HON’BLE SRI JUSTICE B. CHANDRA KUMAR Crl.A.No. 1055 of 2003 Date: 10-06-2010 Between: B. Ramachander Rao ……….. Appellant and State rep., by ACB, Hyderabad ……….. Respondent HON’BLE SRI JUSTICE B. CHANDRA KUMAR Crl.A.No. 1055 of 2003 JUDGMENT: This Appeal is directed against the Judgment, dated 16-06-2003 in C.C.No.25 of 1995 passed by the Additional Special Judge for SPE and ACB Cases-cum-V Additional Chief Judge, City Civil Court, Hyderabad, whereby and whereunder the Appellant herein was found guilty of the offence under Section 13(1)(e) read with 13(2) of the Prevention of Corruption Act, 1988 (for short ‘the Act’) and sentenced to undergo Rigorous Imprisonment for a period of one year and to pay a fine of Rs.2,000/-, in default to suffer simple imprisonment for a period of one year. The value of the disproportionate assets is ordered to be confiscated to the State. 2. The Appellant herein will be referred to as the Accused Officer for the sake of convenience. 3. The brief facts of the case are as follows. The Accused Officer joined in service on 14-08-1963 as Junior Engineer in Panchayat Raj Department and worked in various capacities, and was promoted as Superintending Engineer on 01-12- 1986. He has also worked as General Manager (Technical), A.P. Housing Corporation from 21-12-1991 to 31-12-1993. He retired from service on attaining the age of superannuation on 30-06-1994. While he was working as General Manager (Technical, A.P. Housing Corporation, on receipt of credible information that he was in possession of assets disproportionate to his known sources of income, after obtaining necessary permission from the Director General, ACB, PW-33, the Inspector of Police, ACB, registered a case in Crime No.1/ACB-HR/92 for the offence under Section 13(2) read with 13(1)(e) of the Act on 02- 01-1992 and issued Ex.P-47, FIR. On the same day, PW-33 obtained necessary search warrants from the Court to search the house of Accused Officer and his relatives and simultaneous searches were conducted on 04-01-1992 at Hyderabad, Warangal and Nagram village of East Godavari District. PW-33 himself conducted search in the house of the Accused Officer in Kamalapuri Colony, Hyderabad, in the presence of mediators and similar searches were conducted at other places. Number of documents were seized. The check period was taken from 14-08-1963 to 04-01-1992 i.e., from the date of the Accused Officer entering into Government service till the date of search. 4. A charge sheet was filed against the Accused Officer for the offences under Section 13(2) read with 13(1)(e) of the Act alleging that the total income of the Accused Officer during the check period was Rs.8,58,394/- and the expenditure was Rs.5,10,029 and therefore, the likely savings would be Rs.3,43,365/-, but the total value of the assets was Rs.13,17,749/- and thus the Accused Officer has disproportionate assets of Rs.9,69,385/-. 5. Since the Accused Officer pleaded not guilty and claimed to be tried for the charges levelled against him, the prosecution, in order to prove its case, examined PWs.1 to 34 and got marked Exs.P-1 to P-96 and M.Os.1 to 3. On behalf of the Accused Officer, DWs.1 to 12 were examined and Exs.D-1 to D-41 and Ex.C-1, the property statement filed by the Accused Officer, were marked. 6. The learned Special Judge, on appreciation of oral and documentary evidence adduced on either side, assessed the total income of the Accused Officer, after adding 10% bonus, at Rs.11,76,883/-, expenditure at Rs.4,35,389/- and the likely savings at Rs.7,41,494/-. But the total value of the assets was found at Rs.12,03,433/-. Therefore, the excess assets of Rs.4,61,939/- (Rs.12,03,433 – Rs.7,41,494/-) are found to be disproportionate to the known source of income of the Accused Officer. 7. Heard Sri C. Padmanabha Reddy, learned senior counsel appearing for the Appellant and Sri V.Ravi Kiran Rao, learned Standing Counsel and Special Public Prosecutor for ACB. 8. Having heard the arguments, it appears that the fate of the case depends upon the findings on Item Nos.1, 2 and 6 of the assets and on Item Nos.2 and 4 of the income only. The findings of the learned Special Judge in respect of other items are not in dispute. ITEM NO.1 OF ASSETS: 9. The asset of this item is a three storied house in Plot No.180 of Kamalapuri Colony, Hyderabad, in the name of B. Jayalakshmi, who is the wife of the Accused Officer. 10. The prosecution estimated the value of this asset at Rs.2,78,115/-. According to the Accused Officer, it’s value was Rs.2,06,615/-. But, the learned Special Judge assessed the value of this item at Rs.2,41,304/-. The witnesses to speak on this item are PWs.1, 6, 28 and 34 and the relevant documents are Exs.P-2, P-12, P- 14 to P-18 and P-40(b). 