- 1 - NC: 2025:KHC:10501 CRL.A No. 430 of 2013 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 10TH DAY OF MARCH, 2025 BEFORE THE HON'BLE MR JUSTICE S RACHAIAH CRIMINAL APPEAL NO. 430 OF 2013 BETWEEN: SRI A. VANANGAMUDI S/O K. ARMUGAM, AGED ABOUT 52 YEARS, SUPERINTENDENT, GRADE-B, (IAP-X) W.E.F. 20.07.2011 TO 17.02.2012), O/O COMMISSIONER OF SERVICE TAX, SERVICE TAX COMMISSIONERATE, NO.16/1, SP COMPLEX, LALBAGH ROAD BAGNALORE-560027, R/AT. NO.473, 64TH CROSS, 5TH BLOCK, RAJAJINAGAR, BANGALORE-560010. …APPELLANT (BY SRI. N. RAVINDRANATH KAMATH, SENIOR ADVOCATE FOR SRI P.M. SIDDAMALLAPPA, ADVOCATE) AND: THE STATE OF KARNATAKA, REPTD. BY ITS STATE PUBLIC PROSECUTOR, HIGH COURT BUILDINGS, BANGALORE-560001, THROUGH CBI/ACB, BANGALORE. …RESPONDENT (BY SRI. P. PRASANNA KUMAR, SPL.PP ALONG WITH SRI K.C. NITHIN GOWDA, ADVOCATE) THIS CRL.A. IS FILED U/S.374(2) CR.P.C PRAYING TO SET ASIDE THE JUDGMENT, ORDER AND SENTENCE DATED 27.03.2013 PASSED BY THE XXXII ADDL. CITY CIVIL AND SESSIONS JUDGE AND SPECIAL JUDGE FOR CBI CASES, BANGALORE(CCH-34) IN SPL.C.C.NO.118/2012 AND ACQUIT THE APPELLANT FROM THE CHARGES LEVELED AGAINST HIM. Digitally signed by RENUKA Location: HIGH COURT OF KARNATAKA - 2 - NC: 2025:KHC:10501 CRL.A No. 430 of 2013 THIS CRIMINAL APPEAL HAVING BEEN HEARD AND RESERVED ON 03.02.2025 COMING ON FOR PRONOUNCEMENT OF ORDER, THROUGH VIDEO CONFERENCING, THIS DAY, THE COURT DELIVERED THE FOLLOWING: CORAM: HON'BLE MR JUSTICE S RACHAIAH CAV JUDGMENT 1. This appeal is filed by the appellant-accused being aggrieved by the judgment of conviction and order on sentence dated 27.03.2013 passed in Spl.C.C No.118/2012 on the file of XXXII Additional City Civil and Sessions Judge and Special Judge for CBI Cases, Bengaluru (CCH-34), wherein the Trial Court held that accused is found guilty for the offences punishable under Sections 7 and 13(1)(d) r/w 13(2) of the Prevention of Corruption Act, 1988 (for short ‘P.C Act’). 2. The ranks of the parties henceforth will be considered as per their rankings before the Trial Court for convenience. Brief facts of the case: 3. It is the case of the prosecution that the complainant was the Chief Executive Officer of M/s.G.T.Enterprises, Bengaluru. He was paying the service tax to the - 3 - NC: 2025:KHC:10501 CRL.A No. 430 of 2013 concerned Service Tax Department. Despite the same, the Service Tax Department conducted the audit by forming an audit team and inspected all the documents relating to the said company. Having found that there are some irregularities in the payment of service tax, notices were issued to the company and sought for it’s explanation. 4. It is further stated that the accused being the head of the audit team approached the complainant and requested him to pay the illegal gratification of Rs.50,000/- to do some official favour to the complainant. When he refused to pay the said amount, on 17.02.2012 at about 1.30 p.m., the accused called him over phone and directed to pay taxes of Rs.1,27,000/- plus Rs.4,000/-. When he informed that he need not pay any service tax to the Department, the accused demanded to pay at least Rs.20,000/- to Rs.30,000/- as service tax to the Department. 5. It is further stated that, on 18.02.2012, when his other two colleagues had approached the complainant and also informed him that he would replace the earlier demand - 4 - NC: 2025:KHC:10501 CRL.A No. 430 of 2013 notice and informed him that they would place the new demand notice which is for lesser amount and requested to pay illegal gratification. Being aggrieved by the said demand, the complainant stated to have lodged a complaint. Based on the complaint, a case came to be registered against the accused. After conducting the investigation, submitted charge sheet. 6. To prove the case of the prosecution, the prosecution examined 22 witnesses as PWs.1 to 22 and got marked 43 documents as Exs.P1 to 43 and also identified 26 material objects as M.Os.1 to 26. 7. Heard Sri.N.Ravindranath Kamath, learned Senior Counsel appearing for Sri.P.M.Siddamallappa, learned counsel for the appellant and Sri.P.Prasanna Kumar, learned Special Public Prosecutor along with Sri.K.C.Nithin Gowda, learned counsel for the respondent. 8. It is the submission of the learned Senior Counsel that the Trial Court has failed to consider the main ingredients, such as, demand and acceptance of illegal gratification. In the absence of demand of illegal gratification, the ingredients of Section 7 of the P.C Act - 5 - NC: 2025:KHC:10501 CRL.A No. 430 of 2013 cannot be held to be proved. Such being the fact, the Trial Court has committed an error in rendering the conviction. 