Madras High Court
K.Jayaraman vs The State on 12 June, 2025
Author: D.Bharatha Chakravarthy
Bench: D.Bharatha Chakravarthy
Crl.O.P.No.9339 of 2025
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 12.06.2025
CORAM :
THE HON'BLE MR.JUSTICE D.BHARATHA CHAKRAVARTHY
Crl.O.P.No.9339 of 2025
and Crl.M.P.No.6199 of 2025
1. K.Jayaraman
2. Shanthi
3. J.S.Arun Keerthi .. Petitioners
Versus
The State,
Additional Superintendent of Police,
Vigilance and Anti-Corruption,
City Special Unit-I,
Chennai. .. Respondent
Prayer : Criminal Original Petition filed under Section 528 of BNSS r/w
482 of Cr.P.C., to call for the entire records pertaining to the case in
C.C.No.14 of 2021 on the file of the learned Special Judge for Prevention
and Corruption Act Cases, Chennai and quash the same as against the
petitioners.
1/17
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Crl.O.P.No.9339 of 2025
For Petitioners : Mr.V.Krishnakumar
For Respondent : Mr.A.Gokulakrishnan,
Additional Public Prosecutor
2/17
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Crl.O.P.No.9339 of 2025
ORDER
The prayer in the Criminal Original Petition is to call for the records
pertaining to the case in C.C.No.14 of 2021 on the file of the learned Special
Judge for Prevention of Corruption Act Cases, Chennai and to quash the
same.
2. The case of the prosecution is that the first accused, K.Jayaraman,
is the public servant, working as Chief Engineer, during the check period
2007-2016. The second accused is his wife. The third accused is his son.
The fourth accused was an employee/manager under the first accused.
3. When the matter is taken up for hearing, the learned Counsel for the
petitioners would bring to the notice of this Court that in the very same case,
the fourth accused had filed a discharge application and the same was
dismissed. Aggrieved thereby, he preferred Criminal Revision in
Crl.R.C.No.1933 of 2024. By the order, dated 21.12.2024, this Court
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considered the difference between statement-III and statement-VII and the
fact that the prosecution has calculated the disproportionate assets as
12.12%. Thereafter, this Court considered the error that is made in arriving
at the corrected value in statement-VI and recalculated the entire
disproportionate assets in paragraph No.13 of the said order and calculated
the difference as 9.76%. Therefore, in view of the judgment of the Hon'ble
Supreme Court of India in Krishnanand Agnihotri Vs. State of Madhya
Pradesh , since the disproportionate wealth is less than 10%, the discharge
application has already been allowed, the same would follow in respect of
the other accused in this case also. Therefore, the present quash application
is moved.
4. The learned Counsel for the petitioners would submit that the said
order of this Court in Crl.R.C.No.1933 of 2024 applies in all force to the
other accused also. As a matter of fact, the decision reached by this Court is
that the case need not be pursued further. Therefore, he would pray that the
(1977) 1 SCC 816
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Criminal Original Petition be allowed.
5. The learned Additional Public Prosecutor for the respondent,
opposing the above said submissions, would submit that firstly, the
respondent is aggrieved by the order in Crl.R.C.No.1933 of 2024 and they
are preferring an appeal to the file of Hon'ble Supreme Court of India. He
would also further submit that the petitioners had earlier filed a quash
application in Crl.O.P.No.3684 of 2022, wherein, the same ground was
raised and dismissed. Therefore, he would submit that when the excess
amount involved is more than a crore, the percentage that it is only 9.76%
need not be strictly applied in this case and even if it is rounded off, it would
amount to 10% enabling the organisation to continue the proceedings. Even
otherwise, the calculation that is made by this Court is erroneous in law and
therefore, they are approaching the Hon'ble Supreme Court of India.
6. I have considered the rival submissions made on either side and
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perused the material records of the case.
7. It is relevant to extract the relevant portion of the order, dated
21.12.2024 in Crl.R.C.No.1933 of 2024 and paragraph Nos.3 to 13 are
extracted hereunder for ready reference:-
"3. After investigation, the respondent had laid its
final report. The quintessencial allegations which the
investigating agency explained with its multiple
Statements (Statement I to Statement VII) is that between
01.01.2007 to 31.01.2016 (the check-period) the four
accused persons have amassed assets worth
Rs.2,28,04,824/- in excess of their combined known
sources of income during the said period. The details of
the statements are as below:
Statement No. Statement what it Total Value
deals with (Rs.)
