Sri L C Nagaraja vs State Of Karnataka on 3 December, 2024

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Karnataka High Court

Sri L C Nagaraja vs State Of Karnataka on 3 December, 2024

Bench: M.Nagaprasanna

Reserved on : 12.09.2024
Pronounced on : 03.12.2024

IN THE HIGH COURT OF KARNATAKA AT BENGALURU

DATED THIS THE 03RD DAY OF DECEMBER, 2024

BEFORE

THE HON'BLE MR. JUSTICE M. NAGAPRASANNA

WRIT PETITION No.8266 OF 2021 (GM - RES)

BETWEEN:

SRI L.C.NAGARAJA
S/O. LINGAPPA,
AGED ABOUT 54 YEARS
ASSISTANT COMMISSIONER (REVENUE),
BENGALURU NORTH SUB-DIVISION,
BENGALURU,
R/O. 'JANAMUKHI',
PARAMANNA LAYOUT,
B.H.ROAD, NELAMANGALA - 562 123
BENGALURU NORTH DISTRICT.
... PETITIONER
(BY SRI PRITHVEESH M.K., ADVOCATE)

AND:

1. STATE OF KARNATAKA
REPRESENTED BY CHIEF SECRETARY,
GOVERNMENT OF KARNATAKA,
VIDHANA SOUDHA,
AMBEDKAR VEEDHI,
BENGALURU - 560 009.
2

2. STATE OF KARNATAKA
BY THE CENTRAL BUREAU OF INVESTIGATION.
REPRESENTED BY ITS
SPECIAL PUBLIC PROSECUTOR,
HIGH COURT BUILDING,
BENGALURU - 560 001.
... RESPONDENTS

(BY SRI B.N.JAGADEESHA, ADDL.SPP FOR R-1;
SRI P.PRASANNA KUMAR, SPL.PP FOR R-2)

THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND
227 OF THE CONSTITUTION OF INDIA READ WITH SECTION 482 OF
CR.P.C., PRAYING TO QUASHING FIR NO.73/2019 DATED
09.06.2019 REGISTERED BY COMMERCIAL STREET POLICE, RE-
REGISTERED BY R2 CBI AS NO. RC.14(A)/2019 DATED 30.08.2019
AGAINST THE PETITIONER HEREIN PENDING ON THE FILE OF XXI
ADDL.CITY CIVIL AND SESSIONS JUDGE AND PRL.SPECIAL JUDGE
FOR CBI CASES, BENGALURU (CCH-4) PRODUCED AT ANNEXURE-B
AND E FOR OFFENCES PUNISHABLE UNDER SEC.120-B R/W 420
406, 409 OF IPC AND SEC.09 OF KPID ACT ARRAYING THE
PETITIONER HEREIN IN THE SAID FIR AS ACCUSED NO.18 AND
ETC.,

THIS WRIT PETITION HAVING BEEN HEARD AND RESERVED
FOR ORDERS ON 12.09.2024, COMING ON FOR PRONOUNCEMENT
THIS DAY, THE COURT MADE THE FOLLOWING:-
3

CORAM: THE HON'BLE MR JUSTICE M.NAGAPRASANNA

CAV ORDER

The petitioner is before this Court calling in question

proceedings in Special C.C.No.1055 of 2019 arising out of crime

registered for offences punishable under Sections 7, 7A, 8, 9, 10

and 12 of the Prevention of Corruption Act, 1988 and Sections 120-

B r/w 420, 406, 218 and 409 of the IPC. The petitioner is accused

No.23.

2. The facts, in brief, germane are as follows:-

The petitioner was a public servant at the relevant point in

time. On 12-08-2016 an Officer of Reserve Bank of India

communicates a letter to the Director General and Inspector

General of Police of the State of Karnataka observing that he has

received information of unauthorized deposits by the I Monitory

Advisory ('IMA' for short). The said letter is treated as a complaint

on 08-09-2016 and a direction was issued to the Deputy

Commissioner of Police to investigate the same. Correspondences

between the departments galore and a report is submitted by the
4

Deputy Commissioner of Police that the IMA is conducting business

in accordance with law. The report was sent to the Reserve Bank of

India as also to the Securities and Exchange Board of India as was

informed by the Reserve Bank of India.

3. When things stood thus, on 17-10-2017 the General

Manager of Reserve Bank of India communicates to the Principal

Secretary, Department of Revenue, Government of Karnataka that

certain inputs are received regarding distinct possibility of

unauthorized acceptance of deposits by the IMA group and further

action was sought to be initiated through the said communication.

Based upon the aforesaid communication, the Deputy Secretary,

Revenue Department communicates to the Deputy Commissioner,

Bangalore Urban District directing him to take action against IMA

and its entities and submit a report. On 10-04-2018 in order to

protect the interests of depositors and financial establishments,

Government of Karnataka appoints Assistant Commissioners of all

Districts to be the Competent Authorities to carry out the purposes

of the Karnataka Protection of Interest of Depositors in Financial
5

Establishments Act, 2004 ('the Act' for short). It is here the

petitioner springs into action. The petitioner was functioning as

Assistant Commissioner, Bangalore North. In the light of the

aforesaid notification, he becomes the Competent Authority under

the Act apart from discharging of his regular duty as Assistant

Commissioner. On 18-06-2018, 10 days after the appointment of

the petitioner as the Competent Authority, the Deputy

Commissioner directs the petitioner to take action against the IMA

group by registering a complaint through the Tahsildar under

Section 3 of the Act. The complaint was directed to be registered

as was directed by the Deputy Commissioner. A complaint then

sought to be registered on 13-08-2018.

4. On wanting to register the complaint, the Police of

Commercial Street, the jurisdictional police issued an endorsement

that there were no irregularities or illegalities committed by the IMA

and there was no necessity to immediately lodge the crime. This is

communicated to the Tahsildar on 14-08-2018 and later to the

petitioner on the same day. The petitioner communicates the same

to the Deputy Commissioner and the Commissioner of Police
6

bringing to their knowledge about the endorsement given by the

Commercial Street Police. On 16-11-2018 the petitioner issues a

public notice informing the general public at large that he is the

Competent Authority under the Act and calling upon the general

public to furnish any information about functioning of the IMA. It is

averred in the petition that no complaint was received from any

quarter. The petitioner then issues a notice upon Mohammed

Mansoor Khan, the Chairman of the IMA group calling upon him to

furnish all the documents pertaining to the financial transactions of

the group within 15 days. This is complied with by submission of

voluminous documents.

5. When such examination was in progress, on 01-02-2019

the Government order by which all the Assistant Commissioners

were appointed as Competent Authorities under the Act comes to

be withdrawn. After the said withdrawal, the Deputy Commissioner

communicates to the petitioner asking him to submit a report of all

that he has done during his tenure as the Competent Authority. On

08-03-2019 the petitioner quoting all the reports and also referring

to the notification of withdrawal, at the end submits that no action
7

can be taken against the IMA as no report would indicate any

irregularity against the Group. Though the powers to submit any

such report was withdrawn from the petitioner, the petitioner

communicates the aforesaid report. This is the allegation against

the petitioner. The Deputy Superintendent of Police, CID would

then submit a comprehensive report post investigation. After the

comprehensive report into the allegations against the group, a

complaint again comes to be lodged before the Commercial Street

Police alleging non-payment of deposits made by several depositors

into the IMA. Now a crime comes to be registered in Crime No.73 of

2019 for the offences punishable under Sections 406 and 420 of the

IPC against IMA and its Directors.

6. During the pendency of investigation by the jurisdictional

Police, owing to public outcry, a Special Investigation Team is

constituted and during the pendency of investigation by the SIT the

matter is transferred to the hands of the Central Bureau of

Investigation ('CBI' for short). The petitioner was nowhere in the

picture. The CBI files its charge sheet. Investigation is continued.

The CBI files its additional charge sheet. Here comes the petitioner
8

into the picture along with 3 others as accused No.23. The

allegations against the petitioner are the ones afore-quoted i.e.,

Sections 7, 7A, 8, 9, 10 and 12 of the Prevention of Corruption Act

and Section 120B r/w 420, 406, 218 and 409 of the IPC. Sanction

is accorded to prosecute the petitioner. After according of sanction,

the petitioner has preferred the subject petition seeking quashment

of proceedings initiated against him.

7. Heard Sri M.K. Prithveesh, learned counsel appearing for

the petitioner, Sri B.N. Jagadeesha, learned Additional State Public

Prosecutor appearing for respondent No.1 and Sri P. Prasanna

Kumar, learned Special Public Prosecutor appearing for respondent

No.2.

8. The learned counsel appearing for the petitioner would

vehemently contend that there is no allegation against the

petitioner of any demand or acceptance of illegal gratification which

is sine qua non for an allegation under Section 7 or Section 7A of

the Prevention of Corruption Act. All the allegations against the

petitioner are hearsay. An accused who turned as approver in these

proceedings has sought to nail the petitioner along with others and,
9

therefore, the say of the approver should not be taken as

sacrosanct, as it would not be enough to nail the petitioner into any

of the allegations. It is his submission that there are no

incriminating materials/documents found to substantiate the

allegation of demand or acceptance.

9. The learned Special Public Prosecutor Sri P.Prasanna

Kumar representing the CBI would vehemently refute the

submissions to contend that charge sheet is filed. The approver has

clearly indicated that he has transferred money to the petitioner.

There are notings in the diary which is seized by the CBI which

would all pin down the petitioner. It is submitted, by taking this

Court through the documents appended to the petition, that since it

is a seriously disputed question of fact it is a matter of trial for the

petitioner to come out clean.

10. The learned counsel appearing for the petitioner would

join issue to contend that the concerned Court has discharged three

other accused, two of whom on similar allegations were drawn into

the web of proceedings with the petitioner. He would, therefore,

seek quashment of proceedings on that score also.
10

11. I have given my anxious consideration to the submissions

made by the respective learned counsel and have perused the

material on record.

12. The afore-narrated facts are a matter of record and as

such they would not require any reiteration. The appointment of the

petitioner as the Competent Authority under the Act comes about

on 10-04-2018. The said notification is later on withdrawn by the

State Government by another order dated 01-02-2019. The

notification of withdrawal of appointment of Competent Authorities

reads as follows:

"No.RD 01 GRC 2018 Karnataka Government Secretariat,
M.S. Building,
Bangalore, dated: 01-02-2019.

