The State Of Bihar vs Lalu Prasad And Ors. on 20 March, 2008

ORDER

Ramesh Kumar Datta, J.

Page 1606

1. Earlier when the present Government Appeal against the judgment and order of acquittal dated 18.12.2006 had been taken up by this Court after the issuance of notices upon respondent Nos. 1 and 2, a preliminary objection had been raised on behalf of the respondent Nos. 1 and 2 as well as respondent No. 3, the Central Bureau of Investigation (CBI) regarding the maintainability of the appeal on behalf of the State of Bihar. After hearing the parties, by order dated 20.9.2007, it was held that the present appeal by the State of Bihar is maintainable. The matter has now been heard on the issue of grant of leave to appeal and admission on the merits of the case.

2. Respondent No. 1, who was accused No. 1 in the court below, was charged for the offences under Section 13(1)(e) read with Section 13(2) of the Prevention of Corruption Act, 1988 of having amassed assets disproportionate to his known sources of income during the period between 10.3.1990 to 31.3.1997 in his own name and in the name of his wife, Smt. Rabri Devi, respondent No. 2, their seven daughters and two sons to the extent of Rs. 46,26,826.87 which he could not satisfactorily account for. Respondent No. 2, who was accused No. 2 in the trial court, was charged for the offences under Section 109 IPC read with Section 13(1)(e) read with Section 13(2) of the Prevention of Corruption Act, 1988 for abetting respondent No. 2 in the commission of the said offence by not only keeping a large number of assets valued at Rs. 19,97,191.38 out of the said disproportionate assets of her husband either in her own name and/or in the name of her children but also by falsely claiming her separate income by way of dairy business, agricultural income and income from rent in the income tax returns filed for the years 1986-87 to 1996-97 in 1996 with obvious motive to screen and save the respondent No. 1 from legal action for the possession of the said disproportionate assets by him.

3. The admitted position is that the respondent No. 1 was the Chief Minister of the State of Bihar from 10.3.1990 to 28.3.1995 and again after a short break of a week from 4.4.1995 to 25.7.1997. It was alleged that during the Page 1607 check period of 10.3.1990 to 31.3.1997 he had a total income from sources known to the prosecution of Rs. 16,55,386.03 whereas his expenditure during the same period was Rs. 20,17,557.52 and further he had immovable and movable assets amounting to Rs. 42,64,656.38. On the basis of the said figures it was alleged that during the check period the accused-respondent No. 1 was found in possession of disproportionate assets to the extent of Rs. 46,26,806.87 being the balance after deducting the income during the period from the expenditure incurred and the assets acquired during the check period.

As against the aforesaid figures the defence of the accused persons was that during the period in question the income of respondent Nos. 1 and 2 was to the extent of Rs. 38 lacs whereas the expenditure was only Rs. 10,75,576/- and the value of the assets acquired during this period was also Rs. 22,51,179/- only and thus there was a surplus of income over the expenditure and assets during the check period to the extent of more than Rs. 4.5 lacs and no case of possession of disproportionate assets was made out against them.

4. In his judgment dated 18.12.2006 Shri Muni Lal Paswan, Special Judge, CBI, (AHD), Patna came to the conclusion that the income of the accused persons during the check period was to the extent of Rs. 37,98,639/- whereas the total expenditure during the said period was Rs. 12,25,577/- and the value of the assets acquired during the period was Rs. 22,56,180/-. It was accordingly held by learned Special Judge that the prosecution has not been able to prove the charges leveled against both the accused persons and the accused persons have very successfully and satisfactorily accounted for the possession of the assets and resources or properties with the help of ITAT (Income Tax Appellate Tribunal) orders, Ext. AV-8 and AV-9, and evidences or documents adduced in this case also. It was held that the prosecution has miserably failed to prove the charges leveled against accused No. 2, respondent No. 2 herein, for abetment as she has very successfully proved that she has independent income and resources from her own dairy business, agricultural income and rental income which has been allowed by the order of ITAT, Ext. AV-8 and AV-9, duly confirmed by the Hon’ble Supreme Court. Accordingly both the accused persons were acquitted from the charges leveled against them.

5. Mr. Surendra Singh, learned Senior Counsel appearing for the appellant-State of Bihar submits that the trial court had misdirected itself on the question of law, its findings and conclusions of income, expenditure and assets are not correct and they are off the mark by at least Rs. 35 lacs, if not Rs. 40 lacs. It is submitted that the court below has overlooked the material evidence on the record and has blindly relied upon the judgment and conclusions of the ITAT which he could not have done. It is further contended that there is not a single reference or discussion of the evidence of the defence witnesses in the entire judgment and only on the basis of the conclusions drawn by the ITAT the findings have been recorded in the trial court judgment and consequently the judgment is vitiated.

6. Learned Counsel for the appellant submits that as many as 57 items have been included in the conclusion part of the judgment under challenge under the heads of assets, income and expenditure but for the purposes of admission of the appeal he would at present deal with only 20 of those items to show how the figures of income have been inflated by the trial court whereas those relating to expenditure and assets have been substantially reduced and decreased without any basis in the Page 1608 evidence on the record. In this regard it is pointed out that the excess of income over the expenditure and assets in the judgment of the trial court comes to Rs. 3,17,082/- only which safety margin is crossed even by the elementary mistakes of calculations made in the said judgment.

7. It is firstly submitted by learned Counsel for the appellant that item No. 1 under the head of income being salary of the respondent No. 1 during the check period has been inflated by Rs. 2,63,238/- by showing the gross amount of salary received by accused No. 1 during the said period. It is contended that the salary to be taken into consideration can only be what is received in hand by the accused persons and not the gross salary, i.e., the real income under this head is what is known as the take home salary after the statutory and other deductions are made from the gross salary. In this context learned Counsel relies upon a decision of the Supreme Court in the case of State of Madhya Pradesh v. Awadh Kishore Gupta and Ors. in which it is stated in para-6 that “whatever comes in or is received, is income”. It is therefore, argued by learned Counsel that it is not the gross salary that comes in or is received by the accused person rather after the necessary deductions are made from it the amount which is finally received by him would be his income and thus the figures of Rs. 4,32,905/- given by the CBI ought to have been accepted by the court below and not Rs. 6,96,143/- as finally allowed in the judgment. In this context learned Counsel refers to paragraph No. 112 of the judgment that even the contention of the defence in the trial court was that the CBI has reduced the income of accused No. 1 from salary etc. to the tune of Rs. 1,40,000/-. It is submitted by learned Counsel for the appellant that even if the figure of Rs. 1,40,000/- is added to the amount of Rs. 4,32,905/- as contended by the CBI, the same would come to Rs. 5.72 lacs and thus there would be no justification for incorporating the salary figure of Rs. 6.96 lacs and even on the contention of the defence in the trial court the income under the head salary has been shown as excess to the extent of Rs. 1,23,239/-.

8. Learned senior counsel next refers to item No. 2 under the head Income being Dearness Allowance amounting to Rs. 86,520/-. It is submitted by learned Counsel that in the entire judgment there is no discussion as to how this figure of Dearness Allowance is arrived at and the only reference in the judgment to D.A. is in paragraph 113 where it has been mentioned in the context of pre-check period alone. It is submitted that the D.A. is already included in the pay bills and would thus be part of the amount given under the head salary and there is no justification at all for again separately mentioning Rs. 86,520/- as Dearness Allowance particularly when there is nothing in the judgment to show how the said figure has been arrived at.

9. Learned Counsel next points out the calculation error made by the trial court in item No. 6 under the head of Income being income from encashment of KVPs (Kisan Vikas Patras) in check period from investment of 1986, 1987 and 1989 amounting to Rs. 3,19,500/-. The prosecution had given a figure of Rs. 1,23,700/- on this count. However, it is conceded by learned Counsel that KVPs of Rs. 50,000/- purchased prior to check period was encashed on 11.2.1992 and a sum of Rs. 1,00,750/- was received which was re-invested on the same day by purchasing KVPs of Rs. 1 lac. It is thus submitted by learned Counsel that the CBI ought to have included the income of Rs. 50,750/- also in the income from interest on investment of KVPs of Rs. 1,23,700/- and thus the total income under this item would come to Page 1609 Rs. 1,74,450/-. It is however, contended by learned Counsel that there is absolutely no explanation in the judgment as to how the figure of Rs. 3,19,500/- as income from KVP was arrived at contrary to the clear figures given by the CBI in this regard with the dates on which they accrued except for the error with respect to Rs. 50,750/-. Learned Counsel thus states that there is an evident excess shown under this head to the extent of Rs. 1,45,050/- without any explanation or discussion in the judgment of the trial Court.

10. Referring to the aforesaid three items, it is submitted by learned Counsel that due to error of calculation there is an excess of income shown in the judgment of Rs. 3,74,808/- which by itself crosses the margin of safety of Rs. 3,17,082/-.

