Ajay Pratap Singh vs State Of Kerala

Judgment in C.C.No.26/2014 on the files of the Special Judge (SPE/CBI) - III, Ernakulam is under challenge in this appeal. The appellant herein is the sole accused therein.

Heard the learned counsel for the appellant/accused and the learned Public Prosecutor. Perused the judgment under challenge along with the records of the Special Court.

The prosecution case is that the accused, while working as Inspector, Central Excise, Service Tax Division, had, on 02.07.2011, demanded an amount of Rs.1,00,000/- (Rupees One Lakh only) as bribe from Shri.P.S.Vinod (PW1) for rectifying the defects in the Service Tax returns filed for the financial year 2009 - 2010, and that, after a series of negotiations with Shri.P.S.Vinod (PW1), he had, at about 5.30 p.m., on 07.07.2011, visited the office of PW1 in the building, by name Penta Menaka, repeated the demand for bribe, and accepted a sum of Rs.15,000/- (Rupees Fifteen Thousand only) from him as illegal gratification, other than legal remuneration, as a motive or reward for performing the official act of accepting the Service Tax returns. It is further alleged that the accused, by corrupt or illegal means and by abusing his official position as a public servant, had obtained a pecuniary advantage to the tune of Rs.15,000/-(Rupees Fifteen Thousand only), as stated above. On this premise, the prosecution alleges commission of offences punishable under Section 7 and Sections 13(1)(d) r/w 13(2) of the Prevention of Corruption Act, 1988 (for short, ‘the PC Act’ hereinafter), by the accused.

In this matter, the Special Court framed charge for the said offences and proceeded with trial. During trial, PW1 to PW14 were examined, Exts.P1 to P49 and MO1 to MO13 were marked on the side of the prosecution. On the side of the defence, DW1 and DW2 were examined and Exts.D1 to D4 contradictions were marked. Although Exts.D7 to D9 were marked, but the same were not considered by the learned Special Judge on the ground that the documents were not supported by certification under Section 65B of the Indian Evidence Act, 1872.

On appraisal of the evidence, the Special Court found that the appellant/accused committed offences punishable under Section 7 as well as Section 13(1)(d) r/w 13(2) of the PC Act, 1988. Accordingly, he was convicted for the said offences and sentenced as under:

The learned counsel for the appellant/accused argued that for multiple reasons, the verdict impugned would not sustain. He had pointed out the chronology of events. According to him, as per the evidence of PW1, he had filed returns for the period 2009 - 2010 and he failed to file return thereafter during the period from April 2010 to September 2010. On 30.03.2011, PW1 went to the Central Excise Office for the first time for filing returns of the said year. PW1 paid fine of Rs.2,000/- for the delay in payment of the first half yearly returns for the years 2010 and 2011, as per Ext.P2. According to the learned counsel for the appellant/accused, thereafter on 02.07.2011 when PW1 met the accused, the accused told him that there were some mistakes in the returns filed for the year 2009 and 2010 and for the same, the complainant would have to pay Rs.7,00,000/- (Rupees Seven Lakh only) as tax and penalty. It was thereafter, on 01.07.2011, PW1 visited the office and met the accused and asked him to accept the returns for the period 2010 - 2011, but the accused was not ready to accept the same. According to the learned counsel for the appellant/accused, it was thereafter at 5.30 p.m. on 07.07.2011, trap was arranged and pursuant to thereof, the accused alleged to have demanded and accepted bribe of Rs.15,000/- (Rupees Fifteen Thousand only) from PW1. According to the learned counsel for the appellant/accused, since the evidence of PW1 would suggest that he had knowledge regarding the procedure for filing returns and payment of tax, penalty etc., the allegation of demand of illegal gratification to the tune of Rs.1,00,000/- (Rupees One Lakh only) is inherently improbable, unbelievable and contrary to the commonsense. It is pointed out that, since the total turnover for the financial year 2009-2010, as reflected in Exts.P3 and P4 series would come to Rs.11,89,900/- (Rupees Eleven Lakh Eighty-nine Thousand Nine Hundred only), the amount liable to be reckoned for the purpose of assessment of Service Tax was Rs.1,89,900/- (Rupees One Lakh Eighty-nine Thousand Nine Hundred only), after excluding Rs.10,00,000/- (Rupees Ten Lakh only), which was exempted from payment of Service Tax. If so, the demand and the threat, at the instance of PW1 imposing tax penalty and interest to the tune of Rs.7,00,000/- (Rupees Seven Lakh only) in respect of the said return is an outright impossibility and therefore, the fundamental plank of trap is in the midst of doubt. According to him, this could be fortified by the evidence of PW5, the Superintendent, who also had occasion to discuss the issue with PW1 on the same day and it was disclosed that the amount involved in 2009 - 2010 returns was Rs.11,89,900/- (Rupees Eleven Lakh Eighty-nine Thousand Nine Hundred only). It is argued further that, in fact, there was no demand or acceptance of illegal gratification of Rs.15,000/- (Rupees Fifteen Thousand only), as alleged by the prosecution and even though PW1 to PW3 deposed regarding the demand and acceptance, the same cannot be believed due to the improbability of the evidence highlighting that demand and acceptance of illegal gratification are the prerequisites to avail presumption under Section 20 of the PC Act. The learned counsel placed three decisions, viz., State of Uttar Pradesh v. A.K.Gaba reported in [2026 KHC 7287] with reference to paragraph Nos.11 to 16, Aman Bhatia v. State (GNCT of Delhi) reported in [2025 SCC OnLine SC 1013] with reference to paragraph Nos.52 to 55 and 64 to 67, and Satyanarayana Murthy v. District Inspector of Police reported in [2015 (4) KLT SN 47 (C.No.53) SC] with reference to paragraph Nos.18 to 26, to contend that proof of demand and acceptance of illegal gratification is a sine qua non for establishing an offence under Section 7 of the PC Act and for invoking the presumption under Section 20 thereof. It is submitted further that, in fact, Rs.25,000/- (Rupees Twenty Five Thosuand only) was paid by the accused to PW1, who had been engaged in conducting tour programmes for a tour to be arranged in Wayanad and since the tour programme was not materialized, Rs.15,000/- (Rupees Fifteen Thousand only), the advance amount was repaid on the date of trap and therefore, the entire prosecution case is liable to be disbelieved to enlarge benefit of doubt to the appellant/accused. It is submitted further that from the evidence of DW2, the father of the accused would establish the tour programme and other details supporting the defence case.

