THE HON’BLE SRI JUSTICE B.CHANDRA KUMAR CRIMINAL APPEAL No.1260 of 2003 Dated:- 07th June, 2010 Between: A.Parameshwar …Appellant / Accused AND The State rep by CBI, Hyderabad. …Respondent / complainant THE HON’BLE SRI JUSTICE B. CHANDRA KUMAR CRIMINAL APPEAL No. 1260 of 2003 JUDGMENT: 1. This criminal appeal is directed against the judgment dated 19.11.2003 in C.C.No.20 of 2001 passed by the learned Special Judge for CBI Cases, Hyderabad, whereby and whereunder, the appellant herein was found guilty and was convicted and sentenced to undergo Rigorous Imprisonment for a period of one year and with a fine of Rs.2,000/- for the offence punishable under Section 7 of the Prevention of Corruption Act, 1988, (hereinafter referred to as ‘the Act’) and Rigorous Imprisonment for a period of one year and with a fine of Rs.2,000/- for the offence punishable under Section 13(1)(d) read with Section 13(2) of the Act, with a default sentence of three months on each count. The appellant herein was tried along with Accused No.2 before the learned Special Judge. The appellant herein will be referred to as the accused for the sake of convenience. 2. The brief facts that are necessary for the disposal of the prosecution case are as follows:- The accused was working as Superintendent, Central Excise, Kukatpally-II Range and A-2 was working as Inspector of Central Excise, Kukatpally II Range. P.W.1 – M.Ramakrishna was working as Quality Control Manager in Jai Bharath Equipments Private Limited from the year 1999. The company manufactures mining equipment spares and hydraulic cylinders. It is a small scale unit. The company purchases seamless tubes from Indian Seamless Metal Tubes, which will be used as raw material for manufacture of hydraulic cylinders. They have to maintain certain registers showing the date of receipt of stock, invoice numbers and quantity of stock received etc. Where the yearly turnover of the company is less than Rs.50.00 lakhs, the company need not pay Excise Duty. If the turnover of the company is between Rs.50.00 lakhs and one crore, the company has to pay 5% Excise Duty and if the turnover of the company exceeds one crore rupees, the Excise Duty payable is 16%. Excise Duty already paid, if any, for the purchase of raw material will be deducted while calculating the Excise Duty. RG.23-A Part I and Part II are the registers to be maintained by the companies. While maintaining RG.23-A Part I, certain particulars were not shown. The company was audited by the Excise Department. However, nothing was found during the said audit. 3. According to P.W.1, during January 2001, A-2 visited their company and informed that the company cannot get the benefit of MODVAT scheme from the beginning of the year and that the company has availed excess amount of Rs.3.00 lakhs. According to P.W.1, he explained that there is no chance of availing Rs.3.00 lakhs in excess and at the best, the excess may be Rs.1.5 lakhs for not maintaining the registers properly. According to the P.W.1, they had paid excess tax of Rs.75,000/- and he had informed A-2 that if another Rs.75,000/- is paid, they would not have any problem. According to P.W.1, on 02.02.2001, the accused called him and directed him to advise the Managing Director of the company to come and meet him. On the same day, a letter was handed over to P.W.1 to submit the records. According to P.W.1, on 20.02.2001, A- 2 telephoned him and informed that if their direction is not complied with, they had to issue show-cause notices and further threatened that he had powers to arrest P.W.1 and his boss. According to P.W.1, he conveyed the same to his boss. According to him, on 27.02.2001 when he went to the office of the accused, the accused and A-2 demanded a bribe of Rs.25,000/- to close the issue. Accordingly, he conveyed the same to his boss, Mr.N.V.N.Reddy, Managing Director of the company, instructed him to lodge a complaint with CBI. Ex.P.1 is the authorization letter given by his boss to lodge a complaint. Then, he prepared Ex.P.2 - complaint and went to CBI office and handed over the same to P.W.10 – Satish Prabhu, Inspector, CBI, Hyderabad. P.W.10 – B.Satish Prabhu, having received Ex.P.1 – complaint from P.W.1 and after ascertaining the genuineness of the said complaint, registered a case in RC No.7A/2001 - CBI, Hyderabad, under Section 7 of the Act and issued FIR on 28.02.2001 at about 06:45 P.M. On 01.03.2001, P.W.10 secured mediators, i.e., S.S.Miyan (P.W.2) and one Raj Kumar. As per the instructions of P.W.10, P.W.1 brought Rs.25,000/-, the proposed bribe amount. Then, P.W.1 was introduced to the mediators and vice-versa. P.W.1 produced Rs.25,000/- in Rs.500/- denominations and the said currency note