+ IN THE HIGH COURT OF SIKKIM AT GANGTOK (Criminal Appellate Jurisdiction) DATED : 21-06-2011 CORAM HON'BLE MR. JUSTICE S. P. WANGDI, JUDGE Crl. A. No.04 of 2008 Shri Padam Lall Gurung, S/o Shri Damber Dhoj Gurung, R/o Uttarey, Maneybong, West Sikkim versus The State of Sikkim (Vigilance Department) For appellant For Respondent ''' Appellant ... Respondent Mr. A. Moulik, Senior Advocate with Mr. N. G. Sherpa, Ms. K. D. Bhutia and Mr. Leonard Gurung, Advocates. Mr. P. L. Gurung in person. Mr. J. a, Pradhan, Public Prosecutor with Mr. Karma Thinlay Namgyal, Additional Public Prosecutor and Mr, S. K, Chettri, Assistant Public Prosecutor, Mr. D. K. Siwakoti, Advocate and Ms. Prathana Ghataney, Advocates for the State. I ue £ M I J± I Wangdi, J. This appeal is directed against the judgment of the Special Judge, P. C. Act, East and North Sikkim at Gangtok dated 22-10-2008 in S.T. (Vigilance) Case No.1 of 2004 by which the appellant has been convicted under Section 13(1)(e) read with Section 13(2) of the Prevention of J| \, r\+, Corruption Act, 1988, (hereinafter referred to as the `P. C. Act, 1988') and sentenced to undergo simple imprisonment of one year with a fine of Rs.5,000/- (Rupees five thousand) which if not paid to undergo further imprisonment for three months. 2. The facts of this case briefly are as follows:- (aJ As per the charge sheet submitted by the sikkim Vigilance Police Force, the genesis of the case against the appellant was a first information report based on source information which disclosed that the appellant while holding the post of Chairman, Sikkim Khadi and Village Industries Board and a Minister of the Government of Sikkim from 1983 to 1994, acquired assets disproportionate to his known sources of income by misusing his position as a public servant. It was alleged that he had acquired as many as 8 (eight) RCC buildings individually worth lacs of rupees thereby disclosing commission of offence punishable under Section 13(1)(e) read with Section 13(2) of the P.C. Act, 1988 resulting in registration of Case No.RC-10/95 against the appellant and the charge of its investigation was made over to Shri Hemraj Cintury, Inspector of Police, Vigilance Department. During the course of investigation, it was revealed that the families of both the appellant and his wife were farmers by profession. Later, the appellant joined in the SIB, Gangtok as a Cook on 01-04-1961 and resigned from service on 17-02-1979 when he held the rank of a Field Assistant (Constable). In October, 1979, he was elected to the Sikkim Legislative Assembly for the first time and re- elected in the next two General Elections held in March, 1985, and November, 1989. He resigned from Sikkim Legislative Assembly on 18-06-1994. During his tenure as MLA, he held the following positions as a public servant as defined under Section 2(c) of the P.C. Act,1988:- 24.6.83 to 21.5.84 Chairman, Sikkim Khadi and Village Industries Board 8.3.85 to 17.5.94 Minister of Power and Labour/ Panchayat, R.D.D., Ecclesiastical Affairs/Industries and Ecclesiastical Affairs together or separately •1 iE fbj The above two periods were taken as the check period by the investigating agency and upon registration of the case searches were carried out on 01-11-1995 and 02- 11-1995 in the residences of the appellant at 6th Mile, Tadong, Gangtok, and Uttarey, West Sikkim, respectively. During the search, inventories of various articles found in the two residences were prepared and a number of incriminating documents seized. Efforts were thereafter made to find out and compute (a) the assets of the appellant and his family members at the commencement of the check period, i.e., 24-06-1983 being the date on which he was appointed RE i...., Chairman, Sikkim Khadi and Village Industries Board; (b) total income from the known sources of income of the appellant and his family members during the check period, i.e., 24-06-1983 to 18-06-1994 being the date on which he resigned from the Sikkim Legislative Assembly; (c) assets owned by the appellant and his family members at the close of the check period, i.e., 18-06-1994; (d) expenditure incurred by the appellant and his family members during the check period. Details of these were appended to the charge sheet at ``Statement A, 8, C and D" respectively. It is stated that `Statement 8' was prepared based on the explanation on `known sources of income' given by the appellant under Section 13(1)(e) of the P. C. Act, 1988. As such, rent received from various tenants in respect of the building situated at Gangtok was calculated as per returns filed by the appellant with the Income Tax Department, Government of Sikkim, and where such returns had not been filed, the appellant was not given the benefit of receipt of rent. The statement also did not include any income from benami transactions which the appellant and his family members may have entered into during the check period. A summary of the statements reflected the following facts:- 1. Assets on the last day of Rs`76,71,273177 (Rs.76,71,273-77) check period i.