11. The next and the main thrust of the submissions of learned senior counsel for the appellant rests upon the reliance by the court below on two orders of the ITAT, being Ext. AV-8 and AV-9, treating the same as admissible and using its findings and conclusions to reach the conclusion regarding the income and assets in the present matter without adverting to or discussing the evidence of the defence witnesses in support of such findings. Learned Counsel refers to the following findings of the court below in para-237 of the judgment:

Hence, I find and hold, in the back ground of what I have discussed in the foregoing paragraphs, the order of ITAT, AV-8 and AV-9 is very well be admissible for the just decision of this case and its findings can be used to determine the amount of D.A. with regard to both accused persons in this case.

12. It is contended by learned Counsel that the said complete reliance on the conclusion of ITAT in its two orders by the Court below for reaching the conclusions with regard to the income and assets vitiates the entire judgment and makes its findings to that extent wholly illegal.

13. In the aforesaid context, learned Counsel refers to the sequence of events leading up to the filing of the present disproportionate assets cases against the respondents:

11.3.1996 : The High Court entrusted investigation of Animal Husbandry Department Scam cases to CBI. It also directed the Income Tax Department to initiate action against persons reasonably thought to be involved in the scam and their unaccountable wealth and property.

19.3.1996 : Appeal against the order dated 11.3.1996 rejected by the Supreme Court with the direction that the investigation by CBI shall be monitored by the High Court by order dated 19.3.1996.

23.8.1996 : High Court enquired about filing of separate cases of disproportionate assets under the Prevention of Corruption Act against the concerned persons, issued show cause to the Chief Commissioner of Income Tax why a proceeding of contempt be not initiated against him for not filing a report regarding initiating action as directed earlier.

25.9.1996 : Income Tax notices served on accused persons.

14.10.1996 : Income Tax returns of respondent No. 2 filed for assessment years 1995-96 and 1996-97.

14.11.1996 : Income Tax returns of respondent No. 2 filed for assessment years 1986-87 to 1994-95.

Page 1610

14. On the basis of the aforesaid list of dates it is submitted by learned Counsel for the appellant that the income tax returns had been filed by respondent No. 2 after the aforesaid development had taken place in between 11.3.1996 and 25.9.1996. It is pointed out that in the order dated 11.3.1996 passed by the High Court in CWJC No. 1617/1996 and analogous cases it was clearly stated that the excess withdrawals and expenditures could not have been made year after year without the tacit support and blessings of the high-ups at the secretariat/Government level and further that the State Government gave patronage to the officers of the Animal Husbandry Department who were already under cloud and are now made accused and also that the State Government’s recalcitrance in agreeing to probe by any outside agency (CBI) prima facie shows that it wants to hide facts and shield guilty persons. It is submitted by learned Counsel that although the respondent No. 1 had not been made on accused in the Animal Husbandry Department scam case on the said date yet from the facts which had emerged in the writ petition before the High Court and on the observations made by the High Court and the investigation having been entrusted to the CBI by the High Court and the Supreme Court as also the directions issued to the Income Tax Department, the respondent No. 1 apprehended that because of his involvement in the said scam he was likely to be roped in by the CBI and under the said circumstances, steps were taken in the matter by filing income Tax returns on behalf of respondent No. 2. It is thus submitted that although the FIR in the disproportionate assets case against the accused persons was filed on 18.8.1998 but the foundation and likelihood of the filing of the same became evident to the accused persons in view of the observations made and directions issued in the orders of the High Court dated 11.3.1996 and 23.8.1996 and thus no credence should be given to any such attempt as made by the accused persons to show income and assets on the basis of returns filed by respondent No. 2 before the Income Tax authorities.

Learned Counsel also relies upon the provisions of the Evidence Act contained in Sections 40 to 43 of the said Act which deals with the circumstances in which the judgments of Courts of justice are relevant. It is submitted that Section 40 creates a bar to the taking of cognizance to a suit or holding trial on account of the existence of a previous judgment or order or decree of any Court and thus the said section has no relevance in the present matter. Section 41 relates to the judgments, orders or decrees of a competent Court in exercise of Probate, matrimonial admiralty or insolvency jurisdiction which again is not involved in the present matter. Section 42 provides that judgments, orders or decrees other than those mentioned in Section 41, are relevant in respect of matters of public nature relevant to the enquiry and therefore, the said provision also does not apply to the facts of the present case. In Section 43 it is clearly laid down that judgments, orders and decrees other than those mentioned in Sections 40, 41, 42 are irrelevant, unless the existence of such judgment, order or decree is a fact in issue, or is relevant under some other provisions of the Act.

15. On the basis of the said provisions of the Evidence Act that even the judgment, orders or decrees of a competent Court are relevant and can be taken into consideration only to the extent that is provided in Sections 40 to 42 of the Evidence Act and not under any other circumstances, it is argued that the order of the Tribunal is not even an order of a competent Court and thus it cannot be looked into by a criminal Court during the course of trial for arriving at a conclusion and treating the Page 1611 findings of the tribunal as admissible and binding on the Criminal Court. On this point learned Counsel relies upon a decision of the Privy Council in the case of Emperor v. Khwaja Nazir Ahmad of which it has been held as follows:

It is conceded that the findings in a civil proceeding are not binding in a subsequent prosecution founded upon the same and similar allegations…it is the duty of a criminal Court when a prosecution for a crime takes place before it to form its own view and not to reach its conclusion by reference to any previous decision which is not binding upon it.

16. Learned Counsel also relies upon a decision of a three Judges Bench of the Supreme Court in the case of State of Bihar v. Radha Krishna Singh and Ors. , paras 122 and 123 of which are quoted below.

122. Taking the first head, it is well settled that judgments of courts are admissible in evidence under the provisions of Sections 40, 41 and 42 of the Evidence Act. Section 43, which is extracted below, clearly provides that those judgments which do not fall within the four corners of Sections 40 to 42 are inadmissible unless the existence of such judgment, order or decree is itself a fact in issue or a relevant fact under some other provisions of the Evidence Act:….

123. Some courts have used Section 13 to prove the admissibility of a judgment as coming under the provisions of Section 43, referred to above. We are, however, of the opinion that where there is a specific provisions covering the admissibility of a document, it is not open to the court to call into aid other general provisions in order to make a particular document admissible. In other words, if a judgment is not admissible as not falling within the ambit of Sections 40 to 42, it must fulfill the conditions of Section 43 otherwise it cannot be relevant under Section 13 of the Evidence Act. The words “other provisions of this Act” cannot cover Section 13 because this section does not deal with judgments at all.

It is thus argued on the basis of the aforesaid decisions of the Privy Council and the Supreme Court that the court below has grossly erred in holding that the findings in the order of ITAT, Ext. AV-8 and AV-9, can be used to determine the amount of income, expenditure and assets and that it is binding upon the Criminal Court.

17. Learned Counsel also urges that the learned Special Judge has committed serious error in holding that the order of ITAT has been affirmed by the Supreme Court. It is stated that the judgment of the Supreme Court relied upon in this regard was rendered in the case of Rajiv Ranjan Singh ‘Lalan’ (VIII) and Anr. v. Union of India and Ors. (2006) 6 SCC 631 in which one of the directions prayed for was to respondent Nos. 1 to 4 to file an appeal against the orders passed by the ITAT. It is submitted that in para-14 of the said judgment the Supreme Court had merely held that the prayer of writ of mandamus to direct respondents 1 to 3 to file an appeal against ITAT cannot be allowed and was liable to be rejected. Learned Counsel submits that the same cannot by any stretch of imagination be considered as affirmation of the orders of the ITAT by the Supreme Court and thus the Court below was labouring under gross misconception in this regard.

Learned Counsel for the appellant on the basis of the aforesaid reliance upon the order of the ITAT by the court below refers to certain heads of income, expenditure Page 1612 and assets where the court below has arrived at its findings relying upon the orders of the ITAT. He firstly refers to item No. 14 under the head of Income, i.e., income from agriculture of A-2 during check period which has been given as Rs. 3,75,000/-. Learned Counsel in this regard refers to certain facts which have come in the course of the evidence. On 16.5.1997 Sheo Prasad, father of respondent No. 2, applied to the Circle Officer for mutation of 5 bighas of lands in the name of respondent No. 2. The said application was accompanied by photo copy of an affidavit dated 11.4.1997 stating that the land was gifted in the year 1972 to A-2 as per the family settlement; it was stated therein that accused No. 2 had been taken in adoption by Prasadi Choudhary, her paternal uncle, in the year 1960 and therefore, at the time of her marriage a family settlement was made by which five bighas land was gifted to her. The Circle Officer has been examined as P.W.84 and he stated that he was under pressure since the matter related to the Chief Minister accordingly he mutated the land on 2.6.1997 and the said entry was back-dated to 1972. It is submitted by learned Counsel that the story of adoption in family settlement leading to agricultural income of Rs. 3.75 lacs during the check period is a cock and bull story created by the accused persons after the proceedings were initiated. It is argued that there cannot be a gift of land through a family settlement and in any case any document witnessing a gift must be rejected. It is further submitted that prior to 2.6.1997 there is no revenue record showing ownership or possession of respondent No. 2 over the said land. As a matter of fact, no document was produced in original before the Circle Officer, the income Tax Department or the Special Judge, during the course of the present trial nor is there any revenue entry of prior date. In the said circumstances, it is submitted that considering the sequence of events indicated above, the Court ought not to have accepted the story regarding agricultural income merely on the basis of the same having been accepted by the ITAT when there is no document on the record to support such a stand. Since the finding regarding agricultural income of Rs. 3.75 lacs is not based upon any independent finding of the learned Special Judge, but totally by relying upon the ITAT order, it is contended that such finding is liable to be set aside in view of the law laid down by the Privy Council and the Supreme Court, as referred to above. The two income certificates produced in this regard from the Circle Office are also after the check period and filing of the charge sheet and it could not have been relied upon merely on the basis of the order of the ITAT.

