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REPORTABLE

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO. 131 OF 2007

A. SIVAPRAKASH .....APPELLANT(S)

VERSUS

STATE OF KERALA .....RESPONDENT(S)

J U D G M E N T

A.K. SIKRI, J.

Four persons  were implicated as accused persons in FIR  

registered on 09.09.1993 under Sections 13(2) read with 13(1)(d)  

of the Prevention of Corruption Act, 1988 (hereinafter referred to  

as the 'PC Act') and Section 409 read with Section 34 of Indian  

Penal  Code ('IPC').   After  investigation,  when the  chargesheet  

was filed on 19.01.1998, one more person (who is the appellant  

before us) was also added as an accused.  Chargesheet was filed  

under Section 13(2) read with 13(1)(d) of the PC Act and under  

Sections 468 and 471 read with Section 34 of IPC.  Charges were  

framed by the trial  Court against the accused persons.  Matter  

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went on trial and resulted in acquittal of A-2 and A-3 from all the  

charges and conviction of  A-1,  A-4 and A-5 (i.e.  the appellant)  

under Sections 13(2) read with 13(1)(d) of the PC Act.   These  

accused persons i.e. A-1, A-4 and A-5 were, however, acquitted of  

the charges under Sections 468 and 471 read with Section 34 of  

IPC.

2) No appeal was filed by the State against the acquittal of A-2 and  

A-3.  A-1, A-4 and A-5 filed appeals in the High Court challenging  

their conviction.  A-1 and A-4 passed away during the pendency  

of their appeals and, therefore, those appeals have abated.  Thus,  

it is only the appellant who remains in the fray.  His appeal was  

taken  up  by  the  High  Court  for  hearing  and  was  ultimately  

dismissed by the High Court vide the impugned judgment dated  

25.05.2006.  Thus, in this appeal, we are only concerned with A-5  

(the appellant).  With these introductory remarks, we advert to the  

meat of the matter.

3) The appellant was working as Assistant Engineer in the Public  

Works Department (PWD) attached to Arudai, NES Block within  

the jurisdiction of  which Vandiperiyar  Panchayat  situates.   The  

said Panchayat decided to construct the first floor of the existing  

high school building situated in the Panchayat area, by including  

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the  work  under  Jawahar  Rozgar  Yojana  (JRY).   As  per  the  

procedure  followed  under  the  D.R.D.  Scheme  the  work  was  

included in the JRY to be carried out by a nominee selected from  

the beneficiary of the work.  Accordingly, one Rajarathinam (A-3)  

was selected as nominee, awarding the said work of construction.  

Appropriate agreement was executed by him.  The total estimate  

was for Rs. 4 lakhs which was to be met out of the fund of JRY  

and of Panchayat.  Payment for the work was to be effected as  

per the guidelines issued by the Government including Ex. P/17  

which provided that the Panchayat could make advance payment  

upto 50% of the estimate amount.  It was also mentioned therein  

non-adherence to the aforesaid procedure would be termed as  

irregular.

4) The case of  the prosecution was that  all  the accused persons  

colluded together and A-1, A-2 and A-4 disbursed the amount to  

A-3, the nominee, on the basis of the 'stage certificate' which was  

issued  by  A-5,  the  Assistant  Engineer  in  respect  of  the  part  

completion of  the work.   Ex.  P/16(a) was treated as the stage  

certificate, which in fact is the letter dated 9.6.1992 wherein the  

appellant had certified that 25% of the work in question had been  

completed.   Payments  were  effected  to  the  nominee  on  

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25.03.1992, 21.04.1992, 16.05.1992 and 21.10.1992 at the rate of  

Rs.25,000/-, Rs. 50,000/-, Rs.7,000/- and Rs. 1 lakh.  Payments  

were effected by Ex.P/7, P/10, P/12 and P/14 respectively.  The  

prosecution alleged that the last and largest of these payments,  

i.e.  Rs.  1  lakh,  was  made  on  the  basis  of  purported  'stage  

certificate'  [Ex.P/16(a)] issued by the appellant.   It  was alleged  

that the false stage certificate was issued as 25% of the work had  

not been completed.  In this way, the appellant abused his official  

position to obtain pecuniary advantage.

