Holding

The Supreme Court held that the statutory presumption under Section 7/20 of the Prevention of Corruption Act is mandatory and was correctly applied, and the convictions therefore stand.

Summary

The appellants, T. Shankar Prasad (Assistant Commercial Tax Officer) and Ghaiz Basha (Junior Assistant), were convicted under Sections 7, 13(1)(d) and 13(2) of the Prevention of Corruption Act, 1988 for demanding and receiving a bribe to issue way‑bills. The complainant paid the demanded amount to the junior assistant under a police‑laid trap, and the money was recovered from his possession. The trial court and the Andhra Pradesh High Court upheld the conviction despite the complainant’s partial retraction and the accused’s claim that the money was advance tax. On appeal, the Supreme Court examined the legal presumption under Section 7/20 of the Act, the meaning of "gratification", the admissibility of a hostile witness’s testimony, and the effect of an acquittal on a conspiracy charge under IPC 120B. It held that the statutory presumption is compulsory, can be raised on proof of receipt of money, and need not be rebutted by a plausible explanation; the witness’s partial retraction did not destroy his evidence; and a conviction can stand even if the conspiracy charge fails. Consequently, the Court dismissed the appeals and affirmed the convictions.

Issues considered

The applicability and compulsory nature of the legal presumption under Section 7/20 of the Prevention of Corruption Act, 1988 when money is recovered from an accused.
Whether the presumption can be rebutted merely by an explanation rather than by proof.
The evidentiary value of a hostile witness who partially rescinded his earlier statement.
The effect of an acquittal on the conspiracy charge (IPC s.120B) on the substantive corruption charge.
The proper interpretation of the term "gratification" in the context of the Act.
Whether direct evidence is required to prove acceptance of gratification.

Legislation cited

Code of Criminal Procedure, 1973s. 313
Indian Evidence Act, 1872s. 114, s. 154, s. 20, s. 4
Indian Penal Code, 1860s. 120B
Prevention of Corruption Act, 1947s. 4
Prevention of Corruption Act, 1988s. 13(1)(d), s. 13(2), s. 20, s. 7

Subjects

Prevention of Corruption ActLegal presumptionGratificationBriberyHostile witnessConspiracy chargeBurden of proof

Judgment

' "'\ T. SHANKAR PRASAD A
v.
STATE OF ANDHRA PRADESH

JANUARY 12, 2004

[DORAJSWAMY RAJU AND ARJJIT PASA YAT, JJ.] B

Prevention of Corruption Act, 1988:

Section 20-Pres11mption-Na111re of-Held: ls an inference ofa certain
fact drawn from other proved facts and could be either legal or compulsory-
c
Unless such presumption is disproved or dispelled or rebutted it could be
treated as tantamozmting to proof-But presumption rebuttab/e only by proof
and not by a plausible explanation.

Section 20(1)-Presumption-Mode of proof-Held: Direct evidence is D
one of the modes through which a presumption could be proved-But this is
not the only mode.
~.
Sections 7 and 13(/)(d) rlw S. 13(2)-Bribery-Presumption under-
Applicability of-Assistant Commercial Tax Officer (A-1) demanded bribe
from· complainant for issuing wiry bills to him-Complainant agreed but E
reported the matter to Anti corruption Bureau-Trap laid-Complainant on
direction of A-1 paid the money to his Junior Assistant (A-2)-Money
subsequently recovered from A-2-Trial court convicted A-1 and A-2-High
Court affirmed the conviction-Correctness of-Held: Involvement of both the
acc11sed in a well-planned and cleverly managed device to systematically F
... :1 collect money stood sufficiently established-Belated plea that the money was
received towards advance tax rejected-On the contrary complainant was
entitled to some refund-Conviction upheld.

Section 7 Explanation (b) and S. 20-Gratification-Meaning of-Held:
Different dictionaries gave different meanings to the word "gratification"- G
But that meaning which would be more appropriate to the context has to be
found out-The Oxford dictionary meaning "to give pleasure or satisfaction
"( to" was the most appropriate meaning of the word "gratification ".-Evidence
Act, 1872.
H
419
·+

420 SUPREME COURT REPORTS [2004) I S.C.R.

A Prevention of Corruption Act, 1947:

Section 4-Presllmption-Faclllal or discretionary-Drawing of-Held:
Col/rt has absolute discretion to presume the existence of any fact-However,
SllCh presllmption shollld not be used to draw yet another discretionary
presumption unless there was a statutory compulsion.
B
Evidence Act, 1872:

Section 1j4-Witness-Cross-examination of-Prosecution witness
partially resiled from his earlier statement and did not fi1/ly support the·
C prosecution version-Sllch witness was later cross-examined and contradicted
with the leave of court-Creditworthiness of witness-Held: Such evidence
not to be washed off the record altogether-That part of the testimony of the
witness which was creditworthy might be accepted and acted upon.

Penal Code, 1860:
D
Section 120-B-Criminal conspiracy-Accused charged with criminal
conspiracy to commit an offence-Substantive charge in respect of the said
offence also framed-But conspiracy not established-Effect on substantive
charge-Held: Accused could be convicted/or the substantive offence although
acquitted of the charge of conspiracy.
E
Criminal Trial:

Proof-Standard of-Held: Proof of a fact depends upon the degree of
probability of its having existed-The standard required for reaching that
F supposition is that of a prudent man acting in any important matter concerning
him.