9. It is further submitted that the accused being the head of the audit team had issued a notice demanding to pay the service tax. However, the complainant deliberately in order to implicate the accused in a false case, lodged a complaint, the same has been filed with malafide intention to demoralize the official of the service tax. 10. It is further submitted that none of the witnesses have supported regarding demand of the illegal gratification. Therefore, the conviction rendered by the Trial Court is required to be set aside. Making such submissions, the learned Senior Counsel for the appellant prays to allow the appeal. 11. Per contra, the learned Special Public Prosecutor for the respondent – State justified the judgment of conviction and order on sentence passed by the Trial Court and he further submitted that, merely because the shadow witness has not supported the case, the evidence of other witnesses cannot be brushed aside. The - 6 - NC: 2025:KHC:10501 CRL.A No. 430 of 2013 evidence of PW.18 – complainant is relevant for the reason that he being the complainant has supported the case of the prosecution and also the amount of Rs.25,000/- has been recovered from the accused and the tests which were conducted in respect of chemical analysis have also been proved. 12. It is further submitted that the pendency of the work and also the documents are noticed, which he wanted to replace has also been recovered and the evidence of other witnesses would clearly indicate that the accused was heading the audit team and they have conducted the audit in respect of the complainant company. The conversations between PW.18 and the accused have also been established. Therefore, the findings of the Trial Court in recording the conviction can be sustained. Interference with the said findings is not proper and moreover, the counsel for the petitioner has not made out the grounds to interfere with the said findings. Making such submissions, the learned Special Public Prosecutor prays to dismiss the appeal. - 7 - NC: 2025:KHC:10501 CRL.A No. 430 of 2013 13. Having considered the rival submissions of the learned counsel for the respective parties and also perused the findings of the Courts below in recording the conviction, the evidence of the complainant and panch witness and also the shadow witness, who is examined as PW.9 are relevant for discussion. 14. The complainant has been examined as PW.18. According to him, the Department of Sales Tax have conducted audit in respect of sales tax submitted by the complainant to the Department. During the audit, they have noticed that he had to pay additional service tax to the Department. According to him, the appellant stated to have issued a notice to the complainant to pay the service tax to the Department. 15. It is also stated that, in the meantime, the appellant said to have demanded illegal gratification of Rs.50,000/- to do some official favour. When the complainant has refused to give the said amount, the same has been reduced to Rs.25,000/-. It has come in the evidence of the complainant that the amount of Rs.25,000/- which he had given to the accused has been recovered and seized - 8 - NC: 2025:KHC:10501 CRL.A No. 430 of 2013 in the form of trap panchanama stated to have been conducted by the respondent. 16. PW.9 who was working as a Assistant Manager, Vijaya Bank, Peenya Bengaluru was asked to assist the investigation as a co-panch witness to the incident. According to him, he along with officials of the respondent entered the office of PW.18/CW.1 and they found that the appellant was there in the said office. He further stated that the appellant had admitted that he had received an amount of Rs.25,000/-. Assuming that the amount has been seized from the appellant, the fact remains that, notice had been issued to the complainant to pay the service tax which he had failed to make payment to the Department. In other words, he has cheated the Department in not paying the service tax properly. 