Supreme Court of India

C. CHENGA REDDY AND ORS.versusSTATE OF ANDHRA PRADESH

Citation: 1996 INSC 729
Decided: 12 July 1996
Disposal: Appeal(s) allowed
Bench: G N RAY

Holding

The prosecution failed to establish the case against the accused beyond reasonable doubt; the convictions are set aside.

Summary

The appellants, senior engineering officials and contractors, were convicted for alleged conspiracy, cheating and falsification of accounts in connection with jungle‑clearance projects in Nellore district, based solely on circumstantial evidence and a technical report prepared by a departmental officer during the investigation. The Supreme Court examined whether the prosecution had proved the charges beyond reasonable doubt, whether the technical report was admissible under Sections 161 and 162 of the CrPC and Section 45 of the Evidence Act, and whether violations of PWD code provisions and nomination‑basis allotments could be read as dishonest intent. It held that the technical report was inadmissible, the circumstantial facts were not conclusive, and the alleged procedural violations did not amount to criminal intent. Consequently, the Court found that the prosecution failed to establish the case against any of the officials or contractors. The convictions and sentences were set aside and the fines refunded. The Court also ordered reinstatement of the officials with pension benefits but no back wages, invoking its power under Article 142 to achieve complete justice.

Issues considered

The adequacy of circumstantial evidence to sustain convictions under Sections 120‑B, 420/34 and 477‑A IPC.
The admissibility of the technical report prepared by PW 12 under Sections 161, 162 CrPC and Section 45 Evidence Act.
Whether violations of the P.W.D. Code and departmental circulars, including work allotted on nomination basis, constitute dishonest intention sufficient for criminal liability.
Whether the prosecution proved the alleged conspiracy and misappropriation of funds beyond reasonable doubt.
The scope of the Supreme Court's power under Article 136 to re‑appreciate evidence when lower courts have concurred on guilt.

Legislation cited

Code of Criminal Procedure, 1973s. 161, s. 162
Constitution of Indias. 136, s. 142
Indian Evidence Act, 1872s. 45
Indian Penal Code, 1860s. 120-B, s. 420/34, s. 477-A/34
Prevention of Corruption Act, 1947s. 5(1)(d), s. 5(2)

Subjects

circumstantial evidencecriminal conspiracycorruptionnomination basisanti‑corruption bureauevidence admissibilitydepartmental misconductreinstatementArticle 136Indian Penal CodePrevention of Corruption Act

Judgment

C. CHENGA REDDY AND ORS. A
v.
STATE OF ANDHRA PRADESH

JULY 12, 1996

[G.N. RAY AND DR. A.S. ANAND, JJ.] B

Indian Penal Code, 1860 : Sections 120-B, 420/34 and 477-A.

Prevention of Co1111ption Act, 1947: Sections 5(2) and (J)(d).

State of Andhra Pradesh--Governnzent Engineers and Contrac-
c
ton-Prosecution for e1iminal conspirac;-Clieating and falsification of ac-
counts-Allegation of committing large scale illegalities, i1regularities and
fraud in jungle clearance work-{;ase against all the accused rested on
circun1stantial evidenc~But circunistantial evidence not ]Jroving guilt of
accused beyond doubt--Conviction of accused and sentence iniposed set D
aside.

Evidence Act, 1872 :

Circunistantial evidence--Conviction based UJJon--Validity of-Extent
of proof required in circunzstantial evidence. E
Section 45-E.xpert-Who is.

C!iminal Procedure Code, 1973:

Sections 161 and 162-Applicability of-Statements made dwing inves-
tigation-Pennissibility of us~Alleged offences against Govemmenl offi-
F
cials-Investigation of-Depart111ental official assisting the lnve.\u·gurion
Office1--Report by Depmtmelllal official prepared dwing investigation and
submitted after lodging of FIR-Said Officer examined by Investigation Of-
ficer-Submission of report-His repo11 fanned part of his statement recorded
u11der section 161-Held his report was hit by the bar co11tained in section G
162 and hence inadmissible in evidence-Held he was not expe11 within the
memzing of section 45 of Evidence Act.

C!iminal Trial-Establislunent of guilt of acrnsed-&tent of proof
required-Proof must establish guilt beyond a reasonable doubt-Suspicion
however strong ca1111ot take the place of proof. H
479
480 SUPREME COURT REPORTS [1996] SUPP. 3 S.C.R.

A Constitution of India, 1950:

A1ticle 136--Appeal by special leavi~Reappreciation of evidence by
Supreme Cowt-Numwl/y it would not da-But it would reappreciate
evidence lvhere conclusion of Colats below is based on conjectures and or
sunnises.
B
Anicle 142-Power of Supreme Court to do complete justice between
the parties--Govemment employees-Clwrge of forge1y and corrup-
tion-Violation of P. WD Code and circulm~ established-But no dishonest
intention-(;onviction by Courts below-Acquittal by Supreme Co1111-Instead
C of re111itting the n1aller Cozat itself bnposing punislunent for doing conzplete
justice between the pmties-Direction that officials would be entitled to
reinstalen1ent lvith pensiona1y benefits but not to back wages.

Service Laiv-Misconduct-Punislunent-Propo1tionate to the gravity of
offence.
D
Govemment officials-Violation of code and circulars-Dishonest in-
tention not proved-Held 111ere violation cannot be const1ued as incriniinating
circzanstance to fasten c1i1ninal liability.

'rhe appellants working as Executive Engineers, De11uty Executive
E Engineers and Section Otlicers in the Irrigation Circle, Nellore, State of
Andhra Pradesh, along\\'ith some contractors, were prosecuted under sec~
tions 120-B, 420/34 and 477N34 of the Indian Penal Code, 1860 read with
section 5(2) and S(l)(d) of the Prevention of Corruption Act. They were
alleged to have committed large scale fraud, irregularities and illegalities
F in the execution of jungle clearance work in respect of Gandipalem Project
Division, Nellore South Division and Nellore North Division during 1978-
1981.

The Deputy Engineer-in-Chief, PW-7, who conducted the preliminary
inquiry and the Chief Engineer, PW-1, who conducted the departmental
G enquiry highlighted the irregularities and illegalities noticed by them in
their respective reports. Simultaneously investigation was also entrusted
to the Anti- Corruption Bureau which conducted an inquiry. Some serving
Otlicers of the Engineering Department were deputed to assist the otlicers
of the Anti-Corruption Bureau for purposes of collecting technical data
H during investigation.
C.CHENGAREDDY v. STATE 481 .

After completion of investigation, charge-sheets were filed against A
the appellants. There \\'as no direct evidence available on record connect~
ing any of the appellants with the Commission of the crime alleged against
them. The entire case of the prosecution rested on circumstantial evidence.

Gandipalem Project Division
B
The prosecution case in these appeals against five ollicials viz. Two
•
Executive Engineers, Two Deputy Executive Engineers and a Section 01'-
ficer, along uith a Contractor, resting entirely on circumstantial eviden1'.e
was that (i) the accused conspired to float work for clearance of prickly
pier Jungle during 1979-80 in violation of established rules under P.W.D. C
Code; (ii) committed irregularities by ignoring various circulars and
departmental orders; (iii) allotted work on nomination basis "ithout
inviting tenders; (iv) ''ithout actual execution of work made payment of
Rs. 2869 to the contractor and thereby misappropriated the said amount;
and (v} false and fictitious record relating to preparation of estimates,
allotment of work on nomination basis, dra\Ving up of the agreements and D
making payments was created.

The Trial Court convicted the appellants for various ollices charged
and imposed varying terms of imprisonment, including fine on ditl'erent
counts. The High Court dismissed the appeals except for reduction of E
sentence. Both the Trial Court and the High Court relied on the technical
report (Ex. P-11) prepared by P.W. 12, an ollicer serving in the Irrigation
Department, who assisted the Investigating Ollicer of the Anti- Corruption
Bureau to hold the appellants guilty. In his report P.W. 12 pointed out
various irregularities cpmmitted by the appellants while preparing the
estimate, nonlination of the Contractor for the execution of \\'Ork and F
drawing up of the agreement with the contractor. He also opined that the
corrections had been made in the estimate, Ex. P~4, \\-ith a view to conceal
facts and project false fact-situation.

Ne/lore South Division
G
This appeal has been preferred by three accused viz. Executive
Engineer, Deputy Executive Engineer and a Section Ollicer. The charge
against them related to clearance of work in Julifora Jungle. The prosecu-
tion alleged that no work was done and the entire amount of Rs. 13,164
towards payment was misappropriated by appellants and the contractor. H
482 SUPREME COURT REPORTS (1996] SUPP. 3 S.C.R.

A The circumstances relied upon by the prosecution were : (i) without
assigning any reason work \\'as allo~ted on nomination basis instead of
inviting tenders; (ii) work was started by the contractor before issuance of
\l'ork order; (iii) incorrect measurements were recorded in the measure-
ment book to conceal the extent of actual work; (iv) endorsement on the
estimate documents were made without actual verification of the spot; (v)
B
no proper estimate for earth work, or for filling of pits was prepared; (vi)
anticipated credit for stumps as shown was WT<mg; anll (vii) basic docu-
ments viz. estimate, contract, Rill and payment order were fabricated. Jn
support of the circumstance that no jungle clearance work was dune
reliance was placed on the testimony of PWs 11, 12 and 13.
c
Relying: upon the aboven1entione4 circumstances and testimony of
PWs 11, 12 and 13 as well as the Technical Report submitted by PW 8, the
Trial Court recorded a finding that no work with respect to the clearance
and uprooting of the stumps of Julitlora jungle was undertaken at North-
D Mopur large tank and that the entire contract had been given surrep·
titiously and pa)'ntents 1nisappropriated ..l\ccordingly it convicted them for
various offences and imposed various terms of imprison1nents including
fine. Upholding the conviction the High Court reduced the sentence if
imprisonment of Engineers to the period "till the rising of the Court". The
appellants paid the fine and have since undergone the sentence till the
E rising of the Court.

Nel/ore No1th Division

In this appeal the case against the appellants-accused was that they
f floated work for clearance of Julillora jungle and uprooting of the stumps
but without execution of that work misappropriated an amount of Rs. 5169.
The prosecution alleged that there had been flagrant violations of the codal
provisions in regard to preparation and sanctioning of estimates, nomina-
tion of the agency and allotment of \\''Ork on nomination basis, preparation
of the bills and passing of the same pursuant to an agreement wrongly
G dramt up behveen the parties. The circumstances relied on by the prosecu-
tion were that: (i) the contractor commenced the work before drawing up
the agreement between the parties; (ii) the area from which jungle had been
cleared in 1979 was less than what \Vas actually entered in the measure-
ment hook on the basis of the site inspection carried out in 1984; (iii)
H though no growth of jungle is· possible on the revetment yet the area of
C.CHENGAREDDY v. STATE 483

revetment was included as part of the area from where jungle was shown A
to have been cleared; and (iv) although two pa~ments were not permissible
for clearing jungle and stumps separately yet the same were made.

The Trial Court held that no work with respect to clearance of
Julillora jungle and uprooting of the stumps was undertaken at the site
and the amount was misappropriated by the accused. Accordingly it B
convicted and sentenced the appellants to various terms of imprisonment
and fine. The appellant's appeal, exce11t in the matter of sentence, failed
in the High Court.

Ne/lore South Divisio11-<:011tractor's Appeal c
This appeal has been preferred by the Contractor. It relates to
clearance of Juliflorajungle including removal of stumps. The prosecution
case \l'as that Executive Engineer, Deputy Executive Engineer and Assis-
tant Executive Engineer of Alluru Section entered into criminal conspiracy
with appellant and \\ithout actually doing any work, an amount of Rs. D
15,643 "''as misap11ropriated by the accused persons. The circun1stances
relied upon by the prosecution against the appellant were that (i) the work
was falsely allotted and mthout any work the cheque for Rs.15,643 was
given to the appellant-Contractor, which was encashed by him; (ii)
preparation of estimate, award of sahction, drawing up of agreement were E
in violation of P.W.D. codes; (iii) in the measurement book the area \\'here
the work had been done was recorded by officials in excess to help the
appellants, without having actually visited the site; (iv) the work was split
up into parts so as to allot it on nomination basis to hrh.1g it \\''ithin the
. pecuniary jurisdiction of the Executive Engineers; (v) the terms of the
agreement were ambiguous; and (vi) preparation of bill and making F
separate payment for removal of stumps and clearance of jungle was in
breach of codal provisions. Relying upon these circumstances the courts
below convicted and sentenced the appellant.

Nel/ore North Division--'Contractor's Appeal
G
This appeal has been filed by the Contractor who was allotted work
on non1ination basis by Executive Engineer for clearance of jungle in
Nell ore North Division. The prosecution alleged that (i) the Contractor
\\'as a non-existent person and all the documents purportedly have been
signed by the appellant as a contractor had been fabricated by the En- H
484 SUPREME COURT REPORTS [1996] SUPP. 3 S.C.R.

A gineers because the alleged Contractor was an unknown and fictitious
person; (ii) the name of the contractor as appearing ln the order of
nomination, allotment letter. and the agreement was fictitious am! not
correct. Accepting the prosecution case both the Courts below convicted
and sentenced the appellant.

B The Departmental officials as well as the Contractors preferred ·
appeals before this Court against the judgment of the High Court.

