CBI court Conviction set aside // . 66. In view of the above, this Court set asides the impugned judgment dated 30.10.2018 passed in Spl.C.C.No.1 of 2008 by the learned Special Judge for Prevention of Corruption Act Cases (Principal Sessions Judge), Puducherry. The appellants/A1 & A2 are acquitted from all the charges levelled against them. Consequently, the confiscation order is set aside. Fine amount, if any paid, shall be refunded. Bail bond, if any executed, shall stand cancelled. 67. Accordingly, these Criminal Appeals are allowed.

IN THE HIGH COURT OF JUDICATURE AT MADRAS
RESERVED ON : 27.04.2026
PRONOUNCED ON : 05.08.2026
CORAM
THE HONOURABLE MR.JUSTICE M.NIRMAL KUMAR
Crl.A.Nos.710 and 724 of 2018
C.Anandane … Appellant in Crl.A.No.710 of 2018
Ashok Anand … Appellant in Crl.A.No.724 of 2018
Vs.
State rep. by
The Inspector of Police,
SPE:CBI: ACB, Chennai, Through Public Prosecutor for CBI, Chennai.
(RC MAI 2006 A 0001) … Respondent in
both Crl.As.
Common Prayer: Criminal Appeals filed under Section 374(2) of Cr.P.C.
1973 to set aside the judgment of conviction passed against the appellants in
Spl.C.C.No.1 of 2008 dated 30.10.2018 by the learned Special Judge for Prevention of Corruption Act Cases (Principal Sessions Judge), Puducherry.
For Appellant
in Crl.A.No.710/2018
For Appellant : Mr.V.Raghavachari,
Senior Counsel
Assisted by Mr.B.A.Sujay Prasanna
in Crl.A.No.724/2018
For Respondent : Mr.Dama Seshadri Naidu
Senior Counsel
Assisted by Mr.B.A.Sujay Prasanna
in both Crl.As. : Mr.N.Baskaran
Special Public Prosecutor for CBI Cases
COMMON JUDGMENT
Crl.A.No.710 of 2018 filed by A1 and Crl.A.No.724 of 2018 filed by A2 against the judgment of conviction passed in Spl.C.C.No.1 of 2008 wherein the Trial Court by judgment dated 30.10.2018 convicted A1 and sentenced to undergo one year rigorous imprisonment and to pay a fine of Rs.1,00,000/-, in default, to undergo three months rigorous imprisonment for the offence under Section 13(1)(e) r/w. 13(2) of PC Act and A2 was convicted and sentenced to undergo one year rigorous imprisonment and to pay a fine of Rs.1,00,000/-, in default, to undergo three months rigorous imprisonment for the offence under Section 13(1)(e) r/w. 13(2) of PC Act r/w. 109 IPC. Further, it is ordered that the property viz., undivided share in the name of A2 in the school and hostel buildings of Aditya Vidyashram
Residential School as well as land on which they are existing viz., R.S.1/4,
11/1, 99/5, 99/4, 44/1, 75/4, 75/3, 6/2, 84/7, 75/12, 75/1, 75/7 in Poraiyur
Village, Villianur Commune, Puducherry are ordered to be confiscated to the State for the disproportionate wealth value to the tune of Rs.1,74,36,839/-.
2.Since both appeals arise out of the common judgment in Spl.C.C.No.1 of 2008, this Court disposes both appeals by way of common judgment. For the sake of convenience and clarity, the appellants are referred to as accused as per their rank in the charge sheet.
3.The case of the prosecution is that A1, a public servant, while holding the post of Executive Engineer and Superintending Engineer, Public Works Department, Government of Puducherry, during the period 1st January 1997 to 7th January 2006, acquired assets which were disproportionate to his known source of income and was in possession of assets in his name and his family members, namely A2 and A3, his wife (since died) to an extent of
Rs.3,75,30,221.11. PW75 Deputy Superintendent of Police, ACB, CBI, Chennai received credible information about A1 holding properties disproportionate to his known source of income in his name and in the name of his family members. The Superintendent of Police authorized PW75, by Ex.P346, the Deputy Superintendent of Police registered a case against A1 and A2 in FIR/Ex.P347. Thereafter, search conducted in the house of A1 and A2 on 07.01.2006 in the presence of public witness, search list prepared, inventory taken and documents seized. The residential premises of A1 was searched between 0830 hours to 1130 hours followed by a search in his office between 1330 hours to 1530 hours. The A2’s house was searched on the same day. The service particulars of A1 along with his property statement collected from the office of A1 for the period for 1995 to 2005. Later, PW75 handed over investigation to PW84 who was also authorized to conduct investigation by authorization letter EX.P361. On perusal of the Case diary received from PW75, he examined the witnesses, recorded statements and collected documents. The property statement 1 to 6, Ex.P25 to Ex.P30 received and verified and found that the properties available as per the property statement submitted were grossly disproportionate. Hence, investigation continued, documents collected from Banks, PWD office, Income Tax Department, Registration Department and other Departments. Thereafter, PW84 handed over investigation to PW85, who took up investigation on 28.11.2006 and he was authorised by Ex.P364, PW85 examined witnesses, collected documents, examined the bank witnesses and vendors to the property to the accused, vehicle details, loan particulars all collected. Thereafter, investigation completed. The initial check period of 01.01.2000 to 09.06.2005 was modified and the check period was fixed from 01.01.1997 to 07.01.2006. Final opportunity notice given to the accused, explanation received, found not satisfactory and thereafter sanction for prosecution for A1 obtained. It was found that at the beginning of the check period in Statement A (9 items), assets possessed by the accused was to the tune of Rs.15,87,430.90, at the end of the check period in Statement B (51 items), the assets possessed by the accused was to the tune of Rs.4,69,03,141.29, the income earned during check period by the accused in Statement C (51 items) was Rs.1,46,67,636.08 and the expenditure incurred during check period by the accused Statement D (94 items) was Rs.68,82,146.80. After giving due credit to the income and expenditure, it was found that the accused was holding properties disproportionate to the tune of Rs.3,75,30,221.11 which was around
255.93%. Hence, after getting sanction, charge sheet filed.
4. As per the charge sheet, the assets disproportionate to the knownsources of their income derived as follows:
Sl.No. Description Amount
1. Assets at the beginning of the check period (St-A) 15,87,430.90
2. Assets at the end of check period (St.-B) 4,69,03,141.29
3. Assets acquired during the check period [E=B-A] 4,53,15,710.39
4. Expenditure during the check period (St-D) 68,82,121.80
5. Total pecuniary resources possessed by the accused [F=E+D] 5,21,97,832.19
6. Income during the check period (St-C) 1,46,65,176.10
7. Disproportion [F-C] 3,75,32,656.10
Disproportionate Assets Percentage [7/6 X 100] 255.93%
5. During trial, PW1 to PW85 examined, Ex.P1 to P377 marked on the side of the prosecution. On the side of the defence, DW1 Auditor examined and Ex.D1 to Ex.D37 marked.
6.The Trial Court on the evidence of witnesses and materials came to a conclusion and arrived the value as follows:
(1) Statement A – Rs.16,01,431.00
(2) Statement B – Rs.2,84,21,181.00
(3) Statement C – Rs.1,57,67,032.00
(4) Statement D – Rs.63,84,122.00
7.Thus, the trial Court found that both the accused/A1 & A2 holding disproportionate assets to the tune of Rs.1,74,36,839.00, i.e., 110.59%. The details of which reads as below:
Sl.No. Description Amount
1. Assets at the beginning of the check period (St-A) 16,01,431.00
2. Assets at the end of check period (St.-B) 2,84,21,181.00
3. Income during the check period (St-C) 1,57,67,032.00
4. Expenditure during the check period (St-D) 63,84,122.00
5. Assets acquired during the check period [B-A] 2,68,19,750.00
6. Likely Saving during the check period [C-D] 93,82,911.00
7. Extent of Disproportion Assets [B-A] – [C-D] 1,74,36,839.00
Disproportionate Assets Percentage [7/3 X 100] 110.59%
On conclusion of trial, the Trial Court convicted the appellants as stated above.
8.The learned senior counsel appearing for the appellant/A1 submitted that the Trial Court proceeding against A1’s wife Vijayalakshmi/A3, who died during investigation, hence there can be no case against a dead person but CBI continued to proceed against A3 and included her properties in the disproportionate asset case. The Trial Court despite objections, continued to proceed against A3’s independent assets, when there was no one to defend A3 and to give explanation.
9.A2, son of A1 is an Engineering graduate, who was doing business on his own right, having independent income and filing income tax returns. The income tax returns filed for the financial year 2004-2005 and 2005-2006 not considered for the reason that it was filed after registration of FIR. The learned senior counsel further submitted that clubbing of income of independent family members along with A1 is not proper.
10.A1 joined Public Works Department, Puducherry on 12.09.1973 as Junior Engineer, later promoted as Assistant Engineer during August 1979 and promoted as Executive Engineer in the year 1997 and Superintending Engineer in the year 2003. A1 got superannuated on 03.08.2010.
11.Initially the check period was fixed from 01.01.2000 to
09.06.2005, later it was enlarged from 01.01.1997 to 07.01.2006.