17. PW.21 who acted as a shadow witness to the incident, deposed that he was introduced to the appellant as accountant of the office of PW.18. He stated to have been instructed by the appellant to prepare the balance sheet as per the guidance issued by the appellant. He stated to have reduced the said instruction into writing as - 9 - NC: 2025:KHC:10501 CRL.A No. 430 of 2013 per Ex.P28. Thereafter, the appellant said to have given one pen drive to the staff of PW.18 and asked to take print out of the contents thereof. The print out was taken by the staff and the same has been marked as Ex.P29. He further stated that the appellant said to have asked Rs.50,000/. However, the complainant said to have given Rs.25,000/- and he assured that he would pay the remaining balance of Rs.5,000/-. In the meantime, a trap has been conducted. 18. On reading of the evidence of the shadow witness, it appears that though the amount has been seized from the appellant, whether the appellant had demanded the said amount as illegal gratification or was it paid as a balance to be payable to the Department on receipt of notice of demand given by the appellant to PW.18 is not forthcoming. Even assuming that Ex.P29 is the notice issued to PW.18 after replacing the first notice, the fact remains that, PW.18 had to pay the service tax to the Department. Mere asking the amount without mentioning it as bribe, that cannot be construed itself as bribe and it was given to do some official favour. - 10 - NC: 2025:KHC:10501 CRL.A No. 430 of 2013 19. Even on reading of the transcriptions at Exs.P31 and P38, there is no conversation taken place between the appellant and PW.18 regarding the demand of illegal gratification. In the absence of definite evidence in respect of demand of illegal gratification, even assuming that the complainant supported the case of the prosecution, the same cannot be accepted for the reason that he is an interested witness. 20. In this context, it is relevant to refer the judgment of the Hon’ble Supreme in the case of N.VIJAYAKUMAR v. STATE OF TAMIL NADU1, paragraph Nos.26 and 27, which reads as under: ”26. It is equally well settled that mere recovery by itself cannot prove the charge of the prosecution against the accused. Reference can be made to the judgments of this Court in C.M. Girish Babu v. CBI [C.M. Girish Babu v. CBI, (2009) 3 SCC 779 : (2009) 2 SCC (Cri) 1] and in B. Jayaraj v. State of A.P. [B. Jayaraj v. State of A.P., (2014) 13 SCC 55 : (2014) 5 SCC (Cri) 543] In the aforesaid judgments of this Court while considering the case under Sections 7, 13(1)(d)(i) and (ii) of the Prevention of 1 (2021) 3 SCC 687 - 11 - NC: 2025:KHC:10501 CRL.A No. 430 of 2013 Corruption Act, 1988 it is reiterated that to prove the charge, it has to be proved beyond reasonable doubt that the accused voluntarily accepted money knowing it to be bribe. Absence of proof of demand for illegal gratification and mere possession or recovery of currency notes is not sufficient to constitute such offence. In the said judgments it is also held that even the presumption under Section 20 of the Act can be drawn only after demand for and acceptance of illegal gratification is proved. It is also fairly well settled that initial presumption of innocence in the criminal jurisprudence gets doubled by acquittal recorded by the trial court. 27. The relevant paras 7, 8 and 9 of the judgment in B. Jayaraj [B. Jayaraj v. State of A.P., (2014) 13 SCC 55 : (2014) 5 SCC (Cri) 543] read as under: (SCC pp. 58-59) “7. Insofar as the offence under Section 7 is concerned, it is a settled position in law that demand of illegal gratification is sine qua non to constitute the said offence and mere recovery of currency notes cannot constitute the offence under Section 7 unless it is proved beyond all reasonable doubt that the accused voluntarily accepted the money knowing it to be a bribe. The above position has been succinctly laid down in several judgments of this Court. By way of - 12 - NC: 2025:KHC:10501 CRL.A No. 430 of 2013 illustration, reference may be made to the decision in C.M. Sharma v. State of A.P. [C.M. Sharma v. State of A.P., (2010) 15 SCC 1 : (2013) 2 SCC (Cri) 89] and C.M. Girish Babu v. CBI [C.M. Girish Babu v. CBI, (2009) 3 SCC 779 : (2009) 2 SCC (Cri) 1] . 