The Supreme Court upheld the conviction of a former Sub-Registrar under the Prevention of Corruption Act, 1988 (PC Act) for possessing assets disproportionate to his known sources of income. It also held that once the prosecution establishes the disproportion with reference to known sources of income, the burden squarely rests on the accused to show that the assets were acquired from lawful sources.

A bench of Justice Sanjay Kumar and Justice Sanjeev Sachdeva held so while dismissing the appeal filed by the accused (appellant) against the Kerala High Court's 2025 judgment. The accused who was on interim bail, has been granted two weeks to surrender before the trial court to undergo the remaining sentence.

The appellant joined as a Lower Division Clerk (LDC) in 1971 and became a Sub Registrar in 1993. As per the prosecution, he acquired assets by illegal means between 1993 and 2001 that were disproportionate to his known sources of income. The assets possessed by him and his family were worth Rs 1,93,898 at the start of the check period and Rs 12,37,720 at its end. During this period, they earned Rs 10,12,117.20 and incurred expenditure of Rs 4,93,424, leaving Rs 5,18,693 as the amount (likely savings) which the appellant could not explain.

Subsequently, an FIR was registered in 2001 under Section 13(1)(e) read with Section 13(2) of the PC Act. After a final report by the Deputy Superintendent of Police, Vigilance and Anti-Corruption Bureau, a complaint case was initiated. During the trial, the prosecution examined 45 witnesses and marked 130 exhibits, while the appellant examined himself as a defence witness.

The Special Judge convicted him in 2009 and sentenced him to two years' rigorous imprisonment with a fine of Rs 5,50,000. The High Court confirmed the conviction but, considering the delay in concluding the proceedings, the appellant's age and the trauma undergone, reduced the sentence to one year's rigorous imprisonment and a fine of Rs 2,00,000.

The appellant approached the Supreme Court against the Kerala High Court's ruling.

Before the Supreme Court, the prosecution relied on Basic Statements (A to F). The value of assets acquired during the check period was assessed at Rs 10,43,822, and after subtracting Rs. 5,18,693 (likely savings), the disproportionate assets came out to be Rs 5,25,129, which is 51.88% of the income of the appellant and his family during the check period.

The Court noted that this difference is “much beyond the 10% threshold” as laid down in Krishnanand Agnihotri v State of Madhya Pradesh. It further clarified that Krishnanand Agnihotri does not lay down a hard and fast rule that there can be no prosecution wherever the excess is below ten percent, as this depends on the facts of each case. Referring to BC Chaturvedi v Union of India, the bench noted that the Supreme Court had declined to extend the benefit of deduction beyond 10%.

The appellant (accused) argued that the prosecution case rested on estimation and not actual evidence. He disputed the estimated household expenditure, contending that the criteria used were those of an agricultural family while he was a government servant, and that the non-verifiable expenses lacked vouchers. He also disputed the valuation of the commercial cum residential building, which the prosecution had calculated at Rs 8,59,153 against his own figure of Rs 6,69,000, a difference of Rs 1,90,153. With regards to household expenses, he deposed that the family's maximum daily expense was Rs 35 to Rs 40, or Rs 1,200 per month, against the prosecution's Rs 1,968.96. The High Court had held that even the difference of Rs 700 per month, totalling about Rs 67,200, would not justify the acquisition of assets worth Rs 5,18,693.

Perusing the submissions, the Supreme Court noted that the High Court had recorded that there was no serious dispute on the other assets, as their values were borne by documents. The appellant relied on Exhibit P58 to claim a lower construction cost, but the High Court found it was only a notebook with sporadic entries and not accounts kept in the ordinary course of business, and that the appellant could not substantiate its entries in the witness box. To this, the bench agreed, saying the High Court held rightly that such a notebook must be shown to be kept in the ordinary course of business to be relied upon.

The Court held that the appellant failed to produce cogent material to contradict the valuation based on PWD rates prevailing during the check period. It then tested the appellant's own case on a demurrer. Even if the entire Rs 1,90,153 were deducted, the disproportionate assets would be Rs 3,34,976, still more than 33% above the income. Even if the household expense differential of Rs 67,200 were also reduced, the figure would be Rs 2,67,776, still more than 26% above the income.

The bench also rejected the minor grounds. The difference on the chit fund remittance (Rs 38,786 against Rs 36,320) was negligible. Rental income had been assessed at Rs. 9,600, supported by Exhibits P41 and P44, and the appellant produced no documentary evidence of any more, nor his wife's income tax returns. On salary and GPF loan, the trial court had noted that the salary particulars were exhibited and shown to the appellant, and the appellant produced no material before the Supreme Court to contradict the amounts in the Basic Statements.

Reliance was placed on P Nallamal v State, which held that possession of property disproportionate to known sources of income and the public servant's inability to account for it must combine to constitute the offence. The burden on the first is on the prosecution, and the onus of the second is on the public servant.

It also relied on State of Tamil Nadu v R Soundirarasu, which held that “known sources of income” refers to sources known to the prosecution, while the expression “for which the public servant cannot satisfactorily account” places the onus on the accused, as the facts are within his special knowledge. Referring to State of Madhya Pradesh v Awadh Kishore Gupta, the bench noted that the emphasis must be on the word “satisfactorily,” and the accused must not only offer a plausible explanation but also satisfy the court that it is worthy of acceptance.

“In a prosecution for possession of disproportionate assets, the prosecution is required, in the first instance, to establish the foundational facts, namely, the known sources of income of the public servant during the check period and the assets, pecuniary resources, and expenditures attributable to him during the same period. The expression “known sources of income” does not refer to sources known merely to the accused, but to sources known to the prosecution upon a thorough and lawful investigation. Once the prosecution discharges this initial burden and demonstrates that the assets possessed by the public servant are disproportionate to his known sources of income, a prima facie case stands established,” the bench stated.

The bench added that the law does not cast an impossible burden on the prosecution to negate every hypothetical source from which the accused may claim to have derived income, as such an interpretation would render the provision unworkable. “Where a disproportion emerges from such exercise, the evidentiary burden shifts to the accused to account for the same,” it held.

The Supreme Court observed that the Explanation to Section 13(1)(e) defines the parameters of the investigation and does not contemplate “an open-ended, limitless, or roving enquiry” into every possible avenue of income that may be imagined or claimed by the accused. Allowing so would permit an accused public servant to defeat the provision “merely by advancing speculative or belated claims regarding undisclosed sources of income.”

It held that where an accused relies on income from sources not disclosed in statutory returns, official records, financial documents or other contemporaneous material, the burden necessarily rests on him to establish their existence, legitimacy and availability, and that a failure to do so entitles the court to draw an adverse inference and to hold that the disproportion remains unexplained.

Noting that the prosecution had established a disproportion of over 51% of the known sources of income, and that even on the appellant's own explanation taken on a demurrer, the excess exceeded 26%. It held that “looked at from any angle,” the appellant failed to render a satisfactory explanation.

Finding no infirmity in the trial court's conviction under Section 13(2) read with Section 13(1)(e) of the PC Act, or in its affirmation by the High Court, the bench dismissed the appeal. His interim bail granted in 2025 was also canceled, and the appellant was given two weeks to surrender before the trial court to undergo the remaining sentence.

Appearance:

For Appellant: Mr. Ranjith K.C., AOR; Mr. Manu Krishnan S., Adv.; Mr. Tarun Kumar, Adv.

For Respondent: Mr. Zulfiker Ali P.S., AOR; Mr. Manish Sindwani, Adv.; Ms. Lakshmi Sree P., Adv.; Ms. Anna Oommen, Adv.; Ms. Lebina Baby, Adv.