
1. 1999 SCC (Crl) 373 Anti-Corruption Bureau vs. Surya Prakash
2. AIR 1980 SC 52 Superintendent & Remembrancer, Legal Affairs vs.
Anil Kumar Bhunja
3. 1999 SAR 804 Nallammal & Ors vs. State of Tamil Nadu
4. (2010) 9 SCC 368 Sajjan Kumar vs. CBI
5.6 Quoting the above judgments, learned Additional Advocate
General contended that at the time of framing of charges, the probative
value of the material brought on record by the prosecution cannot be gone
into and before framing of charges, the Court must apply its judicial mind
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on the material placed by the prosecution and must be satisfied that the
commission of offence by the accused was possible. Therefore it is
erroneous to predicate that the prosecution should also disprove the
existence of the possible sources of income of the public servant and mere
grave suspicion would suffice to frame a charge, but in this case more than
prima facie materials were produced before the Special Court and the
Special Court without considering the same discharged all the accused,
which warrants interference of this Court.
5.7 The learned Special Judge, has on an erroneous understanding
of law, conducted a mini trial at the time of dealing with the petition under
Section 239 Cr.P.C. seeking discharge and appreciated the evidence on
record and discharged the accused without considering the parameter laid
down by the Hon'ble Supreme Court.
5.8 Furthermore there is absolutely no explanation from the
accused regarding the properties covered under documents 32 to 42 and 50
that they belong to the Trust and it was portrayed by them for the first time
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while arguments were being advanced in the discharge petitions. The trial
Court without considering the above fact concluded that prosecution in
order to exaggerate the percentage of the disproportionate assets added the
properties standing in the name of the Trust, which is unsustainable. In this
regard support of his contention, the learned Additional Advocate General
has referred the decision of the Hon'ble Supreme Court in the case of State
vs. Bangarappa reported in (2001) 1 SCC 369, wherein it was held that if
the accused fails to come forward with proper explanation, the prosecution
need not wait and it can proceed further and the accused can complete his
explanation during trial.
5.9 Further the learned Special Judge erred in noting that A3 acted
as Benami for A1, whereas the allegation against A3 is that he has abetted
A1 to acquire the disproportionate assets. The learned Special Judge also
erred in coming to the conclusion that the Inspector of Police is incompetent
to investigate the matter, but the Inspector of Police was authorised by the
Government to conduct investigation in terms of Section 17 of the PC Act.
The learned Magistrate failed to consider the materials produced by the
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Investigating Officer and also the law laid down by the Hon'ble Supreme
Court and traversed beyond the scope and object of Section 239 Cr.P.C. by
erroneously passing the order of discharge, which warrants interference.
6 Learned Senior Counsel for the respondents would submit that
A1 was former Minister of Backward Classes Welfare during the period
from 15.04.2006 to 20.03.2011 and he hails from very affluent family from
Muttam Village in Kattumannar Koil Taluk, Cuddalore District. His father
M.R.Krishnamurthi owned agricultural lands of about 65 Acres and was
harvesting 3 crops and thereby earned huge income through agriculture. A1
is a law Graduate and he is the only son to his father. During the check
period he has not acquired any property and the case was registered against
him and his wife only due to political motive.
6.1 The respondent along with other accused, belongs to Hindu
Undivided Family and they are doing textile and Brick business and also
Agriculture in their own lands and from mortgaged lands. They are
cultivating a total extent of 175 acres of land. A2, who is the wife of A1, is
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a native of Edmanal Village, near Sirkali and she also hails from very rich
agricultural family and also Bus owner and their marriage took place in the
year 1985. At the time of their marriage and even after the marriage A2 was
in possession of huge monies and sufficient resources. She was also earning
money independently by running Transport Company. Whatever the
properties standing in the name of A2 and A3 and also monies are the
individual assets, which were derived from individual sources of income
not from the source of A1. The Investigating Officer failed to consider the
backgrounds of the accused and also their source of income and laid the
charge sheet with an ulterior motive.
6.2 The inclusion of assets standing in the name of A2 and A3 with
the assets of A1 is illegal. The assets of A2 and A3 do not belong to A1 and
they have independent source of income. The methodology adopted by the
prosecution to establish the possession of disproportionate assets by the
accused with reference to known source of income is absolutely erroneous.
The clubbing of the properties of other accused with A1 is absolutely not
sustainable. A1 cannot be asked to explain the source of income of others
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for the properties standing in their names, over which, A1 has no claim or
control. A1 has nothing to do with the properties standing in the name of his
family members, who are having independent source of income. The
Investigating Officer failed to consider the same and wrongly clubbed the
properties standing in the name of A2 and A3 with the assets of A1. In the
absence of any evidence showing that the properties standing in the name
of A2 and A3 have been purchased out of the income of A1, clubbing of
assets held by others with A1 is absolutely erroneous. A2 has acquired
properties from and out of her own resources and A3 also has a separate
source of income to acquire properties. Considering the backgrounds of the
accused and their source of income, assets held by them are not
disproportionate as alleged by the prosecution. The prosecution failed to
consider all these aspects and in order to wreak vengeance of the political
party, a false case was foisted and unfortunately prosecution also carried out
the assignment given by the then Ruling Party.