12.In this case, FIR registered based on a oral complaint but no details recorded from whom complaint received. In a case of disproportionate asset, the procedure is that a preliminary enquiry to be initially conducted and if the materials gathered requires further enquiry, then detailed enquiry to be conducted and thereafter, FIR registered.
13.In this case, A1 cancelled the Contractor licence of one Deivasigamani/PW54 who had close link with the then Central Minister from Puducherry and gave a motivated complaint which was magnified, without verification FIR came to be registered and with a preconceived notion, not considering the explanation given and further extending the check period, thereafter no final opportunity notice given, seeking explanation for the extended period and the respondent filed the final report. The explanation given by way of cross examination and examination of defence witness DW1 and marking of documents Ex.D1 to Ex.D37 not considered by the Trial Court.
14.The learned senior counsel submitted that sanction Ex.P22 accorded is not a valid sanction. PW5 admits that sanction was accorded by

Lt.Governor, PW5 confirm it is not his duty to critically analyse the documents submitted by CBI. PW5 further admits that draft sanction order was sent by CBI along with final report, CBI exerted undue pressure forcing sanctioning authority to agree and approve the case and accord sanction, which is proved by marking Ex.D23, the sanction order file. PW5 on receipt of the draft sanction order prepared a fair order for signature of the
Competent authority, Lt.Governor of Puducherry is admitted and proved. Thus, sanction accorded in this case is not an independent sanction and it was only on the force and undue pressure exerted by CBI. In Ex.D23 file, there are several communications, confirming how Sanctioning Authority was not allowed to have his own independent application of mind and hence, sanction is not a valid sanction and consequently the entire case has to go. In support of his contention, the learned senior counsel relied upon the decision of the Apex Court in the case of State of Karnataka vs. Ameer John reported in 2008 (1) MLJ Crl. 542, wherein the Apex Court held that application of mind on the part of the sanctioning authority is imperative. The order granting sanction must be demonstrative of the fact that there had been proper application of mind on the part of the sanctioning authority.
15.The learned senior counsel further referring to Rule 18(2) of the Central Civil Services (Conduct) Rules, 1964, submitted that if the family members of the public servant acquired or hold a property out of their own independent source of income, then no intimation or prior permission required. As regards the properties and business of his son/A2 and wife/A3, it is submitted that properties held by them out and from their own independent sources of income and A1 has nothing to do with their property. Further there is no iota of evidence or materials to show there was any intense transaction between them.
16.The learned senior counsel would further submit that search was conducted in the house of A1 at Poraiyur Village, Villianur Commune, Pudhucherry on 07.01.2006. PW75/Deputy Superintendent of Police along with PW72 and other Police Personnel conducted search in the residence of A1 between 0830 hours and 1130 hours, thereafter the same team is said to have conducted search in the office of A1. As regards A1, search was not conducted in any other place.
17.The learned senior counsel submitted that PW75 conducted initial investigation from 04.01.2006 and handed over investigation to PW84 on 09.05.2006 and his investigation was for the check period 01.01.2000 to
09.06.2005. PW75 admits that he had not issued any notice to A1 and A2. PW84, subsequent Investigating Officer took up investigation on 04.05.2006 and handed over investigation to PW85 on 28.11.2006. He received Statements 1 to 6 from A1’s Department on 16.06.2006 and his investigation was also for the check period 01.01.2000 to 09.06.2005. PW85 took up investigation on 28.11.2006 but case diary handed over to him by PW84 on 02.03.2007, by that time A3 died. He admits that in this case, final opportunity notice Ex.P372 issued to A1 on 14.05.2007 calling upon him to appear before CBI on 19.05.2007. Further, by letter dated 16.09.2007 A1 was called to submit certain particulars. On 24.09.2007 A1 sent a reply Ex.P376 to PW85 seeking details of assets, income and expenditure of A1, his wife/A3 and son/A2 separately and gave explanation that the assets and pecuniary resources of his wife Vijayalakshmi and son Ashok Anand are independent, they have independent source of income, and hold assets in their own right. After this letter, there was no further communication. Till such time, check period was only for the period 01.01.2000 to 09.06.2005 and later, the check period modified and extended from 01.01.1997 to 07.01.2006 on 07.10.2007 and charge sheet filed on 10.01.2008 thus causing great prejudice. In this case, charge sheet filed without giving final opportunity and seeking explanation, which is a condition precedent. He further submitted that as per Section 13(2) r/w. 13(1)(e) of PC Act, holding of properties is not an offence, only if no proper explanation given, then it can be said offence committed. Thus on a preconceived notion charge sheet filed against A1.
18.PW85 admits that A1 sent explanation dated 09.07.2007 and it was received by the Joint Director, CBI but he had not looked into the explanation and considered the same. PW85 fairly admits that there was no complaint against A1 and he had not investigated with respect to any corrupt practice of A1. Further, he fairly submitted that he had not collected any materials to show that A1 incurred an expenditure of Rs.8,25,000/- for the marriage of his daughters. A1 purchased Toyota Qualis vehicle availing vehicle loan from Union Bank of India and he repaid the loan amount and it was informed to his Office. There is no addition or deletion of any properties other than what he disclosed to his Department and Exs.P24 to P30 confirm the same. A1’s father Kanniah was a Class I Contractor of Public Works Department of State of Tamil Nadu and Puducherry and A1 hails from an affluent family having vast tract of agricultural lands and business.
19.A2, son of A1 is an Engineering graduate very much attached to his grandfather and he was inculcated into business at the very young age by his grandfather and A2 is a successful businessman. His son’s arrack business, steel and cement business, flat promoting business, School business are now projected against A1. His son having independent business filing his income tax returns regularly. A3, wife of A1 hails from an affluent family having vast tract of lands doing agriculture and milk dairy business and A3, dealer of Coca Cola and also doing business in the name of Hanndy Super Store and Hanndy Cafeteria in partnership with her daughters and son. A3 having her own independent income. The independent income of his wife and son clubbed and projected against A1. The Trial Court failed to consider the explanation given by A1 and he was convicted.
20.In support of his contentions, the learned senior counsel relied upon the judgment of Hon’ble Apex Court in the cases of Kedari Lal vs.
State of Madhya Pradesh reported in (2015) 14 SCC 505, for the point that the known sources of income as per Section 13(1)(e) of the P.C. Act has two elements, first, the income must be received from a lawful source and secondly, the receipt of such income must have been intimated in accordance with the provisions of law, rules or orders for the time being applicable to the public servant. In this case, as regards A1, there is nothing to show that he failed to inform the department about the property he acquired by him and there is no discrepancy regarding the properties disclosed in Statement 1 to 6/Ex.P25 to P30.
21.The learned Senior Counsel for the appellant/A2 submitted that A2 is a successful businessman. His grandfather, Kannaiyan, a registered Class-I
Contractor in the PWD department in the States of Tamilnadu and Puducherry, engaged in construction business. His grandfather inculcated business culture to A2. Both maternal and paternal grandparents own vast tract of agricultural lands and carrying on various businesses, including construction, school, dairy Farming. Hence, A2 naturally developed interest in business. A2 was also running arrack shop and making good profits. A2 involved in real estate and Flat promotion. He was a partner in Vinayaga Agencies and Hanndy Super Store. Vinayaga Agency was a dealer of CocaCola and carried on a successful business. As Proprietor of Ashok Steels, he supplied construction materials, including bricks and blue metal, to contractors. He started two schools, namely, Adhitya Vidhyashram Residential School, Poraiyur and Adhitya Vidyashram Montessori School at Saram. For the development of his business, he obtained loan from various banks and applied to the Town Planning Authority for approval to construct the residential school and hostel. The Town Planning Authority scrutinised the application submitted by A2 and received the requisite fee and charges paid. The Town planning authority conducted a field inspection, recorded the topographical features of the area and inspected the ongoing construction activities. It was found that construction commenced even before grant of plan approval, hence, notice issued and the construction was regularised. On registration of the case, CBI conducted house search on 07.01.2006. From the house of A2, documents seized and inventory recorded. From the inventory, it is seen that there are 17 items of gold jewels listed with weight and description. But only two items shown acquired in the year 2000 and 2005. For the rest of the gold items, the period of acquisition not recorded.
The officials of REPCO bank and the Primary Agricultural Cooperative bank confirmed that A2 and his mother regularly pledging, redeeming and re-pledging their jewellery and also obtaining business loan. Thus, their possession of the jewellery much before the check period not in dispute. The Trial Court failed to consider these facts. The Trial Court records period of acquisition of jewels not proved by the prosecution, and since A2 and his mother, pledging jewels regularly it is to be construed that the jewels were purchased during the check period, which is against fundamental principles of criminal law.
22.The learned Senior Counsel further submitted that in this case there is no dispute that Ashok Steels was an ongoing business entity and the school was also functional. The CBI had written to the Chief Engineer,
Income Tax department, Valuation Cell for valuation of the school property. Exhibits D11, D12, D13, D14 and D15 confirm the same. From the defence exhibits, it is seen that CBI sent a communication dated 21.02.2007/Ex.D13 to the Chief Engineer, Income Tax department, Valuation Cell informing that the inspection of the school building, hostel building, staff quarters of Adhitya Vidhyashram Residential school, Poraiyur can be on 23.07.2007, otherwise it would cause inconvenience to the classes if the valuation is conducted during school hours, which confirmed that the school was very much functional. He further submitted that the school building was valued by two valuers. PW34, the Valuation Officer submitted his report/Ex.P219. PW64, a panel valuer, submitted two valuation reports, namely, Ex.P145 for the Bank and Ex.D25 for the Income Tax department. PW34 is an
incompetent person, hence, the Trial Court discarded the report/Ex.P219.
