Holding

The prosecution failed to prove the essential ingredients of criminal misconduct under Section 13(1)(d)(ii); there was no causal link between the letter and the payment, and thus the conviction is set aside.

Summary

The appellant, an Assistant Engineer in the Public Works Department, issued a letter dated 9 June 1992 that the prosecution termed a "stage certificate" for a Jawahar Rozgar Yojana (JRY) construction project. Payments amounting to 50% of the contract value were subsequently released to the contractor, A‑3. The trial court and the Kerala High Court convicted the appellant under Section 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act, holding that he had abused his position to obtain pecuniary advantage. On appeal, the Supreme Court examined the circular governing JRY projects, which permits the Panchayat to release up to 50% advance once work has started, irrespective of a stage certificate. The Court found no causal link between the letter and the payment, and the prosecution failed to demonstrate that the appellant obtained any pecuniary advantage. Consequently, the conviction was set aside.

Issues considered

Whether the issuance of the letter constitutes abuse of position under Section 13(1)(d)(ii) of the Prevention of Corruption Act.
Whether a causal connection exists between the alleged "stage certificate" and the advance payment made to the contractor.
Whether the prosecution proved beyond reasonable doubt that the appellant obtained any pecuniary advantage.
Whether the JRY circular allows advance payment without a stage certificate, thereby negating criminal liability.

Legislation cited

Indian Penal Code, 1860s. 34, s. 409, s. 468, s. 471
Prevention of Corruption Act, 1988s. 13(1)(d), s. 13(2)

Subjects

Prevention of Corruption Actcriminal misconductabuse of positionstage certificateadvance paymentJawahar Rozgar Yojanapublic servantpecuniary advantageconviction set aside

Judgment

[2016) 4 S.C.R. 429

A. SlVAPRAKASH A
v.
STATE OF KERALA
(Criminal Appeal No. 131 of2007)
MAY JO, 2016 B
[A.K. SIKRI AND PRAFULLA C. PANT, JJ.]
Prevention of Corruption Act, 1988 - s.13(2) rlw s. JJ(l){d) -
Proceedings under - Alleging that appellant-accused as a public
servant issued a fake 'stage certificate' dated 9. 6.199 2 in respect
of contract awarded to A-3, on tl?e basis whereof payment to the
c
extent of 50% of the contract value was received by A-3 - Conviction
by courts below - On appeal, held: The work contract awarded to
A-3 was under 'Jawahar Rojgar Yojana' - As per Circular dated
23.4.1991, it was permissible for the Panchayat to release 50% of
the estimated cost in advance to the contractor on the starting of D
the project - Thus, Panchayat was empowered to release 50% even
without the letter dated 9. 6.1992 - There is no causal connection
between the release of payment to A-3 and the letter dated 9.6.1992
- The prosecution has sought to cover the case of the appellant-
accused under clause (ii) of s. l 3(l){d) - However, it failed to bring
E
its case within the fold of clause (ii) - Thus, the prosecution failed
to prove the charge beyond reasonable doubt - Conviction of
appellant-accused set aside.
Allowing the appeal, the Court
HELD: 1.1 The work contract awarded to A-3 were under F
Jawahar Rojgar Yojana (JRY). The Commissioner, Village
Development had issued Circular No. 14514/J.R.Y. 1191/C.R.D.
dated 23.04.1991 which prescribes the procedure for
implementation of JRY and contains certain suggestions. Para 2
thereof mentions about the manner in which 50% of the advance
can be released by the Panchayat. [Para 12] [435-A-C] G

1.2 Ex.P/16(a) which is dated 09.06.1992 ('Stage
Certificate")shows that this letter was written on the request of
Panchayat President. Prior to the writing of this letter, A-3 had
already released three payments of Rs.25,000/-, Rs.50,000/- and
Rs. 7,000/-. Thus, it is nobody's case that those payments were H
4"29 .
430 SUPREME COURT REPORTS [2016] 4 S.C.R.