Allowing their appeals, this Court

HELD : l. The prosecution has not been able to establish beyond a
c reasonable doubt, its case against any of' the departmental officials, that
is, the Engineers and Section Oflicers and conse<1uently their conviction
and sentence are set a!'lide. The prosecution has also not established its
case against any of the contractors beyond a reasonable doubt. Their
conviction and sentence are also set aside. The fine paid by each of the
D appellant is directed to be refunded to him. [528-G-H; 529-A)

2. As a normal rule, this Court does not in exercise of its jurisdiction
under Article 136 of the Constitution of India, while hearing a[lpeals by
special leave, reappreciate the evidence, where two courts have concurrent-
E ly appreciated the evidence and arrived at findings of guilt of' the accused
persons. [495-E]

3. Though all these cases hinge. on circumstantial evidence, yet
neither the Trial Court nor the High Court have catalogued the cir-
cumstances relied upon by the prosecution against the appellants, except
F for broad generalisations on the basis of' the charges framed against them.
Therefore, with a view to satisl)'ing its judicial conscience, the Court
examined some of the evidence led in the cases and in particular that
evidence which appears to have principally influenced both the Trial Court
and the High Court to convict the appellants. [495-G; F]

G 4. In a case based on circumstantial evidence, the settled law is that
the circumstances from which the conclusion of guilt is drawn should be
fully proved and such circumstances must be conclusive in nature.
Moreover, all the circumstances should be complete and there should be
no gap left in the chain of evidence. Further, the proved circumstances
H must be consistent only with the hypothesis of the guilt of the accused and
C. CHENGA REDDY v. STATE 485

totdly inconsistent with his innocence. [527-D-E] A

Gandipalem Project Division

5. The established circumstances in this case do not establish
criminality of the appellants beyond the realm of suspicion and the ap-
proach of the trial court and the High Court to the requirements of proof B
in relation to a criminal charge \\'as not proper. The c-c-mrts behnv have
overlooked the settled principles and allowed suspicion to take the place
of proof besides relying upon some inadmissible evidence. [508-F; BJ

6. There is not an iota of evidence led by the prosecution to prove
that no work at all was done for clearance of prickly pier jungle. As a
c
matter of fact, the prosecution has led evidence to sho\V that so1ne \\'ork
had been done hut it is alleged that payments had been made for excessive
work. During the investigation, the inspecting team had noticed existence
of signs of removal of prickly 11ier jungle on the banks of the canal. There
being no evidence to show that after 1979 some work had be,en undertaken D
for removal of prickly pier jungle on any of the banks of the canal, a
reasonable inference to he drawn \Vould be that some n·ork had in fact been
done and therefore, the charge against the appellant that no work had been
done is belied by the prosecution evidence itself. [502-F-G)

7. The technical report prepared by P.W. 12 could not have been E
relied upon by the courts below as it was clearly inadmissible in evidence.
PW 12 while serving in the Irrigation Department assisted the investigat-
ing officer of Anti Corruption Bureau (ACB) during the investigation in
this case. He prepared his report during the course of the investigation
and submitted it to the Investigating Ollicer after the FIR in this case was F
registered. He \Vas examined by the Investigating Oflicer after he had
submitted his report and the said report formed part of his statenient
recorded under Section 161 Cr.P.C. Under these circun1stances the obser-
vations contained in this report technically and factually form a part of
his statement recorded during the investigation of the case is hit by Section G
162 Cr.P.C. Admittedly, the report has not been used for any of the
purposes envisaged by Section 145 of the Evidence Act but as a substantive
piece of evidence. PW 12 does not qualify as an expert within the meaning
of Section 45 of the Evidence Act. Even in his own deposition, he has no
where stated about his technical 'qualifications', 'expertise' or 'experience'
in this particular fi1dd to render 'expert opinion'. There is no 1naterial on H
486 SUPREME COURT REPORTS [1996] SUPP. 3 S.C.R.

A the record to show that he possessed any particular skill which entitled
him to 'dra\v conclusions' relevant to the matter entrusted to him by the
Investigating Officer. Therefore, he is not an "expert11 ll-ithin the meaning
of Section 45 of the Evidence Act and his report was hit by the bar of
section 162 Cr.P.C and was inadmissible in evidence. Once the report, Ex.
P-11 is ruled out of consideration as inadn1issible, then it is not safe to
B
rely on the mere, impressions of the \11tnesses to hold the appellants guilty
of the offences alleged against them. [507-A-G]

8. Though the appellants are established to have violated coda!
provisions besides departmental circulars and instructions regarding
C no1nination of contractors and allohnent of \\'ork to then1, yet, those
circun1stances cannot be said to be consistent only \Vith the hypothesis of
the guilt of the appellants or connect them with the crime alleged against
thenl. That because of the actions of the appellants in breach of codal
provisions, instructions and procedural safeguards, the State n1ay have
suffered financially, particularly by allotment of "'ork on nomination basis
D \Vithout inviting tenders, but those acts of on1ission and comn1ission by
the1nselves do not establish the co1nmission of criminal offence alleged
against them. [508-C-D; F-G]

Abdulla Mohammed Paga1kar v. State (Union Tenit01y of Goa,
E Daman and Diu }, [1980] 3 SCC 110, referred to.

9. Entrustment of work on nomination basis \\'as permissible under
Para 154, Note I A.P. P.W.D. Code also. As per G.O.Ms. No. 1007, TR &
B dated 5.11.76, the limit of monetary value fixed for entrustment of work
on nomination basis to an Executive Engineer is Rs. 20,000. The Superin·
F tending Engineer, Nellore in his Memo No. 599 dated 14.4.80 had advised
the Executive Engineers not to allot \Vorks costing more than Rs. 2500 as
it was required to be ratified by the Superintending Engineer. A circular
to this efl'ect \\'as issued to Assistant Engineers but an unacceptable plea
"'as raised that this circular had not been circulated and communicated
G and therefore it was not followed. [505-E-H]

10. The non-furnishing of reasons for entrusting the work on
nomination basis upto the value of Rs. 20,000 cannot be used as a cir-
cumstance of an incriminating nature against the appellants to establish
any 'dishonest' intention on their part in view of the directions issued by
H the superior oflicers to take up the work urgently because of the ensuing
C.CHENGAREDDYv. STATE 487

monsoon season. Even the splitting up of the work into parts, so as to allot A
it on nomination basis to bring it within the authorised powers of the
ExecutiYe Engineers, which \\'as against the codal provisions and the
circulars issued on the subject from time to time cannot be said to have
been done \lith the necessary "dishonest intention". [506-A-C]

11. There are ample admissions available in the prosecution evidence B
itself by various witnesses to the effect that all estimates and agreements
including the data sheets for the estimates had been checked earlier and
that no mistakes or irregularities had been found therein. This is evident
from the evidence of PWs 8, 11 and 12. None of the witnesses deposed that
the appellants did not inspect the site before preparation or sanctioning C
of the estimates for the clearance \Vork. These is no acceptable material on
the record from \l'hich a conclusive inference may be dra\vn to the eft'ect
that the n1easurements found recorded in the measurement book had not
been actually taken at the site of the work but were manipulated by the
concerned otlicials sitting in the office, though there may he a strong D
suspicion that it "'as so done. Such a strong suspicion, however, cannot
take the place of proof to fasten criminal liability on the appellants.
[501-C-H; 502-A; 503-G]
12. The circumstance that jungle clearance work is only maintenance
work, but, it had been allegedly allotted on nomination basis to the selected
contractor, without recording any reason for considering the \\'Ork to be of
E
an urgent nature cannot by itself be construed to be an incriminating
circumstance consistent only with the hypothesis of the guilt of the appel-
lants. The evidence on the record sho,vs that jungle clearance \rork was
taken up on urgent basis as maintenance of the canal to avoid breaches
during the rainy season on account of the directions issued by the Super- F
intending Engineer and the Chief Engineer in that behalf besides for
clearing the jeep track. [505-B-C]

13. Thus the prosecution has failed to establish that in 1979-80, no
work of jungle clearance in the Gandipalem Project Division was under-
taken and that false and fabricated documents were prepared with a view G
to misappropriate government funds. The prosecution has not even been
able to establish that less w0t* of jungle clearance was undertaken but
paynient was shown to have been 1nade for excessive work and some
amount out of the payment n1ade for the \\'Ork were thus misappropriated
by the appellants in connivance with the contractors. [508-G; 509-A-B] H
488 SUPREME COURT REPORTS [1996] SUPP. 3 S.C.R.

A Nellore South Division

14. The prosecution has failed to establish the case against the
appellants beyond a reasonable doubt. [517-D-E]

15. Influenced by the inadmissible report (Ex. P-10) the courts below
B concluded that the appellants had committed the offence alleged against
them. None of the "itnesses have stated that no work of jungle clearance
was done at the site and the allegation with regard to less work having been
done is based upon calculations made five years later by PW 8, which does
not afford conclusive evidence against the appellants. It was impossible to
C know in 1984 whether jungle clearance work had been carried out and if so
to what extent in the year 1979 on the basis of an ins1iection carried out live
years later in the year 1984. The maximum that can be said against the
appellants is that they committed some indiscretion in the matter of allot-
ment of jungle clearance work on nomination basis and also violated coda)
provisions in the matter of preparation of esti1uatcs, dra\\'ing up of the
D agreement and making payn1ents. These acts of 01nission and commission
du give rise to a strong suspicion that the appellants so acted with a view
to misappropriate Government funds but suspicion, howsoever, strong
cannot take the place of proof. [517-A-D]

16. The technical report submitted by PW 8 which is the sheet anchor
E of the prosecution case is not admissible. Even otherwise this report
prepared after visiting the site in 1984 to demonstrate the position as was
supposed to be existing at the site in 1979-80 is hardly of any value. [515-C]

17. May be, as alleged by the prosecution, clearing of the jungle and
up-rooting of stumps may be one operation and n1aking l\vo separate
F
payments, that is one for clearance of jungle above the ground level and the
other for up-rooting and removing the stumps may be objectionable and
against the codal provisions but in the absence of any evidence to show that
two separate payments were in fact not n1ade to the contractor it is not
possible to say that the charge of conspiracy has been established.
G [516-f-G]
18. While accepting the plea of the prosecution that the accused had
no power to allot work on work nomination basis and they adopted this
mode only as an eye \Vash to cheat the Government and misappropriate the
funds, the High Court and the trial court failed to properly appreciate the
H evidence on the record. Vide GOMs lio. 1007 dated 5.U.76 the Executive
C. CHENGAREDDY v. STATE 489

Engineer had been empol\'ered to entrust \Vork on nomination basis upto A
the value of Rs. 20,000 and that GO Ms No. 1007 was in force at the relevant
time. [516-A-B]

Ne/lore No1th Division •

19. In this case also no evidence has been led by the prosecution to B
show no ivoi* of jungle clearance \\'as at all undertaken. Since the prosecu-
tion nitnesses admitted in their evidence that some \\'Ork had been done, the
charge of conspiracy 1nust necessarily fail. Recourse has been n1ade to
surmises and conjectures by the courts below to hold that no wm* was
found to have been undertaken at the site when it was inspected in 1984. The C
courts belo\\' like in the case arising out of Gandipalen1 Project Division and
Nellore South Division allowed suspicion to take the place of proof to
convict the appellants. For a period of almost five years nothing was done
to verify the correctness or othernise of the allegations relating to jungle
clearance lVork. There does not appear to be any justification for the
prosecution to allege subsequently that the area from which jungle had been D
cleared in 1979 \\'as less than what was actually entered in the measurement
book on the basis of the site inspection carried out in 1984. The ornission on
the part of the department and the ACB to immediately inspect the site is a
serious lacuna in the prosecution case. The exercise undertaken in 1984
after a lapse of five years \\'as a futile exercise because once a jungle has be(n E
cleared and stumps up-rooted, nothing would remain as evidence on the soil
to show the extent to which the jungle was cleared 5-6 years earlier. It would
not even be possible to say whether there was any necessity for jungle
clearance at that earlier point of time. [520-B-C; E; 521-B-C; 522-B-C]

20. From the evidence on record it emerges that when work is F
entrusted on nomination basis to a contractor he may commence the work,
on oral instructions, even before the formal agreement is drawn up. The
agreement itself shows the entrustment of the work to have been done to the
contractor before the conclusion of the agreement and therefore no adverse
inference can be drawn against the contractor or the appellants for com- G
mencing the work before dra\\ing up of the formal agreement. [521-D-F]

21. It is clear from the evidence of PW 13 that if the branches of.
Julillora spread over the revetment area then that has also to be cleared
and the area over the revetnient will also have to be calculated for deter-
mining the total area of jungle clearance. In a disturbed revetn1ent there H
490 SUPREME COURT REPORTS [1996] SUPP. 3 S.C.R.

A is even otherwise the possibility of the grm•1h of Julillora. P.W. 7 who
conducted preliminary inCJuiry stated in his report that it was not possible
to lind out during the inCJuiry held in 1981 whether there in fact existed
any necessity for jungle clearance at the site or not; one fails to see how in
1984 the departmental otficials assisting the ACB could categorically
report about tht' non·existence of the necessity for jungle clearance in 1979.
B
Therefore, the extent of jungle \Vhich \Vas required to be cleared in 1979 on
the basis of "paper calculation" or inspection carried out in 1984 was not
possible to be determined. [522-D-G]

22. Whether the measurements were recorded in the measurement
C book after actually visiting the site or not \Vould only be violation of the
statutory circulars/instructions. It may even be violative of the codal
provisions but in the absence of any evidence, direct or circumstantial, to
establish that ilithout any work having been undertaken at the site, pay-
ments were allegedly n1ade 1 no offence can be said to have been established.
[523-B-C]
D
23. The circumstance that rn·o payments were made for clearing
jungle and stumps separately only shows the violation of coda! provisions
and comntission of irregularities but that does not by itself e~tablish any
criminality in so far as the appellants are concerned. [523-D-E]

E 24. None of the circumstances relied upon by the prosecution cannect
the appellants with the crime alleged against them. The circumstances have
not been proved beyond a reasonable .doubt and the circumstances taken
collectively cannot he said to be compatible only with the hypothesis of the
guilt of the appellants and totally incompatible with their innocence. There-
fore, the prosecution has not established the case against the appellants
F beyond a reasonable doubt. [523-E-F]

Ne/lore South Division • Contractor's Appeal

25. None of the circumstances relied upon by the prosecution against
G the appellant can be said to have been proved satisfactorily and all those
circumstances, "\\ hich are not of any clinching nature, even if held to be
1

proved do not complete the chain of evidence so complete as to lead to an
irresistible conclusion con~istent only with the hypothesis of the guilt of
the appellant and wholly inconsistent with his innocence. The prosecution
has not established the case against the appellant beyond a reasonable
H doubt. [527-D-EJ
C.CHENGAREDDY v. STATE 491

26. Strictly speaking: the abovesaid circun1stances cannot be called A
"circun1stances" against the appellant as the same are more in the nature
of "allegations" of the prosecution against the accused. Even othenvjse, so
far as circumstances (ii) to (vi) are concerned, they concern the oflicials
of the department, and may be relevant in the case of the appellant, if the
charge of conspiracy can be said to have been established. But the charge
B
of conspiracy has not been e~tablished. The evidence on record slHJ\VS that
jungle clearance work was being done at the site in 1979-80. It is nobody's
case that it \Vas being done departn1entally. The conclusion is irresistible
that the same had been done through tl~e agency of the appellant and the
charge of conspiracy must fail. [525-F-G; 527-B-C]
c
27. There have been some irregularities cnmmitted in the matter of
allotment work to the appellant or breach of coda! provisions, circulars
and departmental instructions, for preparation of estimates etc. and those
irregularities give rise to a strong suspicion in regard to the bona/ides of
the oflicial of the department and their link with the appellant, but that D
suspicion cannot be a substitute of proof. The courts below appear to have
drawn inference by placing the burden of proving innocence on the appel-
lant which is an impermissible course. [527-C-D]

Nellore No1th Division - Contractor's appeal
E
28. Prosecution has failed to prove the case against the appellant
beyond a reasonable doubt either through direct or circumstantial
evidence. The courts below have apparently taken a superficial view of the
matter and without considering the material on the record, recorded the
conviction of the appellant. [528-F]
F
29. There is no justification for conviction of the appellant. If the
appellant had nothing tu do with the contract, how could he be convicted
for allegedly not undertaking the work with which he, according to the
prosecution case itself had no concern. In the charge-sheet and the charge
framed against the appellant, the name of the appellant has been given as G
the contractor who was alleged to be a co-conspirator with the Engineers
and section oflicers to misappropriate Government funds by receiving
payments for doing no jungle clearance work. That there was clearance of
jungle at the site in question has been amply established from the prosecu-
tion evidence. Since, jungle clearance work has been found to have been
done in 1979-80 and it is not the prosecution case that it was done H
492 SUPREME COUIUREPORTS [1996] SUPP. 3 S.C.R.