23.With regard to the report submitted by PW64, the learned Senior Counsel contended that the valuation report prepared for the purpose of obtaining bank loan, an inflated one and it was only a projected valuation for the purpose of loan, hence, on a higher side. The valuation report submitted for the Income Tax department, based on the physical structure available. Hence, there was some variation between two reports. But the Trial Court took the higher projected valuation report/Ex.P145 submitted to the bank and failed to consider Ex.D25, which is not proper. To substantiate the same, the learned Senior Counsel relied upon Ex.D34, the order of the Income Tax Appellate Tribunal in I.T.No.50/MDA/2011 dated 25.01.2012, wherein the Appellate Tribunal considered the Income Tax returns of A2 for Assessment year 2007-2008. The Tribunal determined the value of the property as per the report of PW64 and value as per Ex.D25 confirmed and taken as correct value. The Income Tax Appellate Tribunal order has reached finality.
24.The learned senior counsel further submitted that the prosecution valued the construction of school and hostel building as Rs.3,84,32,729/- as per Ex.P220, the Trial Court rejected the report finding that the valuation report has been given by an incompetent person but the Trial Court placed reliance on Ex.P145 submitted by PW64 to Indian Overseas Bank which is a projected valuation. PW64 also given a report Ex.D25 but the Trial Court taken the value of Rs.2,06,90,769 as the construction cost relying upon Ex.P145 which is not proper. Hence the value shown in Ex.P145 is not the correct value and the value as per Ex.D25 alone to be taken as the value for the school and hostel, hence, the difference amount of Rs.72,82,769/- to be deleted in Statement D. Further, the business and stocks of A2 with regard to Ashok Steels not considered and given due credit. A2 invested for construction of school and hostel building and the same is reflected in his income tax returns for the financial year 2004-2005 and 2005-2006. The purchase of stocks through capital credit or sales, cannot be split up item wise and compartmented. The Trial Court admitted the income tax returns of A2 for the accounting year 2000-2001 to 2004-2005 but rejected the income tax returns filed for the year 2005-2006 and 2006-2007, Exs.D6 and D7 giving reason that the same were filed after registration of FIR. PW23 is the Income Tax Officer through whom income tax returns for the financial year 2004-2005 and 2005-2006, Exs.P78, 79 and 80 and Ex.D6 and Ex.D7 filed but no clarification or contradiction, elicited by the prosecution confronting the exhibits with PW34 and nothing was brought on record to discredit the returns. It is also known that the Income Tax Department was aware about the investigation, had there been any false or misdeclaration, income tax returns will not be accepted. In this case, the income tax returns of A2 for the financial year 2005-2006 and assessment year 2007-2008 was taken up for scrutiny by the Income Tax. The Income Tax Appellate Tribunal, considered, scrutinised the assets, liabilities, cash flow statement and thereafter passed the order Ex.D34. Hence, the Trial Court not considering the income and assets of A2 declared for the assessment year 2005-2006 is not proper. The prosecution in this case taken the income of the individual alone for the purpose of income for the check period.
25.He further submitted that depreciation shown in the returns are notional deductions and not on actual expenditure and this notional deductions are given for the purpose of availing benefits as per the Act to the income tax assessee. Hence, it cannot be shown in Statement D as expenditure. PW23 and PW85/Investigating Officer feign ignorance with regard to depreciation and personal drawings of A2 which is reflected in Statement D. The Bank interest and Bank charges of Rs.16,47,983.50 to be deleted from Statement D since it forms part of the expense, declared in the income tax returns. It is to be seen that even in the search list/Ex.P338, the files pertaining to arrack business and the details of Adithya Vidyashram School building seized and taken away by the respondent and the same not produced. These documents withheld since it is unfavourable to the prosecution case, hence adverse inference to be drawn.
26.The learned Senior Counsel further submitted that Ex.D29 is the income derived from the business and the depreciation shown is only a notional expense. Hence, the same to be considered. The investments for a business can be made by availing loan. In this case, A2 had taken loan by cash credit and personal loan from banks, all were declared in his income tax returns.
27.As regards A2, the learned Senior Counsel relied upon the judgment of Hon’ble Apex Court in the case of M.Krishna Reddy vs. State reported in (1992) 4 SCC 45 for the point that if the income and source were disclosed by way of contemporaneous documents such as income tax returns, the same has to be considered as an explanation. In this case, well before the registration of the F.I.R., A2 filing income tax returns and disclosing all his details. Further in the case of Nirankar Nath Pandey vs.
State of U.P. and Others in Criminal Appeal No.5009 of 2024, the Hon’ble Apex Court held that if the check period is for a long period of time, then there will be inflation and a natural progression in the changing economy that affects the value of assets such as property. Hence, there should be a dynamic approach considering the individual’s income and assets over long period. He further referred to the case of Satyanarayanan Murthy vs. State of Andhra Pradesh, reported in (1992) 4 SCC 39, for the point that when there is a contra evidence to PW34 with that of PW64 and more so when PW64 not treated as hostile his evidence to be considered and cannot be shredded away. PW23, the Income Tax officer not discredited the income tax returns of A2, namely, Exs.P79 and 80 and Exs.D6 and D7.
28.Further relied upon the judgment of the Apex Court in the case of Krishnanand Agnihotri vs. State of Madhya Pradesh for the point that burden of showing that a particular transaction is benami and the accused is not the real owner then the onus rest on the prosecution to prove the same beyond all reasonable doubt and not by mere conjecture and surmises as a substitute for proof. Further he relied upon the judgment in the case of P.Nallammal and another Vs. State reported in (1999) 6 SCC 559, for the point that in a disproportionate asset case against public servant, if it is found that family members are holding the property on behalf of the public servant, such individuals can be prosecuted for abetment under Section 107 and 109 of I.P.C., and three illustrations given. In this case, none of the three illustrations would get attracted thereby to implicate A2 in this case.
29.The learned Special Public Prosecutor for CBI Cases strongly opposed the petitioner’s contention and submitted that based on the source information, F.I.R./Ex.P347 in Crime No.1 of 2006 registered on 04.01.2006 by PW75, who was duly authorised under Sections 17 and 18 of the Prevention of Corruption Act. After registration of the F.I.R., on 07.01.2006, PW75 and police personnel with independent witnesses conducted a search at the house of A1, collected incriminating documents and materials and also prepared inventory of valuables. PW75 authorised PW83, K.A.A.Salam, Inspector of Police, who along with PW71, PW73 and others, simultaneously conducted a search at the house of A2 at No.3, Subbiah Street, Periyar Nagar, Puducherry. PW75 collected the service book, personal file, property returns file of A1 from PW13/Chief Engineer, PWD, Puducherry. The personal files of A1 for the year 2002, 2003 and 2004 and particulars of salary drawn from the period 1995 to 2005, particulars of GPF advance, all collected and thereafter on 09.05.2006, the investigation handed over to PW84.
30.He further submitted that PW84 after getting authorisation from the Superintendent of Police, took up further investigation. He received Statement 1 to 6 of A1 and sent communication to various authorities, namely, Canara Bank, Cancard Division, Bangalore and examined
Divisional Manager, Canara Bank, Concord Division, Motor vehicle
Inspector for Qualis van of A1, PW3, the Chief Manager, Union Bank of
India, PW4, the Senior Manager, Can Fin Homes (P) Ltd., Coimbatore, PW6, the Deputy General Manager, Canara Bank, Concord Division, PW9, the Managing Director, PASIC, Puducherry, PW11, PW12, PW13, PW14, PW15 and PW16 from PWD Department Puducherry for salary particulars and GPF withdrawals of A1. He further examined PW17, the then Manager, Canara Bank, Puducherry, PW18, the Programmer, Directorate of
Economics & Statistics, Puducherry, PW19, the Senior Accounts Officer,
BSNL, Puducherry, PW21, the Chief Accounts Officer, BSNL Mobile Division, PW23, the Income Tax Officer, Puducherry. Later, he handed over the investigation to PW85 on 28.11.2006.
31.He further submitted that PW85 is the Investigating Officer, who took up further investigation on 02.03.2007 and examined PW22, the Branch
Manager, Indian Bank, Aryankuppam, Puducherry, PW24, the Senior
Manager, Punjab National Bank, Puducherry. PW25, the Manager, ICICI
Bank, Puducherry, PW26, the Senior Manager, Corporation Bank,
Puducherry, PW28, the Branch Manager, State Bank of Travancore,
Puducherry, PW29, the Chief Manager, Union Bank of India, Puducherry,
PW30, the Assistant Manager, Tamilnadu, Mercantile Bank, Puducherry,
PW32, the Kotak Mahindra Bank Ltd., Chennai and PW37, the Chief Manager, REPCO Bank, Puducherry, collected documents for jewel loan, car loan, advance received in the name of A2 and in the name of Ashok
Steels. PW25 and PW33 examined with regard to insurance of JCB and Tata Bus, PW45, the Deputy Manager, Sundaram Motors, Chennai examined with regard to purchase of Tavera SUV car, PW39 examined with regard to purchase of Bajaj Minidor vehicle by Vijaya Agencies. PW48 from the
Registrar of Companies examined to show that Aditya Vidhyashram Residential School was registered under Registrar of Companies Act. PW52 from Shri Ram Chits examined with regard to A2’s subscription in the chit for Rs.5 lakhs. PW34 is the Valuation Officer in the Income Tax Department, who valued the residence of A1 and school premises of A2. PW53, PW54, PW55, PW56, PW57, PW58 and PW61 are the land owners from whom lands purchased. PW77 to PW80 to whom advertisement for Ashok Steels was published.