Words and Phrases:

"Gratification "-Meaning of in the context of Section 20 of the
G Prevention of Corrup!ion Act, 1988.
"Proo_f'-Meaning of in the context of Section 3 of the Evidence Act,
1872.
j
"Shall be presumed", "may presume" and "shall presume "-Meaning
H of in the context of Section 4 of the Evidence Act, 1872.
T. SHANKAR PRASAD v.STATE 421
, -'( "Presumption "-Meaning of in the context ofSection 114 of the Evidence A
Act, 1872.

The appellants-accused were working as Assistant Commercial Tax
Officer (A-1) and Junior Assistant (A-2) respectively in the Commercial
Tax Department. The appellants demanded a certain amount as bribe from
the complainant (PW-1) for issuing waybills to him. PW-1 agreed to pay B
the amount but reported the matter to the Anti-Corruption Bureau. A trap
was laid and PW-1, on the direction of A-1, paid the amount to A-2. The
said amount was recovered from the possession of A-2.

During the trial A-2 pleaded that he had accepted the amount as
advance tax although he made no such statement during the investigation. C
PW-1 had partially resiled from his earlier statement made before the
investigating officer and did not fully support the prosecution case. PW-
1 was, therefore, declared as a hostile witness and cross-examined under
Section 154 of the Evidence Act, 1872.
D
The trial court convicted the appellants-accused under Sections 7 and
13(l)(d) read with Section 13(2) of the Prevention of Corruption Act, 1988
but were acquitted of the charge for conspiracy under Section 120-B of
the Penal Code, 1860. The High Court affirmed the conviction. Hence the
appeal.
E
On behalf of the appellants it was contended that since the
complainant himself did not support the prosecution version it was
impermissible to convict the accused persons; that the presumption under
Section 7 of P.C. Act read with Section 20 thereof was not to be utilized
against the accused persons; that since no money was recovered from A-
l he should not have been held guilty; and that since the accused persons F
were acquitted of the charge under Section 120-B IPC they were entitled
to acquittal for the offence relatable to the Act.

Dismissing the appeals, the Court

HELD: I. The expressions "may presume" and "shall presume" are G
defined in Section 4 of the Evidence Act, 1872. The presumptions falling
under the former category are compendiously known as "factual
presumptions" or "discretionary presumptions" and those falling under
the latter as "legal presumptions" or "compulsory presumptions". When
the expression "shall be presumed" is employed in Section 4(1) of the H
422 SUPREME COURT REPORTS [2004) I S.C.R.

A Prevention of Corruption Act, 1988, it must have the same import of )-. i

compulsion. 1428-H; 429-A-B]

2. When Section 4(1) of the Prevention of Corruption Act, 1947 deals
with legal pre~umption, it is to be understood as in terrorem i.e. in tone
of a command that it has to be presumed that the accused accepted the
B gratification as a motive or reward for doing or forbearing to do any
official act etc., if the condition envisaged in the former part of the Section
is satisfied. The only condition for drawing such a legal presumption under
Section 4 is that during trial it should be proved that the accused has
accepted or agreed to accept any gratification. The Section does not say

c that the said condition should be satisfied through direct evidence. Its only
requirement is that it must be proved that the accused has accepted or
agreed to accept gratification. Direct evidence is one of the modes through
which a fact can be proved. But that is not the only mode envisaged in
the Evidence Act. (429-B-D]

D M Narasinga Rao v. State of A.P., (2001( l SCC 691, Hazari Lal v.
State (Delhi Admn.), (1974] 4 SCC 560 and Madhukar Bhaskarrao Joshi v.
State of Maharashtra, (2000] 8 SCC 571, relied on. +
If
3.1. Proof of a fact depends upon the degree of probability of its
having existed. The standard required for reaching the supposition is that
E of a prudent man acting in any important matter concerning him.
(429-E(

3.2. The observation in Hawkins' case that "proof does not mean
proof to rigid mathematical demonstration, because that is impossible; it
must mean such evidence as would induce a reasonable man to come to a
F particular conclusion" has stood the test of time and can now be followed
as the standard of proof. In reaching the conclusion, the Court can use \ ..
the process of inferences to be drawn from facts produced or proved. Such
inferences are akin to presumptions in law. (429-F-G I

Hawkins v. Powell's Trillery Steam Coal Co. Ltd., (1911) l KB 988,
G
referred to.