A departmentally, the inference that it was done through the agency of the
appelJa~t appears to be fair and reasonable. The argument that contractor
is a fictitious person it self defeating. (528-B-F]

Punishnzent f(_lr udniinistrative breaches and conlJJlete justice for depa1t1nen-
tal officials.
B
30. In view of the established violation of the codal provisions and
administrative lapses by the departmental officials, a departmental en-
quiry n1ay be justified but in this fact situation, it would be an unnecessary
exercise. A co~rt of equity must so act, within the permissible limits so as
C to prevent injustice. "Equity is not past the age of child bearing" and an
effort to do justice bet\\-·een the parties is a compulsion of judicial con-
science. Courts can and should strive to evolve an appropriate remedy, in
the facts and circun1stances of a given case, so as to further the cause of
justice, \\'ithin the availalJle range and forging ne\V tools for the said
D purpose, if necessary to chisel hard edges of the law. In the established
facts and circumstances of these cases, it \vould be appropriate with a view
to do complete justice between the parties, in exercise of the jurisdiction
under Article 142 of the Constitution of India, to direct that no departmen-
tal inquiry shall now be initiated against the departmental otlicials for
their established administrative breaches and violation of the codal
E provisions in 1979-80. [530-A-E]

31. Consequent upon their acquittal, the otlicials concerned shall be
reinstated in service with continuity of service for all purposes but for their
established administrative lapses and breach of coda! provisions etc. they
F shall not be entitled to any back wages or any other type of monetary
benefit for the period they remained out of service. The suspension al-
lowance, if any, received by all or anyone of them shall however not be
recovered from them. This punishment appears to be commensurate with
the gravity of their lapses and shall serve the ends of justice. Those of the
officials who may have reached the age of superannuation in the
G meanwhile, will get their pensionary benefits calculated on the basis of
their continuous service but they shall be entitled to draw pension with
effect from the date of this order only. [530-E-G]

CRIMINAL APPELLATE JURISDICTION Criminal Appeal
H Nos. 52-105, 107-175 of 1993.
C. CHEN GA REDDY v. STATE [DR. ANAND, J.] 493

From the Judgment and Order dated 27.11.91 of the Andhra Pradesh A
High Court in Crl.A. Nos. 22, 142 and 240 of 1989.

K. Madhava Reddy, U.R. Lalit, A.S. Nambiar, D. Prakash Reddy,
Vimal Dave, Ms. Rani Chhabra and S.C. Patel for the Appellants.

Ms. K. Amareshwari, N.M. Reddy, K. Sethu Madhavan and Guntur B
Prabhakar for for the Respondent.

The Judgment of the Court was delivered by

DR. ANAND, J. This batch of appeals by special leave arise out of C
the Judgment and Order of High Court of Andhra Pradesh dated
27.11.1991. The appellants in these appeals are Executive Engineers,
Deputy Executive Engineers, Section Officers and contractors of Nellore
North Division, Nellore South Division and Gandipalem Project Division.
They alongwith a Superintending Engineer (since dead) and various con-
tractors were tried for offences under Sections 120-B, 420/34, 377A/34 !PC D
and Section 5(2) read with Section 5(1)(d) of the Prevention of Corruption
Act and on being found guilty were sentenced to different terms of im-
prisonment for the said offences. The circumstances under which the cases
arose are:

A Call Attention Motion was moved in the Andhra Pradesh Legis- E
lative Assembly in 1981 alleging large scale fraud, irregularities and il-
legalities committed in the execution of jungle clearance work by the
engineers and contractors in various divisions of Nellore District during
1978-1981. Consequent upon the Call Attention Motion, the Government
directed the then Deputy Engineer-in-Chief. Shri L.R. Kapoor PW. to F
examine and inquire into the allegations. He visited Nellore and after
conducting a preliminary inquiry submitted his report on 17.4.1981 pointing
out various illegalities and irregularities committed by the Engineers. The
Secretary, Irrigation Department of the Government of Andhra Pradesh
also directed the then Chief Technical Examiner. Mohd. Rahamathullak-
ban PW, to rnake an inquiry in to the allgations made on the floor of the G
assembly during the Call Attention Motion. It further transpires that the
Government of Andhra Pradesh issued G.O. Ms. No. 313 Irrigation and
Power Department dated 20.7.1981. Ex. Pl. appointing Shri N.V.M. Krish-
na, the then Chief Engineer, for carrying out departmental enquiry into the
works allegedly carried out in three Divisions, namely, Nellore North H
494 SUPREME COURT REPORTS [1996] SUPP. 3 S.C.R.

A Division, Ncllore South Division and Gandipalem Project Division and the
role of the concerned engineers. Chief Engineer Shri Krishna rW 1 sub-
mitted his report highlighting the irregularities and illegalities as noticed
by him. The case which had acquired importance on account of the call
attention motion in the legislative Assembly was then entrusted by the
B Government to the Anti Corruption Bureau (for short ACB) for inquiry.
The ACB officials conducted an inquiry and on 1.5.1982 submitted a
report. Ex. P.30 to the Director Anti Corruption Bureau with a request to
register a case against the appellants. Consequently, crime case No.
2/ACB/NLR/82 for various offences, as already noticed, came to be
registered against the appellants. The investigation was taken in hand by
C an Inspector of Police ACB in May 1984. On the request of the ACB, some
members of the engineering Staff of the department were deputed to assist
. it for purposes of collecting technical data etc. during the investigation. Site
inspections were also carried out to find out whether any work of jungle
clearance had in fact been done in 1979 in the three divisions and the area
D in which jungle clearance work could have been done in the year 1979 and
the question of making payments in respect of the work allegedly done.
After completion of investigation, chargesheets were filed by the ACB
against the appellants. The Learned Special Judge, after trial of the case,
found the appellants guilty of various offences and imposed varying terms
of imprisonments, including fine on different counts. The substantive sen-
E tences were, however, directed to run concurrently. Against their convic-
tion and sentence the appellants filed appeals in the High Court of Andhra
Pradesh. The High Court by its judgment dated 27.11.1991, confirmed the
conviction of the appellants on different counts but reduced the sentence
of imprisonment of the engineers to the period "till the rising of the Court".
F The sentence of fine and imprisonment in lieu, thereof, as imposed by the
trial court, was, however, maintained. The appellants have since paid the
fine and have undergone the sentence till the rising of the Court. By special
leave they have filed these appeals.

For facility of reference, we may mention that against the judgment
G of the Special Court in CC No. 1-8/87, 35 appeals were filed in the High
Court by 43 appellants therein. In this Court, the criminal appeals arising
out of that case are Criminal Appeal Nos. 72 - 74/93 etc. All these cases
relate to Gandipalem Project Division. Conviction and sentence imposed
in CC. 1/86 and the connected cases before the Special Court, led to the
H filing of 44 appeals in the High Court by 71 appellants therein. The
C.CHENGAREDDY v. STATE[DR.ANAND,J.J 495

Criminal appeals filed by them in this Court are Criminal Appeal Nos. 128- A
130/93 etc. All these relate to Nellore North Division. In respect of Nellcire
South Division, 68 appellants preferred criminal appeals in the High Court
against their conviction and sentence as recorded by the Special judge and
those cases from the batch of Criminal Appeal Nos. 99-101/93 etc. in this
Court. The Contractors had filed separate appeals in the High Court and B
Criminal Appeal No. 153193 and 170-71/93 etc. in this court arise out of
the appeals filed by the contractors.

Learned counsel for the parties submitted before us that since the
material facts, nature of evidence and the questions of law are similar in
all set of appeals, for the sake of convenience, four representative appeals C
one from each of the three Divisions, besides an appeal by the contractors
may be taken up for consideration by us. Consequently, on their suggestion
Criminal Appeal Nos. 72-74/93. Criminal Appeal Nos. 128-130/93, Criminal
Appeals Nos. 99-101/93 and Criminal Appeal No. 153/93 are taken up for
consideration, as representative appeals. There are one or two other D
appeals (Criminal Appeal 170-171/93), involving slightly different factors.
and we shall deal with those also during the course of the judgment. All
the appeals are, therefore, being disposed of by this common judgment.

As a normal rule, this Court does not in exercise of its jurisdiction
under Article136 of the Constitution of India, while hearing appeals by E
special leave, reappreciate the evidence, where two courts have concurrent-
ly appreciated the evidence and arrived at findings of guilt of the accused
persons. However in the light of the submissions made at the bar, with a
view to satisfy our judicial conscience, we have examined some of the
evidence led in the cases and in particular that evidence 'which appears to p
have principally influenced both the trial court and the High Court to
convict the appellants. We may point out here that in all these cases, there
is no direct el<idence available on the record connecting any of the appel-
lants with the commission of the crime alleged against them. The entire
case hinges on circumstantial evidence and unfortunately neither the trial
court nor the High Court have catalogued the circumstances relied upon G
by the prosecution against the appellants, except for broad generalisations
on the basis of the charges framed against them.

From the prosecution case, as emerging out of the evidence of PW
1 to PW 21 and documents Ex. Pl to Ex. P 34 , it transpires that Irrigation H
496 SUPREME COURT REPORTS [1996) SUPP. 3 S.C.R.

A Circle, Nellore comprises of four Divisions, namely, (i) Nellore North
Division, (ii) Nellore South Division (iii) Gandipalem Project Division and
(iv) Special Investigation Division. During 1978-81, Shri Duggi Reddy was
posted as the Superintending Engineer of Irrigation Circle, Nellore. He
was having control over all the four Divisions. Different Executive En-
B gineers, Deputy Executive Engineers, Assistant Executive Engineers, Sec-
tion Officers and other staff were posted in the four divisions to look after
the affairs of their respective divisions. In these appeals we arc concerned
with the allotment of jungle clearance work in the first three divisions of
Nellore Irrigation Circle only. The work of the clearance of the jungle is
normally required to be undertaken departmentally through Luscars, since
C it is treated as maintenance work, but it is the case of the prosecution that
in these cases work for clearance of jungles was allegedly allotted to
contractors on nomination basis in 1979-80 but without any such work
having actually been done it was "represented" that jungles had been
cleared and payments made to the contractors, which amount was in fact
D misappropriated by the departmental officials and the contractors. The
· total expense involved was Rs. 1,15,663 for 12 + l works in the Nellore
North Division ; Rs. 1,95,108 for 17 works in the Nellore South Division
and Rs. 26,068 for 8 works in the Gandipalem Project Division. According
to the prosecution case, the Executive Engineers were not authorised ~o
allot work on nomination basis to the contractors without inviting tenders
E but with a view to bring each of the 'contracts' within their pecuniary
jurisdiction, they 'broke' the contracts into smaller amounts and without
any work of jungle clearance having been actually undertaken payments for
the work shown to have been made which were actually misappropriated
by the accused thereby causing loss to the State Exchequer and wrongful
F gain to themselves. The prosecution, at the trial also tried to establish that
"less work" was done though payments were made for "excessive work" and
the difference in the payments was misappropriated. There is no dispute
that though the jungle clearance work was supposed to haye been done in
1979-80, the matter only came to light, through the call attention motion in
the Legislative Assembly in 1981 and even then it was not till 1984 that any
G physical inspection of various sites was undertaken, except some random
checks made by PW Shri Krishna in 1982. The substratum of the prosecu-
tion case has emerged out of the inspections carried out in 1984.

With this general background, we shall now take up for consideration
H each of the representative appeals, as already observed. Our findings shall
C. CHENGAREDDY v. STATE [DR.ANAND,J.] 497

apply to all the appeals arising out of the concerned division . A
•
CRIMINAL APPEAL NOS. 72-74 OF 1993. (Gandipalem Project
Division)

The substratum of the charge in these appeals, which relate to
Gandipalem Project Division, is that with dishonest intention of misap- B
propriating Government funds, the appellants floated work for so called
clearance of Prickly Pier Jungle on the reach 15/0 to 15/4 mile on Kanpur
Canal but without actual execution of that work, made payment of Rs. 2869
to the contractor, Dunji Ramaiah. The said amount was misappropriated
and wrongful loss was caused to the Government of Andhra Pradesh. Five C
Officials, besides a contractor, were arrayed in the case as accused. While
Al and A2, were at the relevant time serving as Executive Engineers, A3
and A4 were serving as Deputy Executive Engineers (formerly Assistant
Engineers) and A5 was working as the Section Officer. Shri D.B. Duggi
Reddy, Superintending Engineer, who was also arrayed as an accused, died
and the case against him abated. The contractor Dunji Ramaiya died D
during the pcndency of the case in the trial court and the case against him
also abated. As already noticed after the call attention motion in the State
Assembly, an inquiry had been ordered into the allegations and Shri L.R.
Kapoor, Deputy Engineer-in-Chief (Irrigation P.W. was appointed as the
Inquiry Officer. The terms of his reference included enquiry into the E
allegations of the work of jungle clearance allegedly done in Gandipalem
Project Division. In his report, while dealing with jungle clearance work of
the Kanpur Canal he stated :

11
While the necessity or otherwise for jungle clearance cannot be
established at this distant date, more so without inspections of the F
sites of works it appears that there was no justification for givi'ng
the above works on nomination. Even in the report accompanying
the estimates, the urgency for the execution of works·has also not
been explained. Jungle clearance for the following works was done
by the Executive Engineer, Gandipalem Project Division : G
1. Jungle clearance along the allignment of Thikavatapadu branch
channel from 3.8 km to 8.8 km - Divisional Register No. 72 of 1980-81
Rs. 9800.