€. 18.6.94 vide statement-C + 2. Assets at the beginning of Rs. 11,687-70 (Rs. 11,687-70) check period i.e. 24.6.83 vide statement-A 3. Assets acquired during the Rs.76,59,586-07 (Rs.76,59,586-07) check period i.e. 24.6.83 to 18.6.94 (statement-C minus statement-A) 4. Expenses during the check Rs.14,49, 595-12 ( Rs .14,49, 595-12) period (statement-D) 5. Total assets acquired and Rs.91,09,181-19 (Rs.91,09,181-19) expenses incurred during the check period vide sl. no.3 and 4 above. 6. Income during the check Rs.17,40, 332-04 (Rs.17,40,332-04) period (statement-B) 7. Extent of assets Rs.73,68,849-15 (Rs.73,68,849-15) disproportionate to known source of income (serial No.5 minus 6) fcJ It is stated that the above facts disclosed that the appellant during his tenure as a public servant between 24- 06-1983 to 18-06-1994 amassed wealth disproportionate to his known sources of income to the tune of Rs.73,68,849.15 by misusing his position as public servant which he could not satisfactorily account for. It is stated that during the course of investigation, the appellant was given an opportunity to explain his position as regards his various income and expenditure during the check period but he either failed to account for the disproportionate assets or refused to give any explanation culminating in the filing of a charge sheet under Section 13(1)(e) read with Section 13(2) of the P, C. Act, 1988, corresponding to Section 5(1)(e) read with Section 5(2) of the Prevention of Corruption Act, 1947, 6 (hereinafter referred to as the ``P. C. Act, 1947'') against the appellant for trial in the Court of Special Judge, P. C. Act, East and North Sikkim at Gangtok. 3. The Special Judge upon consideration of the materials on record and being satisfied that a pr/.rna faci.e case was made out framed a formal charge under Section 13(1)(e) read with Section 13(2) of the P. C. Act, 1988, against the appellant to which he pleaded not guilty and preferred to go to trial. 4. During course of the trial, the prosecution examined as many as 126 (one twenty six) witnesses and exhibited 458 documents and the appellant in his defence examined 9 (nine) witnesses and exhibited 82 documents and, upon consideration of the materials and evidence on record, the Special Judge found the appellant guilty of the charges under Section 13(1)(e) read with Section 13(2) of the P. C. Act, 1988 and convicted and sentenced him by the impugned judgment and order. 5. In the appeal, the appellant has questioned the legality and correctness of every finding of the trial Court in the impugned I.udgment. 6(aJ. At the commencement of his arguments, Mr. A. Moulik, learned Senior Advocate, by filing a detailed synopsis of arguments on behalf the appellant submitted that the disproportionate assets case against the appellant has to fail as the prosecution did not take into account a large number of income of the appellant from various sources, namely, income from landed properties, rental income, income from execution of contract works by him and his wife, property, cash, gold and silver received by the appellant in his family partition in the year 1964 and also income from sale of livestock which taken together amounted to Rs.1,06,59,585/-. It was submitted that appellant had revealed of such income and assets to the Investigating Officer (in short ``1.0.'') when his statement was being recorded on 27-09-1996 and 28-09-1996, a fact which has been admitted by the I.0. in his deposition in Court as PW126. Those as per the learned counsel, were the sources of income and the assets which the appellant was in possession of at the beginning of the check period but the I.0. admittedly did not take any steps to enquire into them causing him grave prejudice. Therefore, the finding of the prosecution that the assets in the hands of the appellant at the beginning of the check period was only Rs.11,687.70 was erroneous. It was submitted that during the course of the trial the appellant had established the existence of such assets being with him from the deposition of the prosecution witnesses and defence witnesses and also through i documentary evidence exhibited by both the prosecution and the appellant. It was further submitted that although the I.0., during the course of the investigation, accepted the income of the appellant as being Rs.17,40,332/-with regard to the