3.3. Law gives absolute discretion to the Court to presume the
existence of any fact, which it thinks likely to have happened. In that ,J
..
process the Court may have regard to common course of natural events,
H human conduct, public or private business vis-a-vis the facts of the
T. SHANKAR PRASAD v.STATE 423
particular case. The discretion is clearly envisaged in Section 114 of the A
Evidence Act. 1429-G]

4. 1. Presumption is an inference of a certain fact drawn from other
proved facts. While inferring the existence of a fact from another, the
Court is only applying a process of intelligent reasoning which the mind
of a prudent man would do under similar circumstances. Presumption is B
not the final conclusion to be drawn from other facts. But it could as well
be final if it remains undisturbed later. Presumption in law of evidence is
a rule indicating the stage of shifting the burden of proof. From a certain
fact or facts, the Court can draw an inference and that would remain until
such inference is either disproved or dispelled. 1429-H; 430-A-B] C
4.2. For the purpose of reaching one conclusion, the Court can rely
on a factual presumption. Unless the presumption is disproved or dispelled
or rebutted the Court can treat the presumption as tantamounting to
proof. However, as a caution of prudence it may be unsafe to use that
presumption to draw yet another discretionary presumption unless there D
is statutory compulsions.

Suresh Budharmal Kalani v. State of Maharashtra, 119981 7 SCC 337,
relied on. 1430-Cf

5. Illustration (a) to section 114 of the Evidence Act says that the E
Court may presume that "a man who is in the possession of stolen goods
soon after the theft is either the thief or has received the goods knowing
them to be stolen, unless he can account for his possession". That
illustration can profitably be used in the present context as well. 1430-E]

Raghubir Singh v. State of Punjab, 11974] 4 SCC 560, relied on. F
6. In Black's law Dictionary, "gratification" is defined as "a
recompense or reward for services or benefits, given voluntarily, without
solicitation or promise". But in Oxford Advanced Learner's Dictionary
of Current English, the said word is given the meaning "to give pleasure
or satisfaction to". Among the above two descriptions for the word G
"gratification" with slightly differing nuances as between the two, what
is more appropriate for the context has to be found out. The context in
which the word is used in Section 20(1) of the Act is, hence, important.
(431-Ef
H
424 SUPREME COURT REPORTS [2004] I S.C.R.
A Mohmoodkhan Mahboobkhan Pathan v. State of Maharashtra, 119971 )>.. •
10 SCC 600, State of Assam v. Krishna Rao, 1197313 SCC 327 and State of
A.P. v. V. Vasudev Rao, JT (2003) 9 SC 119, relied on.

State of Madras v. A. Vaidianatha Iyer, (19581SCR580, C.I. Emden v.
State of UP., AIR 1960 SC 548, Dhavantrai v. State of Maharashtra, AIR
B (1964) SC 575 and V.D. Jhangan v. State of UP., 1196813 SCR 766, cited.

Black's law Dictionary and Oxford Advanced learner's Dictionary of
Current English, referred to.

7.1. The fact that PW-I did not stick to his statement made during
c investigation does not totally obliterate his evidence. Even in criminal
prosecution when a witness is cross-examined and contradicted with the
leave of Court by the party calling him, his evidence cannot as a matter
of law be treated as washed off record altogether. It is for the Judge of
fact to consider in each case whether as a result of such cross-examination
and contradiction, the witness stands thoroughly discredited or can still
D be believed in regard to a part of his testimony. If the Judge finds that in
the process the cn!dit of the witness has not been completely shaken he _,.
may, after reading and consid~ring the evidence of the said witness, accept ~
in the light of other evidence on record that part of his testimony which
he found to be creditworthy and act upon it. PW-I did not totally resile
E from his earlier statement. (434-H; 435-A-BI

7.2. When money was recovered from the pocket of one of the
accused persons, a presumption under Section 7 of the Act is obligatory.
It is a presumption of law and cast an obligation on the Court to operate
it in every case brought under Section 7. The presumption is a rebuttable
F presumption and it is by proof and not by explanation, which may seem
to be plausible. The evidence of PWS 4, 5, 7 and 8 read with th' evidence >-. #
of PW-I established recovery of money from A-2. A belated and stale
explanation was offered by A-2 that the money was paid towards advance
. tax. This plea was rightly discarded as there was no tax due. and on the

G contrary, the complainant was entitled to some refund. An overall
consideration of the materials sufficiently substantiate, in the case on hand,
the prevalence of a system and methodology cleverly adopted by the
accused that the demand will be specified when both the accused were
r
~
present and thereafter as and when A-1 puts his signature the party has
to meet A-2 at his seat for fixing the seal and making the entry in the
H Register to make the process complete only after collecting the amount
Jt.

T. SHANKAR PRASAD v.STATE [ARIJIT PASA YAT, J.] 425
already specified by A-1 in A-l's presence. The involvement of both of A
them in a well-planned and cleverly managed device to systematically
collect money stood sufficiently established on the evidence let in by
prosecution. (435-D-G]

State of A.P. v. V. Vasudev Rao, JT (2003) 9 SC tt9, C./. Emden v.
State of U.P., AIR (l 960) SC 548, A. Abdul Kaffar v. State of Kera/a, (2003) B
8 Supreme 804 and State of U.P. v. Dr. G.K. Ghosh, AIR (1984) SC 1453,
relied on.

V.K. Sharma v. State (Delhi Adnm.), 11975] l SCC 784, Sita Ram v.
State of Rajasthan, 11975] 2 SCC 227 and Suraj Mal v. State (Delhi Admn.), C
(1979] 4 sec 725, held inapplicable.