A made to A-3 on the basis of any 'stage certificate' or any such
letter issued by the appellant. Thus, much before the issuance of
Ex.P/16(a), A-3 was given the payment of Rs.82,000/-. As per
circular dated 23.04.1991, payment could not be made without
starting a project/work. It means that as per Pa~chayat itself, A-
3 had started work which resulted in the aforesaid payment. Once
B
the work is started, Panchayat was empowered to release advance
to the extent of 50% of the estimated cost, i.e. up to Rs. 2 lakhs.
Thus, Panchayat could have made further payment of
Rs.1,18,000/- even without Ex.P/16(a). Payment of Rs.1 lakh
was made on 09.06.1992, which was well within defined limits.
c r~ara 15] r436-D-FJ

1.3 There is no causal connection between release of
payment to A-3 and letter Ex.P/16(a). Ex.P/16(a) was issued on
the request of Panchayat President. It mentions that "valuation
cost" of the said project is 25%. This letter never stated that A-
D 3 had 'completed' 25% work. The cost which was mentioned by
the appellant included the cost of material as well, which was
brought on site by A-3. Ex. P/16(a) was wrongly termed as the
stage certificate. The High Court wrongly proceeded on the basis
that advance payment could be given only on installment basis
depending upon the percentage of the work completed. [Para
E 16) (436-G-H; 437-AJ
2.1 The prosecution has sought to cover the case of the
appellant under sub-clause (ii) and not under sub-clause (i) and
sub-clause (iii) of s.13(1)(d) of Prevention of Corruption Act, 1988.
Insofar as sub-clause (ii) is concerned, it stipulates that a public
F servant is said to commit the offence of criminal misconduct if
he, by abusing his position as a public servant, obtains for himself
or for any other person any valuable thing or pecuniary advantage.
Thus, the ingredients which will be required to be proved are:
(l)The public servant has abused his position. (2) By abusing
G that position, he has obtained for himself or for any other person
any valuable thing or pecuniary advantage. [Para 17) [437-E-F]
2.2 It was not even the case set up by the prosecution that
appellant had taken that money from some person and had
obtained any pecuniary advantage thereby. It was the obligation
H of the prosecution to satisfy the aforesaid mandatory ingredients
A. SIVAPRAKASH v. STATE OF KERALA 431

which could implicate the appellant under the provisions of Section A
13(l)(d)(ii). The attempt of the prosecution was to bring the case
within the fold of clause (ii) alleging that he misused his official
position in issuing the certificate utterly fails as it is not even
alleged in the chargesheet and not even iota cif evidence is led as
to what kind of pecuniary advantage was obtained by the appellant
B
in issuing the said letter. [Para 18] [437-G-H; 438-A]
C. C:henl{a Reddy & Ors. v. State ofA.P. 1996 (3) Suppl.
SCR 479 : (1996) 10 SCC 193 - relied on.
2.3 The prosecution has failed to prove the charge beyond
reasonable doubt and the courts below have not looked into the c
matter in a proper perspective. (Para 20] (438-G]
Case Law Reference
1996 (3) Suppl. SCR 479 relied on para 19
CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No. D
131 of2007.
From the Judgment and Order dated 25.05.2006 of the High Court
of Kerala at Emakulam in Criminal Appeal No. 679 of l 999(B).
R. Basant, Sr. Adv., Adolf Mathew, A. Karthik, Sanjay Jain,
Advs.for the Appellant. E
M. T. George, Ms. Prerana Chaturvedi, R. Sathish, Advs. for the
Respondents.
The Judgment of the Court was delivered by
A. K. SIKRI, J. I. Four persons were implicated as accused F
persons in FIR registered on 09.09.1993 under Sections 13(2) read with
13( I)( d) of the Prevention of Corruption Act, 1988 (hereinafter referred
to as the 'PC Act') and Section 409 read with Section 34 of Indian
Penal Code ('IPC'). After investigation, when the chargesheet was
filed on 19.0 l.1998, one more person (who is the appellant before us)
was also added as an accused. Chargesheet was filed under Section G
13(2) read with 13( I)( d) of the PC Act and under Sections 468 and 4 71
read with Section 34 of IPC. Charges were framed by the trial Court
against the accused persons. Matter went on trial and resulted in acquittal
of A-2 and A-3 from all the charges and conviction of A-1, A-4 and A-
5 (i.e. the appellant) under Sections 13(2) read with 13(l)(d) of the PC H
432 SUPREME COURT REPORTS (2016] 4 S.C.R.