numbers were noted in the first mediators report. Then the currency notes were treated in Phenolphthalein Powder. The significance of the Phenolphthalein Powder and the Sodium Carbonate Test was explained to the mediators and the test was demonstrated. The currency notes were kept in an envelope and the said envelope was kept in the shirt pocket of P.W.1. P.W.1 was directed not to touch the currency notes and to handover the same only on demand by the accused. According to P.W.1, the accused instructed him to come alone with bribe amount keeping the same in an envelope (cover) and, therefore, nobody accompanied P.W.1 as an accompanying witness. However, a blank cassette with a Micro Cassette Recorder was kept in the right side pant pocket of P.W.1. He was instructed to switch on the same before entering into the chambers of the accused. He was also instructed to give a pre- arranged signal by wiping his face with handkerchief after the accused accepted the bribe amount. After completing pre-trap proceedings, the trap party along with the mediators, proceeded to the office of the accused at about 13:00 hours. 4. After reaching the office of the accused, P.W.1 entered into the office of the accused. Other trap party members took vantage positions around the office of the accused. After about ten minutes, P.W.1 returned and informed that the accused and A-2 were not available in the office. Then the inspector, CBI, directed P.W.1 to wait till the arrival of the accused and A-2. At about 04:00 P.M., the accused and A-2 returned to their office. Then P.W.1 went to the office of the accused and the accused and A-2 directed him to bring the records. When P.W.1 informed the same to the Inspector, CBI, he advised him to go to the company and bring the records. Then P.W.1 went to his company and brought the records at about 05:00 P.M and again met the accused and A-2. Both the accused and A-2 enquired in detail about the maintenance of the records and the problems. They informed that if the records are not corrected, they may be pointed out by some other officer in future and accordingly advised P.W.1 to correct the same. Thus, according to P.W.1, the accused also appraised him that if the show-cause notice is issued, they have to face lot of problems including payment of penalty. 5. According to P.W.1, then the accused called P.W.1 to his cabin and demanded the bribe amount. Then, P.W.1 handed over the envelope to the accused. The accused received the envelope with his right hand and kept it in his desk. Then P.W.1 came out and gave pre-arranged signal to the trap party. Then P.W.10 – Inspector, CBI, Hyderabad, along with other trap party members rushed into the office of the accused and introduced himself to the accused. When the right hand fingers of the accused were subjected to Sodium Carbonate Solution test, the solution turned into pink colour. However, when the left hand fingers of A-1 were subjected to the said test, there was no change in the colour of the solution. Both the hand fingers of A-2 were also subjected to the test, but there was no change in the colour of the solution. The solution was preserved. Then P.W.2 – the mediator was asked to take out the bribe amount from the drawer of the table of the accused. When the currency note numbers were compared with the numbers noted in the first mediators report, they were found to be tallying. A gist of statements was noted in the second mediators report. The proposed bribe amount of Rs.25,000/-, the tape recorder and the micro cassette were seized. Rough sketch of the scene of offence was also prepared under Ex.P.5 besides seizure of certain records. After completing investigation and obtaining sanction order, charge-sheet was filed by P.W.11 – P.K.Anuj Kumar, Inspector of Police, CBI, who succeeded P.W.10. 6. Since both the accused have denied the charged leveled against them, the prosecution, in order to prove its case, examined P.Ws.1 to 12 and got marked Exs.P.1 to P.15 besides marking M.Os.1 to 6. On behalf of the defence, Ex.D.1 was marked but none were examined. 7. The learned Special Judge for CBI cases, having considered the oral and documentary evidence, found the accused guilty for the offence punishable under Sections mentioned supra. However, A-2 was found not guilty for the offence punishable under Section 13(1)(d) read with Section 13(2) of the Act and he was accordingly acquitted. Challenging the sentence and conviction passed against him, the accused preferred the instant appeal. 