11. According to PW-34, the Investigating Officer, who investigated into the case with regard to the assets, income and expenditure of the Accused Officer, the Accused Officer purchased the house of this item admeasuring 300 square metres for Rs.1,06,615/- vide Ex.P-12, sale deed No.3404 of 1985, registered on 17-12-1985 in the office of Sub-Registrar, Khairtabad. The Accused Officer extended it by adding two more rooms in the existing ground floor, and that one out house and first floor staircase etc. were under construction at the time of search. In the second floor, 14 numbers of RCC columns were raised. PW-28, C.Chandramohan, who was working as Deputy Director (Engineering), ACB, Hyderabad, during the relevant period, inspected the said house, on the requisition made by PW-34, and prepared Ex.P-48(a) estimates. According to him, he adopted the relevant SS rates for the period of construction and arrived the cost of construction of the entire area at Rs.1,61,500/-. The further constructions were evaluated by PW-28 as on the date of the house search in Ex.P-40. The cost of the old house and the new constructions made as per the evaluation of PW-28 comes to Rs.2,78,115/-, after adding the cost of bore well and motor at Rs.10,000/-. 12. The main submission of the learned senior counsel is that during search of the house of the Accused Officer, several receipts, showing the actual cost of construction material, have been seized by the Investigating Officer, but those documents were admittedly not furnished to PW-28 for making a reasonable assessment. 13. PW-34 admitted that during the course of house search, several bills and invoices with regard to the construction material were seized, but he had not furnished those bills to PW-28 for consideration with regard to the evaluation of the cost of house construction. He has also admitted that Exs.D-11 to D-14 pertain to the purchase of teakwood from the Forest Department by the wife of the Accused Officer and those documents were seized during the course of house search. He has also admitted that Exs.D- 15 and D-16 are the purchase bills/invoices for the purchase of cement from M/s. Viswam Cement Ltd. Ex.D-17 is the delivery challan issued by Sri Ram Steel Enterprises and Ex.D.18 is the quotation of Sriman Traders. Exs.D-17 and D-18 were also seized during the course of house search. He further deposed that he cannot say whether PW-28 would have arrived the actual amounts spent by the Accused Officer, had he furnished all the bills seized during the course of house search. He has also admitted that he did not verify whether the Accused Officer engaged labour from his native village for the construction of this house. 14. PW-28 admitted that the SS rates used by the Government in respect of calling for tenders vary from place to place and that they include profit of the concerned contractors, godown charges, wash and ward and transportation. He has also admitted that the cost of labour is higher in Hyderabad compared to the districts in A.P. 15. The learned Standing Counsel submits that nothing prevented the Accused Officer to examine witnesses to prove the actual cost incurred for the construction of the house and that the burden lies on the Accused Officer to prove the same. 16. Admittedly, the relevant receipts and invoices have been seized during the house search. When those documents were realized by the Investigating Officer, in all probabilities and for fair estimation of the building value, he should have furnished those documents to PW-28 to enable him to assess the correct value of the building. Normally, when a person constructs a house for himself, he does not call for SS rates and naturally the value of the construction will be low. Admittedly, the SS rates include profit margin, godown charges etc., which will not be there when a person undertakes construction of his own house. When the actual rates of the material purchased for the construction of a building are available, those rates should have been taken for assessing the value of the building, and in respect of other items, their value has to be fixed notionally basing on the SS rates. Since this procedure was not followed by the prosecution, it appears that it may be just and reasonable to accept the version of the Accused Officer on this item. 17. Accordingly, the value shown by the Accused Officer for this item at Rs.2,06,615/- is accepted. Since the learned Sessions Judge assessed the value of this item at Rs.2,41,304/-, the difference amount comes to Rs.34,689/- (Rs.2,41,304 (-) Rs.2,06,615/-), which has to be deducted from the total disproportionate assets. ITEM NO.2 OF ASSETS: 18. This is one of the crucial items, which is a double storied building bearing No.2-1010/B/10/A, Bhavaninagar, Hanumakonda in the name of the one J. Ratnamma, the mother-in-law of the Accused Officer. 