Holding

A charge must be framed whenever the prosecution establishes a prima facie case, and the presumption under section 4 of the Prevention of Corruption Act is to be taken into account at the charge‑framing stage.

Summary

The Supreme Court examined a criminal appeal by R.S. Nayak against former Maharashtra Chief Minister A.R. Antulay concerning the framing of charges under sections 120B, 161, 165, 384, and 420 of the IPC and the Prevention of Corruption Act. The trial judge had framed 21 charges and discharged the respondent on 22 others, including those for extortion and cheating. The Court held that a prima facie case must be established for a charge to be framed and that the presumption under section 4 of the Prevention of Corruption Act applies at the charge‑framing stage. It found that the prosecution had made out prima facie cases for the conspiracy, bribery, and cheating charges, but not for the extortion charges. Consequently, the Court ordered that charges be framed on the remaining 19 items and allowed the appeal in part. The judgment also clarified the distinction between sections 161 and 165 IPC and the procedural requirements under sections 227, 239, and 245 of the CrPC.

Issues considered

Whether a prima facie case exists for each of the draft charges and thus whether charges should be framed under s.245(1) CrPC.
Whether the presumption under s.4 of the Prevention of Corruption Act must be applied at the charge‑framing stage.
Interpretation and scope of sections 161 and 165 of the IPC in relation to public servants.
Whether the ingredients of extortion under s.383/384 IPC are satisfied.
Whether the ingredients of cheating under s.415/420 IPC are satisfied.
Whether the trial judge erred in discharging the respondent on certain charges.

Legislation cited

Code of Criminal Procedure, 1973s. 227, s. 239, s. 245, s. 246, s. 313, s. 319
Indian Penal Code, 1860s. 120B, s. 161, s. 165, s. 383, s. 384, s. 415, s. 420
Prevention of Corruption Act, 1947s. 4, s. 5(1)(a), s. 5(1)(d), s. 5(2)

Subjects

prima facie casecharge framingsection 245 CrPCPrevention of Corruption Actsection 4 presumptionIPC sections 161 and 165extortioncheatingpublic servant corruptiondischarge of accused

Judgment

621
A

a.s.~
v.
A.R.. AtmJlAY & ANL

APRIL 17 • 1986 B

[P. N. BHAGWATI, C. J. AND RANGANATH MISRA, J .]

~ Criminal Procedure Code, 1973

Sections 245( 1) and 246 - Whether a charge should be
framed against the accused or not - Test of 'prima facie' case c
to be applied.
Sections 227, 239 and 245- Comparison between.

Indian Penal Code, 1860
D
Sections 161 and 165 - Scope and differenCE! between -
Motive or reward for abuse of office - Relevancy of.

Sections 415 and 420 - Ingredients of Cheating
explained.
r ~ E
Sections 383 and 384 - "extortionn - Ingredients of.

Prevention of Corruption Act, 1947, s. 4 -Presumption
raised under s. 4 is a presumption of law - It will have to be
..... drawn against an accused once acceptance of a valuable thing
-_, by him is proved. F

~ The respondent was at the relevant time Chief Minister
of the State of MSharashtra. The appellant lodged a complaint
on August 9, 1982 alleging comssion of offences by the
respondent punishable under ss. 161, 165, 384 and 420 read
with s. 120B, Indian Penal Ccie as also s. 5(2) read with s. G
S(l)(d) of the Prevention of Corruption Act. It was alleged in
the complaint that the respondent, as the Chief Minister of
~ the State, had created seven Trusts, one of them being Indira
' 4 Gandhi Pratishthan shown to be a Government Trust and that he
extended favours to those who JUde donations to the said
trusts. In all the trusts, except the Indira Gandhi Pratibha H
Pratishthan, the respondent, his wife, close relations and
friends were associated as trustees.
622 SUPREME COURT REPORTS [ 1986 J 2 S.C. R.

A The complaint was registered as Special Case No. 24/82. ,
and was transferred to the High Court of Bombay for trial"
under an order of this Court dated Feb. 16, 1984. Fifty-seven
witnesses for prosecution were examined before the Trial Judge
and 43 draft charges were placed for his consideration. The
prosecution examdned specific witnesses with reference to the
allegations supporting the draft charges and documents were
B also produced to support the allegations. The Trial Judge
framed 21 charges against the respondent and discharged him i~~
respect of the remaining 22 charges relating to the offence of
cheating, extortion and conspira~y.

The appellant, aggrieved by the order refusing to frame
c charges on 22 heads b:f the Trial Judge, filed the present -Y-
Criminal Appeal by Special Leave.

Allowing the appeal in part,

HELD : (By the Court) 1.1 A prima facie case has been
D established by the prosecution in respect of the allegations
for charges under ss. 120B, 161 and 165 and 420, IPC, as also
under s. 5(1) read with s. 5(2) of the Act. So far as the
three draft charges relating to the offence punishable under
s. 384, IPC are concerned, the learned Trial Judge was right A_"'
in holding that the prosecution failed to make out a prima
E facie case. Therefore, except in regard to the three draft
charges under s. 384, IPC, charges in respect of the remaining
!9 items shall be framed. The appeal is allowed to that
extent. [696 D-F}
-r-'"
1.2 It is still open to the Trial Judge to consider on (
F the material available, if anyone has to be proceeded against~
as a co-conspirator when the charge of conspiracy punishable 1..
under s. 120-B, !PC is framed. Under s. 319 of the Code de
novo trial would be necessary, but it is in the discretion of
the Trial Court to take a decision as to whether keeping all
aspects in view any other person should be brought in as an
G accused to be tried for any of the offences involved in the
case. This is a matter in the discretion of the trial court.
[697 F-H] ~

Per Rauganatb Misra, J. (Bhagwati, C.J. Concurring)
H 2.1 The Code of Criminal Procedure contemplates
R.S. NAYAK v. A.R. ANTULAY 623
A
discharge of the accused by the Court of Sessions under s. 227
~ in a case triable by it, cases instituted upon a police report
are covered by s. 239 and cases instituted otherwise than on
police report are dealt with in s. 245. The three sections
contain somewhat different provisions in regard to discharge
·• of the accused. Under s. 227, the trial Judge is required to B
discharge the accused if he "considers that there is no
sufficient ground for proceeding against the accused. 11
Obligation to discharge the accus~d under s. 239 arises when
~"the Magistrate considers the charge against the accused to be
groundless." The power to discharge is exercisable under s.
245(1) when "the Magistrate considers for reasons to be
recorded, that no case against the accused has been made out c
._ which, if unrebutted, would warrant his conviction." [677 B-E]
'1 - -
2.2 Sections 227 and 239 provide for discharge being
~- ordered before the recording of evidence and the consideration
as to whether charge has to be framed or not is required to be
Mde on the basis of the record of the case, including D
documents and oral hearing of the accused and the prosecution
or the police report, the doctllll!nts sent along with it and
examination of the accused and after affording an opportunity
to the two parties to be heard. The stage for discharge under
~ ~ s. 245, on the other hand, is reached only after the evidence
referred to in s. 244 has been taken. Notwithkqtanding this E
difference in the position there is no scope for doubt that
the stage at which the Magistrate is required to consider the
question of fraaing of charge under s. 245(1) is a preliminary
one and that the test of "prima facie" case has to be applied.
-...,. In spite of the difference in the language of the three
sections, the legal position is that if the Trial Court is F
t- satisfied that a prima facie case is made oqt, charge has to
· be framed. Therefore, in order to decide Whether the order of
discharge should be sustained or set aside, the Supreme Court
has to consider whether on the material on record, a prima
facie case has been made out on behalf of the prosecution.
[677 E-{;] G

Mebant Abbey Dass v. S. Gurdia1. Singh & Ors. , A. I. R.
~ 1971 s.c. 834; State of Bihar v. Rawesb Siugb, (i978] 1 s.c.~
257; lfimal.jit Singh Boon v. State of West Bengal & Anr
[1973] 2 S.C.R. 66; Chandra Deo Siagb v. Prakash Chandra Bos;'
[1964] 3 s.c.R. 629; UniOD of India v. Prafulla laar Sa-l ~ H
Anr., [1979] 2 s.c.R, 229 and Superintendent and Rmewbraneer
624 SUPREME COURT REPORTS [19861 2 s.c.R.

A
of Legal Affairs, llest Beogal v. Anil x.&r Bbnnia & Ora.,~
[1979] 4 s.c.c. 274, relied upon. ··

In the instant case, the oral evidence is backed up by
documentary evidence. Some of the relevant documents have
interpolations and the inquiry relating to interpolation has
not become final. It is indeed difficult at this stage to say
B that the evidence as a whole is inadequate to establish the
prima facie case. The learned Trial Judge, extracted at greatt-
length both the oral evidence as also the contents of docu-
ments but there was not much of analysis to justify rejection
of the material. The learned Trial Judge adopted two different
standards in the matter of weighing the same evidence when he
c agreed to frame 21 charges which were inter-linked and inter- y-
connected with the rest of the prosecution story with -
reference to which the draft charges had been given. If the }--
evidence was accepted for half the number of charges relating
to similar offences, there coul~ hardly be any scope to reject
the 22 draft charges. Similarly in regard to the charge of
0 conspiracy the facts were inter-connected and there could be
no justification to reject the charge even if the other
persons iq>licated were not before the court. The reasoning
given by the learned Trial Judge in support of his order of
discharge in regard to the draft charges relating to ss. 161 ~- ~
and 165, IPC and s. 5(2) read with s. 5(1) of the Act,
E
concerning these transactions cannot, therefore, be sustained.
[683 D-H; 684 A-B)

3.1 Under s. 245(i) of the Code the requirement is that
the evidence must be such which if not rebutted would warrant ~
conviction of the accused. Under the law of evidence the-{
F concept of rebuttable presumption is well-known. Rebuttable , \

presumptions of law are a result of the general experience of
a connection between certain facts or things one being usually
bound to be companion or effect of the other. The connection,
however, in this class is not so intimate or so uniform as to
be conclusively presumed to exist in every case; yet, it is so
G done that the law itself without the aid of a jury infers one
fact fro. tbe crude existence of the other in the abeeuc:e of ,
opposing evidence. In this mde, the law advances the nature }..
and amount of the evidence which is sufficient to establish a
prima facie case and throws the burden of proof UpGn the other
party; and if no opposing evidence is offered, the jury are
. H bound to find in favour of the presumption. A contrary verdict
R.S. NAYAK v. A.R. ANTULAY 625

A
. might be set aside as being against evidence. The rules in
~this class of presumptions as in the former have been adopted
by coiBln consent from 1110tives of public policy and for the
promotion of the general good; yet not as in the former
(conclusive proof) class forbidding all further evidence but
only dispensing with it till some proof is given on the other B
side to rebut the presumption raised. Thus, as men do not
generally violate the Penal Code, the law presumes every man
-~to be innocent; but some men do transgress it; and therefore,
·evidence is received to repel this presumption. [684 B-G}

3,2 The presumption raised under s. 4 of the Prevention
of Corruption Act is a presumption of law which a court is
--\bound to draw, once it is proved that the accused Gove~nt
c
. servant received or obtained a valuable thing in the
-lcircumstanoes mentioned in that section. [685 E]
'
In the instant case, the learned Trial Judge should have
proceeded to scan the evidence keeping in view the concept of D
rebuttable presumption. He also failed to take note of s. 4 of
the Act while dealing with the charges under ss. 161 and 165,
IPC as also s. S(l)(a) and (b) of the Act. It is hoped that
while dealing with the case after the framing of the charges,
"' ;..the learned Trial Judge will keep this legal position in mind
and act accordingly. [685 F-G]
E
The State of Madras v. A. Vaidyanatha lyer • [ 1958]
s.c.R. 580 and L Satwant Singh v. State of Punjab, [1960] 2
s.c.R. 592, referred to.
~
4.1 The main ingredients of the charge under s. 161, IPC
F
'"'"'are :

(i) that the accused was a public servant, (ii) that he
must be shown to have obtained from any person any
gratification other than legal remneration; and (iii) that
the gratificati~n should be as a motive or reward for doing or
forbearing to do any official act or for showing or forbearing G
, to show, in the exercise of his official function, favour or
-idisfavour to any person. [685 H; 686 A-G]

Ordinarily, when the first two ingredients are
established by evidence, a rebuttable presumption arises in
respect of the third. [686 C) H
626 SUPREME COURT REPORTS [ 19861 2 s.c.R.

A 4.2 For an offence under s. 165, !PC, the essential~
ingredients are : (i) the accused was a public servant ; (ii)
he accepted or obtained or agreed to accept or obtain a
valuable thing without consideration or for an inadequate
consideration knowing it to be .inadequate ; (iii) the person
giving the thing must be a person concerned or interested in
or related to the person concerned in any proceeding or
B business transacted or about to be transacted by the
government servant or having any connection with the officiatf-
of himself or of any public !;ervant to whom he is subordinate;
and (iv) the accused must have knowledge that the person
giving the thing is so concerned or interested or related. •
[686 C-G]
c
4. 3 Section 165 is so worded as to cover cases of l
corruption which do not come within ss. 161, 162 or 163. ,..__
Indisputably the field under s. 165 is wider. If public
servants are allowed to accept presents when they are
prohibited under a penalty from accepting bribes, they would
D easily circumvent the prohibition by accepting the bribe in
the shape of a present. The difference between the acceptance
of a bribe made punishable under s. 161 and 165, IPC is that
under the former section the present is taken as a motive or
reward for abuse of office; under the latter section the~ . "
question of motive or reward is wholly iaaaterial and the
E acceptance of a valuable thing without consideration or with
inadequate consideration from a person who has or is likely to
have any business to be transacted, is forbidden because
though not taken as a motive or reward for showing any -f"'
official favour, it is likely to influence the public servant ·
to show official favour to the person giving such valuabl~·
F thing. [686 G-H; 687 A-c) ,·

4.4 The provisions of ss. 161 and 165 !PC as also s. 5
of the Act are intended to keep the public servant free from
corruption and thus ultimately ensure purity in public life.
[687 C]
G
In the instant case, the evidence, therefore, should {
have been judged keeping these aspects in view. [687 C] r

5. The main ingredients of the offence of extortion in
s. 383, !PC are : (i) the accused must put any person in fear
H of injury to that person or any other person; (ii) the putting
of a person in such fear mst be intentional ; (iii) the
R. S. NA.YAK v. A. R. A.NTIJLAY 627

A
. accused lll.lst thereby induce the person so put in fear to
~deliver to any person any property, valuable security or any-
thing signed or sealed which may be converted into a valuable
security; and (iv) such inducement must be done dishonestly.
[690 E-H]
B
Before a person can be said to put any person to fear of
any injury to that person, it must appear that he has held
~out some threat to do or omit to do what he is legally bound
to do in future. If all that a man does is to promise to do a
thing which he is not legally bound to do and says that if
r
money is not paid to him he would not do that thing, such act
would not amount to an offence of extortion. [691 A-B] c
--) Babibul Razek. v. King &lperor, A.I.R. 1924 All 197,
4 relied upon.
In the instant case, there is no evidence at all to show
that the managements of the sugar co-operatives had been put D
in any fear and the contributions had been paid in response to
threats. Merely because the respondent was Chief Minister at
the relevant time and the sugar co-operatives had some of
their grievances p·ending consideration before the Government
r ~and pressure was brought about to make the donations promising
consideration of such grievances, possibly by way of recipro- E
city, there is no justification that the ingredients of the
.. offence of extortion have been made out. The evidence led by
the prosecution falls short of the requirements of law in
regard to the alleged offence of extortion. [691 C-D]
~-
-... . 6.1 Cheating is defined in s. 415 of the !PC and the
F
~ngredients for that offence are : (i) there should be
fraudulent or dishonest inducement of a person by deceiving
him; (ii) the person so induced should be intentionally
induced to deliver any property to any person or to consent
that any person shall retain any property, or (iii) the person
so induced should be intentionally induced to do or to omit to
G
do anything which he would not do or omit if he were not so
deceived; and (iv) in cases covered by the second part of the
-1 act or omission should be one which caused or is likely to
cause damage or harm to the person induced in body, mind,
reputation or property. [695 C-FJ

6. 2 Section 415 actually consists of two parts, each H
part dealing with one way of cheating -
628 SUPREME COURT REPORTS [1986] 2 S.C.R.

A
(i) Where, by deception practised upon a person the,
accused dishonestly or fraudulently induced that"
person to deliver property to any person or to
consent that any person shall retain any property;

(ii) Where, by deception practised upon a person,
B the accused intentionally induces that person to do
or omit to do anything which he would not do or
omit to do, if he were not so deceived and whic~
act or omission causes or is likely to cause damage
or harm to that person in body, mind, reputation or
property. [695 G-H; 696 A] _
c In the instant case, the learned Trial Judge failed to ?'
analyse the evidence which he had at great length extracted·\, · ·
keeping the proper angle of approach in view. Therefore, his,.
conclusion is not made on a proper assessment and is not
sustainable. The evidence, oral and documentary, taken
D together does justify the framing of a charge for the offence
under s. 420, IPC. However, the position is a presumptive one
open to rebuttal by the respondent. A charge under s. 420,
IPC, should, therefore, be framed by the learned Trial Judge
against the respondent. [696 B-D]

7. There must be an assumption that whatever is published
'"' ......
E
in the Government owned paper correctly represents the actual
state of affairs relating to Governmental business until the
same is successfully challenged and the real state of affairs
is shown to be different from what is stated in the Government
publication. [693 B-e) ~
-
F
Barpal Singh & Anr. v. State of Hl.alc:hal Pradesh, [1981]~
1 s.c.c. 560, relied upon. \
Per Bhagwatl, C.J. (Ranganath Misra, J. concurring)

G 8.1 When the court is considering under s. 245 sub-s. (1) ··
of the Code of Criminal Procedure whether any case has been
made out against! the accused which, if unrebutted, would ,
warrant his conviction, it is difficult to understand as to ~·
how the court can brush aside the presumption under s. 4 of
the Prevention of Corruption Act, 1947. Sub.s. (1) of s. 4 of
H that Act provides that where in any trial of an offence
R.S. NAYAK v. A.R. ANTULA.Y 629

A
punishable under s. 161 or 165 of the Indian Penal Code or of
~ an offence referred to in cl. (a} or cl. (b) of sub-s. (1) of
s. 5 of that Act it is proved that an accused has accepted or
obtained or has agreed to accept or admitted to obtain for
himself or for any other person, any gratification (other than
legal remuneration) or any valuable thing from any person, it
B
shall be presumed, unless the contrary is proved·, that he
accepted or obtained or agreed to accept or admitted to
~ obtain, that gratification or that valuable thing as a motive
or reward such as is mentioned in s. 161 or as the case may
be, without consideration or for a consideration which he
knows to be inadequate. When the Court is called upon to
consider whether a charge should be framed or not the question
to which the Court has to address itself is whether the
c
--1 evidence led on behalf of the prosecution is such that, if
_ ~- unrebutted, it would justify the conviction of the accused and
the court has, therefore, to examine the evidence as it stands
without rebuttal and coJDe to a conclusion whether on the basis
of such evidence the court would convict the accused and where
D
the offence charged against the accused is under s. 161 or s.
165 or el. (a) or clause (b) or sub-s. (1) or s. 5, the court
must necessarily apply the presumption under s. 4 while
considering whether on the basis of the unrebutted evidence
~ __)__ which is before it the court would convict the accused. There-
fore, even for the purpose of considering whether a charge
E
should be framed or not the presumption under s.. 4 mst be

- taken into account. 632 A-G]

8.2 Sections 161 and 165 of the !PC have been enacted by
---') the Legislature with a view to eradicating corruption in
public life. The court must therefore interpret s. 165
F
~ according to its plain language without in any manner being
· anxious or astute to narrow down its interpretation. Section
165 DllSt be construed in a manner which would advance the
remedy and suppress the mischief which is intended to be
curbed. [634 D-E]
G
~c. Jacob v. Union of India, [1963] 3 s.c.R. 800, relied
upon.
'-.--(
8.3 Section 165 is wider than s. 161 and an act of
corruption not falling within s. 161 may yet come within the
wide terms of s. 165. What s. 161 envisages is that any
H
630 SUPREME COURT REPORTS [ l 986] 2 S.C. R.

