Holding

The expression "known sources of income" means lawful income known to the prosecution after thorough investigation, and the accused must satisfactorily account for any disproportionate assets, including accrued interest as income.

Summary

The appellant, a former Executive Engineer in the Andhra Pradesh Panchayat Raj Department, was convicted under Section 5(1)(e) read with Section 5(2) of the Prevention of Corruption Act, 1947 for possessing assets disproportionate to his known sources of income. The trial court sentenced him to one year imprisonment, imposed a fine and ordered the sale of certain assets with proceeds confiscated. On appeal, the High Court upheld the conviction, finding the appellant could not satisfactorily account for assets worth Rs.14,36,538 after deducting legitimate savings. The Supreme Court examined the meaning of "known sources of income" and held that it refers to lawful income known to the prosecution after investigation, not merely to sources known to the accused, and that the accused bears the burden of providing a satisfactory explanation. The Court also affirmed that accrued interest on deposits constitutes income for the purpose of the Act. Finding no infirmity in the lower courts' findings, the Court dismissed the appeal.

Issues considered

The proper interpretation of "known sources of income" under Section 5(1)(e) of the Prevention of Corruption Act, 1947 and Section 13(1)(e) of the 1988 Act.
Whether the burden of proof to satisfactorily account for disproportionate assets lies on the accused.
Whether accrued interest on deposits should be treated as income in computing the accused's known sources of income.
Whether the trial court's valuation of assets and agricultural income was correct.

Legislation cited

Indian Evidence Act, 1872s. 106
Prevention of Corruption Act, 1947s. 5(1)(e), s. 5(2)
Prevention of Corruption Act, 1988s. 13(1)(e), s. 13(2)

Subjects

corruptionpublic servantdisproportionate assetsknown sources of incomeburden of proofPrevention of Corruption Actasset confiscationaccrued interest

Judgment

I [2008] 14 S.C.R. 733
<'
~
N. RAMAKRISHNAIAH (DEAD) THR. LRS. A
v.
STATE OF A.P.
(Criminal Appeal No. 1628 of 2008)
OCTOBER 17, 2008
B
-f [DR. ARIJIT PASAYAT AND P. SATHASIVAM, JJ]

Prevention of Corruption Act, 1947:
')
~
s.5(1)(e) rlw s.5(2) - Public servant - Acquiring assets
disproportionate to his known sources of income - Conviction c
by trial court - Certain assets of accused directed to be sold
in public auction and sale proceeds confiscated to Govern-
ment - Judgment and order upheld by High Court - HELD:
Analysis made by trial court and High Court, and evidence on

..
-~
,
record leave no manner of doubt that conviction and sentence D
suffer from no infirmity
s. 5 - "Income" - Connotation of - Interest accrued on
deposits - Since total income and expenditure formed basis
of computation, accrued income duly taken note of - If it is
E
excluded , income earned would be reduced to that extent - It
would not be a factor in favour of accused.
Prevention of Corruption Act, 1988:
s. 13(1)(e) rlws.13(2) ands.5(1)(e) rlws.5(2) of1947 Acts
i7 - Expressions "income': "known sources of income': "satis- F
factorily account for" - Connotation of - Burden is on the ac-
cused to offer a plausible explanation worthy of acceptance
as to how he acquired the wealth - Prevention of Corruption
Act, 1947 - s.5(1)(e) rlw s.5(2) - Evidence Act, 1872- s. 106.
G
-- ~
~-
The appellant-accused, an Executive Engineer in the
State Panchayat Raj Department, was prosecuted for com-
mission of offences punishable uls 5(1 )(e) read with s.5(2)
of the Prevention of Corruption Act, 1947 on the allega-
733 H
734 SUPREME COURT REPORTS [2008] 14 S.C.R.

A tion that during the service period he had acquired as-
sets disproportionate to his known sources of income.
The Special Judge convicted the accused of the offences
charged and sentenced him to simple imprisonment for
one year and to pay a fine of Rs.20,000/-. Certain assets,
s belonging to the accused were also directed to be sold in
public auction and the sale proceeds confiscated to the
State. The High Court upheld the judgment and order of
the Special Judge. Aggrieved, the accused filed the in- _,_
stant appeal. During pendency of the appeal, consequent \