32.PW81 and PW82 and other Inspectors of CBI conducted part investigation and collected documents from L.I.C., Shriram Chits, Vanur, Sub Registrar Office. PW64 was examined by PW82. During investigation it was found that acquisition of the properties was beyond the earlier fixed period, i.e., 01.01.2002 to 09.06.2005. Hence, the check period was modified to 01.01.1997 to 07.01.2006. Thus, after giving a final opportunity notice to A1 and A2 and finding that their explanation not acceptable, sanction for prosecution for A1 obtained and charge sheet filed before the trial Court on 11.01.2008.
33.The learned Special Public Prosecutor submitted that Ex.D6 and
Ex.D7 filed after registration of FIR. Investment to the School building of Rs.41,65,018.90 was shown which is not supported with any documents. The appellant/A2 not raised this point before the Trial Court and for the first time, he is making such a plea. Further referring to Ex.D7, he submitted that in the assets column, hostel building for Rs.70,90,721.90 and School building for Rs.59,12,072.55, in total a sum of Rs.1,30,02,794.45 was shown as asset, likewise the amount of income derived from brick business of Rs.32,25,549/-, JCB rental income of Rs.9,48,687/- and agriculture income of Rs.1,95,750/- are inflated and declared just to create a defence for the case registered against him. Ex.D7 was filed on 31.10.2006 after registration of FIR. Hence, the Trial Court had rightly rejected Ex.D6 and Ex.D7. He further submitted that Ex.D29 is nothing but an extract of cash flow found in Ex.P79 to Ex.P81 and Ex.D6 and Ex.D7, hence Ex.D29 cannot be accepted.
34.In support of his contention, he relied upon the decision of the Apex Court in the case of State of Tamilnadu vs. M.Suresh Rajan reported in (2014) 11 SCC 709 wherein it is held that the property in the name of an income tax assessee itself cannot be a ground to hold that it actually belongs to such an assessee. If accepted, it will lead to disastrous consequences and it will give opportunity to the corrupt public servant to amass property. Further relied upon the decision of the Apex Court in the case of State of Karnataka vs. J.Jayalalitha and others reported in (2017) 6 SCC 263 for the point that mere filing of income tax returns cannot be taken as an explanation for the known source of income.
35.He further submitted that as regards Statement-A, as per the prosecution, the assets held by all the accused at the beginning of the check period was calculated to Rs.15,87,430.90, which is extracted hereunder:
Statement-A
Assets held at the beginning of the check period
Sl.
No. Period Description of the Immovable and Movable
Property Amount
1 29.3.1985 Plot No.4 measuring 2638.64 Sft in Plotted Development Scheme of Pondichery Housing Board Saram of A1 1,09,730.90
2 1988-1989 Construction of house No. 5 New Saram Pondichery of A1 9,29,200.00
3 20.09.1990 Purchase of land R.S No. 102/03 in Reddiyarpalayam
Village vide Document No 2469/90 registered at SRO
Oulgaret in the name of Ms Anuradha of A1 7,000.00
4 30.01.1992 Purchase of land R.S No. 1/3 &2/5 in Villianur Village vide Doc.133/92 registered at SRO Villianur of A1 21,500.00
5 13.04.1993 200 shares of Pondicherry Gazetted Officers Co-
Operative Credit Society Ltd of Rs 100/- each of A1 2,000.00
6 Various house hold articles found in residential premises of A1 and A2. 11,000.00
7 20.10.1982 Purchase of land R.S No. 86/4(Part) in Reddiyarpalayam, Document No 2477/82 registered at SRO , Puducherry of A3 12,000.00
8 25.10.1996 Purchase of land R.S No. 99/2/A/1, 100/1, 100/2 in Thirukanchi owned by Shoram, Emaile Salari Jone son of Remon Savari through PA holder Shri P Nataraja Chettiar vide doc No 5337/96 of A3 4,95,000.00
9 24.10.1985 Purchase of land vide Doc.No.3226 of 1986 in New Survey No.24/1 and 24/6A. Value of purchase not known 0.00
Total 15,87,430.90
36.As regards Statement-B, as per the prosecution, the assets held by all the accused at the end of the check period was calculated to
Rs.4,69,03,141.29, which is extracted hereunder:
Sl.
No. Period Details of Immovable & Movable Properties Value of
Property
(including stamp fee)
1 29.03.85 Plot No.4 measuring 2,638.84 sq ft in Plotted Development Scheme of Pondichery Housing Board
in Saram Revenue Village of A1 1,09,730.90
2 1988-89 Construction of House at No.5, New Saram, Pondichery (on the above plot) as per Statement-I submitted by Shri Anandane.(A1) 9,29,200.00
3 20.09.90 Purchase of land in R.S. No. 102/3 in Reddiarpalayam village vide doc.No. 2469/90 registered at SRO Oulgaret in the name of Ms Anutha of A1 7,000.00
4 30.01.92 Purchase of land in RS No. 1/3 & 2/5 Villianur Village document No. 133/92 registered at SRO Villianur of A1 21,500.00
5 Various house hold articles found in residential premises of A1 and A2. 4,58,295.00
6 125 shares of Pondichery Gazetted Officers Co-
Operative Credit Society Ltd of Rs 100/ each of A1 12,500.00
7 Balance in SB A/c. No.19562 at Indian Bank, Ariyankuppam 176.00
8 Balance in SB A/c. No.12115 at PNB, Pondicherry 163.00
9 Balance in SB A/c No.8319 at Union Bank of India, Pondichery Branch 1,135.00

10 Corporation Bank, Pondichery Branch SB A/C No.3487 balance amount 3,081.7
11 14.03.2005 Purchase of Sumo Victa PY-01-AA 3999 From VST Motors, Pondicherry 5,88,280.00
12 Advance given to House owner Smt. Vijaya by A1 50,000.00
13 20.10.82 Purchase of land in RS No. 86/4 Reddiyarpalayam document No. 2477/82 registered at SRO
Pondichery. In favour of A3 12,000.00
14 Acquisition of land in R.S. No.86/4A by A3 00.00
15 Purchase of land in R.S.No.75/2 in Thirukanchi by A3 00.00
16 07.04.2003 Purchase of Land in RS No. 16/3 & 16/3 Villianur Village document No. 783/03 registered at SRO Villianur by A3 1,70,000.00
17 20.10.04 Purchase of land in RS No. 2/2 & 2/4 Villianur
Village document No. 3536/04 registered at SRO Villianur by A3 4,00,000.00
18 Dec. 1999 Purchase of Falt “C” in IIIrd Floor Comfort
Apartment, 5th and 6th Cross Natesan Nagar, Pondichery along with undivided of share of land in RS No. 172/2 by A3 5,95,400.00
19 27.09.2004 Purchase of Tempo 3wheeler Minidor Pickup from Vinayaga Tempo, Puduchery by A3 1,83,613.00
20 23.07.2004 Purchase of 3 Nos Bajaj GC 1000 goods carrier from Villianur Associates, Puduchery by A3 3,54,000.00
21 Value of Jewels pledged to REPCO Bank Ltd, Pondichery of gross weight of 1147.700 and net weight 939 grams by A3 3,42,735.00
22 Jewels loan at Poraiyur Primary Agriculture CoOperativve Credit Society, Pondichery of gross weight of 220.600 and net weight 182.4 grams by A3 1,01,779.00

23 ICICI bank A/C No 005605001788 in the name of Hanndy Super Store balance amount of A3 10,193.27
24 ICICI bank A/C No 005605002148 in the name of Vinayaga Agencies balance amount of A3 33,530.72
25 24.08.98 Purchase of land in RS No. 75/1 Osudu Village document No. 1816/98 registered at SRO Villianur by A2 58,000.00
26 24.08.98 Purchase of land in RS No. 75/12 Osudu Village document No. 1818/98 registered at SRO Villianur by A2 6,000.00
27 26.03.99 Purchase of land in RS No. 75/3 Osudu Village document No. 624/99 registered at SRO Villianur by A2 1,35,000.00
28 08.6.2000 Purchase of land in RS No. 10/1 & 06/2 Villianur Village document No. 2439/00 & 2440/00 registered at Joint/ Addl SRO Puduchery by A2 9,50,000
29 Amount paid to Shri. Deivasigamani for purchase of land by A2 3,00,000.00
30 20.08.2001 Purchase of land in RS No. 84/7 & 84/10 in Osudu Village document No. 1740/01 registered at SRO Villianur by A2 90,000.00
31 27.02.2002 Purchase of land in RS No. 2/3 Villianur Village document No. 425/02 registered at SRO Villianur by A2 1,00,000.00