19. The main point that arises for consideration in this item is whether the Accused Officer had constructed this house in the name of his mother-in-law J. Ratnamma, as benami. 20. According to the prosecution, the value of this building is Rs.3,99,600/- on the basis of the estimates prepared by PW-28. The learned Special Judge assessed the value of this item at Rs.3,79,935/-. The relevant witnesses are PWs.3, 7 to 10, 14, 28 and 34 and the relevant documents are Exs.P-6, 7, 13 to 16 (a) to (e), 17, 23, 40, 40 (a), 59, 60, 62 and 63, to this item. 21. The case of the prosecution is that the Accused Officer constructed this house with his own income in the name of his mother- in-law. The further case of the prosecution is that J. Ratnamma and her husband J. Venkata Rao were living in a hut at Nagaram village, East Godavari District and they were poor. The said Ratnamma had applied for a loan and at that time she had shown her income as Rs.3,600/- per annum and that the income of her husband was shown as Rs.7,000/- per annum from all sources. Ex.P-62, letter written by the son of Ratnamma, reveals that he was not in a position to send money for the construction of the house at Nagaram. As per Ex.P-63 the wife of the Accused Officer had sent an amount of Rs.300/- by money order to her father and that there was a balance of only Rs.400/- in the bank account of Ratnamma and therefore, all the circumstances show that Ratnamma had no capacity to construct the building. 22. It is also the case of the prosecution that the children of the Accused Officer were residing in the said house while they were studying and the Accused Officer had also taken gas connection in his name to the said house. 23. The learned senior counsel submitted that the house under this item is the own property of Ratnamma, mother-in-law of the Accused Officer, and absolutely there is no evidence to show that it was purchased or constructed by the Accused Officer with his income in the name of his mother-in-law. It is his further submission that J. Venkata Rao, the husband of Ratnamma, purchased Ac.6-75 cents in 1978 vide D-34, sale deed and later sold the same land in 1991 for Rs.1,34,500/-. He further submitted that the Investigating Officer did not investigate with regard to the income of J. Venkata Rao on the said lands from 1978-1991. It is also his submission that J. Venkata Rao was cultivating the lands of one N. Ganapathi, an Ex- MLA, on lease and Ex.D-54 shows that the lease agreement for the cultivation of the lands was found at the time of house search of J. Venkata Rao. It is also his submission that the first floor of the building was constructed in the year 1991-92 and it shows that with the sale proceeds of Ac.6-75 cents of land, Ratnamma constructed the first floor of the building and that Ratnamma was also having an amount of Rs.77,000/- in her bank account by the date of check period. It is also his submission that J. Venkata Rao cultivated Ac.6-75 cents of land for more than thirteen years and there were fish ponds and these circumstances show that Ratnamma was having capacity to construct the building. 24. The learned senior counsel relied on the judgment in KRISHNANAND AGNIHOTRI v. STATE OF M.P.,[1], wherein the Apex Court, while dealing with Benami transactions, held as follows:- “It is not enough merely to show circumstances which might create suspicion, because the Court cannot decide on the basis of suspicion. It has to act on legal grounds established by evidence. Here, in the present case, no evidence at all was led on the side of the prosecution to show that the monies lying in fixed deposit in Shant Devi’s name were provided by the appellant and howsoever strong may be the suspicion of the Court. In this connection, it cannot take the place of proof.” In the above decision, the Apex Court referred to the judgment in JAYADAYAL PODDAR v. MST. BIBI HAZRA [2], wherein it was observed as follows:- “It is well settled law that the burden of showing that a particular transaction is benami and the appellant owner is not the real owner always rests on the person asserting it to be so and this burden has to be strictly discharged by adducing legal evidence of a definite character which would either directly prove the fact of benami or establish circumstances unerringly and reasonably raising an inference of that fact. The essence of benami is the intention of the parties and not unoften, such intention is shrouded in a thick veil which cannot be easily pierced through. But such difficulties do not relieve the person asserting the transaction to be benami of the serious onus that rests on him, nor justify the acceptance of mere conjectures or surmises as a substitute for proof.” 