A Act. These accused persons i.e. A-1, A-4 and A-5 were, however,
, acquitted of the charges under Sections 468 and 471 read with Section
34 ofIPC. ,
2. No appeal was filed by the State against the acquittal of A-2
and A-3. A-1, A-4 and A-5 filed appeals in the High Court challenging
B their conviction. A- I and A-4 passed away during the pendency of their
appeals and, therefore, those appeals have abated. Thus, it is only the
appellant who remains in the fray. His appeal was taken up by the High
Court for hearing and was ultimately dismissed by the High Court vide
the impugned judgment dated 25.05.2006. Thus, in this appeal, we are
only concerned with A-5 (the appellant). With these introductory remarks,
c we advert to the meat of the matter.
3. The appellant was working as Assistant Engineer in the Public
Works Department (PWD) attached to Arudai, NES Block within the
jurisdiction of which Vandiperiyar Panchayat situates. The said
Panchayat decided to construct the first floor of the existing high school
D building situated in the Panchayat area, by including the work under
Jawahar Rozgar Yojana (JRY). As per the procedure followed under
the D.R.D. Scheme the work was included in the JRY to be carried out
by a nominee selected from the beneficiary of the work. Accordingly,
one Rajarathinam (A-3) was selected as nominee, awarding the said
E work of construction. Appropriate agreement was executed by him.
The total estimate was for Rs. 4 lakhs which was to be met out of the
fund of JRY and of Panchayat. Payment for the work was to be effected
as per the guidelines issued by the Government including Ex. P/17 which
provided that the Panchayat could make advance payment upto 50% of
the estimate amount. It was also mentioned therein non-adherence to
F the aforesaid procedure would be termed as irregular.
4. The case of the prosecution was that all the accused persons
colluded together and A- I, A-2 and A-4 disbursed the amount to A-3,
the nominee, on the basis of the 'stage certificate' which was issued by
A-5, the Assistant Engineer in respect of the part completion of the
G work. Ex. P/l 6(a) was treated as the stage certificate, which in fact is
the letter dated 9.6.1992 wherein the appellant had certified that 25% of
the work in question had been completed. Payments were effected to
the nominee on 25.03.1992, 21.04.1992, 16.05.1992 and 21.10.1992 at
the rate ofRs.25,000/-, Rs. 50,000/-, Rs.7,000/- and Rs. 1 lakh. Payments
H were effected by Ex.P/7, P/l 0, P/12 and P/14 respectively. The
A. SIVAPRAKASH v. STATE OF KERALA 433
fA. K. SIKRI, J.l

