TaxTMI 
TaxTMI 
1998 (3) TMI 675
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....ides other articles and documents, two diaries, two small note books and two files containing details of receipts of various amounts from different sources recorded in abbreviated forms of ditties and initials and details of payments to various persons recorded in similar fashion. Preliminary investigation taken up by the CBI to decode and comprehend those entries revealed payments amounting to Rs. 65.47 crores, out of which 53.5 crores had been illegally transferred from abroad through hawala channels, during the years 1988 to 1991 to 115 persons including politicians, some of whom were members of either Houses of parliament during the relevant period, officials of government and Public Sector Undertakings, and friends of S.K. Jain, B. R. Jain, and N.K. Jain, who are three brothers carrying on different businesses. It further revealed that the Jain brothers and J. K. Jain, who is their employee, had acted as middlemen in the award of certain big projects in the power sector of the Government of India to different bidders; that they had official dealings with politicians and public servants whose names were recorded in the diaries and the files; and that some of them had accepted i....
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....nst Shri Shukla and Jains) it is alleged that during the period 1988 to 1991, while shri Shukla was a member of the parliament and for some time a Cabinet Minister of the Central Government he received Rs. 39 lacs (approximately) from Jains. 4. According to CBI the materials collected during investigation clearly disclosed that jains were in the habit of making payments to influential public servants and political leaders of high status expecting official favours from them and the above payments were made to Shri Shukla and Shri Advani with that oblique motive. Thereby, the Cbi averred, the above persons (the respondents in these appeals) committed offences under Section 120B I.B.C. and Section 13(2) read with Section 13(1) (d), 7 & 12 of the prevention of Corruption Act, 1988. 5. The special judge took cognisance upon the above two charge-sheets and issued processes against the respondents. After entering appearance they agitated various grounds (to which we will refer at the appropriate stage) to contend that there was no material whatsoever to frame charges against them. The Special Judge, however, the rejected all those contentions and passed separate orders deciding to f....
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....n other than legal remuneration as a motive or reward for getting general favour from said V. C. Shukla who was holding the post of a member of parliament during the said period and also was Minister for External Affairs during the period from 21.11.90 to Jan. 91 and in pursuance of the said agreement, the pecuniary advantage was obtained by said V. C. Shukla by abusing his official position and without any public interest and the payment was made by you as, aforesaid, gratification an you, thereby, committed an offence punishable U/s 120-b IPC r/w Sec. 7, 12, 13(2) r/w 13(1)(d) of the prevention of Corruption Act, 1988 and within the cognizance of this Court. Secondly, that you, S.K. Jain during the aforesaid period and at the aforesaid place abetted the commission of offence punishable U/S 7 of the P. C. Act, 1988 by offering bribe of Rs. 38,85834 to said V. C. Shukla, who was a public servant during the relevant period as a member of parliament and also as a minister of External Affairs during the period from 21.11.90 to Jan. 91 for getting general favour from him and you, thereby committed an offence punishable u/s 12 of the Prevention of Corruption Act, 1988 and withi....
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.... decide this debatable point it will be necessary at this stage to look into the documents; the two spiral note books (marked MR 68/91 and MR 71/91), two small spiral pads (MR 69/91 and MR 70/91) and two files, each containing some loose sheets of papers (MR 72/91 and MR 73/91). Since according to the prosecution MR 71/91 is the main (mother) book we first take the same for scrutiny. Page 1 of the book begins with the heading "A/C given upto 31st January on 31.1.1998;" and then follows serially numbered entries of various figures multiplied by `some other figures on the left hand column and the product thereof on the next column for each month commencing from January, 1990 to April, 1991. The overleaf ('o' for short ) of the page contains similar entries for the period from April, 1988 to December, 1989 and it ends with the words "2.77' we have to receive". In the subsequent pages the book records monthly receipts of monies/funds from inconspicuous persons/entities during the period commencing from the month of February, 1988 to April 1991 maintained on '2 columns' basis. The left hand column represents the receipts and the right hand column disbursements. In th....
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....of March 91; and 'political expenses as on 26.4.91' with names of a number of persons mentioned thereunder through their initials or surnames and various amounts shown against their respective names in only figures running upto 2 points after decimal. The other entries in this book seem to be wholly unconnected to the entries earlier referred to. The two small spiral pads (M.R. 69/71 and M.R. 70/91) also contain some entries relating to similar receipt and disbursement on certain days and in certain months during the above period - all written in similar fashion. So far as the two files containing some loose sheets of paper are concerned (M. R. 72/91 and 71/91) we notice that in some of these papers accounts of money received and disbursed in one particular month or a period covering a number of months are written. 12. While arguing their case for framing of charges against the respondents it was contended on behalf of the appellant before the trial Court that having regard to the fact that the documents unmistakably showed that accounts of business regarding receipt and payment of money during the period 1988 to 19991 were regularly maintained those documents would be a....
