Without proof of demand and acceptance, recovery of tainted currency cannot sustain conviction.

The complainant, an auto-rickshaw owner, alleged that Accused No. 1, an Assistant Sub-Inspector/Jamadar investigating an accident case involving his rickshaw, demanded ₹1,500 as illegal gratification for avoiding his arrest and seizure of the rickshaw.

The amount was allegedly negotiated to ₹900, of which ₹800 was paid, with the balance ₹100 to be paid later.

On the complainant approaching the Anti-Corruption Bureau, a trap was arranged on 13 January 1999.

The prosecution alleged that Accused No. 1 demanded the balance amount and directed its payment to Accused No. 2, from whose possession anthracene-smeared currency notes were recovered.

The trial court convicted both appellants under Sections 7, 12, 13(1)(d) read with Section 13(2) of the Prevention of Corruption Act, 1988, and sentenced them to two years’ rigorous imprisonment and a fine of ₹1,000 each.

In appeal, the appellants challenged the proof of demand, acceptance, and the reliability of the complainant, shadow witness, and trap-laying officer.

Whether the prosecution proved beyond reasonable doubt that the appellants demanded illegal gratification from the complainant.

Whether the prosecution proved the subsequent voluntary acceptance or obtainment of the alleged bribe by either appellant.

Whether the presumption under Section 20 of the Prevention of Corruption Act could be invoked merely on the basis of recovery of tainted currency notes, in the absence of reliable proof of demand and acceptance.

Whether the trial court’s conviction and sentence warranted appellate interference in view of the contradictions in the prosecution evidence.

The Court applied Sections 7, 12, 13(1)(d), and 13(2) of the Prevention of Corruption Act, 1988, holding that proof of demand and acceptance or obtainment of illegal gratification is essential for conviction under the relevant provisions.

Relying on the Constitution Bench decision in Neeraj Dutta v. State (Government of NCT of Delhi), (2023) 4 SCC 731, the Court held that demand and acceptance must first be proved as facts in issue, directly or circumstantially; mere receipt or recovery of money is insufficient, and the presumption under Section 20 arises only after the foundational facts are established.

The Court further applied the presumption of innocence and the rule that the prosecution must prove guilt beyond reasonable doubt, as stated in Rabindra Kumar Dey v. State of Orissa, AIR 1977 SC 170.

Where two reasonably possible views exist, the view favourable to the accused must be adopted, following State of U.P. v. Krishna Gopal, (1988) 4 SCC 302, and Mallappa v. State of Karnataka, (2024) 3 SCC 544.

The Court found that the prosecution’s three principal witnesses gave materially inconsistent accounts regarding the trap.

The complainant stated that the person who had allegedly demanded and accepted ₹800 earlier was not present during the trap and that he himself placed the tainted notes in the pocket of another police officer; he also admitted that Accused No. 1 neither demanded nor received money from him.

The shadow witness stated that Accused No. 1 refused the money and instructed the complainant to hand it to Accused No. 2, but this detail was absent from the complainant’s testimony.

The panchnama and the trap-laying officer supported a version materially different from that of the complainant and shadow witness, particularly concerning the alleged demand by Accused No. 1.

Consequently, the Court held that demand and voluntary acceptance were not proved beyond reasonable doubt.

Since the foundational facts were unproved, recovery of the tainted notes could not trigger the Section 20 presumption or independently sustain the conviction.

The appeal was allowed; the trial court’s judgment of conviction and sentence dated 27 May 2005 in Special (ACB) Case No. 6 of 2002 was quashed and set aside, and the appellants were acquitted of all charges.

Their bail bonds were cancelled, and any fine paid was directed to be refunded.