8. If the charge of conspiracy to commit criminal breach of trust is
followed by a substantive charge of criminal breach of trust in pursuance
of such conspiracy, the Court can convict the accused under the second
charge even if the conspiracy was not established. (428-A] D

Madan Lal v. State of Punjab, AIR (1967) SC 1990, relied on.

CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No.
909 of 1997.
E
From the Judgment and Order dated 21.4.1997 of the Andhra Pradesh
High Court in Crl. A. No. 708 of 1994.

WITH

Criminal Appeal No. 910 of 1997.
F
Dr. Rama Krishna Reddy for Mrs. D. Bharathi Reddy A.D.N. Rao, A.
Subba Rao, Advs. for the Appellants.

Mrs. K. Amreshwari. and B. Ramanamurthy for G. Prabhakar for the
Respondent. G
The Judgment of the Court was delivered by

ARIJIT PASA YAT, J. These two appeals are directed against the
common judgment of the Andhra Pradesh High Court which upheld the
conviction of the appellants under Sections 7, 11, and 13(1)(d) read with H
426 SUPREME COURT REPORTS [2004) I S.C.R.

A Section 13(2) of the Prevention of Corruption Act, 1988 (in short the 'Act') ')'. '
and Section 120B of the Indian Penal Code, 1860 (for short the 'IPC').

Appellants T. Shankar Prasad (in Crl. A. No.909/1997) and Ghaiz Basha
(in Crl. A.No.910/97)(also described as Al and A2).were working as Assistant
Commercial Tax Officer and Junior Assistant respectively in the office of the
B Commercial Tax Department of Kanigiri, Prakasam District. Way bills were
issued to the traders by the department for their day to day transactions and
taxable goods to be transported were required to be covered by the way bills
issued by the department. Complainant (fW-1) was a dealer in grocery articles
and under the relevant sales tax statutd, a registered dealer. He applied for
c way bills. On 25.4.1992 he requested the accused T. Shankar Prasad to get
the way bills duly stamped and signed by him. The officer demanded Rs.400
as bribe in the presence of other accused. When the complainant expressed
his inability to pay the amount, the demand of the bribe was reduced to Rs.
300. Complainant agreed to pay the amount within two to three days. Since
he was not interested to pay the bribe, he reported the matter to the Anti
D Corruption Bureau officials on 28.4.1992. The case was registered by the
officials on the said date and mediators were secured and trap was arranged. -y
Since on that day accused T. Shankar Prasad was not available in the office, -1
the trap could not be laid. On the next date again the mediators and the
members of the trap party arranged the trap and accordingly the complainant
approached the accused T. Shankar Prasad who directed him to pay the
E
amount to other accused Ghaiz Basha. When the latter received the bribe
amount from the complainant the trap party caught hold of both the officers
and the amount was recovered from the possession of second accused and the
sodium carbonate solution test conducted proved positive. After furnishing
documents to the accused persons and hearing on the question of framing
• F charges, charges were framed. The accused persons pleaded innocence and
»••
claimed to be tried. Eight witnesses were examined and several documents
were marked. The complainant was examined as PW-I. PW-2 was the Assistant
Audit Officer who deposed about the whole scenario before the search was
conducted. The significance of the test by the chemicals and their reactions
was explained to him. Currency notes were applied with phenolphthalein
G powder. The powder was not visible on the currency notes. The DSP who
was monitoring the trap instructed PW-I not to touch the cash and only pay
to the accused on demand. He was asked to give signal after bribe amount .t
was accepted, by waving a handkerchief. PW-4 was an Assistant Director of
Veterinary Hospital who acted as a mediator. He also described in detail
H about the trap operations. PW-5 was a Senior Assistant in the Commercial
T. SHANKAR PRASAD v.STATE [ARIJIT PASA YAT, J.) 427

-~ Tax office who deposed about part of the transaction relating to issuance of A
way bills forms with reference to the official records. PW-7 was DSP who
monitored the operations. PW-8 was the Inspector who had received the
~ complaint from PW-I. The accused persons were examined under Section
313 of the· Code of Criminal Procedure, 1973 (in short the 'Code'). They·
denied about the demand and acceptance of bribe, and took the stand that
false case had been foisted due to enmity. One witness was examined on B
behalf of the accused T. Shankar Prasad. Said witness deposed about the
registration of a relative of the complainant and his business activities.

Stand of the accused T. Shankar Prasad was that no money was recovered
from his possession. The other accused Ghaiz Basha took the plea that there
was no material to show that he had demanded any bribe. He further stated
c
that he had accepted the amount to be deposited as advance tax and when he
was about to write the cha II an, the Anti Corruption Bureau officials caught
hold of him and implicated him falsely.