properties at `Statement 8' pertaining to rental income received by him during the check period, it has been established during the course of the trial that his income from such properties was in fact Rs, 1,89,81,837/-. He submits that the investigation of the case was done unfairly as the statements of as many as 14 tenants of the appellants recorded by the I.0., PW126, under Section 161 of the Code of Criminal Procedure, 1973 (in short ``Crpc'') were suppressed and deliberately not submitted by him with the final report under Section 173 Crpc depriving the appellant of the benefit of rental income of Rs.12,90,700/-. The statements had to be exhibited by the appellant as Exhibits D36 to D49 as those revealed the rental income claimed by him. It was next contended that the conclusion of the I.0. with regard to the `Statement C' pertaining to the valuation of the buildings was highly inflated to Rs.76,71,273.77 which ultimately was reduced to 71,16,070.19. As per Mr. Moulik in the deposition of the prosecution witnesses being the Engineers who had carried out the valuation of the buildings situated at 6th Mile, Tadong, East Sikkim, Tibet Road, Gangtok, East Sikkim, Majhigaon, Jorethang, South Sikkim, . -?? lil,--, Circular Road, Jorethang, South Sikkim, Uttarey, West Sikkim and Dentam, West Sikkim, there are gross contradictions with regard to the schedule of rates (in short ``SoR'') and admitted errors in calculations. It was stated that the valuation arrived at by the Engineers are not correct for the following reasons:- (i) Although in their examination-in-chief, PWs 64, 65 and 66 have deposed that they had valued the buildings of the accused at Tadong as per SoR, 1986 and Tibet Road as per SoR, 1991, but in their cross-examination they have admitted that the calculations done by them were not as per the respective SoR of 1986 and 1991 but at some other rates not at all tallying with the SoR of 1986 and 1991. (ii) The relevant SoR of the respective years were not tendered in evidence as a result neither the Court nor the accused had opportunity to cross check/properly cross-examine on the rates at which the assessments were made. (iii) Assistance of Blue Print Plans were not taken in assessing the valuation. (iv) The Engineers who had done the valuation were not the experts in the line nor were they recognized valuers. (v) Years of construction and years of completion of the respective buildings were not ascertained. Years of construction of the buildings at 10 Jorethang, Majigaon, two buildings of Uttarey, Dentam and at 6th Mile, Tadong were not ascertained properly. Although the prosecution has attempted to prove that those buildings were constructed during the check period, their own witnesses and the defence witnesses have conclusively proved that it was done before commencement of the check period. (vi) Extent of constructions up to the end of check period i.e. 18-06-1994 were not ascertained. (vii) Whether the Engineers had visited the spot was doubtful. A, It was next submitted that the check period taken by the prosecution which is 24-06-1983 to 18-06-1994 are covered by both the P. C. Act, 1947 and P. C. Act, 1988. The P. C. Act, 1988, having come into force w.e.f. 09-09- 1988, the period between 24-06-1983 to 08-09-1988 would obviously be governed by the provisions of the P. C. Act, 1947 and between 09-09-1988 to 18-06-1994 by the P. C. Act, 1988. It was submitted, therefore, that the prosecution has committed an error by combining both the periods as being investigated under the P. C, Act, 1988, when the scope of Section 5(1)(e) under the P. C. Act, 1947 and Section 13(1)(e) under the P. C. Act, 1988, are quite different in view of the explanation that was inserted in the later Act. 11 (cJ It was next submitted that denying the appellant of the benefit of the rental income in respect of buildings at Gangtok on the ground of non-payment of tax on such income is grossly illegal as the prosecution has not all been able to establish that the accused was under any law, rules or order bound to intimate any authority regarding his income. The appellant is a Sikkimese and I.T. Act, 1961 is not applicable to him. Manual of 1948 deals with Income Tax payable based on annual turnover of a business. It does not anywhere require a person to inform the Authority or to pay tax on several types of income, /dJ Referring to the provisions of Sikkim State Income Tax Manual, 1948, the learned senior counsel submitted that the Manual does not provide for payment of tax on income house property but on incomes on salary, business, agricultural produce and patta estate and, that even on these there is no provision for voluntary submission of returns of