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6.3 Further, the learned Senior Counsel for the
respondents/accused contended that in this case, the Inspector of Police
prepared the complaint and registered the case on 03.10.2011 and to
substantiate the allegations in the complaint, he himself took up the
investigation and filed the final report on 18.06.2012, which is legally
incorrect. It is well settled legal position that the officer, who registered the
case should not investigate the case and he should not have conducted the
investigation without prior sanction from the officer not below the rank of
Superintendent of Police as required under Section 17 of the PC Act. There
is no iota of evidence on records produced by the prosecution to show that
the money flew from A1 to A2 and his son A3 for the acquisition of assets
in their names and in the absence of such evidence the assets standing in the
name of A2 and A3 cannot be clubbed with the assets of A1, which would
amount to miscarriage of justice. Therefore the learned Magistrate
considering the facts and evaluating the materials, rightly discharged the
respondents/accused, which does not call for any interference of this Court.
To support the contentions, the learned Senior Counsel placed reliance on
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the following decisions decisions of the Hon'ble Apex Court and this court:
1. Century Spinning and Manufacturing C. Ltd., vs. The State of
Maharashtra (AIR 1972 SC 545)
2. Kalaiselvi vs. The State (2004 (2) CTC 180)
3. Yogesh Alias Sachin Jagdish Joshi vs. State of Maharashtra ((2008)
16 SCC 605)
4. Chitresh Kumar Chopra vs. State (Government of NCT of Delhi)
((2009) 16 SCC 605)
5. P.Vijayan vs. State of Kerala and Another ((2010) 2 SCC 398)
6. K.Thavasi vs. State (2014 (3) MWN (Cr.)70
7. Ghulam Hassan Beigh vs. Mohammad Maqbool Margrey and Ors
(2022) 12 SCC 657
8. Vishnu Kumar Shukla and Another vs. State of Uttar Pradesh and
Another (AIR Online 2023 SC 946)
9. Ram Prakash Chadha vs. State of Uttar Pradesh (AIR Online 2024
SC 480)
6.4 It is unfortunate to note that the prosecution has miserably
failed to even find out the real nature of the properties whether Hindu
Undivided Family or Trust by collecting necessary documents at the time of
investigation. Because of the gross failure on the part of the prosecution and
the total non application of mind the burden may fall on the person accused
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of the offence related to disproportionate assets and he may be compelled to
be a witness against himself to prove that Hindu Undivided Family
properties or assets are added along with his individual properties by
producing necessary documents, which is against the fundamental right
guaranteed to them under Article 20(3) of the Constitution of India. In this
regard the learned Senior Counsel placed reliance on the following
decisions of the Hon'ble Supreme Court:
1. M.P.Sharma vs. Staish Chandra (1954) 1 SCC 385
2. State of Bombay vs. Kathi Kalu Oghad 1961 SCC Online SC 74
3. State of Gujarat vs. Shyamlal Mohanlal Choksi and another 1964
SCC Online SC 41
4. State of Uttar Pradesh vs. Boota Singh and Ors (1979) 1 SCC 31
6.5 Further he would submit that the accused have properly filed
income tax returns and duly accounted for the assets and liabilities. Even
though the Investigating Officer failed to consider the same, the learned
Magistrate rightly appreciated the materials and also found that there is no
prima facie case against the accused and rightly discharged them. Therefore
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there is no merit in the revision petitions and the same are liable to be
dismissed.
7 Heard the learned Additional Advocate General assisted by the
learned Government Advocate (Crl.Side) appearing for the petitioner/State
and the learned Senior Counsel for the respondents/accused and perused the
materials available on record.
8 Admittedly in this case, during the relevant point of time, A1
was a public servant and A2 is the wife and A3 is the son of A1. Based on
the reliable information, the Investigating Officer collected materials and
formed an opinion that there were suspected disproportionate assets held by
the accused. Hence final opportunity notice was issued on 19.04.2012 to A1
to A3 calling for explanation and A1 alone responded to the notice by
giving reply for himself and on behalf of A2 and A3. The Investigating
Officer, took note of the explanation and based on the materials collected
during investigation, found A1 was not able to satisfactorily account for the
assets held in his name and in the name of his family members and came to
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the conclusion that the assets standing in the name of A1 and his family
members were disproportionate to his known source of income. However
the trial Court has erroneously made an observation that the prosecution has
not given sufficient opportunity to the accused to submit their explanation,
which is contrary to the record and the observation of the trial Court is
factually incorrect and legally unsustainable.
9 Further, if at all, the property belongs to a Hindu Undivided
Family and A1 and A2 belong to wealthy family and A1 to A3 are yielding
income through through their independent business, it should have been
disclosed by A1 while he was provided considerable time by the
Investigating Officer and A1 should have satisfactorily accounted the assets
and the pecuniary resources by offering his explanation, but he failed to
utilise the opportunity and therefore it is clear that the defence taken by the
accused is only an afterthought and only for the purpose of this case.
10 It is settled proposition of law that at the time of framing
charges, the Court has to see the final report filed by the prosecution and the
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materials viz. statement of witnesses and also documents collected by the
prosecution during investigation and if the same prima facie reveals that
there is sufficient material to proceed with the case further and the Court
has to frame charges against the accused. Further at the time of framing
charges, the Court has to look into the materials produced by the
prosecution and not the defence taken by the accused or the documents
relied upon by the accused. Further the Court cannot go into the probative
value of the materials produced by the prosecution and validity and veracity
of the same cannot be examined at the stage of framing charges, which can
only be done during trial.