5) In nutshell, the gravamen of the charge against the appellant is  

that  while  working  as  the  Assistant  Engineer,  he  issued stage  

certificate in respect of the contract that was awarded to A-3 and  

on the basis of these certificates, payment to the extent of 50% of  

the contract value was received by A-3.  As per the prosecution,  

that  was  the  false  certificate  which  did  not  depict  the  correct  

progress or the position of the work.  This was surfaced on the  

inspection of  the work  which was carried out  by  PW-2 on the  

direction of Deputy Superintendent of Police (Vigilance) wherein it  

was  found that  the  work  completed  was only  to  the  extent  of  

Rs.42,649.89, that  too as on the date of  inspection which was  

much after the date on which stage certificates were issued by the  

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appellant.  Since the contract value was Rs.4 lakhs, even on the  

date of inspection only 10% work was completed.

6) Entire case of the prosecution rested on Ex.P16(a) coupled with  

the Inspection Report (Ex.PW2).  On the basis of the aforesaid  

documentary evidence produced on record, the trial court came to  

the  conclusion  that  in  issuing  the  certificate  (Ex.P/16(a)),  the  

appellant had abused his official position only to enable either for  

himself or for others to obtain peculiar advantage and, therefore,  

guilty of offence punishable under Section 13(1)(d) of the PC Act.  

Trial  Court,  accordingly,  sentenced  the  appellant  to  undergo  

rigorous imprisonment for the period of two years and to pay fine  

of Rs.75,000/- and in default to undergo rigorous imprisonment for  

a further term of 1½ years under Section 13(2) read with Section  

13(1)(d) of the PC Act.   

7) Challenging  the  conviction  and  sentence  imposed  by  the  trial  

court, the appellant in his appeal to the High Court contended that  

there was no evidence on record to reveal that payments were  

made on the basis of the said letter dated 9.6.1992 [Ex.P/16(a)],  

wrongly termed as 'stage certificate'.  It was also argued that this  

letter was not the basis for making payments as payments were  

effected either before or after the date of Ex.P/16(a).  It was also  

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argued  that  payments  were  not  dependent  upon  the  stage  at  

which the work was and the advance payment upto 50% could be  

released at the start of the work. Itself, as per the procedure laid  

down.

8) The High Court did not find any merit in the aforesaid arguments  

of the appellant.  It concurred with the findings of the trial court  

and held that there was hardly any work done at the spot by A-3  

when  he  was  released  the  payments.   Ex.P/2  which  was  the  

report prepared by PW-2 on 19.07.1994 showed that only Pillar  

work had been completed and the cost of the said work was to  

the tune of Rs.42649.89.  The High Court accepted the contention  

of  the appellant  that  payments of  Rs.25,000/-,  Rs.50,000/-  and  

Rs.7,000/- were made to A-3 before the issuance of Ex.P/16(a).  

However, it held that after the issuance of the said certificate, an  

amount  of  Rs.1 lakh (largest  among the payments made)  was  

released in favour of A-3 on 21.10.1992.  The High Court also  

conceded the position  that  Ex.P/16(a)  could  not  be  termed as  

'stage certificate' as it was accepted even by PW-4 that it was not  

a stage certificate.  Notwithstanding that, the High Court opined  

that the appellant being a responsible officer knew how the stage  

certificate is to be issued.  In spite thereof he issued Ex.P/16(a)  

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which was the letter to the Panchayat informing the Panchayat  

that the percentage valuation cost of completion of one work was  

75% (with which we are not concerned) and that of other work, it  

was  25% and this  information  was obviously  furnished for  the  

purposes of releasing payment to A-3.  From this, the High Court  

concluded that the appellant intended that payment be released  

on the basis of said certificate and writing of this letter (allegedly  

termed as certificate)  amounted to abusing his official  position.  

These are the reasons given by the High Court in dismissing the  

appeal of the appellant.

9) Mr. R. Basant, learned senior counsel appearing for the appellant,  

made a vehement plea that  the trial  court  as well  as the High  

Court  has  totally  misread  the  circular  pertaining  to  JRY under  

which such payments are to be released and a proper reading of  

the  provisions  of  the  said  circular  would  manifest  that  the  

appellant had no role in making the payment, by the Panchayat,  

to A-3.  He referred to the chargesheet and argued that what was  

stated  in  the  chargesheet  was  totally  different  from  what  was  

ultimately held against him.

10) Learned counsel for the respondent, on the other hand, justified  

the reasoning given by the trial court as well as by the High Court  

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in support of their conclusion.

11) We have considered the respective submissions with reference to  

the record.