NOTIFICATION

Notification No. RD 01 GRC 2018 dated: 10-04-2018,
wherein, in exercise of the powers conferred by Section 5 of The
Karnataka Protection of Interest of Depositors in Financial
Establishments Act, 2004 (Karnataka Act 30 of 2005), the
Government of Karnataka have appointed Assistant
Commissioners of all the districts throughout the State of
Karnataka as Competent Authorities to carry out the purposes of
this Act, the said notification dated: 10.04.2018 is hereby
withdrawn with immediate effect and until further orders.

By order and in the name of the
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Governor of Karnataka
Sd/-
(K.R. Ravikumar)
Under Secretary to Government,
Revenue Department (special Cell)."

After withdrawal of the notification in terms of the direction of the

Department of Revenue, the petitioner communicates what steps

taken by him qua the allegations against IMA group. The

communication dated 8-03-2019 reads as follows:

"Government of Karnataka
Office of the Assistant Commissioner, Bengaluru North
Sub-Division, Kandaya Bhavan, K.G.Road, Bengaluru-09
No.MAG/MSC/CR.07/18-19 Date: 08-03-2019
To
Principal Secretary to Government,
Revenue Department,
Multi-stored Building, Dr.Ambedkar Veedhi,
Bengaluru - 560 001.
Sub: Taking action under the Karnataka Protection of
Interest of Depositors in Financial Establishments
Act, 2006 (Karnataka Act 30 of 2005) against M/s I
Monetary Advisory Private Limited and its
associates.
Ref 1. Notification No.RD.01/GRC/2018 dated
10.04.2018.
2. Notification No.RD.02/GRC/2018 dated
29.01.2028
3. Your office letter No. RD.20/GRC/2017 dated 20-
08-2018 address to Deputy Commissioner,
Bangalore Urban District with CC to this office.
4. Complaint lodge with Station House Officer,
Commercial Street Police Station, Bengaluru City
as per complaint No.NKC/MSCR02/2018-19 dated
13-08-2018.
12

5. Letter written from this office to the Police
Commissioner as per letter No.MSC/CR/07/18-19
dated 20-08-2018.
6. Endorsement No.D-1/PS/D-Application/14/2018
dated 14-10-2018 issued by Police Inspector,
Commercial Street Police Station.
7. Letter dated 14-12-2018 issued by IMA Group of
Companies to Assistant Commissioner and Sub-
Divisional Magistrate, Bangalore North Sub-
Division, Bangalore, Karnataka.
8. Letter dated 21-12-2018 No.MSC/CR:07/18-19
issued by Assistant Commissioner, Bengaluru
North Sub-Division, Bengaluru to Deputy
Secretary to Government, Revenue Department.
9. Notification No.RD 01 GRC 2018 dated
01.02.2019 issued by the Government.
10 letter No.CRM-1/01/FIU/Investigation/CID/ 2018,
dated 18-01-2019 issued by Police Commissioner,
Economical offences, CID, Bengaluru to Deputy
Commissioner, Begaluru Dist. Bengaluru.
11 Letter No.MSC(Court)CR36/2017-18
dated:19.02.20--issued by the Office of the
Deputy Commissioner, Bengaluru District,
Bengaluru to this office.
Sir,

In respect of I Monetary Advisory Pvt. Ltd. And its
associates as detailed in the notice u/s 3(2) of the Act,
published on 16-11-2018, this Office was initially
appointed as Competent Authority under Section 5 of the
Karnataka Protection of Interest of Depositors in Financial
Establishments Act, 2004 as per Notification No.RD 01
GRC 2018 dated 10-04-2018. The said Notification has
been withdrawn with immediate effect by issuance of
Notification of even number dated 01-02-2019. In the
interregnum this office had issued notices to the said
financial establishment as well as a public notice calling
for information about the said financial establishments.
Further, several intra-departmental correspondence was
also made.

In response to the notice of this Office, a detailed
explanation in writing has been submitted by the said
13

financial establishment as per their reply dated 14-12-
2018 received by this office on 18-12-2018. The financial
establishment vide the aforesaid response furnished
various particulars including the names and addresses of
their partners including their DIN:PAN and Aadhar
numbers. The financial establishment clearly contended
that they are operating as a Limited Liability Partnership
Firm under the law contemplated in the Limited Liability
Partnership Act, 2008 and stated that they have been
monitored by the registrar of companies and Ministry of
Corporate Affairs. Further, they stated that they do not
deal with financial instruments and forward market
instruments. They say that they deal with only metals
inclusive of gold, silver, copper, nickel along with semi-
precious and precious stones. It is the specific contention
of the said financial establishment that it has received
money from its partners as capital and as such, the said
sum received by the Company as capital from its partners
cannot be construed as 'deposit' within the meaning the
Karnataka Protection of Interest of Depositors in Financial
Establishment Act, 2004 as the amounts contributed as
capital by partners of a firm is not included within the
meaning of the word 'deposit' in view of clause (ii) of sub-
section (2) of Section 2 of the Act.

Further, during the enquiry conducted by this office
it is found that the people who have invested in the said
Company do not have any complaints and they have not
stated before any authority including this Office and the
Police that the Company in question is cheating them or
contemplating to cheat them. In the absence of any such
complaint, this Authority could not prepare a report by
assessing the deposit liabilities and the assets of the said
financial establishment. The Competent Authority is
required to act under the Act after it being appointed as
such under Section 5 of the Act only after an Order under
Section 3 has been passed by the Government. To pass
an Order under Section 3, the Government must have
reason to believe that the financial establishment is acting
in and detrimental to the interests of the depositors with
an intention to defraud them or where the Government is
satisfied that such financial establishment is not likely to
return the deposits or make payment of interest or other
14

benefits assured or provide the services against which the
deposit is received. Since there are no complaints
against the modus operandi of the company, a report
under Section 7 of the Act could not be made.

Even the investigating police viz., Office of the
Director General of Police, CID, Special Cells and
Economic Offences after thorough investigation has
concluded stating that the Company has not received
deposits and it has received only amounts by way of
capital and as such, no action can be taken against the
said Company under the Karnataka Protection of Interest
of Depositors in Financial Establishment Act, 2004.

Under the prevailing facts and circumstances, it is
clear that no action can be taken against the said
financial establishment under the Karnataka Protection of
Interest of Depositors in Financial Establishment Act,
2004. As such this Competent Authority proposes to
obtain approval of the Government to close the above
case as of now.

Awaiting further instructions.

Thanking you,
Yours faithfully,
Sd/-
Assistant Commissioner
Bengaluru North Sub-Division,
Bengaluru."

The petitioner then moves out from Bangalore North. As observed

hereinabove, a complaint is registered, an SIT is constituted and

the matter is finally transferred to the hands of the CBI. After the

said transfer to the CBI, the house of the petitioner is searched.
15

The search list is appended to the petition. The opinion of the

search party is as follows:

"During search no incriminated documents were found.
Hence no documents seized. No damage to person or property
has been caused. The search was conducted in a peaceful
manner and completed at 10.50 hours."

During the search of the house of the petitioner it is observed that

no incriminating documents were found. Hence, no documents are

seized. The search was conducted in a peaceful manner. Therefore,

the CBI itself found no incriminating material against the petitioner.

13. During the trial accused No.2 one Nizamuddin turns as

approver. His statement is used to pin down the petitioner.

Therefore, certain excerpts of his statement recorded under Section

164 of the Cr.P.C., assumes significance, as barring this statement

there is nothing against the petitioner. The statement recorded

reads as follows:

"STATEMENT OF THE ACCUSED (A-2) AS RECORDED
UNDER Section 164(5) Cr.P.C.

When I was working in BMA wealth creators, Mansoor
Khan offered me a job to handle his MCS (Multi Commodity
Exchange) portfolio. I joined IMA in 2015 to handle his trading
account at Jayanagar office. Later, in the month of December,
16

2015, he asked me to attend to his constructions business which
I did. When I was working in IMA I came to know that Shri
Mohammed Mansoor Khan started his business in the year 2006
initially by collecting investment from his relatives and known
contacts. Later he started collecting investment from public in
the name of various schemes such as monthly income plan,
annual income plan, child income, marriage scheme etc. Initially
the investments were collected in the name of M/s I Monetary
Advisory, which is a proprietorship firm and when enquiries
started by various authorities that he had collected the
investments without mandatory license from RBI, he started
new companies and LLP.

He collected investments from public by promising high
returns approximately 30% to 40% in a year by telling us that
he is earning heavy income through online trading in commodity
market and meeting the high returns to his clients. He was
running a Ponzi scheme. However, we have seen that the high
returns to the clients were given every month in the name of
profits out of investment collected from new investors. Mansoor
Khan was doing various charity work using the IMA money like
distribution of rations to poor people, supporting Madrassa and
Masjids etc. Initially we thought he was doing good charity
work. Later, we found that the charity work was done using
investors' money in order to lure new investors. He also
constructed one VKO School in Shivajinagar using IMA fund and
also renovated Nehru school in St. John's Road. The renovated
schools were inaugurated by the then Chief Minister and local
MLA Shri Roshan by misguided the common public that his
business got the support of Government. He also financially
supported Haj programs, jewelry events, food events, sports
event and Mushera organized by Shri Roshan Baig, MLA of
Shivajinagar and Ex-Minister to promote his un regulated
business. Once ShriRoshan Baig, the then Shivajinagar MLA
brought then Chief Minister Shri H.D. Kumaraswamy in IMA
office for Iftar. They had tea and snacks in IMA office and after
some time they left the office. This event was widely shared in
social media. Shri Mansoor Khan utilized this event for his gain.
The common public got misguided with such visits and they
started thinking that IMA got Government support and gathered
more confident to invest in IMA.
17

Mansoor Khan also spent for various religious leaders and
utilized them for making promotional activities to lure the
general public. They propagated IMA in their meetings,
sermons, in their magazines and in their books etc. The
common public of Muslim community misguided by the above
propagation and invested in IMA their hard earned money and in
some cases by selling their existing properties.