18. The next challenge of the learned Counsel for the appellant is to item No. 15 under the head of Income which is income from sale of milk by A-2 as per ITAT order and has been given as Rs. 7 lacs by the court below. In this context learned Counsel points out that the prosecution had given an income of Rs. 4.5 lacs under this head based upon IT returns of respondent No. 2 but subsequently by an after thought the same has been raised to Rs. 7 lacs and thus excess of Rs. 2.5 lacs has been allowed by the learned court below. Learned Counsel refers to the fact that at the stage of trial the CBI had taken the stand that there was no income under this head at all but he fairly submits that once the prosecution accepted Rs. 4.5 lacs it was not open to it to retract; but still according to him, no accounts have been produced and the amount of Rs. 7 lacs has been arrived at by the court below merely by relying upon the order of the ITAT. It is thus submitted that an excess income of Rs. 2.5 lacs has been shown under this head also.

Page 1613

19. Learned Counsel next points out item No. 19 under the head of Income which is cash in hand as per ITAT as on 31.3.1990 and has been shown as Rs. 7,75,000/-. It is submitted that the check period starts from 10.3.1990 and in 20 days such amount could not have been earned and it could only have been savings prior to check period and not the income of check period. It is contended by learned Counsel that it is for the defence to prove if there was any savings prior to check period but nothing has been brought on the record or discussed in the judgment of the trial court to show as to how this saving of Rs. 7.75 lacs was arrived at and merely on the basis of the findings of ITAT the same has been accepted. It is urged by learned Counsel that even if cash in hand of Rs. 7.75 lacs is shown at the beginning of check period, then it was incumbent upon the defence to show how much amount out of it was spent during the check period by bringing on record as to what was the cash in hand at the end of the check period. Learned Counsel also states that it is unusual for any person to keep such a huge amount of cash in hand and the court ought not to have accepted the same merely because the ITAT has accepted it without there being any evidence on the record to support it. Learned Counsel therefore contends that on this item alone the appeal is fit to be admitted.

Learned Counsel next refers to item No. 17 under the head of income which is the income from sale of jeep amounting to Rs. 45,000/-. It is submitted that the respondent No. 1 had never possessed any jeep and merely on the basis of oral evidence of the so called purchaser the said claim ought not to have been accepted. It is argued that regarding any such transaction there would be original registration book which could have been produced before the Court since the so called purchaser had been produced as a witness in the case but the same was not done and without complying with the provisions of Sections 65 and 66 of the Evidence Act, a photo copy of the alleged owner book was produced in Court and marked as Ext. KL. Learned Counsel submits that the same being secondary evidence is inadmissible on account of non-compliance of the provisions of Sections 65 and 66 of the Evidence Act and thus the entire amount of Rs. 45,000/- will have to be ignored.

20. With respect to the assets it is submitted by learned Counsel that the learned court below has decreased the value of assets to the extent of Rs. 20 lacs. It is stated that item No. 1 under the head of Assets is the house of A-1 at Sheikhpura of which a value of Rs. 12,40,000/- has been shown whereas, according to the valuation of the prosecution it comes to Rs. 19,14,300/-. It is submitted that no doubt the said valuation has been done on the basis of rates prevailing in Delhi but the said rates of Delhi were adjusted according to Patna rates by the income tax valuer and only on the basis of the reduced rates the valuation of Rs. 19,14,300/- was arrived at in accordance with the well settled principles of valuation whereas the court below has merely relied upon the valuation accepted by the ITAT and thereby he has abrogated his authority to it. It is thus, submitted that the said asset of the accused has been decreased to the extent of Rs. 6,74,300/-.

21. Learned Counsel then refers to item No. 8 under the head of Assets which is plot of lands No. 1161 by 4 deeds bearing No. 9621 to 9623 and 9632 all dated 9.7.1993, total four plots of 8 kathas 15 dhurs each at the rate of Rs. 36,065/- per deed, the total valuation accepted by the Court below as Rs. 1,44,260/-. According to learned Counsel the prosecution has given the value of the said 35 kathas of land at Rs. 10,66,260/- but relying upon the order of ITAT the court below had decreased the Page 1614 value to the extent of Rs. 9.22 lacs. In this regard, learned Counsel refers to the fact that the earlier purchaser of the said lands was Kaliket Nagar Sahkari Grih Nirman Samiti, Patna which had entered into an agreement with the owner Julumdhari Rai for selling the same at the rate of 30,000/- per katha and the advance of Rs. 2 lacs was also given for the said purpose but ultimately the same could not be finalized due to some problems and litigation also ensued between the parties. Finally, the said amount of Rs. 2 lac was returned by Julumdhari Rai and the sale was made to the accused persons in the names of their children. Learned Counsel referred to the fact that in the Bank Account of said Julumdhari Rai and his brothers with Uco Bank Rs. 6.5 lacs was credited on 6.7.1993 i.e. three days prior to the registration of the present four sale deeds and the same was confirmed by P.W. 87 and 89 although they were declared hostile. Considering the aforesaid facts and the fact that sale deeds of similar lands had also been produced by the prosecution from which it was evident that the figures stated by the prosecution were correct and there was no occasion for the Court to differ with the same merely by holding that the witnesses have turned hostile and thus the statements have no evidentiary value and inadmissible in law. Learned Counsel submits that the valuation has been accepted only because it has been found that the ITAT has accepted the value of the said lands on the basis of valuation given in the registered deeds. It is further submitted that the court below has seriously erred in not relying upon the surrounding circumstances referred to by the CBI as to how a person who had earlier agreed to sell the land at the rate of Rs. 30,000/- per katha and accepted advance of Rs. 2 lacs for the same would return the advance and sell the same at the rate of Rs. 4,000/- per katha only. Learned Counsel also referred to the fact that the accused persons had also purchased other plots of land in village Dhanaut at the rate of Rs. 35,000/- per katha. It is thus urged that the court below has wrongly decreased the valuation of the lands of 35 katha at village Dhanaut merely by relying upon the order of the ITAT.

22. Learned Counsel next refers to item No. 10 under the head of Assets which is NSC No. 536801 to 536804 in the name of A-2 and A-1 valued by the Court at Rs. 40,000/-. Referring to paragraphs 63 and 143 of the judgment learned Counsel urges that the prosecution has given a figure of Rs. 2.4 lacs and the defence had claimed that Rs. 1 lac was prior to the check period and thus even accepting the same the actual decrease would come to Rs. 1 lac if not Rs. 2 lacs as originally claimed since the defence admits that Rs. 1.4 lac is of the check period.

23. Learned Counsel further refers to para-73 of the judgment to show that an amount of Rs. 20,000/- invested in the name of Miss Misa Bharti, daughter of accused persons for acquisition of units in UTI Master Gain 92, has been proved by the prosecution but without any discussion regarding the same to the contrary in the judgment the said amount of Rs. 20,000/- is not included in the assets.

24. Learned Counsel also points out the error in item No. 18 under the head of Assets, namely, Recurring Deposit A/c with State Bank of India, Bailey Road, Patna in 1996, the amount of which is given as Rs. 5,000/- whereas, according to the learned Counsel in para-74 of the judgment, it has been found that an amount of Rs. 75,000/- was deposited in 9 RD Accounts opened on 31.1.1996 during the check period which was not challenged by producing any evidence by the defence. It is thus, submitted by learned Counsel that there is a clear decrease of Rs. 70,000/- in the head of Assets on account of such error.

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25. With respect to assets learned Counsel lastly refers to an amount of Rs. 76,418/- which according to the prosecution was the value of the construction of boundary wall made on the plot of lands of the accused persons. In this regard, learned Counsel refers to para-61 and 143 of the judgment. The said boundary wall, according to the prosecution had been constructed around two plots of land purchased by the accused persons in the year 1990 in the name of A-2 and their sons and there was no mention of any such boundary wall in the sale deed whereas during the investigation it was found that there was a boundary wall around the aforesaid plots. The defence took the stand that the boundary wall was not constructed by them rather it was developed by Sneh Priya Sahkari Grih Nirman Samiti from which they had purchased the plots as a developed land. The Court below however, relied upon DW 78 who stated that he was taken by CBI to a land in the year 2003 and it appears that boundary wall was constructed one and half years earlier. For the said reasons, the court below has not accepted the prosecution case. It is submitted by learned Counsel that stand has been taken by the defence that the boundary wall was in existence when the plot was purchased and it was for them to have proved the said fact and not to have built a third case that the wall finally came into existence in the year 2001 much after the check period on the basis of evidence of DW 78, and it was not open to the Court to have accepted the same. It is submitted that the prosecution has examined the Secretary of the Co-operative Society concerned as P.W. 28 who had made a clear statement that the plot was demarcated by putting boundary pillars only and the said evidence has not been challenged by the defence. It is contended by learned Counsel that it is unheard of that the word ‘developed’ includes construction of boundary wall and any such stand of the defence is contrary to the meaning of the said word as commonly understood and also in the face of the clear evidence led by the prosecution; it was thus not open to the court below, according to him, to have taken up the third case and rejected the claim of the prosecution on the said basis.