income. By placing the following provisions of the Manual, it was submitted that returns were required to be submitted by an assessee only on receipt of notice of demand from the Income Tax Officer:- "11. RETURN OF INCOME STATEMENT OF AGRICULTURE. (i) At the commencement of each financial vear the income tax Officer shall issue notice with Drescribed form enclosed to all those Derson. who are in his oDinion liable to assessment of 12 aaricultural income tax, calling upon them to submit return in the prescribed form duly signed within. the time specified in the notice (which shall not be less than 60 days from the date of the notice). Failure to submit return within the prescribed time will entail summary assessment at the discretion of the Income Tax Officer. 12. SALARY The tax shall be payable by all the Sikkim State employees drawing salary of Rs.200/- and above per month. Such amount of income shall be deemed to be salary due on the date when payment is received by the employees. 14(i) Working on the annual basis of the rate only such amount forming Dart of the tex /s/.c_) Dayable on the monthly salary of the assessee shall be deducted and adjusted towards Incoam /s/.c/ Tax accounts from out of his salary bill at the end of such month by the financial Secretary on intimation from the Income Tax Department. 18. TAX WHEN PAYABLE-GENEIIAL RULE. Any amount specified as payable in a notice of demand, shall be paid into the State Bank delete within the time aiven thereunder, and any assessee failing so to pay shall be deemed to be default provided that, when an assessee has presented an appeal, the appellate authority may in his discretion pass stay order when the assessee will not default in respect of such tax so long the stay order remains in force." [emphasis supplied] fej It was next submitted by him that the appellant was not a public servant from 22-05-1984 to 07-03-1985, i.e, for more than 9 months which fell within the check period as he did not hold any public office during that time but the I.0. has erroneously taken the entire check period 13 commencing from 24-06-1983 to 18-06-1994 as the appellant being a public servant. Although the I.0. when being examined in Court had conceded that the income and assets acquired and held during that period should be excluded, the very fact that it was included caused the appellant grave prejudice. ff/ It was next contended that the prosecution had committed grave illegality in including the income and assets of the wife of the appellant also as the income of the appellant which is not permissible in law. 7faJ. A large number of decisions were cited by Mr. Moulik d`uring the course of his arguments in support of his submissions on the legal principles governing various aspects of cases under Sections 5(1)(e) and 13(1)(e) of the P.C. Act, 1947, and P.C. Act, 1988, respectively. I may refer to some of them which are considered relevant for disposal of this appeal. (b) lr\ C. S. D. Swami vs. The state.. AIR 1960 SC 7, the following has been held while interpreting the term ``satisfactorily account" appearing Section 5(1)(e) of the P. C. Act,1947:- "(5) Ordinarily, an accused person is entitled to acquittal if he can account for honest possession of property which has been proved to have been recently stolen (see illustration (a) to S.114 of the Indian 14 Evidence Act, 1872). The rule of law is that if there is a prima facie explanation of the accused that he came by the stolen goods in an honest way, the inference of guilty knowledge is displaced. This is based upon the well- established principle that if there is a doubt in the mind of the court as to a necessary ingredient of an offence, the benefit of that doubt must go to the accused. But the Legislature has advisedly used the expression ``satisfactorily account", The emphasis must be on the word ``satisfactorily", and the Legislature has, thus, deliberately cast a burden on the accused not only to offer a plausible explanation as to how he came by his large wealth, but also to satisfy the court that his explanation was worthy of acceptance." (c) S.im.ilarly,.in state of M. P. vs. Awadh Kishore Gupta and Ors. .. (2004) 1 SCC 691, .it has been helcl as under: ``5. „ .. The expression ``known sources of income" has reference to sources known to the prosecution after thorough investigation of the case. It is not, and cannot be contended that ``known sources of income" means sources known to the accused. The prosecution cannot, in the very nature of things, be expected to know the affairs of an accused person. Those will be matters ``specially within the knowledge" of the accused, within the meaning of Section 106 of the Indian Evidence Act, 1872 (in