In the year 2016 Shri Mohammed Mansoor Khan with the
help of auditor Shri Iqbal Khan started various companies and
LLPs showing us i.e., the employee of M/s IMA as his co-
partners with 0.003% shareholdings in order to misguide
various Government departments. I was shown as partner in
following companies:

1. M/s I.M. Advisory Pvt. Ltd.
2. M/s IMA Bullion Trading Services Ltd.
3. M/s IMA Publishers Pvt. Ltd.
4. M/s IMA Builders and Developers Pvt. Ltd.
5. M/s IMA FL Health Care Services Pvt. Ltd.
6. IMA Cooperative Society.

Though we were shown as partners the entire decision is
unilaterally taken by Mansoor Khan only and we simply signed
where he asked to sign. We have not invested in the said
companies as our share and the amount of share is shown by
Shri Mohamed Mansoor Khan falsely on records. I state that we
the employees have received only salaries and never received
any share/ returns on any share capital.

Mansoor Khan misguided the investors and employees
stating that he was making huge profits in online trading in
commodity market and also huge gold reserve, which later
turned out to be false. He carried out jewellery business using
investment collected from public in the name of M/s IMA
Jewellers with 0% wastage and 0% making charges and the
jewelleries were sold in huge loss in order to falsely show that
he is running big business and giving returns to his investors out
of income from his business. He also opened various other
businesses using investors' money in order to falsely show the
investors about making money from his other businesses.
18

Since November 2018, after news about notice issued by
Revenue Department came in public, various investors
approached IMA office for taking back their investment. Fresh
inflow become less and company faced great difficulties to give
promised return to the clients and the returns were irregular.
With inflow of funds from new investors return to existing
investors was impossible. During that time the returns were
made by meeting gold jewelleries, which resulted in wastage of
15-20%. The promised returns to approximately 60,000
investors stopped since April and May 2019 and Shri Mohammed
Mansoor Khan failed to return the deposits received from the
depositors when people approached IMA office for taking back
their investments. During this time Mansoor Khan was trying to
get Rs.500 crore loan from NBFC, Delhi in order to repay the
investors. However, he could not obtain the necessary 'NOC'
from Government for obtaining the above loan.

On 7-06-2019 Shri Mohammed Mansoor Khan directed
me, Naveed Ahmed, Nasir Hussain, Arshad Khan and Vaseem to
get the remaining jewelleries melt and sell the same in local
market through Sananullah to meet the payment of returns.
Accordingly, we visited IMA Jewellery and collected 34 Kgs of
gold and gave it to Shri Sananullah who melted the metal with
the help of one Ravi Nirale and sold in local market for
approximate Rs.9/ crores. The said amount was handed over to
Shri Mansoor Khan by Sananullah and Nasir Hussain in our
presence. However, this amount was not used to return the
investments and misused by Mansoor Khan.

On 8-06-2019 Shri Mohammed Mansoor Khan diverted us
by sending us to Malur on the guise of collecting Rs.15/- crores
from unknown person in Kalimullah Jamal farm house. When
myself along with Naveed Ahmed and Vaseem reached Malur,
we came to know that we were cheated and Shri Mohammed
Mansoor Khan planned to escape with the amount generated the
previous day by selling melted gold. Later we came to know
that he left India for Dubai with Rs.9/- crores without repaying it
to the investors. Later, criminal case was registered and the
said case was taken over by SIT and we all the employees/
Directors were arrested and now on bail.

Mansoor Khan purchased various properties in his name
and two properties in the name of Nasir Hussain using IMA
19

funds and another green land property in the name of Dada
Peer I. Mansoor Khan published his scheme in various
newspapers falsely promising huge returns for misguiding public
to get investment. He also used 'Siasat' Urdu Daily Newspapers
for wide publicity of IMA group entities. Huge IMA funds were
spent for running Siasat Urdu Daily of Shri Roshan Baig for the
purpose of creating wide publicity.

Mansoor Khan also spent IMA fund in support of political
leaders. He was using the popularity and position of Shri Roshan
Baig, MLA and then Minister for his personal gain. In order to
gain the confidence of investors Shri Mansoor Khan used the
popularity of Shri Roshan Baig and obtained the confidence.

Once he asked me to alter some contract notes by
changing quantity and price which I refused to do. When I
asked why he was doing this, he had given reasons that
because of tax saving in his other business its common for him.
I have noticed that he used to do some change in contracts
notes to send to the auditors.

In November 2018, there was a notice against IMA by
Revenue Department saying that IMA is collecting funds from
public with unregulated way in all the reputed news papers.
After this publication investors rushed to the office to take back
their funds back but he did not return on time because he had a
shortage of funds and dragging days saying that he will return
them back. Simultaneously he sent me to L.C. Nagaraj, who
was Assistant Commissioner and published the above
notification. I met L.C. Nagaraj and submitted the LLP and
financial documents and came back. After one week Mansoor
Khan asked me to go to him and talk about our files and get his
contact number, which I did. After 2 days Mansoor Khan asked
me to go to DC Office and wait there and I was waiting there
and suddenly Vaseem brought one bag of cash containing 50
lakhs rupees and Mansoor Khan given one WhatsApp number to
hand over that money to L.C. Nagaraj in person. Accordingly, I
have handed over the bag and came back. After that the matter
was closed for two months.

When huge number of investors came to take back their
funds for which Mansoor Khan did not have the funds to return
to them and he approached one NBFC in Delhi to borrow rupees
20

500 crore. After one week NBFC legal team found IMA
notification from Government of Karnataka which was published
by L.C. Nagaraj and they requested Mansoor Khan to clear the
notification issue from Revenue Department then only they can
fund Mansoor Khan. From that day it started and he decided to
get the clearance from Revenue Department by bribing them
with huge money.

There were complaints made by unknown people in RBI
regarding IMA and RBI instructed commercial police station and
from commercial police station there was one notice issued to
Mansoor Khan and Mansoor Khan replied with his financials. No
action was taken by Commercial Street Police Station on RBI
complaint. There was enquiry conducted by Shri Rahul Kumar,
DCP East which Mansoor Khan attended. I also accompanied
Mansoor Khan to the office of the DCP and submitted
documents. No action was taken on the said enquiry also. In
2018 there was EOW enquiry was happened against IMA and
investigation officer was Dy.SP Shri Sridhar. I accompanied Shri
Mansoor Khan along with CA Iqbal Khan with all the LLP's and
financial details submitted the same and came back. Again
Mansoor Khan was called couple of times and I used to visit Shri
Sridhar's office along with Mansoor Khan. I was waiting outside
when Sri Mansoor Khan and CA Iqbal Khan explaining him inside
his chamber. Once I went with Mansoor Khan to CCB office
because he got notice from them as well but I was standing
outside and Mansoor Khan went inside with LLP documents and
submitted the same and came back.

There were many events Mansoor Khan funded such as
Mushaira, food events, jewellery events and sports event. He
used to spend lots of money to promote IMA business to get lots
of investors in his company. Moreover he spend this money
from investors funds. He also spent money in Mushaira,
organized by Roshan Baig. Mansoor Khan instructed me to go to
Roshan Baig and ask about event for sponsorship and told to me
that we can promote our brand in that Mushaira so that we can
promote our jewelry business in our community people. There
were almost 5000 people will be gathered. On the direction of
Mansoor Khan I went to Roshan Baig and approached him for
sponsoring Mushaira which he accepted. Hence, IMA became the
main sponsor of the Mushaira.
21

Mansoor Khan had couple of political leaders contacts and
he used to meet them in function's and events. Shri Mansoor
Khan told me that he was funding lots of money to political
leaders.

All the IMA entities were audited by Iqbal Khan team and
every financial reports audited by his team. Mansoor Khan use
to submit bank statements and transaction reports and contract
notes of online trading to Iqbal Khan and company. They used
to lot of manipulations in books of accounts.

Mansoor Khan informed that PD Kumar is BDA Engineer
and he will support us to buy BDA properties in Bangalore but
after some days I came to know that he was helping IMA to get
clearance from Mr. Raj Kumar Khatri. I was instructed by
Mohammed Mansoor Khan to collect one cash bag from
accounts department and give it to PD Kumar by giving me
WhatsApp number of P.D. Kumar. I was instructed to meet him
and deliver him Rs.1.5 crore. Accordingly, I went to accounts
Department and collected one cash bag and went to P.D. Kumar
house situated at Jayanagar 7th Block and handed over to him
and made him to take with Mansoor Khan for confirmation. I
came to know that another Rs.1/- crore was paid through Shri
Wasim. After some time, Mansoor Khan instructed me to go to
BDA office in RT Nagar and receive cheques from P.D. Kumar or
ask P.D. Kumar to meet him immediately. Accordingly, I went to
BDA office and met Shri Kumar and asked him to meet Mansoor
Khan. Both of them met at Queens Road and after that meeting
Mansoor Khan asked me to collect 4.5 cr. Cheque from P.D.
Kumar. Accordingly, I have collected 2 cheques worth of 4.5
crores from P.D. Kumar. During CBI investigation, I have
handed over the above cheques to CBI for investigation
purpose.

Mansoor Khan instructed me many times to deliver
money to his business transactions having the same I thought
that the money I delivered of Rs.5/- crore at Sadashivanagar
was election money funded by Mansoor Khan for Shri
Krishnegowda, Ex.Corporator.

Mansoor wanted to settle matter with Shri L.C. Nagaraj,
Assistant Commissioner and paid Rs.4.5 crores in 2018 and
2019 January. The amount was delivered by me in front of CCD,
22

Sadashivanagar Main Road. Initially I delivered Rs.50/- lakhs in
front of DC office. Revenue Office, Rs.2/- crore at CCD, Rs.2/-
crore at CCD. It was paid to his assistant Shri Manjunath,
Village Accountant, as instructed by Shri Mansoor. After this
payment, Shri Manjunath gave me clearance letter, singed by
Shri Nagaraj and the same was submitted to Mansoor Khan.
Mansoor Khan after obtaining the said clearance letter,
approached NBFC for availing loan of Rs.500 crores to return
amount back to the investors, but in the said clearance letter
there was a sentence in the last line mentioning that seeking an
approval from Government of Karnataka to close the case. After
seeing the said sentence, NBFC denied the loan.

After clearance from L.C.Nagaraj it came to DC Office
Chamber where the DC need to give clearance to IMA file.
Mansoor Khan instructed me to meet DC. Accordingly, I went to
meet DC Shri Vijay Shankar but same Manjunath was there at
his office. When I asked him to talk to Mansoor, he spoke with
him and after some times I came back. The very next day
Mansoor Khan instructed me to handed over one cash bag of
Rupees 1.5 crores to Shri Manjunath for DC payment. As
directed by Mansoor Khan I had delivered the cash bag to
Manjunath in Millers Road. He also gave clearance and file went
to Principal Secretary at M.S. Building. There was one more
clearance was needed for clearance.

