Holding

A conviction based on circumstantial evidence must exclude any reasonable possibility of innocence; the evidence here failed to do so for the government officials, so their convictions were set aside, while the dealers’ convictions were upheld.

Summary

The case concerned a large‑scale fraud in which imported fertilisers were allegedly lifted from ports but not delivered to government godowns, with dealers and government officials accused of colluding to obtain false transport‑charge certificates. The trial court acquitted the accused, but the Andhra Pradesh High Court reversed the acquittals and convicted the officials under IPC sections 120B, 420, 477‑A and the officials under the Prevention of Corruption Act. On appeal, the Supreme Court examined whether the prosecution had proved the essential ingredients of the offences beyond reasonable doubt, particularly through circumstantial evidence, and whether the officials were entitled to the benefit of doubt. The Court held that the evidence did not eliminate any possibility of innocence of the officials and therefore their convictions could not be sustained, while the dealers’ convictions were upheld. Consequently, the convictions of the government officials were set aside and they were acquitted, whereas the dealers’ convictions were affirmed.

Issues considered

The prosecution must establish all ingredients of the offences beyond reasonable doubt, especially when the case is based on circumstantial evidence.
Whether the High Court was justified in overturning the trial court’s acquittal of the government officials.
Whether the officials had a statutory duty to verify the actual receipt of fertiliser and whether failure to do so constitutes a criminal offence.
Whether the absence of direct evidence of non‑delivery can be compensated by indirect circumstantial evidence.
Whether the dealers, having special knowledge of the transport, can be held liable despite the officials’ benefit of doubt.

Legislation cited

Indian Evidence Act, 1872s. 3
Indian Penal Code, 1860s. 120B, s. 420, s. 477-A
Prevention of Corruption Act, 1988s. 5(2) read with 5(1)(d)

Subjects

circumstantial evidencebenefit of doubtconspiracyfalse certificatefertiliser scandalcriminal appealIndian Penal CodePrevention of Corruption Actappellate jurisdictionevidence appraisal

Judgment

A. JAYARAM AND ANR. ETC. ETC. A
v.
STATE OF ANDHRA PRADESH BY CBI

JULY 13, 1995
B
[G.N. RAY AND FAIZAN UDDIN, JJ.]

Indian .Penal Code, 186~Section 420A-Convictions for offences
under-Appeal against-Appreciation of evidence--Fertiliser scandal in
transporting imported fertilisers from ports of arrival to government
godowns--Prosecution case that fertilisers imported not delivered-Cir- c
cumstantial evidence--Facts established must rnle out any likelihood of in-
nocence of accused-Want of convicing and unimpeachable evidence against
government officials-Govemment officials acquitted on benefit of doubt-Or-
ders of conviction against dealers held legally sustainable.
D
Evidence Act, 1872-Section :r-circumstantial evidence-conviction
based on-Facts established must mle out any likelihood .of innocence of
accused.

Criminal proceedings instituted against the appellants, being the
officers of the State Government and dealers of fertilizers, related to an E
alleged scandal of transporting imported fertilizers from the ports of
arrival to different destinations. Prosecution case that large scale fraud
had been committed by a large number of government officials in con-
spiracy with the dealers in fertilizers who were entrusted to take the
fertilizers from the port to various government godowns as such fertilizers F
had not been transported to the destination but the goods were sold at
some intermediate places and the dealers made a false claim of transpor-
tation charges and A3 who was the Agricultural Assistant Officer and
consignee of the goods made a false entry in the stock register to the effect
that the fertilizers were received at the place of destination and on the
basis of certificate used by A3 since endorsed by A.23, the District Agricul- G
tural Officer about actual transportation of the fertilizers through shortest
route, the claim of the dealer was allowed by the Government, there being
conspiracy and connivance between A-2, A-3 and A-1 to defraud the
Government. The State police was entrusted with the enquiry. As the
enquiry appearing to be tardy, the CBI made enquiries and charge sheets H
75
76 SUPREME COURT REPORTS [1995] SUPP. 2 S.C.R.

A were filed. The Special Judge for Fertilizers and charge sheets were filed.
The Special Judge for Fertilizers Transport Cases (AP) acquitted all the
accused in the criminal cases instituted against the officers and dealers
but on appeal, the High Court reversed the orders of acquittal and
convicted all the appellants u/s 120B r/ws 420 and 477-A Indian Penal Code
and sentenced them to pay a fine of Rs. 100. The Government oflicials were
B
further convicted u/s 5(2) r/ws 5(1) (d) of Prevention of Corruption Act.
These appeals had been filed against the judgments of conviction.

The appellants contended that although an appellate court has
jurisdiction to interfere with the finding of fact and reverse such finding
C on proper appreciation of evidence adduced in the trial, the High Court
had reversed the decisions of the trial court contrary to the well estab-
lished principles justifying such interference; that the prosecution having
pleaded an excuse for not leading better evidence to establish all the
ingredients of the offence on account of inordinate delay in making proper
D investigation and filing the charge sheet by contending that adverse in-
ference should be drawn against the accused but such contention being
against all cannons of criminal jurisprudence should not have been ac-
cepted by the court as it was the obligation of the prosecution to lead
convincing and unimpeachable evidence to prove the charges levelled
against the accused and failure of the prosecution to establish such charge
E for any reason whatsoever could not but enure to the benefit of the accused
particularly when the delay in investigating the case and filing cha.rgesheet
was not attributable to the accused; that the conviction sought to be based
on circumstantial evidence, there was no convincing and unimpeachable
evidence which unerringly pointed out to the guilt of the accused and in
F the facts of the case, no conclusion other than complicity of the accused
for the offence charged, was possible and hence conviction of the appel-
lants on probability, surmise or conjecture was not warranted; that the
appellants having no special knowledge as to what route had been actually
followed by the dealer or transporter in bringing the fertilizers to govern-
G ment godown, they had the duty to certify shortest route between the point
of lifting and point of delivery and being governing officers, responsible at
the receiving point were required to ensure that fertilizers had in fact been
delivered at the receiving point; that on receiving the fertilizers, the
appellants had discharged their duties in certifying the receipt for fer-
tilizers; that nobody had verified the stock received at the godown on the
H date of delivery or even within a reasonable time and if a dealer or
A.JAYARAM v. STATE OF A.P. 77

transporter disposes of fertilisers lifted at port en route and brings a new A
consignment of fertiliser by procuring elsewhere, the government otlicers
at the receiving end had nothing to do and if on receipt of the fertilisers
delivered at the destination, such otlicers had issued certificates, no of·
fence charged against them could be held if, have been established.

The appellants who were dealers submitted that the dealers had B
obtained certificates about the receipt of the goods transported at the

' destination issued by the competent government officials and it had not
. been established that such goods had in fact not been received by leading
any convincing positive evidence about the stock position at the relevant
time as no one had verified the stock at the receiving end either on the date C
of delivery or within reasonable time thereafter; that absence of entry in the
checkpost could not be held to be conclusive evidence about non transpor-
tation of goods and therefore, the High Court was not justified in allowing
the appeals against the dealers mainly on the ground that there were no
entries at the checkposts and there was evidence of sale of some fertiliser;
that transportation of goods by alternative route was not prohibited and D
the evidence about sale of fertilisers at some places did not establish
conclusively and beyond reasonable doubt as to whether the goods to be
transported had been sold and as such the same had not been delivered at
the destination when no proof had been given by the prosecution to what
quality of fertilisers had been sold; that it was becau:.c uf public uproar, E
CBI was entrusted to cause enquiry at a belated stage and knowing fully
well, that such allegations about the scandal in dealing with fertilizers
could not be established for want of proof, the government in order to pacify
public demand initiated the criminal cases against the appella_nts; that the
trial Court by giving detailed reasons acquitted all the accused but the High
Court by reassessing the findings of the trial court convicted the appellants F
mainly on the basis of suspicion, surmise and conjectures as the token
punishment given by the High Court amply demonstrated that the Court
also entertained a feeling that the guilt had not been established in fully
convincing manner.