11 At this juncture, it would be useful to refer to the judgement of
the Hon'ble Supreme Court in the case of Superintendent and
Remembrancer of Legal Affairs, West Bengal vs. Anil Kumar Bhunja and
Ors reported in (1979) 4 SCC 274, wherein the Hon'ble Supreme Court has
held as follows:
“18.It may be remembered that the case was at the stage
of framing charges; the prosecution evidence had not yet
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commenced. The Magistrate had, therefore, to consider the
above question on a general consideration of the materials
placed before him by the investigating police officer. At this
stage, as was pointed out by this Court in State of
Bihar v. Ramesh Singh [(1977) 4 SCC 39 : 1977 SCC (Cri) 533 :
AIR 1977 SC 2018] the truth, veracity and effect of the evidence
which the prosecutor proposes to adduce are not to be
meticulously judged. The standard of test, proof and judgment
which is to be applied finally before finding the accused guilty
or otherwise, is not exactly to be applied at the stage of Section
227 or 228 of the Code of Criminal Procedure, 1973. At this
stage, even a very strong suspicion founded upon materials
before the Magistrate, which leads him to form a presumptive
opinion as to the existence of the factual ingredients constituting
the offence alleged, may justify the framing of charge against the
accused in respect of the commission of that offence.
12 The Hon'ble Supreme Court, in the case of State of Karnataka
vs. M.R.Hiremath reported in (2019) 7 SCC 515, held as follows:
25. The High Court ought to have been cognizant of the
fact that the trial court was dealing with an application for
discharge under the provisions of Section 239 CrPC. The
parameters which govern the exercise of this jurisdiction have
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found expression in several decisions of this Court. It is a settled
principle of law that at the stage of considering an application
for discharge the court must proceed on the assumption that the
material which has been brought on the record by the
prosecution is true and evaluate the material in order to
determine whether the facts emerging from the material, taken on
its face value, disclose the existence of the ingredients necessary
to constitute the offence. In State of T.N. v. N. Suresh Rajan [State
of T.N. v. N. Suresh Rajan, (2014) 11 SCC 709 : (2014) 3 SCC
(Cri) 529 : (2014) 2 SCC (L&S) 721] , adverting to the earlier
decisions on the subject, this Court held : (SCC pp. 721-22, para
29)
“29. … At this stage, probative value of the materials has to be
gone into and the court is not expected to go deep into the matter
and hold that the materials would not warrant a conviction. In
our opinion, what needs to be considered is whether there is a
ground for presuming that the offence has been committed and
not whether a ground for convicting the accused has been made
out. To put it differently, if the court thinks that the accused might
have committed the offence on the basis of the materials on
record on its probative value, it can frame the charge; though for
conviction, the court has to come to the conclusion that the
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accused has committed the offence. The law does not permit a
mini trial at this stage.”
13 Further the Hon'ble Apex Court in the case of State (NCT of
Delhi) Vs. Shiv Charan Bansal And Others reported in (2020) 2 SCC 290
held as follows :
'' Findings and analysis
38. At the stage of framing charges under Section 227 and
Section 228 Cr.P.C, the Court is required to consider whether
there was sufficient material on record to frame charges against
Shiv Charan Bansal, Shailendra Singh, Lalit Mann and Rajbir
Singh. The prosecution alleged that the offences under Section 120-
B, Section 302 read with Sections 120-B/34, Section 201 IPC and
Section 25 of the Arms Act ought to have been framed.
I. Scope of Section 227 and 228 of the Cr.P.C.
39. The Court while considering the question of framing
charges under Section 227 Cr.P.C has the power to sift and weigh
the evidence for the limited purpose of finding out whether or not a
prima facie case has been made out against the accused. The test to
determine prima facie case would depend upon the facts of each
case. If the material placed before the court discloses grave
suspicion against the accused, which has not been properly
explained, the court will be fully justified in framing charges and
proceeding with the trial. The probative value of the evidence
brought on record cannot be gone into at the stage of framing
charges. The Court is required to evaluate the material and
documents on record with a view to find out if the facts emerging
therefrom taken at their face value disclose the ingredients
constituting the alleged offence. At this stage, there cannot be a
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roving enquiry into the pros and cons of the matter, the evidence is
not to be weighed as if a trial is being conducted. Reliance is
placed on the Judgment of this Court in State of Bihar v. Ramesh
Singh1 where it has been held that at the stage of framing charges
under Sections 227 or 228 Cr.P.C., if there is a strong suspicion
which leads the Court to think that there is ground for presuming
that the accused had committed the offence, then the Court should
proceed with the trial.
40. In a recent Judgment delivered in Dipakbhai
Jagdishchandra Patel v. State of Gujarat and Another decided on
24.04.2019, this Court has laid down the law relating to framing of
charges and discharge, and held that all that is required is that the
court must be satisfied with the material available, that a case is
made out for the accused to stand trial. A strong suspicion is
sufficient for framing charges, which must be founded on some
material. The material must be such which can be translated into
evidence at the stage of trial. The veracity and effect of the evidence
which the prosecutor proposes to adduce are not to be meticulously
judged at this stage, nor is any weight to be attached to the
probable defence of the accused at the stage of framing charges.
The court is not to consider whether there is sufficient ground for
conviction of the accused, or whether the trial is sure to end in the
conviction.''
14 Therefore at the stage of framing of charges, the truth, veracity
and effect of the evidence produced by the prosecution need not be
meticulously judged. The learned Special Judge ought to have given an
opportunity to the prosecution to let in evidence during trial to prove its
version and substantiate the materials collected during the investigation.