Once Mansoor Khan took me to R.V.Deshpande house at
his official residence at race course road where I saw Shri
Roshan Baig as well who were sitting inside his chamber and I
was standing outside. After some times Mansoor Khan came
back from his chamber and we left from there. Mansoor Khan
said that the file will be cleared as soon as possible. After one
week I went along with Mansoor Khan to meet R.V. Deshpande
at his R.T. Nagar residence and I was sitting in office reception.
After discussion Mansoor Khan came back and we left. I state
that the clearance letter was not issued by Revenue office and
Mansoor Khan could not get NBFC loan.

During the course of CBI investigation, I confessed before
a Magistrate and also applied for tender of pardon, which was
granted by the trial Judge."
23

It is further germane to notice the admission of guilt by accused

No.2 on12-05-2022 before the learned Magistrate while he was

examined under Section 164(1) of the Cr.P.C. It reads as follows:

" ಾಂಕಃ 12-05-2022 ರಂದು ಆ ೋ ತ ೆ ಸತ ಪ ೆ ೋ ಾ ತು.
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24

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ಸದ Hವರ (ದು)ೊಂ DೆEೕ ೆ. ಅ)ೌಂ:ೆಂ= ಆ7ದE ನHೕv ರವರು ಬ ೆದ ವರ ಯ!" HವರಗಳA
ಇತುC, ಅದನು1 ಾನು ೋ DೆEೕ ೆ.

(ಮುಂದುವ ೆದ-'ೇ()ೆಯನು1 ಮುಂದುವ ೆಸಲು )ಾIಾವ)ಾಶ )ೋ ದE ಂದ ಅನುಮ
5ೕಡIಾ ತು)"

The certificate following the aforesaid statement of accused No.2

reads as follows:

"Certificate as per Section 164(1) Cr.P.C

I have explained to Shri Nizamuddin S/o Azeemuddin,
aged about 37 years R/o No.295, Al-Akra School Road, Near
Ring Road, Razaullah Mustafa Nagar, Davangere, Karnataka,
that he is not bound to make a confession and that, if he does
so, any confession he may make may be used as evidence
against him and I believe that this confession was voluntarily
made. It was taken in my presence and hearing, and was read
over to the person making it and admitted by him to be correct,
and it contains a full and true account of the statement made by
him.
Sd/-
(P.Shivaraj)
XXXVIII ACMM, B'luru."

Accused No.4 another approver gives his statement under Section

164(5) of the Cr.P.C. The portions that are relevant read as

follows:
25

".... .... ....

(a) entries pertaining to handing over of cash of Rs.1
crore to Vaseem on account of expenses on L.C. Nagaraj. This
entry was made by me pertaining to the entrustment of Rs.1/-
crore to Vaseem for meeting expenses in the name of L.C.
Nagaraj as per the instructions and details furnished by Sri
Mohammed Mansoor Khan. The money was entrusted to
Vaseem by me and I do not know whether Vaseem delivered the
same, my job is to follow the instructions of Sri Mohammed
Mansoor Khan to hand over the money to Vaseem for
L.C.Nagaraj. Neither I ask Vaseem nor Vaseem used to tell me
the purpose.

(b) Entry of amount of Rs.2/- crores by cash was
entrusted to Nizamuddin on account of expenses of L.C. Nagaraj
and the information and details of furnished by Sri Mohammed
Mansoor Khan and money was entrusted to Nizam who is none
other than Nizamuddin."

One Vaseem/accused No.5 tendered his statement under Section

164(5) of the Cr.P.C. Vaseem's statement insofar as it bleakly

names the petitioner reads as follows:

".... .... ....

During 2018 Karnataka State Assembly Election me and
Nizamuddin visited VKO School along with Mansoor Khan where we
have delivered money to Ishtiyaq Ahmed (husband of Shivajinagar
Corporator Smt. Farid Ishtiyaq) for the election expenses of
R.Roshan Beigh. In November 2018 Mansoor Khan tried to get
withdraw the notice issued by Revenue Department against IMA for
which heavy bribes were paid. Once on the instructions of Mansoor
Khan I had received cash bag containing Rs.1/- crore from Mansoor
Khan and delivered the same to Sri P.D. Kumar in his residence at
Jayanagar 7th Block. On 28-11-2018 I have delivered Rs.50/- lakhs
to Nizamuddin on the instructions of Sri Mansoor Khan and later
came to know that this amount was delivered to Sri L.C. Nagaraju".
26

The witness Vaseem deposes that someone told him that the

amount was delivered to the petitioner. The approvers' statements

quoted hereinabove are also vague that someone told them that

the amount was delivered to the petitioner. There is no direct

evidence that any amount was directly given to the petitioner.

14. While such factors would become a matter of trial, what

merits entertainment of the petition is that on identical allegations

the concerned Court has discharged 2 of the accused - accused

Nos. 27 and 28, who were brought into the web of crime along with

the petitioner. The two were public servants and against those two

the allegations were identical. Against accused No.27 and 28 the

offences are punishable under Section 420 of the IPC read with

sections 120B, 409, 426, 477A and under Section 9 of the Act.

Further the accused persons are also alleged to have committed

offences punishable under Section 7, 13(1)(d) of the Prevention of

Corruption Act, 1988. In addition to the above, accused No.28 is

also alleged to have committed offences punishable under Sections

7, 8, 9, 11 r/w 13(2) of the Prevention of Corruption Act. If the
27

offences against the petitioner are juxta posed to the offences qua

the aforementioned accused 27 and 28, they are identical. Both

the accused filed discharge applications before the concerned Court

in Special Case No.1055 of 2019 and they are discharged by

different orders of the same date i.e., 15-07-2024. It becomes

necessary to notice the reason for discharge. The concerned Court,

insofar as accused No.27 is concerned, draws summation of reasons

which read as follows:-

".... .... ....

31. To sum up, the main allegation which has been levelled
in the present case against accused No.27 Mr. M. Ramesh is that he
was the Police Inspector of Commercial Street Police Station at the
relevant point of time and he had not initiated any action with
respect to the complaint lodged by Mr. Krishna Deshpande in the
year 2016 alleging of certain irregularities being noticed at IMA. It
is also pertinent to note that immediately after the receipt of the
said complaint, he had conducted a preliminary enquiry and had
also requested competent authorities to furnish necessary details
with respect to registration of M/s IMA and its entities on the basis
of the same, he had collected necessary details from ROC and had
arrived at a conclusion that the IMA was a registered firm carrying
out its financial activities and as such no illegalities were to be
found. The said report came to be forwarded to his higher authority
which was also accepted by them. It is relevant to note that
thereafter a SLCC meeting was conducted including RBI officials
and other competent authority members wherein it was resolved
that the concerned authorities that is the Chief Secretary was
required to issue necessary directions to the competent authorities
to sensitize with respect to lodging of complaints for the offences
committed under Section 3 of KPIDFE Act. It is also relevant to
note in this regard that subsequently another complaint was lodged
by Mr. M.S. Kanapuri alleging of illegal activities in the IMA and its
28

group of entities. The complaint when carefully appreciated
indicates that he had suspected that M/s IMA and its group of
entities were not carrying out business in accordance with law and
they were not registered with appropriate authorities. However,
the records which were collected by the investigating agency clearly
indicated that M/s IMA and group of companies were registered and
were having necessary certificate to carryout business. Repeatedly
it is made clear that mere possession of certificate to carry out
business is not approving the act of IMA or its group of entities, but
the court is only appreciating the role of the present accused
person at that relevant point of time to ascertain whether the act of
the accused attracts the rigors of Prevention of Corruption Act. It is
also relevant to note that subsequently in SLCC meeting, the
auditor of M/s IMA and its entity was summoned and he had
explained about the financial activities which were being carried out
by IMA and its group of companies. At that juncture none of the
members of SLCC had raised any qualms with respect to carrying
out of the financial activities and later on, the GM of RBI himself
had proposed to get the complaint closed on the basis of the
investigation conducted by the police inspector. By looking into the
foresaid aspects, it is crystal clear nothing incriminating is pointed
out against the present accused person. The other set of argument
which has been levelled against the present accused person is that
he had not initiated any action on the basis of the complaint which
was lodged by Mr. S.G.Prasanna Kumar, the then Deputy Tahsildar
of Yelahanka Taluk alleging about the irregular activities of IMA and
its entities in his complaint. It is relevant to note from the records
and the documents produced by the prosecution that the present
accused person had sought for legal advice to ascertain their
competency to register complaint under Section 3 of KPIDFE Act.
The legal advisor, Mr. M.H. Bhaskar had specifically narrated the
contents of the case by referring to the complaint and documents
furnished to him and had opined that it was the competent
authority who has to register the complaint and acting upon the
legal advice the present accused person had issued an
endorsement stating that they were not able to register the
complaint and to conduct the investigation. By looking into all
these aspects, the contention alleged by the prosecution that the
accused in furtherance of the criminal conspiracy entertained by
him with other accused persons had not discharged his duty so as
to enable other accused persons to enrich themselves is not
forthcoming in the materials produced in the charge sheet to frame
charges. Last but not the least; it is also pertinent to note that the
29