prosecution alleged that the last and largest of these payments, i.e. Rs. I A
lakh, was made on the basis of purported 'stage certificate' [Ex.P/16(a)]
issued by the appellant. It was alleged that the false stage certificate
was issued as 25% of the work had not been completed. In this way,
the appellant abused his official position to obtain pecuniary advantage.
5.In nutshell, the gravamen of the charge against the appellant is B
that while working as the Assistant Engineer, he issued stage certificate
in respect of the contract that was awarded to A-3 and on the basis of
these certificates, payment to the extent of 50% of the contract value
was received by A-3. As per the prosecution, that was the false certificate
which did not depict the correct progress or the position of the work.
This was surfaced on the inspection of the work which was carried out
c
by PW-2 on the direction of Deputy Superintendent of Police (Vigilance}
wherein it was found that the work completed was only to the extent of
Rs.42,649.89, that too as on the date of inspection which was much
after the date on which stage certificates were issued by the appellant.
Since the contract value was Rs.4 lakhs, even on the date of inspection D
only I 0% work was completed.
6. Entire case of the prosecution rested on Ex.P16(a) coupled
with the Inspection Report (Ex.PW2). On the basis of the aforesaid
documentary evidence produced on record, the trial court came to the
conclusion that in issuing the certificate (Ex.P/16(a)), the appellant had E
abused his official position only to enable either for himself or for others
to obtain peculiar advantage and, therefore, guilty of offence punishable
under Section 13( 1)(d) of the PC Act. Trial Court, accordingly, sentenced
the appellant to undergo rigorous imprisonment for the period of two
years and to pay fine ofRs.75,000/- and in default to undergo rigorous
imprisonment for a further term of 1Y2 years under Section I 3(2) read F
with Section 13( l )( d) of the PC Act.
7. Challenging the conviction and sentence imposed by the trial
court, the appellant in his appeal to the High Court contended that there
was no evidence on record to reveal that payments were made on the
basis of the said letter dated 9.6. I 992 [Ex.P/16(a)], wrongly termed as G
'stage certificate'. It was also argued that this letter was not the basis
for making payments as payments were effected either before or after
the date of Ex.P/16(a). It was also argued that payments were not
dependent upon the stage at which the work was and the advance
payment upto 50% could be released at the start of the work itself, as
H
434 SUPREME COURT REPORTS [2016] 4 S.C.R.

A per the procedure laid down.
8. The High Court did not find any merit in the aforesaid arguments
of the appellant. It concurred with the findings of the trial court and held
that there was hardly any work done at the spot by A-3 when he was
released the payments. Ex.P/2 which was the report prepared by PW-
B 2 on 19.07.1994 showed that only Pillar work had been completed and
the cost of the said work was to the tune of Rs.42649.89. The High
Court accepted the contention ofthe appellant that payments ofRs.25,000/
-, Rs.50,000/- and Rs. 7,000/- were made to A-3 before the issuance of
Ex.P/16(a). However, it held that after the issuance of the said certificate,
an amount of Rs. I lakh (largest among the payments made) was released
c in favour of A-3 on 21.10.1992. The High Court also conceded the
position that Ex.P/16(a) could not be termed as 'stage certificate' as it
was accepted even by PW-4 that it was not a stage certificate.
Notwithstanding that, the High Court opined that the appellant being a
responsible officer knew how the stage certificate is to be issued. In
D spite thereof he issued Ex.P/l 6(a) which was the letter to the Panchayat
informing the Panchayat that the percentage valuation cost of completion
of one work was 75% (with which we are not concerned) and that of
other work, it was 25% and this information was obviously furnished for
the purposes of releasing payment to A-3. From this, the High Court
concluded that the appellant intended that payment be released on the
E basis of said certificate and writing of this letter (allegedly termed as
certificate) amounted to abusing his official position. These are the
reasons given by the High Court in dismissing the appeal of the appellant.
9. Mr. R. Basant, learned senior counsel appearing for the
appellant, made a vehement plea that the trial court as well as the High
F Court has totally misread the circular pertaining to JRY under which
such payments are to be released and a proper reading of the provisions
of the said circular would manifest that the appellant had no role in
making the payment, by the Panchayat, to A-3. He referred to the
chargesheet and argued that what was stated in the chargesheet was
G totally different from what was ultimately held against him.
I 0. Learned counsel for the respondent, on the other hand, justified
the reasoning given by the trial com1 as well as by the High Court in
support of their conclusion.
11. We have considered the respective submissions with reference
H to the record.
A. SIVAPRAKASH v. STATE OF KERALA .435
[A. K. SIKRI, J.]