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.... the case is at the stage of charge. So these case laws are not applicable to the facts and circumstances of the present case, at this stage." Then, proceeding on the assumption that those documents did not come within the purview of Section 34, the trial court posed the question as to their evidentiary value without first going into the question whether the documents were admissible in evidence) and held that being 'documents' under Section 3 of the Act they could be proved during trial under Sections 61 and 62 thereof. The trial Court then referred to the various entries in the diaries and after correlating them came to the conclusion that a prima facie case had been made out against the respondents. However, the appellant's contention that the entries made in the diaries were also admissible under Sections 17 and 21 as against the Jains did not find favour with the trial court as, according to it, prima facie there was no admission on behalf of the accused. As regards the admissibility of the entries in the documents under Section 10, the trial Court did not record any specific finding. 15. In setting aside the order of the trial court, the High Court accepted ....
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....evidence of the truth of their contents and that during investigation C.B.I. did not examine any witness or collect materials to prove the same. With the above findings and observations, the High Court arrived at the following conclusion:- " "In the present case there is no evidence against the petitioners except the diaries, note books and the loose sheet with regard to the alleged payments (vide MR Nos. 68/91, 72/91 and 73/91). The said evidence is of such a nature which cannot be converted into a legal evidence against the petitioners, in view of my above discussion. There is no evidence in the instant case with regard to the monies which are alleged to have been, received by Jains for the purpose of disbursement. There is no evidence with regard to the disbursement of the amount . Then there is no evidence with regard to the disbursement of the amount. Then there is no evidence with regard to the fact to prove prima facie that the petitioners i.e. Shri L. K. Advani and Shri V. C. Shukla accepted the alleged amounts as a motive or reward for showing favour or disfavor to any person and that the said favours and disfavors were shown in the discharge of thei....
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....#39;Book' ordinarily means a collection of sheets of paper or other material, blank, written, or printed, fastened or bound together so as to form a material whole. Loose sheets or scraps of paper cannot be termed as 'book' for they can be easily detached and replaced. In dealing with the work 'book' appearing in Section 34 in Mukundram vs. Dayaram [AIR 1914 Nagpur 44], a decision on which both sides have placed reliance, the Court observed:- "In its ordinary sense it signifies a collection of sheets of paper bound together in a manner which cannot be disturbed or altered except by tearing apart. The binding is of a kind which is not intended to the moveable in the sense of being undone and put together again. A collection of papers in a portfolio, or clip, or strung together on a piece of twine which is intended to be untied at will, would not, in ordinary English, be called a book think the term "book" in S. 34 aforesaid may properly' be taken to signify, ordinarily, a collection of sheets of paper bound together with the intention that such binding shall be permanent and the papers used collectively in one volume. It is easier however to say what is ....
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.... the transactions contained in MR 71/91 and the connected documents were an inherently credible record of the business in question and the books were maintained with such regularity as was compatible with the nature of the business the Jain brothers were carrying and consequently those books would be admissible in evidence under Section 34. 21. Mr. Sibal, the learned counsel for the Jains, did not dispute that the spiral note books and the small pads are 'books' within the meaning of Section 34. He, however, strongly disputed the admissibility of those books in evidence under the aforesaid section on the ground that they were neither books of account nor they were regularly kept in the course of business. he submitted that at best it could be said that those books were memoranda kept by a person for his own benefit. According to Mr. Sibal, in business parlance 'account' means a formal statement of money transactions between parties arising out of contractual or fiduciary relationship. Since the books in question did not reflect any such relationship and, on the contrary, only contained entries of monies received from one set of persons and payment thereof to anot....
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....wing a balance or result of comparison between items of an opposite nature.' 23. Mr. Altaf Ahmed relied upon the wider definition of the word 'account' as mentioned above to conned that MR 71/91 fulfills the requirements of 'account' as it records a statement of monetary transactions - such as receipts and payments - duly reckoned. Mr. Sibal on the other hand urged that business accounts must necessarily mean only those accounts which record transactions between two parties, arising out of a contract or some fiduciary relations ( a meaning accepted by the High Court). He submitted, relying upon the definition of 'memorandum' as appearing in 'words and Phrases', that MR 71/91 could at best be described as a memorandum of some transactions kept by a person for his own benefit to look into same if and when the occasion would arise. 24. From the above definitions of 'account' it is evident that if it has to be narrowly construed to mean a formal statement of transactions between two parties including debtor-creditor relation and arising out of contract, or some fiduciary relations undoubtedly the book MR 71/91 would not come within the ....