The trial Court noticed that PW-I had partially resiled from the statement
D
made by him during investigation. He made half-hearted attempt to support
the accused Ghaiz Basha. The trial Court found them guilty under Sections
1 7 ~nd 13(1)(d) read with Section 13(2) of the Act. It sentenced each of the
accused to undergo rigorous imprisonment for two years for the offence
relatable to Section 7 and imposed similar sentence for the other offence i.e.
under Section 13(I)(d) read with Section 13(2) of the Act. Fine of Rs. 1,000 E
each was also imposed with default stipulation. Appeals filed by the accused
persons before the Andhra Pradesh High Court were dismissed by the
impugned judgment except modification of sentence. The sentence was reduced

.,•
to 6 months for the offence relatable to Section 7, and one year for the
offence relatable to Section 13(1)(d) read with Section 13(2) of the Act. It
did not find any substance in the plea that the evidence of PW-I did not
implicate the accused persons and since no money was recovered from the
accused T. Shankar Prasad. he was not guilty, and that there was no material
F

about demand of bribe by the other accused. The pleas were re-iterated in the
appeals before us.
G
It was submitted that since the complainant himself did not support the
prosecution version fully, it was impermissible to convict the accused persons.
\ The statutory presumption available under Section 7 read with Section 20 of
the Act was not to be utilized against the accused person. The effect of an
affidavit by the complainant was lost sight of. He did not implicate the
accused persons.directly. Since there was no recovery from A-1, there was H
428 SUPREME COURT REPORTS [2004] l S.C.R.
.,.. 1
A no material to connect him with the tainted money and he should not have
been held guilty. As A-2 was not in the same room where A-1 was sitting,
it has not been established as to what was his role. There was no conspiracy.
A-2 did not know that the amount that was offered was bribe. Great stress p
has been laid by the learned counsel for the appellants on the evidence of
PW-I to show that he has not categorically implicated the accused persons.
B Since the accused persons were acquitted of the charge under Section 1208
IPC, they are entitled to acquittal for the offence relatable to the Act. Such
a plea was specifically rejected by this Court in Madan Lal v. The State of
Punjab, AIR (1967) SC 1590. It was held that if the charge of conspiracy to
commit criminal breach of trust is followed by a substantive charge of criminal
c breach of trust in pursuance of such conspiracy, the Court can convict the
accused under the second charge even if conspiracy was not established. In
any event, no prejudice is caused to the accused persons where there was a
substantive charge of criminal breach of trust.

Reliance was placed on V.K. Sharma v. State (Delhi Admn., [1975) I
D SCC 784, Sita Ram v. The State of Rajasthan, [1975) 2 SCC 227 and Sura)
Mal v. State (Delhi Admn.), [1979) 4 SCC 725 to contend that mere recovery _,.
in the absence of any evidence to show payment of money was not sufficient. 1
Mere recovery without proof of its payment by or on behalf of the complainant
would not bring in application of Section 4 of the Act.

E Learned counsel for the State on the other hand supported the conviction
as done by the trial Court. With reference to the evidence of official witnesses
and the documents brought on record it was submitted that they have no axe
to grind with the accused, are independent witnesses and the Courts below
have rightly relied on the evidence.

F For appreciating rival stands it would be proper to quote Section 20( I)
of the Act, which in essence and Substance is the same as Section 4(1) of the
:>, I
previous Act of 1947 and which reads as follows:

"4.( l) Presumption where public servant accepts gratification other
than legal remuneration.-(1) Where in any trial or an offence
G punishable under Section 161 or Section 165 of the IPC or of an
offence referred to in clause (a) or clause (b) of sub-section (1) of
Section 5 of this Act punishable under sub-section (2) thereof, it is t
'
proved that an accused person has accepted or obtained, or has agreed
to accept or attempted to obtain, for himself or for any other person
any gratification (other than legal remuneration) or any valuable thing
H
T. SHANKAR PRASAD v.STATE [ARIJIT PASAY AT, J.] 429
f~
from any person, it shall be presumed unless the contrary is proved A
that he accepted or obtained, or agreed to accept or attempted to
obtain, that gratification or that valuable thing, as the case may be,
as a motive or reward such as is mentioned in the said Section 161,
or, as the case may be, without consideration or for a consideration
which he knows to be inadequate."
B
Before proceeding further, we may point out that the expressions "may
presume" and "shall presume" are defined in Section 4 of the Indian Evidence
Act, 1872 (in short the 'Evidence Act'). The presumptions falling under the
former category are compendiously known as "factual presumptions" or
"discretionary presumptions" and those falling under the latter as "legal
presumptions" or "compulsory presumptions". When the expression "shall be
c
presumed" is employed in Section 4(1) of the 1947 Act and Section 20 of the
Act, it must have the same import of compulsion.

When the sub-section deals with legal presumption, it is to be understood
as in terrorem i.e. in tone of a command that it has to be presumed that the D
accused accepted the gratification as a motive or reward for doing or forbearing
• 1 to do any official act etc., if the condition envisaged in the former part of the
section is satisfied. The only condition for drawing such a legal presumption
under Section 4 is that during trial it should be proved that the accused has
accepted or agreed to accept any gratification. The Section does not say that
the said condition should be satisfied through direct evidence. Its only E
requirement is that it must be proved that the accused has accepted or agreed
to accept gratification. Direct evidence is one of the modes through which a
fact can be proved. But that is not the only mode envisaged in the Evidence
Act. (See M Narsinga Rao v. State of A.P., [2001] I SCC 691.