The learned Special Public Prosecutor for the CBI strongly opposed these contentions and submitted that, when a tax assessee was threatened by an officer stating that a higher amount would be imposed towards tax and penalty, the assessee would not be in a position to know the exact basis on which the officer was claiming such a higher amount, for example, Rs.7,00,000/- (Rupees Seven Lakh only) in the present case. He also argued that the defence case put up and argued by the learned counsel for the appellant/accused relying on the evidence of DW2, the father of the accused not at all proved. According to the learned Public Prosecutor, since the evidence of PW1 to PW3 categorically established the ingredients for the offences punishable under Section 7 and Sections 13(1)(d) r/w 13(2) of the PC Act, 1988 including demand and acceptance of bribe, its recovery and the positive phenolphthalein test would establish the prosecution case beyond reasonable doubts and in such a case, there is no necessity to interfere with the verdict impugned and the same is liable to be set aside.

Having appraised the rival submissions, the points arise for consideration are;

The events led to lodging of Ext.P1 complaint by PW1 against the accused and the subsequent episodes are relevant in this case. Shri.P.S.Vinod, the complainant got examined as PW1, a prime witness for the prosecution in this regard. PW1 deposed that he was running a firm by name Sai Jobs and HR Consultancy in the building, by name, Penta Menaka at Menaka Junction, Ernakulam. He had obtained Service Tax Registration (Ext.P13) with the Central Excise Department. Service Tax returns were required to be filed twice in a financial year, namely, for the first half-yearly period from April to September and for the second half-yearly period from October to March. Service Tax was payable by a firm when its annual income exceeded Rs.10,00,000/- (Rupees Ten Lakh only). However, NIL returns were also required to be filed even if the annual income did not exceed Rs.10,00,000/- (Rupees Ten Lakh only). PW1 had failed to submit the returns for the first half-yearly period of the financial year 2010-2011 due to personal reasons. He had, however, submitted the returns for the financial year 2009-2010 (Exts.P3 series and P4 series). During the relevant time, the accused was working as the Excise Inspector, Central Excise, 'C' Range, Kathrikadavu, having jurisdiction over the area in which the firm owned by PW1 was situated. PW1 met the accused at the Central Excise Office on 30.03.2011 for submitting the returns for the financial year 2010-2011. The accused pointed out certain defects in the returns submitted for the previous year and informed him that the returns for the financial year 2010-2011 would not be accepted unless the defects in the returns relating to the previous year were rectified. The accused further informed PW1 that he would have to pay Rs.7,00,000/- (Rupees Seven Lakh only) towards tax, including penalty and interest, and demanded a sum of Rs.1,00,000/- (Rupees One Lakh only) as illegal gratification to avoid the said payment after rectifying the defects. PW1 was unwilling to pay the bribe. He had informed the accused that the income of his firm for the financial year 2009-2010 had not actually reached the taxable limit and that his employees had inadvertently included the amount obtained as a loan and another amount received through a chitty in the statement of accounts and, therefore, he was not liable to pay Service Tax. On that basis, he had requested the accused to accept the returns for the financial year 2010-2011.