8. Sri C.Padmanabha Reddy, learned senior counsel appearing for the accused submitted that the learned Special Judge, having disbelieved the prosecution case and the evidence of P.W.1 in respect of A-2, ought not have accepted their evidence in respect of the accused. His second submission is that since both the accused were insisting P.W.1 to produce certain records and they had also issued notices to P.W.1, P.W.1 and his boss, the Managing Director of the company, bore grudge against the accused and falsely implicated him in this case. His further submission is that the entire version of the prosecution witnesses is highly improbable and unbelievable and against the normal human conduct and no conviction can be placed on such evidence. It is also his submission that admittedly when P.W.1 went to the office of the accused at about 1300 hours, none were present in the office and this must have given an opportunity to P.W.1 to enter into the chambers of the accused and keep the envelope in the drawer of the table of the accused so as to falsely implicate him in this case. It is also his submission that the lower Court failed to take into consideration the important facts and circumstances of this case. It is further submitted that if at all the accused had intention to take bribe from P.W.1, nothing prevented them to receive the bribe amount from P.W.1 when he approached them at 04:00 P.M. in their office and when he was directed to bring the records. The conduct of the accused in not demanding any amount from P.W.1 and directing him to produce the records shows that they wanted to verify the records and they never demanded any amount and, therefore, the theory of demanding illegal gratification has no basis. It is also submitted that the trap itself failed since the envelope in which the currency notes were kept was not seized from the possession of the accused and it was only taken out from the drawer of the table of the accused. It is also submitted that admittedly, only the currency notes were treated with phenolphthalein power and those notes were kept in the envelope and admittedly the envelope was not treated with phenolphthalein powder and, therefore, there was no possibility to have the traces of phenolphthalein powder to the hands of the accused even if the prosecution version is to be believed that the accused had received the envelope from P.W.1. Therefore, there is no possibility of the test being proven positive when his right hand fingers were rinsed in the Sodium Carbonate Solution. It is also his submission that when the envelope was not treated with phenolphthalein powder, there was no chance of getting the trace of phenolphthalein powder to the hands of the accused, therefore, the version of the prosecution that when the right hand fingers of the accused were rinsed in the Sodium Carbonate Solution it gave positive result appears to be not only improbable but also false. It is also his submission that since both the accused were insisting for records, P.W.1 and his boss implicated the accused in this case. It is further submitted that the accused is not required to prove his version as is required to be proved its case by the prosecution and it is sufficient if the version of the accused appears to be probable. Learned senior counsel has also referred to the list of witnesses attached to the charge-sheet, which shows that the cassette was sent to the Central Forensic Science Laboratory, New Delhi, was found to be having lot of interfering noise in the recording and the recording is indiscernible. He has also furnished a copy of the report signed by the officer of the Central Forensic Science Laboratory and according to him, the copy of said report was furnished to the accused along with the charge-sheet. 9. The learned Special Public Prosecutor for CBI, Sri C.Keshava Rao, submitted that the accused plays an important role in furnishing the information to the Deputy Commissioner and at this stage, he can close the file without pointing out the irregularities committed by any company. It is also submitted that the accused and A-2 were trying to take advantage of irregularities committed by the company of P.W.1 and, therefore, they were insisting P.W.1 to pay bribe of Rs.25,000/- for showing official favour for closing MODVAT irregular claim of Rs.3.00 lakhs. It is further submitted that the accused issued notice on 02.02.2001 directing P.W.1 to produce the records and that the evidence of P.W.1 reveals that they had issued a letter on 15.03.2001 admitting that a sum of Rs.1,96,803/- was irregularly availed by them. It is further argued that since admittedly there were some irregularities and had the accused closed the file without making corrections in the records, those mistakes might be pointed out by some other officer in future and, therefore, they were insisting P.W.1 to produce records. It is his further