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....umbrated in the above observations. The underlined portion of the above passage supports the contention of Mr. Altaf Ahmed and rebuts that of mr. Sibal that Mr 71/91 is only a memorandum for the entries made therein are totalled and balanced. We are, therefore, of the opinion that MR71/91 is a 'book of account' as it records monetary transactions duly reckoned. 29. Coming now to the word ' business', we need not search for its meaning in Black's Law Dictionary, or words and Phrases for this Court has dealt with the word in a number of cases. In Narain Swadesh Weaving Mills vs. The Commissioner of Excess profits Tax [ 1955 (1) SCR 952], a five judge bench of this Court held that the word 'business' connotes some real, substantial and systematic or organised course of activity or conduct with a set purpose' and the above interpretation was quoted with approval in Mazagaon Dock Ltd. vs. The Commissioner of Income Tax and Excess Profits Tax [1959 SCR 848]. Again in Barendra Prasad Ray vs. I.T.O. [1981 92) SCC 693] this court observed that the word 'business' is one of wide import ad it means an activity carried on continuously and systematical....
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....#39; if they are kept in pursuance of some continuous and uniform practice in the current routine of the business of the particular person to whom they belong. In Kesheo Rao vs. Ganesh [AIR 1926 Nagpur 407] the court interpreted the above words as under: "The regularity of which S.34 speaks cannot possibly mean that there is not mistake in the accounts, as that would make the section a dead letter; no accounts could be admitted in evidence till they had been proved to be absolutely correct, which is in itself an impossible task and also cannot be begun till they have been admitted in evidence. Regularly or systematically means that the accounts are kept according to a set of rules or a system, whether the accountant has followed the rules or system closely or not. Nor is there any thing in the section that says the system must be an elaborate or reliable one. Both those matters, the degree of excellence of the system and the closeness with which it has been followed, affect the weight of the evidence of an entry, not its admissibility. The roughest memoranda of accounts kept generally according to the most elementary system, though often departing from its, are admissible ....
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.... those in MR 70/91, they (the three books ) cannot be said to be books of account regularly kept. We need not, however, at this stage consider whether the entries in these three books will be relevant under any other provisions of Chapter II of the Act. 35. Now that we have found (in disagreement with the High Court ) that entries in MR 71/91 would be admissible under Section 34 of the Act we have to next ascertain there probative value. Mr. Altaf Ahmed took great pains to decode and analyses the entries in the above book and, correlating them with the entries in the other three books and in some of the loose sheets found in the files, submitted that the intrinsic evidence furnished by their internal corroboration and inter-dependence unmistakably demonstrated their authenticity and trustworthiness. According to Mr. Altaf Ahmed the entries reflect such periodicity and regularity as was compatible with the modus operandi of the business of Jain brothers of corrupting public servant including Members of Parliament and Ministers in order to influence their decisions and seek their favours for promotion of their (Jain brothers') economic interests. Besides, he submitted, the ext....
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....such statements shall not alone be sufficient to charge any person with liability. 38. The probative value of the liability created by an entry in books of account came up for consideration in Chandradhar vs. Gauhati Bank [1967 (1) S. C. R. 898]. That case arose out of a suit filed by Gauhati Bank against Chandradhar (the appellant therein ) for recovery of a loan of Rs. 40,000/- . 39. In defence he contended, inter alia, that no loan was taken. To substantiate their claim the Bank solely relied upon certified copy of the accounts maintained by them under Section 4 of the Bankers' Book Evidence Act, 1891 and contended that certified copies became prima facie evidence of the existence of the original entries in the accounts and were admissible to prove the payment of loan given. The suit was decreed by the trial Court and the appeal preferred against it was dismissed by the High Court. In setting aside the decree this Court observed that in the face of the positive case made out by Chandradhar that he did not ever borrow any sum from the Bank, the Bank had to prove that fact of such payment and could not rely on mere entries in the books of account even if they were regula....
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....r himself by what he chooses to write in his own books behind the back of the parties. There must be independent evidence of the transaction to which the entries relate an din absence of such evidence no relief can be given to the party who relies upon such entries to support his claim against another. In Hira Lal Vs. Ram Rakha [ A. I. R. 1953 Pepsu 113] the High Court, while negativing a contention that it having been proved that the books of account were regularly kept in the ordinary course of business and that, therefore, all entries therein should be considered to be relevant and to have been prove, said that the rule as laid down in Section 34 of the Act that entries in the books of account regularly kept in the course of business re relevant whenever they refer to a matter in which the court has to enquire was subject to the salient proviso that such entries shall not alone be sufficient evidence to charge any person with liability. It is not, therefore, enough merely to prove that the books have been regularly kept in the course of business and the entries therein are correct. It is further incumbent upon the person relying upon those entries to prove that the were in accor....
