Mere recovery of tainted currency cannot sustain conviction without proof of demand and acceptance.

A tempo owned by Sashi Kumar, the complainant’s brother, was seized in connection with an accident case investigated by the appellant, an Assistant Sub-Inspector.

The prosecution alleged that the appellant demanded ₹5,000 from the complainant for release of the tempo and submission of a report to the court.

During verification, the appellant allegedly accepted ₹1,500 and agreed to receive the balance of ₹3,000 during a trap operation.

On 3 December 2009, the vigilance team treated six ₹500 currency notes with phenolphthalein powder and allegedly recovered them from the appellant at a tea shop.

He was prosecuted and convicted under Sections 7 and 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act, 1988, and sentenced to two years’ rigorous imprisonment with fines on each count.

Whether the prosecution proved beyond reasonable doubt that the appellant demanded and voluntarily accepted illegal gratification from the complainant?

Whether the prosecution satisfactorily proved the alleged recovery of the tainted currency from the appellant?

Whether the statutory presumption under Section 20 of the Prevention of Corruption Act could be invoked in the absence of reliable proof of the foundational facts of demand and acceptance?

Whether the prosecution established that any official work relating to release of the tempo was pending before the appellant?

The Court applied Sections 7 and 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act, 1988, which require proof of the relevant illegal gratification transaction and, in the case of Section 13(1)(d), the requisite obtainment or abuse of official position.

It held that proof of demand and acceptance of illegal gratification is the foundational requirement for conviction and that mere recovery of tainted currency or a positive phenolphthalein test cannot, by itself, establish guilt.

Section 20 creates a statutory presumption only after the prosecution proves the foundational facts of demand and acceptance; it cannot be used to fill gaps in the prosecution case.

Relying on Rafikmiya Ahmedmiya Malek v. State of Gujarat, 2026 SCC OnLine SC 1662, the Court reiterated that recovery without proof of initial demand is insufficient.

It also considered The State of Karnataka v. Chandrasha, 2024 SCC OnLine SC 3469, and the principles from Neeraj Dutta v. State (Govt. of NCT of Delhi), recognising that demand and acceptance may be proved by direct or circumstantial evidence, but must first be established as facts in issue before the Section 20 presumption arises.

The Court found that the prosecution failed to establish the official work allegedly connected with the demand.

The complainant was not the tempo’s owner, the registered owner and alleged person directly concerned with its release was not examined, the court order was neither properly proved nor verified, and the investigating officer did not establish when it was received at the police station.

The evidence regarding demand and acceptance was also doubtful: the verifier did not establish the pending official work, P.W.7 did not witness either the demand or payment, the post-trap memorandum did not record payment pursuant to a demand, and the tea-shop owner was not examined despite being a material witness.

The alleged recovery was further undermined by the material discrepancy between the prosecution’s assertion that the notes were recovered from the appellant’s shirt pocket and the production of a full pant as the material exhibit; the envelope was also unsealed and bore a different case number.

Although the chemical test was positive, it could only corroborate an otherwise established transaction and could not independently prove demand or voluntary acceptance.

Accordingly, the Court held that the foundational facts necessary to invoke Section 20 had not been proved beyond reasonable doubt.

The conviction and sentence dated 1 June 2017 were therefore set aside, and the appeal was allowed.

The appellant was acquitted of all charges, discharged from his bail bonds, and directed to receive a refund of any fine already deposited in accordance with law.