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15 Further the Hon'ble Supreme Court, in the case of State of
Madhya Pradesh vs. Mohanlal Soni reported in (2000) 6 SCC 338,
reiterating the above, held that at the stage of framing charges, the Court
has to consider whether prima facie there is sufficient material for
proceeding against the accused and the court is not required to appreciate
evidence to conclude whether the materials produced by the prosecution are
sufficient or not for convicting the accused. In the present case, it is seen
that the learned Special Judge, discharged the accused by elaborately
discussing the income of the accused and found that there is nothing
disproportionate to the known source of the accused as alleged by the
prosecution, which is not permissible under law. If the court is satisfied that
prima facie materials are available for proceeding further then charge has to
be framed against the accused.
16 Yet another contention of the learned Senior Counsel is that
the prosecution’s methodology in establishing disproportionate assets is
flawed. The clubbing of properties belonging to other accused viz. A2 and
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A3, with A1’s assets is unsustainable. A1 cannot be held responsible for
properties in the names of individuals over whom he has no claim or
control, especially when these properties were acquired from their
independent income. The Investigating Officer wrongly linked these assets
to A1 without any evidence to the extent that they were purchased with his
income. The Trial Court held that the prosecution, only to boost the
expenses and to add the value of disproportionate income, clubbed the
assets of A2 and A3 along with assets of A1. In this context, it is pertinent
to refer to the meaning of the expression "known sources of income," as
explained by the Hon'ble Apex Court in the case of C.S.D. Swami v. State
[AIR 1960 SC 7], wherein it has been observed as follows:
" Now, the expression 'known sources of income' must have
reference to sources known to the prosecution on a thorough
investigation of the case. It was not, and it could not be,
contended that 'known sources of income' means sources known
to the accused. The prosecution cannot, in the very nature of
things, be expected to know the affairs of an accused person.
Those will be matters 'specially within the knowledge' of the
accused, within the meaning of Section 106 of the Evidence Act."
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17 Further, the Hon’ble Supreme Court, in a recent judgment in
the case of State of Tamil Nadu v. R.Soundirarasu [2023 (6) SCC 768],
reiterated the aforesaid principle and held as follows:
"While the expression ‘known sources of income’ refers to
the sources known to the prosecution, the expression ‘for which
the public servant cannot satisfactorily account’ refers to the
onus or burden on the accused to satisfactorily explain and
account for the assets found to be possessed by the public
servant. This burden lies on the accused, as the said facts are
within his special knowledge. Section 106 of the Evidence Act
applies. The Explanation to Section 13(1)(e) is a procedural
provision which seeks to define the expression ‘known sources of
income’ as sources known to the prosecution and not to the
accused."
18 In the present case, admittedly, the first accused was issued a
notice dated 19.04.2012, affording him an opportunity to offer his
explanation. In response, the first accused offered his explanation for
himself and on behalf of A2 and A3. Whether the properties in question
were acquired from the income of the first accused or are the independent
properties of the respondents is also an issue that can be determined only
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upon full appreciation of evidence during the trial and not at the stage of
deciding a petition seeking discharge.
19 One of the main reasons of the trial court to discharge the
accused is that the accused had filed separate income tax returns during the
check period, which the trial judge took as proof of their financial
independence. However, this reasoning is flawed. Mere filing of income tax
returns does not prove that the assets were lawfully acquired especially
when benami (proxy) transactions are suspected. It is pertinent to note that
the Income Tax Department reviews returns for tax compliance by the
individual, but this case was initiated by the Vigilance and Anti-Corruption
Department, not by the tax authorities. The allegations involve corruption
and possession of assets beyond known income, which fall under the
Vigilance Department’s jurisdiction. If at all A1 to A3 reported their
finances to the Income Tax department, that does not prevent the Vigilance
Department from conducting its own investigation against corruption. The
two departments have different roles: the Income Tax department focuses
on tax matters, while Vigilance and Anti Corruption investigates corruption. Just
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because the tax department accepted a returns, does not mean the assets are
automatically legal, when a case is for the offence under the PC Act. If the
Vigilance Department finds that the assets are disproportionate to the
known source of income, it can proceed with the legal action regardless of
what the tax department has done. At this juncture, it would be useful to
refer the decision of the Hon'ble Supreme Court in the case of State of
Tamil Nadu vs. N.Suresh Rajan and Ors reported in (2014) 11 SCC 709,
wherein it is held as follows:
“The property in the name of an income tax assessee itself
cannot be a ground to hold that it actually belongs to such an
assessee. In case this proposition is accepted, in our opinion, it will
lead to disastrous consequences. It will give opportunity to the
corrupt public servants to amass property in the name of known
persons, pay income tax on their behalf and then be out from the
mischief of law.”
20 Further the Hon'ble Supreme Court in its judgment in the case
of State of Karnataka Vs. J.Jayalalitha reported in (2017) 6 SCC 263 has
held as follows:
“190. The decision is to convey that though the IT returns and
the orders passed in the IT proceedings in the instant case recorded
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the income of the accused concerned as disclosed in their returns, in
view of the charge levelled against them, such returns and the orders
in the IT proceedings would not by themselves establish that such
income had been from lawful source as contemplated in the
Explanation to Section 13(1)(e) of the PC Act, 1988 and that
independent evidence would be required to account for the same.