Hon'ble High Court of Karnataka by its kind order had quashed the
proceedings against Mr. Ajay Hilori who was the DCP. East at that
point of time who had accepted the report furnished by the
investigating agencies. By looking into all these aspects, it is crystal
where the prosecution has not produced necessary materials to
indicate the alleged references committed by the accused person. I
have also bestowed my anxious reading to the fact that the present
accused person is alleged to have committed offence under Section
120B of IPC. In order to prove the concept of conspiracy,
necessary materials are required to be produced to indicate his
active involvement in the offences. However, the material produced
before the Court only indicates that the accused Inspector had not
initiated any action on the basis of the complaint lodged by Mr.
Krishna Deshpande at the inception and an endorsement came to
be issued stating that there was no illegality committed by M/s IMA
and its group of entities. For the sake of arguments, it is to be
noted that the said report was even accepted by SLCC and in its
meeting which consisted of the General Manager of RBI himself. By
looking into the said aspect, it is crystal clear that the provision of
Section 120B of IPC cannot be pressed into service against the
present accused person. With respect to invoking of the provision
of Prevention of Corruption Act, there are no materials to indicate
that there was a illegal gratification obtained by the present
accused person to close the complaint. It is pertinent to note that
the prosecution is relying upon the statement of the approver
Mr.Wasim and also Mr. Naveed Ahmed wherein it has been
narrated that certain amount was paid to Police Inspector Mr. M.
Ramesh, the present accused herein. However, the entire gist of
the approver statement on careful appreciation indicates that there
was no iota of allegation being levelled against the present accused
persons of demanding illegal gratification or handing over the
amount. All that it has been stated by the investigating agency is
that they had collected necessary materials from the e-mail dump
which was recovered at the behest of Naveed who had turned
approver. However, the e-mail dump which has been allegedly
recovered by the investigating agency is also not recovered in
accordance with the provisions of law by complying the provision of
Section 65B of the Indian Evidence Act. By looking into all these
aspects, there are no materials to frame necessary charges against
the present accused persons and as such he is entitled for
discharge. Accordingly, I answer point No.1 in the Affirmative.
30

32. Point No.2: In view of the above observations on Point
No.1, I proceed to pass the following:

ORDER

The application filed U/Sec.227 of Cr.P.C., by the accused No.27 Mr. M. Ramesh is hereby allowed and he is discharged for the offences punishable under Section 120B read with Section 420, 406, 218 and 409 of IPC and under Section 9 of Karnataka Protection of Interest of Depositor in Financial Establishments Act, 2004 and Sec. 7, 8, 9, 11 and 13(1)(d) r/w 13(2) of the Prevention of Corruption Act alleged against him."

Insofar as it pertains to accused No.28 is concerned, the Court has recorded the following reasons to discharge the said accused. It reads as follows:

".... .... ....

46. By looking into the said aspects, what could be summed up is as follows:

"The allegation which is levelled against accused No.28 is of initiating no action on the basis of the complaint lodged by M.S. Kanapuri and also it has been stated that when the petition was entrusted to him, the same was closed by him without conducting any investigation and whereas the records indicate that said allegations are falsified from the materials furnished and no two complaints are forthcoming in the petition register and only complaint which was allegedly entrusted to accused No.28 Gowrishankar is also not backed up by any cogent materials. It seems that a subsequent entry has been inserted to indicate that it was entrusted to Accused No.28. Further, it stated that CW-2 Mr. Gangadhar was the one who had entrusted the investigating materials, once again 31 raises a serious doubt since he was only a Head Constable and whether an Head Constable was competent to entrust investigation to his superior official i.e., Gowrishankar-accused No.28. Even otherwise, in his statement he has feigned his ignorance with respect to missing complaint and all that he has stated that he does not know who were responsible for missing of the said complaint. Further, no reasonable ground has been made out by the prosecution to establish that accused No.28 had indeed handed over huge amount for not investigating the case. Admittedly, at that point of time, no serious allegation were levelled against IMA and its entities and as such question of receiving huge sum of Rs.70/- lakhs to the accused No.28 who was only a Police Sub- Inspector would not have arisen. Lastly, the material which is allegedly recovered through e-mail dump is not in accordance with law and also as per the settled law it cannot be considered as admissible evidence under Section 34 of Indian Evidence Act and the records also indicates that the search conducted in the premises of Accused No.28 Gowrishankar at the earliest point of time yielded no results. By considering all these aspects prosecution has not produced sufficient materials to proceed against accused No.28 in the charge sheet by framing charges."

            Accordingly,   I    answer   point   No.1   in   the
Affirmative.

47.Point No.2: In view of above observations on Point No.1, I proceed to pass the following:

ORDER The application filed U/Sec.227 of Cr.P.C., by the accused No.28 Mr. Gowrishankar is hereby allowed and he is discharged for the offences punishable under Section 120B read with Section 420, 406, 218 and 409 of IPC and under Section 9 of Karnataka Protection of Interest of Depositor in Financial 32 Establishments Act, 2004 and Sec. 7, 8, 9, 11 and 13(1)(d) r/w 13(2) of the Prevention of Corruption Act alleged against him."

The allegations against both them are identical. Accused No.27,a Police Inspector of Commercial Street Police Station was charged of offences under the Prevention of Corruption Act. The concerned Court holds that it is crystal clear that there is no incriminating material or circumstance pointed against the said accused. The Court holds that there is no case to frame charge against the accused. The statements of Sri Wasim and Sri Naveed Ahmed are taken note of. The statements pointed at handing over certain money to accused No.27 as well, like in the case of the petitioner.

The concerned Court holds that the entire gist of approver's statement, on careful appreciation indicates that, there is no iota of allegation levelled against the accused person of demanding illegal gratification or handing over of the amount. There can be no cavil of doubt that the petitioner is similarly placed. The allegations are the same. The statement givers are the same and the statements are also the same. Therefore, the petitioner also would become entitled to the benefit or obliteration of proceedings against him as 33 is done against accused No.27 by the concerned Court apart from what is narrated hereinabove. It is an added circumstance.

15. Now coming to accused No.28, the allegation against him is identical to the allegation against the petitioner. There are entries made of receiving huge sum of `70/-lakhs. This is also based upon the statements made by the approvers. The concerned Court holds that this cannot be so sacrosanct to become admissible in evidence.

Though the case of accused No.28 would not cover the issue qua the petitioner on all its fours, it is nonetheless obliteration of proceedings against a public servant. It is necessary to notice the submission of the learned counsel appearing for the petitioner that the aforesaid two orders qua accused Nos. 27 and 28 have today become final. Therefore, the benefit of those reasons apart from the reasons rendered hereinabove would lead to obliteration of proceedings against the petitioner.

16. The issue now would be whether the ingredients of Section 7 or 7A of the Prevention of Corruption Act ('PC Act' for 34 short) are even met in the remotest sense in the case at hand.

Section 7 and 7A of the PC Act read as follows:

"7. Offence relating to public servant being bribed.--Any public servant who,--

(a) obtains or accepts or attempts to obtain from any person, an undue advantage, with the intention to perform or cause performance of public duty improperly or dishonestly or to forbear or cause forbearance to perform such duty either by himself or by another public servant;

(b) obtains or accepts or attempts to obtain, an undue advantage from any person as a reward for the improper or dishonest performance of a public duty or for forbearing to perform such duty either by himself or another public servant; or

(c) performs or induces another public servant to perform improperly or dishonestly a public duty or to forbear performance of such duty in anticipation of or in consequence of accepting an undue advantage from any person, shall be punishable with imprisonment for a term which shall not be less than three years but which may extend to seven years and shall also be liable to fine.

Explanation 1.--For the purpose of this section, the obtaining, accepting, or the attempting to obtain an undue advantage shall itself constitute an offence even if the performance of a public duty by public servant, is not or has not been improper.

Illustration.--A public servant, 'S' asks a person, 'P' to give him an amount of five thousand rupees to process his routine ration card application on time. 'S' is guilty of an offence under this section.

Explanation 2.--For the purpose of this section,--

(i) the expressions "obtains" or "accepts" or "attempts to obtain" shall cover cases where a person being a public servant, obtains or "accepts" or attempts to obtain, any undue advantage for himself or for another person, by abusing his position as a public servant or by using his personal influence over another public servant; or by any other corrupt or illegal means;

(ii) it shall be immaterial whether such person being a public servant obtains or accepts, or attempts to obtain the undue advantage directly or through a third party.

7-A. Taking undue advantage to influence public servant by corrupt or illegal means or by exercise of personal influence.--Whoever accepts or obtains or attempts to obtain from another person for himself or for any other person any undue advantage as a motive or reward to induce a public servant, by corrupt or illegal means or by exercise of his personal influence to perform or to cause performance of a public duty improperly or dishonestly or to forbear or to cause to forbear such public duty by such public servant or by another public servant, shall be punishable with imprisonment for a term which shall not be less than three years but which may extend to seven years and shall also be liable to fine."

Interpretation of Section 7 or 7A of the PC Act need not detain this Court for long or delve deep into the matter. The Apex Court interpreting Sections 7 and 7A, has clearly indicated that there should be demand and acceptance for the purpose of a duty or its forbearance. The Apex Court right from 1955 interpreting the old PC Act up to the latest judgment has held as follows:

Interpretation under the unamended Act:

The Apex Court in the case of B.JAYARAJ v. STATE OF ANDHRA PRADESH1 interprets Section 7 and holds as follows:

".... .... ....

7. Insofar as the offence under Section 7 is concerned, it is a settled position in law that demand of illegal gratification is sine qua non to constitute the said offence and mere recovery of currency notes cannot constitute the offence under Section 7 unless it is proved beyond all reasonable doubt that the accused voluntarily accepted the money knowing it to be a bribe.

The above position has been succinctly laid down in several judgments of this Court. By way of illustration reference may be made to the decision in C.M. Sharma v. State of A.P. [(2010) 15 SCC 1 : (2013) 2 SCC (Cri) 89] and C.M. Girish Babu v. CBI [(2009) 3 SCC 779: (2009) 2 SCC (Cri) 1]."

(Emphasis supplied) The Apex Court later in N.VIJAYAKUMAR v. STATE OF TAMILNADU2 has held as follows:

".... .... ....

26. It is equally well settled that mere recovery by itself cannot prove the charge of the prosecution against the accused. Reference can be made to the judgments of this Court in C.M. Girish Babu v. CBI [C.M. Girish 1 (2014) 13 SCC 55 2 (2021) 3 SCC 687 37 Babu v. CBI, (2009) 3 SCC 779 : (2009) 2 SCC (Cri) 1] and in B. Jayaraj v. State of A.P. [B. Jayaraj v. State of A.P., (2014) 13 SCC 55 : (2014) 5 SCC (Cri) 543] In the aforesaid judgments of this Court while considering the case under Sections 7, 13(1)(d)(i) and (ii) of the Prevention of Corruption Act, 1988 it is reiterated that to prove the charge, it has to be proved beyond reasonable doubt that the accused voluntarily accepted money knowing it to be bribe. Absence of proof of demand for illegal gratification and mere possession or recovery of currency notes is not sufficient to constitute such offence. In the said judgments it is also held that even the presumption under Section 20 of the Act can be drawn only after demand for and acceptance of illegal gratification is proved. It is also fairly well settled that initial presumption of innocence in the criminal jurisprudence gets doubled by acquittal recorded by the trial court.