~ ,-1 "Proof of the fact depends upon the degree of probability of its having
F
existed. The standard required for reaching the supposition is that of a prudent
man acting in any important matter concerning him. Fletcher Moulton l.J. in
Hawkins v. Powells Tillery Steam Coal Co. ltd., (1911) I KB 988 observed
as follows:
G
"Proof does not mean proof to rigid mathematical demonstration,
because that is impossible; it must mean such evidence as would
'\' induce a reasonable man to come to a particular conclusion".

The said observation has stood the test of time and can now be followed
as the standard of proof. In reaching the conclusion the Court can use the H
430 SUPREME COURT REPORTS [2004] I S.C.R.
'>- <
A process of inferences to be drawn from facts produced or proved. Such
inferences are akin to presumptions in law. Law gives absolute discretion to
the Court to presume the existence of any fact which it thinks likely to have
happened. In that process the Court may have regard to common course of
natural events, human conduct, public or private business vis-a-vis the facts
of the particular case. The discretion is clearly envisaged in Section 114 of
B the Evidence Act.

Presumption is an inference of a certain fact drawn from other proved -f
facts. While inferring the existence of a fact from another, the Court is only
applying a process of intelligent reasoning which the mind of a prudent man
c would do under similar circumstances. Presumption is not the final conclusion
to be drawn from other facts. But it could as well be final if it remains
undisturbed later. Presumption in law of evidence is a rule indicating the
stage of shifting the burden of proof. From a certain fact or facts the Court
can draw an inference and that would remain until such inference is either
disproved or dispelled.
D
For the purpose of reaching one conclusion the Court can rely on a ._,
factual presumption. Unless the presumption is disproved or dispelled or
1 •
rebutted the Court can treat the presumption as tantamounting to proof.
However, as a caution of prudence we have to observe that it may be unsafe
to use that presumption to draw yet another discretionary presumption unless
E there is a statutory compulsion. This Court has indicated so in Suresh
Budharmal Kalani v. State ofMaharashtra, [ 1998] 7 SCC 33 7 "A presumption
can be drawn only from facts and not from other presumptions by a process •
of probable and logical reasoning".

Illustration (a) to Section 114 of the Evidence Act says that the Court
F
may presume that "a man who is in the possession of stolen goods soon after >-. lo
the theft is either the thief or has received the goods knowing them to be
stolen, unless he can account for his possession". That illustration can profitably
be used in the present context as well when prosecution brought reliable
materials that there was recovery of money from the accused. In fact the
G receipt and recovery is accepted. The other factor is the acceptability of the
plea of loan, which the High Court itself has not held cogent or credible.

We may note that a three-Judge Bench in Raghubir Singh v. State of J"
Punjab, [1974] 4 SCC 560 held that the very fact that the accused was in
possession of the marked currency notes against an allegation that he demanded
H and received the amount is "res ipsa loquitur".
T. SHANKAR PRASAD v.STATE (ARIJIT PASA YAT, .I.] 431
) ,~ In Hazari Lal V. State (Delhi Admn.), [1980] 2 sec 390 it was observed A
that there is no requirement to prove passing of money by direct evidence.
It may also be proved by circumstantial evidence. In Madhukar Bhaskarrao
Joshi v. State of Maharashtra, [2000] 8 SCC 57 I it was observed thus:

"The premise to be established on the facts for drawing the
presumption is that there was payment or acceptance of gratification. B
Once the said premise is established the inference to be drawn is that
the said gratification was accepted "as motive or reward" for doing
or forbearing to do any official act. So the word "gratification" need
not be stretched to mean reward because reward is the outcome of the
presumption which the court has to draw on the factual premise that C
there was payment of gratification. This will again be fortified by
looking at the collocation of two expressions adjacent to each other
like "gratification or any valuable thing". If acceptance of any valuable
thing can help to draw the presumption that it was accepted as motive
or reward for doing or forbearing to do an official act, the word
"gratification" must be treated in the context to mean any payment D
for giving satisfaction to the public servant who received it".

It is to be noted that decisions. relied upon by the learned counsel for the
accused were considered in Narsinga Rao 's case (supra) and it was held that
the principles had no application as the findings recorded depend upon the E
veracity of the testimony of the witnesses, so far as Suraj Mal's case (supra)
is concerned, and the observations in Sita Ram's case (supra), were to be
confined to the facts of that case and no legal principle for future application
could be discerned therefrom.

In Black's Law Dictionary, "gratification" is defined as "a recompense F
or reward for services or benefits, given voluntarily, without solicitation or
promise". But in Oxford Advance Learner's Dictionary of Current English
the said word is given the meaning "to give pleasure or satisfaction to".
Among the above two descriptions for the word "gratification" with slightly
differing nuances as between the two, what is more appropriate for the context
has to be found out. The context in which the word is used in Section 4( 1) G
of the Act is, hence, important.

+.... In Mohmoodkhan Mahboobkhan Pathan v. State of Maharashtra, [1997]
10 SCC 600 this Court has taken the same meaning for the word "gratification"
appearing in Section 4(1) of the Act. We quote the following observations: H
432 SUPREME COURT REPORTS (2004] I S.C.R.