191. Though considerable exchanges had been made in course
of the arguments, centring around Section 43 of the Evidence Act,
1872, we are of the comprehension that those need not be expatiated
in details. Suffice it to state that even assuming that the income tax
returns, the proceedings in connection therewith and the decisions
rendered therein are relevant and admissible in evidence as well,
nothing as such, turns thereon definitively as those do not furnish
any guarantee or authentication of the lawfulness of the source(s) of
income, the pith of the charge levelled against the respondents. It is
the plea of the defence that the income tax returns and orders, while
proved by the accused persons had not been objected to by the
prosecution and further it (prosecution) as well had called in
evidence the income tax returns/orders and thus, it cannot object to
the admissibility of the records produced by the defence. To
reiterate, even if such returns and orders are admissible, the
probative value would depend on the nature of the information
furnished, the findings recorded in the orders and having a bearing
on the charge levelled. In any view of the matter, however, such
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returns and orders would not ipso facto either conclusively prove or
disprove the charge and can at best be pieces of evidence which have
to be evaluated along with the other materials on record. Noticeably,
none of the respondents has been examined on oath in the case in
hand. Further, the income tax returns relied upon by the defence as
well as the orders passed in the proceedings pertaining thereto have
been filed/passed after the charge-sheet had been submitted.
Significantly, there is a charge of conspiracy and abetment against
the accused persons. In the overall perspective therefore neither the
income tax returns nor the orders passed in the proceedings
relatable thereto, either definitively attest the lawfulness of the
sources of income of the accused persons or are of any avail to them
to satisfactorily account the disproportionateness of their pecuniary
resources and properties as mandated by Section 13(1)(e) of the Act.
192. A Constitution Bench of this Court in Iqbal Singh
Marwah v. Meenakshi Marwah [Iqbal Singh Marwah v. Meenakshi
Marwah, (2005) 4 SCC 370 : 2005 SCC (Cri) 1101] in this context
had ruled 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 on the other as both the cases have to be
decided on the basis of the evidence adduced therein.
......
196. This Court ruled that the fact that the accused, other than
the two Ministers, had been assessed to income tax and had paid
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income tax could not have been relied upon to discharge the accused
persons in view of the allegation made by the prosecution that there
was no separate income to amass such huge property. It was
underlined that the property in the name of the income tax assessee
itself cannot be a ground to hold that it actually belongs to such an
assessee and that if this proposition was accepted, it would lead to
disastrous consequences. This Court reflected that in such an
eventuality it will give opportunities to the corrupt public servant to
amass property in the name of known person, pay income tax on their
behalf and then be out from the mischief of law.
21 In view of the above decisions made by the Hon'ble Supreme
Court, in the present case, merely the accused have filed income tax returns,
they cannot be allowed to escape from the clutches of law unless the same is
proved with sufficient materials in the manner known to law.
22 The learned Senior Counsel appearing for the respondents
submitted that the present case has been foisted with political malice, and
that the complaint, being motivated by rivalry, ought not to have formed the
basis for initiating prosecution. It was contended that the charge sheet has
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been filed without due consideration of the relevant materials, and that the
allegation of disproportionate assets has not been satisfactorily
substantiated. However, the mere allegation of malafides or political
animosity cannot, by itself, be a ground for quashing the proceedings or
discharging the accused. Once the Investigating Officer registers a case,
conducts investigation, and files a charge sheet finding prima facie material,
it is for the Court to assess whether there is sufficient ground to proceed.
The Court is then to frame charges and allow the prosecution to establish its
case by leading evidence. In this context, it would be useful to refer to the
decision of the Hon’ble Supreme Court in State of M.P. v. Awadh Kishore
Gupta & Ors., [(2004) 1 SCC 691], wherein it was held that the veracity of
the allegations and the motive behind the complaint are matters to be tested
during trial and cannot be the sole basis for pre-trial intervention.
“8. Exercise of power under Section 482 of the Code in a case
of this nature is an exception and not the rule. The section does
not confer any new powers on the High Court. It only saves the
inherent power which the Court possessed before the
enactment of the Code. It envisages three circumstances under
which the inherent jurisdiction may be exercised, namely, (i) to
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give effect to an order under the Code, (ii) to prevent abuse of
the process of court, and (iii) to otherwise secure the ends of
justice. It is neither possible nor desirable to lay down any
inflexible rule which would govern the exercise of inherent
jurisdiction. No legislative enactment dealing with procedure
can provide for all cases that may possibly arise. Courts,
therefore, have inherent powers apart from express provisions
of law which are necessary for proper discharge of functions
and duties imposed upon them by law. That is the doctrine
which finds expression in the section which merely recognizes
and preserves inherent powers of the High Courts. All courts,
whether civil or criminal, possess, in the absence of any
express provision, as inherent in their constitution, all such
powers as are necessary to do the right and to undo a wrong in
the course of administration of justice on the principle quando
lex aliquid alicui concedit, concedere videtur id sine quo res
ipsa esse non potest (when the law gives a person anything it
gives him that without which it cannot exist). While exercising
powers under the section, the Court does not function as a
court of appeal or revision. Inherent jurisdiction under the
section though wide has to be exercised sparingly, carefully
and with caution and only when such exercise is justified by the
tests specifically laid down in the section itself. It is to be
exercised ex debito justitiae to do real and substantial justice
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for the administration of which alone courts exist. Authority of
the court exists for advancement of justice and if any attempt is
made to abuse that authority so as to produce injustice, the
court has power to prevent such abuse. It would be an abuse of
process of the court to allow any action which would result in
injustice and prevent promotion of justice. In exercise of the
powers, court would be justified to quash any proceeding if it
finds that initiation/continuance of it amounts to abuse of the
process of court or quashing of these proceedings would
otherwise serve the ends of justice. When no offence is
disclosed by the complaint, the court may examine the question
of fact. When a complaint is sought to be quashed, it is
permissible to look into the materials to assess what the
complainant has alleged and whether any offence is made out
even if the allegations are accepted in toto.