27. The relevant paras 7, 8 and 9 of the judgment in B. Jayaraj [B. Jayaraj v. State of A.P., (2014) 13 SCC 55 : (2014) 5 SCC (Cri) 543] read as under: (SCC pp. 58-

59) "7. Insofar as the offence under Section 7 is concerned, it is a settled position in law that demand of illegal gratification is sine qua non to constitute the said offence and mere recovery of currency notes cannot constitute the offence under Section 7 unless it is proved beyond all reasonable doubt that the accused voluntarily accepted the money knowing it to be a bribe. The above position has been succinctly laid down in several judgments of this Court. By way of illustration, reference may be made to the decision in C.M. Sharma v. State of A.P. [C.M. Sharma v. State of A.P., (2010) 15 SCC 1 : (2013) 2 SCC (Cri) 89] and C.M. Girish Babu v. CBI [C.M. Girish Babu v. CBI, (2009) 3 SCC 779 : (2009) 2 SCC (Cri) 1] .

8. In the present case, the complainant did not support the prosecution case insofar as demand by the accused is concerned. The prosecution has not examined any other witness, present at the time when the money was allegedly handed over to the accused by the complainant, to prove that the same was pursuant to any demand made by the accused. When the complainant himself had disowned what he had stated in the initial complaint (Ext. P-11) 38 before LW 9, and there is no other evidence to prove that the accused had made any demand, the evidence of PW 1 and the contents of Ext. P-11 cannot be relied upon to come to the conclusion that the above material furnishes proof of the demand allegedly made by the accused. We are, therefore, inclined to hold that the learned trial court as well as the High Court was not correct in holding the demand alleged to be made by the accused as proved. The only other material available is the recovery of the tainted currency notes from the possession of the accused. In fact such possession is admitted by the accused himself. Mere possession and recovery of the currency notes from the accused without proof of demand will not bring home the offence under Section 7. The above also will be conclusive insofar as the offence under Sections 13(1)(d)(i) and (ii) is concerned as in the absence of any proof of demand for illegal gratification, the use of corrupt or illegal means or abuse of position as a public servant to obtain any valuable thing or pecuniary advantage cannot be held to be established.

9. Insofar as the presumption permissible to be drawn under Section 20 of the Act is concerned, such presumption can only be in respect of the offence under Section 7 and not the offences under Sections 13(1)(d)(i) and (ii) of the Act. In any event, it is only on proof of acceptance of illegal gratification that presumption can be drawn under Section 20 of the Act that such gratification was received for doing or forbearing to do any official act. Proof of acceptance of illegal gratification can follow only if there is proof of demand. As the same is lacking in the present case the primary facts on the basis of which the legal presumption under Section 20 can be drawn are wholly absent."

The abovesaid view taken by this Court fully supports the case of the appellant. In view of the contradictions noticed by us above in the depositions of key witnesses examined on behalf of the prosecution, we are of the view that the demand for and acceptance of bribe amount and cellphone by the appellant, is not proved beyond reasonable doubt. Having regard to such evidence on record the acquittal recorded by the trial court is a "possible view" as such the judgment [State of T.N. v. N. Vijayakumar, 2020 SCC OnLine Mad 7098] of the High Court is fit to be set aside. Before recording conviction under the provisions of the Prevention of Corruption Act, the courts have 39 to take utmost care in scanning the evidence. Once conviction is recorded under the provisions of the Prevention of Corruption Act, it casts a social stigma on the person in the society apart from serious consequences on the service rendered. At the same time it is also to be noted that whether the view taken by the trial court is a possible view or not, there cannot be any definite proposition and each case has to be judged on its own merits, having regard to evidence on record."

(Emphasis supplied) The Apex Court later in the case of K.SHANTHAMMA v.

STATE OF TELANGANA3 has held as follows:

".... .... ....

10. We have given careful consideration to the submissions. We have perused the depositions of the prosecution witnesses. The offence under Section 7 of the PC Act relating to public servants taking bribe requires a demand of illegal gratification and the acceptance thereof. The proof of demand of bribe by a public servant and its acceptance by him is sine qua non for establishing the offence under Section 7 of the PC Act.

11. In P. Satyanarayana Murthy v. State of A.P. [P. Satyanarayana Murthy v. State of A.P., (2015) 10 SCC 152 :

(2016) 1 SCC (Cri) 11] , this Court has summarised the well-

settled law on the subject in para 23 which reads thus : (SCC p. 159) "23. The proof of demand of illegal gratification, thus, is the gravamen of the offence under Sections 7 and 13(1)(d)(i) and (ii) of the Act and in absence thereof, unmistakably the charge therefor, would fail. Mere acceptance of any amount allegedly by way of illegal gratification or recovery thereof, dehors the proof of demand, ipso facto, would thus not be sufficient to bring home the charge under these two sections of the Act. As a 3 (2022) 4 SCC 574 40 corollary, failure of the prosecution to prove the demand for illegal gratification would be fatal and mere recovery of the amount from the person accused of the offence under Section 7 or 13 of the Act would not entail his conviction thereunder."

(emphasis supplied)

12. The prosecution's case is that the appellant had kept pending the return of commercial tax filed by the said Society for the year 1996-97. The appellant had issued a notice dated 14-2-2000 to the said Society calling upon the said Society to produce the record. Accordingly, the necessary books were produced by the said Society. The case made out by PW 1 is that when he repeatedly visited the office of the appellant in February 2020, the demand of Rs 3000 by way of illegal gratification was made by the appellant for passing the assessment order. However, PW 1, in his cross-examination, accepted that the notice dated 26-2-2000 issued by the appellant was received by the said Society on 15-3-2000 in which it was mentioned that after verification of the books of accounts of the said Society, exemption from payment of commercial tax as claimed by the said Society was allowed. PW 1 accepted that it was stated in the said notice that there was no necessity for the said Society to pay any commercial tax for Assessment Year 1996-97.

13. According to the case of PW 1, on 23-3-2000, he visited the appellant's office to request her to issue final assessment order. According to his case, at that time, initially, the appellant reiterated her demand of Rs 3000. But she scaled it down to Rs 2000. Admittedly, on 15-3-2000, the said Society was served with a notice informing the said Society that an exemption has been granted from payment of commercial tax to the said Society. Therefore, the said Society was not liable to pay any tax for the year 1996-97. The issue of the final assessment order was only a procedural formality. Therefore, the prosecution's case about the demand of bribe made on 23-3-2000 by the appellant appears to be highly doubtful.

14. PW 1 described how the trap was laid. In the pre- trap mediator report, it has been recorded that LW 8, Shri R. Hari Kishan, was to accompany PW 1 -- complainant at the 41 time of offering the bribe. PW 7 Shri P.V.S.S.P. Raju deposed that PW 8 Shri U.V.S. Raju, the Deputy Superintendent of Police, ACB, had instructed LW 8 to accompany PW 1 -- complainant inside the chamber of the appellant. PW 8 has accepted this fact by stating in the examination-in-chief that LW 8 was asked to accompany PW 1 and observe what transpires between the appellant and PW 1. PW 8, in his evidence, accepted that only PW 1 entered the chamber of the appellant and LW 8 waited outside the chamber. Even PW 7 admitted in the cross-examination that when PW 1 entered the appellant's chamber, LW 8 remained outside in the corridor. Thus, LW 8 was supposed to be an independent witness accompanying PW 1. In breach of the directions issued to him by PW 8, he did not accompany PW 1 inside the chamber of the appellant, and he waited outside the chamber in the corridor. The prosecution offered no explanation why LW 8 did not accompany PW 1 inside the chamber of the appellant at the time of the trap.

15. Therefore, PW 1 is the only witness to the alleged demand and acceptance. According to PW 1, firstly, the demand was made of Rs 3000 by the appellant on 24-2-2000. Thereafter, continuously for three days, she reiterated the demand when he visited the appellant's office. Lastly, the appellant made the demand on 29-2-2000 and 23-3-2000. On this aspect, he was cross-examined in detail by the learned Senior Counsel appearing for the appellant. His version about the demand and acceptance is relevant which reads thus:

"In the vicinity of office of AO the jeep, in which we went there was stopped and I was asked to go into the office of AO and the trap party took vantage positions. Accordingly, I went inside the office of AO. I wished AO. At that time apart from AO some other person was found in the office room of AO and he was talking to the AO. AO offered me a chair. After discussion with the AO the said other person left the room of AO. I informed AO that I brought the bribe amount as demanded by her and also asked her to issue the final assessment orders. Then I took the said tainted currency notes from my shirt pocket and I was about to give the same to the AO and on which instead of taking the same amount directly by her with her hands she took out a diary from her table drawer, opened the diary and asked me to keep the said amount in the diary.

Accordingly, I kept the amount in the said diary. She closed the said diary and again kept the same in her table drawer and locked the drawer and kept the keys in her hand bag which was hanging to her seat. She pressed the calling bell and a lady attender came into the room of AO, then she instructed the lady attender to call ACTO concerned to her along with the society records concerned.

Accordingly, ACTO came to AO along with record. After going through the ledger and cash book, etc. AO signed on the last page of the said ledger and cash book mentioning 26-2-2000 below her signature in the said register though she signed on 27-3-2000 in my presence. AO directed her attender to affix official rubber stamp below her signature in the ledger and cash book and accordingly attender affixed the same. AO also signed on the office note of final assessment orders at that time. Thereafter, I collected the general ledger and cash book from the attender after affixing the said rubber stamp thereon and came out of the office of AO and relayed the pre-arranged signal to the trap party."