Thereafter, PW1 was not able to visit the Central Excise Office till 01.07.2011 as he was engaged in the construction of his residential house in his native place. On 01.07.2011, when PW1 again met the accused and produced the statement of account relating to his bank account (Ext.P5), the Day Book and the Account Books. Nevertheless, the accused refused to accept the returns. Thereupon, PW1 met Shri.K.B.Mohandas (PW5), Superintendent of Central Excise, 'C' Range, who summoned the accused and, after verifying the records produced by PW1, instructed the accused to accept the returns after rectifying the defects. When the accused and PW1 came out of the chamber of the Superintendent, the accused obtained the visiting card of PW1 and informed him that he would visit his office on the following day. On 02.07.2011, after contacting PW1 over his mobile phone, the accused visited his office at about 12.00 noon and, after verifying the relevant records, informed him that he had to pay Rs.7,00,000/- (Rupees Seven Lakh only) towards tax, including penalty and interest, which could be avoided by paying a sum of Rs.1,00,000/- (Rupees One Lakh only) as illegal gratification. PW1 was not inclined to pay the amount demanded. While so, the accused contacted PW1 at 9.30 a.m. on 04.07.2011 over his mobile phone, enquired about his decision and informed him of the consequences that he would have to face if he failed to pay the bribe. At that time, the accused reduced the demand to Rs.80,000/- (Rupees Eighty Thousand only). On 05.07.2011, PW1 contacted the accused over his mobile phone and requested him to accept the returns. The accused responded that he would have to pay Rs.50,000/- (Rupees Fifty Thousand only) and informed PW1 that he would come in the evening on 06.07.2011. PW1 then informed the accused that his son had been hospitalised and that he would contact him after his son's discharge from the hospital. At 9.30 a.m. on 07.07.2011, the accused contacted PW1 over the landline telephone and demanded a sum of Rs.25,000/- (Rupees Twenty-five Thousand only) to be paid in the evening. Due to the continuous demand for illegal gratification by the accused, PW1 decided to lodge a complaint before the CBI. Accordingly, on 07.07.2011, he preferred Ext.P1 complaint, which had been scribed by Sreejith (PW4), before the Superintendent of Police, CBI, Cochin Branch. On the basis of Ext.P1 complaint, Shri. Babu Mathew (PW14), Inspector of Police, CBI, registered Ext.P44 First Information Report.

As regards to the pre as well as post trap proceedings PW1, PW3, PW4 and PW14 were relied on by the prosecution and acted upon by the trial court. Their evidence would reveal that the trap team led by J.R.D'Cruz (PW3), Inspector of Police, CBI, assembled at the SBI Guest House, Pullepady, at about 2.00 p.m. on 07.07.2011 along with the independent witnesses, including Mahendran (PW2), and the complainant, P.S. Vinod (PW1). At the Guest House, PW1, as instructed by PW3, contacted the accused over his mobile phone after putting the call on the loudspeaker mode. In response to a query from the accused as to whether he had arranged the money, PW1 informed him that he could arrange only Rs.15,000/- (Rupees Fifteen Thousand only) on that day and that the balance amount of Rs.10,000/- (Rupees Ten Thousand only) would be arranged on Monday. The accused then instructed PW1 to arrange Rs.15,000/- (Rupees Fifteen Thousand only) on that day itself and agreed to come to the office of PW1 between 5.00 p.m. and 6.00 p.m. PW1 requested the accused to contact him over the phone before reaching his office, to which the accused responded in the affirmative. PW1 also showed the mobile number dialled by him to those present. Thereafter, PW1 produced MO1 series currency notes, as instructed by PW3, who directed Mahendran (PW2) to count the same. Subsequently, a phenolphthalein test by using sodium carbonate solution was demonstrated. Then MO1 series currency notes were smeared with phenolphthalein powder and kept at the pocket of PW1. PW1 to PW3 categorically deposed regarding the pre-trap proceedings during trial and the said evidence failed to be shaken during their cross-examination.