12) It is not in dispute that two works were awarded to A-3: one was  

known  as  “JRY  –  consignment  semi  permanent  building  in  

Vandiperiyar”  and  other  was  known as  “JRY –  construction  of  

permanent building in Vandiperiyar”.  In the present case, we are  

concerned with release of payments to A-3 in respect of second  

work contract.  As is clear from the nomenclature of these two  

contracts,  they  were  under  JRY.   The  Commissioner,  Village  

Development,  Thiruvananthapuram  had  issued  Circular  No.  

14514/J.R.Y. 1/91/C.R.D. dated 23.04.1991 which prescribes the  

procedure  for  implementation  of  JRY  and  contains  certain  

suggestions.  Para 2 thereof is relevant for our purposes which  

mentions about the manner in which 50% of the advance can be  

released by the Panchayat.  It reads as under:

“2.  It was directed that for all works under J.R.Y.  contractors shall be avoided and the works shall be  directly  taken  up  by  the  panchayats  or  by  the  convenors  elected  by  the  consumers.   It  was  directed that the amount for such works will be paid  in  advance.   As  per  the  circular  of  village  Development  Commissioner  No.  29786/J.R.Y  1/90/CRD dated 23.7.1999, instructions have been  issued to  panchayats  to  give necessary  funds in  advance.   By this  way preparing bills  every  now  

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and  then  can  be  avoided  and  the  50%  of  estimated cost can be given in advance.  But  such funds have to be sanctioned considering  the  work  in  hand  in  part  installments.  Otherwise without starting a project work 50%  advance  expenditure  cannot  be  given  in  advance.  To do so will not be in order.  Money  required to start a work can be given in advance  and as the work progresses according to the work,  more funds can be sanctioned.  Funds entrusted  with  the  panchayats  for  the  works  of  JRY  are  included in the public funds and the panchayats are  reminded that unnecessary withdrawals from such  funds would tantamount temporary misutilisation of  public funds.  When 50% of budget work is given  as advance and when works are completed, a part  bill can be prepared and advance amount can be  written off  against  completed works.   Panchayats  are further informed that without preparing part bill  more  than  50%  advance  payment  cannot  be  allowed  and  doing  so  would  amount  to  misutilisation of Government funds.”   

13) Based on the aforesaid paragraph, submission of Mr. Basant was  

that it was permissible for the Panchayat to release 50% of the  

estimated cost of the Project as advance payment, though it was  

to  be sanctioned only after  the project/work  has started.   This  

Circular,  however,  mentioned  that  money  required  to  start  the  

work can be given in advance and as the work progresses, more  

funds can be sanctioned.  He, thus, submitted that release of 50%  

payment was not contingent upon the stage of the execution of  

the work, but on the mere start of the work.

14) There  appears  to  be  merit  in  the  aforesaid  submission  of  the  

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learned senior counsel.  PW-4 who was the Assistant Executive  

Engineer in his deposition has categorically admitted that in JRY  

Scheme Work,  there is a provision to give advance amount of  

50% of work.  The total cost of the work in question, for which the  

payments were made, was Rs. 4 lakhs and 50% thereof comes to  

Rs. 2 lakhs.

15) Ex.P/16(a) which is dated 09.06.1992 shows that this letter was  

written on the request of Panchayat President as it start with the  

words “as requested by you.......”.  In respect of work in question,  

it is averred that “...Also the percentage valuation cost of the JRY  

construction of permanent building in Vandiperiyar is 25 (twenty  

five  only).”   Prior  to  the  writing  of  this  letter,  A-3  had  already  

released  three  payments  of   Rs.25,000/-,  Rs.50,000/-  and  

Rs.7,000/-.  Thus, it is nobody's case that those payments were  

made to A-3 on the basis of any 'stage certificate' or any such  

letter issued by the appellant.  Thus, much before the issuance of  

Ex.P/16(a), A-3 was given the payment of Rs.82,000/-.  As noted  

above, as per circular dated 23.04.1991, payment could not be  

made  without  starting  a  project/work.   It  means  that  as  per  

Panchayat  itself,  A-3  had  started  work  which  resulted  in  the  

aforesaid  payment.   Once the work  is  started,  Panchayat  was  

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empowered  to  release  advance  to  the  extent  of  50%  of  the  

estimated cost,  i.e.  up to Rs. 2 lakhs.   Thus, Panchayat could  

have  made  further  payment  of  Rs.1,18,000/-  even  without  

Ex.P/16(a).   Payment  of  Rs.1  lakh  was  made  on  09.06.1992,  

which was well within defined limits.