32 Transfer of lands in Villianur village from G.
Kannaiyan to A1& subsequent transfer from A1 to A2 00.00
33 17.4.2002 Purchase of land in RS No. 2/6 Villianur Village document No. 777/02 registered at SRO Villianur by A2 1,50,000.00
34 Construction of School and Hosterl Buildings asper the IOB valuation by A2 3,84,32,729.00

35 18.02.2005 Purchase of Chevrlet Tavera from Sundaram Motors by A2 8,93,368.00
36 01.06.2005 Purchase of Veh No.TN27C 5969 from Suguneswara Motors(p) Salem by A2 1,50,000.00
37 Purchase of Mahendra Maxi Car PY 01 D 4423 from P.K.Baskar by A2 1,30,000.00
38 08.06.2005 Purchase of TN 49X 4041 from D. Kalavathi by A2 1,25,000.00
39 Value of Jewels pledged to REPCO Bank Ltd, Pondichery of gross weight of 2043.800 and net weight 1751 grams by A2 6,39,115.00
40 Jewels loan at Poraiyur Primary Agriculture CoOperative Credit Society, Pondichery of gross weight of 105 and net weight 94.5 grams by A2 49,612.00
41 SBT, Pondicherry Current A/C No 1257 balance amount by A2 4,323.45
42 UBI Current A/C No 101-11148 in the name of M/s Ashoka Steel balance amount by A2 13,609.00
43 Corporation Bank Current A/C No 01/000978
Ashoka Steel balance amount by A2 4,257.5
44 IOB, Reddiarpalayam Current A/C No 303 in the name of A2 balance amount 3,692.25
45 TMB Current A/C No 318972 in the name of A2 balance amount 2,767.5
46 F.D A/C 4768 in the name of A2 in REPCO Bank Ltd 25,432.00
47 F.D A/C 5097 in the name of A2 in REPCO Bank Ltd 25,106.00
48 F.D A/C 5703 in the name of A2 in REPCO Bank Ltd 22,817.00
49 Daily Deposit A/C 4262 in the name of A2 in REPCO Bank Ltd 1,000.00
50 FD in the name of the School of A2 1,75,000.00
51 Investment shares of UBI in the name of A3, Gopika Devi and Rathi 32,000.00
Total 4,69,03,141.29
37.As regards Statement-C, as per the prosecution, the income earned during check period was calculated to Rs.1,46,67,636.08, which is extracted hereunder:
Sl.
No. Details of Income Period of Income Amount
1 Salary received from PASIC January 1997 to Dec 1997 by A1 1,15,765
2 Salary received from PWD From 22.12.1997 to 13.08.1998 by A1 32,062
3 Salary received from PWD From 14.08.1998 to 03.11.1998 by A1 15,743
4 Salary received from PWD From 04.11.1998 to 14.11.2000 by A1 1,76,377
5 Salary received from PWD From 15.11.2000 to 28.11.2003 by A1 3,49,287
6 Salary received from PWD From Dec.2003 to 30.04.2005 by A1 2,16,191
7 Salary received from PWD From 01.05.2005 to 31.12.2005 by A1 1,25,538
8 GPF withdrawal from PWD 14.08.1998 to 03.11.1998 by A1 28,759
9 GPF withdrawal from PWD 04.11.1998 to 14.11.2000 by A1 1,68,000
10 GPF withdrawal from PWD 15.11.2000 to 28.11.2003 by A1 1,33,000
11 GPF withdrawal from PWD Dec. 2003 to 30.04.2005 by A1 1,54,000
12 GPF withdrawal from PWD From 01.05.2005 to 31.12.2005 by A1 54,000

13 Amount received from
Doordarshan Kendra by A1 July 2004 600
14 Outstanding balance of loan given by Pondicherry
Gazetted Officers Co-
Operative Society to A1 2,20,810
15 Outstanding balance in salary loan A/c 554/80 at Indian Bank, Ariyankuppam A1 4,858
16 Balance Car loan A/C No 379506520470317 of UBI Car loan A/C No 379506520470317 of UBI 3,92,811
17 Outstanding balance in Loan given by PPACCS A1 31,800
18 Interest Credit to ED SB A/c. Canara Bank A1 49
19 Interest Credit at SB Account 19652 at Indian Bank A1 140
20 Interest Credit at SB Account 121156 at PNB A1 249
21 Interest Credit at SB Account 8319 at UBI A1 865
22 Interest Credit at SB Account 3487 at Corporation Bank A1 428
23 Debit balance in SB A/C No 000019479 at Canara Bank A1 2,087
24 Housing Loan from
CANFIN Home Ltd A3 1,76,206
25 CC A/C No. 142 of Handy
Super Store at Punjab A3 5,12,158.83

National Bank
26 Term Loan A/C No. 12567 of Handy Cafeteria at PNB A3 4,84,000
27 Vehicle loan A/C No. MTL 131 at SBT A3 3,62,110
28 CC A/C No. 1004 at SBT A3 1,034,204
29 Agriculture Jewels loan at
PPACS A3 28,600
30 2 Loans at PPACS A3 69,200
31 3 Jewels loan at REPCO A3 4,20,000
32 Income as per IT return 2005-06 A3 1,23,336
33 Car loan MTL 184 at SBT A2 5,14,550
34 TL Suvida A/C No.
67001927913 at SBT A2 3,00,000
35 CC A/C No 540547 of M/s
Ashoka Steel at UBI A2 1,001,749.5
36 Term Loan of IOB A2 50,00,000
37 Loan from PPACCS A2 31,000
38 Jewels loan from PPACCS A2 35,700
39 Development loan A/C No 1143 M/s Ashoka Steel at
REPCO Bank A2 1,85,571
40 Outstanding of development loan A/c No.947 of M/s Ashok Steels at REPCO
Bank released on 23.06.2004 A2 00.00
41 3 Jewels loan from REPCO A2 8,00,000
Bank
42 Outstanding balance in loan under agreement 00
43 Divident received from UBI in the name of A3 and Gopika Devi A2 4,560
44 Current A/C 347 of IOB
balance A2 66,636.75
45 Muthukuviyal Deposit
interest Rs 1.1 lakhs made on 09.07.2001 11,419
46 Interest received in Daily
Deposit Account 3165 at
Repco Bank A1 356
47 Interest received in Daily
Deposit Account 3723 at
Repco Bank A1 217
48 Interest received in Daily
Deposit Account 2680 at
Repco Bank A1 522
49 Income shown in IT return of A2 AY 2000 to 2005 5,83,050
50 Income Tax refund – do- 3,49,071
51 Sale of land at Vanoor village, Tindivanam by sale deed 795/99 A1 3,50,000
Total 1,46,67,636.08
38.As regards Statement-D, as per the prosecution, the expenditure incurred during check period was calculated to Rs.68,82,146.80, which is extracted hereunder:
Sl.
No. Details of Expenditure Period of Expenditure Amount Rs.
1 Repayment of HBA principal amount by A1 07.09.1998 68,750.00
2 Payment of Interest on HBA by A1 11.02.1999 71,815.00
3 CAN Card Visa bearing No. 454363301070942 of A1 Oct 97 to Sep 03 5,982.00
4 Telephone bill for No. 2243565 by A1 Dec 98 to 1,29,084.00
5 Donation given by A1 for renovation of Senate Hall of University Madras 15.10.04 200.00
6 Payments made to Regn Fee, Hypothecation entry fee and one time tax reservation of fancy number and termination of HPA entry. by A1 8,900.00
7 Rent paid for premises at No 3 by A1 Jan 2004 to Dec 2005 2,16,000.00
8 Registration and stamp duty paid for settlement deed No 681/02 by A1 8,990.00
9 Interest and Bank charges debited in
ED SB A/c 000019479 at Canara
Bank by A1 1,709.00
10 Interest and Bank Charges SB A/c. 19562 65.00
11 Interest and Bank charges debited in
ED SB A/c 12115 at Punjab National
Bank by A1 780.00
12 Interest and Bank charges debited in 1,350.00