The respondent State submitted that it being a large scale scandal G
in the matter of transportation of imported fertilizers the fraud was
perpetrated with the active conni\'ance of the government officials
entrusted to receive the fertilisers at the destination, such fraud could not
be detected immediately, therefore, the CBI had to be entrusted for causing
enquiry long after the incident, the CBI, handicapped to a large extent, H
Jiii
)
78 SUPREME COURT REPORTS [1995] SUPP. 2 S.C.R. I

~
A examined the lorry owners, the persons purchasing the fertilisers stated
to have been transported and the officials in the check post, it ~1ad been
conclusively established that the fertilisers lifted at the port had in fact
not been transported to destination but sold elsewhere and that such
lorries did not pass through the usual route to be followed for such ..,_
transportation, and therefore, . the certificate which was issued by the
B government officials ·about the actual transportation of these fertilisers by
the shortest route was false and fabricated and, such certificate had been
issued without actually receiving the goods; that on the basis of such
evidences since accepted by the High Court, the order of conviction by the
'
High Court by reversing improper judgment of acquittal passed by the
c trial Court was wholly justified and no interference was called for as the
High Court was fully aware of the appeal Court's responsibilities and
duties in dealing with the judgment of acquittal, since the finding of the
trial Court was completely against the weight of the evidence, accordingly
the impugned orders of conviction and sentence had been passed; that the
High Court elaborately dealt with several circulars issued prior to March
D
12, 1968 and subsequent to March 12, 1960, indicating the responsibilities
of the Agricultural Officer and held that despite specific guidelines given,
the accused A-2 and A-3 deliberately failed and neglected to perform their
official duties; that in a case governed by the circumstantial evidence it is
often very difficult to prove when the minds of the facts proved, the
E reasonable inference can be drawn about the collusion between A-2 and
A-3, namely, the government officials and the dealer in fertilisers A-1; that
it had been established that there was no entry in any of the check posts
and the prosecution had established by examining the purchasers of
fertilisers, the lorry owners, the officials of the check posts that such
lorries had not transported the fertiliser at the destination and therefore,
F
only conclusion could be drawn that a false certificate was procured by the
dealer A-1 and false certificates were given by the local government offi-
cials, A-2 and A-3 in perpetrating a deep rooted conspiracy to defraud ;
public exchequer; that a very lenient sentence by the High Court had been
passed considering mitigating circumstances that the case continued for
G long because large number of documents had been exhibited and large
number of witnesses were examined and therefore, the Government offi-
cials had to suffer because of the pendency of criminal cases but such by t
no means, established that the accused are not guilty;

H Disposing of the matter, this Court
A. JAYA RAM v. STATE OF AP. 79

HELD : 1.1. A large scale fraud had been committed in the mater of A
transportation of fertilisers from the ports of arrival to various destina·
tions in the State of Andhra Pradesh. Such fertilisers had been brought at
a point of time when the State was in dire need of good quality of fertilisers
for cultivation. It was the case of the prosecution that large scale fraud
had been committed by a large number of government officials in con- B
spiracy with the dealers in fertilisers who were entrusted to take the
fertilisers from the port to various government godowns. The C.B.I. made
enquiries and charge sheets were filed alleging that the fertilisers lifted
from the port and stated to have been transported at different destinations
had in fact not been transported in the manner alleged but on the basis of C
false entries made by the government officials and also by issuing false
certificate of such transportation payments had been made. No evidence
had been led whether fertilisers in fact had not been delivered on the
relevant date at the destination by proving the stock register at the relevant
time. Senior officials of the concerned department were not examined. No
witness from the locality of the godown was also examined to show on the D
relevant dates no delivery of fertiliser at the destination had taken place.
Unless by unimpeachable and convincing evidence, the factum of non
delivery of such fertilisers with reference to actual stock position on the
relevant date could be clearly established, it was very difficult to proceed
on the footing that the concerned government officials issued false certifi- E
cate about receipt of the goods on the dates in question. It was not unlikely
that some fertilisers had in fact been delivered to the government officials
at the destination. On the basis of such delivery, the certificates had been
issued by them. It was not the case of the prosecution that the quality of
the fertilisers was required to be examined by the officers at the receiving
end and they had proper infrastructure to make such exercise. It was not
F
established that the fertiliser was not available anywhere in the locality so
that it was not possible to replace the quantity of fertiliser after selling the
original consignment. Simply on the basis of evidence given by lorry
owners that their lorries did not carry the fertilisers or such lorries had
gone to different places and some fertilisers were sold by the dealers to G
other persons, non delivery of fertilisers at the destination by other means
could not be fully ruled out. The circumstances were undoubtedly very
intriguing and raised considerable doubt but in the absence of unimpeach·
·able direct evidence about the actual stock position at the receiving end,
the indirect circumstantial evidences, did not establish the prosecution H
80 SUPREME COURT REPORTS [1995] SUPP. 2 S.C.R..

A case beyond all reasonable doubts. There is no absolute standard of proof
in a criminal trial and the court should not nurture fanciful doubts by
exaggerated devotion to the rule of benefit of doubt, but in a case of
circumstantial evidence all the links in the chain of events from which
irresistible conclusion ~J>out the guilt of the accused for the offence alleged
can be drawn, must be established beyond the pale of reasonable doubt.
B The court has to be watchful and avoid the danger of allowing suspicion
to take the place of legal proof. Conviction can not be based on circumstan-
ces indicating that the prosecution case is quite likely to be true. For
basing the conviction in a case governed by circumstantial evidence, the
facts established must rule out any likelihood of innocence of the accused•
.C The exact stock position on the alleged date of delivery of fertiliser which
would have repelled any other possibility was unfortunately not forthcom-
ing. No attempt to establish the actual stock position of fertiliser in the
godown in question on the relevant date or soon thereafter with reference
to register of stock or any other contemporaneous document had been
D made. It was only through negative and indirect evidence the prosecution
was attempting to establish that the fertiliser had not been delivered. Such
evidence would have been very convincing to corroborate the direct
evidence about the stock position in the event the correctness of such stock
position was challenged. So long the possibility of some other conclusion
could not be fully ruled out, the prosecution case remained in the realm
E of probability. [101-H, 102-A-H, 103-A-G]

· 1.2 The government officials who were appellants could not be held
to be guilty with all certainty and they were entitled to get the benefit of
doubt. Although the High Court reversed the orders of acquittal in con-
victing the government officials, the High Court perhaps felt that some
F
convincing evidences were lacking and it was not unlikely that for the said
reasons, although the High Court convicted the government officials for
serious offences charged against them only a token sentence of fine of Rs.
100 and detention till the rising of the Court had been passed which
sentence normally should not have been passed. (103-H, 104-A-B]
G
1.3. Direct and position evidences had been led by the prosecution
to show that the fertilisers were not. transported by the dealers in the
manner alleged by them. If the dealers had transported the fertilisers by
a different route or by any other transport and if they had sold different
H fertilisers, such facts were within their special knowledge and in the facts
. .I'
AJAYARAM v. STATE OF AP . 81

of the case, the dealers ought to have satisfied the court that the fertilisers A
had in fact been transported by other transports and in a manner different
from what was mentioned in the bills. The evidence adduced by the
prosecution by examining lorry owners, clerks of such owners, officers of
the check posts on the usual routes convincingly pointed out that the
fertiliser was not transported in the way it appeared in the bills since
B
certified by the government officials at the destination. If some fertilisers
of equal quantity had been handed over at the destination, it was not
unlikely that the government officials having taken delivery of such fer-
tilisers without appreciating the fraud and with reference to the record of
loading or the fertiliser at port, would be justified in issuing certificate
about transportation at reasonable rate by the shortest route. As the c
possibility or delivering fertilisers of similar quantity which may not be
qualitatively same, by procuring them locally, when non availability f>f
fertiliser in the region had not been established by the prosecution, could
not be fully ruled out, the government officers, were entitled to benefit of
doubt. But in the facts of the case, such benefit will not be available to the
D
dealers. (104-C-G]

1.4. It is really unfortunate that in fertiliser scandal of such mag-
r· - nitude, appropriate steps at the right time has not been taken and for want
of convincing and unimpeachable evidence, the accused who were govern-
ment otlicials had been acquitted by giving them benefit of doubt. Such E
large scale scandal to transporting imported fertiliser would not have
occurred if larger number of government officials and others than
prosecuted were not involved. It was not unlikely that superior government
officials had also played a vital role in perpetrating the said fraud or
concealing the same. The tardy enquiries made by the State police thereby
necessitating an enquiry by the C.B.I. at a belated stage was only a sad
F
commentary on the efficiency on the police administration. This Court only
hopes that in future there will be proper vigilance and scandal of this types
may not take place. (105-B-C]

Janar Lal Das v. State of Orissa, (1991) 3 SCC 27, referred to. G
CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No.
-,.:
310 of 1989 Etc. Etc.