submission that the accused had not only demanded the bribe amount, but he wanted to see that in future, even if the records are verified by any other officer, there should not be any problem to him. It is further argued that the version of the accused that P.W.1 had kept the envelope of tainted currency notes in the table drawer of accused cannot be accepted since the other staff members in the office including the Inspector will be always available in the office. It is further argued that even according to P.W.1, he went into the office of the accused only on two occasions i.e., for the first time when the accused directed him to bring the records and for the second time when he brought the records from his office. Thus, there was no chance or occasion to P.W.1 to keep the envelope of tainted currency notes in the drawer of the table of the accused. It is also argued that when the accused received the envelope from P.W.1 and when he had kept the said envelope in his table drawer, there was every possibility of his fingers coming into contact with Phenolphthalein Powder and, therefore, when the accused had rinsed his fingers in the Sodium Carbonate Solution, the test was positive. It is argued that the evidence of P.W.2 who is a mediator and who has no interest in either the case of the prosecution or in the case of the accused, had categorically deposed that the test was positive when the accused rinsed his fingers in the Sodium Carbonate Solution. It is further argued that the evidence of P.W.2 proves that the tainted currency notes were recovered from the table drawer of the accused. It is also argued that the evidence of P.W.6, who was working as Inspector of Central Excise also reveals that he was sitting in the same hall where the accused was sitting and his chamber and the chamber of the accused is separated by partition and that P.W.1 did not enter into the office room of the accused prior to 04:30 P.M. on that day. Thus, the main submission of the learned Special Public Prosecutor for CBI is that the evidence of P.Ws.1 and 2 coupled with the evidence of P.W.10, clinchingly establishes that the accused, for the purpose of closing MODVAT irregular claims of the company, demanded bribe of Rs.25,000/- from P.W.1 and accepted the same on the date of trap and that the trap was successful. It is also his submission that conversation of P.W.1 and both the accused was recorded in the tape recorder, carried by P.W.1 and that the said conversation was transcribed by one Prabhanjan Kumar, Sub-Inspector of Police, ACB, Hyderabad, and it also supports the prosecution case. It is further submitted that in the above circumstances, there are no grounds to interfere with the judgment of the learned Special Judge. He has relied on the judgment in Madhukar Bhaskarrao Joshi Vs. State of Maharashtra, Respondent[1] in support of his contention wherein it was held that that “once it is found that the accused is in possession of currency notes smeared with Phenolphthalein Powder, it is sufficient to draw a legal presumption under Section 20 of the Act.” 10. Sri C.Padmanabha Reddy, learned senior counsel, in his reply, submitted that P.W.1 is not a reliable witness and he has changed his version from time to time. 11. In the light of the above facts, the points that arise for consideration are (1) whether the tainted currency notes were recovered from the possession of the accused; and (2) whether P.W.1 had any opportunity to keep the currency notes in the table drawer of the accused and (3) whether the prosecution proved its case? 12. A reading of the evidence on record gives an impression that the version of P.W.1 cannot be said to be beyond suspicion. Of course, the evidence on record shows that there were certain irregularities in MODVAT claim by M/s.Jaibharat Equipments Private Limited, wherein, P.W.1 was working as Quality Control Manager. Admittedly, the accused was working as Superintendent of Central Excise, Kukatpally – II Range, Hyderabad. A-2 also was working as Inspector in the same range. The accused had to obtain written permission from the Deputy Commissioner concerned for visiting small-scale units. Even the accused sought permission to visit sixty (60) units as per the request letter dated 16.02.2001. On receiving the request, P.W.4 – Deputy Commissioner of Customs and Central Excise Department, Hyderabad, called the accused and after ascertaining the reasons, accorded permission for visit of three units which include M/s.Jaibharat Equipments Private Limited. According to P.W.4, the accused never informed him that there was MODVAT problem in the above said unit. Admittedly, irregular availment of MODVAT of Rs.3,23,723/- was noticed by the