ED SB A/c 8319 at Union Bank of India
13 Interest and Bank charges debited in Vehicle Loan A/c No. 470159 of A1 at UBI for Veh No. PY-01-V-4005 77,680.00
14 Interest and Bank charges debited in Vehicle Loan A/c No.
379506520470317 of A1 at UBI 37,811.00
15 Interest and Bank charges debited in
SB A/c 01/003487 at Corporation Bank 100.00
16 Insurance and registration charges for SUMO Victa 31,083.00
17 Intereset paid on loans taken from
PPACCS 9,992.00
18 Interest paid on loan taken from
PGOCCS ltd 1,62,987.00
19 Domestic expenditure 6,41,845.00
20 Interest debited in salary A/c No. 554/80 in Indian Bank 26,508.00
21 Expenditure for the marriage of his two daughters 8,25,000.00
22 Loss suffered in purchase and sale of Qualies 1,53,580.00
23 Registration and one time tax paid for vehicle No. PY-01AA 3999 7,800.00
24 NIC premium for policy No. 501506 07.07.2003 to 07.07.2005 51,332.00
25 Interest paid in Salary Loan A/C No.
DLS/01/99/0003 at Corporation Bank 13,061.00

26 Tuition and examination fee paid to SRM Engg College 66,515.00
27 Repair and damage of Qualis Toyota 34,368.00
28 IT and surcharge paid by A3 asper IT returns for Ays 2005-06 9,718.00
29 Registration and Stamp Duty for Settlement Deed 549/97 by A3 7,947.00
30 Registration and stamp duty for settelment deed No 1453/97 by A3 34,392.00
31 Registration and stamp duty for settelment deed No 783/03 by A3 17,948.00
32 Registration and stamp duty for settelment deed No 3536/04 by A3 3,098.00
33 Interest and Bank charges debited in Current A/c No.1601 at PNB by A3 90.00
34 Interest and Bank charges debited in C C A/c No.142 at PNB by A3 2,42,671.00
35 Interest and Bank charges debited in C urrent A/c No.1602 at PNB by A3 3,225.00
36 Interest and Bank charges debited in MTL A/c No.131 at SBT by A3 65,110.00
37 Interest and Bank charges debited in C C A/c No.1004 at SBT by A3 1,63,024.00
38 Interest and Bank charges debited in C A A/c No.005605002148 at ICICI by A3 1,975.23
39 Interest and Bank charges debited in C A A/c No. 005605001788 at ICICI by A3 1,503.87
40 Interest debited in Housing Loan No 2,24,206.00

1404 of CANFIN Home Ltd by A3
41 Interest paid for 3 closed Jewel
Loans at REPCO Bank 10.12.2005 50,472.00
42 Interest paid on closed Agriculture loan taken from PACCS ltd by A3 14,350.00
43 Interest paid on closed Agriculture loan taken from PACCS ltd by A3 6,155.00
44 Loss suffered in purchase and sale of Land in RS 99/2/A/1 by A3 1,73,000.00
44A Loss suffered in purchase and sale of Land in RS 75/2 by A3 1,32,200.00
45 BSNL Mobile expenditure by A2 07/05 -96 to 01/06 -2006 9,756.00
46 IT and surcharge paid by A3 AY 2000 to 2005 4,65,010.00
47 Fee paid to Pondicherry Planning Authority by A2 48,628.00
48 Fee paid to Directorate of School
Education for permission to open
School by A2 29.11.2004 to 08.12.2005 200.00
49 Stamp Duty and registration charges for Trust Deed 1061/01 216.00
50 Registration Fee for School 50.00
51 Paid For Daily Thanthi News Paper 03.09.02 to 28.11.02 14,500.00
52 Paid For Dinakaran News Paper 25.12.02 to 05.01.03 15,000.00
53 Paid For Tamil Murasu News Paper 6,500.00
54 Payment made to Dinamalar for Advertisement 31.10.02 5,000.00
55 Payment made on Air Media Net work 15.12.02 10,000.00

56 Payment made to Malaimalar for Advertisement 11.09.02 8,400.00
57 Amount received from Sri RAM
Chits 32,740.00
58 Paid to LIC Prmium in Policy No. 73161248 and 713670394 1,76,786.00
59 Registration and stamp duty for settelment deed No 1816/98 5,900.00
60 Registration and stamp duty for settelment deed No 1818/98 658.00
61 Registration and stamp duty for settlement deed No 624/99 13,596.00
62 Registration and stamp duty for settlement deed No 2439/2000 5,512.00
63 Registration and stamp duty for settlement deed No 2440/2000 46,022.00
64 Registration and stamp duty for settlement deed No 1740/2001 13,781.00
65 Registration and stamp duty for settlement deed No 425/2002 10,599.00
66 Registration and stamp duty for settlement deed No 682/02 8,994.00
67 Registration and stamp duty for settlement deed No 777/02 15,872.00
68 Interest Bank charges Current A/C No. 1257 in SBT 15,047.00
69 Interest Bank charges MTL A/C No. 184 in SBT 19,550.00
70 Interest Bank charges CC A/C No. 9,28,703.00

54047 in UBI
71 Interest Bank charges Current A/C No. 10111148 in UBI 3,283
72 Interest Bank charges Current A/C No. 01000978 in Corporation Bank 11,949.5
73 Interest Bank charges Current A/C No. 303 in IOB 7,940.75
74 Interest Bank charges Current A/C No. 347 in IOB 1,453.75
75 Interest Bank charges TL TCD A/C No. 207500031 in IOB 2,86,754.00
76 Interest Bank charges Current A/C No. 318972 in TMB 7,062.5
77 Interest on development loan A/C 804in REPCO 2,956.00
78 Interest on development loan A/C 947 in REPCO 11,726.00
79 Interest on development loan A/C 1143 in REPCO 5,473.00
80 Interest on Jewel loan A/C 10/14 in
REPCO 1,28,666.00
81 Loss and purchase sale of JCB 3,82,000.00
82 Interest on loan from Kotak Bank 2,17,006.00
83 Insurance JCB 08.01.03 to 08.01.05 47,240.00
84 Registration fee for JCB 725.00
85 Interest paid on closed Agriculture loan taken from PACCS ltd 17,309.00
86 Interest paid on closed Agriculture 2,654.00
loan on Jewel taken from PACCS ltd
87 Insurance premium for veh no. TN 27 C 5969 13,260.00
88 Temporary registration charges for Tavera 36,671.00
89 Registration fee one time tax paid for veh. No PY-01-AA6999 7,800.00
90 Registration fee one time tax paid for veh No PY-01-AA6999/ PY01 AF 7179 2,600.00
91 Primary permit for veh. No TN 49 X 4104 2,000.00
92 Registration fee one time tax paid for veh No PY 01 S 0789 and PY 01 S 3435 1,520.00
93 Insurence for above vehicle 1,390.00
94 Insurance premium for veh No PY 01 S 3435 15.3.02 to 13.03.05 for two years and 15.03.03 and
15.03.2004 one year 1,225.00
Total 68,82,146.8
39.He further submitted that during trial, on the side of the prosecution, PW1 to PW85 examined, and Exs.P1 to P377 marked. On the side of the defence, DW1 examined and Exs.D1 to D37 marked. The Trial Court on the evidence and materials produced, found that accused faileld to give explanation for the properties held by them and arrived disproportionate asset held by the accused as Rs.1,74,36,839.00 and convicted the appellant as stated above.
40.Considering the submissions made and on perusal of the materials, it is seen that FIR registered on information. PW75 registered FIR/Ex.P347 for the check period 01.01.2000 to 09.06.2005 against A1 and A2. Soon after registration of FIR on 04.01.2006, PW75 along with his team conducted search in the house of A1 and A2 on 07.01.2006. A1’s house and office was searched by PW75 and team and A2’s house was searched by PW83 and team. During the house search, documents seized and articles found in the house of A1 and A2, inventory drawn. In the search made in the house of A2, documents pertaining to arrack business, Ashok Steels, School building, valuation report, all seized. In the inventories drawn in the house of A1, there is no gold articles recorded and in the inventory drawn in the house of A2, 13 items of gold articles recorded, out of which, acquisition period given as 2000 and 2005 for two articles alone and for the rest of the articles, the period of acquisition not recorded. It is not the case that the jewels were new and recently purchased. Both A1 and A2 having good family background. A1’s father is a Class 1 contractor in Public Works Department in the States of Tamil Nadu and Puducherry. One brother of A1 was former MLA and another brother is in Government position. Apart from contract business, A1’s father was holding agricultural lands and he is a man with affluence, which is not seriously disputed. In fact, Kanniah, grandfather of A2 inculcated the business culture to A2. A2’s mother Vijayalakshmi also hails from a family of affluence having vast tract of agricultural lands, dairy business and also running a School. Further, A2 is married to a family with affluence. A2 was into the retail business of arrack, having dealership from Puducherry Distilleries, running Ashok steels dealing with steels and cements and two Schools. Admittedly the name of Vijayalakshmi, mother of A2 does not find place in the FIR. There is no material to show how and for what reason, and at what point of time Vijayalakshmi arrayed as A3 and no alteration report filed. During investigation, Vijayalakshmi passed away which is recorded and admitted by PW85/Investigating Officer. In such factual position, listing the properties of Vijayalakshmi and projecting her as an abettor to A1 in acquiring properties and holding the same in her name is not proper. In all fairness, in Statements A to D, the properties, income and expenditure of Vijayalakshmi ought to have been deleted.
41.Now, in the backdrop, considering Statement A, Assets at the beginning of the check period, Sl.Nos.1 to 7 pertains to A1 and Sl.Nos.8 and 9 pertains to A3. As regards Statement B, SL.Nos.1 to 4 are same as Statement A. Sl.No.5 in Statement B, the value shown is Rs.4,58,295.00, correspondingly in Statement A in Sl.No.6, it is shown as Rs.11,000. In this case, the house search witnesses PW72, PW75 and PW76 for A1 and PW71, PW73 and PW83 for A2’s house confirmed that the value of the household articles recorded by PW75 and PW84 on their own, now giving explanation that the article value given by A1 and A2 is not proper, more so, when house search conducted, both A1 and A2 were confined in the house and FIR registered against them. In view of the above, no reliance can be placed on the alleged values given by them, in the absence of any other evidence to show fixing of value was by an assessor or others. In this case, no such evidence available. The appellants admit that the household articles value is around Rs.2,83,760, hence the same to be taken and the amount of
Rs.1,74,535 to be deducted in statement-B.
42.Sl.No.6 in Statement B is corresponding to Sl.No.5 in Statement A and there is difference of Rs.10,500. Hence, the sum of Rs.2,000/- to be deducted in Statement-B.
