TaxTMI 
TaxTMI 
1998 (3) TMI 675
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....15 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 illegal gratification other than legal remuneration from jains as a reward for giving them and the companies they own and manage various contracts. On such revelation the CBI registered a case on march 4, 1995 under Sections 7 and 12 of the prevention of Corruption Act, 1988 and Section 56 read with Section 8(1) of the Foreign Exchange Regulation Act, 1973 against the Jains, some public servants and others being RC No. 1(A)/95 ACU (VI) and on completion of investigation filed 34 charge-sheets (challans) in the Court of the Special Judge, ....
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....lique 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. 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 frame charges and try the respondents. Pursuant to the order passed in Case No. 15 of 1996 (arising out of C.S. No. 8 dated 23.1.1996) the following charges were framed against Shri Shukla:- " Firstly, that you, V. C. Shukla , during the period from Feb. 90 to Jan. 91 at Delhi agreed with other co-accused S.K. Jain, N.K. Jain, B. R. Jain, and J. K. Jain to do an illegal act, to wit, to obtain pecuniary advantage from the said Jains by abusing your official position as a public servant being Membe....
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.... 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 within the cognizance of this Court." Similar charges were also framed against the other Jains. In the other case (c.c. No. 17 of 1996), in which Shri Advani figure as an accused with Jains no formal charge was framed (as by then the respondents had moved the High Court), but the special Judge decided to frame charges against them in similar lines as would be evident from the order dated September 6, 1996, the relevant portion of which reads as under: ....
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.... 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 the column of receipts the source is indicated in abbreviated form on the left of the figure representing the sum received. On the right side of the said figures a number is mentioned which co-relates with the serial number of the account of receivers recorded on pages 1 and 1(o) of the diary for the period subsequent to 31.1.1988. So far as the names of the payees are concerned the same have also been recorded in abbreviated form, alphabets or words. The entries, how....
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.... 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. 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 admissible under Section 34 of the Act. Relying upon the statements of some of the witnesses recorded during investigation and report of the handwriting expert that the entries in the documents were in the handwriting of J.K. Jain, and that the three Jain brothers had signed those documents in token of their authenticity, it was contended that entries therein would be admissible also under Section 10 of the Act to prove that pursuant to a conspiracy hatched up by the Jains to obtain fa....
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....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. In setting aside the order of the trial court, the High Court accepted the contention of the respondents that the documents were not admissible in evidence under Section 34 with the following words: " An account presupposes the existence of two persons such as a seller and a purchaser, creditor and debtor. Admittedly, the alleged diaries in the present case are not records of the entries arising out of a contract. They do not contain the debts and credits. They can at the most be described as a memorandum kept by a person for his own benefit which wil....
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....rd 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 their duties as public servants as contemplated by 5.7 of the Act (Prevention of Corruption Act, 1988). Thus the court will have to presume all the above facts in the absence of any evidence in connection therewith to frame charges against the petitioners. To appreciate the contentions raised before us by the learned counsel for the parties it will be necessary at this stage to refer to th....
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....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 not a book for the purposes of S. 34, and I have no hesitation in holding that unbound sheets of paper in whatever quantity, though filled up with one continuous account, are not a book of account within the purview of S. 34." We must observe that the aforesaid....
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....would be admissible in evidence under Section 34. 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 another set of persons it could not be said, by any stretch of imagination that they were books of account, argued mr. Sibal. He next contended that even if it was assumed for argument's sake that the above books were books of account relating to a business still they would not be admissible under Section 34 as they w....
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....ts 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. 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 purview of Section 34. Conversely, if the word 'account' is to be given wider meaning to include a record of financial transactions properly reckoned the above book would attract the definition of 'book of account'. It cannot be gainsaid that the words 'account', 'books of account', 'business' and 'regularly kept' appearing in Section 34 are of general import. necessarily, therefore, such words must receive a general construction unless....
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....ealt 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 systematically by a person by the application of his labour or skill with a view to earning an income. The activities of the Jain brothers, as sought to be projected by the prosecution now on the basis of the materials collected during investigation (detailed earlier) would, therefore, be 'business' for they were being carried on continuously in an organised manner, with a set purpose (be it illegal) to augment their own resources. mr. 71/91 is, therefore, a book of account kept in the course of business. That brings us to the question whether it was 'reg....
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....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 in evidence, but would of corse have no weight." The view expressed by the Kerala High Court in Kunjamman Vs. Govinda Kurukkal [1960 kerala Law Times 184] in this regard is that the words 'regularly kept' do not necessarily mean kept in a technically correct manner for no particular set of rule or system of keeping accounts is prescribed under Section 34 of the Evidence Act and even memoranda of account kept by petty shopkeepers are admissible if they are authentic While dealing with the same question the Pu....
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....ith 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 external independent corroboration of those entries as required under Section 34 was also available to the prosecution from the statements made by Shri Jacob Mathai, Danial P. Rambal and P. Ghoshal and Ejaj Ilmi during investigation, in that, they have admitted receipts of the payments as shown against them in MR. 71/91. While on this point, he made a particular reference to those entries in MR 71/91 Which, according to him m if corresponded with the entries in the other books and the enclose sheets would prove the payments to Shri Advani and Shri Shukla.....