Statement - I The combined value 65,64,033.00
of the assets of A1
to A4 at the
beginning of the
check period (as on
31.12.2006)
Statement - II The combined value 14,99,55,323.00
of the assets of A1
to A4 at the closing
of the check period
(as on 31.01.2016)
Statement - V Statement II - 14,33,91,290.00
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Statement I (value
of the assets
acquired during
the check period)
Statement - III The combined 18,81,56,287.00
income of A1 to A4
during the check
period (from
01.01.2007 to
31.01.2016)
Statement - IV Expenditure during 6,75,69,821.00
the check period
Statement - VI Differential sum 12,05,86,466.00
between Statement
III & IV (likely
savings during the
check period)
Statement - VII Statement V - VI 2,28,04,824.00
(the difference
between the value of
assets acquired
during the check
period minus a
likely savings made
by A1 to A4 during
the check period.
Since it is judicially settled that 10% tolerance is allowable
between the value of the assets acquired during the check
period and the income during the same period, the
prosecution proceeds to determine the percentage of
difference between Statement-III and Statement-VII. Its
calculation in terms of the final report runs as below:
Statement-VII x 100 = Rs. 2,28,04,824 x 100 = 12.12%
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Statement-III Rs. 18,81,56,287
Apparently the value of the asset acquired during the
check period is in excess by 2.12% beyond the tolerance
level of 10%, the prosecution alleges that the accused
persons, including the petitioner herein of acquiring
wealth beyond the known sources of income to the extent
of 2.12%.
4. The endeavour of the petitioner before the trial
Court has been that even in terms of the final report,
atleast two entries in Statement III, on the face of it, are
erroneous. These entries relate to the cash-inflow into the
account of the petitioner during the check period pursuant
to sale of two items of immovable properties described as
Items 86 and 87 in Statement III (the Statement of Income
of the accused persons during the check-period). Instead
of showing the actuals as declared and brought into
account by the petitioner, the investigating agency has
shown only the profit earned by the sale of these two items
of properties by reducing the cost of acquisition of these
properties as is done by the Income Tax Department for
ascertaining the taxable income on capital gains. This is
explained:
Item No. Date & cost of Date & sale Differe
acquisition consideration nce
received (4) - (2)
Date Amount Date Amount
(1) (2) (3) (4)
III (86) 16.09. Rs.22,4 16.05. Rs.2,25,0 Rs.2,02
Detailed 1992 6,265 2013 0,000 ,53,535
in
Statement
I (2) and
III (87) 06.05. Rs.17,9 12.06. Rs.29,00, Rs.11,0
Detailed 2004 7,405 2009 000 2,595
in
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Statement
I (7)
5. Per contra, the learned prosecutor explained that
when an asset at the opening of the check period
(Statement I) is not sold and is retained by the accused at
the closing of the check period (Statement II) then the
value addition during the check period will be nil. If
however, a property is sold during the check period, the
entire sale proceeds cannot be brought in but it must be
reduced by the cost of acquistion of the asset, since what is
required to be reckoned is not the sale consideration
obtained, but the net income that was obtained. This net
income is but the profit made by an accused from the sale
of asset during the check period, and this precisely has
been done by the investigators in this case, and indeed, it
is always done.
Discussion & Decision
6. Howsoever, this Court tries to persuade itself to
appreciate the argument of the learned prosecutor, it still
struggles to reconcile with the unreality of its content.
7. What is the core issue in any case involving an
accusation that an accused has acquired wealth
disproportionate to the known sources of income during a
specific perific period -the check period, computing the
legitimate accountable cash inflow in the hands of the
accused during the check period is critical. To make it
clear, it is not the net income that matters but the
legitimate cash-inflow. Therefore, it cannot be confined to
salary, or earning through one-s physical labour, or rental
incomes, or profits from business etc., but also any inflow
of money through loan or gift. To this may have to be
added sale consideration brought into account by the sale
of any assets: movable or immovable.
8. It is here the investigator has blundered, and
blundered egregiously. The investigator at all times needs
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into probe just a solitary fact: "has the accused legitimate
and accounted money in his hand during the check period
to acquire assets during the check period?
9. Turning to the two specific entries Statement III
(86) and (87), the investigator has brought in the profits
made by the sale of immovable properties and not the
actual cash inflow into the account of the accused during
the chek period due to the sale of these assets. He is not
an Income Tax Officer to assess the gain obtained due to
sale of a capital asset for taxation purposes.
10. Similarly unless an asset is purchased and sold
during the check period, capital gain obtained may not be
relevant to reckon the actual cash-inflow during the check
period.
11. The investigator needs to realise value
accretion of assets happen in different ways:
a)In case of actual cash in hand, ordinarily it cannot
enlarge without the knowledge of the person holding it. In
case of bank deposits, except the interest component
which the bank gives, there may not be a possibility for
accretion to the deposits made.
b)In the case of investments made in stocks and shares,
gold, or immoveable properties, the current value of the
past investment read it as the value of these assets during
the check period on which investments were made prior to
the check period, depends on market conditions. In
otherwords the market decides what their value is, and the
accused will not have any control over the value
fluctuations, more so in cases of stocks and shares and
immoveable properties since gold has not shown
tendencies to fluctuate vastly or as violently as the other
two.
c)Another aspect that determines the value of gold or
immovable property is how desperate one is keen to sell.