From the Judgi;nent and Order dated 9.6.87 of the Andhra Pradesh
High Court in Crl. No. 918 of 1982. H
82 SUPREME COURT REPORTS [1995) SUPP. 2S.C.R.

A K.T.S. Tulsi, Additional Solicitor General, K. Madhava Reddy, Ms.
Amershwari, K.R. Choudhary, G. Narasimhlu, AS. Nambiar, V.V. Vaze,
D. Satyanarayan, R.P. Srivastava, Hemant Sharma, W.A. Quardi, P. Par-
meswaran and C.B. Babu for the appearing parties.

B The Judgment of the Court was delivered by

G.N. RAY, J. All the aforesaid appeals were heard analogously
because the criminal proceedings instituted against the appellants in these
appeals, being the officers of the State Government of Andhra Pradesh
C and dealers of fertilizers in the State of Andhra Pradesh related to an
alleged scandal in transporting imported fertilisers from the ports of Tamil
Nadu and Andhra Pradesh to different destinations in the State of Andhra
Pradesh. A tabular statement indicating the numbers of the appeals in this
Court corresponding numbers of the appeals in the Andhra Pradesh High
Court and corresponding number of the criminal cases in the trial Court
D out of which the appeals in the High Court arose given below :

SL Supreme Court High Court High Court Trial Court
No. Appeal No. Appeal.No. Appeal No. Appeal No.
1 Crl. Appeal A-9 DAO Crl. Appeal CC No. 8/73
9n~
No. 308/89 A-10 DAO No. 317/82
E I I.,

2 Crl. Appeal A-14 AAO Crl. Appeal CC No. 14/73
No. 309/89 A-15 AAO No. 66/83 -
A-16 AAO
3 CrL Appeal A-2 DAO Crl. Appeal CC No. 8/73
No. 310/89 A-3AAO No. 918/82
F
4 Crl. Appeal A-7 AAO Crl. Appeal CC No. 5/74.
No. 31If89 A-8AAO No. 65/83
5 Crl. Appeal A-21 AAO Crl. Appeal CC No. 10/74
No. 312/89 A-22DAO No. 164/83
A-23 AAO
G
A-24AAO
6 Crl. Appeal A-8AAO Crl. Appeal CC No. 3/74
No. 313/89 No. 919/82
7 Crl. Appeal A-10 AAO Crl. Appeal CC No. 4/74
No. 314/89 A-11 AAO No. 163/83
H
,_ ,. A.JAYARAM v. STATE OF AP. [G.N. RAY,J.] 83

8 Crl. Appeal A-3 AAO Crl. Appeal CC No. 3/78 A
No. 315/89 No. 540/83
9 Crl. Appeal A-2 DAO Crl. Appeal CC No. 7/73
No. 316/89 A-3 AAO No. 921/82
10 Crl. Appeal A-15 AAO Crl. Appeal CC No. 15/72
No. 317/89 A-16 DAO No. 185/83 B
A-17 AAO
11 Crl. Appeal A-1 Dealer Crl. Appeal CC N. 13/72
No. 164/94 A-10 AAO No. 920/82
A-11 DAO
A-12 AAO c
It may be indicated here that the appellants in 11 appeals before this
Court namely Criminal Appeals Nos. 308 to 317 of 1989 are the officers of
the State Government of Andhra Pradesh and all the appellants in
Criminal Appeals Nos. 163, 165, 166, 184 and 185 are dealers in fertilisers
and in Criminal Appeals Nos. 164 of 1994 some of the appellants are D
officers of the State Government and others are dealers.

The Special Judge for Fertilizers Transport Cases (AP.) acquitted
all the accused in the criminal cases instituted against the officers and
dealers. But on appeals by the state of Andhra Pradesh, the High Court E
of Andhra Pradesh by the impugned Judgments reversed the orders of
acquittal and convicted all the appellants. As the Criminal Appeal No. 310
of 1989 was taken up first for hearing and was argued at length as the main
appeal and learned counsel appearing of the appellants in the -other
appeals supplemented the arguments by drawing attention of this Court to
the special facts relating to such appeals, we propose to deal with the F
arguments advanced in Criminal Appeal No. 310 of 1989 at length.

Criminal Appeal No. 310 of 1989 has been preferred by Accused No.
2 District Agricultural Officer Nandiyal (DAO) and Accused No. 3 Assis-
tant Agricultural Officer Nandiyal (AAO) Accused No. 1 who was a dealer
in fertiliser was also convicted by the High Court. Both A-2 and A-3 have G
been convicted by the High Court under Section 120B read with Section
420 1.P.C. and sentenced to pay a fine of Rs. 100 and in default to undergo
rigorous imprisonment for one month. They were further convicted under
Section 5(2) read with Section 5(1) (d) of Prevention of Corruption Act
and sentenced to pay a fine of Rs. 100 and in default to undergo rigorous H
84 SUPREME COURT REPORTS [1995) SUPP. 2 S.C.R. ~

A imprisonment for one month. They were also sentenced to imprisonment
till the rising of the Court. The dealer accused No. 1 was however convicted
under Section 477-/\. l.P.C. and sentenced to pay a fine of Rs. 100 in default
to undergo rigorous imprisonment for one month. He was also sentenced
to detention till the rising of the Court. It may be indicated here that the
Government Officers in the other appeals were sentenced similarly on
B similar evidence. Accordingly submissions on behalf of such appellants
were also more of less on similar terms.
,,

The impugned judgment of the High Court reversing the orders of
acquittal and convicting the appellants in these appeals have been assailed
c by the learned counsel for the appellants by contending that although an
appellate Court had jurisdiction to interfere with the finding of fact and
reverse such finding on proper appreciation of evidence adduced in the
trial, as a rule of prudence, court of appeal should not interfere with the
order of acquittal if the trial court's reasonings for basing the order of
acquittal are not perverse or against the weight of the evidence adduced
D ~
in the case and the basis of judgment is founded on a reasoning which can
not be held to be one the possible views which may be reasonably taken
by the Court. The learned counsel have submitted that the guidelines or
the principles justifying interference by the Court of appeal against an
order. of acquittal have been well settled by a number of decisions of this
E Court indicating that rules of prudence dictate that unless a very strong
case for interference against a well reasoned order of acquittal is made
out, the court of appeal will refrain from making its own assessment of the
evidence for taking one of the possible views, different from the view taken
,,
by the trial court. It has been submitted that although High Court has
rightly pointed out the principles justifying interference against the order
F
of acquittal it failed to appreciate the facts and circumstances of the cases
and the evidences adduced in the trial and has reversed the decision of the
trial court contrary to the well established principles justifying such inter-
ference. The contention of the learned counsel appearing for the appellants
in Criminal Appeal No. 310 of 1989 are to the following effect :
G
(a) The High Court in this case has totally ignored the reasons ~
given by the Trial Court and totally overlooked the several admis-
sions made by t~e prosecution witnesses in their cross-examination
which wholly demolishes the value of their evidence in examina-
H tion-in-chief. Except discussing one aspect, namely that owners of
AJAYARAM v.STATEOFAP.[G.N.RAY,J.] 85

the shops are competent witnesses to identity the handwriting of A
their clerks who made the entries in the account books there is
no discussion regarding several other reasons given by the Trial
Court for not accepting the evidence of the prosecution witnesses.

(b) The High Court has gone by surmises. The High Court has, in
reversing the Trial Courts Judgment of acquittal however found B
that on the evidence adduced the view taken by the trial court
could not have been taken. The High Court, sitting in appeals,
ought not to have reversed the acquittal without displacing the
findings of the Trial Court merely because a different view was
also possible. The High Court has nowhere considered how the c
officers, A-2 and A-3, could be held guilty of conspiracy without
a categorical finding that no fertilizer was received by the AAO
(A-3). It has not adverted to the admissions made by the prosecu-
tion witnesses in their cross examination which were referred to
by the Trial Court for acquitting them.
D
(c) The High Court has failed to notice that not a single witness
of the prosecution has stated that there was no stock of fertilizers
on the day when it was recorded in the stock register by A-3.

( d) The High Court failed to see that upto the date of issuance of E
the impugned certificates, there was no obligation to verify the
registration number of the trucks in which the fertilizers were
transported.