With respect to expenditure learned Counsel submits that the court below has decreased the same by about Rs. 5 lacs without any sound basis. In this regard he refers to item No. I under the head of expenditure which is educational expenses of children for which the court below has given Rs. 3,25,458/- whereas according to the prosecution it was Rs. 4,32,367/-. It is stated that cogent documentary evidence has been produced on the said point and there was no occasion to reduce the said expenditure.

26. Learned Counsel next refers to an amount of Rs. 89,378.25 under the head of expenses on contesting election by A-1 but in para 244 of the judgment the court below has accepted the defence version, without any accounts or receipts being produced, that no expense has been made by respondent No. 1 during the course of election and amounts had been arranged by his agents by donations and contributions, since the same has been accepted by the ITAT also.

27. Learned Counsel next refers to item No. 17 under the head of Expenditure which relates to house hold expenditure for which the court below has given only Rs. 1,50,000/- whereas according to the prosecution it should be Rs. 5,50,795/-. It is submitted that calculation of household expenses was made considering the very large size of the family having 11 members and was on the basis of approximately Rs. 20 per day per head which would be the bare minimum amount taking into account expenses on Page 1616 toiletries, clothes, pocket money, etc., which would still have to be spent even when some of the children were studying outside. It is submitted that the court below has accepted a ridiculously low figure of Rs. 5/- per day per person which is unthinkable considering the standard of living of the accused persons and the top level and expensive schools to which their children were sent. Learned Counsel submits that the reduction of more than Rs. 4 lacs under this head is wholly unjustified and the figure accepted by the court below is completely arbitrary and not based on ground reality.

On the basis of the aforesaid facts pointed out by the learned Counsel, it is submitted that there can hardly be any doubt that the accused persons are in possession of assets disproportionate to their known sources of income to the extent of Rs. 35 to 40 lacs.

28. It is submitted by learned Counsel that even in an appeal against acquittal re-appreciation of evidence is permissible and in the face of such strong evidence it would be a miscarriage of justice not to interfere with the acquittal of the accused persons who are guilty of the offences for which they have been charged. It is contended on the basis of what has been stated above that there are compelling and substantial reasons for interference against the acquittal since the court below has not relied upon convincing and relevant materials and has on the other hand based its findings upon the order of the Tribunal which it could not have done. In this regard learned Counsel refers to a decision of the Supreme Court in the case of State of Madhya Pradesh v. Bacchudas alias Balaram and Ors. of which it has been held as follows:

There is no embargo on the appellate court reviewing the evidence upon which an order of acquittal is based. Generally, the order of acquittal shall not be interfered with because the presumption of innocence of the accused is further strengthened by acquittal. The golden thread which runs through the web of administration of justice in criminal cases is that if two views are possible on the evidence adduced in the case, one pointing to the guilt of the accused and the other to his innocence, the view which is favourable to the accused should be adopted. The paramount consideration of the court is to ensure that miscarriage of justice is prevented. A miscarriage of justice which may arise from acquittal of the guilty is no less than from the conviction of an innocent. In a case where admissible evidence is ignored, a duty is cast upon the appellate court to re-appreciate the evidence where the accused has been acquitted, for the purpose of ascertaining as to whether any of the accused really committed any offence or not. (See Bhagwan Singh v. State of M.P. . The principle to be followed by the appellate court considering the appeal against the judgment of acquittal is to interfere only when there are compelling and substantial reasons for doing so. If the impugned judgment is clearly unreasonable and relevant and convincing materials have been unjustifiably eliminated in the process, it is a compelling reason for interference. These aspects were highlighted by this Court in Shivaji Sahabrao Bobade v. State of Maharashtra ; Ramesh Babulal Doshi v. State of Gujarat ; Jaswant Singh v. State of Haryana ; Raj Kishore Jha v. State of Bihar ; State of Punjab v. Phola Singh ); Suchand Pal v. Phani Pal and Sachchey Lal Tiwari v. State of U.P. .

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29. Countering the aforesaid arguments of learned Counsel for the appellant, it is argued by Mr. Ram Jethmalani, learned senior counsel appearing for respondent Nos. 1 and 2, that earlier there was no provision for grant of leave to appeal by the Court before an appeal against acquittal could be admitted and the same was introduced on the recommendations of the Law Commission of India in the Code of Criminal Procedure, 1973 in order to tighten the scope of interference. It is submitted that an appeal against acquittal is analogous to the provisions of Article 136 of the Constitution of India with regard to grant of special leave to appeal by the Supreme Court. According to him, the true test for interference in such matter is such state of affairs from the record of the case which shocks the conscience of the Court and compels it to interfere with the acquittal in the interest of justice. It is submitted by him that no such state of affairs prevails in the present case. He argues that corruption in the present world now runs into thousands or crores and not in lacs whereas the allegations in the present matter against the respondents was only to the extent of possessing disproportionate assets of Rs. 46 lacs in a period of seven years which the appellants are confining to Rs. 35 lacs, i.e., approximately Rs. 5 lacs per year. This, according to him, shows something seriously wrong with the present matter. It is contended that the accused is not a simple public servant but an Ex. Chief Minister and high profile politician and he has been involved in the cross-fire of politics and the case is an outcome of the political battle being waged against him by his political opponents. In this context he relies upon certain observations made by the Supreme Court in the case of Rajiv Ranjan Singh ‘Lalan'(VIII) and another (supra), in para-60 of which it was observed by the Court that the petitioners are waging a political battle against Respondents 4 and 5 therein (respondent Nos. 1 and 2 herein) through the medium of public interest litigation. It is stated that the strange feature of the FIR is that the informant Mr. B.N. Kharagwal, Inspector, CBI who was examined as P.W. 130 has stated in his cross-examination that he did not know that he was informant of the case and he did not know why he was made informant nor did he know anything about the facts of the case.

30. With regard to the main thrust of the appellant’s case that the findings of the Tribunal or Civil Court are not binding on the criminal Court as laid down in Khwaja Nazir Ahmad’s case (supra) by the Privy Council, learned Counsel states that he does not argue against the said proposition nor according to him, any such decision of any authority would be binding upon the criminal Court. He however, submits that when the assets have been disclosed to public authorities, namely, the Income Tax authorities the clandestine nature of the assets would be washed out and Income tax authorities have in their assessment and appellate order affirmed the said assets and decided about the tax amounts payable on them. It is urged that the IT returns were filed on 14.10.1996 much before filing of the FIR on 18.8.1998 and even if it is accepted that the respondents apprehended trouble then they did not destroy rather they disclosed the assets which were with them. In the said circumstances, the order of the income tax authorities, being by a statutory authority, would be relevant under Section 35 of the Evidence Act and they are direct and conclusive evidence of public disclosure and even though not conclusive they are reliable evidence on other matters.

31. It was next argued by learned Counsel that the version of the accused persons has to be accepted because his statement has to be treated as that of a witness Page 1618 unless the prosecution has proved it to be false beyond doubt. It is submitted that under Section 157 of the Evidence Act previous statements made to public authorities may be proved to corroborate the testimony of witnesses and the statement of the respondents was made to the Income Tax authorities before the FIR was lodged. In such circumstances, the probative value of the ITAT orders is nearly conclusive, more so when the whole case of the prosecution was based upon IT orders. It is stated that at the lowest level all the assessment orders were in favour of the accused persons but after filing of the charge sheet the appellate Commissioner was prevailed upon to reverse all orders but fortunately for the accused persons before the trial ended, the ITAT reversed the said orders. In the said circumstances, it is submitted that since the whole case of the prosecution was based upon IT orders and there was hardly any investigation done by it, the findings of the IT authorities cannot be overlooked in the matter.

32. Learned Counsel further submits that in the present matter the prosecution has examined 132 witnesses and the defence has also examined as many as 94 witnesses and every fact has been proved by the defence by incontrovertible defence evidence showing either admission by the prosecution or no prosecution investigation on the said points. In the said circumstances, it is argued that the findings of the ITAT would be without the slightest blemish and would be relevant and have near binding effect and thus no error was committed by the court below in relying upon the same.