8. In the present case, the complainant did not support the prosecution case insofar as demand by the accused is concerned. The prosecution has not examined any other witness, present at the time when the money was allegedly handed over to the accused by the complainant, to prove that the same was pursuant to any demand made by the accused. When the complainant himself had disowned what he had stated in the initial complaint (Ext. P-11) before LW 9, and there is no other evidence to prove that the accused had made any demand, the evidence of PW 1 and the contents of Ext. P-11 cannot be relied upon to come to the conclusion that the above material furnishes proof of the demand allegedly made by the accused. We are, therefore, inclined to hold that the learned trial court as well as the High Court was not correct in holding the demand alleged to be made by the accused as proved. The only other material available is the recovery of the tainted currency notes from the possession of the accused. In fact - 13 - NC: 2025:KHC:10501 CRL.A No. 430 of 2013 such possession is admitted by the accused himself. Mere possession and recovery of the currency notes from the accused without proof of demand will not bring home the offence under Section 7. The above also will be conclusive insofar as the offence under Sections 13(1)(d)(i) and (ii) is concerned as in the absence of any proof of demand for illegal gratification, the use of corrupt or illegal means or abuse of position as a public servant to obtain any valuable thing or pecuniary advantage cannot be held to be established. 9. Insofar as the presumption permissible to be drawn under Section 20 of the Act is concerned, such presumption can only be in respect of the offence under Section 7 and not the offences under Sections 13(1)(d)(i) and (ii) of the Act. In any event, it is only on proof of acceptance of illegal gratification that presumption can be drawn under Section 20 of the Act that such gratification was received for doing or forbearing to do any official act. Proof of acceptance of illegal gratification can follow only if there is proof of demand. As the same is lacking in the present case the primary facts on the basis of which the legal presumption under Section 20 can be drawn are wholly absent.” - 14 - NC: 2025:KHC:10501 CRL.A No. 430 of 2013 The abovesaid view taken by this Court fully supports the case of the appellant. In view of the contradictions noticed by us above in the depositions of key witnesses examined on behalf of the prosecution, we are of the view that the demand for and acceptance of bribe amount and cellphone by the appellant, is not proved beyond reasonable doubt. Having regard to such evidence on record the acquittal recorded by the trial court is a “possible view” as such the judgment [State of T.N. v. N. Vijayakumar, 2020 SCC OnLine Mad 7098] of the High Court is fit to be set aside. Before recording conviction under the provisions of the Prevention of Corruption Act, the courts have to take utmost care in scanning the evidence. Once conviction is recorded under the provisions of the Prevention of Corruption Act, it casts a social stigma on the person in the society apart from serious consequences on the service rendered. At the same time it is also to be noted that whether the view taken by the trial court is a possible view or not, there cannot be any definite proposition and each case has to be judged on its own merits, having regard to evidence on record.” 21. On careful reading of the above said judgment, it makes it clear that mere possession and recovery of the currency notes from the appellant without proof of demand will not - 15 - NC: 2025:KHC:10501 CRL.A No. 430 of 2013 bring home the offence under Section 7 of the P.C Act. The presumption as envisaged under Section 20 of the P.C Act can be raised, if the offence under Section 7 of the P.C Act is proved. 22. Having considered the principles laid down by the Hon’ble Supreme Court in the case of N.Vijayakumar stated supra, the evidence of PWs.9, 18 and 21 did not disclose the demand of illegal gratification by the appellant. Even assuming that PW.18 has supported the case, the same cannot be accepted as proved in the absence of the evidence of PWs.9 and 21. Therefore, I am of the considered opinion that the Trial Court has committed an error in recording the conviction. Hence, the judgment of conviction is liable to be set aside. 23. In the light of the observation made above, I proceed to pass the following: ORDER (i) The Criminal Appeal is allowed. (ii) The judgment of conviction and order on sentence dated 27.03.2013 passed in Spl.C.C No.118/2012 by the XXXII Additional City - 16 - NC: 2025:KHC:10501 CRL.A No. 430 of 2013 Civil and Sessions Judge and Special Judge for CBI Cases, Bengaluru (CCH-34), is set aside. (iii) The appellant / accused is acquitted for the offences punishable under Sections 7 and 13(1)(d) r/w 13(2) of the Prevention of Corruption Act, 1988. (iv) Bail bonds executed, if any, stands cancelled. Sd/- (S RACHAIAH) JUDGE UN List No.: 19 Sl No.: 1