A "7. The primary condition for acting on the legal presumption )-- ' '
under Section 4( I) of the Act is that the prosecution should have
proved that what the accused received was gratification. The word
'gratification' is not defined in the Act. Hence, it must be understood
in its literal meaning. In the Oxford Advanced Learner's Dictionary
of Current English, the word 'gratification' is shown to have the
B meaning 'to give pleasure or satisfaction to'. The word 'gratification'
is used in Section 4( I) to denote acceptance of something to the
1°
pleasure or satisfaction of the recipient."

What is the concept of gratification has been succinctly stated by this
c Court in The State of Assam v. Krishna Rao, [1973] 3 SCC 227, in following
illuminating words:

"21.-ln our opinion, there is merit in the appellant's contention that
the High Court has taken an erroneous view of Section 4 of the
Prevention of Corruption Act. That section reads:
D "4. Presumption where public servant accepts gratification
other than legal remuneration.-( I) Where in any trial or an
offence punishable under Section 161 or Section 165 of the 1
j
.....
!PC or of an offence referred to in clause (a) or clause (b)
of sub-section (I) of Section 5 of this Act punishable under
E sub-section (2) thereof, it is proved that an accused person
has accepted or obtained, or has agreed to accept or attempted
to obtain, for himself or for any other person any gratification
...
(other than legal remuneration) or any valuable thing from
any person, it shall be presumed unless the contrary is proved
that he accepted or obtained, or agreed to accept or attempted
F
to obtain, that gratification or that valuable thing, as the case
may be, as a motive or reward such as is mentioned in the
~ •
said Section 161, or, as the case may be, without consideration
or for a consideration which he knows to be inadequate.
(2) Where in any trial of an offence punishable under Section
G
165-A of the Indian Penal Code or under clause (ii) of sub-
section (3) of Section 5 of this Act, it is proved that any
gratification (other than legal remuneration) or any valuable
thing has been given or offered to be given or attempted to --r
be given by an accused person, it shall be presumed unless
H the contrary is proved that he gave or offered to give or
T. SHANKAR PRASAD v.STATE [ARIJIT PASA YAT, J.] 433

attempted to give that gratification or that valuable thing, as A
the case may be, as a motive or reward such as is mentioned
in Section 161 !PC or as the case may be without
consideration or for a consideration which he knows to be
inadequate.

(3) Notwithstanding anything contained in sub-sections ( 1) B
and (2) the court may decline to draw the presumption
referred to in either of the said sub-sections, if the gratification
or thing aforesaid is, in its opinion, so trivial that no inference
of corruption may fairly be drawn."

22.-ln State of Madras v. A. Vaidiaratha Iyer, [1958] SCR 580 after C
reproducing the relevant provisions of Section 4 of the Act this Court
observed that where it is proved that a gratification has been accepted
the presumption under Section 4 of the Act shall at once arise. It is
a presumption of law and it is obligatory on the Court to raise it in
every case brought under Section 4. In the reported case this Court D
allowed the appeal of the State of Madras and setting aside the
impugned order of acquittal passed by the High Court restored that
1 of the Special Judge convicting the respondent there. In C./. Emden
v. The State of U.P., AIR (1960) SC 548 the appellant who was
working as a local foreman, was found to have accepted a sum of
Rs.375 from a railway contractor. The appellant's explanation was E
that he had borrowed the amount as he was in need of money for
meeting the expenses of the clothing of his children who were studying
in school. The Special Judge accepted the evidence of the contractor
and held that the money had been taken as a bribe, that the defence
story was improbable and untrue, that the presumption under Section
4 of the Act had to be raised and that the presumption had not been F
rebutted by the appellant and accordingly convicted him under Section
161 !PC and Section 5 of the Act. On appeal the High Court held that
on the facts of that case the statutory presumption under Section 4
had to be raised, that the explanation offered by the appellant was
improbable and palpably unreasonable and that the presumption had G
not been rebutted, and upheld the conviction. The appellant contended,
on appeal in this Court, inter a/ia: (i) that the presumption under
Section 4 could not be raised merely on proof of acceptance of money
but it had further to be proved that the money was accepted as a
bribe, (ii) that even if the presumption arose it was rebutted when the
appellant offered a reasonably probable explanation. This Court, H
434 SUPREME COURT REPORTS [2004) I S.C.R.

A dealing with the presumption under Section 4, observed that such ).. '
presumption arose when it was shown that the accused had received
the stated amount and that the said amount was not legal remuneration.
The word 'gratification in Section 4(1) was to be given its literal
dictionary meaning of satisfaction or appetite or·desire; it could not
be construed to mean money paid by way of a bribe. The High Court
B was justified in raising the presumption against the appellant as it was
admitted that he had received the money from the contractor and the
amount received was other than legal remuneration. On the facts the
explanation given by the accused, in agreement with the opinion of
the High Court was held to be wholly unsatisfactory and unreasonable.
C In Dhanvantrai v. State of Maharashtra, AIR (I 964) SC 575 it was
observed that in order to raise the presumption under Section 4( I) of
the Act what the prosecution has to prove is that the accused person
has received 'gratification other than legal remuneration' and when it
is shown that he has received a certain sum of money which was not
a legal remuneration, then, the condition prescribed by this section is
D satisfied and the presumption thereunder must be raised. In Jhangan
v. State of U.P., [1968] 3 SCR 766 the above decisions were approved
and it is observed that mere receipt of money is sufficient to raise the 1
presumption under Section 4(1) of the Act."