A
gratification other than legal remuneration should have been
accepted or obtained or agreed to be accepted or attempted to ~
be obtained by the accused for himself or for any other person
as a rotive or reward for doing or forbearing to do any
official act or for showing or forbearing to show, in the
exercise of his official function, favour or disfavour to any
person, or for rendering or attempting to render any service
B
or disservice to any person, while s. 165 does not require
taking of gratification as a motive or reward for any specific ~
official action, favour or service but strikes at obtaining by
a public servant of any valuable thing without consideration
or for a consideration which he knows to be inadequate from
any person whom he knows to have been or to be or likely to be
c concerned in any proceeding or business transacted or about to ~
be transacted by such public servant or having any connection \
with the official functions of himself or of any public ~
servant to whom he is subordinate or from whom any person whom '
he knows to be interested in or related to the person so
D
concerned. Whereas under s. 161 it is necessary to establish
that the taking of gratification must be connected with any
specific official action, favour or service by way of motive
or reward, no such connect ion is necessary to be proved in
order to bring home an offence under s. 165 and all that is
necessary to establish is that a valuable thing is accepted or _._ ...,.
obtained or agreed to be accepted or attempted to be obtained
E
by a public servant from any person whom he knows to have been
or to be likely to be concerned in any proceeding or business
transacted or about to be transacted by such public servant or
having any connection with the official function of such
public servant and such valuable thing has been accepted or (*-
obtained without consideration or for a consideration which ,-
F such public servant knows to be inadequate. [634 F-H; 635 A-E] ,.,

The reach of s. 165 is definitely wider than that of s.
161. Moreover, it is clear from illustration (c) to s. 165
that money or currency is regarded by the Legislature as a
valuable thing and if it is accepted or obtained by a public
G
servant without consideration or for inadequate consideration
in the circumstances set out. in s. 165, such public servant
would be guilty of an offence under that section. [635 E-F] }.---
'
CRIMINAL APPELLATE JURISDICTION : Criminal Appeal No. 658
of 1985.
H
R.S. NAYAK v. A.R. ANTULAY [BHAGWATI, C.J.} 631
A
From the Judgment and Order dated 23/24/29/30th April,
1985 of the Bombay High Court in Special Case No. 24 of 1982.

Ram Jethmalani, M.V. Katarke, Jai Singhani, Mahesh
Jeth~lani, K.N. Madhusoodhanan, Satish Maneshinde and Ms.
Rani Jethmalani for the Appellants. B

L.N. Sinha, P.P. Rao, S.B. Bhasme, R.D. Ovalekar, D.R•
.. Gadgil, Miteen v. Pradhan, Rajendra s. Desai, V.M. Kanade,
Mahesh Rajedhyaksha, P.P. Singh, A.S. Bhasme, A.M. Khanwilkar
and M.N. Shroff for the Respondents.

The following Judgments of the Court were del~vered c
)
;. BBAGWATI, C.J. I agree with the judgment about to be
~, delivered by my learned brother Ranga Nath Misra, but there
are some two or three charges in regard to which I should like
to make more detailed observations since they have not been
dealt fully by my learned brother and he has left it to me to D
consider them in some detail. Since the genesis of this appeal
has been set out by my learned brother at length I do not
propose to repeat what has been so ably said by him and I will
confine myself only to the facts relating to the charges which
). are going to be'dealt with by me. But I may be permitted to
say a few words in regard to two points which have been E
discussed by my learned brother in his judgment since they are
of some importance and can without impropriety bear further
discussion.

~ The first point arises out of a contention raised by the
1 learned counsel appearing on behalf of the first respondent F
, . (hereinafter referred to as the • respondent') that the
presumption under Section 4 of the Prevention of Corruption
Act 1947 applies only after a charge is framed against an
accused and has no application at the stage when the court is
considering the question whether a charge should be framed or
not. It is said in geometry that a point has position but no G
magnitude, but we are constrained to observe that this point
raised on behalf of the first respondent has not only no
-4. magnitude but has even no position. It is wholly without
substance and indeed it is surprising that it should have been
raised by the learned counsel appearing on behalf of the first
H
632 SUPREME COURT REPORI'S [1986] 2 s.c.R.
A

respondent. When the court is considering under Section 245
sub-section (1) of the Code of Criminal Procedure whether any r
case has been made out against the accused which if unrebutted
would warrant his conviction, it is difficult to understand as
to how the court can brush aside the presumption under Section
B 4 of the Prevention of Corruption Act, 1947. Sub-section (1)
of Section 4 of that Act provides that where in any trial of
an offence punishable under Section 161 or Section 165 of the
Indian Penal Code or of an offence referred to in clause (a) ..
or clause (b) of sub-section (1) of Section 5 of that Act it
is proved that an accused has accepted or obtained or has
C agreed to accept or admitted to obtain for himself or for any
other person, any gratification (other than legal
remuneration) or any valuable thing from any person, it shall ~
be presumed, unless tne contrary is proved, that he accepted ,
or obtained or agreed to accept or admitted to obtain, that >-
gratification or that valuable thing as a motive or reward
D such as is mentioned in Section 161 or as the case may be,
without consideration or for a consideration which he knows to
be inadequate. When the court is called upon to consider
whether a charge should be framed or not the question to which
the court has to address itself is whether the evidence led on
behalf of the prosecution is such that if unrebutted it would
E justify the conviction of the accused and' the Court has, i
therefore, to examine the evidence as it stands without
rebuttal and come to a conclusion whether on the basis of such
evidence the court would convict the accused and where the
offence charged against the accused is under Section 161 or
Section 165 or clause (a) or clause (b) of sub-section (1) of
F Section 5 the Court must necessarily apply the presumption ~
under Section 4 while considering whether on the ~sis of the
unrebutted evidence which is before it the court would convict~
the accused. We do not therefore see any substance in the '·~
contention raised on behalf of the first respondent and we \
must proceed to dispose of this appeal on the basis that even '
G for the purpose of considering whether a charge should be
framed or not the presumption under Section 4 must be taken
into account.

The second point on which considerable controversy was ~
\

raised before us related to the scope and ambit of Section 165
H of the Indian Penal Code. I agree with my learned brother that
it may not be desirable at this stage to define the precise
R.S. NAYAK v. A.R. ANTULAY [BHA<l¥ATI, C.J.] 633
A

. ambit and coverage of Section 165 because that is a matter
,-. which will have to be considered by the High Qlurt in depth
when the case goes back before the High Court and the first
respondent is called upon to face his trial on the charges
framed against him. But it is necessary to indicate the broad B
parameters of Section 165 and to emphasize the basic
distinction which exists between that Section and Section 161.
It may be pointed out straight away that these two sections
4 have been enacted by the Legislature with a view to eradicat-
. ing corruption in public life. We may usefully quote here the
following pertinent observations made by this Court in Re :
Special Courts Bill which came by way of Presidential C
Reference and which is reported in 1979 (2) s.c.R. 476 :

" •••• As I read it, this measure is the embryonic
expression of a necessitous legislative project,
which, if full-fledged, will work a relentless
break-through towards catching, through the D
compulsive criminal process, the higher inhabitants
of Indian public and political decks, who have in
practice, remained 'untouchable' and 'unapproach-
able' to the rule of law. 'O~eration Clean Up' is a
'consUIIIJlation devoutly to be wished', although
naive optimism cannot obfuscate the obnoxious ex- E
perience that laws made in terrorem against those
who belong to the top power bloc prove in action to
be paper tigers. The pathology of our public law,
with its class slant, is that an umnincing oobuds-
man or sentinel on the qui vive with power to act
against those in power, now or before, and offering F
legal access to the informed citizen to complain
with iDIDllnity does not exist, despite all the
bruited umbrage of political performers against
peculations and perversions by higher echelons. Law
is what law says and the moral gap between word and
deed menaces people's faith in life and law. And G
then, the tragedy- democracy becomes a casualty."

"The impact of 'sunmit' crimes in the Third World
setting is more terrible than the Watergate syn-
drome as perceptive social scientists have un-
masked. Corruption and repression-cousins in such H
situations-hijack developmental processes. And, in
634 SUPREME COURT REPORTS [19861 2 s.c.R.
A
the long run, lagging national progress means ebb-
ing people's confidence in constitutional means to?-
social justice. And so, to track down and give
short shrift to these heavy-weight criminaloids who
often mislead the people by public moral weight-
B lifting and multipoint. manifestoes is an urgent
legislative mission partially undertaken by the
Bill under discussion. To punish such super
offenders in top positions, sealing off legalistic~
escape routes and dilutory strategies and bringing·
them to justice with high speed and early finality,
c is a desideratum voiced in vain by Commissions and
Conmittees in the past and is a dimension of the
dynamics of the Rule of Law ••••• "
-r·
The Court TDJst therefore interpret Section 165 according to ~
its plain language without in any manner being anxious or
0 astute to narrow down its interpretation. Section 165 must be
construed in a manner which would advance the remedy and
suppress the mischief which is intended to be curbed. This was
the canon of construction which was adopted by this Court in
interpreting Section 165 in R.C. Jacob v. Union of India,
[ 1963] 3 S.C. R. 800. There are a few decisions of ancient
E vintage which have dealt with the interpretation of Section_,( ~
165 but since we are not finally laying down the true scope
and ambit of Section 165 we do not propose to discuss these
decisions. Suffice it to point out at the present stage that
on its plain terms Section 165 is wider than Section 161 and •
that an act of corruption not falling within Section 161 may
F yet come within the wide terms of Section 165. What Section (--
161 envisages is that any gratification other than legal '
remuneration should have been accepted or obtain~d or agreed~
to be accepted or attempted to be obtained by the accused for
himself or for any other person as a 110tive or reward for
doing or forbearing to do any official act or for showing or
G forbearing to show, in the exercise of his official function,
favour or disfavour to any person, or for rendering or
attempting to render any service or disservice to any person,
while Section 165 does not require taking of gratification as
a motive or reward for any specific official action, favour~
or service but strikes at obtaining by a public servant of any'
H valuable thl.ng without consideration or for a consideration
which he knows to be inadequate, from any person whom he knows
R.S. NAYAK v. A.R. ANTULAY [BHAGWATI, C.J.] 635

A
to have been or to be or likely to be concerned in any
~proceeding or business transacted or about to be transacted by
such public servant or having any connection with the official
functions of himself or of any public servant to whom he is
subordinate or from whom any person whom he knows to be
interested in or related to the person so concerned. Whereas B
under Section 161 it is necessary to establish that the taking
of gratification must be connected with any specific official
---\-action, favour or service by way of motive or reward, no such
connection is necessary to be proved in order to bring whom an
offence under Section 165 and all that is necessary to
establish is that a valuable thing is accepted or obtained or
agreed to be accepted or attempted to be obtained by a public C
~ servant from any person whom he knows to have been or to be
~ likely to be concerned in any proceeding or business
-1 transacted or about to be transacted by such public servant or
,, having any connection with the official function of such
public servant and such valuable thing has been accepted or
_ obtained or agreed to be accepted or attempted to be obtained D
without consideration or for a consideration which such public
servant knows to be inadequate. The reach of Section 165 is
definitely wider than that of Section 161. Moreover, it is
clear from illustration (c) to Section 165 that money or
'J- _~currency is regarded by the Legislature as a valuable thing

and if it is accepted or obtained by a public servant without E
consideration or for inadequate consideration in the circums-
tances set out in Section 165, such public servant would be
guilty of an offence under that Section. Having said this much
on the interpretation of Section 165 we now proceed to examine
~~~ the facts on the basis of which the High Court has declined to
. frame certain charges against the. first respondent. F
r
We will first deal with the 35th, 36th and 37th of the
draft charges which were submitted by the lea~ned counsel for
the appellant before the High Court and on the basis of which
the High Court was invited by him to frame charges against the
first respondent. These charges related to a transaction in G
which according to the appellant, a sum of Rs. 8 lakhs was
paid by one Ramesh Merchant and his partners by way of
--.4 contribution to Indira Gandhi Pratibha Pratishthan on 16th
April 1981 as a motive for the granting of no objection
certificate by the first respondent for letting out of certain
premises by M/s Nanubhai Jewellers of which Ramesh Merchant H
636 SUPREME COURT REPORTS [1986] 2 S.C.R.

A and some others were partners to Indo-Suez Bank. The facts r
giving rise to these charges in so far as relevant may be
briefly stated as follows.

There was a firm called M/s Nanubhai Jewellers which was
in possession of certain ground floor premises situate at 113/
115, Mahatma Gandhi Road, Fort, Bombay as a tenant. There were
B various changes in the constitution of this firm from time to
time but we are not concerned with these changes in thef-
present appeal. What is material to note is that at the
relevant time this firm consisted of Mukesh Dadlani, Lal Chand
Rohra, Ramesh Merchant his father and two other partners. The
rent payable by this firm was originally Rs. 3000 per month
c but under a new agreement of lease dated 27th September 1979 ~
the rent was raised to Rs. 15000 per month in consideration of
the landlords giving to the tenant power to sub-let the}
premises. It seemc; that si.nce 1979-80 this firm was incurring
losses and was not in a position to make use of the premises
for its own purposes and hence it decided to sub-let the
D entire premises barring about 500 sq. ft. to Indo-Suez Bank at
a monthly rent of Rs. 1,24,120 and an agreement of lease was
entered into between them on 12th December 1980. But it was
not possible for this firm to sub-let the premises to
Indo-Suez Bank without a no objection certificate from the ;1,__ "'
Controller of Accommodation in view of the Bombay Land
E Requisition Act 1948. The partners of this firm therefore made
an application to the Controller of Accommodation on 13th
Janullry 1981 pointing out that the Indo Suez Bank had
approached them with a request to allow them to use the .- ~
premises for the purpose of opening their branch office in (
F
Bombay and that it would be advantageous to the country to --J
make it possible for the Indo-Suez Bank to open a branch r
office and requesting the Controller of AccotmOOdation "to
grant the necessary permission••••••••••• to permit the Bank to
use the premises on sub-lease basis". Though this application
was dated 13th January 1981, it appears from the endorsement
made on the application that it was received in the office of
G the Controller of Accommodation on 11th February 1981. There-
after on 19th February 1981 an officer from the office of the ,
Controller of Accommodation visited the premises and certain t"-
documents relating to the partnership of 'A./s Nanubhai
Jewellers were handed over by Lal Chand Rohra and the father
of Ramesh Merchant to such officer. They also handed over to
H
R.S. NAYAK v. A.R. ANTULAY [BHAGWATI, C.J.] 637
..
A
such officer copies of the rent receipts for November, 1973
and November·, 1980 as also a Xerox copy of the registration
~ ~, certificate of the firm under the Bombay Shops and Establish-
) ments Act. Ramesh Merchant several times went to . the office of
the Controller of Accommodation for no-objection cP.rtificate
but he was told that the application was under process. Now
B
the record shows that on 14th February, 1981 a noting was made
in the file seeking a direction whether suppressed vacancy
. inquiry should be made to ascertain whether the premises could
! be requisitioned as a suppressed vacancy or whether the no
objectiort certificate should be granted. Further inquiry was
thereupon made for the purpose of determining whether there
t
was a suppressed vacancy in respect of the premises and after c
such inquiry was completed a further noting was made on 2nd
March 1981 recommending that in view of the facts set out in
that noting ''it is for orders whether we may consider the
request and grant" the no objection certificate in this case.
~ Shri Rawat, who was an Accommodation Officer, made an endorse-
ment on the foot of his further noting pointing out that 0 ·~
l
·according to the inqulry made by the office no vacancy had I
·'·
·:
actually occurred at any time in the premises and there was
accordingly no suppressed vacancy and moreover only a part of
the premises was proposed to be sub-let by the firm of M/s
Nanubhai Jewellers and hence the premises could not . be re-
~ quisitioned as a suppressed vacancy and consequently no objec- E
tion certif1cate might be granted. The file containing these
notings thereafter went fo the· Additional Chief Secretary who
also placed his signature below that of Shr1 Rawat indicating l,
his agreement with the endorsement made by Shri Rawat. The .. ' .

· date below the signature of.the AdditiQnal Chief Secretary is
a little doubtful but we can safely take it to be 2nd March F
;•

~ 1981 since there is an endorsement at the botto~ of the page
~ showing that the file was received in the Secretariat of t:!e
Additional Chief Secretary on 12th March 1961 and obviously it
~t have gone to the Secretariat to the Chief Minister after
~tng of the endorsement by the Additional Chief Secretary.
The page of the file containing the endorsement of Shri Rawat G
!'? atso contains in red ink. an endorsement made by the first 11
respondent and thls endorsement reads "in view of "lA"' B"
e&ay be done'' and below this endorsement is the signature of
the first respondent and below that is the date which
~~sently reads 16/3. We shall revert to this endorsement of
first respondent a little later ~1en we eAamtne the argu- H
-.ents
urged on behalf of the pa~ties.
f
638 SUPREME COURT REPORTS [19861 2 s.c.R·.
•

A
Now according to the evidence of Ramesh Merchant he came
to know from the staff- of the office of the Controller of
J.
Acconmodatio.n in the first week of April, 1981 that file re- :. ·
~r.'. .t.ng to their application for · no objection certificate had .,.
b t;.· ··. i forwarded to the ficst respondent. Ramesh ~-farchant knew
the first respondent quite~ell slnce he and hts father had
bee11 stitching clothes for the first respondent. Ramesh ·
B
Merchant therefore, after consulting his partners, went to the
residence of the first respondent a day or two after he
received the above information that the file had been forward- j
ed to the first respondent. Ramesh Merchant stated in his
f. evidence that he told the first respondent about the applica-
tion for permission made on behalf of the firm of M/s Nanubhai
c
J
~
J
Jewellers and requested the first respondent to sanctlon grant
of no objection certificate stating that he and hts ·father i
!
were partners tn that finn. The first respondent stated that
he knew that the file of the finn of M/s Nanubhai Jewellers ·
had been forwarded to htm and that if the premises wece to be ~
D given to a Bank there could be no objection to grant of a no.
objection certif 1--~ate. The first respondent • however, asked
Ramesh Merchant "to make . a handsome don:1tion to the Indira .
Gandhi Prattbha Pratishthan" and when R.:lmesh Merchant asked
the first respondent as to h-:>w much he wonld ltke them to
donate, the f1rst respondent asked ~~esh Marchant to donate ... ~
E Rs. 10 lakhs. Ramesh Merchant thereupon pointed out to the · 'f-~
first respondent that there was a registered agree~nt betOtleen · _· .I
the Government of India and the Government of France where--
f': under the Cov~rnment of France had permitted the State Bank of
I
', I India to open 1ts Branch at Paris and the Govel.·nroent of India
'.I had conBequently permitted Indo- Suez Bank to o,,en it$ Branch
? F at Bombay and he accot>dingly requested the first re.spondetlt
l·j'
I
"to lk1me a -reasonable amount for donat Lon". The first 7
' f
I
respondent:, accordtng to the evidence of Ramesh ~terchant
.\ .~ considered hi3 request sympathetically and asked hi~ to donate
It,.
,~·

i
•' 8 lakhg. Ramesh t1erchant thereupon to l.d the first .
i'
!l respondent that he would consult hts other partners and let .
·~ ~
' 1
; :
c hlm know. Raoesh Merchant thereafter contacted Lal Chand P~hra ·
and other partner9 and told them that he had met the first ~
' (
respondent in connection with the grant of no objection certi-
.· ficate and the first respondent had demanded Rs. 10 lakhS for
the no objection certificate but it was ulttmately agreed that
the firm of M/s Nanubha1 Jewellerg would pay Rs: 8 lal<.hS bY
_,•. H way of donation to a Government Trust namely Indlra _CanJhl

(
·,
R.S. NAYAK v. A.R. ANTULAY [BHAGWATI, C.J.] 639

A
Pratibha Pratishthan. Lal Chand Rohra and other parties agreed
-<'to donate the amount of Rs. 8 lakhs to Indira Gandhi Pratibha
·Pratishthan and a cheque for Rs. 8 lakhs was accordingly
issued by the partners of the fi~ of M/s Nanubhai Jewellers.
Ramesh Merchant took this cheque to the first respondent at
his residence on 16th April 1981 and on being infor~d that a B
cheque had been brought the first respondent called one of his
secretaries and asked Ramesh Merchant to hand-over the cheque
to him. Ramesh Merchant accordingly handed over the cheque for
iRs. 8 lakhs to the Secretary. Ramesh Merchant was at this
stage in his evidence asked the following question by the
learned counsel appearing on behalf of the appellant.
c
What did the accused tell you about the NOC ?
t and to this question the following answer was given by Ram~stt
Merchant :
t
"The accused told me that the needful would be done in
the matter." D
Ramesh Merchant reiterated in cross-examination by the learned
counsel appearing on behalf of the first respondent:

"After I handed over the cheque the accused stated that
he will do the needful in the matter." E
The no objection certificate was thereafter issued by the
office of the Controller of Accol'IIDOdation on 18th April 1981.
On these facts the learned counsel appearing on behalf of the
appellant submitted that offences under Section 161, 165 of
the Indian Penal Code and Section 5(2) read with Section 5(1) F
_(d) of the Prevention of Corruption Act 1947 were clearly made
out on behalf of the prosecution so as to warrant the framing
~ of charges for the said offences against the first respondent.

It is clear from the cross-examination of Ramesh Merchant
by the learned counsel on behalf of the first respondent that
G
the case of the first respondent was that Ramesh Merchant had
not gone to visit the first respondent on either at the two
occasions depose to by him nor had Ramesh Merchant offered the
cheque of Rs. 8 lakhs to the Chief Minister but that the
cheque of Rs. 8 lakhs was sent by the father of Ramesh
Merchant directly to the Secretary, Indira Gandhi Pratibha
H
640 SUPREME COURT REPORTS [19861 2 s.c.a.

A
Pratishthan along with a letter dated 16th April 1981. The
learned counsel for the first respondent contended that the?
donation of Rs. 8 lakhs by the partners of the firm of M/s
Nanubhai Jewellers to Indira Gandhi Pratibha Pratishthan had
nothing to do with the grant of no objection certificate and
that the two were totally distinc't transactions not having any
B · connection with each other. The order of grant of no objection
certificate to the ~irm of M/s Nanubhai Jewellers had accord-
ing to the learned counsel for the first respondent already
been made by the first respondent on 16th March 1981 and fort
this purpose he relied on the endorsement in red ink made by
the first respondent in the file relating to the grant of no
c objection certificate at the bottom of the page containing the
endorsement of Shri Rawat. The argument of the learned counsel
for the first respondent was that if the order for grant of no
objection certificate had already been made by the first
respondent on 16th March 1981 there could possibly be no
connection between the grant of no objection certificate and
D tt.e donation of Rs. 8 lakhs which came to be independently
made on 16th April 1981. This argument is prima facie specious
and does not appeal to us. We do not see any reason why for
the purpose of considering whether a charge should be framed
or not we should disbelieve the evidence of Ramesh Merchant
and Lalchand Rohra. What we have to consider is whether the
E evidence led on behalf of the complainant in regard to this
transaction is such that if unrebutted that would warrant the
conviction of the first respondent. We are clearly of the view
that a prima facie case has been made out on behalf of the
prosecution and the evidence led before the court is such as
to warrant the conviction of the first respondent unless
F satisfactorily rebutted.

The first question that we must consider is whether the
endorsement sanctioning the grant of no objection certificate
to the fi~m of M/s Nanubhai Jewellers was made by the first
respondent on 16th March 1981 or it was made on 16th April
G 1981 but the figure nl6/4" below the endorsement of the first
respondent was at some stage tempered with and altered to
"16/3" by overwriting the figure "3" over the original figure
"4". This is not the stage to come to any definite finding on
this question because after the charges are framed, evidence
may have to be led on behalf of the prosecution for the
H
purpose of establishing overwriting of the figure "4" by the
~~ ._,_ ,~?:2-~ -· ·- .. .~ .. ··- ... ~ - -- - · ~ .... .,_ , ;..;..
-· --..:

·---·
l R.S. NAYAI< v. A.R. ANTULAY {BHAGWATI, C.J.]
••
figure "3" and the first respondent may also lead the evidence t:
A l
, ,. sh~ that there is no overwriting and the original figur e :I
>

~;~'ilays was "3''. But while we are considering the prima facie ~~
case made out agai:nst the first respondent we ca nnot help I .-
, .
.,
observing that it does appear from the original endorsement in
red ink made by the first respondent at the bottom of the
i relevant page in the file (Ex. 815(0)) that · figure "3" has B

! been thickly written over another figure which was presumably
.~"4". The possibility cannot be ruled out that the original
· date below the endorsement was "16/4" and the figure "4" was
overwritten by figure "3" with a view to showing as tf the
\j endorsement was made on 16th March 1981. This possibility does

f seem to receive support from the circumstance that, as
appearing from the stamped endorsement on the last page of the c
file (Ex. 815(0)), the file was received back in the office of
the Controller of Accommodation on 18th April 1 ·~81. It is a
-..little difficult to understand that, if the first respondent
made his endorseme nt in red ink sanctioning the grant of no
objection certificate on 16th March 1981, the file should no t
have gone back to the Controller of AccOJlliOOdation until 18th D .-
April 1981. It is perhaps more probable that the endorsement '
in red ink was made by the first respondent on 16th April 1981
aoo ~diately thereafter the file was sent back and received
t
~r-in the ofUce of the Controller of Accommodation on 18th April \·
. 1981. There is also one other endorsement at the bottom of the I·

E
i
-\ page (Ex. 815(0)) which says "Secretary has s een it" and it
bears the date " 18/4". All these circumstances do go to indi- l:i'
~te prima facie that the endorsement in red irik sanction!~ ~'
• J

the grant of no objection certificate was made by the first )

respondent on 16th April 1981. And, if that be so, · it lends
L considerable support to the oral testimony of R.amesh Merchant t·
Ii fand Lal Chand Rohra. F j
I l

\-.
Ra~sh Merchant clearly stated in his evidence that when
h ,.
e met th.e first res pondent at his residence "Varsha" on 11th l
~~~2th April 1981 -perhaps the date was 14th April 1981-
)