33. In support of the aforesaid proposition, learned Counsel for the respondents relies upon a decision of the Supreme Court in the case of M. Krishna Reddy v. State Deputy Superintendent of Police, Hyderabad . In the said case the accused had based his case upon the income tax returns filed by him, by his wife, his daughter and his son-in-law prior to the raid upon his house and the filing of the FIR. The same was not accepted by the trial court and the High Court but the Supreme Court in para-14 of the judgment held as follows:

We are unable to appreciate that reasoning and hold that the prosecution has not satisfactorily discharged the expected burden of proof in disproving the claim of the appellant. Therefore, on the face of these unassailable documents i.e. the wealth tax and income tax returns, we hold that the appellant is entitled to have a deduction of Rs. 56,240 from the disproportionate assets of Rs. 2,37,842.

34. Learned Counsel for the respondents next relies upon a decision of the Supreme Court in the case of State of Andhra Pradesh v. J. Satyanarayana 2001(1) BCCR 300, para-7 of which is quoted below:

Evidence was led by the respondent in support of the above pleas. The prosecution itself placed on record, Ex. P-17 an income-tax return filed by the wife of the respondent for the previous year. It was produced from proper quarters and proved by ITO, P.W.8. Income-tax return, Ex. P-17 had been filed by the wife on 2nd of January, 1986, admittedly much before date of raid and even before registration of the case. The evidence regarding loans which were claimed to have been received by wife was led through D.W.15 and D.W.25 who stood the scrutiny of cross-examination well. Loans received by the wife from the lenders had found reflection in the accounts of those lenders with their accounts also prepared much earlier to the date of raid. It was argued Page 1619 before the High Court that Ex. P-17, income-tax return of the wife should not be relied upon and that it was an after thought, brought into existence to save the respondent. The High Court rightly rejected it. We fail to understand how the income-tax return Ex.P-17, filed by the wife on 2nd January, 1986 could be labeled as an after thought when it had been filed much prior to even the registration of the case against the respondent by the ACB. Not only was that return filed but the assessment had also been completed. The receipt of various loans which had been shown by the wife in the return thus, stood accepted by the income-tax authorities. The evidence led by the prosecution itself by filing of income-tax return of the wife coupled with the evidence of defence witnesses clearly goes to establish that the house in Anand Nagar Colony was an asset belonging to the wife of the respondent and not to the respondent himself. The High Court, therefore, rightly arrived at the conclusion that the said house could not be treated as an asset of the respondent by correct appreciation of evidence and proper application of law to the fact of the case. We are satisfied that the finding recorded by the High Court to the effect that the house in Anand Nagar Colony was an asset of the wife of the respondent and not of the respondent is correct and proper and suffers from no infirmity at all. Once we arrive at that finding, the conclusion becomes irresistible that an order of acquittal of the respondent recorded by the High Court is well merited. It suffers from no illegality, let alone perversity. We consequently, do not find any reason to interfere with the well-merited order of acquittal. This appeal, therefore, fails and is dismissed.

35. Learned Counsel on this point lastly relies upon the case of DSP, Chennai v. K. Inbasagaran in which also the accused who was public servant in a case of disproportionate assets had denied the charges and taken the plea that the assets which had been recovered were not his assets but they were of his wife who was running three companies. The conclusion drawn by the Supreme Court in the said case is contained in para 17 of the judgment which is as follows:

Now, in this background, when the accused has come forward with the plea that all the money which has been recovered from his house and the purchase of real estate or the recovery of the gold and other deposits in the bank, all have been owned by his wife, then in that situation how can all these recoveries of unaccounted money be laid at his hands. The question is, when the accused has provided satisfactory explanation that all the money belonged to his wife and she has owned it and the Income Tax Department has assessed it in her hand, then, in that case, whether he could be charged under the Prevention of Corruption Act. It is true that when there is joint possession between the wife and husband, or father and son and if some of the members of the family are involved in amassing illegal wealth, then unless there is categorical evidence to believe, that this can be read in the hands of the husband as the case may be, it cannot be fastened on the husband or the head of the family. It is true that the prosecution in the present case has tried its best to lead evidence to show that all these monies belonged to the accused but when the wife has fully owned the entire money and the other wealth earned by her by not showing in the income tax returns and she has accepted the whole responsibility, in that case, it is very difficult to hold the accused guilty of the charge. It is very difficult to segregate that how much of the wealth belonged to the husband and Page 1620 how much belonged to the wife. The prosecution has not been able to lead evidence to establish that some of the money could be held in the hands of the accused. In case of joint possession it is very difficult when one of the persons accepted the entire responsibility. The wife of the accused has not been prosecuted and it is only the husband who has been charged being a public servant. In view of the explanation given by the husband and when it has been substantiated by the evidence of the wife, the other witnesses who have been produced on behalf of the accused, coupled with the fact that the entire money has been treated in the hands of the wife and she has owned it and she has been assessed by the Income Tax Department, it will not be proper to hold the accused guilty under the Prevention of Corruption Act as his explanation appears to be plausible and justifiable. The burden is on the accused to offer plausible explanation and in the present case, he has satisfactorily explained that the whole money which has been recovered from his house does not belong to him and that it belonged to his wife. Therefore, he has satisfactorily accounted for the recovery of the unaccounted money. Since the crucial question in this case was of possession and the premises in question were jointly shared by the wife and the husband and the wife having accepted the entire recovery at her hand, it will not be proper to hold the husband guilty. Therefore, in these circumstances, we are of the opinion that the view taken by the High Court appears to be justified and there are no compelling circumstances to reverse the order of acquittal. Hence, we do not find any merit in this appeal and the same is dismissed.

36. On the basis of the aforesaid cases, it is submitted by learned Counsel that in the present matter also the returns were filed with the Income Tax Department much prior to the filing of the FIR in the disproportionate assets case and the income and assets disclosed to the Income Tax Department have been accepted by the ITAT whose decision has become final not having been appealed against. In such circumstances, it is submitted that the court below did not commit any illegality in accepting the said findings of the ITAT and coming to the conclusion that the accused persons have satisfactorily explained the assets in their possession and no case of possession of disproportionate assets was made out.

37. Learned Counsel for the respondents also emphasizes the fact that the present matter is not one where the money has been found on raids conducted upon the accused persons. It is stated that evidence that has come on the record discloses poverty conditions which is unusual. He also emphasizes the fact that all the assets of the accused persons are open assets and have been acquired by registered documents. It is submitted that the case of Awadh Kishore Gupta (supra) relied upon by the appellant has no relevance in the present context since the same relates to quashing of criminal proceedings. Similarly, according to learned Counsel the case of Radha Krishna Singh (supra) relied upon by the appellant is also wholly irrelevant in the present matter as the same related to civil suit in relation to claim regarding succession.

38. Learned Counsel also refers to the fact that in the present matter no preliminary enquiry was made whereas that is the normal practice in a case involving high ranking officials and public servants. In this regard he relies upon the statements made by the informant Mr. B.N. Kharagwal, Inspector who admits that no preliminary Page 1621 enquiry was made in this case and he had not made any enquiry but only verified and first time his statement was recorded by the investigating officer on 21.9.98.

39. With respect to income from dairy or sale of milk learned Counsel refers to the dishonesty of the prosecution of having first admitted the dairy income of Rs. 4.5 lacs but during the trial having retracted from the same and trying to show that assertion made in the charge sheet is false. It is submitted that P.W. 131 the main I.O. has admitted that he has got the figures regarding income from IT assessment orders. The said IT assessment orders clearly show that the income found was net income, yet an attempt was made to show the same as gross income and to show expenses of Rs. 1.12 lacs as expenses for running the business making an increase of Rs. 5.62 lacs. It is submitted by learned Counsel that the dairy income of Rs. 4.5 lacs accepted by the prosecution related only to part of the check period whereas for the entire check period the dairy income as shown in the returns and accepted by the ITAT comes to Rs. 7 lacs.

40. Learned Counsel also refers to the findings in the judgment that the dairy income was existing even from the period much prior to the check period from 1976 onwards as has been accepted by the ITAT and it is submitted that the saving from the said income has gone towards the cash in hand of Rs. 7.75 lacs as on 31.3.1990.

41. Learned Counsel refers to para-125 of the judgment to show that the agriculture income from the land of respondent No. 2 and also from the children’s land comes to Rs. 3.75 lacs and Rs. 88 thousand and that the same was proved by the defence witnesses and the judgment of the ITAT has been relied upon only for the purpose of figure of income.

42. Regarding the valuation of the house of respondent No. 1 it is submitted by learned Counsel that the same is based upon opinion evidence and the evidence of the defence has been rightly accepted by the trial Court since the valuation by the prosecution was made by using Delhi rates whereas in the case of the defence valuation the rates of labour and material in Patna which are much lower have been used and the said valuation reports of the respondents which were enclosed in the IT returns was accepted by IT valuer; it was thus open to the trial court to accept the same as being the more reasonable view having stood the test of IT scrutiny. In this regard learned Counsel states that as a matter of fact, the final amount has been taken after excluding the amount of Rs. 2.7 lacs from the valuation as amounts spent after check period.