Thus, PW1 to PW3 categorically deposed that the accused demanded and accepted the bribe amount of Rs.15,000/-(Rupees Fifteen Thousand only) on the date of trap. The crucial question to be considered is whether the improbabilities pointed out by the learned counsel for the appellant/accused have sufficient force to disbelieve the prosecution case and to believe the defence put up by the accused.

In this connection, it is relevant to refer the finding of the Special Court as regards the same contentions raised in paragraph No.37 which reads as under:

In paragraph Nos.37.1 to 37.8, the learned Special Judge negatived the contentions. The same read as under:

Similarly, the learned Special Judge also disbelieved the evidence of DW1 and DW2, the learned Special Judge not acted upon Exts.D7 to D9 for want of certification under Section 65B of the Indian Evidence Act, 1872 and relied on other documents.

Coming to the evidence of DW1, DW1 is Nazar Khan, the Deputy Commissioner of Central Excise, it was through him Ext.D5, the letter containing the list of telephone numbers used by PABX at Central Excise Bhavan, Kathrikadavu from 01.07.2011 to 08.07.2011 was tendered in evidence and during cross examination, DW1 stated that PABX is a common facility for telephone service in a building, by which, one can call to another section as well as outside. In fact, the evidence of DW1 is having no much relevance to the fact in issue. Coming to the evidence of DW2, during chief examination, even though DW2 stated that his son had paid Rs.25,000/- (Rupees Twenty Five Thousand only) to PW1, to arrange a tour programme to Wayanad, during cross examination, he conceded that he had only hearsay knowledge regarding the transaction and also he had no idea about the places in Wayanad. Therefore, the learned Special Judge disbelieved the same. In fact, hearsay knowledge/evidence is no evidence. Even otherwise, DW2’s evidence, if given, reliance through the same is absolutely hearsay, the same is quite insufficient to prove the defence case within the yardstick of preponderance of probabilities. In order to prove payment of Rs.25,000/- (Rupees Twenty Five Thousand only) by the accused to PW1, convincing evidence is necessary. Thus, in the absence of convincing evidence, the learned Special Judge rightly negated the defence case.

Now, it is necessary to address the ingredients required to attract the offences under Section 7 r/w Section 13(1)(d) r/w Section 13(2) of the PC Act. The same are extracted as under:-

In this connection it is relevant to refer a 5 Bench decision of the Apex Court in [AIR 2023 SC 330], Neeraj Dutta Vs State, where the Apex Court considered when the demand and acceptance under Section 7 of the P.C Act, 1988 to be said to be proved along with ingredients for the offences under Sections 7 and 13(1)(d) r/w 13(2) of the PC Act, and in paragraph 68 it has been held as under :

Thus, the legal position as regards to the essentials under Sections 7 and 13(1)(d)(i) and (ii) of the P.C Act, is extracted above. Regarding the mode of proof of demand of bribe, 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. 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. The mode of proof of demand and acceptance is 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. Insofar 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.

In this context, it is relevant to refer the decision of this Court in Sunil Kumar K. v. State of Kerala reported in [2025 KHC OnLine 983], in Crl.Appeal No.323/2020, dated 12.9.2025, wherein in paragraph No. 12, it was held as under:

In a recent decision of the Apex Court reported in [2026 INSC 365] in The State of Kerala v. K.A.Abdul Rasheed, the Apex Court considered the decision [(2023) 4 SCC 731], Neeraj Dutta v. State (NCT of Delhi) and in paragraph 13 the Apex Court held as under:

The first point raised by the learned counsel for the appellant/accused is that demanding bribe of Rs.1,00,000/-(Rupees One Lakh only) and even reduction of the same for a lesser sum in the facts of the case is an improbability. The reason for the submission advanced by the learned counsel for the appellant/accused is that when the total amount assessed for the financial year 2009 – 2010 was Rs.11,89,900/- (Rupees Eleven Lakh Eighty-nine Thousand Nine Hundred only), the taxable amount was only Rs.1,00,000/- (Rupees One Lakh only), for which, payment of imposition of penalty of Rs.7,00,000/-(Rupees Seven Lakh only) is an impossibility.