(e) The High Court failed to consider that the District Agricultural
Officer in Nandiyal which is in Kumool District, has neither F
Jurisdiction nor the staff to monitor each lorry transporting fer-
tilizers lifted from Kakinada port which is five districts away at a
distance of nearly 600 kms. from his place of posting. He (A-2,
DAO) was to take the certificate given by A-3 (AAO) and issue
a certificate verifying the distance and reasonableness of Rate after G
verifying the stock which he did. There is no evidence to the
contrary.

(t) The High Court has erred in noting the DAO's (A-2) conten-
tion. It was never argued for A-2 that he had no obligation to verify
the stock. H
86 SUPREME COURT REPORTS (1995) SUPP. 2 S.C.R.

A (g) The High Court failed to notice that there is an entry in the
stock register of the respective stock on the particular day and A-3
(AAO) gave the certificate. Prosecution has not examined any
witness even to say that no truck came and no fertilizer was
delivered to A-2 on that day.
B (h) No witness was examined to prove that on the day the entry
was made, any inspection was done either on that day or within a
reasonable time thereafter to hold that no stock was received and
certificate given by A-2 and A-3 are false.

c (i) No witness was examined to show that attempt was made to
ascertain if any stock was in the godown contemporaneously with
the date of the entry in the stock Register or the issuance of the
certificate; nor was there any specific compalaint to this effect.

No one was examined to prove that there was no stock on the
D relevant date.

G) The High Court totally ignored the evidence of PWs. 13. and
15 who categorically stated that fertilizers were freely available in
the market which fact was specifically referred to and relied upon
by the Trial Court to acquit the appellant. With the limited juris-
E diction of A-2 and A-3 they could only verify the stock brought to
them and enter in the stock register. They had no machinery to
verify whether it was the self same stock which was lifted by A-1 '
from Kakinada or some other stock. For that purpose A-2 was
required only to verify the part documents showing lifting at this
F port. It is the admitted ca5e of prosecution that Dealer A-1 did
lift fertiliser from Kakinada. Hence some fertiliser was delivered
to A-2. Even if it was not the same, A-2 and A-3 were bound to
issue the certificates. Hence they cannot be held guilty. There is
no evidence that fertilizer was not delivered at all. When fertilisers
were freely available the dealers could even after selling away
G
fertilisers lifted at port could very well have purchased fertilisers
locally and delivered it to A-2. Unless this hypothesis, which is
highly probable is excluded by positive evidence A-2 and A-3
cannot be found guilty.

H (k) The trial court further held that the alleged sales by dealer
A.JAYARAM v. STATE OF AP. [G.N.RAY,J.] 87

(A-1) at Bubbili and Sompeta was not established. The trial Court A
also held that the identity of the fertilisers sold is not established.
In the absence of such evidence, the trial court refused to believe
'/,#-.
that the fertilisers were not transported from Kakinada to Alagad-
da in Kurnool District. Dealing with this aspect, the High Court
has observed that the partner of the shop has been examined and
B
in some cases clerk has been examined and accounts in which the
sale transactions are entered are proved and hence sale by A-1 is
proved. In coming to that conclusion, the High Court failed to
notice that :

(i) day books were not filed and only ledgers were filed. c
(ii) In the ledgers there is no entry of A-1 selling the fer-
tilisers.

(iii) There is also no entry to identify the fertilisers sold, nor
even that it was imported fertiliser taken delivery of at D
Kakinada by A-1. The day book in which such entries are said
to have been made was not produced.

(iv) That the registration number of trucks were not entered
in the ledger and are said to have been entered in the day
book but that day book was not produced. The witnesses E
examined admitted that they .did not travel in the trucks
which transported the fertilizers purchased by them.
)
(v) The drivers were not examined.

(vi) The trip sheets of the trucks were not filed. A few filed F
are loose sheets. Witnesses admitted that they were not main-
tained for all trips. Referring to the decision in State of Kera/a
v. Thomas Alias Boby, [1986) 2 SCC 411 it was contended
that trip sheets were not worthy of credence because loose
sheets properly maintained and kept not in any book form,
G
have no evidentiary value. No liability can be imposed on the
... ~
basis of mere entry in the account books and such trip sheets .
All these facts were taken note of by the trial court in holding
the sales not proved.

(vii) The High Court in reversing the findings has only made H
88 SUPREME COURT REPORTS (1995] SOPP. 2 S.C.R.

A a general reference to the examination-in-chief of those wit-
nesses and wholly ignored the damaging admissions made by
each one of the witnesses in cross-examination.

(viii) The High Court has only pointed out that partners of
.'
the firm which purchased fertilisers were competent wit-
B nesses to identify the signature of the clerks who made these
entries. That by itself does not establish the identity of the
fertilisers lifted from Kakinada port nor does it establish that
A-1 had sold those fertilisers.

c (ix) The High Court has placed reliance on entries at the
check posts. Judicial notice of the fact could be taken note
of that for several trucks moving on road there are no entries
in the check posts regions. When these fertilisers iµ-e admit- ...
tedly not liable for sales tax, if no entries are made, no
inference adverse to the accused could be drawn.
D
(I) The ingredients of the offence charged against the appellants
have not been established for the following reasons :

(a) A-2 and A-3 are charged with the offence of giving false
certificates. For bringing home the charge of 120-B read with
E 420 against A-2 and A-3, the prosecution in this case must
establish that they had conspired with A-1 to cheat. There is
no direct evidence on this aspect. Of course, it can be estab-
lished by circumstantial evidence. The most essential in-
gredient of the offence of cheating is deceiving any person.
F and inducing that person to deliver any property. In this case
there is no proof of non delivery of fertiliser. The certificate
issued by A-2 and A-3, could be said to· be false only if no
fertiliser was·received by A-3 and yet A-3 entered in the stock
register aJid issued the certificate. There is no finding of the
High Court that the stock of fertilisers was not received. It
G may be noted that there is no duty cast upon A-3 to certify
that a particular type of fertiliser has been received or im-
ported fertiliser has been received or the very same stock
lifted from Kakinada port was received by him. A-3 was only
to certify the quantity of fertiliser received. It was not within
H the power of A-3 to monitor the transport all the way from
_...~ AJAYARAM v. STATEOFAP.(G.N.RAY,J.) 89

Kakinada to Allagadda over a distance of 600 Kms. His A
jurisdiction is limited to one of the several talukas of the
district while the fertiliser was to be transported over 5
" ..... districts. When fertiliser was freely available in the market, it
may very well be that A-1 disposed of the fertiliser lifted from
Kakinada at Kakinada or at any other place nearby, pur-
B
chased other fertilisers freely available in the market and
delivered to A-3 and A-3 who having received the same
entered in the stock register and issued the certificate. The
certificate so issued could not be said to be false or given to
deceive anyone unless it is established that no fertiliser at all
was received on the particular day a certificate issued cannot c
be said to be false. There is no such evidence; hence A-3
cannot be held guilty.

(b) A-2, DAO, issued certificate certifying the distance from
Kakinada to Allagadda and the reasonable rate which could
D
be paid per ton of fertiliser per km. It is not the case of the

- prosecution that the certificate of distance and reasonable
price is false or untrue. The case is that the fertilisers were
not transported at all and that no fertiliser was reversed on
the day when it was entered in the stock register. A-3 was to
give the certificate certifying the distance and the rate for E
transport after verifying the stock after obtaining the certifi-
cate issued by A-3. If the certificate issued by A-3 is not false,
as submitted above, when there is no evidence that DAO A-2
has not verified the stock, A-2 also cannot be held guilty.
Even assuming that A-1 has disposed of the fertiliser lifted F
from Kakinada at any other place and did not actually
transport it to Allagadda, so long as it is not established that
on the day when the entry is made in the stock register, there
was no stock received by A-3 neither A-2 nor A-3 can be held
guilty. The prosecution has failed to prove positively that
there was no fertiliser on the relevant date. G
'1
The prosecution however wants the court to draw an in-
ference against the accused on the evidence of sale of certain
fertilisers by A-1 the dealer, at some other place. There is no
basis of or such inference especially when plenty of fertilisers H
A
90 SUPREME COURT REPORTS (1995] SUPP. 2 S.C.R.

were freely available in the market and even after disposing
-
of the fertilisers at a different place, the dealer (A- 1) could
have purchased fertiliser from the nearby market and
delivered the same to A-3. A certificate issued by A-3 on .- '
receiving such fertilisers cannot be said to be falsely issued
with an intent to deceive the government to secure benefit
B for A-1. A-2 also could not therefore be found guilty.