In Cl. Emden v. State o(Uttar Pradesh, AIR (1960) SC 548 and VD.
E Jhangan v. State of Uttar Pradesh, [I 966] 3 SCR 736 it was observed that
if any money is received and no convincing, credible and acceptable
explanation is offered by the accused as to how it came to be received by
him, the presumption under Section 4 of the Act is available. When the
receipt is admitted it is for the accused to prove as to how the presumption
p is not available as perforce the presumption arises and becomes operative.

These aspects were highlighted recently in State of Andhra Pradesh v.
~. .
V. Vasudev Rao, JT [2003] 9 SC I I 9.

On a close reading of PW I's evidence it appears th_at he has not really
G given a clean chit to the accused persons. Though a feeble attempt was made
to show that he has not implicated A-2, in fact that is really not of significance
when his evidence is read along with the evidence of other witnesses. The
evidence clearly shows that A- I directed the money to be paid to A-2. The
stand of accused about nature of receipt of the money is also not consistent.
The stand was taken as if the money was received by A-2 for the payment
H of the advance tax. The documents brought on record go to show that there
T. SHANKAR PRASAD v.STATE [ARIJIT PASAYAT, J.] 435
-{,
was no necessity for paying any advance tax. In fact the official records A
indicate that the tax due was fully paid. Therefore, the plea that the amount
was paid as advance tax is clearly without substance.

The fact that PW-I did not stick to his statement made during
investigation does not totally obliterate his evidence. Even in criminal
prosecution when a witness is cross-examined and contradicted with the leave B
of Court by the party calling him, his evidence cannot as a matter of law be
treated as washed off record altogether. It is for the Judge of fact to consider
in each case whether as a result of such cross examination and contradiction,
the witness stands thoroughly discredited or can still be believed in regard to
c
a part of his testimony. If the Judge finds that in the process the credit of the
witness has not been completely shaken he may after reading and considering
the evidence of the said witness, accept in the light of other evidence on
record that part of his testimony which he found to be creditworthy and act
upon it. As noted above, PW-I did not totally re_sile from his earlier statement.
There was only a half-hearted attempt to partially shield A-2. PW-I has
categorically stated that he had paid the money to A-2 as directed by A-1. As D
noted above, the plea of A-2 that he had accepted the money as advance tax
has been rightly discarded being contrary to official records. Evidence of
PW-2 with regard to proceedings on 28.4.1992 has been clearly established.
Evidence of PW-4 the mediator is corroborated by the evidence of PWs I,
3, 7 and 8. His report was marked as Ext P.13. The same along with the other
E
evidence clearly establish the accusations against both the accused. When
money was recovered from the pocket of one of the accused persons a
presumption under Section 7 of the Act is obligatory. It is a presumption of
law and cast an obligation on Court to operate it in every case brought in
Section 7. The presumption is a rebuttable presumption and it is by proof and
not by explanation which may seem to be plausible. The evidence of PWs 4, F
f ..~
5, 7 and 8 read with the evidence of PW- I established recovery of money
from A-2. A belated and stale explanation was offered by A-2 that the inoney
was paid towards tax. This plea was rightly discarded as there was no tax due
and on the contrary the complainant was entitled to some refund. An overall
consideration of the materials sufficiently substantiate, in the case on hand
the prevalence of a system and methodology cleverly adopted by the accused
G
that the demand will be specified when both the accused were present and
\..' thereafter as and when the A-l puts his signature the party has to meet A-
2, at his seat for fixing the seal and making entry in the Register to make the
process complete only after collecting the amount already specified by A-1
in A-2's presence. The involvement of both of them in a well planned and H
436 SUPREME COURT REPORTS (2004) I S.C.R.

A cleverly managed device to systematically collect money stood sufficiently )- '
established on the evidence let in by prosecution. Further A-2 did not offer
his explanation immediately after the recovery of money. A similar plea of
receiving money as advance tax was rejected and affirmed by this Court in
A. Abdul Kaffar v. State of Kera/a, (2003) 8 Supreme 804. It was noted that
B such a stand was not taken at the first available opportunity, and the defence
was not genuine. In State of UP. v. Dr. G.K.Ghosh, AIR (1984) SC 1453 it
was observed that in case of an offence of demanding and accepting illegal
gratification, depending on the circumstances of the case, the Comt may feel
safe in accepting the prosecution version on the basis of the oral evidence of
the complainant and the official witnesses even if the trap witnesses turn
C hostile or are found not to be independent. When besides such evidence,
there is circumstantial evidence which is consistent with the guilt of the
accused and not consistent with his innocence, there should be no difficulty
in upholding the conviction.

When the factual position is examined in the background of legal
D principles culled out from various decisions of this Court, the inevitable
conclusion is that the High Court's judgment is irreversible.

Above being the position, the appeals being without merit are dismissed.

v.s.s. Appeals dismissed.