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....nkers' 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 regularily kept in the corse of business in view of the clear language of Section 34 of the Act. This Court further observed that where the entries were not admitted it was the duty of the Bank, if it relied on such entries to charge any person with liability, to produce evidence in support of the entries to show that the money was advanced as indicated therein and thereafter the entries would be of use as corroborative evidence. The same question came up for consideration before different High Court on a number of occasions but to eschew prolixity we would confine our attention to some of....
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....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 accordance with facts. The evidentiary value of entries relevant under Section 34 was also considered in Hiralal Mahabir Pershad (supra ) I.D. Dua, ]. (as he then was ) speaking for the Court observed that such entries though relevant were only corroborative evidence and it is to be shown further by some independent evidence that the entries represent honest and real transactions and that monies were paid in accordance with those entries. A conspectus of the above decisions makes it evident that even correct and authentic entries in books of account cannot without independent evidence of their trustworthiness, fix a liability upon a person. Keeping in view the above principles, even if we proceed on the assumption that the entries made in MR 71/91 are correct and the entries in the other books and loose sheets which we have already found to be not admissible in evidence under Section 34) are admissible under Section 9 of the Act to support an inference about the formers' correct....
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....onsent. 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 words of the Section makes in abundantly clear that such concept of agency can be availed of, only after the Court is satisfied that there is reasonable ground to believe that they have conspired to commit an offence or an actionable wrong. In other words, only when such a reasonable ground exists, any thing said, done or written by any one of then in reference to their common intention thereafter is relevant against the others, not only for the propose of proving the existence of the conspiracy but also for proving the existence of the conspiracy but also for proving that the other person was a party to it. In Bhagwan Swarup vs. State of Maharashtra [ A. I. R 1965 S. C. 682 ], this court analysed the section as follows:- " (1) There shall be a prima facie evidence affording a reasonable ground for a Court to believe that two or more persons are members of a conspiracy; (2) if the said condition is fulfilled, any thing said, done or written by any ....
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.... 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 as Shri Advani is concerned, we find that no one has even spoke about him in their statements. Since the first requirement of Section 10 is not fulfilled the entired in the documents cannot be pressed into service under its latter part . Lastly, comes the questions whether the entries are 'admissions' within the meaning of Section 17 of the Act so as to be admissible as relevant evidence under Section 21; and if so, as against whom can the entries be prove. IN Section 17 admission has been defended to be a statement, oral or documentary, which suggests any inference as to any fact in issue or relevant fact and which is made by any of the persons, and under the circumstances, mentioned in the subsequent Sections (Section 18 to 21). Section 18, so far as it is relevant for our present purposes, provides that statements made by apart to the proceeding or by an agent to any such party, whom the Court regards under the circumstances of the case, has expressly or impliedly authorised by him to make the....
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.... 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 language to construe confession as a statement by an accused 'suggesting the inference that he committed the crime". The above statement of law has been approved and consistently followed by this Court. [Palvinder Kaur vs. State of Punjab (1953) S.C.R. 94, Om Parkash vs. State of U.P. A.I.R. 1960 SC 409 and Veera Ibrahim vs. State of Maharashtra (1976) 3 S.C.R. 692]. It is thus seen that only voluntary and direct acknowledgement of guilt is a confession but when a confession falls short of actual admission guilt it may nevertheless be used as evidence against the person who made it or his authorised agent as an 'admission' under section 21. The law in this regard has been clearly - and in our considered view correctly - explained in Monir's law of Evidence (New Edition at pages 205 and 206), on which mr. Jethmalani relied to bring home his contention that even if the entries are treated as 'admission' of jains still they cannot be used against Shri Advani....
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....elow 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]: " The first group of sections in the Act in which the word ' statement ' occurs, are ss. 17 to 21, which deal with admissions. Section 17 defines the word 'admission', ss. 18 to 21 lay down what statements are admissions, and s. 21 deals with the proof of admissions against persons making them. The word s used in ss. 18 to 21 in this connection are 'statements made by.'. It is not disputed that statements made by persons may be used as admissions against them even though they may not have been communicated to any other person. For example. Statements in the account books of a person showing that he was indebted to another person are admissions which can be used against him even though these statements were never communicated to any other person. Illustration (b) of s. 231 also shows that the word 'statement' used in these sections does not necessarily imply that they must have been communicated to any other person. In the Illustration in question entries made in the book kept....
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....iracy, 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. Resultantly , the statements cannot be proved as admission of Jains of such conspiracy. We hasten to add hat the case the prosecution intended to project now was not that there was a conspiracy amongst the Jains to offer illegal gratification to Shri Advani and shri Shukla and that pursuant thereto the latter accepted the Same. We need not, therefore, dilate of the question whether, if such was the case of the prosecution, the statements could be proved against the Jains as their admission. Thus said we may now turn our attention to Section 12 of the P. C. Act. That Section reads as under:- " " Punishment for abetment of offences defined in section 7 or 11... Whoever abets any offence punishable under Section 7 or section 11 whether or not that offence is committed in consequence of that abetment, shall be punishable with imprisonment for a term which shall be not less than six months but which may extend to five years and shall also be liable to fine." Undoubtedly for a person to be guilty thereunde....