43. Regarding 35 kathas of land of Dhanaut which was acquired by registered documents and for which valuation of Rs. 1.44 lacs has been accepted by the court below, it is submitted by learned Counsel that the prosecution has mainly relied upon private documents of 1993 which had been created as evidence since the people of the area learnt that the Government was about to acquire the lands of the area but the said agreement for sale for much higher rates never went through since the sale were abandoned later when the government decided not to acquire the same. Learned Counsel refers to the fact that the vendors of the respondents had acquired the lands at the rate of Rs. 375/- per katha in 1979 and after 14 years the respondents paid eleven times more for the same. It is stated that evidence was led on behalf of the defence regarding sales in area during the contemporary period Page 1622 whereas the four witnesses, namely, P.Ws. 85 to 88, produced by the prosecution did not support their case and were declared hostile. Considering the circumstances that the valuation of the respondents was accepted by the ITAT, there was nothing wrong in the court below accepting the said valuation and not the imaginary valuation of more than Rs. 10 lacs put forward by the prosecution. It is submitted in this context that a document never registered is no evidence regarding the valuation of the land since the same can be safely held to have been created for collateral purpose and there is thus no evidence by the prosecution of any kind.

44. Regarding the KVPs (Kisan Vikas Patras), learned Counsel submits that the prosecution has not treated the interest earned as income but the entire value of KVPs was treated as assets and thus the total income of Rs. 3.19 lacs was reduced to Rs. 1.23 lacs whereas the assets were increased to Rs. 4 lacs. It is stated that the defence had proved the entire amount properly by cross-examining P.W.41 and on the basis of the evidence of D.W.3.

45. Learned Counsel for the respondents also stated that an amount of Rs. 1.58 lacs as the value of Maruti Car has wrongly been shown in the column of assets by the learned court below as the same was purchased by securing loan which was repaid from the salary.

46. Regarding the income from salary and Dearness Allowance, learned Counsel has referred to para 112 of the judgment stating that the court below has come to the conclusion that the salary has gone up to Rs. 6,92,663.50.

Regarding the income from sale of Jeep, learned Counsel refers to Para-128 of the judgment in which the Court below, according to him, has rightly relied upon the statement of D.W.8.

47. Learned Counsel also submits that an arbitrary figure of Rs. 5,54,791/- has been taken by the CBI towards house hold expenses whereas separate expenses on education of children has been taken and considering the ordinary conditions in which the accused persons were maintaining their family and various products from agriculture and dairy being available to them it is submitted, that the amount of Rs. 1.5 lacs taken by the court below for this item is justified.

48. With respect to the boundary wall learned Counsel submits that there is no evidence by the prosecution as to when it was constructed. Clear stand of the respondents was that it was outside the check period and the said stand has therefore, rightly been accepted in the judgment.

49. It is submitted by learned senior counsel for the respondent Nos. 1 and 2 that when two views are possible as per the evidence on the record, the one taken by the trial court in favour of the accused should not be disturbed by the appellate court and the accused persons having been acquitted by the trial Court the presumption of their innocence is further strengthened and its findings should not be lightly interfered with. In support of the same learned Counsel relies upon the general propositions enunciated by the Supreme Court in the case of Chandrappa and Ors. v. State of Karnataka of which lays down as follows:

From the above decisions, in our considered view, the following general principles regarding powers of the appellate court while dealing with an appeal against an order of acquittal emerge;

Page 1623

(1) An appellate court has full power to review, reappreciate and reconsider the evidence upon which the order of acquittal is founded.

(2) The Code of Criminal Procedure, 1973 puts no limitation, restriction or condition on exercise of such power and an appellate court on the evidence before it may reach its own conclusion, both on questions of fact and of law.

(3) Various expressions, such as, “substantial and compelling reasons”, “good and sufficient grounds”, “very strong circumstances”, “distorted conclusions”, “glaring mistakes”, etc. are not intended to curtail extensive powers of an appellate court in an appeal against acquittal. Such phraseologies are more in the nature of “flourishes of language” to emphasise the reluctance of an appellate court to interfere with acquittal than to curtail the power of the court to review the evidence and to come to its own conclusion.

(4) An appellate court, however, must bear in mind that in case of acquittal, there is double presumption in favour of the accused. Firstly, the presumption of innocence is available to him under the fundamental principle of criminal jurisprudence that every person shall be presumed to be innocent unless he is proved guilty by a competent court of law. Secondly, the accused having secured his acquittal, the presumption of his innocence is further reinforced, reaffirmed and strengthened by the trial Court.

(5) If two reasonable conclusions are possible on the basis of the evidence on record, the appellate court should not disturb the finding of acquittal recorded by the trial court.

50. On the basis of the aforesaid submissions learned Counsel contends that the judgment of acquittal is founded on facts and supported by incontrovertible evidence which is opposed by hardly any worthwhile evidence led on behalf of the prosecution; further nothing unaccounted had been found on searches and thus it would be huge miscarriage of justice if the respondents are subjected to another hearing on a totally false and mala fide prosecution.

51. Learned Counsel for the CBI, Respondent No. 3, has not made any separate submission and has adopted the arguments advanced by learned Counsel for respondent Nos. 1 and 2.

52. In his reply learned Counsel for the appellant, Mr. Surendra Singh states that it has wrongly been argued that Section 35 of the Evidence Act would apply with respect to ITAT orders even though the same is not relevant under Sections 40 to 43 of the Evidence Act. In this regard, he relies upon a decision of this Court in the case of Mt. Khedia v. Mt. Turia and Ors. of which is quoted hereunder:

On a review of the authorities, considered above, therefore, the principles, which emerge, and, which can be extracted, there from, may be summarized thus:

The Evidence Act does not make a finding of fact arrived at on the evidence before the Court in one case evidence of that fact in another case.

A judgment, not inter parties, which would not be admissible under Sections 40 to 43 of the Evidence Act, would not become relevant, merely because it contains a statement as to a fact which is in issue or relevant in the suit, and to such a judgment Section 35 of the Evidence Act has no application.

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Where a judgment is not in rem, nor relating to matters of public nature, nor between the parties to a subsequent suit, the fact that the Court by that judgment decides a point in a particular way is not relevant for the purpose of the decision of the same point in the subsequent suit.

Therefore, a statement of a relevant fact in a previous judgment, not inter parties, is not admissible under Section 35 of the Evidence Act.

There is, therefore, nothing in the Evidence Act to warrant the view that a statement of fact in a previous judgment, not inter parties, can be used as evidence in a subsequent suit to decide a point which is in issue in that case.

53. Learned Counsel also relies upon a decision in the case of Rajan Rai v. State of Bihar , in para-8 and relevant part of para-10 of which it has been laid down as follows:

8. Coming to the first submission very strenuously canvassed by Shri Mishra, it would be necessary to refer to the provisions of Sections 40 to 44 of the Evidence Act, 1872 (short “the Evidence Act”) which are under the heading “Judgments of courts of justice when relevant”, and in the aforesaid sections the circumstances under which previous judgments are relevant in civil and criminal cases have been enumerated. Section 40 states the circumstances in which a previous judgment may be relevant to bar a second suit or trial and has no application to the present case for the obvious reasons that no judgment, order or decree is said to be in existence in this case which could in law be said to prevent the Sessions Court from holding the trial. Section 41 deals with the relevancy of certain judgments in probate, matrimonial, admiralty or insolvency jurisdiction and is equally inapplicable. Section 42 refers to the relevancy and effect of judgments, orders or decrees other than those mentioned in Section 41 in so far as they relate to matters of public nature, and is again inapplicable to the present case. Then comes Section 43 which clearly lays down that judgments, orders or decrees, other than those mentioned in Sections 40, 41 and 42, are irrelevant, unless the existence of such judgment, order or decree is a fact in issue, or is relevant under some other provisions of the Evidence Act. As it has not been shown that the judgment of acquittal rendered by the High Court in appeals arising out of the earlier Sessions trial could be said to be relevant under the other provisions of the Evidence Act, it was clearly “irrelevant” and could not have been taken into consideration by the High Court while passing the impugned judgment. The remaining Section 44 deals with fraud or collusion in obtaining a judgment, or incompetency of a court which delivered it, and can possibly have no application in the present case. It would thus appear that the High Court was quite justified in ignoring the judgment of acquittal rendered by it which was clearly irrelevant.

10. …In view of the foregoing discussion, we are clearly of the view that the judgment of acquittal rendered in the trial of the other four accused persons is wholly irrelevant in the appeal arising out of the trial of the appellant Rajan Rai as the said judgment was not admissible under the provisions of Sections 40 to 44 of the Evidence Act. Every case has to be decided on the evidence adduced therein. Case of the four acquitted accused persons was decided on the basis of evidence led there while the case of the present appellant has to be decided only on the basis of evidence adduced during the course of his trial.

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54. Learned Counsel for the appellant next refers to the judgments relied upon on behalf of the respondents, namely, M. Krishna Reddy (supra), J. Satyanarayana (supra) and K. Imbasagaran case(supra) and submits that in the first two cases the income tax returns had been filed by the wife and other relations of the accused much prior to the raid that was conducted on his house and thus it was on the basis of the factual situation that the Apex Court had held that the returns filed by the said persons showing different assets, lands etc. cannot be ignored as they were not an afterthought. With respect to K. Imbasagaran’s case (supra) it is submitted that there the wife had not been prosecuted and it is the husband who alone had been charged being a public servant and taking into consideration the fact that the wife was running three concerns, two of which were limited companies registered under the Companies Act, and had come up with the case that she was the owner of the entire assets that had been recovered, the Apex Court had come to the conclusion that in the said circumstances, the prosecution had failed to show that the recoveries of unaccounted money was that of the husband public servant.