c upon death of the appellant, his heirs were brought on
record.
Dismissing the appeal, the Court
HELD: 1.1 The expression "known sources of in-
D come" means income received from any lawful sources,
the receipt of which has been intimated in accordance
with the provisions of any law, rules or orders for the time
being applic'able to a public servant. The expression
"known source of income" has reference to sources
E known to the prosecution after thorough investigation of
the case. The prosecution cannot, in the very nature of
things be expected to know the affairs of an accused per-
son. Those will be matters "specially within the knowl-
edge" of the accused, within the meaning of Section 106,
of the Indian Evidence Act, 1872. [para 14) [7 40-C-E]
F
1.2 The emphasis of the phrase "known sources of
income" in Section 13(1) (e) of the Prevention of Corrup-
tion Act, 1988 (Section 5(1) (e) of 1947 Act) is clearly on
the. word "income." It would be primary to observe that
G qua the public servant, the income would be what is at-
tached to his office or post, commonly known as remu-
neration or salary. Other income which can conceivably
be income qua the public servant will be in the regular
receipt from (a) his property, or (b) his investment. A re-
H ceipt from windfall, or gains of graft, crime or immoral se-
J

N. RAMAKRISHNAIAH (DEAD) THR. LRS. v. 735
STATE OF A.P.
-~
cretions by persons prima facie would not be receipt for A
the "known sources of income" of a public servant. [para
15] [740-F; 741-8]
1.3 The legislature has advisedly used the expres-
sion "satisfactorily account." The emphasis must be on
the word "satisfactorily" and the legislature has, thus, · B
-I deliberately cast a burden on the accused not only to of-
fer a plausible explanation as to how he came by his large
wealth, but also to satisfy the Court that his explanation
• was worthy of acceptance. [para 16] [741-C]
2.1 In the instant case, one of the items as far as in-
c
come is concerned was interests on deposits. The High
Court noted that the same related to interest accrued on
deposits. Since total income and expenditure formed the
basis of computation, the accrued income has been duly
D
taken note of. The accrual of interest was on the deposits
.o; .·
-(
made, in a sense that it is not an investment. That was
accrued income. If it is excluded, the income earned would
be reduced to that extent. Thus, it would not be a factor in
favour of the accused. [para 7] [738-C-D]
E
2.2 The analysis made by the trial court and the High
Court and evidence on record leave no manner of doubt
that the conviction as recorded does not suffer from any
infirmity. [para 17] [741-D]
CRIMINALAPPELLATE JURISDICTION: Criminal Appeal F
j
No. 1627 of 2008
From the Judgment and Order dated 7.10.2005 of the High
Court of Judicature, Andhra Pradesh at Hyderabad in Crl. Ap-
peal No. 1524 of 1998 G
~- Sarvesh Bisaria and Anil Nag for the Appellant.
.... "
Altaf Fathima and D. Bharathi Reddy for the Respondents.
The Judgment of the Court was delivered by
H
\.