2. Jungle clearance along the allignment of Ambapuram Branch H
498 SUPREME COURT REPORTS [1996] SUPP. 3 S.C.R.

A Channel from km. 2.7 to 5.6 km Divisional Register No. 347/KC of 1979-80
- Rs. 8100.
•
The above two estimates are for conducting site surveys of the
branch channels of the Kanpur Canal Scheme. Jungle clearance
was done before doing surveys and levelling to enable the prepara-
B tion of plans and estimates for taking up the execution of the said
works. The estimate indicate the urgency for execution of the works
and hence there appears to be some justification for taking up
these works on nomination. The necessity or otherwise of the
jungle clearance cannot be established al this distant date more so
c in the absence of site inspection.IT

While summing up he observed :

"The Executive Engineers, Nellore South Division, Nellore North
Division and Gandipalem Divisions are answerable for having
D
sanctioned estimates \vithout inspection of the works in utter
disregard to the instructions issued by the superintending En-
gineer - vide Annexure No. 23 and 24".

Subsequently, Sh. N.V.M. Krishna Chief Engineer (Investigation)
E PW conducted an inquiry and in respect of Gandipalem Project Division,
in his report, he pointed out certain irregularities in the matter of allotting
the jungle clearance work to 'chosen contractors' on nomination basis. He
submitted his report to the Government. It appears that the matter was
simultaneously entrusted to the ACB also who after making a preliminary
F inquiry submitted their report dated 1.5.82 to the Director Anti Corruption
Bureau and sought his permissio11 to register case against the accused and
others on the allegation of making 'excessive payments'. According to the
preliminary report of ACB excessive payments had been made for jungle
clearance work and that irregularities had been committed in allotting the
work on nomination basis. At the trial, however, the prosecution sought to
G establish that no work of jungle clearance had been carried out at all and
that the entire amount alleged to have been spent for jungle clearance was
i.n fact dishonestly misappropriated by the appellants, in collusion with the
confr'actor.

H The appellants were put on trial on the following charges :
C. CHEN GA REDDY v. STATE [DR. ANAND, J.] 499

"(i) That you the abovenamed A-1 to A-5 and one D.B. Duggi A
Reddy formerly Superintending Engineer of Nellore, during the
year 1979-80 conspired to float the work known as Prickly Pier
jungle clearance on the banks of Kanpur Canal from mile 15/0 to
15/4 situated at a distance of 2 miles West of South Mopur, Nellore
District in violation of established rules under P.W.D. Code with B
intent to cheat the Govt. of AP. and that the said act was done in
pursuance of the agreement between you all who thereby com-
mitted an offence punishable under section 120 B of the Indian
Penal Code and within my cognizance ;

(ii) Secondly, that you the abovenamed A-1 to A-5 herein being C
the public servants employed as formerly Executive Engineers,
Deputy Executive Engineers and Section Officer of Gandhiupalem
prciject division respectively during the period between 1979-80 at
the workspot i.e. on the banks of Kanpur canal from mile 15/0 to
15/4 as mentioned in charge No. 1 above by corrupt and illegal
means in abuse of your official position as such public servants D
obtained for yourselves pecuniary advantage to the extent of Rs.
2,869 and thereby committed an offence punishable under section
5(2) read with 5(1)( d) of the Prevention of Corruption Act, 1947
and within my cognizance :

(iii) Thirdly, that you the abovenamed accused Nos. 1 to 5 at about E
the same time, place and date as mentioned in charge N0 . 1 above
cheated the Govt. of AP. with regard to the work of prickly pier
jungle clearance at the banks of Kanpur canal to a tune of Rs.
2,869 and that you thereby committed an offence punishable u/s.
UO r/w 34 of I.P.C. and within my cognizance ;
F
(iv) And fourthly, that you the abovcnamed A-1 to A-5 alongwith
deceased D.B. Duggi Reddy at about the same date, time and place
as stated in charge No. 1 above being the public servants of P.W.D.
Department of GoVt. of AP. wilfully and with intent to defraud
the govt. of AP. created false records with regard to the work G
mentioned in charge No. 1 above which belonged to the Govt. and
you all thereby committed an offence punishable u/s. 477-A r/w.
34 of the I.P.C. and within my cognizance."

After considering both oral and documentary evidence, the trial
court, convicted the appellants for various offences with which they had H
500 SUPREME COURT REPORTS [1996] SUPP. 3 S.C.R.

A been charged. The appeals filed by the appellants, except for reduction of
the sentence was also dismissed by.the High Court. fa its order dismissing
the appeals, the High Court opined :

(i) during the year 1979-80. A-1 lo A-5 alongwilh one late D.B.
Duggi Reddy conspired to flout the work known as 'prickly pier
B jungle clearance' on the banks of Kanpur canal from mile 15/0 to
15/4 situate at a distance of 2 mile west of South Mopur, Nellore
district in violation of the established rules under P.W.D. Code
with intention to cheat the Government of Andhra Pradesh ;

C (ii) that A-1 to A-5 being public servants obtained for themselves
pecuniary advantage lo the extent of Rs. 2,869 by corrupt and
illegal means by abuse of the official position ;

(iii) that A-1 lo A-5 cheated the Government to the lune of Rs.
2,869 without doing the jungle clearance work in flagrant disregard
D of the Coda! rules ; and

(iv) that A-1 lo A-5 wilfully and with an intention to defraud the
Government created false records with regard to the prickly pier
jungle clearance work on Kanpur canal from mile 15/0 to 15/4."
E We have heard learned counsel for the parties and examined some
of the evidence relied upon by the courts below, with a view to find out
whether prosecution has established that "no work" of clearance of Prickly
Pier jungle was done at all and the amount was misappropriated by
preparing false documents.
F
From the evidence of PW 1 Shri NVM Krishna Chief Engineer
(Investigation) who had conducted the second inquiry we find that he
admitted that he did not inspect any work under Kanpur Canal and that
his observations as reflected in the report Ex. P2 were not applicable to
any of the works on the Kanpur Canal. PW 4 Sheikh Mehboob Sharif,
G admitted in his cross-examination that during their inspection of the site in
1984 they had noticed signs of the removal of prickly pier jungle on the left
bank of Kanpur canal. The prosecution has led no evidence to show that
after 1979 any work had been done for removal of prickly pier jungle on
the banks of Kanpur canal and therefore from the evidence of PW 4, it
H follows that 'some' work of clearance of prickly pier jungle at the banks of
C.CHENGAREDDY v. STATE[DR.ANAND,J.] 501

Kanpur canal had been undertaken prior to the inspection of the site by A
the inspecting team. It was rather impossible to have found out in 1984
whether any work or the extent of it, had been done in fact for clearance
of the prickly pier jungle in 1979-80 i.e. 4/5 years ago and PW 7 Shri Raja
Rao. Commissioner of Project, rightly admitted that in case of jungle
clearance after the completion of work, it is not possible to know either
B
the quantum of work or the extent of jungle clearance by site inspection
carried out after some time.

So far as the prosecution case that false and fictitiot1s records relating
to the preparation of estimates, allotment of work on nomination basis,
drawing up of the agreements and making payments is concerned, we find c
that there arc ample admissions available in the prosecution evidence itself
by various witnesses to the effect that all the estimates and agreements
including the data sheets for the estimates had been checked earlier and
that no mistakes or irregularities had been found therein. Reference in this
connection may be made to the statement of PW 8 Syed Ismail, who clearly D
deposed that he had checked the estimates and agreements etc. and
forwarded the same and had there been any mistake in the same, he would
have reported the same to the sub Divisional Officer for rectification but
no such action was taken because no mistakes 'vas observed. According t.o
Shri BVG Krishna Murthy, PW 11 who had scrutinised the bill relating to
jungle clearance work from miles 15/0 to 15/4 and had put his initials in E
the measurement book also he had not noticed any irregularity in the bill
and that the corrections found in the estimates and other documents
accompanying the estimates stood explained. It appears that while subor-
dinate officers had proposed clearance of larger areas, the concerned
Executive Engineer had corrected the estimates by reducing the area uf F
jungle clearance and hence the corrections. That the Executive Engineers
had the powers to correct the estimates prepared by the Section Officers
has been categorically admitted by PW 12 K. Ram Mohan Rao in his
statement at the trial. It, therefore, appears to us that the trial court drew
on its imagination to hold that the corrections made in the estimates and G
other documents established that the entries had been 'manipulated' to
show that jungle clearance work had been undertaken when it had not been
so effected and that the corrections etc. had been made by the Executive
Engineers without actually visiting the site and without making any actual
verification at the spot. There is no materia1 available on the record to
support the above observations. None of the prosecution witnesses deposed H
502 SUPREME COURT REPORTS [1996] SUPP. 3 S.C.R.

A that the appellants did not inspect the site before preparation or sanction-
ing of the estimates for the clearance work. The trial court, as well as the
High Court, it appears did not also correctly appreciate the true scope and
ambit of Ex. P 4(a), the statement accompanying the estimates to clear the
prickly pier jungle on the banks from miles 15/0 to 15/5 of Kanpur Canal.
B The statement accompanying the estimate records that the estimates pro-
vide for clearing of the prickly pier jungle on the banks of the canal, both
right and left, "which is obstructing the jeep track". Whether or not the
clearance of jungle on the right bank was, necessary for removing obstruc-
tion of the jeep track was immaterial and V(hat was relevant was whether
the jungle clearance work had been undertaken or not. Making payment
C for clearance of jungle on the right baak, which was not necessary may give
rise to an inference that the departmental officials had been negligent and
did not act in the best interest of the department but from that action of
the officials, it is not possible lo draw the conclusion that the official
committed the offence alleged against them. The prosecution evidence
D reveals that the clearance of prickly pier jungle on the left and the right
bank was also undertaken with a view to properly maintain the canal banks
and to prevent their breaches during the rainy season besides facilitating
the removal of obstruction of the jeep track. The High Court conjeclurised
while observing that since clearance of the right bank was not necessary
for clearing the view of the jeep track "its clearance was not done". This is
E against the weight of evidence on the record.

There is not an iota of evidence led by the prosecution to prove that
no work at all was done for clearance of prickly pier jungle on the reach
15/0 to 15/4 mile on Kanpur Canal in 1979-80. As a matter of fact, the
F prosecution has led evidence to show that some work had been done but
it is alleged that payments had been made for excessive work. As already
noticed during the investigation, the inspecting team had noticed existence
of signs of removal of prickly pier jungle on the banks of the canal. There
being no evidence to show that after 1979 some work had been undertaken
for removal of prickly pier jungle on any of the banks of the canal, a
G reasonable inference lo be drawn would be that some work had in fact
been done and therefore the charge against the appellant that no work had
been done is belied by the prosecution evidence itself. In view of the
admission of PW 7, Shri Raja Rao. Commissioner of Projects, that in case
of jungle clearance, after the completion of work, it is not possible to know
H the exact quantum of work on inspection of the site years later, the notes
C. CHEN GA REDDY v. STATE (DR. ANAND, J.] 503

made by the inspecting team in 1984 lose all their relevance and sig- A
nificance. The inferences drawn by the courts below that the estimates had
been prepared by A-5 without actually visiting the site ; that A-3 had
forwarded the estimate without actual verification at the spot and that A-1
had made corrections without any physical verification at the spot are
based on no evidence. The courts below have relied upon surmises rather B
than any evidence to draw such inferences, because none of the prosecu-
tion witnesses deposed that the appellants did not inspect the site before
preparation and sanctioning of the estimates and preparing bills in respect
thereof. Section Officer A-5 had proposed jungle clearance on the right
bank as well as on the left bank because he had found that jungle was
obstructing the jeep track. The courts below relied upon the enteries in the c
log book Ex. P-19 to hold that the verification purporting to have been
done at the site was false. Neither the driver of the vehicle nor anyone else
from the department was examined at the trial lo prove the enteries in the
log book. The correctness of the log book has remained rather doubtful.
Even otherwise the absence of entry in the log book, which admitteclly was D
not being maintained by the accused, cannot give rise to an irresistible
conclusion that the engineers of the department did not visit the site for
actual verification. The vagueness regarding sho\ving nature of the work or
its details or mentioning that in some places the jungle to be clearecl was
"light junglcn and not 11 prickly pier jungle11 in the measureme11t book also
E
cannot Jead to a conclu_sion, much less an irresistible one, that the wrong
mentioning hacl been made in the agreement regarding the nature of the
work because A-3 had not visited the site while verifying the actual
clearance of jungle on 7.7.79. In this regard the statement of PW 11 Shri
Krishnamoorthy, who admitted in his deposition that he had scrutinised the
bill relating to jungle clearance work of Kanpur Canal from reaches 15/0 F
to 15/4 miles on 27.8.79 assume significance particularly because PW 11
had also put his initials in the measurement book, Ex. P6 at page 32 relating
to the relevant bill. There is, therefore, no acceptable material on the
recorcl from which a conclusive inference may be drawn to the effect that
the measurements founcl recorded in the measurement book Ex. P6 had G
not been actually taken al the site of the work but were manipulated by
the concerned officials sitting in the office, though there may be a strong
suspicion that it \Vas so done. Such a strong suspicion, however, cannot take
the place the proof to fasten criminal liability on the appellants.
H
A careful perusal of the report Ex. P4( a) shows that the proposal
504 SUPREME COURT REPORTS [1996] SUPP. 3 S.C.R.