12. It is not in dispute that two works were awarded to A-3: one A
was known as "JRY - consignment semi permanent building in
Vandiperiyar" and other was known as "JRY - construction of permanent
building in Vandiperiyar". In the present case, we are concerned with
release of payments to A-3 in respect of second work contract. As is
clear from the nomenclature of these two contracts, they were under B
JRY. The Commissioner, Village Development, Thiruvananthapuram.
had issued Circular No. 14514/J.R.Y. 1/91/C.R.D. dated 23.04.1991 which
prescribes the procedure for implementation of JRY and contains certain
suggestions. Para 2 thereof is relevant for our purposes which mentions
about the manner in which 50% of the advance can be released by the
Panchayat. It reads as under: C
"2. It was directed that for all works under J.R.Y. contractors
shall be avoided and the works shall be directly taken up by the
panchayats or by the convenors elected by the consumers. It
was directed that the amount for such works will be paid in
advance. As per the circular of village Development D
Commissioner No. 29786/J .R.Y 1/90/CRD dated 23. 7.1999,
instructions have been issued to panchayats to give necessary
funds in advance. By this way preparing bills every now and then
can be avoided and the 50% of estimated cost can be given
in advance. But such funds have to be sanctioned
considering the work in hand in part installments. E
Otherwise without starting a project work 50% advance
expenditure cannot be given in advance. To do so will not
be in order. Money required to start a work can be given in
advance and as the work progresses according to the work, more
funds can be sanctioned. Funds entrusted with the panchayats F
for the works of JRY are included in the public funds and the
panchayats are reminded that unnecessary withdrawals from such
funds would tantamount temporary misutilisation of public funds.
When 50% of budget work is given as advance and when works
are completed, a part bill can be prepared and advance amount
can be written off against completed works. Panchayats are G
further ii1formed that without preparing part bill more than 50%
advance payment cannot be allowed and doing so would amount
to misutilisation of Government funds."
13. Based on the aforesaid paragraph, submission of Mr. Basant
was that it was permissible for the Panchayat to release 50% of the H
436 SUPREME COURT REPORTS [2016) 4 S.C.R.

A estimated cost of the Project as advance payment, though it was to be
sanctioned only after the project/work has started. This Circular,
however, mentioned that money required to start the work can be given
in advance and as the work progresses, more funds can be sanctioned.
He, thus, submitted that release of 50% payment was not contingent
upon the stage of the execution of the work, but on the mere start of the
B
work.
14. There appears to be merit in the aforesaid submission of the
learned senior counsel. PW-4 who was the' Assistant Executive Engineer
in his deposition has categorically admitted that in JRY Scheme Work,
there is a provision to give advance amount of 50% of work. The total.
c cost of the work in question, for which the payments were made, was
Rs. 4 lakhs and 50% thereof comes to Rs. 2 lakhs.
15. Ex.P/16(a) which is dated 09.06.1992 shows that this Jetter
was written ori the request of Panchayat President as it start with the
words "as requested by you ....... ". In respect of work in question, it is
D averred that " ... Also the percentage valuation cost of the JRY
construction of permanent building in Vandiperiyar is 25 (twenty five
only)." Prior to the writing of this letter, A-3 had already released three
payments of Rs.25,000/-, Rs.50,000/-and Rs.7,000/-. Thus, it is nobody's
ca;;e that those payments were made to A-3 on the basis of any 'stage
E certificate' or any such letter issued by the appellant. Thus, much before
the issuance ofEx.P/l 6(a), A-3 was given the payment of Rs.82,000/-.
As noted above, as per circular dated 23.04.1991, payment could not be
made without starting a project/work. It means that as per Panchayat
itself, A-3 had started work which resulted in the aforesaid payment.
Once the work is staiied, Panchayat was empowered to release advance
F to the extent of50% of the estimated cost, i.e. up to Rs. 2 lakhs. Thus,
Panchayat could have made further payment of Rs.1,18,000/- even
without Ex.P/16(a). Payment of Rs. I lakh was made on 09.06.1992,
which was well within defined limits.
16. In this hue, let us consider the nature of Ex.P/l 6(a). It is
G issued on the request of Panchayat President. It mentions that "valuation
cost" of the said project is 25%. This letter never stated that A-3 had
'completed' 25% work. It only mentioned "valuation cost". A specific
plea was raised by the appellant that it was the cost which was n~entioned
by him and that included the cost of material as well which was brought
H on site by A-3. High Court rejected this argument which is clearly
A. SIVAPRAKASH v. STATE OF KERALA 437
[A. K. SIKRI, J.]