~•ub-lirst respondent stated that stnce the premises we re to be
G
granttet to Indo-Suez Bank there should be no difficultyM ha
in
to ng 110 objection certificate but he asked Ramesh ( ere nt
~e a handsome donation to Indira Gandhi Pratibha
Pratteh ha
d0 nau t n. The conte"'t " in which the demand for a handsome
in on was made by the first respondent left Ramesh Merchant
no doubt that a handsome donation would have to be given by
,
.~
I,
•·. H

--·- - ·-·----~
... . -- - - - -
; ·· · - , ..~ . .-- ·~ - . . r • •.• -
"·
r .. .,
642 SUPREME COURT REPORTS [1986 1 2 s.c.~.
l
~.
·,
1 A
his firm in consideration of getting the no object!
certificate. When asked as to how much he would like the
of NanubhaL Jewellers to donate, the first respondent askecP ~.
fi:
Ra!l!esh Merchant to donate Rs. 10 lakhs and when Ramesh ·
Merchant pointed out that the Government of India have
permitted the lndo-&tez Bank to open its branch in Bombay and
B the premis es were being sub-let to Indo- Suez Bank and
requested him to name a reasonable figure for the donation,
the first respondent considered the request of Ramesh,
Merchant sympathetically and asked him to donate Rs. 8 lakhs.
The circumstance that Ramesh Merchant had to request the first
i. respondent to . name a reasonable amount for the donation and
.\
) c that the first respondent considered this reque st reasonably,
does go to show that pressure was exercised on Ramesh Merchant
to make a handsome donation as consideration for the grant of
no objection certificate and the ultimate figure demanded was
Rs. 8 lakhs. If the donation was being made voluntarily why'
should any request have been made by Ramesh Merchant to the
D first respondent to name a reasonable amount and where could
be the question of such ~ request being considered
sympathetically by the first respondent. Moreover, when Ramesh
Merchant contacted Lalchand Rohra and his other parterns after
this meeting with the first respondent_. he clearly told tht!m
that the first respondent had de manded Rs. 10 .lakhs for the no~
E objection certificate but it was ultimately agreed that the !
firm of M/s Nanubhai Jewellers would pay Rs. 8 lakhs by way of ~
donation to Indira Gandhi Pratibha Pratisthan. There is no :
reason to disbelieve the evidence given by Lalchand Rohra to ;
this effect. Since the rent which the firm of M/s. Nanubhai ·
Jewellers was to get from Indo-Suez Bank w.1s phenomenal and it .J
F was more than eight times the rent payable by it to the ..;
landlord, the partners of the firm of M/s. Nanubhai Jewellers ...j :
obviously did not mind paying the donation of Rs. 8 lakhs for
getting the no objection certificate. The · cheque for Rs • 8 '
lakhs was ma·ie · out and according to the evidence of Ramesh
He if chant~ he went to the residence of the first respondent
uv.arshau on the same day~ namely 16 April 1981 and handed over~
the chequ~ to the Secretary as directed by the first .....
· n--det
res~ndent. lt ia significant note thdt the v~
to
· sanctioning the grant of no objection certificate was made bY
tr~ first rt~pondent on the file on 16th April 1981. i·e· 0~
the same date on which the cheGue for Rs. 8 lakhs was receh'~
H from too linn of M/s. Nanubhai Jewellers and the no object!.
11
:L ____ -- . ....- ~
- - - ---~ ·--------- ·/" - -• •_-1, -
R.S, NAYAK v. A,R, ANTULAY [BHAGHAII, C,J.] 643
A
J.. was issued within two days after the receipt of the cheque.
These are tell-tale circumstances which prima facie go to show
that the grant of no objection certificate and the donation of
Rs. 8 lakhs were closely related transactions and that one was
in fact the consideration for the other. It may also be noted
that the firm of M/s. Nanubhai Jewellers had been incurring B
losses for the last more than two years and if that be so, it
is difficult to understand why the partners of this firm
~· should have voluntarily decided to make a donation of Rs. ~
lakhs. What altruistic motive could have inspired them to have
made such a handsome donation when they themselves were
incurring losses. Prima Facie, the inference~ to be drawn from
these circumstances is irresistible and unless the first c
\ respondent can rebut this evidence, it is difficult to reject
the contention of the prosecution that a prima facie case
1 has been made out against the first respondent in respect of
this transaction. It is undoubtedly true that in cross-
examination by the learned counsel for the first respondent
Ramesh Merchant stated that no objection certificate has been D
granted on the merits of the application and not as a favour
to the firm of M/s Nanubhai Jewellers but this statement
cannot make any difference to the correct evaluation of the
evidence because whatever be the view of Ramesh Merchant as to
:>< whether the no objection had been granted to him on merits or
not, it is the totality of the evidence which has to be E
considered and even if the firm of M/s Nanubhai Jewellers were
entitled to obtain no objection certificate on merits, still
the first respondent could bargain for a handsome donation as
quid pro quo for granting the no objection certificate which
, was entirely within his power to do so.
F
We are, therefore, of the view that a J?rima facie case
was made out on behalf of the prosecution against the first
respondent in respect of the transaction of no objection
certificate and 35th, 36th and 37th charges should have been
framed against the first respondent.
G
That takes us to draft charges 29, 30, and 31 arising out
of the donations made by M/s Hira Nandan! Builders and Hira
Nandan! Construction Private Limited to lldira Gandhi Pratibha
Pratishthan. It is necessary to state briefly the facts
relating to this transaction in order to be able to decide
H
whether a prima fade case has been made out on behalf of the
644 SUPREME COURT REPORTS [ 1986 ] 2 S.. C. R.

A prosecution against the respondent in regard to this
transaction and evidence led on behalf of the prosecution is >
such that if unrebutted it would warrant the conviction of the
respondent on these charges. These draft charges are sought to
be made good on the basis of the oral evidence of the sole
witness Hira Nandani PW-28 and the documentary evidence
produced in the course of his deposition. We will begin by
B first referring to the evidence of Hira Nandan! and whilst we
consider that evidence we shall refer to the various documents )
produced in the case.

Hira Nandan! was known to the respondent for more than 15
years and in fact the respondent was a famdly friend of Hira
c Nandan!, having been a patient of the father of Hira Nandan!
who is a leading Ear, Nose, and Throat specialist in Bombay. 1
In 1974-75 Hira Nandan! entered the construction business and
started a limited company called Baf-Hira Builders Private
Limited. We are not concerned with thi~ company in the present
appeal. There were also two other concerns started by Hira
D Nandan! in 1979 in course of the construction business but
these are also not relevant for our purpose except that we may
state the names of these two concerns, namely, Hira Nandan!
Constructions and Hira Nagar Constructions. In January, 1981
Hira Nandan! started a partership in the name of Hira Nandan!
Enterprises. It is this firm which figures prominently in the
E history of this case. There were also four other partnership
firms started by Hira Nandan! in the same year and these were
Hira Nagar Developers, Hira Nandan! Developers, Apex Construc-
tions and Apex Builders. There was also a private limited
company floated by Hira Nandan! in the name of Hira Nandani
Constructions. Private Limited. These various concerns of Hira
F Nandan! undertook construction contracts which were started ..
sometime in 1980 and 1981. One of the construction works
undertaken by Hira Nandan! was in the name of Hira Nandan!
Enterprises and this construction work was undertaken under an
agreement with Udyogik Shramik Kamgar Housing Society. It
appears that in respect of the construction work undertaken by
G the various concerns of Hira Nandani there was a stalemate in
or about April 1981 and the construction works were held up
for want of cement. The concerns of Hira Nandan! had received
some small quantities of cement but the quantities received
were wholly inadequate and no further quantities of cement

H
- -· ~ ---_,.._ __ - . .. _ - ·
-·~:"...:. ·- --·- :... :_..,...;.._ .......:.. ...:.. ..... ..

i :

I. > R.S. NAYAK v. A.R. AN'l'ULAY [BHAGWATI, C.J.}
645

A
vailable because cement was a controlled item and 1

I." :t \Jere a f un ess
11 rroent of quota o cement was made by the State Government
~~ ~as not possible for any builder to obtain cement. Now th;
record shows that the entire control over allotment of quota
:; ;

1 1
of cement "\oTas retained by the respondent with himself in his
I capacitY as Chief Minister and no allotment could be made B
t ..rlthout his sanction or approval. Since the concerns of Hira
f Nandan! were starved of cement and they could not proceed with
' ~ the construction works undertaken by them without cement they
made applications to the respondent from time to time for
allotment of quota of cement. We have on record four applica-
tions dated 28th April 1981, one being Ex. 355 and 3SSA made
by Hira Nandani Construction Private Limited, the second being c
r Ex. 356 and 356A addressed by Hira Nagar Developers, the third
being Ex. 357 and 357A addressed by Hira Nagar Constructions
{. and the fourth being Ex. 358 and 358A addressed by Hi~a Nagar
j· Enterprises. All these applications ' were addressed to the
1
~ respondent in his capacity as Chief Minister. The application
of Rira Nandani Constructions Private Limited Ex. 355 and 355A D
pointed out that until the date of the application the company
i
had been allotted only 30 metric tonns of cement and requested
the respondent to allot at least 250 metrtc tonns of cement.
.I
I

Similarly the application of Hira Nagar Developers Ex. 356 and .!
4. 356A complained that the firm had no t received any supply of
.-. cement at all and requested the respondents to allot at least E
250 metric tonns of cement. So also the application of Hira
Nagar Constructions Ex:. 357 and 357A stated that the firm had
... received unt 11 the date of the application only 50 metric
I

tonns of cement and requested the respondent to allot at
least 250 metric tonn~ of cement. And lastly the application
' 'f.
of Hira Nandan! Enterprises Ex. 358 and 358A also pointed out
that no allotment of cement had been received by them and .,
F

requested the respondent that at least 100 metric tonns of
cement should be allotted to them. The record shows that pur-
suant to the application of Hira Nandani Construction Private
I.ilnlted E>t. 355 and 3SSA al totment of 200 metrlc tonns was
• - ~e to the company but thls allotment lapsed and the company G
1
could not obtain delivery of any quantity of cement under this
allotment. Subsequently. however. another order of allotment
~as made on 23rd July 1981 Ex. 693 under which 100 metric
onns of cement was allotted and the company could obtain
delivery of 100 metric tonns of cement under this order of
allotment. The allotment of 200 metric tonns of cement \lias H
also made on the application of Hira Nagar Developers Ex. 356
-·. ·-~-· ... _ __

{
~
··-y
··,; • '

646 SUPRE11E COURT REPORTS [ 19861 2 s.c.R1

A
and 356A but the . firm co_u ld obtain only 74 metric tonns of \i
cement under this letter of allotment and the balance lapsed
Thereafter another order of allotment was made on 23rd Jut • .....
( ...J..
1981 granting 25 metric tonns of cement and this quantity ~f r
cement was lifted by the firm Hira Nagar Developers. II
Siiidlarly 200 metric tonns of cement was lifted on the J
B application of Hira Nagar Construction Ex. 357 and 357A but
this allotment also lapsed and Htra Nagar Construction could
not obtain the delivery of any quantity out of 200 metric .,
tonns allotted to ·them but in this case also a subsequent
order of . allotment was made on 23rd July, 1981 alloting so

-
metric tonns of cement and this quantity of 50 metric tonns
c was lifted by Hira Nagar Construction. The same position
obtained in regard to Messrs Hira Nandani Enterprises. In the I
case of this concern also allotment of 100 metric tonns was
made on the application Ex. 358 and 358A but this allotment

0
lapsed because it was made .in such a manner that this concern
could not obtain delivery of any quantity out of 100 metric
t:onns allotted to it. Subsequently on the same date as in the
. '
case of the other three concerns, that is, on 23rd July, 1981
an order was made alloting 50 metric tonns of cement to Rira
Nandani Enterpriseg and delivery of 50 metric tonns of cement
was taken by this concern pursuant to the order of allotment.
It will thus be seen that in the case of these four concerns.
E namely, Hira Nandani Construction Private Limited, Hira Nagar
Developers, Hira Nagar Construction and Hira Nandant Enter-
prises, only 74 metric tonns of cement could be obtained prior I'
I

to 4th July, 1981 and it was admitted by Hira Nandant in the .t.
I
course of his evidence that it wa s correct that till 15th i
I

June, 1981, that he had not received more than 400 metric
p
tonne of cement against the four applications dated 28th
April, 1981 Exs. 355 and 355A to 358 and 358A. It was onlY -j ·
when as a result of further representations made to the
respondent, new orders of allotment were issued on 23rd July,
1981 that some quantities of cement could be obtained by these t
~

four concerns of lUra Nandani. I

c
We have already referred to the fact that Hira Nandani
Enterprises had undertaken construction work. under the
agreement wttn Udyogik. Shramlk l<amgar Housing SocietY• On
tfL)St
lCcount o! wa.nt of cement this construction work he:~J 8l
com~ to a F.Jtand-still tn Jul'le, 1981. lllra Nandanl Enterprls:~
had also not been able to obtain any quantity of cement

··--- -..---------- .. --
648 SUPREME COURT REPORTS [19861 2 s.c.R.

A
the prosecution contended that by obtaining for the benefit of ~
Indira Gandhi Pratibha Pratishthan the two donations of Rs.
30,000 and Rs. 1,20,000 in consideration of the grant of the
two pe~ts in favour of Hlra Nandan! Enterprises and Udyogik
Shramik Kamgar · Housing Society the first respondent had
comadtted offences under sections 161 and 165 of the Indian
B Penal Code, sub-sections l(d) and (2) of section 5 of the
Prevention of Corruption Act, 1947.

We shall presently proceed to consider whether these
charges could be said to have been prima facie made out on
behalf of the prosecution. But at this stage, it is necessary
c to refer to two other applications made by Hira Nandan! ,
Builders and Apex Builders, both being concerns of Hira ·j
Nandan!. It seems that Hira Nandan! Builders has started a new
project at Varsava in May, 1981 and they needed cement for
this project and they accordingly made an application dated
15th June, 1981 Ex. 648 and 648A for allotment of at least 500
D metric tonns of cement. Apex Builders also made another
application dated 23rd June, 1981 Ex. 649 and 649A for
allotment of at least 250 metric tonns of cement and though
this application was in the name of Apex Builders it was in
respect of the same Varsava project. Now according to the ;J
evidence of V.T. Chari PW-41 who was at the relevant time
E Secretary, Food and Civil Supplies Department, the respondent
mentioned to him on 24th June 1981 that one Pesi Tata would be
giving to him i.e. to V.T. Chari on 25th June 1981 a set of
applications for cement indicating the quantity to be
sanctioned and that these proposals had his approval and
therefore the Department should take action on these cases and
F thereafter report to the first respondent for confirmation. On ~
the next day i.e. 25th June 1981 Pesi Tata saw V.T. Chari and
handed over to him. three sets of applications each with a
covering statement showing the quantity asked for and the
quantity to be sanctioned and according to these statements
the total quantity to be sanctioned came to 9700 metric tonns.
G V.T. Chari thereupon made a note in the file on the same day
i.e. 25th June 1981 setting out the above facts and stating
that "necessary action may be taken and thereafter the papers
may be submitted to C.M. through Secy. F & C.S.D and Min. F &
CS." This note made by V.T. Chari in the file is Ex. 420. The
endorsement at the. foot of this note shows that it was addres-
H sed to the Deputy Secretary with a copy to the Minister,
::- ~~ :_:; ~:.:.~>; - e.;.;;:.::.;:.l-'t'~=--g.62 - C(;<-"7-f:i---:....:-.
-•• "'- R.S. NAYAK v. A.R. ANTULA~ [BIIAGIATI, C.J. J - -649 R
i. ~ t
l, Fod and Civil Supplies for information. It was recorded there
b; v. T. Chari that he had also "submitted a note separately to
A ·;r.
;~
[.:.,
L
:..
.-. C M. for confirmation of the action being taken by the
~partment". A . note addressed to the respondent was
U· ,
:;,. , ·
accordingly made by V. T. Chari simultaneously and it was in t .
the following terms : B J..
"C.M. may kindly recall that he had mentioned to me l .