A that had been prepared was for jungle elearar.cc on both the banks of the
canal and the mere fact that subsequently the inspecting team found that
no clearance was actually required on the right bank does not militate
against the probability that even though not required, yet jungle clearance
was also done on both the banks i.e., the right and left bank, as proposed
B because of error of judgruent or carelessnc~s of the dt:partmental officials.
If, the work was done, the question whether it was required to be done or
not, could not be used _as an incriminatory circumstance against the appel-
lants lo draw an irresislable inference of their guilt after excluding the
hypothesis of their innocence. We are unable lo subscribe to the observa-
C lion : "that there was no necessity of clearance of jungle over the said bank
as the jungle could not damage any part of the canal and therefore the
proposal for clearance of the jungle had been made with a dishonest
intention of boosting up of the area and to draw more funds from the
Government." The observations are rather conjectural and arc against the
D weight of evidence on the record. Again, in vain have we searched through
the evidence for support for the observations of the courts below that the
depth of the Kanpur Canal was only 15 ft. and the length of jeep track only
203.16 sq. mts. There is no evidence on the record to that effect and on
the contrary, the evidence of PW 12 Shri K. Rammohan Rao is to the effect
E that the depth of Kanpur Canal at the reach between 15/0 to 15/4 miles
ranges from 6.33 ft. to 9.74 ft. The inspecting agency did not take any
measurements, but adopted a method of calculating the area by multiplying
the assumed width of the jeep track with the length of the canal to hold
the length of the jeep track to be only 203.16 sq. mis. According to the
F case of the appellants, they had prepared the estimates and sanctioned the
work of jungle clearance for the entire reach taking into account both the
banks, inclusive of the area obstructing the jeep track. In our opinion, the
trial court quite unjustifiably found that the appellant had failed to deduct
the area occupied by the rough stone inlet. No evidence was led to show
that the rough inlet was in existence prior to 1979 on the bank of Kanpur
G canal. The mere fact that the investigating agency in 1984, after a period
of five years~ found that a rough stone inlet \Vas in existence was inconse-
quential particularly since PW 12 Shri K. Rammohan Rao admitted during
his cross-examination that he could not say as to when the rough stone inlet
found on the left hank had in fact been constructed. There was, thus, no
H acceptable material on the record to establish the existence of the rough
C. CHENGAREDDY v. STATE [DR.ANAKD,J.] 505

stone inlet prior to or in 1979, when jungle clearance work was done and A
no adverse inference could have been drawn against the appellants on
account of the existence of rough stone inlet on the left bank of the canal
in 1984. It was the fact situation existing in 1979-80 which was relevant and
not the situation as existing in 1984.
B
One other circumstance which has been relied upon by the prosecu-
tion against the appellants is that jungle clearance work is only main-
tenance work, but, it had been allegedly allotted on nomination basis to the
selected contractor, without recording any reasons for considering the
work to be of an urgent nature. This circumstance, however, in our opinion,
by itself cannot be construed to be an incriminating circumstance consis- c
tent only with the hypothesis of the guilt of the appellants. The evidence
on the record shows that jungle clearance work was taken up on urgent
basis as maintenance of the canal, to avoid breaches during the rainy
season on account of the directions issued by the Superintending Engineer
and the Cheif Engineer in that behalf besides for clearing the jeep track. D
The appellants, according to their learned counsel, made allotment
of work to the contractor on nomination basis by virtue of the powers
conferred upon the Executive Engineer in that behalf under G.O. Ms. 1007
dated 5.11.1976. It was argued that vide G.O. 69 dated 1.2.1978, it had been E
decided to allot 15% of the work to the weaker sections of the society and
the allotment of the work to Shri Dunji Ramaiah, contractor, who admit-
tedly belonged to the weaker section of the society, on nomination basis,
was fully justified. The evidence of PW 5, shows that entruslmenl of work
on nomination basis was permissible under Para 154. Note I, A.P. P.W.D.
Code also. As per G.O. Ms. No. 1007, TR & B dated 5.11.76, the limit of F
monetary value fixed for entrustment of work on nomination basis to an
Executive Engineer is Rs. 20,000. The Superintending Engineer, Nellore in
his Memo. 599 dated 14.4.80 had advised the Executive Engineers not to
allot works costing more than Rs. 2500 on nomination basis without his
prior approval. It was stated that if the cost of work exceeded Rs. 2500 it G
was required to be ratified by the Superintending Engineer. A-1 had
hiraself issued a circular, Ex. P 17 to all the Assistant Engineers working
under him and to the draftsmen directing them not to propose nomination
for work costing more than Rs. 2500. A-1 in his statement recorded under
Section 313 Cr.P.C. stated he had issued circular Ex. P-17 but took the
unacceptable plea that the circular had not been circulated and communi- H
506 SUPREME COURT REPORTS (1996] SUPP. 3 S.C.R.

A cated lo his subordinates and therefore it was not followed. The finding of
the courts below that A-1 to A-4 violated the coda! provisions as well as
circulars and instructions issued from time to time are amply supported by
the circumstances and other material on the record. However, the non-
furnishing of reasons for entrusting the work on nomination basis upto the
value of Rs. 20,000 cannot be used as a circumstance of an incriminating
B nature against the appellants to establish any 'dishonest' intention on their
part in view of the directions issued by the superior officers to take up the
work urgently because of the ensuing monsoon season. Even the splitting
up of work into parts, so as to allot it on nomination basis to bring it within
the authorised powers of the executive engineers, which was against the
C Coda! provisions and the circulars issued on the subject from time to time
cannot be said to have been done with the necessary "dishonest intention".
Jn our opinion, whereas the appellants are established to have violated
codai provisions besides departmental circulars and instructions regarding
nomination of contractors and allotment of work to them, yet, those
D circumstances cannot be said to be consistent only with the hypothesis of
the guilt of the appellants or connect them with the crime alleged against
them. 111 fairness to learned counsel for the appellant we must observe that
he did not challenge the findings regarding administrative lapses and
breach of coda! provisions but emphasised that for those lapses they could
not be held guilty of the criminal offences alleged against them.
E
The conclusions arrived at by the courts below that the official
appellants did not follow the codal provisions and that they have committed
gross financial irregularities and administrative lapses in the matter of
clearance of the prickly pier jungle under Kudimaramath Rules and other
relevant provisions cannot be faulted with but nonetheless, the same cannot
F
be construed as 11 incriminating circumstancesn to fasten criminal liability on
the appellants.

It appears to us that the trial court and the High Court were greatly
G influenced by the technical report Ex. P-11 prepared by PW 12 Shri K.
Ram Mohan Rao to hold the appellants guilty. In this report, PW 12 inter
alia pointed out various irregularities committed by the appellants while
preparing the estimate, nomination of the contractor for the. execution of
the work and drawing up of the agreement with the contractor etc. He also
opined that the corrections had been made in the estimate Ex: P 4 with a
H view to conceal facts and project a false fact-situation. This report is sheet
C.CHENGAREDDY v. STATE[DR.ANAND,J.] 507

anchor of the prosecution case but in our opinion it could not have been A
relied upon as it was clearly inadmissible in evidence and the opinion of
the High Court to the contrary is not acceptable. PW 12 Shri K. Ram
Mohan Rao was serving in the Irrigation Department when he was
entrusted with the task of assisting the investigating officer of ACB during
the investigation in this case. Perusal of Ex. P 32 shows that he had been
B
issued specific orders to report lo the ACB and assist the investigation
agency. He prepared his report Ex. P-12, during the course of the inves-
tigation and submitted it to ·PW 19, the investigating officer on 30th June,
1984 after the FIR in this case, Ex. P-24, was registered by PW 19 on
17.5.1982. PW 12 was examined by the investigating officer after he had
submitted the report and his report, forms a part of his statement recorded C
by ACB under Section 161 Cr.P.C. Under these circumstances the obser-
vations contained in report Ex. P 11, which technically and factually form
a part of the statement of PW 12, recorded during the investigation of the
case by PW 19 is, hit by Section 162 Cr.P.C. No statement made by any
person to a police officer during the course of investigation can be used D
for any purpose at any enquiry or trial in respect of any offence under
investigation at the time when such statement was made, except for the
purpose of contradicting a witness as provided under Section 145 of the
Evidence Act. Admittedly, Ex. P 11 has not been used for any of the
purposes envisaged by Section 145 of the Evidence Act but as a substantive
piece of evidence. The opinion of the courts below that the statement E
contained in Ex. P 11 was not hit by Section 162 Cr.P.C. on the ground
that PW 12 was an expert within the meaning of Section 45 of the Evidence
Act and his report Ex. P 11 submitted to the investigating officer was as
such not hit by Section 162 Cr.P.C. is clearly erroneous as PW 12 does not
qualify as an v.pert within the meaning of section 45 of the Evidence Act. F
Even in his own deposition, he has no where stated about his technical
'qualifications', 11 expertise 11 or 11 experience 11 in this particular field to render
"expert opinion". There is no material on the record to show that PW 12
possessed any particular skill which entitled him to "draw conclusions"
relevant to the matter entrusted to him by the investigating officer. We are,
therefore, of the opinion that PW 12 is not an 'expert' within the meaning G
of Section 45 Evidence Act and Ext. P 11 was hit by the bar of Section 162
Cr.P.C. and was inadmissible in evidence and could not have been relied
upon in the criminal trial to fasten criminal liability on the appellants.

Jn a case based on circumstantial evidence, the settled law is that the H
508 SUPREME COURT REPORTS [1996] SUPP. 3 S.C.R.

A circumstances from which the conclusion of guilt is drawn should be fully
provc<l and such circumstances must be conclusive in nature. Moreover, all
the circumstances should be complete and there should be no gap left in
the chain of evidence. Further, the proved circumstances must be consis-
tem only with the hypothesis of the guilt of the accused and totally
B inconsistent with his innocence. In the present case the courts below have
overlooked these settled principles and allowed suspicion to take the place
of proof besides relying upon some inadmissible evidence.

On a careful consideration of the material on the record, we are of
the opinion that though the prosecution has established that the appellants
C have committed not only coda! violations but also irregularities by ignoring
various circulars and departmental orders issued from time to time in the
matter of allotment of work of jungle clearance on nomination basis and
have committed departmental lapse yet, non of the circumstances relied
upon by the prosecution are of any conclusive nature and all the cir-
D cumstances put together do not lead to the irresistible conclusion that the
said circumstances are compatible only with the hypothesis of the guilt of
the appellant and wholly incompatible with their innocence. In Abdulla
Mohammed Pagarkar v. State (Union Territo1y of Goa, Daman and Diu),
[1980] 3 SCC 110, under somewhat similar circumstances this Court opined
that mere disregard of relevant provisions of the Financial Code as well as
E ordinary norms of procedural behaviour of government officials and con-
trac1:0rs, without conclusively establishing, beyond a reasonable doubt, the
guilt of the concerned officials and contractors, may give rise to a strong
suspicion but that cannot be held to establish the guilt of the accused. The
established circumstances in this case also do not establish criminality of
F the appellants beyond the realm of suspicion and, in our opinion, the
approach of the trial court and the High Court to the requirements of proof
in relation to a criminal charge was not proper. That because of the actioJIS .
of the appellants in breach of coda! provisions, instructions and procedural
safeguards, the State may have suffered financially, particularly by allot-
ment of work on nomination basis without inviting tenders, but those acts
G of omission and commission by themselves do not establish the commission
of criminal offences alleged against them. We may reiterate that once the
report, Ext. P 11, is ruled out of consideration as inadmissible, then it is
not safe to rely on the mere impressions of the witnesses to hold the
appellants guilty of the offences alleged against them. The prosecution has
H failed to establish that in 1979-80, no work of jungle clearance in the
C. CHEN GA REDDY v. STATE [DR. ANAND, J.j 509

Gandipalem Project Division was undertaken and that false and fabricated A
documents were prepared with a view to misappropriate government funds.
The prosecution has not even been able to establish that less w01k of jungle
clearance was undertaken but payment was shown to have been made for
excessive work and some amount out of the payments made for the work
were thus misappropriated by the appellants in connivance with the con- B
tractors. The comoction and sentence imposed against the appellants
_, (which had been reduced by the High Court to a token sentence) under
the circumstances cannot be sustained and we accordingly accept the
appeal and set aside their conviction and sentence. Fine paid by the
appellants shall be refunded to them.
c
Criminal Appeal Nos. 99-101/93 (Ne/lore South Division)

The three appellants in these appeals were at the relevant time
serving as Executive Engineer, Deputy Executive Engineer and Section
Officer respectively in the Nellore South Division. The allegations against
them and D.B. Duggi Reddy, Superintending Engineer (since dead) relate D
to the clearance work undertaken in the year 1979 in respect of J uliflora
Jungle at North Mopur, Large Tank 1800 M to 2000 M in Kovur Taluk,
Nellore District. The contract with regard to the clearance of the jungle
work was·given by the accused Executive Engineer, to the accused CO!ltrac-
tor on nomination basis for which payment was made on alleged comple- E
ti011 of the clearance work though in fact no payment should have been
made as 'no work' was done and the entire amount was misappropriated
by the appellants and the contractor. The contractor has filed a separate
appeal. The accused were put to face their trial on the follO\ving charges :
:
"(i) That you, the above named Al to A4 herein and one D.B. F
Duggi Reddy (deceased Superintending Engineer) during the year
1979-80 conspired to float the work known as Clearing and uproot-
ing the jungle at North Mopur, Large tank from 1800 M to 2000
Min Kovur Taluk, Nellore District in violation of established rules
under PWD Code, with intent to cheat the Govt. of AP. and that G
the said act was done in pursuance of the agreement between you
all and thereby committed an offence punishable u/s. 120-B of the
Indian Penal Code and within my cognizance.

(ii) Secondly, that you the above named Al to A3 herein being
public servants employed as formerly Executive Engineer, Dy. H
..

510 SUPREME COURT REPORTS [1996] SUPP. 3 S.C.R.

A Executive Engineer and Assistant Executive Engineer of Alluru
Section respectively during the period between 1979-80 at the
work spot i.e. North Mopur large tank from 1800 M to 2000 M
mentioned in charge No. 1 above by corrupt and illegal means in
abuse of your official position as such public servants obtained for
yourselves or for A4 pecuniary advantage to the extent of Rs.
B
13,164 and thereby committed the offence punishable u/s. 5(2) r/w.
5(l)(d) of the Prevention of Corruption Act, 1947 and within my
cogmzance.

(iii) Thirdly that you the above named Accused Nos. 1 to 4 herein
c at about the same time, place and date as mentioned in charge
No. 1 above cheated the Govt. of A.P. with regard to the work of
clearing and uprooting the jungle at North Mopur large tank from
1800 M to 2000 M to a tune of Rs. 13,164 and that you thereby
committed an offence punishable u/s. 420 r/w. 34 of the !PC and
within my cognizance.
D
(iv) And, fourthly, ihat you the abovenamed accused Nos. 1 to 4
herein along with deceased D.B. Duggi Reddy at about the same
date, time and place as stated in charge No. 1 above being the
public servants and contractor respectively of P.W. Department of
E the Govt. of AP. wilfully and with intent to defraud the Govt. of
A.P. created false records with regard to the work mentioned in
charge No. 1 above which belonged to the Govermnent and you
all thereby committed an offence punishable u/s. 477-A r/w. 34 of
!PC and within my cognizance."