The prosecution, however, says that in the circumstances
only negative evidence could be adduced that fertiliser were
disposed of elsewhere and positive evidence of fertiliser not
c having been delivered on the relevant date to A- 3, coufd
not be adduced. This contention cannot be accepted for
several reasons.

(i) The evidence of anyone who inspected the godowns as
they are expected to be inspected periodically could have
D been adduced. Not single witness has been examined by the
prosecution to. prove this.

(ii) Evidence of persons of the locality where the godown was
situated, could have been adduced to show that no trucks
-
came and no fertilisers were received at that godown on that
E
day or a day or two earlier or later.

(iii) A-3 had certified that A-1 dealer has taken delivery at
Kakinada as per port document and that he has delivered
certain quantity of fertiliser.
F
(iv) The conspiracy is said to be of the DAO (A-2) and AAO,
(A-3) with the dealer (a-1). The conspiracy is not between
any officer above the level of DAO and yet none of those
higher officers have been examined to show that in or about
the relevant date, these fertilisers were not available in the
G god own.
l(
(v) While the offence is alleged to have taken place in Oc-
tober 1968. FIR was registered on 24.6.1970 and the char-
gesheet was laid in 1973. The charge sheet does not say that
H any officer Higher in hierarchy to A-2 was involved. Yet non
AJAYA RAM v. STATE OF AP. [G.N. RAY,J.) 91

of them has been examined to prove that fertilisers were not A
in the godown on the day when they were purportedly
received by A-2.

It has been very strongly contended by the learned counsel for the
appellant that the prosecution pleaded an excuse for not leading better
evidence to establish all the ingredients of the offence on account of B
inordinate delay in making proper investigation and filing the charge sheet
• and contended that adverse inference should be drawn against the accused.
The learned counsel for the appellants has contended that such contention
being against all cannons of criminal jurisprudence should not have been
accepted by the Court. It was the unfailing obligation of the prosecution c
to lead convincing and unimpeachable evidence to prove the charges
levelled against the accused. Failure of the prosecution to establish such
charge for any reason whatsoever cannot but enure to the benefit of the
accused particularly when the delay· in investigating the case and filing
chargesheet was not attributable to the accused.
D
It has also been contended that the conviction was sought to be based
on circumstantial evidence. The principles underlying circumstantial
evidence are well settled by decisions of this Court in a catena of cases.
Referring to the decision made by this Court in Janar Lal Das v. State of
01issa, [1991) 3 SCC 27, the learned counsel has submitted that this court E
has indicated that in order to sustain conviction on ~ircumstantial evidence,
three conditions must be fulfilled namely;

(i) the circumstances from which an inference of guilt is sought
to be drawn, must be cogently and firmly established.
F
(ii) those circumstances should be definite unerringly pointing
towards the guilty of the accused;

(iii) the circumstances, taken cumulatively, should from a chair
so complete that there is no escape from the conclusion that within
G
all human probability the crime was committed by the accused and
done else, and it should also be incapable of explanation on any
.,. other hypothesis than that of the guilt of the accused.
'<

In cases depending largely upon circumstantial evidence there
is always a danger that conjecture or suspicion may take the place H
92 SUPREME COURT REPORTS [1995) SUPP. 2 S.C.R.

A of legal proof. The Court must satisfy itself that various cir-
cumstanced in the chain of evidence should be established clearly
and that the completed chain must be such as to rule out a
reasonable likelihood of the innocence of the accused. When the
main link goes, the chain of circumstances gets snapped and other
circumstances cannot in any manner establish the guilt of the
B accused beyond all reasonable doubts. It is at this juncture the
court has to be watchful and avoid the danger of allowing the ·
suspicion to take the place of legal proof for sometimes uncon- •
sciously it may happen to be a short step between moral certainty
and legal proof. At times it can be a case of 'may be true'. But
c there is a long mental distance between 'may be true' and 'must
be true' and the same divides conjectures from sure conclusions.

It has been contended that there is no convicing and unimpeachable
evidence which unerringly points put to the guilt of the accused and in the
facts of the case, no conclusion other than complicity of the accused for
D the offence charged, Is possible. Hence, conviction of the appellant on
probability, surmise or conjecture was not warranted.

The learned counsel for the appellant has submitted that the appel-
!ants had no special knowledge as to what route had been actually followed
E by the dealer or transporter in bringing the fertilisers to government
godown. The appellants had the duty to certify shortest route between the
point of lifting and point of delivery and certify reasonable rate on the basis
of such shortest route. It has been contended that· the appellants being
government officers responsible at the receiving point were required to
F ensure that fertilisers had in fact deliv1>,red at the receiving point. On
receiving the fertilisers, the appellants have discharged their duties in
certifying the receipt of fertilisers. Nobody had verified the stock received
at the godown on the day of delivery or even within a reasonable time. If
a dealer or transporter disposes of fertilisers lifted at port on route and
bring a new consignment of fertiliser by procuring elsewhere, the govern-
G ment officers at the receiving end had nothing to do. If on receipt of the
fertilisers delivered at the destination, such officers had issued certificates,
no offence charged against them could be held to have been established. \('
>"

Circulars issued subsequent to 1.11.68 would go to show that A-2
H (DAO) nor A-3 (AAO) were required to verify the Registration number
A.JAYARAM v. STATEOFA.P. [G.N.RAY,J.] 93

of trucks in which the fertilisers were actually transported to Allagadda. A
That was prescribed only subsequent to the date of the alleged offence.
Under the earlier circulars there was no such requirement. Reliance was
placed by the prosecution on circular dated 5.2.68 at page 29 to 31 of paper
book, Vol.II which require the A-2 (DAO) to conduct physical verification
of stocks received in the district and the manure mixing firm and report B
the same in a cover addressed to the Director of Agricultural by name.
I
v
There was no failure to verify on the part of A-2 when he issued such
a letter. The letter is extracted at page 70 of the High court judgment, Ex.
P-87. No evidence is adduced by the prosecution to show that no stock was
received by A-3 and that A- 2 did not physically verify the stock. Not one C
witness has so stated. The prosecution only insists upon the court to draw
adverse inference against the accused from the fact that A-1 had disposed
of some fertilisers somewhere at Kakinada, Bubli, or Sompeta after lifting
from Kakinada. When several complaints were made that officers were
delaying in issuing the certificates the procedure was modified by circulars D
dated 27.6.1966 Ex.P-1 at page 149 and circular dated 12.3.1968 Ex.D-48
page 155. Ex.D-48 specifically says that DAO (A-2) should ensure that the
parties have actually moved the stock and for this purpose the DAO may
obtain the certificate of verification from Agricultural Extension Officer
(A-3). A-2 has obtained such certificate. Further, the Agricultural Exten-
sion Officer (A-3) should furnish the stock book entry of the depot E
concerned. Admittedly such an entry is found and it is furnished by A-3 to
A-2 and A-2 in turn has forwarded the same to the higher authorities.
Further, Agricultural Extension Officer (A-3) is required to make the stock
book entry basing on the material furnished in proforma I issued at the
ports. It is the admitted case of the prosecution that proforma 1 issued at
the ports was so furnished. Hence the certificate issued by A-3 cannot be F
said to be false when for the purpose of ensuring actual movement of
stocks, these alone were to be taken into account. As regards the certificate
to be issued by A-2 (which is at page 152 of the Special Leave Petition
paper book), circular dated 27.6.1966, states that in view of the clarifica-
tion given by the Government of India, the following procedure is
prescribed for certification regarding rates and distance. That procedure G
was followed. There is no evidence of the prosecution that procedure was
not followed. There is no allegation that distance and rates certified are
not correct.

Circular dated 5.2.1968 only emphasises the physical verification. H
94 SUPREME COURT REPORTS (1995] SUPP. 2 S.C.R.

A There is no evidence that he had not physically verified issuing the certifi-
cate of distance and route in the covering letter addressed to the Director
of Agriculture, does not prescribe verifying Registration Number of trucks.

The learned counsel appearing for the appellants who are govern-
ment officers have submitted that charges against the government servants
B could not be established. Even if the transporters or dealers in fertilisers
had committed guilt they were liable to be convicted for the part played
by them put on account of any guilty on the part of the dealers, the officers
could not be prosecuted. Hence, there was no occasion to convict such
officers by reversing the orders of acquittal.
c
The learned counsel for other appellants who are government of-
ficers have submitted that facts and circumstances in other cases are more
or less similar. No verification of stock at the receiving end had been done
immediately after receipt of the goods or even within reasonable time.
D Therefore, the appellants for the grounds indicated in Criminal Appeal No.
310 of 1989 should be acquitted by setting aside the unjust and improper
order of conviction and sentence passed by the High Court.