I
yesterday (24th June 1981) that Shri P. D. Tata will
.t .
be giving to . me to-day applications for cement
indicating the quantity to be sanctioned. C.M. ~-

observed that the cases had his approval and the ~ -
Deptt. should take necessary action thereon and c ;
,
I .
report to C.M. for confirmation.
f
I · .'1
J .' ' "'~·.
· 2. Shri P.D. Tata saw me to-day (25/6/81) and gave
me 3 sets of applications with statements
indicating the quantity applied for and the
I~
quantity to be sanctioned. In all there are 58
applications and the total quantity to be
D l:
~·
sanctioned comes to 9,700 metric tonns. f. ·_
'I'

3. A copy of the 3 statements is annexed to this
note.

4. Necessary action is being taken separately on
the applications. The main papers will be submitted
to C.M. after issue of allotment orders. C.M. may
E
r ~
tl
'•u.
'f
~··
kindly see for confirmation of action being taken lj
~
by the Deptt." [
F \,;
This note was submitted to the respondent and it is marked Ex. ·Itil.•
421. It is the evidence of V.T. Chari that the file containing ·r~:~
thia note was returned to him on the same day, that is, 25th •'
Jme 1981 and when the file came back to him, this note bore ~:
the signature of the respondent and the date in his t·~
;•_.
\. hand~lting and v. T. Chari thereupon noted on the reverse of G
-~ the note "Please keep with papers d~aling with these cases"
r. and addressed this note to the Deputy Secretary. Now the note
1 Ex. 421 as exhibited contained the following endorsement made
i by the re.apondent :
I'
"'A' - Is it 1 Where is 'B' ? Secy. to withdraw H
action and F & cs Deptt• to decide on merit as
~- usual. I 8.10 indeed surprised at such notings."
.. ... -~ .. ·- ----.---- ···--- - -
..
-.' -·---- ~ ... ..:-- · ,. -
I
I-
l . .. .... - .. . -·..
' ~- '

:;· .·, . .. ..
I

i '- . .
_... _.... .. --··- - - - - - - - --
_....

650 SUPREME COURT REPORTS [1986] 2 S.C.R,~

A -•
just above his signature and date. The evidence o·f V.T. Chart
is that this endorsement which has been marked Ex. 421A was
not there at the time when the file was received by V.T. Chari
from the respondent on 25th June 1981 and it was for the first
time in September 1982 when R.D. Pradhan, who was then Chief
Secretary, called V.T. Chari to his office and showed him the
B note Ex. 421 along with another note Ex. 419A that he saw the
above endorsement of the respondent. The suggestion therefore
clearly was that this endorsement was made by the respondent
some time between 25th June 1981 and September 1982,
presumably when a writ petition was filed in the High Court of
Bombay challenging the allotment of quotas for cement. It is
c not necessary for the purpose of deciding the present appeal
to come to a definite finding on the question whether this
endorsement was in fact made by the respondent on 25th June
1981 or it was subsequently interpolated by him. But we are
constrained to make some observations in regard to thl'i J.
endorsement, . since . the learn.t.d Judge has adversely commented
D on V.T. Chari in regard to his role in this affair. We do not
think the learned Judge was justified in making adverse
c~nts against V.T. Chari. If the respondent had not
m·· 'tir:med to V. T. Chari that Pesi Tata would be giving him a
set of epplications for cement indicating the quantity to be
sanct1nned and that these proposals had his approval and
E therefore the Department should take action on these ca~es and
therea~ter report to the first respondent for confi~tion, it
is extremely difficult to believe that V.T. Chari would have
made the note Ex. 420 on the file. It would be foolhardy on
the part . of V. T.. Chari t · a . senior and experienced I.A.S.
Officer, to make a false endorsement on the file attrlbuting
F to the Chief Minister of the State somethtntT which he never
..:)

said. The note made by V.T. Chari also proceeded to state trutt
Pesi Tata had given him 3 sets of applications each with a
covering statement showing the quantity asked for and the
quantity to be sanctioned and that necess3cy action should be
taken and thereafter the papers should be submitted to the
G first respondent through Secretary, Food and Civil Supplies
Department and Minister. Food and Civil Supplies. If the
first respondent had not glven him the instru~tions set out in
the note, would V.T. Chari, if he were in hts sense~, ever
direct the Department that the papers should be submitted to
the first respondent after taking nacessary action. That would
H be the easie~t way for him to secure his e:<.poaure. Then
l
(
I
l.
R.S. NAYAK v. A.R. ANTULAY [BHAGIATI, C.J.] 651

A
:again, if no such instructions had been given to him by the
~first respondent, is it possible that he would have prepared
tbe note Ex. 421 and subudtted it to the first respondent on
the same day. If V.T. Chari had decided to allot 9700 metric
lonns of cement to different applicants on his own, presumably
with a view to obliging these applicants for consideration or B
even otherwise, and to palm it off on the first respondent by
falsely attributing the authority to do so to the first
.,.-respondent, it passes one's comprehension as to why he should
have on the same day submitted note Ex. 421 to the first
respondent which would expose his deception and fraud and
provide an opportunity to the respondent to immediately
contradict and expose him. V.T. Chari would in that event be c
.-inviting his own ruination. It is indeed difficult to
l attribute such irrationality and foolishness to a senior
~ I.A.S. Officer like V.T. Chari. Moreover, it is interesting to
, note that if the note Ex. 421 submitted by V. T. Chari to the
respondent was wrong and the respondent had not given to V.T.
Chari the instructions set out in that note, would the D
respondent have rested content with merely making an
endorsement at the foot of the note saying that he was
surprised at such notings. The first respon4ent would have
been shocked at the statement contained in the note falsely
~involving the respondent and dishonestly attributing to him
authority which he had not given and he would have iDIIlediately E
called upon V.T. Chari to explain h'is conduct in making the
note and taken action against him besides stopping the allot-
ments of cement referred to in the the statements accompanying

r the note. But nothing of this sort was done by the first
respondent. It is also significant to note that on 1st July
1981 two allotments orders were issued and on 2nd July 1981 a F
~bird allotment order was made allotting in the aggregate the
precise quantity of 9700 metric tonns referred to in the note
Ex. 421. It is unfortunate that the statements which accom-
panied the note Ex. 421 were not available and could not be
exhibited in evidence. The case of the prosecution was that
the original of Ex. 421 and the three statements accompanying G
that note were abstracted at some stage by the ·first respon-
dent or someone on his behalf and that is the reason why Ex.
~421 as produced and exhibited !n court was not the original
but the photostat copy which had been taken out in the secre-
. tariat before the original was lost. It is not necessary for
H
652 SUPREME COURT REPORTS [1986] 2 S.C.R.
A
the purpose of the present appeal to resolve this controversy,
raised on behalf of the prosecution and to come to a definit~
finding upon it. But even on the material on record, there is
reason to believe that the three statements which accompanied
the note Ex. 421 tlllst have formed the basis of the three
allotment orders dated 1st July, 1981 and 2nd July, 1981 part
B
of Ex. 421, because like the statements, the allotment orders
were also three in number and the aggregate quantity allotted
under the three allotment orders was 9,700 metric tonns whichr.
is the same as the aggregate quantity shown in the three
statements. Moreover, the application dated 15th June, 1981
Ex. 648 and 648A made by Hira Nandani Builders and the appli-
c cation dated 23rd June, 1981 Ex. 649 and 649A made by Apex
Builders figured in the first allotment order dated 1st July,J·
1981 and in respect of these two applications, it was stated
in the allotment order that it had been decided to allot 300
metric tonns of cement to Hira Nandani Builders and 250 metric
tonns of cement to Apex Builders.
D
Obviously, therefore these two applications formed part
of the applications which were handed over by Pesi Tata to
V.T. Chari, as mentioned in Exs. 420 and 421 and the fact when
it was put to Hira Nandani that these two applications were in .
the possession of Pesi Tata, Hira Nandani found it difficult_~
E
to deny it. FurthertOOre the record shows that in respect of
these two applications t letters of allotment of 300 metric
tonns of cement to Hira Nandani Builders and 250 metric tonns
of cement to Apex Builders were issued on the same day,
namely, 1st July, 1981 on which the first order of allotment,
part of Ex. 421 in respect of 21 applicants, including Hira '(
F Nandani Builders and Apex Builders, was made by the Food and 1
Civil Supplies Department. It would thus appear prima facie_.,
that Hira Nandani Builders and Apex Builders obtained 300
metric t.Jnns and 250 metric tonns respectively of cement on
applications submitted by them through the intervention of
Pesi Tata.
G
We may now revert to the dontions of Rs. 30,000 and Rs.
1,20,000 made by Hira Nandan! Construction Prviate Limited and \
Hira Nandani Builders respectively. The case of the t
prosecation was that these two donations were made by the two
concerns of Hira Nandani in order to obtain allotment of
H cement which was badly needed for the construction works
undertaken by the various concerns of Hira Nandani. This was
R.S. NAYAK v. A.R. ANTULAY [BHAQlATI, C.J.] 653
A
disputed on behalf of the respondent who contended that these
.,;;two donations had been made by Hira Nandani Construction
Private Limited and Hira Nandani Builders voluntarily and they
had nothing to do with the allotment of cement to the concerns
of Hira Nandani. Now there are certain salient features in
B
regard to this transaction which in our opinion go to show

·.:\
prima facie that these two donations were connected with the
~. allotment of cement to the concerns of Hira Nandani. In the

1
_...,first place, there is no reason why any of the concerns of
Hira Nandan! should have made such large donations to Indira
Gandhi Pratibha Pratishthan. It was admitted by Hira Nandani
,. that none of his concerns had made any profit and in fact he
conceded in evidence that the donations made by his two con- c
- cerns to the Indira Gandhi Pratibha Pratishthan "had no
, \connection with the profits of the two concerns or of any of
'
1
his other concerns." He also admitted in evtdence that Hira
Nandan! Con~truction Private Limited had made a donation of
only Rs. 2,422 in the calander year 1980 and a donation of
only Rs. 2, 251 in the calander year 1981 and so far as Hira D
I(·
' Nandani Builders are concerned, they had not made any donation
at all and apart from this the only donations made by Hira
Nandani Construction Private Limited and Hira Nandani Builders
were the donations of Rs. 30,000 and Rs. 1,20,000 to Indira
....i Gandhi Pratibha Pratishthan. It is in these circumstances
prima facie difficult to understand as to what prompted Hira E
Nandani Construction Private Limited and Hira Nandani Builders
to make the donations of Rs. 30,000 and Rs. 1,20,000 res-
pectively to Indira Gandhi Pratibha Pratishthan when they were
not making any profits at all and they had not made any subs-
.;<- '--y tantial donations to any other charities, despite large and
: frequent demands on the Hira Nandani family. Moreover it is F
tanot without significance that the two donations of Rs. 30,000
and Rs. 1,20,000 were handed over to Indira Gandhi Pratibha
Pratishthan on the same day, namely, 4th July, 1981 on which
the permits were issued by the authoriti~s alloting 50 metric
tonns to Hira Nandani Enterprises and 200 metrie tonns to-
Udyogic Shramik Kamgar Housing Society. When Hfra Nandani was G
asked as to how it happened that he paid the two cheques of
Rs. 30,000 and Rs. l, 20,000 on 4th July, 1981 which was also
~the date of the two permits, the answer given by him was that
it was purely coincidental. It is true that sometimes coin-
cidences do happen but a coincidence of this kind is suffi-
cient to prima facie support the inference that the two H
654 SUPREME COURT REPORTS [ 1986] 2 S.C. R.

A
donations of Rs. 30,000 and Rs. 1,20,000 were connected with,
the grant of the two permits. It is interesting to note that~
prima facie one other correlation can also be perceived
between the two donations of Rs. 30,000 and Rs. 1,20,000 made
by Hira Nandani on behalf of his two concerns and the quota of
cement allotted under the two permits. The donation of Rs.
B 30,000 could be said to have been worked out at the rate of
Rs. 30 per bag for the permit of 50 metric tonns, that is,
1000 bags of cement while the donation of Rs. 1,20,000 could
be said to have been arrived at by applying the same rate ofT-
Rs. 30 per bag in respect of the permit of 200 metric tonns,
that is, 4000 bags of cement. When Hira Nandani was asked to
c explain how it was that for the permit of 50 metric tonns,
that is, 1000 bags, he made a payment of Rs. 30,000 which
worked out to Rs. 30 per bag and for the permit of 200 metric y
~

tonns, that is, 4,000 bags he made payment of Rs. 1,20,000 ;
which worked out to the same rate of Rs. 30 per bag, the only r
answer which Hira Nandan! could give was that it was a
D coincidence. It is indeed strange that coincidences should
take place in this transaction. It,may also be noted and this
-li
too is not a factor without significance that the cheque for
Rs. 30,000 was made out on 22nd June, 1981 but it was retained
b~7 Hira Nandani until 4th July, 1981 and it was only on 4th
July, 1981 when the two permits were issued alloting quota of )(
E cement that both the cheques of Rs. 30,000 and Rs. 1,20,000
were handed over by Hira Nandani.

We, therefore, reach the conclusion that on the evidence ~
led on behalf of the prosecution a prima facie case IIJJst be
held to have been made ou.t against the respondent in respect 'f'--
F of the transaction of the donations of Rs. 30,000 and Rs. \
1,20,000 and 29th, 30th and 31st charges ought in the circums-~
tances to have been framed against the respondent.

Then we go on to consider 23rd, 24th, 25th, 41st, 42nd
and 43rd of the draft charges relating to the transactions of
G the National Centre for the Performing Arts (hereinafter
referred to as "NCPA"). NCPA was started sometime prior to
1968 as a Centre for promotion and engagement of the
performing arts. The Government of Maharashtra granted land to } _
NCPA from Block III~ Backbay Reclamation area in two phases on
leasehold basis. First, an area admeasuring 5 acres, that is,
H 20,200 sq. metres was granted under Government resolution
R.S. NAYAK v. A.R. ANTUI.AY [BHA.GWATI, C.J.] 655

A
dated lOth May 1968 and then subsequently additional area
"itdmeasuring about 3 acres, that is, 10219.4 sq. metres was
granted under Government resolution dated 15th May 1970. Both
the grants were on the same terms and conditions and the
ground rent payable by NCPA was Re.l per annum in respect of
each of these two areas of land. It was provided that NCPA B
will construct on the plot necessary buildings and structures
for carrying out its performances including residential
uarters for essential staff working in the Centre and for
i isiting artists and students provided the Centre would be at
liberty to make available these facilities to outside parties
at such compensation as it may deem fit so long as the income
from the land and buildings was appropriated for the objects c
~of the Centre and further a sum equal to 25% of the net annual
\profits of the Centre was credited . to the Government of
~-iMaharashtra. The Government of Maharashtra was given a right
to nominate two representatives on the Council of the Centre.
Thus, a plot of about 8 acres in the Backbay Reclamation area
was granted to NCPA for the purpose of carrying on its D
activities. The Minister of Culture and the Chief Secretary to
the Government of Mahdrashtra were both nominated ex-officio
Member on the Council of NCPA.

~ Subsequently, with a view to enabling it to meet its
operating expenses NCPA made an application to the Government E
of Maharashtra by its letter dated 4th March 1971 requesting
the Government for permission to utilise upto one-fourth of
the area granted to it for the purpose of putti.ng up high
grade shops and offices. This request of NCPA was granted by
Y the Government of Maharashtra. By a Government resolution
. dated 31st October 1972, the r~vernment granted permission to F
~~CPA to use one-fourth area of the land for putting up high
grade shops and offices on condition that 50% of the net
income accruing out of the commercial user of this area would
be payable to the Government of Maharashtra subject to certain
conditions which are not material for the purpose of the
present appeal. But, since it would take someti.me for high G
grade shops and offices to be put up on one-fourth area of the
land, NCPA applied to the Government of India for a bridging
~ loan of Rs. 3 crores and this loan was sanctioned by the
Government of India in February 1974 on the security of
mortgage of three-fourths of the plot and the buildings
constructed thereon. This necessitated the sub-division of the H
656 SUPREME COURT REPORTS [19861 2 s.c.R.

A
plot approximately into one fourth and three fourth and th~
Government of Mahrashtra accordingly agreed to grant one leas~
in respect of 23689.90 sq.metres of area on which auditoriums
and schools of NCPA were to be built and another lease in
respect of 7892.59 sq. metres on which the commercial complex
might be put up. NCPA thereafter drew the first instalment of
B loan of Rs. 80 lakhs from the Government of India in March
1976 and carried on construction of its building on
three-fourth area of the plot.

The result was that NCPA could use three-fourth area of
the plot for carrying out its own purposes subject to payment 1
c of 25% of the net income of the Centre to the Government of
Maharashtra while one-fourth area of the plot could be f -
developed by NCPA for the commercial complex with a view to,
generating income. Now, at this time F.S.I. was 3.5 and apply-~
ing it to the entire plot of about 8 acres, NCPA was entitled
to build with a fairly large rentable area and on this basis
D NCPA prepared plans of a commercial building with rentable
area of 400,000 sq. ft. But, to the great dismay and
consternation of the Directors of NCPA\ a Government resolu-
tion was passed an 23rd March 1978 providing that since two
separate leases were given to NCPA in respect of 7,892.59 sq.
metres and 23,689.90 sq. metres, that is, approximately 1/4 ~
E and 3/4 area of the plot, the construction to be carried "on
the land should be with reference to the F.S. I. pemissible
for each individual plot separately". The consequence of this
Government resolution was that on the basis of F.s.r. of 3.5, t

NCPA could build a commercial building having a net rentable
area of only 240, 000 sq. ft. instead of 400, 000 sq. ft. &re- 'f " __..
F over, prior to the issue of this Government resolution, a •
notification was i.ssued by the Bombay Municipal Regional~
Development Authority (hereinafter referred to as "BMRDA") on
19th June, 1977 reducing the F.S.I. from 3.5 to 1.33. On the
basis of this new F.S.I of 1.33, the net rentable area of the
connnercial building which could be put up by NCPA was still
G fl!rther reduced to 90,000 sq. ft. instead of the required
400,000 sq. ft. These developments which took place in
1977-1978 jeopardized the very existence of NCPA.

One J.J. Bhabha was at all material times Managing
trustee of NCPA and apart from him there were ten other
t-
H
R.S. NAYAK v. A.R. ANTULAY [BHAGWATI, C.J.] 657

A
~rustees including J.R.D. Tata. When NCPA found itself in this
difficult situation where it would.be almost impossible for it
to carry out its activities, J.R.D. Tata addressed a letter
dated 1st January 1979 to the then Chief Minister requesting
him to permit NCPA to construct a commercial building with a
rentable area of 400,000 sq.ft. This letter was followed by B
meetings with various officers in which J.J. Bhabha
participated alongwith one Ajit Kerkar. Now, Ajit Kerkar was
~ot in any way officially connected with NCPA. He was the
Managing Director of Indian Hotels Co. Ltd. as also Chairman
of the Board of Directors of PIEM Hotels Ltd. and Taj Trade
and Transport Co. Ltd. which are admittedly Tata concerns.
Though Ajit Kerkar did not hold any official position in NCPA, c
\he took an active part in the negotiations with the various
officers of the Government of Maharashtra in 1979 for the
-ipurpose of obtaining relaxation of the BMRDA notification
dated 19th June 1977 and Government resolution dated 23rd
March 1977 so as to enable NCPA to construct a coJIUDercial
building of net rentable area of 400,000 sq.ft. The fact that D
Ajit Kerkar and J.J. Bhabha both participated in these nego-
tiations is clearly established by the Note dated 20th July
1979 addressed by Ajit Kerkar to J.J. Bhabha (part of Ex.
247)and the letter dated 18th July 1979 addressed by J.J.
,.J.Bhabha to Minister, Advani (part of Ex. 247). It is obvious
that both of them acted in unison in carrying on the negotia- E
tions for the purpose of rescuing NCPA from the precarious
position in which it found itself. But, their ef~orts did not
succeed.

When the respondent came to power as Chief Minister,
·~fforts were renewed on behalf of NCPA to obtain the necessary F
relaxation which would enable it to put up a commercial
complex which would generate sufficient income. Ajit Kerkar
was obviously on very good terms with the respondent. He was
appointed by the respondent as Chairman of a High Power
Steering Cormnittee to deal with the problem of slums and
dilapidated houses and he was given an office in Mantralava. G
He was also appointed a trustee of Indira Gandhi Pratibha
_ ~Pratishthan on 18th October 1980. He started negotiations with
, the Government of M.aharashtra in February-March 1981 and put
forward a scheme under which the entire plot of 8 acres would
be treated as covered by one lease so that the net rentable
area available to NCPA for building purposes would be
H
658 SUPRE.\iE COURT REPORTS [1986] 2 s.c.R.