F After trial, the learned Special Judge recorded the finding that no
work with respect to the clearance and uprooting of the stumps of Juliflora
jungle was undertaken at North-Mopur large tank and that the entire
contract had been given surreptitiously and payments misappropriated and
convicted the appellants and the contractor for offences under Sections
G 120-B !PC, 420/34 !PC, 477 N34 !PC as well as for offences under Section
5(2) read with 5(1)(d) of the Prevention of Corruption Act. The accused
were sentenced as follows :

"A.1 to A.4 to unclergo RI for a period of one year each for the
offence u/s. 120B !PC; RI for a period of two years each and to
H pay a fine of Rs. 1000 ea,ch i/d to undergo RI for 4 months each
C.CHENGAREDDY v. STATE[DR.ANAND,J.] 511

for the offence u/s. 420 !PC r/w. 34 !PC; RI for a period of two
years each for the offence u/s. 477-A !PC r/w. 34 !PC and further
sentenced Al to A4 to undergo RI for a period of 2 years each
and to pay a fine of Rs. 1000 each i/d to undergo RI for 4 months
each for the offence u/s. 5(2) r/w. 5(1 )(d) of Prevention of Cor-
ruption Act. The sentences shall run concurrently.

I further direct that the sentence imposed on Al in this case
is ordered to run concurrently with the sentence of imprisonment
imposed on him in CC. 9/86 to 21/87 and 23/87 to 25/87. The
sentence of imprisonment imposed on A2 in this case is order to
run concurrently with the sentence of imprisonment imposed on
him in CC. 9/87 to 14/87 and 19/87 to 21/87. The sentence of
imprisonment imposed on A3 in this case is ordered to run con-
currently with the sentence of imprisonment imposed on him in
cc. 1/86."
The High Court in appeal by the appellants against their conviction
and sentence held :
11
0n a reappraisal of the entire evidence on record, both oral and
documentary, and on a consideration of the conclusions reached
by the trial court, this court feels that the prosecution has made
out the case under Sections 120-B, 420 read with 34 and 477-A
read with 34 !PC against Al to A4 and under Section 5(2) read
with 5(l)(d) of the Prevention of Corruption Act against Al to
A3, and the convictions thereunder are confirmed ........ Hence, A 1
and A3 are sentenced for the offences under Section 120-B, 420
read with 34 and 477-A read with 34 !PC and Section 5(2) read
with 5(l)(d) of the Prevention of Corruption Act till the rising of
the Court and each of them is further sentenced to pay additional
fine of Rs. 1000 (rupees one thousand) under each count in
addition to the one imposed by the Court below under Section,420
read with 34 !PC and Section 5(2) read with 5(l)(d) of the
Prevention of Corruption Act, in default to suffer R.I. for three
months under each count.

Time granted for payment of fine is one month from today.

As regard the sentence to be inflicted on the contractor, A4
who has been charged and tried for the offences along with A 1 to
512 SUPREME COURT REPORTS [1996] SUPP. 3 S.C.R.

A3, who are Government employees the same yardstick cannot be
used. With the active connivance and A4 alone, Al to A3 have
committed the offences and A4 assisted them by subscribing him-
self to the agreement and other documents. So, A4 must be dealt
with severely. Hence, A4 is sentenced for the offences under
Section 120-B, 420 read with 34 and 477-A read with 34 IPC to
suffer rigorous imprisonment for six months under each count and
the sentence of fine imposed by the learned Special Judge under
Section 420 read with 34 !PC is confirmed. All the sentences of
imprisonment shall run concurrently."

The High Court then arrived at the following conclusions :

"(i) during the year 1979-80, Al to A4 along with one late D.B.
Duggi Reddy conspired to float the work known as clearance and
uprooting of jungle on North Mopur large tank from 1800 M to
2000 M 1/1 mile to l/2 mile of Kovur taluk in Nellore district, in
violation of the established rules under PWD Code, with intention
to cheat the Government of Andhra Pradesh;

(ii) Al to A3 being public servants, obtained for themselves and
for A4 pecuniary advantage to the extent of Rs. 13,164 by corrupt
and illegal means by abuse of their official position;
•
(iii) Al to A4 have cheated the Government to the extent of Rs.
13,164 without doing the work of clearance and uprooting of jungle
on North Mopur large tank, Kovur taluk, in flagrant disregard of
the Coda! rules; and

(iv) Al to A4 wilfully and with intention to defraud the Govern-
ment, created false records with regard to the work of clearance
and uprooting of jungle on North Mopur large tank."

Prosecution in support of its case examined 24 witnesses while the
appellants examined two in their defence. The prosecution relied upon a
number of documents Ex. Pl to Ex. P31.

Like the case of the appellants connected with Gandipalem Project
Division, the case against the appellants herein is also based only on
circumstantial evidenc1<. Apart from the oral evidence, the prosecution
relied upon five basic documents viz., estimate (Ex. P3); the contract (Ex.
C.CHENGAREDDY v. STATE[DR.ANAND.J.] 513

P4); the bill (Ex. P7); payment order (Ex. PS) and the technical report A
given by PW 8 (Ex. PlO) to connect the appellants with the crime. Accord-
ing to the prosecution, no w01k at all had been done for jungle clearance
at North Mopur and Exs. P3, P4, P7 and PS were fabricated and manipu-
lated with the dishonest intention of appropriating funds amounting to Rs.
1~16~ B
The circumstances (as can be culled out from the judgment of the
courts below) relied upon by the prosecution and accepted by the courts
below to convict the appellants are :

(i) that the clearing and uprooting of jungle at North Mopur could C
not be given on non1ination basis and that the tenders \vhich should have
invited for allotment of that work were not floated with a view to misap-
propriate Government funds;

(ii) that no reasons were given for allotting the work on nomination
basis in breach of codal provisions; D

(iii) that the work was allegedly started by the contractor before
issuance of work order;

(iv) that incorrect n1easurements \Vere recorded in the measurement
book to cancel the extent of actual work done; E

(v) that AZ and A3 made endorsements on the estimate documents

.. without conducting actual verification at the spot;

(vi) that no proper estimate for earth work or for filling of the pits
was prepared; F

(vii) that the anticipated credit for stumps as shown was wrong.

On the basis of the aforesaid circumstances, the prosecution at-
tempted to establish that no work of jungle clearance was done and that G
Ex. P3, P4, P7 and PS were manipulated and fabricated with dishonest
intention of misappropriating funds of the Government. Reliance \Vas
placed on the statement of PWs 11, 12 and 13 in support of the circumstan-
ces that no jungle clearance work was done and that the modus operendi
adopted by appellants to give the work on nomination basis ignoring the
c8dal provisions and instructions on the subject was only to cover the fraud H
514 SUPREME COURT REPORTS [1996] SUPP. 3 S.C.R.

A committed by the appellants in connivance with the contractor. PW 11
deposed that jungle clearance work is not of an urgent nature implying
thereby that it could not have been alloted without floating tenders on
. nomination basis. To the same effect is the evidence of PW 12 who went
on to add that normally Jungle clearance work is taken up under the
B category of maintenance work which is undertaken departmentally through
laskars. PW 13 also deposed that out of the funds allotted for maintenance
work, jungle clearance work is required to be undertaken. The prosecution,
however has led no evidence lo show that the jungle clearance work was
undertaken departmentally in 1979 or that no jungle clearance was re-
quired to be undertaken in 1979.
c
From the evidence on the record it transpires that pre- measurement
of the work was done on 8.ll.79; estimate was prepared by A3 on 22.11.79;
a proposal to allot work on nomination to A4 was made. The proposal was
forwarded by A2 lo Al on 25.11.79. Al approved the proposal on 15.12.79
D to allot the work on nomination basis to A4. PW 6 in his statement
admitted that he had examined Ex. P3 and Ex. P4 in 1979-80 and that
cx-facie he had not found anything wrong in the procedure followed for
allotment of jungle clearance work on nomination basis and therefore he
did not point out any irregularity at that time. Even PW 5 who had
scrutinised the estimate contained in Ex. P3 in 1979 deposed that he had
E not found anything wrong therein. The evidence of FW 5 and PW 6, thus,
docs not support the prosecution case that the documents were fabricated
and entire amount misappropriated. Thought PW 11, 12 and 13 deposed
at the trial that jungle clearance work is not work of an urgent nature and
is only maintenance work hut we find that none out of them deposed that
F the work being maintenance work, it was actually carried out by laskars of
the department. The assertion of PW 8 in his technical report, Ex. PlO,
that there were no signs of jungle clearance \Vhen he visited the site in 1984
cannot lead to the conclusion, must less an irresistible conclusion, that in
J979-80 jungle had not been cleared at the site. There is ample evidence
on the record to show that jungle clearance work had been done in 1979-80.
G The statement of PW 17 Assistant Engineer, shows that jungle clearance
work was being done in 1979-80. If that be so, it was obligatory on the part
of the prosecution to lead evidence to show as to who carried out the work.
No evidence has been led to show that the work of jungle clearing was
done by departmental laskars and the very fact that work had been done
H shows that the prosecution allegation that no work was done has remained
C.CHENGAREDDY v. STATE[DR.ANAND,J.] 515

unsubstantiated. So far as allotment of work on nomination basis is con- A
cerned, the prosecution does not dispute that urgent works could be
allotted on nomination basis. The Chief Engineer admittedly had issued
instructions to have the jungles cleared in view of expected monsoon and
therefore the urgency of the matter, is quite obvious. There is also no
reliable evidence available on the record to show that work done was less
B
than the work paid for as is alleged by the prosecution.

The report Ex. PlO submitted by PW 8 which is the sheet anchor of
the prosecution case, for the reasons which we have already given while
dealing with Criminal Appeal of the Gandipalem Project Division not
admissible in evidence. All the reasons given therein apply to Ex. PlO with c
equal force and we need not repeat the same. Even otherwise report Ex.
PlO, prepared after visiting the site in 1984 to demonstrate the position as
was supposed to be existing at the site in 1979-80 is hardly of any value.

According to the prosecution case, the extent of work shown to have
been done by the contractor for which payment was allegedly made to him D
was not possible to be done in the short period in \vhich it \Vas sho\vn to
have been done and this fact exposed the fabricated nature of the docu-
ments. This plea of the prosecution is again based on the inadmissible
technical report Ex. PlO. In our considered view PW 8 adopted a defective
method to work out the details of the work done and on that basis no E
reasonable conclusion is possible to be drawn to the effect that no work of
jungle clearance was in fact done in 1979-80.

Ex. Pl and P2, panchnamas, relied upon by the prosecution and
accepted by the courts below for ascertaining the time taken for clearing
the jungle on the basis of work done by a labourer in a day do not help F
the prosecution. Apart from the fact that it is doubtful whether Ex. Pl and
P2, the panchnamas, prepared during the investigation of the case can be
used as .substantive piece of evidence, since none of the labourers who are
alleged to have done the clearing work were examined at the trial, we find
it even other\vise an unsatisfactory manner of determining the tin1e taken G
for \Vork of jungle clearance. Ho\V much \Vork one labourer can turn out
would depend upon a number of factors like his skill, energy, experience
etc. ? Generalisation as has been done by the prosecution and accepted by
the courts belo\V is neither fair nor proper.

The prosecution also sought to establish that the accused had no H
516 SUPREME COURT REPORTS [1996] SUPP. 3 S.C.R.

A power to allot work on nomination basis and that they adopted this mode
unly as an eye wash to cheat the Government and misappropriate the
funds. The High Court and the trial court failed to properly appreciate the
evidence on the record in this behalf also while drawing an inference of
criminality. The courts below while accepting this pica of the prosecution
B failed to appreciate that vide GOMS No. 1007 dated 5.11.76 the Executive
Engineer had been empowered to entrust work on nomination basis upto
the value of Rs. 20000 and that GOMS No 1007 was in force at the relevant
time. Mr. L.R. Kapoor, Commissioner Command Area Development
Government of A.P. PW 10, stated :

C "GOMS No. 1007, dt. 5.l l.76 relating to the powers of the Execu-
tive Engineers in entrusting the works on nomination is still in
force. I have referred to this GO as Ann. 29 in Ex. P.16. This GO
is not yet repealed and it is still in force. Under this GO the
Executive Engineer can entrust the work on nomination basis
costing Rs. 20000."
D
That the appellants ignored certain other instructions on the subject
cannot lead to an irresistible inference that they did so with dishonest
intention only,

E That the appellants adopted a wrong mode a:id procedure in making
two separate items in the estimate for clearing the jungle above the ground
level and for uprooting the stumps has not been accepted even by the
Board of Chief Engineers vidc its proceedings dated 21.7.84. May be, as
alleged by the prosecution clearing of the jungle and up-rooting of stumps
F may be one operation and making t~·o separate payments, that is one for
...
clearance of jungle above the ground level and the other for up- rooting
and rem0\1ng the stumps may be objectionable and against the coda!
provisions but ln the absence of any evidence to show that t\VO separate
payments were in fact not made to the contractor it is not possible to say
G that the charge of conspiracy has been established. The statement of PW
20 Superintending Engineer who admitted that separate payments for
up-rooting the stumps of Juliflora are also permissible under Rule Ill(2)(f)
of Standard Schedule of Rates lends support to the defence plea rather
than to the prosecution version. PW 12 and PW 16 have given. a lie to the
prosecution case as projected at the trial and none of those witnesses was
H declared hostile.
C. CHEN GA REDDY v. STATE [DR. ANAND, J.] 517

It appears to us, that influenced by the inadmissible report Ex. PlO, A
the courts below concluded that the appellants had committed the offence
alleged against them. None of the witnesses except PW 8, who as already
noticed, was not competent to depose in that behalf before he visited the
site only in 1984 and not prior thereto have staled that no wmk of jungle
clearance was done at the site and the allegation with regard to less work
B
having been done is based upon calculations made five years later by PW
8, which does nol afford conclusive evidence against the appellants. ll is a
matter of common sense and even the prosecution witnesses have accepted
that it was impossible to know in 1984 whether jungle clearance work had
been carried out and if so lo what extent in the year 1979 on the basis of
. an inspection carried oul five years later in the years 1984. The maximum c
that can be said against the appellants is that they committed some indis-
cretion in the matter of allotment of jungle clearance work on nomination
basis and also violated coda! provisions in the matter of preparation of
estimates, drawing up of the agreements and making payments. These acts
of omission an<l commission do give rise to a strong suspicion that the D
appellants so acted with a view lo misappropriate Government funds but
suspicion, ho\vcver, strong cannot take the place of proof. The prosecution
has in our opinion failed to establish the case against the appellants beyond
a reasonable doubt. The conviction and sentence imposed upon the appel-
lants, under the circumstances, cannot be sustained and we accordingly
accept the appeal and set aside their conviction and sentence. Fine shall E
be refunded to the appellants.