The learned counsel appearing for the dealers in their appeals have
submitted that it was allegeu that the dealers, pursuant to the conspiracy
E with other accused namely the government officers had preferred false
claims for reimbursement of the road transport charges. It has been
contended that the dealers has obtained certificates about the receipt of
the goods transported at the destination i~sued by the competent govern-
ment official. It had not been established that such goods had in fact not
F been received by leading any convincing positive evidence about the stock
position at the relevant time. No one had verified the stock at the receiving
end either on the date of delivery or within reasonable time thereafter.
Hence, it cannot be contended that goods in question had not been
transported at all but false claim for such transportation charge had been
made. It has been contended that the High Court allowed the appeals
G against the dealers mainly on the ground that there were no entries at the
checkposts and that there was evidence of sale of some· fertilisers. Absence
of entries in checkposts ipso facto did not establish that the lorries did not
.· ply through the routes in question. It could not be established beyond all
reasonable doubts that invariably in all cases appropriate entries in check-
H posts had been made. It has been established that checkpost entries had
AJAYARAM v.STATEOFAP.[G.N.RAY,J.] 95

not always been properly maintained. Hence, absence of entry in the A
checkpost could not be held to be conclusive evidence about non transpor-
tation of goods.

It has also been contended that transportation of goods by alternative
route was not prohibited. The only embargo was that transportation charge
B
\ should be paid on the basis of shortest route certified by competent
government official. The learned counsel have contended that evidence
about sale of fertilizers at some places had been led by the prosecution.
Such fact ipso facto, does not establish conclusively and beyond reasonable
doubt as to whether the goods to be transported had been sold and as such
the same had not been delivered at the destination. No proof has been c
given by the prosecution as to what quality of fertilisers had been sold.
There is also no evidence that no fertiliser was available in the market in
the entire region. It has been contended by the learned counsel for the
appellants that after a long lapse of time, an uproar was made in the State
Assembly and in the media about large scale manipulation in the transpor- D
tation of fertilisers. It was only because of public pressure that long after
transportation was effected enquiries were sought to be made. It was
unfortunate that the government could not place reliance on the State's
police and because of public uproar, C.B.I. was entrusted to cause enquiry
into the allegation of scandal with the transportation of fertilisers. Admit-
tedly, such enquiry had been made at a very belated stage when hardly E
there was any material or evidence to substantiate the charges against the
accused. It has been contended that knowing fully well, that such allega-
tions about the scandal in dealing with fertilizers could not be established
for want of proof, the government in order to pacify public demand
initiated the criminal cases against the appellants. The trail Court by giving F
detailed reasons acquitted all the accused in the criminal cases instituted
against them. But as aforesaid, the High Court reassessed the findings of
the trial court and convicted the appellants mainly on the basis of suspicion,
surmise and conjectures. It has been contended that the token punishment
given by the High Court amply demonstrates that the High Court also
entertained a feeling that the guilty had not been established in a fully G
convincing tnanner. In the aforesaid facts, the learned counsel have sub-
mitted that the impugned decisions of the High Court have occasioned
grave injustice and should be set aside by this Court.

The learned counsel appearing for the State of AP. in these appeals H
96 SUPREME COURT REPORTS [1995) SUPP. 2S.C.R. -.-
/

A have, however seriously disputed the contentions made on behalf of the
appellants. The learned counsel for the State in Criminal Appeal No. 310
of 1989 has contended that transportation of fertilisers had to be made
from the port of Kakinada to Allagadda in Kurnool District. It is the
prosecution case that such fertiliser had not been transported to the
destination but the goods were s9ld at Kakinada itself .and at some inter-
B mediate places and the dealers made a false claim of transportation charge
for a sum of Rs. 13,972.50. A-3 who was the Agricultural Assistant Officer ( .-
\'
and consignee of the goods made a false entry in the stock register to the
effect that the fertilizers were received at Allagadda and on t!te basis of
certificate used by A-3 since endorsed by A-23, the District Agricultural
c Officer about actual transportation of the fertilizers through shortest route,
the claiJ;n of the dealer was allowed by the government. The prosecution
alleged that there had been conspiracy and connivance between A-2 and
A-3 and A-1 to defraud th-e Government.

D Learned counsel for the State respondent in support.of the judgment ~
has submitted that the prosecution in support of its case examined. the
owners of the lorries alleged to have transported the goods from Kakinada
to Allagadda as Pws. 6, 7, 8, 16 and 22. It is the prosecution case that the
fertilisers stated to have been carried to the destination at Allagadda had
been disposed of at Kakinada. Such purchasers of fertilisers were examined
E as PWs. 1-4, 13-15, 21,24, 29, 30, 34 and 35. The officials of the check post
on the regular route between Kakinada and Allagadda were also examined
by the prosecution being PWs. 26.-28 and 31. It has been contended by the
learned counsel for the respondent that unfortunately after long lapse of
time it was not possible to lead direct evidence about the actual position
F of stock of fertilisers at the destination point on the date of alleged receipt
of fertilisers or immediately thereafter. It has been submitted that it was a
large scale scandal in the matter of transportation of imported fertilisers
at various destinations at State of Andhra Pradesh and because the fraud
was perpetrated with the active connivance of the government officials
entrusted to receive the fertilisers at the destination, such fraud could not
G be detected immediately. He has submitted that it is unfortunate that the
C.B.I. had. to be entn,1sted for causing enquiry because effective enquiry I(

could not be made by the State agencies. Such enquiry had been held long
after the incident of fraud. Naturally, the C.B.I. was handicapped to a great
extent but despite the .same the C.B.I. has done excellent job and by
H examining the lorry owners, the persons purchasing the fertilisers stated to
AJAYARAM v. STATEOFA.P.[G.N.RAY,J.] 97

have been transported and the officials in the check post. It has been A
conclusively established from depositions of such witnesses that the fer-
tilisers in question had in act not been transported to destination. The
learned counsel has submitted that once this fact is clearly established that
the fertilisers which had been lifted at the port and was scheduled to be
transported at the destination Allagadda had not been transported by the B
lorries through which it was said to have been transported and it is also
proved that fertilisers had in fact been sold elsewhere and such lorries did
not pass through the usual route to be followed for such transportation,
there will be no difficulty in holding that the certificate which was issued
by the government officials about the actual transportation of the said
fertilisers by the shortest route was false and fabricated and such certificate C
had been issued without actually receiving the goods. On the basis of such
evidences since accepted by the High Court, the order of conviction by the
High Court by reversing improper judgment of acquittal passed by the trial
court is wholly justified and no interference is called for the trial court
proceeded on surmise and conjecture. The learned counsel has submitted D
that the High Court was fully aware of the appeal court's responsibilities
and duties in dealing with the judgment of acquittal. Since the finding of
the trial Court was completely against the weight of the evidence and such
finding could not be held to be based on a reasonable view which could be
taken on the basis of evidence adduced in the case, the High Court felt E
that such order of acquittal could not be sustained. Accordingly, the
impugned orders of conviction of sentence have been passed. It has been
submitted by the learned counsel for the respondent th1:1t the trial court
erred in drawing adverse inference again:;t the prosecution case because
the drivers of the lorries had not been examined but only the lorry owners
were examined. The trial court also draw an adverse inference because the
F
clerks of the lorry owners who made entries about the movement of the
lorries in question had not been examined. The learned counsel has sub-
mitted that such view. of the trial court was wholly erroneous and unjus-
tified. The lorry owners were competent to say whether the lorry owned by
them had been engaged for the transportation of the fertilisers in question G
it was not necessary to examine the drivers who actually drove the lorries.
The owners of the lorries were expected to know the hand writing of the
clerks engaged by them in the registers maintained in their office. To prove
such entries about the movement of lorries, the clerks were not required
to be examined and no adverse inference was required to be drawn for not H
98 SUPREME COURT REPORTS [1995} SUPP. 2 S.C.R.