A
de.terminable by applying to the F. S. I. to the whole of th)L
area of the plot instead of applying it separately to each of
the two areas into which the plot was decided. The scheme
provided that the commercial development of the plot would be
confined to one-fourth of the area of the plot, the F.S.I.
used for such development would not exceed 450,000 sq.ft.,
that is 1.33 for the entire plot and shops and office would be
B
restricted to 50% of this area and the balance would be used
for a hotel and the construction on the remaining three-fourt~,
area though in excess of 1. 33 for the whole plot, would be
exempted from BMRDA Notification and would be "approximately
l.OO for the whole plot" so that the total F.S.I. used would
be approximately 2. 33 and the income of the Government of
c Maha.rashtra would be "restricted to SO% of the net income from(
the commercial-cumrhotel development after meeting all expens~
es of NCPA." The scheme also provided for making of donations}
to Indira Gandhi Pratibha Pratishthan. The discussions in this
regard were carried on by Ajit Kerkar with Gavai (Chief
Secretary), Prabhakar (Special Secretary Finance) Pradeep
0
(Secretary, Finance) and Kapoor (Secretary, Urban Development)
as also with the respondent. But, these discussions did not
yield any positive results until 24th March 1981 when Ajit
Kerkar prepared a Note (Ex. 229) and handed it over to Gavai.
in his chamber on the same day. This note set out the scheme~
proposed by Ajit Kerkar but it did not make any mention of the
E
donations to be made to Indira Gandhi Pratibha Pratishthan.
Some reliance was placed on behalf of the respondent on the
fact that this note did not make any reference to donations to
..
be made to Indira Gandhi Pratibha Pratishthan and it waai ~
sought to be argued that there was in fact no such talk prior·.
to the date of this note. But this argument is futile becausJir
F
Ajit Kerkar clearly admitted in his evidence that in FebruarJ ·
1981 he had discussed this scheme with the respondent, Gavai,
Prabhakar, Pradeep and Kapoor and that he had made it clear to
the respondent and these officers that the donee of the scheme
was Indira Gandhi Pratibha Pratishthan. There can therefore be
no doubt that in February 1981 the question of_donations to be
G
made to Indira Gandhi Pratibha Pratishthan was discussed
between Ajit Kerkar. on the one hand and the respondent and 1
other officers on the other hand. Now as mentioned above thet -
note Ex. 229 was handed over by Ajit Kerkar to Gavai on 24th
March 1981 and following upon this note there was discussion
between Ajit Kerkar and Gavai in the presence of Prabhakar on
H
R.S. NAYAK v. A.R. ANI'ULAY [BHAGWATI, C.J.] 659

A
-..(25th March 1981 when ·the scheme put-forward by Aj it Kerkar was
discussed. It was agreed between Ajit Kerkar on behalf of NCPA
and Gavai on behalf of the Government of Maharashtra that the
entire plot of 8 acres would be covered under o11e lease on
condition that the mortgage in respect of 3/4th area of the
plot is redeemed, the commercial development of the plot would B
be confined to l/4th area of the plot and full FSI at the rate
of 1.33 in respect of the entire area of the plot would be
~available to NCPA and this would give almost 4,50,000 sq. ft.
·of floor space area for construction of buildings including
the existing construction already made by NCPA to the extent
of 95,000 sq. ft. Gavai and Prabhakar intimated to Ajit Kerkar
that it may not be possible to override BMRDA Notification c
~,restricting FSI to 1.33, but that floor space area available
, on the basis of 1.33 FSI in respect of the entire area of the
. ~ plot should be sufficient for NCPA for construction. Gavai and
· Prabhakar pointed out that on 1/4th area of the plot, NCPA
could build a residential hotel in addition to high-grade
shops and offices for which permission was already given. Ajit D
Kerk.ar agreed to this suggestion provided "not less than SO%
of the area is allotted to be utilised for hotel and the
balance for the purpose of shops and offices". This condition
proposed by Ajit Kerkar was found acceptable to Gavai and
__! Prabhakar. It was also agreed that the condition providing for
payment of 25% of the net profit of the Centre to the Govern- E
ment of Maharashtra would remain unchanged and so also would
the provision that SO% of the net income from the commercial
;
complex should be paid by NCPA to the Government of
-r,
'
Maharashtra.

Now at this meeting held on 25th March 1981 the question F
'P-of making donations to IndL~a Gandhi Pratibha Pratishthan was
also discussed as a part of the negotiations and Ajit Kerkar
stated that the following donations would be made by NCPA
either by itself or through others :

i) Initial donation of Rs. 1 crore within 6 months G
of Government's confirmation.

ii) After 3 years i.e. on completion and
commissioning of the commercial complex - Rs. 25
lakhs per year.
H
660 SUPREME COURT REPORTS [19861 2 s.c.R.

A iii) After 8 years i.e. 5 years after the~
completion of the commercial complex - Rs. 50 lakhs~
per year.

But he requested that these donations should be considered as
deductible expenses while computing the net income so that 50%
of the net income payable to the Government of Maharashtra
B should be arrived at after deducting the donations from the
net income. But this request for deductibility of the~
donations in computation of the net income was not acceptable'
to Gavai and Prabhakar.

Immediately, after the aforesaid discussion between Ajit
c Kerkar on the one hand and Gavai and Prabhakar on the other, y-
they all went to the respondent and informed him of the
agreement arrived at with NCPA. The respondent approved and i
I
confirmed the agreement but it was made clear to Ajit Kerkar
and it was agreed by him that the donations made to Indira
Gandhi Pratibha Pratishthan would not be deductible as
D
expenses of NCPA while computing its net income. Thus it was
clearly agreed that donations would be made to Indira Gandhi
Pratibha Pratishthan by NCPA by itself or through others but
that they would not be deductible in computing the net income
of the commercial complex of NCPA. The argument urged on ,l, '
behalf of the respondent which found favour with the learned
E
Trial Judge was that when the respondent declined the request
of Ajit Kerkar to permit deductibility of the donations made
to Indira Gandhi Pratibha Pratishthan the entire scheme
foundered and thereafter there was no question of making any
donations to Indira Gandhi Pratibha Pratishthan. This 1 -
contention of the respondent appears prima facie to be
F
unsustainable for the following reasons. ~

In the first place there is a noting made by Prabhakar
in the Government file relating to NCPA on 29th April 1981
part of Ex. 230 where it has been clearly recorded by him;
G "It needs to be recorded that in the meeting held
first by C.S. with Shri Ajit Kerkar aad latter when
C. S. and Shri Aj it Kerkar explained the agreement 't
reached to C.M. both on 25-3-81, it was clearly
stated and agreed that the payments to the Indira
Gandhi Pratibha Pratishthan would be after NCPA' s
H
R.S. NAYAK v. A.R. ANTULAY [BHAGWATI, C.J.] 661

A
net income was computed and were not to be
considered as NCPA' s expenses while computing net
income."

This noting made at a time when no controversy had arisen at
all must prima facie be accepted as correct. Moreover, its B
correctness was deposed to by Prabhakar when he was in the
witness box. Ajit Kerkar of course disputed that any such
(agreement was arrived at between him on the one hand and Gavai
Prabhakar and the respondent on the other but prima facie we
are inclined to accept the testioony of Ajit I<erkar to this
effect because we would prefer documentary evidence to oral
evidence in case of conflict between the two. It is a trite c
saying that witnesses may lie but documents do not.

Secondly, it is significant to note that a donation of
Rs. 1 crore was made by four Tata concerns to Nirmal Sethia
Foundation which was a Foundation in which the respondent, his
wife, Nirmal Sethia, his wife and Ajit Kerk.ar were trustees. D
This donation of Rs. 1 crore was made up of four cheques, one
dated 31st July, 1981 for Rs. 30 lakhs issued by Indian Hotels
Company Limited, the second also dated 31st July, 1981 for
Rs.60 lakhs drawn by Lake Palace Hotel and Motel Private
, Limited, the third dated 17th August, 1981 for Rs. 50 lakhs
drawn by Piem Hotel Company Limited and the fourth dated 1st E
September, 1981 for Rs. 10 lakhs drawn by Taj Trade and
Transport Company Limited, all four being Tata concerns. It is
interesting to note that these four cheques making up in the
aggregate a donation of Rs. 1 crore were paid over to Nirmal
Sethia Foundation within six months of the order dated 6th
May, 1981 issued by the Government of Maharashtra granting F
• relaxation asked for by NCPA, thus apparently complying with
the scheme put forward by Ajit Kerkar under which the initial
donation of Rs. 1 crore was to be made to Indira Gandhi
Pratibha Pratishthan but, as admitted by Aj it Kerkar himself
in paragraph 35 of his evidence, "NCPA did not make the
proposed donation to the IGPP because the Government did not G
agree to exempt the entire amount as deductible expense ••••••
We agree to pay the donations to the Nirmal Sethia Foundation
because the trust agreed to exempt the entire amount under the
Income Tax Act". It is thus obvious that the donation of Rs. 1
crore which was to be made to Indira Gandhi Pratibha
Pratishthan within six months of the Government's confirmation
H
662 SUPREME COURT REPORTS [1986] 2 s.c.R.

A under the agreement arrived at on 25th March, 1981 was ~
diverted to Nirmal Sethia Foundation in which the respondent·
and his wife were trustees alongwith Nirmal Sethia and his
wife and Ajit ~rkar. It is indeed difficult to understand as
to why these four Tata concerns should have decided to make
donations of an aggregate sum of Rs. 1 crore to Nirmal Sethia
Foundation which was a newly set up Foundation without any
B charitable activity to its credit. It also strains one's
credulity to believe that it was a mere co-incidence that the Y
donation made to Nirmal Sethia Foundation was of Rs. 1 crore ·
which was the identical figure of the donation agreed to be
made to Indira Gandhi Pratibha Pratishthan. When Ajit Kerkar
was asked as to how he happened to fix the figure of Rs. 1
c crore for the donation made to Nirmal Sethia Foundation, his 1·
answer was : "I cannot say who suggested the figure of Rs. 1
crore. There was no particular reason why the figure of Rs. 1
crore had been arived at." It is also strange that to make the
figure of Rs. 1 crore a post-dated cheque for Rs. 10 lakhs was
issued by Taj Trade and Transport Company Limdted. This cheque
D was sent to Nirmal Sethia Foundation on 23rd August, 1981 and
it was dated 1st September, 1981. It is difficult to under-
stand why Taj Tr~de and Transport Company Limited should have
given a donation of Rs. 10 lakhs to Nirmal Sethia Foundation
by a post-dated cheque when on the date of handing over of the -~
cheque, it did not have sufficient funds in the bank. The only
E answer which Ajit Kerkar could give in explanation, which is
rather strange conduct, was that Taj Trade and Transport
Company Limited "expected that sufficient funds would be depo-
sited in its account by 1.9.1981". There is another circums- .,
tance which is of a baffling character - indeed it defies any
rational conduct - and this circumstance is that the four
F cheques representing the aggregate donation of Rs. 1 crore
were handed over by these four Tata concerns to Nirmal Sethia \
1
Foundation by way of donation without any resolution being ~
passed by the Borad of Directors in that behalf and strangely '
enough these four cheques paid by way of donation were credit-
ed as deposits in the books of Nirmal Sethia Foundation. When
G examined on this point, Ajit Kerkar stated, "Initially all the
four amounts were to be treated as deposits and were to be
treated later as donations after obtaining the sanction of the )
Board of Directors". This is indeed a strange explanation
which is prima facie difficult to believe. What would happen
if the Board of Directors of any of these four Tata concerns
H
R.S. NAYAK v. A.R. AN'TIJLAY [BHAGlATI, C.J.] 663

A
were to refuse to sanction the donation. Nirmal Sethia Founda-
II(
tion would then have to return the amount of the donation but
if this amount was already spent by Nirmal Sethia Foundation
for purchasing land for the purpose of building a hospital,
how would Nirmal Sethia Foundation be able to return the
amount of the donation and even if the amount of the donation B
were returned, it would be without interest becaus~ there was
admittedly no provision for payment of interest and a Tata
~ concern making the donation would lose interest on the amount
of the donation for the period during which the amount remain~
ed with Nirmal Sethia Foundation. Prima facie the entire
episode relating to this donation of Rs. 1 crore to Nirmal
Sethia Foundation appears to be bizarre. Obviously - and here c
again we are expressing our prima facie view this donation of
\ Rs. 1 crore to Nirmal Sethia Foundation was co-related to the
~ donation of Rs. 1 crore agreed to be made to Indira Gandhi
Pratibha Pratishthan and lends support to the evidence of
Prabhakar supported by his noting dated 29th April, 1981 part
of Ex. 230. We would not on this material be unjustified in D
taking the view that it was in pursuance of the agreement
arrived at on 25th March, 1981 that the donation of Rs. 1
crore was made and since income tax exemption was not avail-
able in case of donation to Indira Gandhi Pratibha
l Pratishthan, this donation of Rs. 1 crore was made to Nirmal
Sethia Foundation. E

It is therefore clear that though Gavai, Prabhakar and
the respondent did not agree to the deductibility of the
donations to be made to Indira Gandhi Pratibha Pratishthan in
computing the net income of NCPA from its commercial complex,
it was definitely agreed on 25th March, 1981 that donations, F
,.. as· stated above, would be made by NCPA by itself or through
others to Indira Gandhi Pratibha Pratishthan. It appears that
since the Government of Maharashtra was not agreeable to
override BMRDA notification restricting FSI to 1.33 as also to
permit the donations to Indira Gandhi Pratibha Pratishthan to
be deducted in computing the income of NCPA, Ajit Kerkar G
informed J.J. Bhabha, as stated by him in paragraph 19 of his
deposition that his scheme was not acceptable to the
Government and that Bhabha should therefore move in the
matter. J.J. Bhabha accordingly addressed a letter dated 1st
April, 1981 Ex. 216 to Gavai. This letter was collected from
, J.J. Bhabha's office by Sen Gupta, Executive Assistant of Ajit H
664 SUPREME COURT REPORTS [1986 I 2 s.c.R.

A
Kerkar in order that Ajit Kerkar should be able to personally ~
hand over to Gavai and pursue the matter with the Government.
The- letter ·dated 1st April, 1981 Ex. 216 was accompanied by a
note prepared by J.J. Bhabha. When Ajit Kerkar got this letter
dated 1st April, 1981 Ex. 216 alongwith the note, he dictated
to Sen Gupta an endorsement to be made at the foot' of the note
B and his endorsement was written out by Sen G.tpta in his own
handwriting as per the dictation of Ajit Kerkar. This
endorsement was written down by Sen wpta in the oorning of •
lOth April, 1981 and it is marked 'B' at the foot of Ex. 216.
It is significant to note what this endorsement said :

c "The NCPA by itself or through others, will arrange
to make the following donations to Indira Pratibha
Pratishthan, an allied organisation involved in
r
-(

giving similar support to the performing and non-

D
performing acts;

one time within six months of Govt.'s confirmation
Rs. 1 crore three years after i.e. on completion
and commdssioning of the commercial complex. Rs. 25
'
lakhs per year eight years after five years after
the completion of the comercial complex, Rs. 50
lacs per year. The above donations may be A
E considered as NCPA 's expenses, while computing
NCPA' s net income. rr

Ajit Kerkar again tried to persuade the Government of
Maharashtra that the above donations to be made to Indira
Gandhi Pratibha Pratishthan should be considered as expenses
F of NCPA while computing its net income. But obviously this
effort also did not succeed. Indeed it would have been
difficult for the GOvernment of Maharashtra to agree to allow
the donations to Indira Gandhi Pratibha Pratishthan to be
considered as expenses of NCPA while computing 50 per cent of
the net income of NCPA payable to the Government for two very
G good reasons. Firstly, it would be a fraud on the Government
because than 50 per cent of the donations to Indira Gandhi
Pratibha Pratishthan would be really paid by the Government
and secondly it would have to be expressly stated in the
official documents that the donat~ons were deductible in
computing the net income of NCPA and that would have exposed
H the real nature of the transaction, namely, that the donations
R.S. NAYAK v. A.R. ANTULAY [BHAGWATI, C.J.] 665

A
were paid for getting a favour from the respondent. Neither
. Gavai and Prabhakar nor the respondent therefore accepted this
suggestion of Ajit Kerk.ar. But the other part of the agreement
reached on 25th March, 1981 was placed before the Cabinet
alongwith the Cabinet Note and it was approved by the Cabinet.
The draft of the Government resolution embodying this B
agreement was submitted by the Under Secretary alongwith his
note which was approved by Pengulkar, Deputy Secretary. This
, note which is dated 16th April, 1981 and which is part of Ex.
, 230 referred to the J.J. Bhabha's letter dated 1st April, 1981
Ex. 216 and apointed out that in that letter NCPA had
undertaken that it would itself or through others arrange to
make donations to Indira Gandhi Pratibha Pratishthan, as set c
out in the endorsement marked 'B' Ex. 216. It was stated in
this note that NCPA had requested that these donations may be
~considered as expenses of NCPA while computing its net income.
Obviously reference was made by Pengulkar in this note to the
request made by NCPA in the letter of J.J. Bhabha dated 1st
April, 1981 Ex. 216 because Pengulkar was seeking D
instructions of his superiors in regard to this request which
was rejected on 25th March, 1981 but restored on lOth April,
1981. It was when this note of Pengulkar came to Prabhakar
that he recorded the note dated 29th April, 1981 marked 'B' to
which we have referred in some detail. The note of Prabhakar
· dated 29th April, 1981 marked 'B' supported by the oral E
evidence of Prabhakar clearly establishes that NC~A had agreed
to make donations set out in the endorsement marked 'B' in Ex.
216 to Indira Gandhi Pratibha Pratishthan and that it was
agreed that the donations so made would not be treated as
deductible expenses.
F
• It seems that Sen Gupta and Shakur Khan, representatives
of NCPA. again made another effort to persuade Gavai and
Prabhakar to agree that donations to be made to Indira Gandhi
Pratibha Pratishthan should be allowed to be deducted as
expenses before determining the net income of the commercial
complex of NCPA. But as appears clearly from the note of Gavai
G
dated 30th April, 1981 part of Ex. 230, Gavai and Prabhakar
clearly pointed out to Sen Gupta and Shakur Khan that NCPA
would have to pay these donations after SO per cent of the net
income was paid to the Government and that such donations
cannot be treated as expenses. This note of Gavai also
eetablishes beyond doubt that NCPA had agreed to pay donations
H
666 SUPREME COURT REPORTS [ 1986 ] 2 S.C. R.

A to Indira Gandhi Pratibha Pratishthan and their request for
treating the donations as deductible expenses was turned down
by the Government of Maharashtra. The draft Government
resolution for giving effect to the Cabinet decision of lOth
April, 1981 was approved by the Chief Secretary and the
Government resolution dated 6th May, 1981 was issued by the
Government of Maharashtra directing that :
B
i) The entire plot of land admeasuring 30,419 sq. mtrs.
should be covered under one single lease provided that the
mortgage in respect of 3/4th of the plot is redeemed. National
Centre for the Performing Arts will also have option to extend
the existing mortgage with the Government of India to cover
c the entire property.

ii) The National Centre for the Performing Arts be
allowed to utilise the F.S.I. at the currently permissible
rate of 1.33 over the entire plot. The area so covered would,
however be inclusive of the existing construction already made
0 by the N.C.P.A. to the extent of about 95,000 sq.ft.

iii) The NCPA be permitted to build a hotel of
international standard in the complex and offices and shops
ancilary and germane to such Hotel Establishment only. They
may by themselves or through any other parties develop and
E
operate the commercial complex.

iv) The NCPA will be required to pay to Government 25% of
the net annual profits of the Centre and also 50% of the net
income from the properties put to commercial use, in terms of
original Goverrunent Resolution. J.J. Bhabha had to admit in
F his evidence that by reason of this Government resolution the 4
impediment in the way of NCPA was completely removed and
according to the evidence of Prabhakar, the benefit which NCPA
received by reason of this Government resolution could be
estimated to be in the neighbourhood of several crores.
G We must also refer to the donations aggregating to Rs.
26 lakhs made by Indian Hotels Company Limited on 31st March,
1981. These donations were made to three trusts floated by the
respondent namely Mahasle Taluka Pratishthan, Ambet
Pratishthan and Shri Verdhan Matadarsangh Pratishthan. Rs. 6
lakhs were donated to Ambet Pratishthan, Rs. 10 lakhs to
H
R.S. NAYAK v. A.R. ANTULAY [BHAGWATI, C.J.] 667

A
Mahasala Taluka Pratishthan and Rs. 10 lakhs to Shri Verdhan
~ Matadarsangh Pratishthan. There was also one other trust
floated by the respondent namely Raigarh Pratishthan. These
four trusts were drafted by Sheroo Kanuga PW-16 and in all
these four trusts the respondent, his wife and Sheroo Kanuga
were the only trustees and it was provided in each of these B
four trusts that any vacancy arising the office of trustee
would be filled up from the family of the respondent. It is
tJthe evidence of Sheroo Kanuga that the drafts of these four
., trust deeds were prepared by him on the basis of the trust
• deed of Indira Gandhi Pratibha Pratishthan and the respondent
had not examined these four trust deeds but merely the broad
features were explained to the respondent. Now the trust deeds c
~ in respect of these four trusts were executed by the trustees
\ on 20th March 1981 and they were lodged with the Charity
' ~ Commdssioner on 23rd March 1981. On the application of Sheroo

... · Kanuga compliance with Rule 7A of the Maharashtra Public
Trusts Rules was dispensed with even though it was legally not
permissible to do so. Sheroo Kanuga also obtained certificates D
from the Income-tax Authorities exempting donations made to
these four trusts. She roo Kanuga explained in his evidence
that all this had to be rushed through in order to enable
donations to be taken from the potential donor companies
~before 31st March 1981. He admitted that Indian Hotels Company
Limited was the company which was expected to give donations E
before 31st March 1981. He went on to say that the respondent
had sent to him one Jadav who was a labour leader in the Taj
Group of Companies in Bombay and he heard from Jadav that
Indian Hotels Company Limited intended to make donations
•· ·l before 31st March 1981. Indian Hotels Company Limited accord-
; ingly by a Resolution of its Board of Directors dated 31st F
~rch 1981 approved of donation of Rs. 6 lakhs to Ambet
Pratishthan, Rs. 10 lakhs to Mahasle Taluka Pratishthan and
Rs. 10 lakhs to Shri Verdhan Matadarsangh Pratishthan and
cheques were paid to Sheroo Kanuga on behalf of these three
trusts.
G
Now it does appear prima facie that these 3 donations
aggregating Rs. 26 lakhs were paid by Indian Hotels Company
-.t Limited pursuant to some understanding reached in the course
·of negotiations leading to the agreement dated 25th March
1981. We fail to appreciate what possible reason could have
prompted Indian Hotels Company Limited to make these donations H
668 SUPREME COURT REPORTS [ 1986 ] 2 S. C. R.