25. The learned senior counsel has also relied on the judgment in M.KRISHNA REDDY V. STATE BY DEPUTY SUPERINTENDENT OF POLICE, HYDERABAD [3], wherein a reference was made to the decision in KRISHNANAND AGNIHOTRI’s case (1 supra) and similar view was taken by the Apex Court. He has also relied in the case P. SATYANARAYAN MURTY v. STATE OF A.P.[4], in support of his contention that the burden of showing a particular transaction as benami and that the Accused Officer is the real owner of the property always rests on the person asserting it to be so. 26. The learned senior counsel has also relied on the Judgment in K. GOVERDHAN v. STATE OF A.P. [5], wherein it was held that: “22. There is another aspect of the matter which deserves to be mentioned. Mere fact that the ostensible owner had no source of income in itself would not lead to any interference that the property in question was purchased with the income of a particular person. The absence of any source of income to the ostensible owner would merely indicate that the property might have been acquired with the income flowing from some one else. As to who that some one else is a matter of evidence and proof. That circumstance cannot lead to an inference that the property in question was acquired with the income from the accused. As pointed out by the learned Counsel for the appellant, that one of the sons of Narsingamma who has been examined as PW12 was himself a Government employee. No material has been placed before the Court to show that he might not have been interested in having the property acquired benami in the name of his mother. Thus, as stated above, it is a matter of evidence and not a matter of mere inference though the evidence may not be direct and may consist of circumstantial evidence. In this case, the Investigating Officer PW43 has candidly admitted that there is no material to show that the investments for the purchase of properties alleged to be benami were in any way traceable to the income of the accused. No circumstantial evidence of a definitive character has been placed on record to lead to an inference that it was the income of the accused which financed purchase of alleged benami properties.” Thus it appears that there should be some evidence to show that the income of the Accused Officer was in fact used for acquiring the property and where there is no evidence to show that it was the income of the Accused Officer, who financed the purchase or construction of the alleged benami properties, the version of the prosecution cannot be accepted. 27. The learned senior counsel has also referred to the admissions made by PW-34, the Investigating Officer, who deposed that he has no evidence to show that any amounts flowed from the Accused Officer for the purchase of the site or construction of the house at Warangal in the name of Ratnamma. It is further submitted that mere finding of the xerox copy of the sale deed or the fact that the children of the Accused Officer were residing in the house along with their maternal grandmother or that the Accused Officer had taken the gas connection in his name, are not sufficient grounds to hold that the property was purchased by the Accused Officer in the name of his mother-in-law. 28. On the other hand, the learned Standing Counsel submits that Ratnamma and her husband were living in a hut and no costly items were found in their house at the time of search and that the bank account maintained by them shows that they were having megre income and that Ratnamma sought a loan of Rs.4,500/- and at that time she had shown her income as Rs.3,600/- per month and thus the admissions made by Ratnamma and her husband, while obtaining the loan mortgaging their house site, reveal that their financial position was weak and there was no probability to construct the building. It is also his submission that the Court has to see how the property was used and that admittedly, the children of the Accused Officer were residing in the building and the Accused Officer himself had taken a gas connection in his name to the said house and that Ratnamma and her husband were residing at Nagaram and they never resided in this building and that the son of Ratnamma was not in a position to send any amount for the construction of the house at Nagaram and therefore, all these circumstances go to show that Ratnamma was not in a position to construct the building. It is also his case that neither Ratnamma nor her husband, Venkata Rao, has been examined and had they entered into the witness box, some more facts would have come to light. 