(emphasis supplied)

16. Thus, PW 1 did not state that the appellant reiterated her demand at the time of trap. His version is that on his own, he told her that he had brought the amount. What is material is the cross-examination on this aspect. In the cross-examination, PW 1 accepted that his version regarding the demand made by the appellant on various dates was an improvement. The relevant part of the cross-examination of the appellant reads thus:

"I did not state to ACB Inspector in Section 161 CrPC statement that on the evening of 24-2-2000 I met the AO and that she demanded the bribe. I did not mention in Ext. P-3 complaint that continuously for 3 days after 24-2-2000 I met the AO and the AO reiterated her demand. I did not mention in Ext. P-3 complaint that on 29-2-2000 I approached the AO and the AO demanded bribe of Rs 3000 and that unless I pay the said bribe amount she will not issue final assessment orders. I did not state in my Section 164 statement before the Magistrate that 13-3-2000 to 16- 3-2000 I was on leave and from 1-3-2000 to 12-3-2000, I was engaged in recovering the dues of the society. It is not true to suggest that I did not meet the AO continuously 3 43 days i.e. on 25-2-2000, 26-2-2000 and 27-2-2000 and that 27-2-2000 is Sunday. It is not true to suggest that I did not meet the AO in the evening of 24-2-2000 and that AO did not demand any money from me. I did not state in my Section 161 CrPC statement to Inspector of ACB that before I left the office of DSP on the date of trap I made a phone call enquiring about the availability of AO and the AO was in the office and informed me that she should be available in the office from 6.00 to 7.00 p.m. on that day so also in my Section 164 CrPC. I made such a phone call from the office of the DSP, ACB. I do not remember as to from which phone number I made phone call on that day. I cannot describe office telephone number of the AO. It is not true to suggest that I did not make any such phone call to AO and that she did not give any such reply to me. I did not state to ACB Inspector in my Section 161 CrPC statement or to the Magistrate in my Section 164 CrPC statement that I went inside the office of AO and I wished AO and at that time apart from AO some other person was found in the office room of AO and that he was talking to the AO and that the AO offered me a chair and that after discussion with the AO the said person left the room of AO and then I informed the AO that I brought the bribe amount. I did not state that said aspects to DSP during the post trap proceedings also."

(emphasis supplied)

17. Thus, the version of PW 1 in his examination-in-chief about the demand made by the appellant from time to time is an improvement. As stated earlier, LW 8 did not enter the appellant's chamber at the time of trap. There is no other evidence of the alleged demand. Thus, the evidence of PW 1 about the demand for bribe by the appellant is not at all reliable. Hence, we conclude that the demand made by the appellant has not been conclusively proved.

18. PW 2, Shri B.D.V. Ramakrishna had no personal knowledge about the demand. However, he accepted that on 15-3-2000, the said Society received a communication informing that the said Society need not pay any tax for the year 1996-97. PW 3 Shri L. Madhusudhan was working as Godown Incharge with the said Society. He stated that on 15-3- 2000, when he visited the appellant's office, ACTO served the original notice dated 26-2-2000 in which it was mentioned that 44 the Society was not liable to pay any tax. It is his version that when he met the appellant on the same day, she enquired whether he had brought the demanded amount of Rs 3000. However, PW 3 did not state that the appellant demanded the said amount for granting any favour to the said society.

19. PW 4 Ahmed Moinuddin was ACTO at the relevant time. He deposed that on 27-3-2000, the appellant instructed him to prepare the final assessment order, which was kept ready in the morning. He stated that he was called at 6 p.m. to the chamber of the appellant along with books of the said Society. At that time, PW 1 was sitting there. He stated that the appellant subscribed her signature on a Register of the said Society and put the date as 26-2-2000 below it. He was not a witness to the alleged demand. However, in the cross- examination, he admitted that the appellant had served a memo dated 21-3-2000 to him alleging that he was careless in performing his duties."

(Emphasis supplied) The afore-quoted judgments were rendered interpreting Section 7 as it stood prior to amendment. The Apex Court holds that demand and acceptance are sine quo non for an offence under Section 7.

Judgments post amendment:

The Apex Court has further interpreted Section 7(a), post amendment, in the case of NEERAJ DUTTA v. STATE (GOVT. OF NCT OF DELHI4 and holds as follows:

2023 SCC OnLine SC 280 45 ".... .... ....

8. Before we analyze the evidence, we must note that we are dealing with Sections 7 and 13 of the PC Act as they stood prior to the amendment made by the Act 16 of 2018 with effect from 26th July 2018. We are referring to Sections 7 and 13 as they stood on the date of commission of the offence. Section 7, as existed at the relevant time, reads thus:

"7. Public servant taking gratification other than legal remuneration in respect of an official act.--

Whoever, being, or expecting to be a public servant, accepts or obtains or agrees to accept or attempts to obtain from any person, for himself or for any other person, any gratification whatever, other than legal remuneration, as a motive or reward for doing or forbearing to do any official act or for showing or forbearing to show, in the exercise of his official functions, favour or disfavour to any person or for rendering or attempting to render any service or disservice to any person, with the Central Government or any State Government or Parliament or the Legislature of any State or with any local authority, corporation or Government company referred to in clause (c) of section 2, or with any public servant, whether named or otherwise, shall be punishable with imprisonment which shall be not less than three years but which may extend to seven years and shall also be liable to fine.

Explanations.-

(a) "Expecting to be a public servant"- If a person not expecting to be in office obtains a gratification by deceiving others into a belief that he is about to be in office, and that he will then serve them, he may be guilty of cheating, but he is not guilty of the offence defined in this section.

(b) "Gratification". The word "gratification" is not restricted to pecuniary gratifications or to gratifications estimable in money.

(c) "Legal remuneration"- The words "legal remuneration" are not restricted to remuneration which a public servant can lawfully demand, but include all remuneration which he is permitted by the Government or the organisation, which he serves, to accept.

(d) "A motive or reward for doing". A person who receives a gratification as a motive or reward for doing what he does not intend or is not in a position to do, or has not done, comes within this expression.

(e) Where a public servant induces a person erroneously to believe that his influence with the Government has obtained a title for that person and thus induces that person to give the public servant, money or any other gratification as a reward for this service, the public servant has committed an offence under this section."

9. Section 13(1)(d), as existed at the relevant time, reads thus:

"13. Criminal misconduct by a public servant.--

(1) A public servant is said to commit the offence of criminal misconduct,-

(a) ....................................

(b) ....................................

(c) ....................................

(d) if he,-

(i) by corrupt or illegal means, obtains for himself or for any other person any valuable thing or pecuniary advantage; or 47

(ii) by abusing his position as a public servant, obtains for himself or for any other person any valuable thing or pecuniary advantage; or

(iii) while holding office as a public servant, obtains for any person any valuable thing or pecuniary advantage without any public interest; or

(e) ........................................"

10. The demand for gratification and the acceptance thereof are sine qua non for the offence punishable under Section 7 of the PC Act.

11. The Constitution Bench4 was called upon to decide the question which we have quoted earlier. In paragraph 74, the conclusions of the Constitution have been summarised, which read thus:

"74. What emerges from the aforesaid discussion is summarised as under:

(a) Proof of demand and acceptance of illegal gratification by a public servant as a fact in issue by the prosecution is a sine qua non in order to establish the guilt of the accused public servant under Sections 7 and 13(1)(d)(i) and (ii) of the Act.

(b) In order to bring home the guilt of the accused, the prosecution has to first prove the demand of illegal gratification and the subsequent acceptance as a matter of fact. This fact in issue can be proved either by direct evidence which can be in the nature of oral evidence or documentary evidence.

(c) Further, the fact in issue, namely, the proof of demand and acceptance of illegal gratification can also be proved by circumstantial evidence in the absence of direct oral and documentary evidence.

(d) In order to prove the fact in issue, namely, the demand and acceptance of illegal gratification by the public servant, the following aspects have to be borne in mind:

(i) if there is an offer to pay by the bribe giver without there being any demand from the public servant and the latter simply accepts the offer and receives the illegal gratification, it is a case of acceptance as per Section 7 of the Act. In such a case, there need not be a prior demand by the public servant.

(ii) On the other hand, if the public servant makes a demand and the bribe giver accepts the demand and tenders the demanded gratification which in turn is received by the public servant, it is a case of obtainment. In the case of obtainment, the prior demand for illegal gratification emanates from the public servant. This is an offence under Section 13(1)(d)(i) and (ii) of the Act.

(iii) In both cases of (i) and (ii) above, the offer by the bribe giver and the demand by the public servant respectively have to be proved by the prosecution as a fact in issue. In other words, mere acceptance or receipt of an illegal gratification without anything more would not make it an offence under Section 7 or Section 13(1)(d), (i) and (ii) respectively of the Act. Therefore, under Section 7 of the Act, in order to bring home the offence, there must be an offer which emanates from the bribe giver which is accepted by the public servant which would make it an offence. Similarly, a prior demand by the public servant when accepted by the bribe giver and in turn there is a payment made which is received by the public servant, would be an offence of obtainment under Section 13(1)(d) and (i) and (ii) of the Act.

(e) The presumption of fact with regard to the demand and acceptance or obtainment of an illegal gratification may be made by a court of law by way of an inference only when the foundational facts have been proved by relevant oral and documentary evidence and not in the absence thereof. On the basis of the material on record, the Court has the discretion to raise a presumption of fact while considering whether the fact of demand has been proved by the prosecution or not. Of course, a presumption of fact is subject to rebuttal by the accused and in the absence of rebuttal presumption stands.

(f) In the event the complainant turns 'hostile', or has died or is unavailable to let in his evidence during trial, demand of illegal gratification can be proved by letting in the evidence of any other witness who can again let in evidence, either orally or by documentary evidence or the prosecution can prove the case by circumstantial evidence. The trial does not abate nor does it result in an order of acquittal of the accused public servant.

(g) In so far as Section 7 of the Act is concerned, on the proof of the facts in issue, Section 20 mandates the court to raise a presumption that the illegal gratification was for the purpose of a motive or reward as mentioned in the said Section. The said presumption has to be raised by the court as a legal presumption or a presumption in law.

Of course, the said presumption is also subject to rebuttal. Section 20 does not apply to Section 13(1)(d)(i) and (ii) of the Act.

(h) We clarify that the presumption in law under Section 20 of the Act is distinct from presumption of fact referred to above in point

(e) as the former is a mandatory presumption while the latter is discretionary in nature."

(emphasis added)

12. The referred question was answered in paragraph 76 of the aforesaid judgment, which reads thus:

"76. Accordingly, the question referred for consideration of this Constitution Bench is answered as under:

In the absence of evidence of the complainant (direct/primary, oral/ documentary evidence), it is permissible to draw an inferential deduction of culpability/guilt of a public servant under Section 7 and Section 13(1)(d) read with Section 13(2) of the Act based on other evidence adduced by the prosecution."