736 SUPREME COURT REPORTS [2008] 14 S.C.R.

A DR. ARIJIT PASAYAT, J 1. Leave granted.
2. Challenge in this appeal is to the judgment of a learned
Single Judge of the Andhra Pradesh High Court dealing with
Criminal Appeal preferred by appellant No.1-N. Ramakrishnaiah
who died during the pedency of the appeal and his legal heirs
8 were brought on record as appellants in this appeal.
3. The factual matrix leading to the conviction of the ac- t-
cused N. Ramakrishnaiah was as follows:
The accused joined government service as a Supervisor
C on 02 .11 .1955 in the Andhra Pradesh Panchayat Raj Depart-
ment. He was promoted as a Deputy Executive Engineer on
02.01.1967 and further promoted as an E.xecutive Engineer on
01.03.1979. He continued to work as an Executive Engineer,
Kamareddy of Karimnagar District till he was kept under sus-
D pension on 26.05.1986. On reliable information that he had ac-
quired assets disproportionate to his known sources of income,
a case was registered on 12.05.1986 and the investigation was
taken up. During the course of investigation, search was con-
ducted. The documents found during the search disclosed ac-
E quisition of number of assets by the accused in his name and in
the name of his dependents. During the check period i.e. from
2.11.1955 to 13.5.1986, he acquired assets worth
Rs.14, 71,578. His income from all known sources was
Rs.8,23,634/- and the expenditure during the check period was
F Rs.7,88,574/-. After deducting the expenditure from the income,
he would have saved Rs.35,040/-. But he had acquired the as-
sets worth Rs.17,71,578/-. After deducting the likely saving of
Rs.35,040/-, the disproportionate assets in possession of·ac-
cused from his known sources of income was worked out at
G Rs.14,36,538/- and he could not give satisfactory account for
acquisition of those assets. He was, therefore, liable for pun-
ishment under Section 5 (1)(e) read with Section 5 (2) of the
Prevention of Corruption Act, 194 7 (hereinafter referred to as
the "Old Act").
H The following was the charge framed against the accused:
N. RAMAKRISHNAIAH (DEAD) THR. LRS. v. 737
STATE OF A.P.
)
"That you being a public servant employed as Supervisor A
on 02.11.1955 subsequently promoted as Dy. Executive
Engineer on 02.01.1967 and Executive Engineer on
01.03.1979 in the Panchayat Raj Department of
Government of Andhra Pradesh, during the period between
02.11.1955 and 13.05.1986 acquired assets, which were B
disproportionate to your known sources of income and on
-r· or about the 13th day of May, 1986 you had been in
possession of pecuniary resources or property ,in your
name and in the names of your wife and children to the
extent of Rs.14,36,538.00 which were disproportionate to c
your known sources of income and for which you could not
satisfactorily account and you thereby committed an
offence under section 13 (1) (e) of the Prevention of
Corruption Act, 1988 .(Sec. 5(1) (e) of the Old Act)
punishable under Section 13(2) of the said Act (Sec. 5(2)
D
of the Old Act) and within my cognizance."
'·--r' .
He denied the above charge and claimed for trial. The pros-
ecution in order to prove the guilt of the accused examined P.Ws.
1 to 52, and marked Exs. P.1 to P.195. No oral evidence was
adduced on defence side. But, Ex.D-1 relating to the agricul- E
> tural income for some period was marked.
The learned Special Judge after considering the oral and
documentary evidence, found the accused guilty for the offence
punishable under Section 5(1 (e) read with Section 5(2) of the
....._i Act, convicted and sentenced him to undergo simple imprison- F
ment for one year and to pay a fine of Rs.20;000/-_ in default to
suffer simple imprisonment for three months. The learned Spe-
cial Judge also directed that Item Nos.1 to 4 of assets to be
sold in public auction and the sale proceeds was directed to be
confiscated to the State. Being aggrieved by the judgment of G
~~

-" the trial Court accused preferred the appeal in the High Court,
which was dismissed.

4. It is to be noted that in the appeal before the High Court,
the dispute was restricted to only Item No.26 of the assets (mov-
H
738 SUPREME COURT REPORTS [2008] 14 S.C.R.

-f--·
A ables) and agricultural income. It was stated that the former was '
over estimated and deserved to be scaled down and there was
underestimation of the latter and the same was to be increased.
The High Court with reference to the evidence and materials on
record did not find any substance in the plea and upheld the
8 conclusions.
5. The stand was re-iterated by the learned counsel for the +-
appellants.
6. On the other hand, learned counsel for the State sup-
c ported the judgments of the trial Court and the High Court.
7. One of the items as far as income is concerned was
interests on deposits. The High Court noted that the same re-
lated to interest accrued on deposits. Since total income and
expenditure formed the basis of computation, the accrued in-
D come has been duly taken note of. The accrual of interest was
on the deposits made, in a sense that it is not·an investment. ••
That was accrued income. If it is excluded, the income earned "'r-
would be reduced to that extent. Thus, it would not be a factor in
favour of the accused.
E
8. Similar is the position in respect of deposits in Pratibha
Finance Corporation and Sapthagin Finance Corporation.
9. So far as movables covered by item No.26 are con-
cerned, the trial Court and the High Court relied upon the evi-
F dence of PW 36 and PW 52 and Ext P-112 (list of movables).
10. The movables covered are those which were listed in
the inventory made at the time of search room wise. The details
contained are the year of acquisition, the value of each article
and other particulars given by the accused himself. The details
G were recorded by PW-36. Further, PW-52 also corroborated
the evidence by deposing to similar effect. Though suggestion +--
··~ ~
was made that the accused did not give the detail to PW-36,
significantly PW-52 was not cross-examined in this regard. High
Court noticed t.hat it was not specified by the accused as to in
H respect of which particular item there was over valuation. Sig-
N. RAMAKRISHNAIAH (DEAD) THR. LRS. v. 739
STATE OF A.P.