29. The learned Standing Counsel relied on the Judgment i n K. PONNUSWAMY v. STATE OF T.N. [6]. In that case A-1 was employed as a Lecturer in Government Arts College earning a small salary. His wife A-2 had only a small agricultural income and had no other source of income. His daughter, A-3, who was then a student, had also no other source of income. The financial condition of the family was such that the appellant could not even repay his small debts. Later the appellant was elected as MLA and became Deputy Speaker of the Legislative Assembly and thereafter Minister of Education. The prosecution case is that during the check period when the appellant became a Minister, he acquired in his name and in the names of A-2 to A-5, pecuniary resources and property disproportionate to his known sources of income. The explanation given by A-2 and A-3 for the acquisition of this wealth was that it had been gifted to them by A-4. In the circumstances, the Apex Court held that prior to the check period, A-4 had not been afflicted by any love and affection and had not made any gifts to any member of the family of A-1 and did not even extend help to pay off the small debts of A-1 even after the decrees had been passed against A-1. Yet suddenly, during the check period, i.e., when A-1 was a Minister, A-4 donated large sums of money to A-2 and A-3. The natural presumption, considering the common course of natural events and human conduct, is that A-1 would have used his nephew A-4 to transfer his monies to A-2 and A-3. This is the supposition, which any prudent man, under these circumstances, would act upon considering the natural course of events. The prosecution having established by legal evidence that the monies were transferred by A-1 to A-2 and A-3 through A-4 and that these were monies of A-1 in the hands of A-2 and A-3, it was for the appellant to satisfactorily account for the gifts. He could have done so by showing that even before the check period A-4 had made gifts of substantial amounts. 30. In the case on hand, it is not the case of the Accused Officer that the building was constructed with the monies received by way of gifts and therefore, it appears that the above referred decision is not applicable to the facts of this case and can be distinguished. 31. Now we have to see as to what was the financial position of J. Ratnamma and her husband and whether they were in a position to construct the building of this item. 32. The prosecution examined PW-7, G. Shanker Babu, Manager in Corporation Bank, Nagaram, to show that Ratnamma had opened a bank account vide S.B. Account No.b/no.2163/88 on 12-04- 1988 and that Ex.P-13 is the ledger extract of the said Account, which shows that there was a balance of Rs.1516-75 ps as on 11-05-1992. The evidence of PW-8, Branch Manager of Andhra Bank, Tatipaka, Rajol Mandal, East Godavari District, shows that Ex.P-14 is the ledger extract in respect of S.B. Account.b/no.1772 of their bank in the name of J. Ratnamma W/o Venkata Rao, which shows that there was balance of Rs.9,251-65 ps as on 04-01-1992. It has to be seen that PW-8 further deposed that Ex.P-15 is the ledger extract in respect of Account No.2125 of their branch in the name of the Accused Officer himself and there was only a balance of Rs.86-85 ps as on 04-01- 1992. 33. PW-12 is the Manager in Indian Overseas Bank, Hanumakonda. He deposed that Ex.P-19 is the ledger extract of S.B. Account No.6794 in the name of B. Jayalakshmi, wife of the Accused Officer, and it shows that there was a balance of Rs.1,052-95 ps as on 04-01-1992. Ex.P-20 is the ledger extract in respect of S.B. A/c.No.11240 in the name of Accused Officer, which shows that there was a balance of Rs.589.25 ps as on 04-01-1992. Ex.P-21 is the ledger extract in the name of one Smt. Bayya Uma in respect of S.B. Account No.12585, which shows that there was a balance of Rs.1,396/- as on 04-01-1992. 34. Thus merely basing on the balance amount in the bank account of a person, his financial position cannot be determined. 35. PW-9 is the Senior Assistant in A.P. State Housing Corporation, Kakinada. According to him, Ex.P-16(a) is the loan application, submitted by J. Ratnamma to admit her as beneficiary in their corporation, showing her monthly income as Rs.300/-. Ex.P-16(b) is the income certificate