9. In R.P. Kapur v. State of Punjab [AIR 1960 SC 866 : 1960
Cri LJ 1239] this Court summarized some categories of cases
where inherent power can and should be exercised to quash the
proceedings:
(i) where it manifestly appears that there is a legal bar against
the institution or continuance e.g. want of sanction;
(ii) where the allegations in the first information report or
complaint taken at their face value and accepted in their
entirety do not constitute the offence alleged;
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(iii) where the allegations constitute an offence, but there is no
legal evidence adduced or the evidence adduced clearly or
manifestly fails to prove the charge.
10. In dealing with the last case, it is important to bear in mind
the distinction between a case where there is no legal evidence
or where there is evidence which is clearly inconsistent with
the accusations made, and a case where there is legal evidence
which, on appreciation, may or may not support the
accusations. When exercising jurisdiction under Section 482 of
the Code, the High Court would not ordinarily embark upon an
enquiry whether the evidence in question is reliable or not or
whether on a reasonable appreciation of it accusation would
not be sustained. That is the function of the trial Judge.
Judicial process, no doubt, should not be an instrument of
oppression or needless harassment. Court should be
circumspect and judicious in exercising discretion and should
take all relevant facts and circumstances into consideration
before issuing process, lest it would be an instrument in the
hands of a private complainant to unleash vendetta to harass
any person needlessly. At the same time the section is not an
instrument handed over to an accused to short-circuit a
prosecution and bring about its sudden death. The scope of
exercise of power under Section 482 of the Code and the
categories of cases where the High Court may exercise its
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power under it relating to cognizable offences to prevent abuse
of process of any court or otherwise to secure the ends of
justice were set out in some detail by this Court in State of
Haryana v. Bhajan Lal [1992 Supp (1) SCC 335 : 1992 SCC
(Cri) 426] . A note of caution was, however, added that the
power should be exercised sparingly and that too in the rarest
of the rare cases. The illustrative categories indicated by this
Court are as follows : (SCC pp. 378-79, para 102)
“(1) Where the allegations made in the first information report
or the complaint, even if they are taken at their face value and
accepted in their entirety do not prima facie constitute any
offence or make out a case against the accused.
(2) Where the allegations in the first information report and
other materials, if any, accompanying the FIR do not disclose a
cognizable offence, justifying an investigation by police
officers under Section 156(1) of the Code except under an
order of a Magistrate within the purview of Section 155(2) of
the Code.
(3) Where the uncontroverted allegations made in the FIR or
complaint and the evidence collected in support of the same do
not disclose the commission of any offence and make out a case
against the accused.
(4) Where, the allegations in the FIR do not constitute a
cognizable offence but constitute only a non-cognizable
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offence, no investigation is permitted by a police officer
without an order of a Magistrate as contemplated under
Section 155(2) of the Code.
(5) Where the allegations made in the FIR or complaint are so
absurd and inherently improbable on the basis of which no
prudent person can ever reach a just conclusion that there is
sufficient ground for proceeding against the accused.
(6) Where there is an express legal bar engrafted in any of the
provisions of the Code or the Act concerned (under which a
criminal proceeding is instituted) to the institution and
continuance of the proceedings and/or where there is a specific
provision in the Code or the Act concerned, providing
efficacious redress for the grievance of the aggrieved party.
(7) Where a criminal proceeding is manifestly attended with
mala fides and/or where the proceeding is maliciously
instituted with an ulterior motive for wreaking vengeance on
the accused and with a view to spite him due to private and
personal grudge.”
11. As noted above, the powers possessed by the High Court
under Section 482 of the Code are very wide and the very
plenitude of the power requires great caution in its exercise.
Court must be careful to see that its decision in exercise of this
power is based on sound principles. The inherent power should
not be exercised to stifle a legitimate prosecution. The High
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Court being the highest court of a State should normally
refrain from giving a prima facie decision in a case where the
entire facts are incomplete and hazy, more so, when the
evidence has not been collected and produced before the Court
and the issues involved, whether factual or legal, are of
magnitude and cannot be seen in their true perspective without
sufficient material. Of course, no hard-and-fast rule can be
laid down in regard to cases in which the High Court will
exercise its extraordinary jurisdiction of quashing the
proceedings at any stage. (See Janata Dal v. H.S.
Chowdhary [(1992) 4 SCC 305 : 1993 SCC (Cri) 36 : AIR
1993 SC 892] and Raghubir Saran (Dr) v. State of Bihar [AIR
1964 SC 1 : (1964) 1 Cri LJ 1] .) It would not be proper for the
High Court to analyse the case of the complainant in the light
of all probabilities in order to determine whether a conviction
would be sustainable and on such premises, arrive at a
conclusion that the proceedings are to be quashed. It would be
erroneous to assess the material before it and conclude that the
complaint cannot be proceeded with. In proceedings instituted
on complaint, exercise of the inherent powers to quash the
proceedings is called for only in a case where the complaint
does not disclose any offence or is frivolous, vexatious or
oppressive. If the allegations set out in the complaint do not
constitute the offence of which cognizance has been taken by
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the Magistrate, it is open to the High Court to quash the same
in exercise of the inherent powers under Section 482 of the
Code. It is not, however, necessary that there should be
meticulous analysis of the case before the trial to find out
whether the case would end in conviction or acquittal. The
complaint has to be read as a whole. If it appears that on
consideration of the allegations in the light of the statement
made on oath of the complainant that the ingredients of the
offence or offences are disclosed and there is no material to
show that the complaint is mala fide, frivolous or vexatious, in
that event there would be no justification for interference by
the High Court. When an information is lodged at the police
station and an offence is registered, then the mala fides of the
informant would be of secondary importance. It is the material
collected during the investigation and evidence led in the court
which decide the fate of the accused person. The allegations of
mala fides against the informant are of no consequence and
cannot by itself be the basis for quashing the proceedings.