A examining the clerks. It has been submitted that the High Court observed
that there were several circulars issued prior to March 12, 1968 and
subsequent to March 12, 1960 and such circulars only indicated the respon-
sibilities of the Agricultural Officers. It has been submitted that the High
Court elaborately dealt with the circulars and held that despite specific
B guidelines given, the accused A-2 and A-3 deliberately failed and neglected
to perform their official duties. The learned counsel has submitted that in
a case governed hy the circumstantial evidence it is often very difficult to
prove when the minds of the accused met and it is only from the facts
proved, the reasonable inference can be drawn about the collusion between
C A-2 and A-3, namely, the government officials and the dealer in fertilisers
A-1. It has been contended by the learned counsel for the respondent that
the owner of lorry PW.6 was examined by the prosecution. The said owner
was the best person to speak about the fact whether his lorry had been
taken on hire at the relevant time for transporting the goods. The lorry
owner is not expected to maintain the trip sheets written some time in 1968
D when he was examined after se\1eral years. P.W. 35 the clerk in the shop
of G. Surya Narayana stated that he had purchased 340.bags of urea from
PW 30 Bhoja Dharam Raju & Company, Kakinada and by making and
entry he took delivery of the said 340 bags of urea. PW 30 was· also
examined to prove that Bhoja Dharam Raju and Company had sold 340
E bags of urea. Ex. P. 164 and P .167 are the sale bills issued by Dharam Raju.
Ex. P. 65 and P. 67 are the two sale bills which were also sent with the
lorries and by which the stocks were sent. Such bills clearly established the
lorry did not proceed on the same date to Kakinada and any statement to
that effect was false. Ex.P. 164 is the seal of Ramabhadrapuram check post
entry, It has been contended by the learned counsel for the respondent
F
that if the lorry in question had in fact travelled by any other route, such
fact was within speciaJ knowledge of the accused trader. In that event, the
burden shifts to the accused to prove the special facts within his knowledge.
The owner of the lorry had been examined as PW7 and the said owner had
proved the entry Ex. P. 20 in the day book maintained by him on 9.10.1968.
G The trip sheet Ex.P.21 dated 11.10.1968 shows that the lorry made a trip
from Kakinada to Sompeta. Sompeta is situated with Srikakulam District
which is at one end of the State of Andhra Pradesh touching the border
State ·of Orissa. It has been established by examining the officials of the
check posts that there is no entry in any of the check posts between
H Kakinada and Allagadda in respect of the lorry in question namely lorry
AJAYARAM v. STATEOJ:<'AP.(G.N.RAY,J.] 99

bearing No. A.P.W. 4926. Ex.P.39 is the account book dated October 10, A
1968 showing that fertilizers belonging to A-1 were loaded in the said lorry.
The account book of P.W. 30 shows that they purchased the fertilisers on
October 10, 1968 and the trip sheet shows that the fertilisers had in fact
been transported to a different place. From such evidences a reasonable
conclusion can be drawn that the said lorry did not reach the destination. B
P.W.l is the husband of the owner of lorry No. APP 8379. The said witness
has stated that Ex.P.l is the trip sheet and his lorry did not transport any
fertiliser to Allagadda and he does not know whereabout to his driver
Rama Rao. P.W. 22 is the clerks who identified the signatures of Rama
Rao, Driver. P.W. 33 gave evidence to the effect that the lorry made a trip C
from Kakinada to Amatalagalsa and identified Ex.P .58 the way bill and
stated that the vehicle did not transport any Fertiliser for Thallam Trading
Company namely A-1 from Kakinada to Allagadda on October 10, 1968.
So far as the transporter of fertilisers of lorry No. APV. 7335 is concerned,
the owner of the lorry P.W.24 has proved that the Ex.P.28 is the trip sheet
dated January 10, 1%8 which shows that the lorry transported from D
Kakinada to Rajam. Rajam is in Sri Kakularn District. Such fact clearly
indicated that the fertiliser in question had not been transported by lorry
No. APV 7335. The learned counsel has submitted that even if transporta-
tion by one of the lorry appears to have not been conclusively proved, there
is no difficulty in convicting the accused if non delivery of the fertiliser at E
the destination on other occasions is established. The learned counsel has
submitted that ingenuous plea has been taken for raising unfounded doubts
to the effect that the case had been established beyond all reasonable
doubts. Accordingly, the benefit of doubt should go to the accused. Such
case of the accused, however, should not be accepted for the simple reason
that the prosecution establis];ied by examination the purchasers of fer-
F
tilisers, the lorry owners, the official of the check posts that such lorries
had not transported the fertiliser at the destination and the lorries had in
fact transported different goods at other destinations. On the basis of such
evidence, only conclusion can be drawn that a false certificate was
procured by the dealer A-1 and false certificates were given by the local G
government officials. A-2 and A-3 in perpetrating a deep rooted conspiracy
to .defraud public exchequer. It has been contended that the learned
counsel for the State that the Assistant Agricultural Officer was the con-
signee of the goods. He was required to make an entry in the stock register
after physically verifying that the goods had in fact been transported. It was H
100 SUPREME COURT REPORTS (1995) SUPP. 2 S.C.R.

A on the basis of such receipt of goods that he was required to issue ,... ·
certificate that the goods had reached the destination. The other accused
namely the District Agricultural Officer had to satisfy himself about the
physical arrived of goods for the purpose forwarding the claim of the dealer
for payment.
B
The learned counsel has further submitted that several circulars were
issued from time to time by the competent authorities with regi.'rd to the
verification of stocks and certificate to be issued on the genuineness of the
claim. Between 1958 and 1968, different circulars have been issued on
different dates. The subsequent circulars issued after the commencement
c of offence however need not be considered for these appeals. Ex.P.83, the
circular dated June 24, 1964 requires that the Assistant Agricultural Officer
should satisfy himself that the goods were actually transported by shortest
route through the mode of transport claimed in the bill and the rates
mentioned therein are reasonable. Ex.P.84 is a circular dated February 5,
D 1968 which contains that the officers should certify that the distance is the
shortest and the rates claimed are reasonable. In view of the said circulars,
the District Agricultural Officer was required to satisfy that the goods were
actually transported. It has been contended by the learned counsel for the
respondent that the trial court held that Ex.P .83 is the circular which was
superceded by the circular P.84 and it was no duty of the Agricultural
E Officer to certify that the goods had actually been transported. Such finding
of the trial Court, according to the learned counsel for the respondent, is
wholly erroneous and on misreading of the circulars which should not be
accepted. The learned counsel for the respondent has submitted .that the
appellant No. 1, District Agricultural Officer, issued a covering letter Ex.P.
F 37 along the Ex. P.38. Ex.P. 38 which contained a statement about the
reasonableness of the rate and correctness of the distance. But while
sending the bill of the trader he also sent a covering letter Ex.P .37 dated
November 1, 1968 which is to the following effect :

"that a quantity of 99 .981 mts. of urea for· which a claim has
G been preferred in this bill was actually received."

The District Agricultural Officer had really taken the task of certify-
ing that the goods had actually been received. Such certificate only points
out that he was a party to the conspiracy to cheat the Government and
H caused loss to the public exchequer. Similarly, the Assistant Agricultural
AJAYA RAM v. STATE OF AP. [G.N.RAY,J.] 101

Officer has also given certificate Ex.P. 38 dated October 22, 1968 that large A
quantity of fertiliser had been brought by Thallum Trading Corporation
and the said Assistant Agricultural Officer had verified the same and found
correct. Such certificate only points out that he was a party to conspiracy
and when the goods had in fact not reached the destination, he issued a
false certificate only for the purpose of defrauding public exchequer. It has
B
been also submitted by the learned counsel for the respondents that the
trial court failed to consider some of the relevant materials and it had also
considered some materials improperly. It is because of such errors and
omissions that the High Court was fully justified in considering the
evidence and setting aside the orders of acquittal passed against the weight
of the evidence. It has been submitted by the learned counsel for the State C
that a very lenient sentence by the High Court has been passed but such
lenient sentence by no means establishes that the accused are not guilty.
The Court in awarding sentence takes mitigating circumstances into con-
sideration. The case continued for long because large number of docu-
ments had been exhibited and large number of witnesses were examined. D
The Government officials had to suffer because of the pendency of criminal
cases. Considering such mitigating circumstances, it is quite likely that a
lenient sentence has been passed by the High Court . The learned counsel
for the respondent submits that there is no merit in the appeals and the
same should be dismissed.
E
The facts and circumstances of the case in the other appeals are
mox:e or less the same. The prosecution by examining the purchasers of the
fertilisers the owners of the transport, officials of the check posts of usual
routes, tried to establish that the fertilisers in question had not in fact been
carried to the destination. Hence, no bill for such transportation could be F
presented by the dealers, and no certificate about transportation of such
goods by the shortest route at a reasonable cost could be issued by the
government officials. Accordingly, it was contended by the learned counsel
for the state that the conviction in all the cases should be upheld and this
Court should dismiss the appeals preferred by the accused.
G
After giving our anxious consideration to the facts and circumstances
of the case and considering the judgments by both the courts and evidences
adduced in the case through which we have been taken by learned counsel
for the parties, it appears to us that a large scale fraud had been committed
in the matter of transportation of fertilisers from the ports of arrival to H
102 SUPREME COURT REPORTS [1995] SUPP. 2 S.C.R.