erroneous. It was equally wrong in terming it as the stage certificate. A
The High Court wrongly proceeded on the basis that advance payment
could be given only on installment basis depending upon the percentage
of the work completed. We, thus, are of the opinion that there is no
causal connection between release of payment to A-3 and letter Ex.Pl
16(a).
8
I 7. Section I 3(1 )( d) of the PC Act reads as under:
"I 3. Criminal misconduct by a public servant
(I) A public servant is said to committhe offence of criminal ,.
misconduct,-
xxxx c
(d) If he,-
(i) by corrupt or illegal means, obtains for himself orfor any
other person any valuable thing or pecuniary advantage; or
(ii) by abusing his position as a public servant, obtains for
himself or for any other person any valuable thing or pecuniary D
advantage; or
(iii) while holding office as a public servant, obtains for any
person any valuable thing or pecuniary advantage without an/
public interest; or"
The prosecution has sought to cover the case of the appellant E
under sub-clause (ii) and not under sub-clause (i) and sub-clause (iii).
Insofar as sub-clause (ii) is concerned, it stipulates that a public servant
is said to commit the offence of criminal misconduct if he, by abusing his
position as a public servant, obtains for himself or for any other person
any valuable thing <tr pecuniary advantage. Thus, the ingredients which
will be required to be proved are:
( 1) The public servant has abused his position.
(2) By abusing that position, he has obtained for himself or for any other
person any valuable thing or pecuniary advantage.
18. It was not even the case set up by the prosecution that appellant
G
had taken that money from some person and had obtained any pecuniary
advantage thereby. It was the obligation of the prosecution to satisfy
the aforesaid mandatory ingredients which could implicate the appellant
under the provisions of Section 13(1 )(d)(ii). The attempt of the prosecution
was to bring the case within the fold of clause (ii) alleging that he misused
his official position in issuing the certificate utterly fails as it is not even H
438 SUPREME COURT REPORTS [2016] 4 S.C.R.

A alleged in the chargesheet and not even iota of evidence is led as to
what kind of pecuniary advantage was obtained by the appellant in issuing
the said letter.
19. In C. ChenNa Reddy & Ors. v. State ofA.P., ( 1996) I 0 SCC
193, this Court held that even when coda! violations were established
B and it was also proved that there were irregularities committed by allotting/
awarding the work in violation of circulars, that by itself was not sufficient
to prove that a criminal case was made out. The Court went on to hold:
"22. On ,a careful consideration of the material on the record, we
are of the opinion that though the prosecution has established that
the appellants have committed not only coda! violations but also
c irregularities by ignoring various circulars and departmental orders
issued from time to time in the matter of allotment of work of
jungle clearance on nomination basis and have committed
departmental lapse yet, none of the circumstances relied upon by
the prosecution are of any conclusive nature and all the
D circumstances put together do not lead to the irresistible conclusion
that the said circumstances are compatible only with the hypothesis
of the guilt of the appellants and wholly incompatible with their
innocence. In Abdulla Mohd. Pagarkar v. State (Union
Territory of Goa, Daman and Diu), ( 1980) 3 SCC 110, under
somewhat similar circumstances this Court opined that mere
E
disregard ofrelevant provisions of the Financial Code as well as
ordinary norms of procedural behaviour of government officials
and contractors, without conclusively establishing, beyond a
reasonable doubt, the guilt of the officials and contractors
concerned, may give rise to a strong suspicion but that cannot be
F held to establish the guilt of the accused. The established
circumstances in this case also do not establish criminality of the
appellants beyond the realm of suspicion and, in our opinion, the
approach of the trial court and the High Court to the requirements
of proof in relation to a criminal charge was not proper.... "
G 20. We, therefore, are of the opinion that the prosecution has
- miserably failed to prove the charge beyond reasonable doubt and the
courts below have not looked into the matter in a proper perspective.
We, thus, allow this appeal and set aside the conviction of the appellant.
The appellant is already on bail. His bail bonds shall stand discharged.
H Kalpana K. Tripathy Appeal allowed.