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23 Therefore while deciding a petition under Section 239 Cr.P.C.
the Court cannot function as a Court of appeal or revision. Further, the
Court, while dealing with the petition seeking discharge, cannot appreciate
the evidence, but can evaluate the material and documents on record to the
extent of its prima facie satisfaction about the existence of sufficient
ground for proceeding against the accused. The Section should not be an
instrument handed over to an accused to short-circuit a prosecution and
bring about its sudden death and the Court has to see whether there exist
prima facie materials to proceed against the accused. The citations referred
to by the learned Senior Counsel for the respondents are not applicable to
the facts of the present case on hand especially when the offence is under
the PC Act and the case is at the stage of framing of charges.
24 As far as the contention regarding the validity of sanction is
concerned, a mere defect in the sanction would not affect the case of the
prosecution and in this regard it is useful to refer the decision of the
Hon'ble Supreme Court reported in (2009) 15 SCC 537 in the case of
V.Padmanabham vs. Government of Andhra Pradesh and Ors and the
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relevant portion is extracted hereunder:
“8. So far as the defect in sanction aspect is concerned,
the circular on which the High Court has placed reliance needs
to be noted. The Circular in question is dated 9-2-1988 the
relevant portion reads as follows:
The Government also decided that before giving approval
of prosecutions, the Principal Secretary, Law and Legal
Department will obtain the advice of department concerned.”
A bare perusal of the paragraph shows that before giving
approval for prosecution, advice of the department concerned
was necessary. The question arises whether the absence of
advice renders the sanction inoperative. Undisputedly the
sanction has been given by the Department of Law and
Legislative Affairs. The State Government had granted approval
of the prosecution. As noted above, the sanction was granted in
the name of the Governor of the State by the Additional
Secretary, Department of Law and Legislative Affairs. The
advice at the most is an interdepartmental matter.
9. Further, the High Court has failed to consider the
effect of Section 19(3) of the Act. The said provision makes it
clear that no finding, sentence or order passed by a Special
Judge shall be reversed or altered by a court of appeal on the
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ground of absence of/or any error, omission or irregularity in
sanction required under sub-section (1) of Section 19 unless in
the opinion of the court a failure of justice has in fact been
occasioned thereby.
10. In the instant case there was not even a whisper or
pleading about any failure of justice. The stage when this
failure is to be established is yet to be reached since the case is
at the stage of framing of charge whether or not failure has in
fact been occasioned was to be determined once the trial
commenced and evidence was led. In this connection the
decisions of this Court in State v. T. Venkatesh Murthy [(2004)
7 SCC 763 : 2004 SCC (Cri) 2140] and in Parkash Singh
Badal v. State of Punjab [(2007) 1 SCC 1 : (2007) 1 SCC (Cri)
193] need to be noted. That being so the High Court's view
quashing the proceedings cannot be sustained and the State's
appeal deserves to be allowed which we direct.
11. Coming to the appeal filed by the accused one of the
questions is whether the investigating officer was authorised to
conduct the investigation. The investigation was carried on by
the duly authorised officer, namely, the Deputy Superintendent
of Police under Section 17(c) of the Act. The broader issues
raised need not be looked into. The function of investigation
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was merely to collect evidence and any irregularity and
illegality in the course of collection of evidence can hardly be
considered by itself to affect the legality of trial by a competent
court of the offence so investigated.”
25 The Hon'ble Supreme Court, in the decision reported in (2004)
7 SCC 763 in the case of State by Police Inspector vs. T.Venkatesh Murthy,
further held as follows:
7. A combined reading of sub-sections (3) and (4) makes the
position clear that notwithstanding anything contained in the
Code no finding, sentence and order passed by a Special
Judge shall be reversed or altered by a court in appeal,
confirmation or revision on the ground of the absence of, or
any error, omission or irregularity in the sanction required
under sub-section (1), unless in the opinion of that court a
failure of justice has in fact been occasioned thereby.
8. Clause (b) of sub-section (3) is also relevant. It shows that
no court shall stay the proceedings under the Act on the
ground of any error, omission or irregularity in the sanction
granted by the authority, unless it is satisfied that such error,
omission or irregularity has resulted in a failure of justice.
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9. Sub-section (4) postulates that in determining under sub-
section (3) whether the absence of, or any error, omission or
irregularity in the sanction has occasioned or resulted in a
failure of justice, the court shall have regard to the fact
whether the objection could and should have been raised at
any earlier stage in the proceedings.
10. Explanation appended to the section is also of
significance. It provides, that for the purpose of Section 19,
error includes competency of the authority to grant sanction.