43.As regards the property, Income and Expenditure the following is calculated and deducted. With regard to Sl.Nos.13 to 24 and 51 pertains to assets held by A3, the same to be deducted and hence, a sum of Rs.22,35,250.99 has to be deleted from Statement B.
44.The income of A3 shown in Statement C are income from Hanndy
Super Store of Rs.5,12,158.83 in Sl.No.25, Term loan of Hanndy Cafeteria at Punjab National Bank of Rs.4,84,000 in Sl.No.26, Vehicle loan at State Bank of Travancore of Rs.3,62,110 in Sl.No.27, CC A/C.No.1004 at State Bank of Travancore of Rs.10,34,204, Agriculture jewel loan at PPACS of Rs.28,600 in Sl.No.29, two loans at PPACS of Rs.69,200 in Sl.No.29 and three jewel loans at REPCO of Rs.4,20,000 in SL.No.31, income as per IT return for the year 2005-2006 of Rs.1,23,336 in Sl.No.32.
45.Further in Statement D Expenditure incurred during check period,
Sl.Nos.28 to 44A, 46 and 69 pertains to A3 and hence, a sum of
Rs.17,27,651.10 to be deleted.
46.In this backdrop, as regards A1, no property stands in his name other than what was declared to his Department. A1 submitted Statements 1 to 6 as called from his Department which confirms that there is no suppression or addition.
47.Now, considering the case of A2, it is seen that as stated above, A2 is an independent businessman. He is having business in the name of Ashok Steels dealing in steels and cement. He takes stocks from PASIC and also running arrack business, TDS deducted by Puducherry Distilleries are submitted to the income tax returns and refund paid which is confirmed by PW23 Income Tax Officer through whom Ex.P75 covering letter giving details along with income tax returns of A1 for the year 2003-2004, 20052006 and 2006-2007 (Ex.P76 and Ex.P77), and income tax return of A2 for the year 2000-2001 to 2004-2005 (Ex.P79, Ex.P80 and Ex.P81) and income tax returns of Vijayalakshmi for the year 2005-2006 (Ex.P78) submitted. The sale of steel and cement running to several lakhs, arrack business all disclosed. Thus, it is seen from the that from the financial year 1999-2000, A2 doing business showing steady progress. Even before registration of case, these returns filed then and there without any delay. The Auditor who filed income tax returns examined as DW1 who gives detailed explanation and filed cash flow statement. All bank details, purchase of vehicles, chit subscription, jewel loan, OD facility availed, all details furnished in the Income tax returns. PW23 admits that the income tax returns of A1 and A2 as well as Vijayalakshmi, all assessed and approved. Ex.P78 is the income tax returns of Vijayalakshmi who is running business in the name of Vinayaga Agencies. From the income tax returns it is seen that she is the agent of Coca-Cola soft drink, a reputed brand. The respondent as well as the Trial Court only taken taken the net income lastly derived but not considered the profit and loss account, cash in hand, business transaction and other aspects. The balance sheet gives all details but the same has not been considered as required. As regards A2, Ex.D6 income tax return for the financial year 2004-2005, Ex.D7 for the financial year 2005-2006 and Ex.D8 income tax returns for the financial year 2006-2007 of Vijayalakshmi, all marked through PW23. Further Ex.D9 Assessment order confirms that income tax returns of A2 for the financial year 2005-06 assessed and accepted. Thus even before registration of case business continued and income tax returns filed.
48.The prosecution neither disputed the balance sheet Ex.P76 to Ex.P80 nor denied filing of income tax returns and not disputed the defense documents Ex.D6 to Ex.D8. Ex.D6 is for the financial year 2004-2005 filed on 31.10.2005, the investment to the School building of Rs.41,65,018.90 recorded and JCB was shown as asset. Ex.D6 filed well before registration of F.I.R. Further in Ex.D7 income tax return for the financial year 2005-206 filed on 31.10.2006, all details furnished. The purchase of steel, sale of steelto the tune of Rs.1,24,61,779.68, sale of cement to the tune of Rs.19,22,945.65 are disclosed and also the available stock of cement and steel furnished. Further the bank details furnished and the other income from agriculture JCB rental to the tune of Rs.9,48,687, brick sale to the tune of Rs.32,25,549 also furnished. Further, completion of hostel building for Rs.70,90,721.90 and school building for Rs.59,12,972.55, owning of commercial vehicles, bus, lorry, van, road roller, all have been disclosed.
This was taken up for scrutiny and the value of the building was confirmed by the Income Tax Appellate Tribunal in its order Ex.D34. It is further seen that DW1 is the Auditor who have been regularly filing income tax returns for a very long period and through him, Ex.D29 to Ex.D34 marked. Though elaborate cross-examination done by the prosecution with DW1 but there is nothing to culled out or any dent made in his evidence. Ex.D29 is the cash flow statement which corroborates and in conformity with Ex.P79 and Ex.P80. Further Ex.D34 confirms that the income tax returns Ex.D6 and Ex.D7 considered by the Income Tax Authorities. Ex.D34 confirms the disallowance of the Assessing Officer for claim of agriculture income of
Rs.1,92,500 and the same was left open to be reconsidered and reassessed.
The grievance of the Department was with regard to deleting the addition of Rs.63,97,983/- from the construction cost.
49.Based on the valuation report/Ex.D25 given by PW64, the Income Tax Appellate Tribunal confirmed the valuation of PW64 and fixed the building value which attained finality. Over and above the value fixed by the Income Tax Appellate Tribunal, the Trial Court on the contra, considered the valuation report/Ex.P145, which was for the purpose of obtaining loan from the Indian Overseas bank. Naturally for availing loan, there will be an inflated projection. The Income Tax Appellate Tribunal, a Quasi-judicial body approved the report/Ex.D25. Hence, this value has force and reason to be taken. A2 in this case is an independent person having his own business for years well before the registration of the case and regularly filing contemporary documents with the authorities and Income Tax department, which is not in dispute. PW50 conducted field inspection on 24.02.2004 and found construction was ongoing, later it was ratified. Thus, A2 has been carrying on the construction using his business funds and bank loans. The Indian Overseas bank granted loan, all disclosed in the income tax returns. In view of the above, there cannot be any doubt or dispute with regard to the sources of income, period of construction and value of construction.
50.It is not in dispute A2 is an independent person in all manner and he is not dependent to A1. In view of Rule 18(2) of the Central Civil Services (Conduct) Rules, 1964, it is clear that if a family member of the public servant acquires the property or deals with the property out of his own independent sources of income, then no prior permission or intimation to the department is required. In view of the above, there is no violation committed by A1. As regards the source, in this case, initially as per the F.I.R. till the second investigating officer was holding investigation, the check period was from 01.01.2000 to 09.06.2005. PW85 confirms that notices/Exs.P372 and 373 dated 14.05.2007 to A1 was served and thereafter followed by another notice dated 17.09.2007, calling A1 to appear on 25.09.2007. A1 sent reply requesting to give separate details of assets, income and expenditure of himself, of his wife and son. In any event, A1 had sent a reply giving all details and also made it clear that he had no knowledge of his wife and son, who are independent.
51.A2 was served with a notice dated 17.05.2007 calling upon
information about the trust and the school. It is seen that in this case, till the notice was served and explanation given, the check period was from 01.01.2000 to 09.06.2005. Later PW85, the 3rd Investigating Officer, extended the check period to 01.01.1997 to 07.01.2006, After extending the check period, no final opportunity notice was given, which is in clear violation of this Court direction in the case of A.P.Pillai vs. The Inspector of
Police, CBI reported in 2013(3) MWN (Cr.) 62.
52.It is also to be seen that the Investigating Officer on 21.02.2007 sent a communication/Ex.P13 to the valuation officer informing that the inspection to be held on Saturday or holiday so that the functioning of the school would not be disturbed, confirming that the school was very much functional. It is also to be seen that in the income tax returns the income and expenditure statements, loan and credit facility payments made by A2 through the bank and the necessary charges included in individual’s payments, all disclosed in the income tax returns. This being so, for the second time, listing bank interest payment and other bank payments as an additional expenditure in Statement-D is not proper. Further availing the benefit of Depreciation, a statutory deduction would not efface the value of the amounts available with the assessee, i.e., A2 in this case.
53.As regards Statement-B is concerned, as per Ex.P281, A1 purchased Sumo Victa Car for a sum of Rs.6,23,158/- by availing bank loan of Rs.4,60,000/-. He had paid only Rs.1,63,158/- and the balance amount was paid through EMI of Rs.15,000/- from his salary account, which is recorded in his bank account statement and income tax returns. The Trial Court had taken the value of Rs.5,88,280/- as determined by the prosecution for purchase of Sumo Victa car. Since only a sum of Rs.1,63,158/- was paid by A1, which is confirmed by the evidence of PW29 and Exs.P175 and P281, loan amount of Rs.4,60,000/- to be deducted in Statement-B.
54.As far as item No.34 in Statement-B is concerned, the prosecution has shown a sum of Rs.3,84,32,729/- as cost of construction of school building and hostel building. But the Trial Court had taken the value as per Ex.P145 as Rs.2,06,90,769/-. Therefore, a sum of Rs.1,77,41,960/- (Rs.3,84,32,729 – Rs.2,06,90,769) has been deducted from Statement-B. This Court arrives at the value as per Ex.D25 as Rs.1,34,08,000/-. Hence, the difference amount of Rs.43,33,960/- (Rs.1,77,41,960 – Rs.1,34,08,000) to be deducted from Statement-B.