nificantly, signature of the accused is there in the inventory. The A
·--r· conclusions of the High Court to reject contentions of the ac-
cused do not suffer from any infirmity to warrant interference.
11. So far as the agricultural income is concerned, pros-
ecution relied upon the evidence of Manda! Revenue Officer
(PW-23). He furnished details relating to yield, cultivation, in-
B
spection remarks in respect of the agricultural properties for
-~ Faslis 1378 to 1395. The details are Ext. P91 and P92. An-
other witness was PW-24 who gave Ext P94 statement giving
details of land in Agadala Lanka Village. He also gave details
~ for Faslis 1379 to 1394. Similarly, PW-25 gave details by c
Ext.P95 for Fastis 1376 to 1390 in respect of Pydichinthalapadu
Village. As per Ext.P96 details were given from 1968 to 1985
relating to market rate of Paddy at Eluru. Other witnesses ex-
amined to prove the agricultural income aspect were PWs 40,
41, 27. An agriculturist PW-39 was examined to show the yield. D
His lands were adjacent to that of the accused.
,_
-.,' 12. It is interesting to note that accused placed reliance
on Ext.01 purporting to show yields in certain Faslis. It was re-
covered from the house of the accused. But interestingly no ma-
terial was adduced to show who was the author of the docu- E
-+ ment and as to on what basis the entries were made. There
was not even a signature of the person who had prepared it.
The High Court did not attach any importance to it.
13. We notice that the figure indicated in Ext.01 is F
Rs.1,34, 160/- for the period from 1961 to 1976. The trial Court
.;.'i has in fact gone to the extent of adopting the figures of these 15
years for the next 10 years. The entries in Exts. P92 to 95 have
not been established to be erroneous and therefore the trial
Court and the High Court have rightly refused to accept
G
accused's stand of under-estimation.

--~
;. 14. Section 13 of Prevention of Corruption Act, 1988 (in
short the 'Act') deals with various situations when a public ser-
vant can be said to have committed criminal misconduct. Clause
(e) of Sub-section (1) of the section is applicable when the pub- H

- - -
740 SUPREME COURT REPORTS [2008] 14 S.C.R.

A lie servant or any person on his behalf, is in possession or has, ·--y-
at any time during the period of his office, been in possession I

for which the public servant cannot satisfactorily account of pe-
cuniary resources or property disproportionate to his known
source of income. Clause (e) of Sub-section (1 ), of Section 5 of
B the Old Act was in similar lines. But there have been drastic
amendments. Under the new clause, the earlier concept of
"known sources of income" has undergone a radical change.
As per the explanation appended, the prosecution is relieved '4-
of the burden of investigating into "source of income" of an ac-
c cused to a large extent, as it is stated in the explanation that
"known sources of income" mean income received from any
lawful sources, the receipt of which has been intimated in ac-
~
cordance with the provisions of any law, rules or orders for the
time being applicable to a public servant. The expression "known
source of income" has reference to sources known to the pros-
D
ecution after thorough investigation of the case. It is not, and
cannot be contended that "known sources of income" means
~
sources known to the accused. The prosecution cannot, in the y
very nature of things be expected to know the affairs of an ac-
cused person. Those will be matters "specially within the knowl-
E edge" of the accused, within the meaning of Section 106, of the
Indian Evidence Act, 1872 .(in short, the 'Evidence Act'). \---
"
15. The emphasis of the phrase "known sources of income"
in Section 13(1) (e) (old Section 5(1) (e)) is clearly on the word
F "income." It would be primary to observe that qua the public
servant, the income would be what is attached to his office or
post, commonly known as remuneration or salary. The term "in- r1
come" by itself, is classic and has a wide connotation. What-
ever comes in or is received is income. But, however, wide the
-G import and connotation of the term "income", it is incapable of
being understood as meaning receipt having no nexus to one's
labour, or expertise, or property, or investment, and being fur- -1-·
ther a source which may or may not yield a regular revenue. "" """
These essential characteristics are vital in understanding the
term "Income". Therefore, it can be said that, though "income"
H
N. RAMAKRISHNAIAH (DEAD) THR. LRS. v. 741
STATE OF A.P.

41,..in receipt in the hand of its recipient, every receipt would not A
\ partake into the character of income. For the public servant,
whatever return he gets of his service, will be the primary item
of his income. Other income which can conceivably be income
qua the public servant will be in the regular receipt from (a) his
property, or (b) his investment. A receipt from windfall, or gains B
of graft, crime or immoral secretions by persons prima facie
would not be receipt for the "known sources of income" of a
~ public servant.

16. The legislature has advisedly used the expression "sat-
• isfactorily account." The emphasis must be on the word "satis- C
factorily" and the legislature has, thus, deliberately cast a bur-
den on the accused not only to offer a plausible explanation as
to how he came by his large wealth, but also to satisfy the Court
that his explanation was worthy of acceptance.
D
17. The analysis made by the trial Court and the High Court
and evidence on record leave no manner of doubt that the con-
' 1:....,.. viction as recorded does not suffer from any infirmity. We find
no infirmity with the order of the High Court. The appeal is dis-
missed.
E
R.P. Appeal dismissed.

7