A aggregating to a large figure of Rs. 26 lakhs to the three~
trusts of the respondent. It is significant to note that these
three trusts along with the 4th trust of Raigarh Pratishthan
were executed and registered and income-tax exemption
certificates were obtained in the course of just 10 days
before the donations came to be made to them by Indian Hotels
·Company Limited. The extra ordinary speed with which these
B four trusts were created followed immediately after the making
of donations by Indian Hotels Company Limited clearly show '1.
prima facie of course, that there must have been some
understanding between Ajit Kerkar and the respondent.

The only explanation offered by Ajit Kerkar for the
c making of these donations to the three trusts was that Jadav 'l-
who was a labour leader in the Taj Group of Companies was 1

pressing him to do something for improving the conditions in }
the Konkan Region. Ajit Kerkar also relied on a letter dated
15th January 1981 said to have been addressed to him by Jadav.
The case of Ajit Kerkar was that it was on account of the
D pressure exerted by Jadav on behalf of over 600 employees
working in the Taj Group of Hotels who hailed from Konkan
Region that Indian Hotels Company Limited decided to make
these donations to the three trusts of the respondent. This
story put forward by Ajit Kerkar prima facie does not appear ~
to be true. If Jadav was pressing on behalf of the employees
E of the Taj Group of Hotels for doing something for the famil-
ies of the employees in the Konkan Region it is difficult to
see why no donations or contributions were made by Indian
Rote ls Company Limited to any other trusts such as Konk.an _.., )
Unnati Mitra Mandal prior to 25th March 1981. Moreover we fail '1
to appreciate why the employees in the Taj Group of Hotels
F should be so keen in securing development of the Konkan Region~
instead of demanding improvement in their own living eondi-
tions in Bombay. Moreover, the minutes of the meeting of the
Board of Directors of Indian Hotels Co~any Limited held on
31st March 1981 do not bear out the story put forward by Ajit
Kerkar that it was at the instance of Jadav that these dona-
G tions came to be made. What is stated in the minutes of the
meeting is as follows :
,.
\

"The Managing Director reported to the Board that '
over 600 employees working in Grades I to V in the
Taj Mahal and Taj Nahal Intercontinental Hotels,
H
·r-- R. s.. NAYAK v • · A. Rio ANTULA.Y [BHACMATI, C. J.]
1. .
~1
669
.

tr . Bombay, and who hail from the Konkan Region, had A
r,~ approached the Managing Director · to · contribute
amounts . to · certain public charitable trusts
I recently established for the p~rpose of undertaking
programmes of . rural development in the rural areas
of the Konkan Region. The Managing Director further
reported that the Trustees of the Trusts were very B
eminent .Public personalities and the . trusts had ·
been issued ·certificate of exemption of tax under

[ Sec. lSCCA of the Income-tax Act, .1961, pursuant to
which donations to the Trusts would be fully exempt
from tax in the hands of the donors. The ~ of
the Trusts are under :
c
L'- (i) Ambet Pratishthan
(ii) Shrivardhan Matadarsangh Pratishthan
r? (iii) Mhasale Taluk Pratishthan".
r .

l · It is difficult to understand as to how over 600 employees
~rking in the Taj Group of Hotels suddenly came to know just D
.. a little prior to 31st March 1981 that three trusts had been
. floated by the respond~nt when they were executed and
· r·~ registered only a few days before that. How is it that within
· 4 or 5 days over 600 employeeq of the Taj Group of Hotels came
to know about the existence of these trusts and how did they
, · co~ to know that these 3 trusts were established for the E
.~. purpose of undertaking programmes of rural development in the
1 rural areas of Konkan Region. It is also stated in th~ minutes
\ that Aj it Kerkar in his capacity as the Managing Director
._ . reported that the trustees of these 1 trusts were very eminent
•
t/~· ~ubUc personalities. We wonder whether the respondent's wife
·r · . and Sheroo l<anuga could be said to be "very eminent public
F
Personalities". It ls also strange that though a large sum of
· . ~· 26 lakhs was being pal.d by way of donations, J.J .. Bhabha
l ·· id. not even bother to inquire as to who were the eminent
·l • · ~Ublic personall.ties who were trustees of these three trusts •
. .. the
b; ~sjttr~~k.afacie
'-• · i .
dlfficult to accept thed ebexpluannajut!~~f~;:er~~
1\.t!r r. We do not think we wou1 •
G

th material on record to take the prima facie view that
neea~ donations of Rs • 26 lakhs were also connected with the
l<egotiattons which took place on 25th March 1981 between 1\j it
ot~l<ar on the one hand and Cavai and the respondent on the
er.
H

_ _ _ _.¥,. .
~
_! . ·~ - ·· -- -

670 ·SUPREME COURT REPORTS [ 1986 l 2 s.c.R.

A . we· !DUst therefore hold that a ·prima facie case has ·been~··
made out ·o n behalf · of the prosecution · for framing 23rd, 24th, . ·,
25th t 41st , :· 42nd ·arid :· 43rd draft
'
charges · against the
resoondent. The learned Triat Judge in our opfnion fell into
. an 'error in discharging the respondent in respect of these
charges. · :
B Before we close \lie · may make it clear that we have -9.
examined . the evidence on· record merely for the purpose of
deciding whether the evidence is of such a nature that, if
unrebutted, it would warrant the conviction of the respondent~
It will be open to the respondent to rebut this evidence and , ~
c to make out his defence when the trial proceeds against him on t' f
the charges already framed by the learned Trial Judge and the .
additional charges which we have directed to be framed against .

him. I!AIIGANAlll MISRA. J. This appeal . by special leave is-) \
D . directed against the order of a learned Single Judge of the t

Bombay High Court dated Aprll · 30, 1985, refusing to ·· frame t
charges on 22 heads while framing charges under 21 other heads. '

E
This litigation has had a chequered career. A short
account of the events relevant for the disposal of this appeal
may now be indicated.
.I
·· The appellant, R.S. Nayak, filed a petltion of complaint ~) J
on September 11, 1981, in the Court of the Chief Metropolitan 1
Magistrate, Esplanade, Bombay, alleging c~ssion of several l
offences by the respondent and some other persons. The learned 1
F Chief Metropolitan Magistrate declined to take cognizance_ a~~
the offences punishable under sections 161 and 165, I.P.C. and~- 1
Section 5(2) of the Prevention of Corruptlon Act (II of . 1947) ·
('Act' for short) without appropriate sanction as the
respondent was* at · the relevant ttrne, holding the office of . 1
Chief Minister of the State of Maharashtra. Several ·legal
G proceedings were taken thereafter in regard to the necessltY
of sanction. Ultimately, however, the appellant lodged a fresh ~·

j complaint on August 9, 1982. alleging commission of offences
by the respondent punishable under ss. 161, · 165, 384 and
420 read with s. 120B, I.P.c. as also s. 5(2) read with 8 •
S(l}(d) of the Act. This complaint came to be registered 89
J
I H
R.S. NAYAK v. A.R. ANTULAY [MISRA, J.] 671

A
~Special Case No. 24/82 and was transferred to the High Court
of Bombay for trial under an order made by a Constitution
Bench of this Court on February 16, 1984, in R.S. Nayak v.
~R. Aotulay, [1984) 2 s.c.c. 183. This Court directed :

"Therefore, Special Case No. 24/82 and Special Case B
No. 3/83 (a similar complaint filed by one P.B.
Samant against the respondent) pending in the Court
,~ of the Special Judge, Greater Bombay, Shri R. B.
Sule, are withdrawn and transferred to the High
Court of Bombay with a request to the learned Chief
Justice to assign these two cases to a sitting
Judge of the High Court." c
-) This Court in a separate judgment delivered on the same day in
~ ~R. Antulay v. Ramdas Srinivas lfayak & Anr., [1984) 2 S.C. C.
500, held :

" ••••• When cognizance is taken on a private D
complaint or to be precise, otherwise than on a
police report, the Special Judge has to try the
case according to the procedure prescribed for
trial of warrant cases instituted otherwise than on
_.;.,
police report by a Magistrate (sections 252 to 258
of 1898 Code of Criminal Procedure) Section 252

..
E
requires that when accused is brought before a
Court, the Court shall proceed to hear the
complainant and take all such evidence as may be
produced in support of the prosecution. Accused has
a right to cross-examine complainant and his
witnesses. If upon considering the evidence so F
produced, the Court finds that no case against the
accused has been made out , which, if unrebutted,
would warrant his conviction, the Court shall
discharge the accused (section 253 ibid). If, on
the other hand, Court is of the opinion that there
is ground for presuming that the accused has G
committed an offence, which the Court is competent
to try, a charge shall be framed in writing against
the accused. ••••••"

(emphasis supplied)
H
672 SUPREME COURT REPORTS [1986 1 2 s.c.R.

A
Pursuant to these judgments the case was posted for trial~
before Khatri, J. of the Bombay High Court. The trial opened
before Khatri, J. on April 9, 1984, and 16 witnesses were
examined before him by July 27, 1984. Then followed the
dispute relating to fabrication of the public records,
produced in the Court. Khatri, J. ordered inspection of the
files as also an inquiry into the allegations. By an order
B
dated April 23, 1984, . he found that the prosecution
allegations against the respondent of tampering with the files~
by removing and interposing certain documents and
interpolating endorsements on some other documents were not
well-fo~ed. The prosecution, thereupon, applied for transfer
of the case to some other Judge. That was refused but on the
c request of Khatri, J. that he may be relieved of trying they··
case, the learned Chief Justice nominated Mehta, J., another~ I

Judge of that court as the trial Judge. Fortyone more ~
witnesses were examined before Mehta, J. and after
examination of 57 witnesses in all for the prosecution, the
trial Judge was invited to consider the framing of charges. ~
D
Fortythree draft charges were placed for his consideration. By
the impugned order the learned·Trial Judge framed 21 charges
and refused to frame the remaining 22 charges proposed by the
prosecution and made an orJer of discharge in respect of those .
charges. It is this order of discharge relating to 22 charges A
E
which is assailed by the complainant in this appeal.

The respondent, a Barrister by profession, entered into
politics and was for some time Minister of La~ in the State of
Maharashtra and following the general election in 1980, came {~ ....
to be the Chief Minister of that State up to January 20, 1982.
The appellant in his complaint petition named the respondent
F
as the 1st accused and mentioned "others known and unknown" as--..
the remaining accused persons. He alleged in the petition of
compLaint that between August 1980 and September 1981 when
respondent was functioning as Chief Minister, he retained to
himself the power to deal with the following matters :
G
(1) The allotment of cement quota and distribution
of cement;

(2) Supply and sale of industrial alcohol, issue of
licenses for wholesalers and retailers dealing in
country liquor and Indian made foreign liquor;
H
R.S. NAYAK v. A.R. A:.~Y [MISRA, J.] 673

(3) Control of co-operatives and in particular the
· sugar co-operatives;
t .
' (4) Administration of urban land ceiling law
restriction of F.S.I. and exemptions therefrom and
in fact he himself exercised these powers of the
State. B

During this pe riod seven Trusts were created by the
respondent as per the following particulars

-·
i-·
1,
..
l
Serial No. Name of the Trust Date of
Registration
c
1. Indira Gandhi Pratibha Pratishthan(IGPP) 18.10.80
.I . ,....,
2. Nirmal Sethia Pratishthan (NSPP) 29.12.80

3. Konk.an Unnati Mitra Manda! (KUMM} 17 .03.81 '

25.03.81 D
4. Raigad Zila Pra tlshthan (RZP)
j
i
1. "") s. Srivardhan Matadhar Sangh Pratish-
25.03.81
than (SMSP)
l 6. Mhasale Taluka Pratishthan (MIP) 25.03.81
.E
t
7. Ambet Pratishthan (AP) 25.03.81

It is the prosecution case - and there is no dispute -
... that Srtvardhan located in the District of Raigad was the
· .j~ "''I Assembly Constituency of the respondent. Konkan is the region F
~ ·in which the District of Raigad is located. The respondent
I belonged to village Ambet which is part of Mhasale Taluka in
Raigad District. The five Trusts appearing against items 3-7

,·; above were thus intended to place ample funds at the disposal
of the respondent and provide means and resources for his
L Political aggrandisement. Nirmal Sethia Pratishthan was
!..;...· ~ cre~ted in the name of 8 friend of the respondent. In all
i ~heae SiK Trusts the respondent, his wife, close relations and
G

l riends were assocJated as Trustees. So far as IGPP is
l concerned, the respondent represented that the State Cabinet
f had taken a decision on October 6, 1980, to create the same.
! On October 7, l9BO, the respondent at a Press Conference made H
~
674 SUPREME COURT REPORTS [1986] 2 s.c.R.

A a declaration to this effect and in official publications also~
this fact was duly publicised. It is the prosecution case that
the late Smt. Indira Gandhi, the then Prime Minister, had
never agreed to have her name associated with the Trust which
came to be registered with the Charity Commissioner on October
18, 1980. Though it was not a Government Trust and Smt. Gandhi
had not agreed to her name being associated with it, the
B respondent personally and through others gave a lot of
publicity representing as if these were facts with a view toy
inducing people to believe that IGPP was a Government Trust·
and the late Prime Minister had agreed to associate her name
with that Trust. These representations were made with a view
to creating an appropriate impact on the mind of the people at
c large. According to the prosecution, as a fact, Mrs. Gandhi )
had not consented to associate her name with the Trust and ~
that fact was disclosed on the floor of the Lok Sabha by the~
then Defence Minister on behalf of th~ Prime Minister. It is
on record that her name was deleted and the Trust later came
to be known only as Pratibha Pratishthan.
D
As already stated, 43 draft charges were placed before
the learned Trial Judge on the basis of the evidence of 57
prosecution witnesses and a large volume of documents. 43 r
draft charges were divided into six groups for convenience of~
consideration by the learned Trial Judge. These six heads with
E reference to the specific allegations and the particulars of
the draft charges are shown below:

Serial No. Allegation Offence Charge No.
~lleged
1
F Conspiracy 120B, IPC
1.
2. With reference to
1
·'
l
Sugar Co-operatives

(a) Shetkari Sahakar 165, 384, 420, IPC 2-4
Sakhar Karkhana
G
(b) Warna -do- 5-7

(c) Panjara -do- 38-40

H
-
R.S. NAYAK v. A.R. AN!ULAY .
[MISRA, J J
675

(a) National Centre for A
. Performing Arts 161 & 165, IPC .. 23-25
(NCPA) 5(2) read with
5(1) of the
Prevention of
Corruption Act.
I B
:...:1 (b) Indian Hotel 161 & 165, IPC; 41-43
t.
I
Co. Ltd. 5(2) read with
5(1) of the
Prevention of
,
.t • Corruption Act.
I ~
l
4. Nanubhai Jewellers c
161 & 165, IPC; 33)35
,....,. (F.S.I.) 5(2) read with . .
'
5(1), Prevention
of Corruption Act.
5. Industrial Alcohol -do- 32,34 D .
6. · Cement Allotments - -co- . 8-22,

7 transactions . 26-31 • .

The prosecution examined specific witnesses with E
reference to the allegations supporting the draft . charges.
'
. Similarly, documents were also produced ~· t!':, suppon- ' the .
" allegations. The learned Trial Judge, who was ' requi~ed in law
to state the reasons if he discharged the accused~ in an
unusually long order . extracted the e~idence of w.1tne,sses at
~... , .length as also the contents of the documents, and framed 21 F
~ ·~charges while discharging the respondent in respect 'of the
remaining 22. The prosecution filed an application on July 5,
1
\

I
1984, Ext. 214-A, disclosing the names of the other accused
Persons and those names were : I
I

j 1. Mr. Ajit Kerkar, PW. 44; G
J
~/ .
~> (
2. Mr. P.G. Gavai, Chief Secretary to the Maha- i
rashtra Government at the relevant time and a I

l l
Trustee of the lGPP;
H
I
~

l
I
j
t
l
.If 676 SUPREME COURT REPORTS [19861 2 s.c.a. j
A . L
3. All officers of the State Government of~
Maharashtra who participated in the issue of f
l various Government orders knowing that the sa111e
were being issued for a consideration;

l
) B
4. Officers of the Sugar Directorate who used
official pressure for collection of money from the
Sugar Co-operatives and Joint Stodk Companies under
instructions of the respondent;

5. Mr. Pessi Tata, since dead, who negotiated
several transactions relating to alcohol and c~t ,.,..
c allocations ; 4 '
,I •,

I
I

6. Mr. N.M. Tidke, Minister of Co-operation. __.., ~

Admittedly, by July 5, 1984, the trial had already begun
and several witnesses for the prosecution had already been i
D examined.

The learned Trial Judge did not accept the prosecution
case regarding the offence of cheating and extortion. ..~
I
Similarly, the charge of conspiracy was not accepted. The r
learned Trial Judge framed 21 charges in respect of six
E transactions relating to cement and one relating to industrial
alcohol for offences under as. 161 and 165, IPC and s. 5(2)
read with s. S(l)(d) of the Act. For these 7 transactions, 21
charges in all were framed, 3 charges for each transaction.

As pointed out by the Constitution Bench in the judgment
F to which reference has been made, the relevant sections of the\ j
Code of Criminal Procedure ('Code' for short) for the trial of~.
a case of this type are sections 244, 245 and 246. Section
245(1) provides : !
I
I

~
"If upon taktng of the evidence referred to in s.
244, the Magistrate considers, for reasons to be ,j
G
recovered, that no case against the accused baS .....
been made out which, if unrebutted. would warrant
.
r
. .~

his conviction, the Magistrate shall discharge ~
him ...

While section 246(1), on the other hand, requires :
H
R.S. NAYAK v. A.R. ANTULAY [MISRA, J.] 677

"If ~en such evidence has been- taken or at any A
previous stage of the case the Magistrate is of
opinion that there is ground for presuming that the
accused has committed an offence triable under this
Chapter which such Magistrate is competent to try
and which in his opinion should be adequately
punished by him, he shall frame in writing a charge B
against the accused."

The Code contemplates discharge of the accused by the Court of
Sessions under s. 227 in a case triable by it; cases
instituted UP,on a police report are covered by s. 239 and
cases instituted otherwise than on police report are dealt
with in s. 245. The three sections contain some what different c
l provisions in regard to discharge of the accused. Under s.
, 227, the trial Judge is required to discharge the accused if
he 'considers that there is not sufficient ground for proceed-
ing against the accused.' Obligation to discharge the accused
under s. 239 arises when "the Magistrate considers the charge
against the accused to be groundless." -The power to discharge 0
is exercisable under s. 245(1) when "the Magistrate considers,
for reasons to be recorded, that no case against the accused
has been made out which, if unrebutted, would warrant his
~ conviction ••• " It is a factthat ss. 227 and 239 provide for
discharge being ordered before the recording of evidence and
the consideration as to whether charge has to be framed or not E
is required to be made on the basis of the record of the case,
including docu!Ile:nts and oral hearing of the accused and the
r prosecution or the police report, the documents sent along
with it and examination of the accused and after affording an
-.. opportunity to the two parties to be heard. The stage for
discharge under s. 245, on the other hand, is reached only F
after the evidence referred to in s. 244 has been taken. Not-
withstanding this difference in the position there is no scope
for doubt that the stage at which the Magistrate is required
to consider the question of framing of charge under s. 245(1)
is a preliminary one and the test of "prima facie" case has to
be applied. In spite of the difference in the language of the G
three sections, the legal position is that if the trial Court
r is satisfied that a prima facie case is made out, charge has
to be framed.