16) In this hue, let us consider the nature of Ex.P/16(a).  It is issued  

on  the  request  of  Panchayat  President.   It  mentions  that  

“valuation cost” of the said project is 25%.  This letter never stated  

that A-3 had 'completed' 25% work.  It only mentioned “valuation  

cost”.  A specific plea was raised by the appellant that it was the  

cost which was mentioned by him and that included the cost of  

material as well which was brought on site by A-3.  High Court  

rejected this argument which is clearly erroneous.  It was equally  

wrong  in  terming  it  as  the  stage  certificate.   The  High  Court  

wrongly proceeded on the basis that advance payment could be  

given only on installment basis depending upon the percentage of  

the work completed.  We, thus, are of the opinion that there is no  

causal connection between release of payment to A-3 and letter  

Ex.P/16(a).

17) Section 13(1)(d) of the PC Act reads as under:

“13.  Criminal misconduct by a public servant

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

xxxx (d)  If he,-

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

(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”

The  prosecution  has  sought  to  cover  the  case  of  the  

appellant under sub-clause (ii) and not under sub-clause (i) and  

sub-clause  (iii).   Insofar  as  sub-clause  (ii)  is  concerned,  it  

stipulates that a public servant is said to commit the offence of  

criminal  misconduct  if  he,  by  abusing  his  position  as  a  public  

servant, obtains for himself or for any other person any valuable  

thing or pecuniary advantage.  Thus, the ingredients which will be  

required to be proved are:

(1) The public servant has abused his position.

(2) By abusing that position, he has obtained for himself or for  

any other person any valuable thing or pecuniary advantage.

18) It was not even the case set up by the prosecution that appellant  

had taken that money from some person and had obtained any  

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pecuniary  advantage  thereby.   It  was  the  obligation  of  the  

prosecution to satisfy the aforesaid mandatory ingredients which  

could implicate the appellant under the provisions of Section 13(1)

(d)(ii).   The  attempt  of  the  prosecution  was to  bring  the  case  

within the fold of clause (ii) alleging that he misused his official  

position  in  issuing  the  certificate  utterly  fails  as  it  is  not  even  

alleged in the chargesheet and not even iota of evidence is led as  

to  what  kind  of  pecuniary  advantage  was  obtained  by  the  

appellant in issuing the said letter.

19) In C. Chenga Reddy & Ors. v. State of A.P., (1996) 10 SCC 193,  

this Court held that even when codal violations were established  

and it was also proved that there were irregularities committed by  

allotting/ awarding the work in violation of circulars, that by itself  

was not sufficient to prove that a criminal case was made out. The  

Court went on to hold:

“22.  On a careful consideration of the material on  the record, we are of the opinion that though the  prosecution  has  established  that  the  appellants  have committed not only codal violations but also  irregularities  by  ignoring  various  circulars  and  departmental orders issued from time to time in the  matter of allotment of work of jungle clearance on  nomination  basis  and  have  committed  departmental lapse yet, none of the circumstances  relied  upon  by  the  prosecution  are  of  any  conclusive  nature  and  all  the  circumstances  put  together do not lead to the irresistible conclusion  that  the  said  circumstances  are  compatible  only  

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with  the hypothesis  of  the guilt  of  the appellants  and  wholly  incompatible  with  their  innocence.  In  Abdulla Mohd. Pagarkar v. State (Union Territory of   Goa, Daman and Diu),  (1980) 3 SCC 110, under  somewhat similar circumstances this Court opined  that  mere  disregard of  relevant  provisions  of  the  Financial  Code  as  well  as  ordinary  norms  of  procedural  behaviour  of  government  officials  and  contractors,  without  conclusively  establishing,  beyond a reasonable doubt, the guilt of the officials  and  contractors  concerned,  may  give  rise  to  a  strong  suspicion  but  that  cannot  be  held  to  establish the guilt of the accused. The established  circumstances  in  this  case  also  do  not  establish  criminality  of  the appellants  beyond the realm of  suspicion and, in our opinion, the approach of the  trial court and the High Court to the requirements of  proof  in  relation  to  a  criminal  charge  was  not  proper....”

20) We,  therefore,  are  of  the  opinion  that  the  prosecution  has  

miserably  failed to  prove the charge beyond reasonable  doubt  

and the courts below have not looked into the matter in a proper  

perspective.   We,  thus,  allow  this  appeal  and  set  aside  the  

conviction of the appellant. The appellant is already on bail.  His  

bail bonds shall stand discharged.

.............................................J. (A.K. SIKRI)

.............................................J. (PRAFULLA C. PANT)

NEW DELHI; MAY 10, 2016

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