CRIMINAL APPEAL NOS. 128-130 OF 1993 (NELLORE NORTH
DIVISION)
F
These appeals arise out of Crime Case No. 1 of 1986 and relate to
the clearance of Juliflora jungle on Krakatur small tank on the reach 0/0
to 1450 meters.

The prosecution case against the appellants A2 (Executive En-
gineer), A3 (Deputy Executive Engineer) and A4 (Assistant Executive G
Engineer), who were tried along with Al Superintending Engineer (since
dead) and A5 the contractor who has filed a separate appeal, is that with
dishonest intention of misappropriating Government funds, the accused
iloated work called clearance of JuliOora jungle and up-rooting stumps
having width of 50 ems. to 100 ems. on the reach 0/0 to 1450 metres on H
518 SUPREME COURT REPORTS [1996] SUPP. 3 S.C.R.

A Krakatur small lank and without execution of that work misappropriated
an amount of Rs. 5169 allegedly paid to the contractor A5 by cheque by
entering into a criminal conspiracy with him. The mailer like the cases of
Gandipalem Project and Nellore South Di,1ision came to be entrusted for
investigation, after the Call Attention Motion was moved in the State
Assembly in 1981, alleging large· scale bungling and embezzlement of
B
government fun.ds in various Division of Nellore District for clearance of
jungles etc. to the ACE. We have already referred lo the history of the case
in the beginning of the judgment and need not repeal the same.

PW 7 Sh. L.R. Kapoor, Commissioner Command Area Develop-
C ment, Govt. of Andhra Pradesh who was appointed lo enquire into the
allegations made on the floor of the House after holding an inquiry made
the report in which he expressed his opinion lhal jungle clearance work
ought to have been given by calling tenders instead of resorting to allotment
on nomination basis and that the procedure adopted by the appellants was
D against the coda! provisions. Subsequently, the Chief Engineer Irrigation
Department (Investigation) Sh. N.V.M. Krishan PW 9 who also made an
inquiry submitted his report pointing out various irregularities committed
in the preparation and sanctioning of the estimates; non1ination of the
agencies; conclusion of the agreements in violation of A.P. PWD Code, AP
E Financial Code and AP Public Works Accounts Code besides departments,
instructions and circulars. Subsequently, the case was entrusted to ACE
and the investigating officer of the ACE took up the investigation in 1984.
At the request of the ACE, assistance of engineering staff was provided
and the departmental official assisting ACE submitted his report during
the investigation of the case and the accused \vere sent up for trial.
F Following charges were framed by the learned Special Judge on 17.1.1987:

"Thal you above named A-2 lo A-5 and one D.E. Duggi Reddy
(deceased A-1) during the year 1979-80 conspired to float the work
known as juliflorajungle clearance al Krakatur Small Tank situated
G at a distance of l KM West of Krakatur in violation of the village
rules under P.W.D. code with intent lo cheat Government of
Andhra Pradesh and that the said act was done in pursuance of
the agreement between you all and you all thereby committed an
offence punishable under Section 120-B of the Indian Penal Code
H and within my cognizance;
C. CHENGAREDDY v. STATE [DR ANAND, J.] 519

Secondly that you above named accused A-2 to A-4 being A
servants employed as former Executive Engineer, Deputy Execu-
tive Engineer and Section Officer of Nellore North Division
respectively during the period between 1979-80 at the work spot
i.e., Krakatur small 'J;ank mentioned in charge No. 1 above by
corrupt an illegal means in abuse of your official position as such B
public servants obtained for yourselves or for A-5 and yourself
pecuniary advantage to the extent of Rs. 5,169 and thereby com-
mitted the offence punishable under Section 5(2) r/w. Section
5(1)(d) of the Prevention of Corruption Act 1947 and within my
cognizance;
c
Thirdly that you the above named accused A-2 to A-5 at about
the same time place and date cheated the Government of A.P.
with regard to the work of Juliflora jungle clearance at Krakatur
small Tank to a tune of Rs. 5,169 and that you thereby committed
an offence punishable under Section 420 !PC r/w. 34 of the Indian D
Penal Code and \vithin my cognizance.:

Fourthly that you the above named accused A-2 to A-5 along
with deceased A-1 by name D. B. Duggi Reddy at about the same
date, time and place as stated in charge No. 1 above being the
public servants and contractor of P.W.D. Department of Govern- E
ment of A.P. willfully and with intent to defraud the Government
created false records with regard to the work mentioned in charge
No. 1 above which belonged to the Government and you thereby
committed an offence punishable under section 477-A !PC r/w. 34
of the indian Penal Code and within my cognizance. F
And I hereby direct that you all be tried by me on the above
11
said charges.

Prosecution in support of its C<:iSe examined 28 witnesses besides G
relying upon a number of documents. The accused on the other hand
examined two witnesses in defence. The trial court at the conclusion of the
trial held that no work with respect to clearance of Juliflora jungle up-root-
ing of the stumps \Vas undertaken at the site and the amount \Vas n1isap-
propriated by the accused and convicted and sentenced the appellants to
various terms of imprisonment and fine. H
520 SUPREME COURT REPORTS [1996] SUPP.3 S.C.R.

A The appeals of the appellants, except in the matter of sentence, failed
in the High Court.

Like the cases of Gandipalem Division and the Nellore South
Di\ision, in this case also no evidence has been led by the prosecution to
B show that no work of jungle clearance was at all undertaken. PW 8 and PW
9 who deposed that jungle clearance work had been done in 1979-80, were
declared hostile, nonetheless we find that the prosecution has led no other
evidence to show that in fact no work had been done at the site in question.
Since, the prosecution witnesses admitted in their evidence that some work
had been done, the charge of conspiracy must necessarily fail. Recourse
C has been made to surmises and conjectures by the courts below to hold
that 110 wmk was found lo have been undertaken al the site when it was
inspected in 1984. PW 7 Sh. L.R. Kapoor and PW 19 Shri N.Y.M. Krishna
who had inquired into the matter before the case was entrusted to the ACE
have categorically admitted at the trial that they had not visited the site in
D question at the time of conducting the inquiry. According to Sh. L.R.
Kapoor, PW 7 not only he did not visit the site in question but he did not
even examine a single witness at the time of conducting inquiry relating to
the work at the site. The prosecution has alleged and tried to establish that
there had been flagrant violations of the coda! provisions in regard to
preparation and sanctioning of estimates, nomination of the agency and
E allotment of work on nomination basis, preparation of the bills and passing
of the same pursuant to an agreement wrongly drawn up between the
parties. According to the courts below, the commencement of the work by
the contractor before drawing up the agreement between the parties
exposed the criminal conspiracy between the accused.
F
It appears to us that the courts below like in the case arising out of
Gandipalem Project Division and Nellore South Division allowed suspicion
to take the place of proof lo convict the appellants. No evidence has been
led by the prosecution to show the reaction of the department lo the
allegations made on the Floor of the House in 1981 itself. Till 1984, after
G the case was registered no inspection of the site was undertaken by the
ACE. No examination of the site except for some random check by Mr.
Krishna in 1982 was also done and, thus, we find that for a period of almost
five years nothing was done to verify the correctness or other\vise of the
allegations relating to jungle clearance work. Could the sites have depicted
H the state of jungle and the presence of Julillora or its extent as it existed
C.CHENGAREDDY v. STATE[DR.ANAND,J.] 521

in the year 1979 during the inspection made in 1984 '! The answer to us A
appears clearly to be in the negative. Even the Chief Engineer and the
Superintending Engineer admitted during their cross- examination that it
was not possible lo know in 1984 if .JuliJlora jungle actually existed at the
site in question in 1979-80 or not. We fail to understand as to why after
the case had been entrusted to the ACB in 1982 itself they look no steps
B
to visit the site and ascertain about the situation uf the site till 1984. The
prosecution witnesses have admitted that there were jungles of .luliflora 0n
the bank in 1979. There also does not appear to be any justification for the
prosecution to now allege that the area from which jungle had been cleared
in 1979 was less than what was actually entered in the measurement book
on the basis of the site inspection carried out in 1984. The omission on the C
part of the department and the ACB to immediately inspect the site is a
serious lacuna in the prosecution case.

Prosecution has tried to make much capital out of the fact that the
contractor allegedly started work of jungle clearance even before the D
formal agreement was drawn up. From the evidence of PW 10, PW13 and
PW 20 it emerges that when work is entrusted on nomination basis to a
contractor he may commence the work, on oral instructions, even before
the formal agreement is drawn up. The agreement Ex. PS itself shows the
entrustment of the work to have been done to the contractor before the
conclusion of the agreement and therefore no adverse inference can be E
drawn against the contractor or the appellants for commencing the work
before drawing up of the formal agreement. The Deputy Executive En-
gineer PW 13 admitted in his cross-examination that entrustment of work
before conclusion of the agreement is not irregular and has been resorted
to in other cases also. PW 20 who was at the relevant time Chief Engineer F
(Irrigation) stated in his deposition that in cases of urgency, the competent
authority could direct commencement of the work before completion of
the formalities of executing the agreement. Even though PW 14 Mr. C.
Janardhana Rao, Chief Engineer {minor Irrigation) was declared hostile
by the prosecution, yet, we find that his categorical admission in the G
cross-examination to the effect that in his capacity as Chief Engineer he
had addressed a letter, as early as on 26.4.1981, to the Secretary Irrigation
and Power Department stating therein that jungle clearance work in Nel-
lore District, which would include the Nellore North Division also, had
been done properly and the work had been allotted within the powers of
the Executive Engineer, has not been contradicted by any other evidence. H
522 SUPREME COURT REPORTS (1996] SUPP. 3 S.C.R.

A Besides, PW 17 admitted that he did not find any mistake when he audited
the bill pertaining to the work in question while PW 12, the head draftsman
of the Irrigation North Division categorically deposed that while scrutinis-
ing the estimate Ex. P4, for showing the removal of stumps of Juliflora as
a scpara~e item he had not raised any objection in vie\v of the pro\~sions
B of Rule 2(J) of the 1979 Rules. lt appears to us that the exercise undertaken
in 1984 after a lapse of five years was a futile exercise because once a jungle
has been cleared and stumps up-rooted, nothing would remain as evidence
on the soil to show the extent to which the jungle was cleared 5-6 years
earlier. It would not even be possible to say whether there was any necessity
for jungle clearance at that earlier point of time. Much capital was sought
C to be made by learned counsel for the State of including the area of
revetment as a part of the area from where jungle was shown to have been
cleared to urge that since there could be no growth of jungle on the
revetment, the measurements were falsely recorded and the criminality had
got exposed. We cannot agree. In this connection we find that the state-
D mcnt of PW 13 is somewhat relevant. He admitted that if the branches of
.luliflora spread over the revetment area than that has also to be cleared
and the area over the revetment will also have to be calculated for deter-
mining t.he total area of jungle clearance. He went on to say that in a
disturbed revetment there is even otherwise the possibility of the growth
E of Juliflora. Since, PW 7 Mr. L.R. Kapoor who had visited the site during
4.4.1981 to 6.4.81 for conducting preliminary inquiry stated in his report
that it was not possible to find out during the inquiry held in 1981 whether
there in fact existed any necessity for jungle clearance at the site or not,
we fail to see how in 1984 the departmental officials assisting the ACB
could categorically report about the non-existence of the necessity for
F jungle clearance in 1979. It is a matter of common knowledge which is not
disputed even by the prosecution that J uliflora does not grow in an orderly
manner but is a wild growth. Therefore, the extent of the jungle which was
required to be cleared in 1979 on the basis of "paper calculation" or
inspection carried out in 1984 was not possible to be determined.
G
Indeed, jungle clearance work is a part of maintenance work. But
there is nothing on the record to show that it was so undertaken
departmentally in 1979-80. It was under the instructions of the Superin-
tending Engineer contained in circular memo No. 2021-02 dated
H 29.12.1978 that the jungle clearance work was treated as urgent work, to
prevent breaches during the rainy season and avoid damages to the tank
C. CHEN GA REDDY v. STATE [DR. ANAND.).] 523

bunds and therefore no fault can be found wilh A2 for not recording A
reasons for treating the work as of urgent nature and allotting it on
nomination basis. The reasons we have given while dealing \Vith the appeals
from Gandipalem Project and Nellorc Soulh Division, lo hold that the
prosecution has failed to establish its case against the appellants beyond a
reasonable doubt also apply to these appeals with equal force. Whether B
the measurements \Vere recorded in the measurement book after actually
visiting the site or not would 0nly be violation of the statutory circulars and
instructions. It may even be violative of the coda! provisions but in the
absence of any evidence, direct or circumstantial, to establish that without
any work having been undertaken at the site, payments were allegedly
made, no offence can be said to have been established. That the C
departmental officials did not go to the site is a possible inference which
may be drawn from the fact that divisional vehicle did not go upto the site
but again the same cannot be construed as sufficient to establish criminal
conspiracy between the parties. The argument of learned counsel for the
State that two payments were not permissible for clearing jungle and D
stumps separately only show the violation of coda! provisions and commis-
sion of irregularities but that does not by itself establish any criminality in
so far as the appellants are concerned. In our opinion none of the cir-
cumstances relied upon by the prosecution connect the appellants with the
crime alleged against them. The circumstances have not been proved
beyond a reasonable doubt and the circumstances taken collectively cannot E
be said to be compatible only with the hypothesis of the guilt of the
appellants and totally incompatible with their innocence. Under the cir-
cuinstances we are of the opinion that the prosecution has not established
the case against the appellants beyond a rea,onable doubt. Their appeals
therefore succeed and are allowed and their conviction and sentence are F
set aside. Fine shall be refunded to the appell~nts.

CRIMINAL APPEAL NO. 153 OF 1993 (NELLORE SOUTH DIVISION
. - CONTRACTOR'S APPEAL)

This appeal has been filed by the contractor A4, and arises out of G
Cr!. Case No. 9/87 (High Court Appeal No. 184/89). It relates to clearance
of J ulillora jungle from 0 to 1 mile including removal of 14800 stumps in
Nellore South Division. The jungle clearance work was allotted to the
appellant by the Executive Engineer on nomination basis. On completion
of the work, the appellant suhmitted his bill and an amount of Rs. 15643 H
524 SUPREME COURT REPORTS [1996] SUPP. 3 S.C.R.