H
678 SUPREME COURT REPORTS [19861 2 s.c.R.

A
In Habant Abbey Dass v. S. Gnrd:l.al. Singh & Ors •• A. I.R. ,
1971 S.C. 834, this Court in case instituted on complaint
applied the prima facie test. In State of Bihar v. Raeesb
Singb, [1978] 1 s.c.R. 257, this Court again pointed out that
the standard of test and judgment which is to be finally
applied before recording a finding regarding guilt or
B otherwise of the accused, is not to be applied at the stage of
deciding the matter under s. 227. It was further observed :

"If the evidence which the prosecution proposes to
adduce to prove the guilt of the accused even if
fully accepted before it is challenged in cross-
c examination·or rebutted by the defence evidence, if
any, cannot show that the accused comitted the
offence, then there will be no sufficient ground
for proceeding with the trial. An exhaustive list
of circumstances to indicate as to what will lead
to one conclusion or the other is neither possible
D nor advisable. We may just illustrate the
difference of the law by one more example. If the
scales of pan as to the guilt or innocence of the
accused are something like even at the conclusion
of the trial, then, on the theory of benefit of
doubt the case is to end in his acquittal. But, if
E on the other hand, it is so at the initial stage of
making an order under s. 227 or s. 228, then in
such a situation ordinarily and generally, the
order which will have to be made will be one under
s. 228 (charge to be framed) and not under s. 227
(of discharge)".
F
Untwalia, J. who spoke for the Court in that case, quoted with ~
approval the view expressed by Shelat, J. in Nir.aljlt S~
Boon v. State of west BeQgal & Anr•• [1973] 2 S.C.R. 66, and
wltoat had been said in yet another earlier decision of the
Court in Dlanclra Deo Singh v. Prakash Oumclra Bose, [ 1964) 3
G S.C.R. 629. In the case of Union of India v. Prafulla x.-r
Sawel & Anr., (1979] 2 S.C.R. 229, (a decision to which the
trial Court referred), this Court was dealing with a case
involving allegations relating to offences punishable under s.
5(2) read with s.S(l)(d) of the Act and s. 120-B, IPC as here.
Fazal Ali, J. indicated that the Court has power to sift and
H
weigh the evidence for the limited purpose of finding out
R.S. NAYAK v. A.R. ANTULAY [MISRA, J.] 679

A
whether or not a prima facie case against the accused has been
~\made out. In Superintendent and R • whrancer of Legal Affairs~
West JewwU v. Anil luMr Bbamia & Ors., [1979] 4 S.C.C. 274,
a three Judge Bench of this Court said :

"At this stage, as was pointed out by this Court in
B
State of Bihar v. R esh Slugh~ (supra), the truth,
veracity and the effect of the evidence which the
prosecution proposes to adduce are not to be
metieulously judged. The standard of test, proof
and judgment which is to be applied finally before
finding the accused guilty or otherwise is not
exactly to be applied. At this stage, even a very
strong suspicion founded upon materials before the
c
Magistrate which leads him to form a presumptive
opinion as to the existence of the factual
ingredients constituting the offence alleged may
justify the framing of charge ••••• "
D
The lar~ge of sub-s. (1) of s. 245 also places the matter
beyond dispute by using the same test as suggested by
Un~alia, J., in the case of ~h S~, (supra).

l. The use of the words "if, upon taking of the evidence
referred to in s. 244" in sub-s. (1) of s. 245 is suggestive
E
of the statutory intention that until "all such evidence as
may be produced in support of the prosecution" is taken, the
stage for judicial consideration as to whether charge is to be
framed is not reached. Now it is a fact that several witnesses
r named by the prosecution still remain to be examined in the
instant case but no grievance was made before us by the
• appellant's counsel that the trial Judge had acted wrongly in F
taking up the question of framing of charges prematurely.
Obviously this complaint could not be made since after 57
witnesses had been examined it was the prosecution itself
which invited the learned Trial Judge to take up the matter of
framing of charges.
G
Admittedly, the witnesses examined for the prosecution
t- have been cross-examined and in the case of some, at great
length. There is no scope for doubt that the rebuttal case
envisaged in s. 245(1) of the Code is fairly clear from the
cross-examination of prosecution witnesses as also from the
H
680 SUPREME COURT REPORTS [19861 2 s.c.R.

A
documents exhibited before the Court, apart from direct~
evidence being led by the defence independently. Under the·
scheme of the Code there is no scope for the accused to lead
defence evidence until the prosecution is closed and the
examination of the accused under s. 313 of the Code is over.
With the amendment of the Code of 1898 in 1955 and under the
B new Code of 1973 the procedure relating to all varieties of
criminal trials, excepting warrant cases on private
complaints, has been simplified. The procedure in respect ofr
trials according to warrant procedure in private complaints,
however, continues to be cumbersome and time-taking and it is
for Parliament to simplify the procedure for such cases keep-
C ing all aspects in view.
'

Lengthy arguments were advanced both by Mr. Jethmalani ~
for the appellant and Mr. P.P. Rao for the respondent with ~
reference to the evidence. When an attempt was made by learned
counsel on both sides to present an analysis of the evidence
D and criticism was advanced by Mr. Jethmalani against the
reasons given by the trial Judge and support was indicated by
Mr. Rao to such reasons, we indicated to Mr. Rao that if we
went into the matter at length even for the prima facie
purpose and indicated conclusions it might embarrass the j
respondent in, his defence even in respect of the charges
E framed by the trial Court. In view of these observations made
in course of the hearing, a written statement on behalf of the
respondent was filed on November 5, 1985, signed by the
respondent and his counsel. The relevant portion of the said
statement reads thus : -,
I

F "Since some charges have already been framed by_.
learned Trial Judge with respect to offences under
ss. 161 and 165, I.P.C. and s. 5(1)(d) read with s.
5(2) of the Prevention of Corruption Act and the
ingredients of the offence under s. 165, I.P.C.
have not been specifically adverted to in the main
G judgment and the respondent has in any event to
argue before the trial Court regarding the scope as
well as the ingredients of the offences under ss.
161 and 165, I.P.C. on which there is not nuch of .,
case law and it involves appreciation of the scheme
of the relevant provisions of the I.P.C. as well as
H of the Prevention of Corruptlon Act, the respondent
R.S. NAYAK v. A.R. ANTULAY [MISRA, J.] 681

is willing to face trial straightaway in respect of A
not only the charges already framed but also on the
draft charges in so far as they involved the
offences alleged under ss. 161 and 165, I.P.C. and
s. 5(1)(d) read with s. 5(2) of the Prevention of
Corruption Act and the charge of conspiracy
relating thereto ••••••••• " B

When such a statement was filed, we pointed out to Mr.
Rao that while in the trial Court on the basis of such a stand
charges could straightaway be framed in regard to those
offences named in the statement in the appeal unless the order
of discharge made by the trial Court is vacated and the
reasons advanced by the trial Judge are set aside, it would c
not be proper for this Court in exercise of its appellate
jurisdiction to direct that charges be framed. It was further
pointed out that a direction to frame charges on the basis of
the statement filed has to be on the footing that the
prosecution evidence in support of the charges was such that
unless rebutted, the respondent would liable to be convicted. D
This observation made by us was merely a restatement of the
legal position and was not meant to prejudice the respondent
in any manner. But it cannot be disputed that in order to
•. decide whether the order of discharge should be sustained or
set aside, we have to consider whether on the material on
record, a prima facie case has been made out on behalf of the E
prosecution.

As hearing proceeded, at one stage we were inclined to
r lay down generally the para-metres of the provisions of s.
165, I.P.c. Mr. Rao for the respondent while making his submd-
~ssions in regard to the actual scope of the offence covered by F
rs. 165, I.P.C. pointed out on more than one occasion that the
respondent mdght be prejudiced in his defence if while laying
down the parametres of that offence, we indicated a straight-
jacket foi1lllla. He also suggested that the matter should be
left to be argued and the learned Trial Judge should be free
to come to his conclusion in law with reference to the facts G
of the case about the scope and ambit of that provision that
t if any party was aggrieved by the decision it would still be
open to be corrected in the appellate forum. Taking these
submissions into consideration and on further deliberation, we
are inclined to accept the view that it may not be appropriate
H
682 SUPREME COURT REPORTS [19861 2 S.C.R.
A
at this stage to lay down the ambit and scope of the offence·>
under s. 165, I.P.C. at any great length. It would be
sufficient in our view to generally point out the distinction
between sections 161 and 165, I.P,C. and simultaneously deal
with the provisions of s. 5(1) read with s. 5(2) of the Act.
But before doing so, we would briefly refer to the evidence in
B support of the charges which the respondent has agreed to be
framed for the purpose of showing that the learned Trial Judge
had prima facie taken a wrong view and it was a fit case where~
these charges should have also been framed.

The complainant PW. 14 is a member of the Bhartiya Janata
c Party. He was elected as a State legislator in 1978 and from
1980 onwards he was General Secretary of the Bombay City unit ,
of the said Party. He has supported the prosecution·
allegations in general. According to him, the IGPP was~
publicised as a Government Trust. A statement of the
respondent at the Press Conference held immediately after the
D Cabinet decision and repetition of that in contemporaneous
Government publications led people to believe tha~ IGPP was a
Government Trust. The Government publications have been
exhibited. Though an attempt has been made while
cross-examining the witness to bring out the position that ~
what was published in the Government publications was not •
E known to the respondent, that has yet to be established. PW.
1, a Cabinet colleague of the respondent and now a sitting
Member of Parliament who has close association with one of the
major sugar co-operatives as also Directors of the other sugar
co-operatives, has spoken about the demand of contribution
and the raising of contribution taking a bag of sugar produced l
F as the unit. There is considerable evidence in regard to
allotment of cement under instructions of the respondent. j
Contemporaneous record prepared by responsible public officers,
prima facie supports the position that the respondent had
directed allotments to be made i.n a manner said to be not
strictly in accordance with the prevailing procedure. The
G persons to whom allotments of cement have been made have in
many cases contributed large sums of money to the Trust funds.
In regard to the NCPA there is contemporaneous documentary
evidence as also oral evidence to show that certain conces- 1
sions were extended by Government and payments had been
received which have gone into the Trust funds. While the
H prosecution has alleged that the payments of money were a
R. S. NAYAK v. A. R. ANTULAY [MISRA, J .} 683

consideration for the favour shown to NCPA, the defence has A
come out with the version that the payments made and
stipulated were unconnected and the large sum of money agreed
· to be paid was for the purpose of improving the lot of the
people of Konkan region. Similarly, in regard to the grant of
'No Objection Certificate' in respect of the premises of
Nanubhai Jewellers, there is evidence from the side of the B
prosecution to support its allegation that the power of the
"'!- State was exercised for a consideration while there is no
denial regarding receipt of the payment but the link is denied
and disputed. Similarly, in regard to industrial alcohol at
least so far as Kolhapur Sugars are concerned, there is the
evidence of PW. 50 and payment of Rs. 2,25,000 which has gone
into the funds of the KUMM has been alleged and is claimed to c
~ have been proved. The record shows that the allotment of
~ alcohol was restored.

The oral evidence in this case is backed up by document-
ary evidence. Some of the relevant documents have interpola-
tions and the inquiry relating to interpolation has not become D
final. It is indeed difficult at this stage to say that the
evidence as a whole is inadequate to establish the prima facie
case. The learned Trial Judge, as already pointed out,
~ extracted at great length both the oral evidence as also the
contents of documents but there was not much of analysis to
justify rejection of the material. It may be pointed out that E
there is substance in Mr. Jethmalani' s submission that the
learned Trial Judge adopted two different standards in the
matter of weighing the same evidence, when he agreed to frame
r 21 charges which were inter-linked and inter-connected with
the rest of the prosecution story with reference to which the
22 draft charges had been given. In fact it is this position F

f which, when properly considered by his counsel, led the
respondent to file his statement suggesting that charges for
the other offences excepting under ss. 384 and 420, IPC, may
also be framed. If the evidence was accepted for half the
number of charges relating to similar offences, there could
hardly be any scope to reject the 22 draft charges. Similarly, G
in regard to the charge of conspiracy the facts were inter-
t connected and there could be no justification to reject the
charge even if the other persons implicated were not before

H
684 SUPREME COURT REPORTS [1986} 2 S.C.R.

A
the Court. The reasoning given by the learned trial Judge in.
support of his order of discharge in regard to the draft·
charges relating to ss. 161 and 165, IPC and s. 5(2) read with
&• 5(1) of the Act, concerning these transactions cannot,
therefore, be sustained. We are, in the circumstances,
inclined to take the view that the statement filed by the
B respondent was justified and the order of discharge made by
the learned trial Judge is not sustainable.

It is appropriate at this stage to take note of the fact
that under s. 245(1) of the Code the requirement is that the
evidence must be such which if not rebutted would warrant
c conviction of the accused. Under the law of evidence the
concept of rebuttable presumption is well-known. As pointed
out by Taylor in his Treatise on Evidence, "rebuttable
presumptions of law are a result of the ganeral experience of .
a connection between certain facts or things one being usually
bound to be the companion or affect of the other. The
D connection, however, in this class is not so intimate or so
uniform as to be conclusively presumed to exist in every case;
yet, it is so done that the law itself without the aid of a
jury infers one fact fro. the crude existence of the other in
tbe absence of opposing evidence. In this mode, the law
advances the nature and amount of the evidence which is suffi- ·
E cient to establish a prima facie case and throws the burden of
proof upon the other pary; and if no opposing evidence is
offered, the jury are bound to find in favour of the presump-
tion. A contrary verdict might be set aside as being against
evidence. The rules in this class of presumptions ~s in the
former have been adopted by comon consent from motives of
public policy and for the promotion of the general good; yet,
not as in the former (conclusive proof) class forbidding all~
further evidence but only dispensing with it till some proof
is given on the other side to rebut the presumption raised.
Thus, as men do not generally violate the Penal Code, the law
1
presumes every man to be innocent; but some men do transgress
G it; and therefore, evidence is received to repel this
presumption.n

(emphasis supplied by us).

The learned trial Judge should have proceeded to scan
H the evidence keeping this aspect of the legal position in view
R. S. NAYAK v. A. R. ANrULA.Y [MISRA, J. ] 685

A
which he has missed. There is another aspect which has also to
~be noticed here. One of the allegations against the respondent
is the colllllission of offences punishable under s. 5( 1) read
with s. 5(2) of the Act. Section 4 of that Act provides :

'\fuere in any trial of an offence punishable under B
s. 161 or section 165 of the Indian Penal Code, or
of an offence referred to in clause (a) or clause
(b) of sub-s. (1) of s. 5 of this Act punishable
-~
under sub-section (2) thereof, it is proved that
an accused person has accepted or obtained, or has
agreed to accept or attempted to obtain, for himr
self or for any other person, any gratification c
(other than legal remuneration) or any valuable
thing from any person, it shall be presumed unless
the contrary is proved that he accepted or obtained
or agreed to accept or attempted to obtain, that
gratification or that valuable thing, as the case
may be, as a motive or reward such as is mentioned D
in the said section 161, or, as the case may be,
without consideration or for a consideration which
he knows to be inadequate."

~ The presumption raised under s. 4 is a presumption of law
which a Court is bound to draw, once it is proved that the E
accused Government servant received or obtained a valuable
thing in the circumstances mentioned in the section (see Tbe
State of Madras v. ~ Vaidyanatha Iyer. [195&1 s.c.R. 580 and
K. Satwant Singh v. 'l'be State of Punjab, [1960] 2 S.C.R. 592).
'f The learned Judge failed to take note of this statutory
provision while dealing with the charges under ss. 161 and F
-.165, !PC as also s. 5(1 )(a) and (b) of the Act. We do not
intend to say anything more at this stage. But we do hope that
while dealing with the case after the framing of the charges,
the learned trial Judge will keep this legal position in mind
and act accordingly.
G
In the face of the pronounced view of this Court that the
Minister is a public servant, no attempt was made either
before the High Court or before us to argue that to the Chief
+ Minister, ss. 161 and 165 of the Indian Penal Code would not
apply. The main ingredients of the charge under s. 161, !PC,
are : H
686 SUPREME COURT REPORTS [19861 2 s.c.R.

A
(1) that the accused was a public servant;
;......
(2) that he must be shown to have obtained from
any person any gratification other than legal
remuneration; and

B (3) that the gratification should be as a motive
or reward for doing or forbearing to do any
official act or for showing or forbearing to show,
i.n the exercise of his official function, favour o~
disfavour to any person.

C Ordinarily, when the first two ingredients are established by
evidence, a rebuttable presumption arises in respect of the
third. For the offence under s. 165, IPC the essential
ingredients are

(i) the accused was a public servant;
D
(ii) be accepted or obtained or agreed to accept or
obtain a valuable thing without consideration or
for an inadequate consideration knowing it to be
inadequate;

E (iii) the person giving the thing must be a person~
concerned or interested in or related to the person
concerned in any proceeding or business transacted
or about to be transacted by the government servant
or having any connection with the official of him-
self or of any publie servant to whom he is
F subordinate ; and
....
(iv) the accused must have knowledge that the '
person giving the thing is so concerned or
interested or related.

G It has been pointed out by this Court in A. Vaidyanatha
I,er'a case (Supra) that s. 165 is so worded as to cover cases
of corruption which do not come within ss. 161, 162 or 163.
Indisputably the field under s. 165 is wider. U public
servants are allowed to accept presents when they are
prohibited under a penalty from accepting bribes, they would
H easily circumvent the prohibition by accepting the bribe in
R. S. NAYAK v. A.R. ANTUIAY [MISRA, .J.) 687

A
the shape of a present. The difference between the acceptance
4 of a bribe made punishable under s. 161 and 165, IPC, is this
: under the former section the present is taken as a motive or
reward for abuse of office, under the latter section the
questio~ of motive or reward is wholly immaterial and the
acceptance of a valuable thing without consideration or with
B
inadequate consideration from a person who has or is likely to
have any business to be transacted, is forbidden because
though not taken as · a motive or reward for showing any
~official favour, it is likely to influence the public servant
to show official favour to the person giving such valuable
thing. The provisions of ss. 161 and 165, IPC as also s. 5 of
the Act are intended to keep the public servant free from
corruption and thus ultimately ensure purity in public life.
c
The evidence in the case, therefore, should have been judged
- keeping these aspects in view.

We shall now proceed to consider the charge relating to
extortion punishable under s. 384, IPC. The allegation in
0
respect of this alleged offence is to be found in paragraph 18
of the petition of complaint which reads thus :

"That on the facts mentioned above, the accused is
also guilty of an offence under s. 384, I.P.C. When
a Chief Minister demands moneys from persons offi- E
cially transacting business with him or who are
likely to transact business with him in the future,
it is implicit in the situation that a veiled
threat is conveyed that the request or demand will
not be attended to and there will either be denill
or delay in the matter of granting to them what
they are entitled to or that they will be harassed F
by a large number of pink-pricks by which bureau-
cracy and the Government make anyone's life miser-
able if the Chief Minister's demands are not
complied with. Moneys are, therefore, obtained by
extortion and payments called donations are the
direct result of fear of injury. The accused has G
thus been guilty of the offence under s. 384,
I.P.C."

The learned Judge considered framing of charge relating to
extortion in paragraphs 97-107 of his order. According to
H
688 SUPREME COURT REPORTS [1986] 2 s.c.R.

A
him, the evidence of IW. I Shalinitai did not establish that
the accused or anybody on his behalf held out any threat>
either personally to her or to the Sangli Karkhana. According
to the learned counsel, the learned Judge fell into an error
in confining his consideration of the issue by referring to
the deposition of PW. 1 alone. The evidence of PW.51, Gilda,
B was equally relevant and germane to the issue of extortion
acc0rding to him and should have been referred to and relied
upon while dealing with the consideration of the charge. Mr.
Jethmalani next contended that the following features which ~
had been established should have led the learned Judge to hold
that there was material for the view that a case in respect of
c the charge had been made out by the prosecution.