55. It is submitted that the facts of the present case stand on an entirely different footing and the respondents cannot be permitted to base their defence on the mere technicality that the actual disproportionate asset case was registered on 18.8.1998 whereas the income tax returns had been filed in October and November 1996, since in the present matter the accused No. 2 had filed the income tax returns several months after the investigation was entrusted to the C.B.I. by order of this Court dated 11.3.1996 which was upheld by the Supreme Court on 19.3.1996, and the further order dated 23.8.1996 for filing D.A. cases against the accused persons involved in the Animal Husbandry Department scam. It is submitted that in the said circumstances, no blind reliance can be placed on the findings recorded by the ITAT and the court below ought to have arrived at any finding after referring to the evidence of the prosecution and defence witnesses which has not been done in the present case.

56. Regarding the charge that Mr. B.N. Kharagwal, Inspector, CBI was not the real informant, it is submitted by learned Counsel that he himself as P.W. 130 stated that he was asked to make an enquiry and he submitted a confidential report, Ext. 94/5 to the SP, CBI, P.W. 132. It has come in the evidence of P.W. 132 that it is on the basis of the confidential report that he dictated the FIR and showed P.W. 130 as informant and P.W. 132 himself signed the same and he had further stated that he did not annex the confidential report in the FIR.

57. With respect to Maruti Car, it is stated by learned Counsel that the value of Maruti Car has rightly been shown in the assets column as Rs. 1.58 lacs because even if it was obtained by taking loan, the same was paid in installment from the salary of respondent No. 1 and would thus be an asset created from the income.

58. Lastly, it is stated by learned Counsel for the appellant that the appellant has not conceded that disproportionate asset is not Rs. 46 lacs but only prima facie for the purpose of admission it was tried to be shown that at the very least the respondent Nos. 1 and 2 were in possession of disproportionate assets of Rs. 35 to Rs. 40 lacs.

59. On a consideration of the aforesaid submissions of the parties, this Court is inclined to accept that certain calculation errors and unjustified inclusions or exclusions Page 1626 are to be found in the judgment of the court below. Thus, in the income from salary in the discussions made in the judgment of the court below it is clearly stated that the defence has contended that the salary gets increased by Rs. 1.4 lacs from that shown by CBI. Thereafter, there is no discussion as to how the amount of Rs. 4.32 lacs given by CBI increased by Rs. 1.4 lacs thus amounting to Rs. 5.72 lacs has finally been shown to be Rs. 6.96 lacs under the said item. In the absence of any discussion it must be treated that there is an error of approximately Rs. 1.24 lacs in the said head as contended by the appellant. Similarly with respect to Dearness Allowance amount of Rs. 86,520/- nothing was shown in the entire judgment as to how the said figure has been arrived at and in the absence of any such discussion it must be held that the inclusion of said amount of D.A. under the head of income is not justified.

60. Again with respect to K.V.Ps. it has rightly been pointed out by learned Counsel for the appellant by referring to various paragraphs of the judgment as also after considering the discussion made in para 149 as relied upon by the respondents that there is no explanation as to how the figure of Rs. 3,19,500/- has been arrived at except for a bare assertion made by the court below. Learned Counsel for the appellant has rightly conceded to the fact that there is an error of Rs. 50,750/- and thus the total amount on the basis of discussion made in the judgment cannot exceed Rs. 1,74,450/- as interest on KVP during the check period. That being the position, there is clearly excess income of Rs. 1,45,015/- shown under this head.

Again with respect to units of master gain worth Rs. 20,000/-, there is no discussion in the judgment as pointed out by the appellant and nothing could be shown by the respondents, but I find that in para-242 of the judgment a bland statement has been made that the defence has proved that this amount belongs to Miss. Misa Bharti and does not belong to A-1 or A-2. There is absolutely no discussion how such a conclusion has been drawn by the court below. The said amount thus appears to have been wrongly excluded from assets.

Similarly there appears to be a clear error with respect to Recurring Deposit Account which has been shown in the asset column to the extent of Rs. 5000/- only whereas in para 74 of the judgment the total amount invested therein has been shown as Rs. 75,000/- and there is thus a decrease of Rs. 70,000/- which is not explained anywhere in any portion of the judgment.

61. I further find that while discussing the educational expenses of the children of the accused persons in paras 77, 78, 170 and 171 of the judgment the Court below has accepted the statement on behalf of the respondents that Rs. 25,000/- being caution money must be excluded from the educational expenses and accordingly, the expenses have been shown as Rs. 3,25,427/- after deducting from the total amount of Rs. 3,50,457/-. It is evident from the reading of para 170 of the judgment that caution money was deposited with respect to two of the daughters of the respondents, who are stated to have studied in Mayo College, Ajmer from 1995 to 1998, being Rs. 12,500/- for each of the daughters and the amount of Rs. 25,000/- was subsequently refunded. It is true that caution money is refundable money but the same could only have been refunded after the period of study was over in the year 1998 and thus the refund could not have been made during the check period and the court below has thus wrongly excluded this amount of Rs. 25,000/- from the educational expenses.

62. On a consideration of the aforesaid errors committed under the head of salary, dearness allowance, KVP, units of master gain, RD Account and caution money, Page 1627 this Court finds that a total amount of Rs. 4,69,808/- has been wrongly either increased in the income or omitted or decreased in the value of assets or expenditure as per the judgment of the trial court. The safety margin after deducting the expenses and assets from the income of the accused persons as per the findings of the trial court is only Rs. 3,17,082/- and thus on the basis of these errors committed with respect to these six items alone the safety margin is crossed and there would be disproportionate asset of Rs. 1,52,726/-.

Coming next to the acceptance of the order of the ITAT as binding upon the criminal Court and the acceptance of the conclusions of the ITAT as final and also the view of the trial Court that the same has been affirmed by the Supreme Court there can hardly be any doubt that the same is based on a completely erroneous view of the law as laid down in various decisions starting from the Privy Council judgment in Khwaja Nazir Ahmad’s case and the proposition that the findings of the ITAT are not binding has been accepted even by the learned Counsel for respondent Nos. 1 and 2. However, it was tried to be shown by him that the Income tax return having been filed much prior to the filing of the FIR in the disproportionate assets case the same can be relied upon as having nearly conclusive value on the basis of the decision of the Supreme Court cited by him, but the said submission cannot be considered to be correct.

63. In the three decisions relied upon by him, in the two cases of M.K. Reddy (supra) and J. Satyanarayana, (supra) the raid had been conducted much after filing of the income tax returns by the accused person, his wife, son-in-law etc. and therefore the Court was of the view that the facts mentioned in the tax returns corroborated the story put forward by the accused person that he had received the amounts as loan, etc. from his wife and son-in-law. Thus the stand taken in the criminal case had been accepted considering the fact that it stood corroborated from the previous filing of the income tax returns by the accused persons and connected persons when no such proceedings of disproportionate asset was even apprehended. In the third case of K. Imbasagaran (supra) the conclusions were completely based upon the fact that the wife was a Director of and running two limited companies registered under the Companies Act apart from a proprietary concern and that she had owned up all the assets that were unearthed during the raid and she not having been prosecuted and only the husband having been charged it would be difficult to segregate how much wealth pertained to the husband and how much belonged to the wife. Thus, under such circumstances the Apex Court had come to the conclusion that the accused could not be held guilty under the Prevention of Corruption Act as he had come out with a plausible explanation.

64. With regard to the income from agriculture of Rs. 3.75 lacs it has rightly been argued by learned Counsel for the appellant that the said finding is wholly based upon the findings of ITAT and no legal evidence to corroborate the same has been discussed in the judgment. In the circumstances in which the said income has been shown for the first time by getting mutation done on 2.6.1997 much after the AHD scam cases were entrusted to the CBI by orders of this Court and the Supreme Court and the fact that there was not even a single revenue entry or document of a prior date brought on the record or discussed in the judgment of the trial court would go to show that the same could not have been accepted merely on the basis of the fact that ITAT had accepted the same. Any such story with which Page 1628 the defence has come up after the threat of prosecution for disproportionate asset loomed large over the head of the accused persons ought not to have been lightly accepted by the trial court without scrutinizing the legal value of the evidence led on the said point. This Court does not find that any such scrutiny has been made in the judgment of the trial court and simply on the basis of acceptance of the figures by the ITAT the court below has arrived at its conclusion which is not permissible.