Such distress-sales generally does not fetch value addition.
Alternatively, if a purchaser is desperate to buy a property
for his own purposes, then a property may even fetch a
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premium.
But broadly it is the market that decides. In the context of
a case where the prosecution alleges that the accused
possesses assets disproportionate to his known sources of
income, for an accused to make a windfall through a sale
of an immoveable property acquired before the check
period but sold during the check period, all that he is
required to do is to preserve the property over a period of
time. He needs to do nothing more than preserving it.
The investigators of this class of crime needs to realise it.
12. Let it be understood in the factual context of
the case, with reference to the table in paragraph 4. The
cost of acquisition of Item III(86) in 1992 was
Rs.22,46,265 and the cash inflow through its sale in 2013
is Rs.2.25 crores. What is the contribution of the
petitioner to the value accretion? A building was
constructed prior to check period and it stops there. And,
if a windfall was made only because he preserved the
property. The investigator need not worry about the
profits he had made. It is plainly not his job. He needs to
ascertain as to whether the petitioner had the money in his
hand legitimate and accounted, to acquire assets during
the check period. If so considered, then the respondent
has reduced the total cash-inflow by Rs.40,43,870/- which
represents the combined cost of acquisition of item 86 and
87 in Statement III without any justification. His poor
knowledge on accounting cannot trouble the petitioner.
This amount must now be added to the income statement,
and if so added, then the total income (total cash-inflow is
a better expression) during the check period as disclosed in
Statement III has to be adjusted. It will now read
Rs.18,81,56,287/- + Rs.40,43,870/-, and accordingly, the
total income of the petitioner during the check period must
be reckoned at Rs.19,22,00,157/-.
13. Now, if the asset to income ratio during the
check period is reworked, it will be as follows: First to the
numerator part. It is Statement VII. But Statement VII is
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(Statement V -Statement VI). And Statement VI is
Statement III -Statement IV. Due to the change in value
of Statement III, Statement VI has to be reworked.
(a) Arriving at the corrected value of Statement VI
State- III IV VI
ment
Value Rs.19,22,00,157* Rs.6,75,69,821 Rs.12,46,30,3
(Change in (No change in 36**
value) value) (Change in
value)
* Statement III (Rs.18,81,56,287 + Rs.40,43,870).
See: Para 12 above.
** Since Rs.40,43,870 is added to Statement III,
Statement VI will also have a value addition by said sum.
(b) Arriving at the corected value of Statement VII
State- V IV VII
ment
Value Rs.14,33,91,290 Rs.12,46,30,336 Rs.1,87,60,95
(No Change in (change in 4*
value) value) (Change in
value)
* Since value of Statement VI has increased by Rs.
40,43,870, necessarily the value of Statement VII will be
reduced by the like sum.
(c) Calculation of DPA based on corrected value:
Statement-VII x 100 = Rs. 1,87,60,954 x 100 = 9.76 %"
Statement-III Rs. 19,22,00,157
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Thus, it can be seen that the Court considered the manner of
calculation, by which, the prosecution claimed an excess of 12.12% and how
the same was erroneous and ultimately, found that the excess was only
9.76%.
8. I do not see any reason to defer with the said findings that are made
in detail in the said Criminal Revision Case. Even though an argument is
made that the respondents are preferring Special Leave Petition, it can be
seen that the order is dated 21.12.2024 and now, we are in the month of
June, 2025. Even this case was adjourned on repeated occasions earlier. In
view thereof, when a view has been taken, especially considering the fact
that it is the case of the prosecution that the excess is 12.12% and the
calculation as per the said judgment is 9.76%, no further extension of time
need be given in the matter.
9. As far as the arguments relating to the second quash application are
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concerned, the first application was dismissed on 12.04.2022 and
subsequently, on 21.12.2024 the order was passed in Criminal Revision
Case. Therefore, in view of the subsequent order, considering the change of
circumstances, wherein, the very same plea has been entertained and
answered in the affirmative on a prayer made by the other accused in the
same case, I am of the view that the second quash application is
maintainable.
10. Accordingly, finding merits, this Criminal Original Petition stands
allowed. The case in C.C.No.14 of 2021 on the file of the learned Special
Judge for Prevention of Corruption Act Cases, Chennai, shall stand quashed.
12.06.2025
Neutral Citation : no
grs
To
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1. The Special Judge for Prevention of Corruption Act Cases,
Chennai.
2. The Additional Superintendent of Police,
Vigilance and Anti-Corruption,
City Special Unit-I,
Chennai.
3. The Public Prosecutor,
High Court of Madras.
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D.BHARATHA CHAKRAVARTHY, J.
grs
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12.06.2025
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