A was paid to him. According to the prosecution case. Al to A3 entered into
a criminal conspiracy with A4 and without actually doing any work of
jungle clearance obtained payment of Rs. 15643 and that amount was
shared by all the accused and with a view to cover up the misappropriation,
records were fabricated. It is alleged that the jungle clearance work could
B not have been allotted to the appellant on nomination basis without floating
tenders and even the nomination of the appellant as the contractor was
made in violation of the coda! provisions since Al did not even assign any
reason for giving the work on nomination basis and had not obtained any
sanction from the higher authorities to allot work on nomination basis.

C Learned counsel for the appellant Mr. Nambiar submitted that the
estimate was sanctioned by Al on the basis of an estimate prepared by A3
and counter singed by A2. The estimated value of the work was Rs. 18500
but that amount was, however, slashed and iii the agreement concluded
\vith the appellant on 25.1.80, Ex. P5, the amount was shown as Rs. 15643
D and these facts were indicative of the bonafides of the officials of the
department in getting the jungle cleared through the agency of the appel-
lant. Argued, the learned counsel that in any event if the departmental
officials committed any codal violations or ignored circulars and instruc-
tions in the matter of allotment of jnngle clearance work, the appellant
E could not be held respon.sible' more so when the charge of conspiracy is
not only vague but also not proved on the record. Learned counsel further
contended that vide GOMS No. 1007 dt. 5.11.76, the Executive Engineers
had been authorised to allot work, on nomination basis, without calling for
tenders where the amount involved was less than Rs. 20000 and, therefore,
F the allotment of the work in question to him on nomination basis could not
be faulted ~th. It was further submitted that the case of the prosecution
to the effect that no w01* at all was done and by preparing fictitious
documents, the entire payment was misappropriated by Al to A3 in
connivance with the appellant has been belied by the prosecution evidence
itself. In this connection learned counsel referred to the evidence of PW
G 17 Assistant Engineer, who admitted in his deposition that he had seen
work was being actually done at the site in 1979-80. Learned counsel also
drew our attention to the report of inspection submitted by the Chief
Engineer on 29.7.79 according to which jungle clearance work had actually
been done at the site and urged that this evidence completely demolished
H the prosecution case.
C.CHENGAREDDYv. STATE[DR.ANAND.J.J 525

The circumstances relied upon by the prosecution and accepted by A
the courts below against the appellant are :

(i) that work of clearance of Juliilorajungle and uprooting of stumps
was falsely alloted and without any work being done a cheque
for Rs. 15643 was given to the contractor which was encashed by
him; B
•
(ii) that there has been flagrant violations of provisions of PWD
Codes etc. in the matter of preparation of estimate; accord of
sanction; drawing up of the agreement and allotment of work on
nomination basis to the appellant; C

(iii) that in the measurement book the area where work had been
done was recorded by the officials in excess to help the appellant,
without having actually visited the site;

(iv) that the allotment of work by nomination was irregular and in D
violation of coda! rules. Major work had been split up so as to
bring up the allotment of work within the pecuniary jurisdiction
of the Executive Engineers;

(v) the terms of the agreement Ex. P5 concluded between Al and
A4 are ambiguous; E
(vi) preparation of bill and making of separate payment for removal
of stumps and clearance of jungle was in breach of coda!
provisions.
<

Strictly speaking the above cannot be called 'circumstances' against F
the appellant as the same are more in the nature of "allegations" of the
prosecution against the accused. Even otherwise, so far as circumstances 2
to 6 (supra) are concerned, they concern the officials of the department,
and may be relevant in the case of the appellant, if the charge of conspiracy
can be said to have been established. The charge of conspiracy against the G
accused was that without any work being done by him, payment was made
to him and various documents fabricated to justify the payment, which was
misappropriated. Circumstances 1 and 3 derive their colour and content
from the aforesaid circumstances.

Was any jungle clearance work done in 1979 at the site in question? H
526 SUPREME COURT REPORTS [1996] SUPP. 3 S.C.R.

A If the answer to the question is in the affirmative, the charge of conspiracy
must fail. While dealing with the case of departmental officials, we have
held that the charge of conspiracy ha& not been established. Those reasons
apply to the case of the appellant also. Besides, PW 17 is the Assistant
Engineer of the department. Kodavalur Tank Channel was within his
B jurisdiction when he was working as Section Officer at Kodavalur, from
May 1980 to July 1984. He deposed that being a native of Kodavalur, he
had seen that Kodavalur Tank Supply Channel even before he started
working as Section Officer in Kodavalur section. He admitted during his
cross examination :

c "During 1979-80 I was working at Darsi. While going to Darsi by
bus from Kovur, I observed jungle clearance work being done on
Kodavalur Tank Supply Channel. I saw the jungle clearance work
being done at a road bridge which is across the Kodavalur Tank
Supply Ch•mnel and that road bridge is within the chainage fro'rn
0/0 to 1/0 mile. This tank supply channel runs in embankment on
D
that chainage i.e. 0/0 to 1/0 mile."

The above statement of PW 17, when considered in the light of the
inspection report of the Chief Engineer dated 29.7.79, shows jungle
clearance work was being done in 1979-80. PW 21 a resident of Rajapulan
E ·who has his tailoring shop situate on the left bank of Kodavalur tank for
the last about 12-13 years deposed at the trial that about 8-9 years ago he
had seen some officials getting jungle cleared on the banks of that channel
by engaging coolies. The evidence of this witness, thus, also shows that
jungle clearance work was being done at the site in question in 1979-80 and
F to that extent PW 21 corroborates the testimony of Assistant Engineer P
17. It is nobody's case that jungle clearance work was done in 1979-80
through departmental laskars and, therefore, the legitimate inference to be
drawn from the evidence of PW 21 is that jungle clearance work was being
done at the site in 1979-80 through the appellant. PW 18 is a bus conductor.
G He has a hut on the Northern bank of the channel since 1977. According
to him villagers used to cut and take away Karratumma plants growing on
the channel banks. He denied any knowledge as to whether contractors of
the PWD department had cleared Karratumma plants growing on the
banks of Kodavalur tank supply channel during 1979-80. As against this
material, is the evidence of PW 8 who visited the site in 1984 and stated in
H his report that no work of jungle clearance had been done in 1979 as there
C. CHENGAREDDY v. STATE(DR.ANAND,J.] 527

was growth of juliflora at the site when he visited it. Finding the growth of A
.Tuliflora in 1984 could not lead to an irresistible conclusion that the jungle
had not been cleared in 1979-80. In this connection, the evidence of PW
11 ·has significance. This witness admitted during his cross-examination that
juliflora grows rather fast and is a wild growth. It could not have stopped
growing between 1979 and 1984. Since, the prosecution witnesses PW 17
B
and 21 have admitted that in 1979-80, work of clearance of juliflora jungle
was being done at the site and it is no body's case that it was being done
departmentally, the conclusion is irresistible that the same, had been done
through the agency of the appellant and the charge of conspiracy must fail.
There have been some irregularities committed in the matter of allotment
of work to the appellant or breach of coda! provisions, circulars and c
departmental instructions, for preparation of estimates etc. and those
irregularities give rise to a strong suspicion in regard to the bona/ides of
the officiah of the department and their link with the appellant, but that
suspicion cannot be a substitute of proof. The courts below appear to have
drawn inferences by placing the burden of proving innocence on the D
appellant which is an impermissible course. Jn our opinion none of the
circumstances relied upon by the prosecution against the appellant can be
said. to have been proved satisfactorily and all those circumstances, which
are not of any clinching nature, even if held to be proved do not complete
the chain of evidence so complete as to lead to an irresistible conclusion
consistent only with the hypothesis of the guilt of the appellant and wholly E
incpnsistent with his innocence. The prosecution has not established the
case against the appellant beyond a reasonable doubt. This appeal, there-
fore, succeeds and is allowed. The conviction and sentence of the appellant
is hereby set aside. Fine, if paid by the appellant shall be refunded to him.
The appellant is on bail. His bail bonds shall stand discharged. F
CRIMINAL APPEAL NOS. 17{}-171 OF 1993 (NELLORE NORTH
DIVISION - CONTRACTOR'S APPEAL)

These appeals arises out of C.C. No. 4 of 1987 and have been filed
by the contractor (AS) who was alloted work on nomination basis for G
clearance of jungle in Nellore North Division o.n the reach of 0.0 to 1450
metres on Krakatur small tank.

The prosecution case against the contractor is that he is a non-
existent person. ~ccording to the prosecution there _was no such _contractor H
528 SUPREME COURT REPORTS [1996] SUPP. 3 S.C.R.

A who had been alloted work on nomination basis and all the documents
purporting to have been signed by the appellant as a contractor had been
fabricated by the engineers because the contractor was an unknown and
fictitious person. It is alleged that the name of the contractor as appearing
in the order of nomination, allotment letter and the agreement is fictitious
B and not correct. Both the courts appear to have readily accepted the
prosecution case and convicted and sentenced the appellant. We fail to see
any justification for such a conviction. If the appellant had nothing to do
with the contract, how could he be convicted for allegedly not undertaking
the work with which he, according to the prosecution case itself had no
concern. In the charge sheet and the charge framed against the appellant,
C the name of the appellant has been given as the contractor who was alleged
to be a co-conspirator with the Engineers and section officers to misap-
propriate government funds by receiving payment for doing no jungle
clearance work. That there was clearance of jungle at the site in que.stion
has been amply established from the prosecution evidence which has been
D discussed while dealing with the appeals relating to Nellore North Division.
Since, jungle clearance work has been found by us to have been done in
1979-80 and it is not the prosecution case that it was done departmentally,
the inference that it was done through the agency of the appellant appears
to us to be fair and reasonable. The charge framed against the appellant
was never amended and since the charge contained the name of the
E appellant as a co- conspirator, who is supposed to have been alloted the
work but who did no work and yet received payment and shared it with
his co-accused, we fail to see how it is open to the prosecution to now
contend that the contractor is a fictitious person. The argument is self
defeating. Prosecution has failed to prove the case against the appellant
F beyond a reasonable doubt either through direct or circumstantial
evidence. The courts below have apparently taken a superficial view of the
matter and without considering the material on the record, recorded the
conviction of the appellant which cannot be sustained. His appeal succeed
and are allowed. His conviction and sentence is set aside. Fine paid by him
shall be fefunded to him. His bail bonds are discharged.
G
As a result of our above discussion of various representative appeal
and which discussion equally applies to all the appeals filed in this court
arising out of the judgment of the High Court dated 27.11.91, we find that
the prosecution has not been able to establish, beyond a reasonable doubt,
H its case against any of the departmental officials, that is, the Engineers and
C.CHENGAREDDY v. STATE[DR.ANAND,J.] 529

section officers and consequently their appeals succeed and their convic- A
tion and sentence are set aside. The fine paid by each one of them is
directed to be refunded to them. The prosecution has also not established
its case against any of the contractors beyond a reasonable doubt. Their
appeals also succeed and their conviction and sentence are hereby set
aside. The fine paid by them is directed to be refunded to them. Their bail
B
bonds shall stand discharged.

This takes us to one other aspect of the case. Mr. L.R. Kapoor who
conducted an inquiry from 4.4.81 to 6.4.81 and .submitted his report on
28.4.81 to the Government found that there had been defiance of the
authority of the Superintending Engineer in the matter of execution of c
work and spending of grants besides violation of coda] provisions and
breach of departmental instructions and circulars. He recommended
departmental action against the accused. However, before the accused
could be proceeded departmentally, the case was entrusted to ACB and
the accused were tried by the learned special judge and were convicted D
and sentenced. Their appeals, except for reduction of sentence, failed in
the High Court. Both the courts found that grave irregularities were
committed by the officers concerned in the matter of allotment of work
and the method followed by them was in violation of the coda] provisions
departmental instructions and circulars. The courts below have also found
that the officials had committed serious administrative irregularities and E
lapses. Reference has been made both by the trial court and the High
Court to the coda! provisions i.e. A.P. PWD code, A.P. Financial Code etc.
and the circulars and instructions issued from time to time which were
respected in their breach by the official accused. We have not found it
possible to take a view different than the one taken by the courts below in F
this regard though in our opinion the breach of code provisions or violation
of the circulars and instructions and commission of administrative ir-
regularities cannot be said to have been done by the officials concerned
with any corrupt or dishonest intention. Learned counsel appearing for all
the appellants also during the course or their arguments were unable to G
point out any error in those findings and according to them in the estab-
lished facts and circumstances of the case, the irregularities, administrative
lapses and violation of the coda] provisions, could only have resulted in
a departmental action against the officials but criminal prosecution \Vas not
justified. Their argument has force and appeals to us. Since, \Ve have given
the benefit of doubt to the accused persons (department officials) and H
530 SUPREME COURT REPORTS [1996] SUPP. 3 S.C.R.

A acquitted them, they may seek reinstatement in service. However, as we
have agreed with the findings recorded by both the courts below with
regard to the violation of the coda! pro;isions and administrative lapses by
the departmental officials, it appears to us that a departmental enquiry may
be justified but in this fact situation, it would be an unnecessary exercise.
B Learned counsel for the appellants have been heard by us at length and
they were unable to assail the findings of the courts below regarding coda!
violations and administrative lapse which may have caused some loss to the
exchequer also. What then should be the course of action which should be
followed in the facts and circumstances of the case ? While the officials
deserve lo be punished, should we remit the matter to the department for
C awarding appropriate punishment or should we impose the punishment
ourselves and close the chapter. A court of equity must so act, within the
permissible limits so as to prevent injustice. "Equity is not past the age of
child bearing" and an effort lo do justice between the parties is a compul-
sion of judicial conscience. Courts can and should strive to evolve an
D appropriate remedy, in the facts and circumstances of a given case, so as
to further the cause of justice, within the available range and forging new
tools for the said purpose, if necessary to chisel hard edges. of the law. In
our opinion in the established facts and circumstances, it would be ap-
propriate with a view to do complete justice between the parties, in exercise
of our jurisdiction under Article 142 of the Constitution of India, to direct
E that no departmental inquiry shall now be initiated against the departmen-
tal officials for their established administrative breaches and violation of
the coda! provisions, in 19'79-80. Consequent upon their acquittal, the
official re~pondent shall be reinstated in service with continuity of service
for all purposes but for their established administrative lapses and breach
F of coda! provisions etc., they shall not be er.titled to any back wages or any
other type of monetary benefit for the period they remained out of service.
The suspension allowance, if any, received by all or anyone of them shall
however not be recovered from them. This punishment appears to us to be
commensurate with the gradty of their lapses and shall serve the ends of
justice. Those of the officials who may have reached the age of superan-
G nuation in the meanwhile, will get their pensionary benefits calculated on
the basis of their continuous service but they shall be entitled to draw
pension with effect from the dale of this order only.

T.N.A. Appeals allowed.

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