65. With regard to income from sale of milk of Rs. 7 lacs, learned Counsel for the appellant has conceded that the prosecution having accepted Rs. 4.5 lacs as income for the check period on the basis of income tax returns it was not open to it to resile from the same at the stage of trial; thus Rs. 4.50 lacs stands accepted under this head. However, learned Counsel has sought to argue that there is an excess of Rs. 2.5 lacs shown. It is evident from the judgment that dairy income of Rs. 4.5 lacs arose for the period from 1993-94 to 31.3.1997 whereas in the returns filed for the period 1990-91 to 1992-93 income of Rs. 2.5 lacs has been shown from the said source which has also been accepted by the ITAT. That being the position, learned Counsel for the appellant was unable to show at this stage how the court below has committed any error on this count if the CBI itself accepted the figure of Rs. 4.5 lacs for the period from 1993-94 till the end of the check period.

66. Regarding the sale of Jeep there appears to be some force in the submission of the learned Counsel for the appellant that mere oral evidence without the production of the original owner book ought not to have been relied upon by the court below. In para 128 of the judgment the trial court has held that the prosecution has not proved any document that the jeep does not belong to A-1, hence income of Rs. 45,000/- from the sale of the jeep should be included in the income of A-1. The said finding prima facie appears to be contrary to the law in this regard wherein defence raised by the accused persons regarding income from any other source not known to the prosecution has to be proved by the accused persons and it is not for the prosecution to disprove the same. Hence, the accused persons having taken the plea that the respondent No. 1 was the owner of the jeep which was sold for Rs. 45,000/- during the check period, it was for them to have proved the same by bringing on record the evidence which is admissible under the provisions of the Evidence Act; a photo copy of the owner book being produced by someone who claims to be the transferee owner of the vehicle without complying with the provisions of Sections 65 and 66 of the Evidence Act does not appear to be legal evidence and the court below has wrongly shifted the onus on the prosecution in this regard.

67. With regard to cash in hand of Rs. 7.75 lacs also the Court below appears to have misdirected itself by merely giving finding on the basis of ITAT order. It is well settled that any saving or income prior to the check period has to be proved by the accused persons by bringing cogent evidence regarding income and expenditure of the past period on the record. From the discussions made in the judgment and the defence of the accused persons, it is evident that the accused persons were having bank accounts, fixed deposits, recurring deposits as well as investments in National Savings Certificates and Kisan Vikas Patras in their names and that of their children from much before the check period; it would be difficult for any Court to out right believe that persons who are making investments in various Bank accounts and other investments of amounts running into several lacs of rupees would keep a huge amount of Rs. 7.75 lacs as cash in hand with them. Here again there is absolutely no Page 1629 discussion in the judgment of the trial court as to how the said amount is acceptable. I also find force in the contention of learned Counsel for the appellant that if any cash in hand is to be accepted at the beginning of the check period then the accused persons would be obliged to show as to what was the cash in hand at the end of the check period also, so that only the difference between the two amounts could be taken into account for arriving at the amount actually spent during the check period toward creation of assets or making expenditure.

68. Regarding the valuation of the house this Court would be inclined to accept the submission of learned Counsel for the respondents at this stage that the same is a matter of opinion evidence of experts from two sides pitted against each other. It is difficult to per se accept that the court below has decreased the value of the said assets to the tune of Rs. 6,74,300/-. The said amount in any case would have to be reduced by an amount of Rs. 2.7 lacs which has been discussed in the judgment as having been spent after the check period and thus the difference between the two figures of valuation of the two sides would be approximately Rs. 4 lacs on the face of it. However, this is a matter on which two views are possible at this stage and in such circumstances, clearly the appellate court cannot interfere with the findings of the trial court.

69. With regard to purchase of 35 kathas of land by four sale deeds of 9.7.1993 there appears to be some force in the arguments of learned Counsel for the appellant. It appears that the learned trial Court has given too much weight to the fact that the four vendors, P.Ws. 85 to 88, have turned hostile. It is well settled that merely because the witnesses have turned hostile does not demolish the prosecution case on a particular point if there are other surrounding circumstances to support it; his evidence is admissible in the trial and there is no legal bar to base a conviction upon his testimony if corroborated by other reliable evidence (conf. Bhagwan Singh v. State of Haryana ). The Court below has not at all taken this aspect into account that there are facts on the record to show that there was prior agreement between the vendor and a Co-operative Housing Society for sale of the same land at Rs. 30,000/- per katha and for which an amount of Rs. 2 lacs was given as advance. It is difficult to blindly accept that a party would return the advance of Rs. 2 lacs in order to sell the same land for a much lesser amount of Rs. 1,28,000/-. Moreover, in the same village Dhanaut the accused persons have previously purchased other plots of land for a valuation which was being claimed by the prosecution. These facts can be found from the judgment itself and the dispute regarding boundary wall relates to 2 plots of land purchased by the accused persons in the same village which was purchased three years earlier at the rate of approximately Rs. 28,000/- per katha and thus the said issue could not have been so lightly dealt with as has been done by the court below only on the ground the witnesses had turned hostile and by merely relying upon the order of the ITAT. The reduction on this count in the value of assets would be approximately Rs. 9.22 lacs.

70. With regard to NSC it is the claim of the appellant that even from the defence admission an amount of Rs. 1.4 lacs would be the assets of the check period and thus Rs. 1 lac has been shown as less under the said head by giving only Rs. 40,000/- as the value of the assets. However, on a consideration of the discussions made in para 148 of the judgment I find that it has been found therein that the clear case of the defence was that Rs. 1 lac is asset prior to the check period and another Rs. 1 lac Page 1630 is the income from the assets received during the check period and thus, it appears that the court below has rightly considered only Rs. 40,000/- as value of NSC in item No. 10 under the heading of Assets and the stand of the appellant does not appear to be correct in this regard.

71. With regard to construction of boundary wall over the two plots for which value has been assessed as Rs. 76,418/- by the CBI this Court finds that the discussion and finding of the court below on the said issue does not appear to be reasonable and acceptable. The defence of the respondents being that the boundary wall was pre-existing at the time of the purchase itself, only the said defence could have been looked into and not a new one on the basis of statement of a defence witness that according to him the said boundary wall appeared to have been constructed one and half years before 2003. That was not the case of the defence and no finding could have been recorded on the basis of any such statement of D.W. 78. If the defence failed to show that there was a boundary wall at the time of original purchase and they had not constructed it, then the only possible conclusion for the court would have been to accept the same as an asset created during the check period, the purchase having been made during the check period.

72. With respect to educational expenses there is no clear explanation in the judgment why the figures shown by the prosecution should be rejected in favour of the defence leading to a further decrease of Rs. 81,910/- apart from caution money which has been discussed above.

Regarding the election expenses also it appears that there is a blind reliance by the court below on the conclusions of the ITAT without any receipts or accounts being produced by the respondents to show that the entire expenses of Rs. 89,378/- were received as donations, etc.

73. With respect to house hold expenses, there is no satisfactory discussion in the judgment as to how the same has been reduced from Rs. 5.5 lacs approximately to Rs. 1.5 lacs considering the size of the family and the type of living standard and the types of schools in which the children were studying.

74. Thus, on a consideration of the aforesaid contentions of the parties, it appears that the appellant has been able to make out apart from pointing out the aforesaid error with respect to six items, a strong case with respect to showing increase of income or reduction of expenditure and assets with respect to salary to a further extent of Rs. 1.4 lacs approximately without any proper discussion towards income from the salary, Rs. 3.75 lacs towards income from agriculture, Rs. 45,000/- towards income from sale of jeep, Rs. 7.75 lacs as cash in hand at the beginning of the check period, Rs. 9.22 lacs approximately towards the value of 35 kathas land at village Dhanaut, Rs. 76,418/- towards construction of the boundary wall, Rs. 89,378/- towards election expenses, Rs. 81,910/- towards education expenses and Rs. 4 lacs approximately towards household expenses, the total of which comes to more than Rs. 29 lacs. If this is added to the error with respect to six items pointed out above of Rs. 4,69,808/- it would make the total increase of income or decrease of expenditure and assets to the tune of nearly Rs. 33.7 lacs.

75. The aforesaid increase of income or decrease of expenditure and assets of Rs. 33.7 lacs is a very substantial amount considering the overall figures of income, expenditure and assets arrived at by the court below and if the safety margin of Page 1631 Rs. 3.17 lacs found by the court below is deducted from it, the amount of disproportionate assets would come to about Rs. 30.5 lacs. It is true that learned Counsel for the respondents strongly urged that the defence has proved every fact by incontrovertible defence evidence through examination of as many as 94 defence witnesses but unfortunately, the same is not reflected in any discussion in the judgment of the learned Special Judge and he has sought to rely mainly on the findings and conclusions in the orders of ITAT. The findings thus arrived at by the court below cannot be held to be legal and valid on the basis of materials on the record. In that view of the matter, this Court is left with no alternative but to re-appreciate the evidence at the hearing of the appeal so as to come to a proper conclusion in the matter.

87. It is, however, made clear that the observations or findings as recorded above in this order have been made only for the purpose of considering the question of grant of leave to appeal and for admission of the appeal and they should not be taken as this Court’s final opinion on the merits of the case which can only be considered and decided after a proper appreciation of the entire evidence on the record.

89. In view of the discussions made above, leave to appeal is granted.

90. This appeal shall be heard.

91. Call for the records from the Lower Court.