26 Yet another decision reported in (2023) 1 SCC 329 in the case
of Vijay Rajmohan vs CBI (Anti Corruption Branch) held as follows:
22. Statutory provisions requiring sanction before
prosecution either under Section 197CrPC or under Section
97 of the PC Act also intend to serve the very same purpose of
protecting a public servant. These protections are not
available to other citizens because of the inherent
vulnerabilities of a public servant and the need to protect
them. However, the said protection is neither a shield against
dereliction of duty nor an absolute immunity against corrupt
practices. The limited immunity or bar is only subject to a
sanction by the appointing authority.
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27 The Hon'ble Apex Court, in the recent judgment in the case of
State vs. Easwaran (2025 INSC 397) held that the High Court committed an
error in quashing the prosecution on the grounds that the sanction to
prosecute was illegal and invalid. The Hon'ble Apex Court has reiterated
that the validity of a sanction is an issue that must be examined during the
course of trial.
28 The learned Senior Counsel for the respondents/accused
contended that gross failure on the part of the prosecution and the total non
application of mind, the burden will fall on the person accused of the offenc
under PC Act and he may be compelled to be a witness against themselves
to prove that Hindu Undivided Properties and the assets of the individual
are added by producing necessary documents, which is against the
fundamental right guaranteed under Article 20(3) of the Constitution of
India and he also placed reliance on the decisions of the Hon'ble Apex
Court. In the present case, there was no compulsion for the accused to
witness against themselves. The accused have filed petitions under Section
239 Cr.P.C and to strengthen their defence they produced some revenue
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documents. At the risk of repetition, if the accused are all having their
independent source of income, it should have been disclosed, while notice
dated 19.04.2012 was served on A1 to A3. Further this Court already
elaborately discussed the known source of income and it is settled
proposition of law that the Court, while dealing with an application under
Section 239 Cr.P.C. has to accept the materials brought on record by the
prosecution. Therefore the contention with regard to Article 20(3) of the
Constitution of India is not sustainable, especially, for this case and the
decisions relied on by the learned Senior Counsel are not applicable to the
facts of the present case on hand.
29 Furthermore the case is now only at the stage of framing
charges and the respondents/accused are free to raise all their defences
before the trial Court. A challenge on a mere technical ground at this stage
is untenable. Hence, the contention regarding defect in sanction is rejected,
and the judgments relied upon by the learned Senior Counsel are not
applicable to the present case.
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30 As far as the allegation against A2 and A3 that they abetted A1
to amass wealth is concerned, the learned Senior Counsel for the
respondents/accused contended that there is no abetment on the part of A2
and A3 and they all have separate independent source of income and that
the learned Special Judge has also made an observation that the prosecution
has not proved that A2 and A3 abetted A1 to acquire assets which are
disproportionate to his known source of income. However, the allegation of
the prosecution against A2 and A3 is that they abetted A1 for acquiring the
properties which are disproportionate to his known sources. Therefore, A2
and A3 have to be tried along with A1. In this regard it is useful to refer the
decisions of the Hon'ble Supreme Court in the case of "P.Nallammal &
Others-Vs-State of Tamil Nadu" (1999 SAR 804), wherein it is held as
follows:
"Legislative intent is manifest that abettors of all the
difference offences u/s. 13(1)(e) of the P.C. Act-1988 should
also be dealt along with the public servant in the same trial held
by the Special Judge".
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Crl.R.C.Nos.583 to 585 of 2016
31 In view of the above principles, the abettors of all the offence
under the PC Act, should be dealt along with the public servant in the same
trial by the Special Judge. Therefore the reason cited by the learned Special
Judge to discharge the accused is not sustainable.
32 This Court has carefully gone through the allegations in the
charge sheet, statement of witnesses and the documents, which reveal that
there is prima facie materials to proceed further.
33 Furthermore, prosecution has to be given an opportunity to
prove its case and substantiate the materials collected during investigation.
A reading of the entire materials and also the order passed by the learned
Chief Judicial Magistrate, reveal that the learned trial Judge traversed
beyond the scope of Section 239 Cr.P.C. and this Court finds that there are
prima facie materials to proceed with the case further against the accused.
34 The grounds taken by the respondent/accused are nothing but
defences, which are all matter for trial. In the present case, finding of the
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Crl.R.C.Nos.583 to 585 of 2016
trial Judge is perverse and there is a compelling reason to interfere with the
order passed by the learned Magistrate.
35 Therefore these revisions are allowed and the common order of
the learned Special Judge/Chief Judicial Magistrate, Cuddalore, in
Crl.M.P.Nos.146, 147 and 148 of 2013 in Spl.S.C.No.03 of 2012, dated
03.02.2016., is hereby set aside and the Special Court is directed to frame
charges against the accused and proceed further in accordance with law.
Further, since the check period is between 2006 to 2011 and the case is of
the year 2012, the trial Court is directed to conduct trial on a day to day
basis and dispose of the matter on merits in accordance with law within a
period of six months from the date of receipt of a copy of this order.
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Neutral Citation : Yes/No
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Crl.R.C.Nos.583 to 585 of 2016
To
1. The Special Judge/Chief Judicial Magistrate, Cuddalore,
3. The Public Prosecutor, High Court of Madras.
Copy to: 1) The Section Officer, Criminal Section, High Court Madras
2) The Section Officer, ER Section, High Court Madras
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Crl.R.C.Nos.583 to 585 of 2016
P.VELMURUGAN, J.,
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Pre-Delivery Order in
Crl.R.C.Nos.583 to 585 of 2016
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