(emphasis added) 50

13. Even the issue of presumption under Section 20 of the PC Act has been answered by the Constitution Bench by holding that only on proof of the facts in issue, Section 20 mandates the Court to raise a presumption that illegal gratification was for the purpose of motive or reward as mentioned in Section 7 (as it existed prior to the amendment of 2018). In fact, the Constitution Bench has approved two decisions by the benches of three Hon'ble Judges in the cases of B. Jayaraj1 and P. Satyanarayana Murthy2. There is another decision of a three Judges' bench in the case of N. Vijayakumar v. State of Tamil Nadu5, which follows the view taken in the cases of B. Jayaraj1 and P. Satyanarayana Murthy2. In paragraph 9 of the decision in the case of B. Jayaraj1, this Court has dealt with the presumption under Section 20 of the PC Act. In paragraph 9, this Court held thus:

"9. Insofar as the presumption permissible to be drawn under Section 20 of the Act is concerned, such presumption can only be in respect of the offence under Section 7 and not the offences under Sections 13(1)(d)(i) and (ii) of the Act. In any event, it is only on proof of acceptance of illegal gratification that presumption can be drawn under Section 20 of the Act that such gratification was received for doing or forbearing to do any official act. Proof of acceptance of illegal gratification can follow only if there is proof of demand. As the same is lacking in the present case the primary facts on the basis of which the legal presumption under Section 20 can be drawn are wholly absent."

(emphasis added)

14. The presumption under Section 20 can be invoked only when the two basic facts required to be proved under Section 7, are proved. The said two basic facts are 'demand' and 'acceptance' of gratification. The presumption under Section 20 is that unless the contrary is proved, the acceptance of gratification shall be presumed to be for a motive or reward, as contemplated by Section 7. It means that once the basic facts of the demand of illegal gratification and acceptance thereof are proved, unless the contrary are proved, the Court will have to presume that the gratification was demanded and accepted as a motive or reward as contemplated by Section 7. However, this presumption is rebuttable. Even on the basis of the 51 preponderance of probability, the accused can rebut the presumption.

15. In the case of N. Vijayakumar5, another bench of three Hon'ble Judges dealt with the issue of presumption under Section 20 and the degree of proof required to establish the offences punishable under Section 7 and clauses (i) and (ii) Section 13(1)(d) read with Section 13(2) of PC Act. In paragraph 26, the bench held thus:

"26. It is equally well settled that mere recovery by itself cannot prove the charge of the prosecution against the accused. Reference can be made to the judgments of this Court in C.M. Girish Babu v. CBI [C.M. Girish Babu v. CBI, (2009) 3 SCC 779 : (2009) 2 SCC (Cri) 1] and in B. Jayaraj v. State of A.P. [B. Jayaraj v. State of A.P., (2014) 13 SCC 55 : (2014) 5 SCC (Cri) 543] In the aforesaid judgments of this Court while considering the case under Sections 7, 13(1) (d)(i) and (ii) of the Prevention of Corruption Act, 1988 it is reiterated that to prove the charge, it has to be proved beyond reasonable doubt that the accused voluntarily accepted money knowing it to be bribe. Absence of proof of demand for illegal gratification and mere possession or recovery of currency notes is not sufficient to constitute such offence. In the said judgments it is also held that even the presumption under Section 20 of the Act can be drawn only after demand for and acceptance of illegal gratification is proved. It is also fairly well settled that initial presumption of innocence in the criminal jurisprudence gets doubled by acquittal recorded by the trial court."

(emphasis added)

16. Thus, the demand for gratification and its acceptance must be proved beyond a reasonable doubt.

17. Section 7, as existed prior to 26th July 2018, was different from the present Section 7. The unamended Section 7 which is applicable in the present case, specifically refers to "any gratification". The substituted Section 7 does not use the word "gratification", but it uses a wider term "undue advantage". When the allegation is of demand of gratification and acceptance thereof by the accused, it must be as a motive or reward for doing or forbearing to do any official act. The fact 52 that the demand and acceptance of gratification were for motive or reward as provided in Section 7 can be proved by invoking the presumption under Section 20 provided the basic allegations of the demand and acceptance are proved. In this case, we are also concerned with the offence punishable under clauses (i) and (ii) Section 13(1)(d) which is punishable under Section 13(2) of the PC Act. Clause (d) of sub-section (1) of Section 13, which existed on the statute book prior to the amendment of 26th July 2018, has been quoted earlier. On a plain reading of clauses (i) and (ii) of Section 13(1)(d), it is apparent that proof of acceptance of illegal gratification will be necessary to prove the offences under clauses (i) and (ii) of Section 13(1)(d). In view of what is laid down by the Constitution Bench, in a given case, the demand and acceptance of illegal gratification by a public servant can be proved by circumstantial evidence in the absence of direct oral or documentary evidence. While answering the referred question, the Constitution Bench has observed that it is permissible to draw an inferential deduction of culpability and/or guilt of the public servant for the offences punishable under Sections 7 and 13(1)(d) read with Section 13(2) of the PC Act. The conclusion is that in absence of direct evidence, the demand and/or acceptance can always be proved by other evidence such as circumstantial evidence.

18. The allegation of demand of gratification and acceptance made by a public servant has to be established beyond a reasonable doubt. The decision of the Constitution Bench does not dilute this elementary requirement of proof beyond a reasonable doubt. The Constitution Bench was dealing with the issue of the modes by which the demand can be proved. The Constitution Bench has laid down that the proof need not be only by direct oral or documentary evidence, but it can be by way of other evidence including circumstantial evidence. When reliance is placed on circumstantial evidence to prove the demand for gratification, the prosecution must establish each and every circumstance from which the prosecution wants the Court to draw a conclusion of guilt. The facts so established must be consistent with only one hypothesis that there was a demand made for gratification by the accused. Therefore, in this case, we will have to examine whether there is any direct evidence of demand. If we come to a conclusion that there is no direct evidence of demand, this Court will have to 53 consider whether there is any circumstantial evidence to prove the demand."

Subsequent to NEERAJ DUTTA's case the Apex Court in the case of SOUNDARAJAN v. STATE5 has held as follows:

".... .... ....

FINDING ON PROOF OF DEMAND

9. We have considered the submissions. It is well settled that for establishing the commission of an offence punishable under Section 7 of the PC Act, proof of demand of gratification and acceptance of the gratification is a sine qua non. Moreover, the Constitution Bench in the case of Neeraj Dutta3 has reiterated that the presumption under Section 20 of the PC Act can be invoked only on proof of facts in issue, namely, the demand of gratification by the accused and the acceptance thereof.

10. As stated earlier, complainant PW-2 has not supported the prosecution. He has not said anything in his examination-in-chief about the demand made by the appellant. The public prosecutor cross-examined PW-2. The witness stated that there was no demand of a bribe made by the appellant. According to him, he filed a complaint as the return of the sale deed was delayed. Though PW-2 accepted that he had filed the complaint, in the cross-examination, he was not confronted with the material portions of the complaint in which he had narrated how the alleged demand was made. The public prosecutor ought to have confronted the witness with his alleged prior statements in the complaint and proved that part of the complaint through the concerned police officer who had reduced the complaint into writing. However, that was not done.

11. Now, we turn to the evidence of the shadow witness (PW-3). In the examination-in-chief, he stated that the 5 2023 SCC OnLine SC 424 54 appellant asked the PW-2 whether he had brought the amount. PW-3 did not say that the appellant made a specific demand of gratification in his presence to PW-2. To attract Section 7 of the PC Act, the demand for gratification has to be proved by the prosecution beyond a reasonable doubt. The word used in Section 7, as it existed before 26th July 2018, is 'gratification'. There has to be a demand for gratification. It is not a simple demand for money, but it has to be a demand for gratification. If the factum of demand of gratification and acceptance thereof is proved, then the presumption under Section 20 can be invoked, and the Court can presume that the demand must be as a motive or reward for doing any official act. This presumption can be rebutted by the accused.

12. There is no circumstantial evidence of demand for gratification in this case. In the circumstances, the offences punishable under Section 7 and Section 13(2) read with Section 13(1)(d) have not been established. Unless both demand and acceptance are established, offence of obtaining pecuniary advantage by corrupt means covered by clauses (i) and (ii) of Section 13(1)(d) cannot be proved."

The Apex Court in the case of NEERAJ DUTTA-II supra was clarifying and interpreting the judgment in the case of NEERAJ DUTTA-I, which was rendered by a Constitution Bench and further holds that proof of demand and acceptance of gratification is sine qua non for any allegation under Section 7, be it pre-amendment or post- amendment. This is reiterated in the case of SOUNDARAJAN supra.

17. On a coalesce of the judgments rendered by the Apex Court, as quoted supra, the soul of Section 7 is demand and acceptance. The unmistakable inference on the interpretation, in the considered view of the Court would be, if there is demand but no acceptance it would not make an offence under Section 7. If there is acceptance but no demand, it would then also make no offence under Section 7. An act alleged under Section 7 should have the ingredients of demand and acceptance and it is for the performance of a public duty or forbearance from performance.

Therefore, demand and acceptance should be for the purpose of performance of some duty. For such performance there should be work pending at the hands of the public servant against whom Section 7 is alleged.

18. In the light of the aforesaid elucidation of law by the Apex Court, both under the unamended and amended P.C. Act, neither the demand nor acceptance is proved to the remotest sense in the case of the petitioner. Search and seizure did not yield any result, as there were no documents found in the place of residence of the petitioner. No receipt of illegal gratification as a demand or 56 acceptance is even found to its remotest sense. No trap is laid. No recovery happens from the hands of the petitioner at any point in time. Therefore, with these pointed indicators, entertainment of petition merely because the CBI has filed its charge sheet, permitting trial against this petitioner would become an abuse of the process of law and result in miscarriage of justice.

19. For the aforesaid reasons, the following:

ORDER

(i) Writ Petition is allowed.

(ii) Proceedings in Special C.C.No.1055 of 2019 pending before the XXI Additional City Civil & Sessions Judge and Principal Special Judge for CBI Cases, Bangalore concerning charge sheet in R.C.No.14(A)/2019 filed by the CBI stand quashed.

(iii) It is made clear that the observations made in the course of the order are only for the purpose of consideration of the case of petitioner under Section 482 of Cr.P.C. and the same shall not bind or influence the proceedings against any other accused pending before any other fora.

Consequently, I.A.No.1 of 2021 also stands disposed.

Sd/-

(M. NAGAPRASANNA) JUDGE bkp CT:MJ

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