55.As regards Sl.Nos.39 and 40 in Statement-B are concerned, in the inventory taken at the A2’s house, the period and mode of acquiring of the jewels not recorded. Hence, jewels available even before the check period. During the pledging of the jewels, the payment of interest alone can be taken as expenditure and it cannot be stated that the jewels acquired during the check period. Hence, a sum of Rs.6,88,727/- (Rs.6,39,115 + Rs.49,612) to be deducted in Statement-B.
56. In Ex.D7, the rental income from JCB of Rs.9,48,687/- and income from Lorry business of Rs.2,79,500/- shown, which comes to Rs.12,28,187/-. Hence, the same to be included in Statement-C (Income earned during check period).
57.In this case, the Income Tax returns of A2 and A3 marked as
Exs.P78 to P81 and Exs.D6 to D8 filed by the Chartered Accountant, DW1.
DW1-Rajendiran filed Ex.D29, the extract of cash generated as per Income Tax returns of A2 from the year 1999 – 2000 to 07.01.2006, from which, he had taken the income for each financial year and the depreciation. As stated above, the depreciation are Income Tax benefit given to the assessee and in real sense this depreciation amount is available with A2. Thus, the income during the above period is Rs.64,92,436.22, in which, agricultural income of Rs.1,28,250 is deducted as per Ex.D34. This income has to be reconciled. Thus, the income of Rs.63,64,186.22 (Rs.64,92,436.22 – Rs.1,28,250) has to be added in Statement-C.
58.With regard to Statement-D, the marriage expense was shown as Rs.8,25,000/-. PW85, the Investigating Officer admits that there is no proof collected for the same. The Trial Court had taken the marriage expense as Rs.5,00,000/-. Since no materials produced to substantiate the marriage expenses, the entire amount of Rs.5,00,000/- to be deducted in Statement-D. Further with regard to Serial No.22, the loss suffered on the purchase and sale of the Qualis car shown an Rs.1,53,580/-, the same to be deducted, since the car was purchased availing bank loan, EMI paid, reflected in Bank statement and income tax returns and it had its own depreciation, hence, no loss suffered. With regard to Serial No.23, the one time tax paid for the vehicle Tata Sumo No.PY-01AA 3999 is inclusive of the invoice amount and charges, which are paid through bank demand draft.
59.In Statement-D, the bank charges pertaining to A2 in Sl.Nos.68, 70 to 80, 82, 85 and 86 have been already declared shown as expense in the income tax returns. Again taking this cannot be an expense incurred by A2.
Hence, an amount of Rs.16,47,983.50 to be deducted from Statement-D.
60.Further the evidence of PW5 and the sanction order/Ex.P22 show that the authenticating authority merely confirmed the request for sanction and draft sanction order annexed and further the sanction was not granted after an independent application of mind. Ex.P22 and Ex.D23 confirms the same. Ex.D23 records that a fair order is enclosed below for signature of the competent authority, His Excellency the Lt. Governor of Puducherry. It is a note put up by PW5, hence, draft sanction order received and thereafter fair order made ready and for signature of sanctioning authority, file was placed, nowhere it is demonstratively shown there was independent application of mind.
61.It is also to be seen that a communication was sent by the DIG, CBI on 18.10.2007 that sanction may accorded at the earliest for launching prosecution. Further, extraordinary pressure haunting on A1 to somewhat suspend him or remove him from service. On perusal of Ex.D23, it is clear that there is no independent, serious application of mind by the sanctioning authority. PW5 admits that Ex.P22 and Ex.D23 are verbatim reproductions and it is a matter of record. Further he admits that on 24.12.2007, the Chief Minister sanctioned the file and sent the same to Lt. Governor, who signed the file on the same day. The charge sheet containing statements and documents are voluminous and it is humanly impossible to peruse and sift through the records independently and accord sanction with such short span of time. Further perusal of Ex.D23 makes it clear that there was extra force shown and sanction file not processed in the normal course of business.
62.This Court, on the submissions and reassessment of evidence and materials as referred and extracted above along with the finding of the trial Court had come to the following conclusion, which are detailed by way of the tabulation below. As regards Statement-A, the trial Court calculated the value of assets at the beginning of the check period as Rs.16,01,431/-. Since there was no dispute with regard to Statement-A, the same is hereby confirmed.
63.As regards Statements B to D, the following deductions and inclusions made as follows:
Statement B:
Sl.Nos.13 to 24 and 51 pertains to A3, hence a sum of
Rs.22,35,250.99 is deducted from Rs.2,84,21,181 (Asset-finding of the trial Court). Therefore, the assets at the end of check period pertaining to A1 and
A2 as per the finding of the Trial Court after deducting the assets of A3 is
Rs.2,61,85,930.01
S.No. Deductions to be made
Sl.No.5 1,74,535
Sl.No.6 2,000
Sl,No.11 4,60,000
Sl.No.34 43,33,960
Sl.No.39 6,39,115
Sl.No.40 49,612
Total 56,59,222
Thus, the total value of assets at the end of check period is Rs.2,61,85,930.01 (–) Rs.56,59,222 = Rs.2,05,26,208.01
Statement C:
Sl. Nos.24 to 32 pertains to A3, hence a sum of Rs.32,09,814.83 is deducted from Rs.1,57,67,032 (finding of the trial Court). Therefore, the Income earned during the check period by A1 and A2 as per the finding of the Trial Court after deducting the income of A3 is Rs.1,25,57,217.17
S.No. Addition to be made
Rental income from JCB 9,48,687
Income from Lorry business 2,79,500
Income as per cash flow statement during the check period 63,64,186.22
Total 75,92,373.22
Thus, the total income earned during check period is Rs.1,25,57,217.17 (+)
Rs.75,92,373.22 = Rs.2,01,49,590.39
Statement D:
Sl. Nos.28 to 44A, 46 and 69 pertains to A3, hence a sum of Rs.17,27,651.10 is deducted from Rs.63,84,122/- (finding of the trial Court). Therefore, the Expenditure during the check period by A1 and A2 as per the finding of the Trial Court after deducting the expenditure of A3 is Rs.46,56,470.90
S.No. deduction to be made
Sl. No.21 5,00,000
Sl.No.22 1,53,580
Sl.Nos.68, 70 to 80, 82, 85 & 86 16,47,983.50
Total 23,01,563.50
Thus, the total expenditure during the end of check period is
Rs.46,56,470.90 (-) Rs.23,01,563.50 = Rs.23,54,907.40
Sl.
No. Description Prosecution Trial Court This Court finding
1. Assets at the beginning of the check period (St-A) 15,87,430.90 16,01,431.00 16,01,431.00
2. Assets at the end of check period (St-B) 4,69,03,141.29 2,84,21,181.00 2,05,26,208.01
3. Income during the check period (St-C) 1,46,65,176.10 1,57,67,032.00 2,01,49,590.39
4. Expenditure during the check period (St-D) 68,82,121.80 63,84,122.00 23,54,90740
5. Assets acquired during the check period [B-A] 4,53,15,710.39 2,68,19,750.00 1,89,24,777.01
6. Likely Saving during the check period [C-D] 77,83,054.30 93,82,911.00 1,77,94,682.99
7. Extent of Disproportion Assets [B-A] – [C-D] 3,75,32,656.10 1,74,36,839.00 11,30,094.02
Disproportionate Assets Percentage [7/3 X 100] 255.93% 110.59% 5.60%
64.Thus the disproportionate assets held by appellants/A1 & A2 are detailed below:
65. The Hon’ble Apex Court in the case of Krishnanand Agnihotri vs. The State of Madhya Pradesh reported in (1977) 1 SCC 816 held that the disproportionate assets found in possession of the accused if less than ten per cent of total income then the same will not constitute an offence. As per the revised calculations, the assets acquired by the appellants/accused 1 and 2 during the check period amount to Rs.1,89,24,777.01, whereas the likely savings available to them during the said period amount to Rs.1,77,94,682.99. Thus, no disproportionate assets are found to have acquired by the appellants/A1 and A2 during the check period. Hence, the prosecution failed to establish accused were in possession of assets disproportionate to their known sources of income.
66. In view of the above, this Court set asides the impugned judgment dated 30.10.2018 passed in Spl.C.C.No.1 of 2008 by the learned Special
Judge for Prevention of Corruption Act Cases (Principal Sessions Judge), Puducherry. The appellants/A1 & A2 are acquitted from all the charges levelled against them. Consequently, the confiscation order is set aside. Fine amount, if any paid, shall be refunded. Bail bond, if any executed, shall stand cancelled.
67. Accordingly, these Criminal Appeals are allowed.
05.08.2026
Index : Yes/No
Speaking Order/Non Speaking Order
Neutral Citation: Yes/No cse/RSI
To
1.The Inspector of Police,
SPE:CBI: ACB,
Chennai,

2.The Special Judge,
(Under Prevention of Corruption Act, 1988) Principal Sessions Judge, Puducherry.
3.The Special Public Prosecutor for CBI Cases, Chennai.  
M.NIRMAL KUMAR, J.
cse/RSI
Pre-delivery judgment made in
Crl.A.Nos.710 and 724 of 2018
05.08.2026