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.... that two or more persons have conspired together to commit an offence or an actionable wrong, any thing said, done or written by any one of such persons in reference to their common intention, after the time when such intention was firs t entertained by any one of them, is a relevant fact as against each of the persons believed to be so conspiring, as well for the purpose of proving the existence of the conspiracy as for the purpose of showing that any such person was a party to it." 46. In dealing with this Section in Sardul Singh vs. State of Bombay [ AIR 1957 S. C. 747], this court observed that it is recognised on well established authority that the principle under lining the reception of evidence of the statements, acts and writings of one co-conspirator as against the other is on the theory of agency. Ordinarily, a person cannot be made responsible for the acts of other unless they have been instigated by him or done with his knowledge or consent. This section provides an exception to that rule, by laying down that an overt act committed by any one of the conspirators is sufficient, (on the general principles of agency) to make it the act of all. But then, the opening of ....
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....onsider the materials collected during investigation from that perspective. Indeed, according to the charges of conspiracy all the respondents were parties thereto and the conspiracy existed for the period from February, 1990 to January, 1991. Therefore we have to ascertain whether there is Prima facie evidence affording a reasonable ground for us to believe about its such existence. 49. To persuade us to give an affirmative answer to the above question mr. Altaf Ahmed drew our attention to the statements of Jacob Mathai (L. W. 4), Dr. P.K. Magu (L.W. 14), Vijay Kumar Verma (L. W. 15), Bharat Singh (L. W. 16) C. D.D Reddy (L. W. 17), S.R. Choudhary (L. W. 18), Ram Prasad (L. W. 19), H. P. Guha Roy (L. W. 20) and Narendra Singh (L. W. 21). On perusal of their statements we find that some of them are irrelevant to the charges of conspiracy with which we are now concerned while others, to the extent they can be translated into legally admissible evidence, only indicate that Shri Shukla was known to the jain Brothers and had gone to their residence on formal occasions. The above statements cannot be made a reasonable ground to believe that all of them have conspired together. So far....
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....al cases (as contained in Section 21), such a statement cannot be proved by or on their behalf. While on this point the distinction between 'admission' and concession' needs to be appreciated. In absence of any definition of 'confession' in the Act judicial opinion, as to its exact meaning, was not unanimous until the judicial Committee made an authoritative pronouncement about the same in Pakala Narayana vs Emperor [AIR 1939 privy Council 47] with these words:- ".... a confession must either admit in terms the offence, or at any rate substantially all the facts which constitutes the offence. An admission of a gravely incriminating fact, even a conclusively incriminating fact, is not of itself a confession, eg. An admission that the accused is the owner of an was in recent possession of the knife or revolver which caused a death ..................................................... have a general term for use in the three following articles, confession secured by inducement, made upon oath, made under a promise of secrecy. The definition is not contained in the Evidence Act, 1872, and in that Act it would not be consistent with the natural use of langua....
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....ent falls short of a confession, it is admissible only against its maker as an admission and not against those who are being jointly tried with him. Therefore, from the point of view of Section 30 of the Evidence Act also the distinction between and admission and a confession is of fundamental importance." (emphasis supplied) 52. In the light of the preceding discussion we proceed to consider the validity of the arguments canvassed by Shri Altaf Ahmed in this regard. Mr. Altaf Ahmed urged that it being a settled principle of law that statements in account books of a person are 'admissions' and can be used against him even though those statements were never communicated to any other person, the entries would be admissible as admission of J. K. Jain, who made them that apart, he contended, they would be admissible against jain brothers also as they were made under their authority as would be evident from their endorsements/signatures appearing against below some of those entries. In support of his first contention he relied upon the following passage from the judgment of his Court in Bhogilal Chunilal pandya vs. State of Bombay [(1959) Supp. (1) SCR 310]: ....
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....eparate agreements; one with Shri Shukla and the other with Shri Advani, in terms of which they were to make certain payments to them as a gratification other than legal remuneration as a motive or reward for getting their favour while they were 'public servants' and in pursuance of the said agreements payments were actually made to them thereby the Jains committed the offence of conspiracy under Section 120 b of the Indian Penal code; and under Section 12 of the prevention of Corruption Act, 1988 (P.C. Act for short), in that, they abetted the commission of offences under Section 7 of the Act by Shri Shukla and Shri Advani. 54. It is thus seen that the prosecution sought to prove that there were tow separate conspiracies, in both of which Jains together figured as the common party and Shri Advani or Shri Shukla, as the other . Since we have already found that the prosecution has not been able to made out a prima facie case to prove that Shri Advani and Shri shukla were parties to such conspiracies, the charges of conspiracy, as framed/sought to be framed, cannot stand also against the Jains, for the simple reason that in a conspiracy there must be two parties. Resultant....