short ``the Evidence Act'')." /dJ To support his contention that the investigation by the I.0, in the case had been unfair as the I.0. had failed to inquire into the assets and income disclosed by the appellant and his su`ppression of the statements under Section 161 Crpc of a number of witnesses who had revealed his rental income, Mr. Moulik referred to the following passage in the case of Sfafe Inspector of Po/i.ce, 15 Vishakhapatnam vs. Surya Sankaram Karri '. (2006) 7 SCC 172.. ``19. Illegality apart, the manner in which the investigation was conducted, is condemnable. The least that a court of law would expect from the prosecution is that the investigation would be a fair one. It would not only be carried out from the stand of the prosecution, but also the defence, particularly, in view of the fact that the onus of proof may shift to the accused at later stage. The evidence of PW 41 raises doubts about his bone f7.c/es. Why he did not examine important witnesses and as to why he had not taken into consideration the relevant documentary evidence has not been explained. He did not even care to ascertain the correctness or otherwise of the status of both the respondent and his wife before the Income Tax Department. Above all, he did not produce before the court the statements made by the respondent, his wife and those of his sons, although they were relevant. Had the statements of DW 3 and DW 4 been produced before, the learned Special Judge might not have opined that the sons of the respondent, other than DW 2, did not make any contribution to their parents at all. If such statements were made by the said witnesses before the investigating officer, omission on the part of DW 1, the wife of the respondent, to state the same before the Special Judge might have taken a back seat and the statements of other sons of the respondents, namely, DW 3 and DW 4 might not have been ignored by the learned Special Judge.`` (e) In support of his assertion that the duration of the check period which fell before the enforcement of P. C. Act, 1988, i.e., brought into effect from 08-09-1988 the provisions of the P. C. Act, 1947, would apply and the rigors of the explanation appended to Section 13(1)(e) of the former Act shall have no application for that period, the following portion of the judgment of the case in P. Nallammal & Anr. vs. State represented by Inspector of Police .. (1999) 6 SCC 559 was placed..- 16 ``19. Shri K. K. Venugopal endeavoured to establish that the offence under Section 13(1)(e) of the PC Act is to be understood as an offshoot of the different facets of misconduct of a public servant enumerated in clauses (a) to (d) of the sub-section which a public servant might commit. According to him, unless the ill-gotten wealth has a nexus with the sources contemplated in the preceding clauses the public servant cannot be held guilty under clause )e) of Section 13(1). Learned Senior Counsel elaborated his contention like this: If a servant is able to account for the excess wealth by showing some clear sources, though not legally permissible, but not falling under any of the preceding clauses of the sub-section, he would be discharging the burden cast on him. He cited an example like this: If the public servant satisfies the court that the excess wealth possessed by him is attributable to the dowry amount which he received from the father-in-law of his son, the public servant is not liable to be convicted under the aforesaid clause. 20. The above contention perhaps could have been advanced before the enactment of the PC Act, 1988 because Section 5(1)(e) of the old PC Act did not contain an ``Explanation" as Section 13(1)(e) now contains .... /fJ In the above context, reference was also made to the case Of Jagan M. Seshadri vs. State of T. N. .. (2002) 9 SCC 639..- ``7. A bare reading of Section 30(2) of the 1988 Act shows that any act done or any action taken or purported to have been done or taken under or in pursuance of the repealed Act, shall, insofar as it is not inconsistent with the provisions of this Act, be deemed to have been done or taken under or in pursuance of the corresponding provisions of the Act. It does not substitute Section 13 in place of Section 5 of the 1947 Act. Section 30(2) is applicable ``without prejudice to the application of Section 6 of the General Clauses Act, 1897". In our opinion, the application of Section 13 of the 1988 Act to the fact situation of the present case would offend Section 6 of the General Clauses Act, which, inter alia provides that repeal shall not (/.) affect the previous operation of any enactment so repealed or anything duly done or suffered thereunder, or (/./) affect any investigation, legal