( i) The respondent had decided to raise Rs. 10
crores for the IGPP out of which a moiety was to be
raised during the crushing season of 1980-81 and
the remainder during the following season;
D
(ii) The IGPP between the date of its formation and
31.3.81 had been able to secure a very small amount
compared to the target and bul~ of that small
amount had come from the Government of Maharashtra;

E (iii) Considering the pomp and publicity with which
IGPP had been brought into existence, the financial
position appeared to be ridiculous for want of
sufficient funds. The respondent had assured the
Board of Trustees at the meeting of the 6th May
1981 that the sugar cooperatives at his instance
F had agreed to iOIDediately make payment of their
contribution;

(iv) The statement of the respondent was based upon
the fact that at the meeting on 25th April, 1981,
of the ministerial committee held in his
G Secretariat Chamber, he had extracted promises from
the managements of the sugar co-operatives for
payment of contributions to IGPP in lieu of an
assurance to them of agreeing to their pending
demands with Government;

H (v) After obtaining the promise of donations, the
respondent adjourned consideration of the demand of
R.S. NAYAK v. A.R. ANTULAY [MISRA, J.] 689

A
the indUstry to the next meeting to be held on the
28th May 1981 and insisted upon compliance of the
promise of donations before their demands could be
acceded to;

(vi) The entire offi~ial machinery, particularly of B
the Sugar Directorate, was utilised to bring abou~
pressure on the Sugar Federation and its component
members for extracting contributions. Pressure was,
therefore, brought about of Marathe, P.W. 5,
through Lulla, P.W. 7, and the telegram under Ext.
81 was sent to the members of the Federation;
c
(vii) P.W.l, Shalinitai, rightly described the
conduct of the respondent as one of pestering and
in answer to such extortion to which she yielded,
she advised the Sangli Karkhana to make the payment
in the interest of the society. According to Mr.
Jethmalani, the position came to this that if the D
factory had not paid, the legitimate demands pend-
ing consideration of Government would have suffered
a setback;

(viii) The donations in the instant case were the
outcome of pressure and were not voluntary in E
character. The fact that the Penzarakan Karkhana
had issued a cheque of Rs. 2 Lakbs in spite of its
strained financial circumstances and while it had a
bank balance of less than Rs. 6,000 and the Sangli
Karkhana had to arrange for a duplicate cheque as
the original cheque had been left at Sangli and F
had not reached the respondent in time, were indi-
cative of the volume of pressure that must have
been brought about for collecting the donations;

(ix) Mr. Jethmalani pointed out that it was the
respondent's own case that if the management had G
made payments which were illegal, they themselves
abetted the offence of cheating. This suggestion
had been put to three relevant prosecution witness-
es. The fact that these witnesses closely connected
with the sugar co-operatives had committed even a
H
690 SUPREME COURT REPORTS [1986] 2 s.c.R.

A
criminal offence goes to show that their act was ~
not at all voluntary and the fiscal interest of the
factories must have been their sole and primary
consideration for such conduct.

On the basis of these facts and circumstances, learned counsel
B for the appellant argued that the three charges of extortion
had been prima facie established and the learned trial Judge~
was, therefore, not justified in refusing to frame charges for
the offence under s. 384, IPC.

Mr. Rao for the respondent relied upon the definition of i
c 'extortion' in s. 383 in the Indian Penal Code and contended ~
that the ingredients of the offence had not been ~rima facie,
established so as to justify framing of a charge for the said
offence.

'Extortion' is thus defined in s. 383, I.P.C. :
D
"whoever intentionally puts any person in fear of
any injury to that person, or to any other, and
thereby dishonestly induces the person so put in
fear to deliver to any person any property or ,. . .
valuable security, or anything signed or sealed
E which may be converted into a valuable security,
coDDDits extortion.n

The main ingredients of the offence are

(i) the accused must put any person in fear of
F injury to that person or any other person; ~
~
(ii) the putting of a person in such fear must be
intentional;

(iii) the accused must thereby induce the person so
G put in fear to deliver to any person any property,
valuable security or anything signed or sealed
which may be converted into a valuable security; _
and

(iv) such inducement must be done dishonestly.
H
R. S. NAYAK v. A.R. ANTUI.AY [MISRA, J.} 691

A
~~efore a person can be said to put any person to fear of any
injury to that person, it must appear that he has held out
some threat to do or omit to do what he is legally bound to do
in future. If all that a man does is to promise to do a thing
which he is not legally bound to do and says that if money is
not paid to him he would not do that thing, such act would not B
amount to an offence of extortion. We agree with this view
which has been indicated in Babibal Jaqk v. ting E.peror 1
~.I.R. 1924 All 197. There is no evidence at all in this case
that the managements of the sugar co-operatives had been put
in any fear and the contributions had been paid in response to
threats. Merely because the respondent was Chief Minister at
. the relevant time and the sugar co-operatives had some of c

~
their grievances pending consideration before the Government
and pressure was brought about to make the donations promising
consideration of such grievances, possibly by way of recipro-
city, we do not think the appellant is justified in his
contention that the ingredients of the offence of extortion
have been made out. The evidence led by the prosecution falls o
short of the requirements of law in regard to the alleged
offence of extortion. We see, therefore, no justification in
the claim of Mr. Jethmalani that a charge for the offence of
. extortion should have been framed.
).._

The only other allegation in respect of which there is an E
order of discharge is relating to cheating. In the petition of
c~mplaint detailed factual allegations were made in paragraphs
19 to 30 in regard to this aspect. The complaint alleged :
~
"That in the specific cases of contributions
received by the IGPP the accused is further guilty F
of committing an offence of cheating under s. 427
of the Indian Penal Code. The accused embarked upon
a systematic campaign to associate the name of the
Prime Minister of India, Mrs. Indira Gandhi with
this Trust in order that the contributions to this
Trust would be easily forthcoming. This was, in G
fact, intended to strengthen the impression that
not only Mr. Antulay' s Government but also Mrs.
Indira Gandhi was actively involved in his opera-
tions. That such an impression was sought to be
created is further borne out by the fact that for
H
692 SUPREME COURT REPORTS [1986] 2 S.C.R.

A
inaugurating the said trust, a function was held at>
the Raj Bhavan, in Bombay on 11th October 1980. The'
Prime Minister especially flew in to perform the
inauguration ceremony. A picture of the Prime
Minister and the accused standing by her side while
the former is signing documents connected with the
B
Trust appeared in most of the leading newspapers in
their issues dated 12th October 1980."

The allegations in regard to this offence are
two-fold: (i) though IGPP was not a State Government Trust,
publicity was given by the respondent himself and through his
c agents as also through news media owned by the State
Government and the public press to the fact that IGPP was a
Government trust; and (ii) though Mrs. Gandhi had never agreed
to the Trust being named after her, the respondent associated ,
her name for the purpose of creating an impression in the mind
of the people at large that the then Prime Minister, Mrs.
D lndira Gandhi had associated herself with the respondent's
trust. The fact that Mrs. Gandhi had not consented was stated
on the floor of the Parliament. The correct position was
always known to the respondent and yet he either directly or
through others misrepresented these two aspects with a view to
making people part with money by way of contribution to this "
E Trust.

The evidence in regard to these allegations is ~oth
oral and documentary. The Cabinet met on October 6, 1980, and
it is the prosecution case that the respondent gave out a
Press Conference on the following day that on the 6th October
F the Cabinet had decided to create a Trust by the name of IGPP.
The news relating to the Press Conference was reported in
several newspapers, a few among them being the Free Press
Journal, Sakal, Lok Satta, Nav Shakti and the Indian Express.
The report appearing in the Free Press Journal has been marked
as Ext. 190. That was shown to PW. 10 Arya, the Secretary of
G
the IGPP and on reading the Report he admitted it to be more
or less correct. A reference to the newspaper publication
shows that the respondent had announced that the creation of
the Trust was the decision of the Government of Maharashtra.
Exhibit 48 is the October-November 1980 issue of a Government
publication titled ·~ashtra Sbasana Cbe Nirnay" (decisions
H of the Government of Maharashtra). Therein there is reference
R. S. NAYAK V• A.R. ANTULAY [MISRA, J.] 693

A
-..( to IGPP and a reading . of it prima facie shows that the
· establishment of IGPP was the decision of the Government of
Maharashtra. PW.B the Director-General of Information and
Public Relations of the Government of Maharashtra at the
relevant time has accepted this publication. It is true that
he has taken the stand that there is no ministerial approval B
at the pre-publication stage of the contents. That may not at
all be material because there must be an assumption that
~whatever is published in the Government o~1ed paper correctly
represents the actual state of affairs relating to Govern-
mental business until the same is successfully challenged and
the real state of affairs is shown to be different from what
. is stated in the Government publication. This position would C
- , get support from the decision of this Court in B8rpal Singh &
-Anr. v. State of Himachal Pradesh,[l981] 1 s.c.c. 560. The
prosecution has also relied on the Government of Maharashtra
.·- publication 'Lok Rajya'. The English and Marathi versions of
this publication for October 1980 have been proved as Exts.
179-180 respectively. Similarly, there is another Government D
of Maharashtra publication known as '~harashtra Marches
Ahead," Ext. 181, which is a publication of December 1980.
These documents, according to the prosecution, give an
impression that IGPP was a Government created Trust. The Trust
~Deed of the IGPP is Ext. 208 and it clearly shows that it is
not a Government Trust nor was it created by the Government. E
Even the respondent was not a Trustee qua Chief Minister. As a
._ fact IGPP was registered as a public trust with the charity
comnrl.ssioner.

EW. 1, an erstwhile Cabinet colleague of the respondent
~has deposed that on the lith October, 1980, when she attended F
\the function at t_he Raj Bhavan to which we shall presently
advert, she came to know the actual state of affairs, viz.,
though the respondent was trying to create an impression that
IGPP was a Government Trust, yet the same was not; but on
account of her being in the Cabinet she did not dispute the
position anywhere publicly. The Cabinet Resolution has not yet G
seen the light of the day. PW. 1 was specifically questioned
as to whether there was a Cabinet decision in respect of
t creation of IGPP as a Govt. Trust. She declined to answer the
question by saying that she was bound by the oath of secrecy
and she would not be in a position to disclose that
information. The prosecution attempted to cause production of H
694 SUPREME COURT REPORTS [1986] 2 s.c.R.

A
the Cabinet decision but privilege was claimed and the claim .>-
has succeeded. Therefore, the document has not been produced
before the learned trial Judge and is not a part of the
record. The propriety of the claim of privilege is subjudice
before this Court and we do not intend to say anything more
about it. The.core of the prosecution allegation in regard to
this part of the matter is with reference to the sugar
B
co-operatives. Several witnesses have been examined to support
this aspect of the prosecution case. ..._

So far as the second aspect, i.e. relating to the
association of the name of Mrs. Gandhi is concerned, Mr. Rao :
for the respondent has admitted the position that Mrs. Gandhi
c had at no stage given her consent to her name being associated r · -
wi·th the Pratibha Pratisthan. It is not disputed that under
the law, w~thout appropriate sanction or authority. the name
of the Prime Minister was not available to be associated.
There has been a denial of any such consent having been given
by the then . Defence Minister on the floor of l.Dk Sabha.
D
Respondent made a similar statement on the floor of the
Maharashtra Legislature on September 9, 1981, wherein, apart
from endorsing the statement in Parliament, he took the
responsibility on himself of assuming Mrs. Gandhi's consent.
Yet, on 16th October, 1980, in Lok Rajya - a MaharashtraA
Government publication - a picture of the accused standing by
E
the side of . the late Prime Minister was reproduced with the
following inscription below the photograph :
11
..
Prime Minister Indira Gandhi affixing her
signature on the documents giving her consent to i
name the Maharashtra Government's Trust for ·,
F
promoting talent in literature and fine arts as 1"'
~Indira Gandhi Pratibha Pratishthan' at Raj Bhavan
on Saturday. Watching keenly is Chief Minister A. R.
Antulay."

The learned trial Judge devoted a substantial part of the
G
impugned order to deal with the charge under s. 420, !PC. He
referred to the statement of PW 1 that she had actually known
the real state of affairs before the contributon was made to -... t
the IGPP. He ultimately took the view that the material placed
on record 'did not justify a charge under s. 420 !PC being
framed. We.· do not propose to refer to every item of evidence
H
R. S. NAYAK v. A. R. ANTULAY [MISRA, J.] 695

A
~on record relating to the allegation of cheating. We are
afraid that if we follow that procedure and express our
opinion one way or the other with reference to each item of
evidence, either party is likely to be prejudiced when the
matter goes for trial notwithstanding our statement that we
were doing so only for the purpose of finding out whether a B
prima facie case had been made out. We would, therefore, not
~refer to the evidence any further.

Cheating is defined in s. 415 of the !PC and the
ingredients for that offence are :

(i) there should be fraudulent or dishonest c
inducement of a person by deceiving him;

(ii) (a) the person so induced should be
intentionally induced to deliver any property to
any person or to consent that any person shall
retain any property, or o
(b) the person so induced should be intentionally
induced to do or to omit to do anything which he
would not do or omit if he were not so deceived;
and
E
(iii) in cases covered by the second part of (ii),
the act or omission should be one which caused or
is likely to cause damage or harm to the person
induced in body, mind, reputation or property.

' (See DJ.lbqh Rai Jarry v. UDion of IDdia & On •• [1974] 2 F
s.c.R. 178.)

Section 415 actually consists of two parts, each part
dealing with one way of cheating -

1. Where, by deception practised upon a person the G
accused dishonestly or fraudulently induces that
person to deliver property to any person or to
t consent that any person shall retain any property ;

2. Where~ by deception, practised upon a person,
the accused intentionally induces that person to do H
696 SUPREME COURT REPORTS [19861 2 s.c.R.
A
or Qmit to do anything which he would not do or
omit to do, if he were not so deceived and which
act or omission causes or is likely to cause damage
or harm to that person in body, mind, reputation or
property.

B The question is whether these ingredients are satisfied
by the prosecution evidence. We must point out that the
learned trial Judge failed to analyse the evidence which he'
had at great length extracted keeping the proper angle of
approach in view. Therefore, his conclusion is not made on a
proper assessment and is not sustainable. We are inclined to
C agree with Mr. Jethmalani that the evidence) oral and
documentary, taken together does justify the framing of a
charge for the offence under s.420, !PC. Here again, we would
like to reiterate that the position is a presumptive one open
to rebuttal by the respondent. We are, therefore, of the view
that a charge under s. 420, !PC, should be framed by the
D learned trial Judge against the respondent.

The net result of the aforesaid discussion, therefore, is
that a prima facie case has been established by the
prosecution in respect of the allegations for charges under
ss.l20B, 161, and 165 and 420, IPC, as also under s.S(l) read
E with s. 5(2) of the Act. So far as the three draft charges
relating to the offence punishable under s. 384, IPC, are
concerned, we agree with the learned trial Judge that the
prosecution failed to make out a prima facie case. Therefore,
except in regard to the three draft charges under s.384, IPC,
charges in respect of the remaining 19 items shall be framed.
F The appeal is allowed to that extent.

Lot of argument has been made by Mr. Jethmalani that
other persons who have been named in the application of the
complainant Ext. 214-A, should also be proceeded against,
particularly in regard to the charge of conspiracy punishable
G under s.12G-B, IPC. As we have already pointed out, Pessi Tata
is dead. One of the other persons shown in Ext. 214-A is also
dead as indicated therein. Excepting Tidke, the Minister of
Co-1lperation, Gavai, &~.13, and Ajit Kerkar, m.44, and a few
other public officers who have been specifically named in Ext.
214-A, names · of others were not disclosed and a prayer was
H made that all other officers who were involved in the matter
R.S. NAYAK v. A.R. ANTULAY [MISRA, J.] 697

A
may be proceeded against. It may be that some of these
( officers or outsiders have not behaved in an independent
manner and have failed to act up to the expectation of the
office they held. But that by itself may not be sufficient
justification for prosecuting them criminally. Again, as
pointed out by the learned trial Court, if that is to be done B
at this stage, the trial which has already been sufficiently
protracted would have to be de ~ and would required further
time to be spent. It appears that some of these officers like
~avai have already retired and are no more in service. Almost
five long years have intervened between the events and now.
These are relevant aspects to be taken into consideration. So
far as Gavai is concerned, the learned trial Judge has examin- c
,ed his conduct with reference to the matter relating to NCPA
and has come to the conclusion - one which may not be imme-
diately rejected - that he was anxious to watch the interests
t of the Government and, therefore, did not agree with the
concessions proposed by the NCPA. We are inclined, therefore,
to take the ~iew that so far as Gavai is concerned, the trial D
Judge was justified in holding that he was not liable to be
proceeded against as a co-conspirator. While dealing with this
aspect of the matter, the learned Judge indicated that
superior's direction was a germane consideration. We agree
with Mr. Jethmalani's submission that the superior's direction
~s no defence in respect of criminal acts, as every officer is E
bound to act according to law and is not entitled to
protection of a superior's direction as a defence in the
matter of commission of a crime. It is relevant to point out
that the other ·persons alleged against were not before the
·~ourt as accused persons. There was, therefore, no question of
'discharging them. An application had been made to the trial
F
-~urt and it is still open to the trial Judge to consider on
the matterial available if anyone has to be proceeded against
as a co-conspirator when th~ charge of conspiracy punishable
under s. 120-B, IPC is framed. It is true that under s. 319 of
the code de ~ trial would be necessary. It is in the
discretion of the trial Court to take a decision as to whether
G
keeping all aspects in view any other person should be brought
in as an accused to be tried for any of the offences involved
Jn the case. We do not express any definite vieW' in this
tegard and we consider it sufficient to indicate that this is
a matter in the discretion of the trial court.
H
698 .. . SUPREME COURT REPORTS · [1986] 2 s.c.a. _j
A
There is one other aspect which required to be dealt "~i
with. The learned trial Judge while. dealing with Chari, IV. r {

41, in paragraph 653 observed. r

"There appears to be no . doubt that Chari is a I
I
disgruntled subordinate. The manner in which he
B came out with the suggestion of substituting his
note, Exhibit 421, . the manner in which · Chari

l
volunteered his answers, would indicate that he had
harboured an animus against . Gavai. This RSpect of
Chari's evidence, therefore, cannot be said to be

l
. reliable evidence against Gavai." ~,_.
c
These observations ag~inst Chari appear to be totally f
unwarranted and the learned trial Judge should not have, on ,...
the facts before him, come to this conclusion and castigated ...,...f
the public officer in the manner referred to above. We are ,
somewhat surprised that the learned trial Judge did not even
D refer to the contents of the document, Ext. 421, with ·
reference to which considerable evidence had been led. In this
connection the evidence of PWs. 46, 47 and 49 should also have
~~~n considered by the learned trial Judge. These observations
must, t~erefore, be expunged. The learned trial Judge will~~:"';
consider the entire evidence in its proper perspective when he
E finally dtsposes of the case.

We have no intention to make anything final at this stage
except that the prosecution ·for the! offence under s. 384,
IPC 7 must fail. Any observation made by us in any part of our t
F
judgment is confined , to the question as , to whether charges ~·
should be framed and/or the order of discharge should be
upheld. Even where we have said that a charge is to be frame~ ; ·.~
r·.
the position . is that a prima facie case has been made out ~ ·
which is open to be rebutted by the 1st respondent. The
learned trial Judge is, therefore • free to come to his own '
conclusions on the basis of the evidence which is already on ·r·
G record and which may be led before him by the parties when the : ·
trial proceeds after the framing of the charges and he will j_. ·
decide whether the charges against the 1st respondent are made ·~~
out or not on the basis of the entire evidence. · ;

At the hearing Mr. Jethm.alani for the appellant had
H prayed that we should gtve a direction to the learned Ch.ief

~--~-----------~------~~--~--~~~
R.S. NAYAK v. A.R. ANTULA.Y (MISR..o\, J.) 699

'
;.;,;._·. Justice to nominate a Judge other than Mehta, J. to take up A
J
the further trial of the case and this prayer has been opposed
by Mr. Ra~ for the respondent. It is too well settled that
litigants can have no say in regard to the choice of the judge
. before whom their lis IIllSt be heard. We have no doubt that
Mehta, J. had dealt with the matter in a fair way and there
is no warrant on the facts of the case for shifting the case B
from him to another learned Judge for trial. Recording of the
' ."' ,
I ).,.'
prosecution evidence i s almost over and but for a few more
witnesses and some documents which might come, the prosecution
has alr~ady laid its entire cards before the Court and Mehta,
J. has, with reference to all this material, taken a view ...
.'~

_; which we have reversed. Though we have no doubt in our mind
that Mehta, J. acted fairly and impartially in disposing of c
the case in the'manner he did, it cannot be said that there is 1.~
no scope for apprehension in the appellant's mind that hls
complaint may not receive adequate and proper treatment at the
hands of . the same learned Judge who has already expressed
himself one way. In these circumstances, while reiterating our
opinion that we have no doubt that Mehta, J. acted fairly and D
i~artially and without. casting any reflection \Jhatsoever on
the leat>ned Judge, we would, following the well known dictum
~ that jus tice should not only be done but must also appear to
be done, request the learned Chief Justtce of the High Court
to nominate another learned Judge to take up the matter from
the stage at which Mehta, J. made the impugned order. We hope E
the learned Chief Justlce will take prompt steps to nominate a
learned Judge to t ake up the trial and once such nomination is
made, the learned trial Judge will proceed expeditiously to
dispose of the case finally.
F

M.L.A. Appeal allowed in part.

.
'
;:

.··· .