The learned Special Public Prosecutor for the CBI resisted this contention, submitting that, under the service tax assessment procedure, even if the tax payable is initially less, by the efflux of time, the amount would become substantial due to the stringent statutory provisions providing for the levy and recovery of substantial penalties. He also would submit that in the instant case, the appellant/accused hesitated to accept the service tax returns for the year 2009 – 2010 and thereafter, he made a visit to the office of PW1 and after verification of the records, he, in fact, threatened PW1 with imposition of Rs.7,00,000/- (Rupees Seven Lakh only) as fine. Going through the evidence given by PW1, on 02.07.2011, when he contacted the accused through his mobile phone, the accused told him that the accused would visit his office at about 12.00 noon, that too, after the direction of PW5. Then the accused verified the relevant records of the concern of PW1 and he informed to PW1 that he had to pay Rs.7,00,000/- (Rupees Seven Lakh only) towards tax including tax penalty and interest which could be avoided by paying a sum of Rs.1,00,000/- (Rupees One Lakh only). Reading the evidence of PW1 in the above line, on par with the argument advanced by the learned Special Public Prosecutor for CBI, the contention raised by the learned counsel for the appellant/accused that demand of Rs.1,00,000/- (Rupees One Lakh only) which was reduced to Rs.80,000/- (Rupees Eighty Thousand only) and then to Rs.50,000/- (Rupees Fifty Thousand only) is not an improbability in the facts of the case. The rationale is, an empowered officer to verify the records of the concern run by PW1, for assessing the returns, on verification of the records, informed PW1 that on his assessment, the income would come to an amount which would necessitate payment of Rs.7,00,000/- (Rupees Seven Lakh only), including fine, penalty and interest, PW1 would be in a helpless position and he would be forced to believe the same for the smooth conduct of his business. Therefore, this contention must fail. In view of the said finding, the contention raised by the learned counsel for the appellant/accused that PW1 met the Superintendent, a superior officer of the appellant/accused, who was examined as PW5, to discuss the issue, would make no difference, since, thereafter, the appellant/accused visited PW1 and demanded Rs.1,00,000/- (Rupees One Lakh Only), stating that otherwise he would impose Rs.7,00,000/- (Rupees Seven Lakh Only) towards tax, penalty and interest.

The next contention raised by the learned counsel for the appellant/accused that there was no demand or acceptance of illegal gratification of Rs.15,000/- (Rupees Fifteen Thousand only), as contended by the prosecution. At the same time, the learned counsel for the appellant/accused conceded that the evidence of PW1 to PW3 would support demand and acceptance of bribe, but the same could not be relied on because of the improbability, as already discussed.

The legal position pointed out by the learned counsel for the appellant/accused, relying on the decisions in A.K.Gaba’s case (supra), Aman Bhatia’s case (supra) and Satyanarayana Murthy’s case (supra), and the legal position discussed in this judgment otherwise would show that proof of demand and acceptance of illegal gratification is a sine qua non for establishing an offence under Section 7 of the PC Act and to invoke presumption under Section 20 thereof.

In the instant case, the consistent evidence given by PW1 supported by PW2 and PW3 would show demand and acceptance of Rs.15,000/- (Rupees Fifteen Thousand only) from the appellant/accused on the date of trap with positive result of phenolphthalein test corroborated the same in continuation of the earlier demand. Here, the appellant/accused, in fact, admitted demand and acceptance of Rs.25,000/- (Rupees Twenty Five Thousand only) by him on the date of trap. But his version regarding acceptance of the same was towards repayment of the amount borrowed by PW1 from him to arrange a tour programme in Wayanad. In fact, the said defence case failed to be proved. In such case, the learned Special Judge is right in finding that the appellant/accused committed offences punishable under Sections 7 and 13(1)(d) r/w 13(2) of the PC Act and the conviction does not require any interference.

Going through the sentence imposed by the learned Special Judge, the sentence imposed also found to be very reasonable, considering the gravity of the offences. Therefore, the sentence also is liable to be confirmed.

In the result, this appeal fails and the same is dismissed by confirming the conviction and sentence imposed by the Special Court. Consequently, the order suspending sentence and granting bail to the appellant/accused stands cancelled and his bail bond also stands cancelled. The appellant/accused is directed to surrender before the Special Court to undergo the sentence, forthwith, failing which, the Special Court is directed to execute the sentence, without fail.

Registry is directed to forward a copy of this judgment to the Special Court, for information and compliance.