Department during the course of verification, of course, after the trap. Thus, admittedly, there was some problem with regard to the claim of MODVAT in the unit of M/s.Jaibharat Equipments Private Limited. Admittedly, the accused issued notices to P.W.1 on 02.02.2001 to submit records. Admittedly, the records were not submitted till 01.03.2001, of course, P.W.1 says that he had taken the records to the office of the accused on 27.02.2001, i.e., on the date of trap. According to P.W.1, since the accused was demanding the bribe amount of Rs.25,000/-, he contacted his Managing Director who in turn, asked him not to furnish the records and report the matter to the CBI. According to P.W.1, in January 2001, A-2 visited their office and informed him that the company could not get the benefit of MODVAT scheme from the beginning of the year and that the company had availed excess amount of Rs.3.00 lakhs. According to him, on 20.02.2002, A-2 telephoned to him and enquired him for not submitting the records and directed him to meet them in their office. His further case is that on 29.02.2001, he went to the Excise Office where the accused and A-2 demanded him to pay Rs.25,000/- as bribe. His specific case is that they advised P.W.1 to bring the demanded amount on 01.03.2002 in a cover (envelope). It is also his case that he was asked by the accused to come alone. Then, he lodged the complaint and after registering the case, the First Mediators Report was prepared. The evidence of P.W.1, P.W.2 and P.W.10 clearly shows that on 01.03.2002 at about 10:30 A.M., P.W.1 produced Rs.25,000/- in Rs.500 denominations. The mediators have noted down the note numbers. Then phenolphthalein powder was applied to the currency notes after explaining the significance of the phenolphthalein test to the mediators and others. The currency notes were kept in an envelope and the envelope was kept in the shirt pocket of P.W.1. He was directed not to touch the said currency notes and to pay the same to the accused only on his demand. It is not clear from the evidence whether the envelope was closed or not. This assumes importance since admittedly the envelope was not treated with phenolphthalein powder. It is not the case of P.W.1 that he opened the cover and his hands came in contact with the tainted currency notes. Even according to P.W.1, he had handed over the envelope to the accused and that the accused had received the same and kept it in the table drawer. It is not the case of P.W.1 that the accused opened the cover and touched the currency notes. According to P.W.1, then he came out and gave the pre-arranged signal. Then immediately the ACB officials rushed into the cabin (office room) of the accused. It is the case of the prosecution that both the accused and A2 were present in the office room and when the test was conducted, the hand wash of both the hands of the accused gave positive result. However, the hand wash of A-2 remained colourless. When the currency notes were alone treated with phenolphthalein powder and they were kept in the envelope and when the envelope was not treated with phenolphthalein powder and when it is not the case of prosecution that the envelope was not completely closed, it appears that there was no possibility of the fingers of the accused coming into contact with the currency notes and Phenolphthalein Powder. Thus, it is not clear how the test conducted to both hand fingers of the accused gave positive result. It has to be seen that P.W.2 who kept the envelope in the shirt pocket of P.W.1 did not treat the currency notes with Phenolphthalein Powder. This itself creates a doubt in the version of the prosecution. 13. The other important circumstance is that, admittedly, P.W.1 informed P.W.10 – B. Satish Prabhu, Inspector of Police, CBI, that the accused asked him to come alone and to bring the amount in an envelope. This itself creates suspicion. According to P.W.10 - the trap laying officer, as the accused instructed P.W.1 to come alone with the bribe amount keeping the same in an envelop, he had decided not to send any accompanying witness and made arrangement for giving a tape recorder to the complainant. According to P.W.1, the trap party went to the office of the accused at about 1.00 PM after completing the first mediator’s report. According to P.W.1, the accused and A2 were not available in their office and they had gone out. He says that he conveyed the same to the Inspector, CBI, who advised him to wait there. He says that he waited in the office up to 4.00 PM. P.W.1 had categorically admitted that none were available in the office when he first entered the office of the accused. The learned Special Standing Counsel for CBI Cases