A various destinations in the State of Andhra Pradesh. Such fertilisers had
been brought at a point of time when the State was in dire need of good
quality of fertilisers for cultivation. It is the case of the prosecution that
large scale fraud had been committed by a large number of government
officials in conspiracy with the dealers in fertilisers who were entrusted to
take the fertilisers from the port to various government godowns. The
B
prosecution case is because there was a conspiracy involving reasonable
government officials, the fraud could not be detected earlier. Thereafter,
when the State Police was entrusted with the enquiry, for some inexplicable
reasons, the enquiry appeared to be trady. In the meantime, uproar 'Yas
made in the State Assembly and .the newspapers published the news of
c large scale scandal relating to transportation of fertilisers. The embarrassed
State Government thereafter entrusted the C.B.I. to make enquiries. The
C.B.I. made enquiries and charge sheets were filed. There is no manner of
doubt that by that time it was quite late and the C.B.I. was handicapped
in causing more effective enquiry. Despite such fact, it appears to us that
D the C.B.I. has done excellent job by examining the lorry owners, the clerks
of the lorry owners, the officials of different check posts and also the
purchasers of fertilisers at different places for the purpose of showing that
the fertilisers lifted from the port and stated to have been transported at
different destinations had in fact not been transported in the manner
E alleged but on the basis of false entries made by the government officials
and also by issuing false certificate of such transportation payments has
been made. Unfortunately, no evidence has been led whether fertilisers in
fact had not been delivered on the relevant date at the destination by
proving the stock register at the relevant time. It is really unfortunate that
in a case of such magnitude senior officials of the concerned department
F were not examined. No witness from the loca1ity of the godown was also
examined to show that on the relevant dates no delivery of fertiliser at the
destination had taken place. Unless by unimpeachable and convincing
evidence, the factum of non delivery of such fertilisers with reference to
actual stock position on the relevant date can be clearly established, in our:
G view, it becomes very difficult to proceed on the footing that the concerned
gpvernment officials issued false certificate about receipt of the goods on
the pates in question. There is force in the contention of the learned
counsel for the appellants that it was not unlikely that some fertilisers had
in fact been delivered to be government officials at the destination. On the
H basis of such delivery, the certificates had been issued by them. It is not
AJAYARAM v.STATEOFAP.[G.N.RAY,J.] 103

the case of the prosecution that the quality of the fertilisers was required A
to be examined by the officers at the receiving end and they had proper
infrastructure to make such exercise. It has been rightly contended that it
was not established that the fertilisers was not available anywhere in the
locality so that it was not possible to replace the quantity of fertiliser after
selling the original consignment. Simply on the basis of evidence given by B
lorry owners that their lorries did not carry that fertiliser or such lorries
had gone to different places and some fertilisers were sold by the dealers
to other persons, non delivery of fertiliser at the destination by other means
can not be fully ruled out. The circumstances are undoubtedly very intrigu-
ing and raise considerable doubt but in the absence of unimpeachable
direct evidence about the actual stock position at the receiving end, the C
indirect circumstantial evidences, in our view do not establish the prosecu-
tion case beyond all reasonable doubts. It is true that there is no absolute

- standard of proof in a criminal trial and the court should not nurture
fanciful doubts by exaggerated devotion to the rule of benefit of doubt but
in a case of circumstantial evidence all the links in the chain of events from D
which irresistible conclusion about the guilt of the accused for the offence
alleged can be drawn, must be established beyond the pale of reasonable
doubt. The court has to be watchful and avoid the danger of allowing
suspicion to take the place of legal proof. Conviction can not be based on
circumstances indicating that the prosecution case is quite likely to be
true. For basing the conviction a case governed by circumstantial evidence, E
the facts established must rule out any likelihood of innocence of the
accused. The exact stock position on the alleged date of delivery of
fertiliser which would have repelled any other possibility is unfortunately
not forthcoming. It does not appear that any attempt to establish the actual
stock position of fertiliser in the godown in question on the relevant date F
or soon thereafter with reference to register of stock or any other contem-
poraneous document has been made. It is only through negative and

- indirect evidence the prosecution is attempting to establish that the fer-
tiliser had not been delivered. Such evidence would have been very con-
vincing to corroborate the direct evidence about the stock position in the
event the correctness as such stock position was challenged. So long the G
possibility of some other conclusion cannot be fully ruled out, the prosecu-
tion case remains in the realm of probability.
. )'

In the facts of the case, we are of the view that the government
officials who are appellant in some of these appeals cannot be held to be H
104 SUPREME COURT REPORTS [19951SUPP.2 S.C.R.

A guilty with all certainty and they are entitled to get the benefit of doubt.
The appeals, preferred by the government officials therefore, should be
·-
allowed by setting aside the conviction of sentence passed against them by
the High Court. It appears to us that although the High Court reversed the
orders of acquittal in convicting the government officials, the High Court
perhaps felt that some convincing evidences were lacking and it is not
B unlikely that for the said reasons, although the High Court convicted the
government offici.als for serious offences charged against them only a token
sentence of fine of Rs. 100 and detention till the rising of the Court had
been passed which sentence normally should not have been passed.

c So far as the appeals preferred by the dealers of the fertilisers are
concerned, it appears to us that direct and positive evidences have been
led by the prosecution to show that the fertilisers were not transported by
the dealers in the manner alleged by them. If the dealers had transported
the fertilisers by a different route or by any other transport and if they had
D sold different fertilisers, such facts were within their special knowledge and
in the facts of the case, the dealers ought to have satisfied the court that
the fertilisers had in fact been transported by other transports and in a
manner different from what was me!ltioned in the bills. The evidence
adduced by the prosecution by examining lorry owners, clerks of such
owners, officers of the check posts on the usual routes convincingly point
E out that the fertiliser was not transported in the way it appeared in the bills
since certified by the government officials at the destination. If some
fertilisers of equal quantity had been handed over at the destination, it was
not unlikely that the government officials having taken delivery of such
fertilisers without appreciat":tg the fraud and with reference to the record
F of loading of the fertiliser at port, would be justified in issuing certificate
about transportation at reasonable rate by the shortest route. As the
possibility of delivering fertiliser of similar quantity which may not be
qualitatively same, by procuring them locally, when non availability of
fertiliser in the region had not been established by the prosecution, cannot
be fully ruled out, lhe government officers, in our view, were entitled to
-
G benefit of doubt. But in the facts of the case, such benefit will not be
available to the dealers. We, therefore, do not find any reason to interfere
with the orders of conviction passed against the dealers· and their appeals 1 •
being Criminal Appeals Nos. 163, 165, 166, 184 and 185 of 1994 are
dismissed. Criminal Appeal No.164 has been preferred both by the dealers
H and the government officials. Such appeal stands allowed in part and
AJAYARAM v. STATEOFAP.[G.N.RAY,J.) 105

conviction and sentence passed against the government officials being A
appellants Nos. 3 to 5 stand set aside and they are acquitted. But the
appeals preferred by appellants Nos. 1 and 2 stands dismissed.

It is really unfortunate that in fertiliser scandal of such magnitude,
-- " appropriate steps at the right time had not been taken and for want of
convincing and unimpeachable evidence, the accused who were govern- B
ment officials have been acquitted by giving them benefit of doubt. It
appears to us that such large scale scandal in transporting imported
fertiliser would not have occurred if larger number of government officials
and others than prosecuted were not involved. It is not unlikely that
superior government officials had also played a vital role in perpetrating C
the said fraud or concealing the same. The tardy enquiries made by the
State police thereby necessitating an enquiry by the C.B.I. at a belated stage
is only a sad commentary on the efficiency of the police administration. We
may only hope that in future there will be proper vigilance and scandal of
this type may not take place.
D
R.A. Appeal disposed of.