Mere Recovery Without Proof Of Demand Invalidates Corruption Charges: Karnataka HC

In a decisive check on mechanical anti-corruption prosecutions, the Karnataka High Court has acquitted three individuals, ruling that the recovery of marked currency alone cannot sustain a conviction under corruption law without independent, admissible proof of demand and voluntary acceptance.

A single-judge bench comprising Justice G Basavaraj delivered the ruling while setting aside a Special Court judgment that had convicted a Village Accountant under the corruption law and two private citizens for attempting to cause the disappearance of evidence.

The High Court held that the prosecution failed to discharge its primary burden of establishing the mandatory foundational facts of illegal demand and voluntary acceptance. Evaluating the evidence on record, the Court observed that the primary witness testimonies were uncorroborated, and the voice recording relied upon by the Lokayukta Police lacked the required compliance under Section 65B of the Indian Evidence Act. It noted that the sanctioning authority acted mechanically by endorsing police records without independently assessing crucial facts, including the non-recovery of money directly from the primary public servant.

The Court, in its reasoning, observed: "In the facts and circumstances of the present case, this Court is of the considered view that the prosecution has not discharged that initial burden to the standard required in a criminal trial... The evidence of recovery, in the facts of the present case, cannot be treated as a substitute for proof of demand and voluntary acceptance. The prosecution having failed to establish the essential ingredients of the offences beyond reasonable doubt, the appellants are entitled to the benefit of doubt."

Addressing the charge of destroying evidence, the Court clarified that passing currency between individuals does not automatically attract criminal liability under Section 201 read with Section 34 of the Indian Penal Code without proving prior knowledge and explicit criminal intent.

Background

The case originated from a complaint filed by an agriculturist who applied for a Small Farmer Certificate at Nemmadi Kendra to access the Ganga Kalyana Scheme. The application was sent to Accused No.1, a Village Accountant, for verification. The complainant alleged that Accused No.1 demanded a bribe of Rs 10,000, which was later negotiated down to Rs 4,000.

Upon receiving the complaint, Lokayukta Police provided a voice recorder to capture the verification conversation and organized a trap on June 11, 2010. During the trap at Accused No.1's residence, the complainant allegedly handed over phenolphthalein-treated currency. The prosecution alleged that Accused No.1 passed the money to Accused No.2, who handed it to Accused No.3, from whom it was ultimately recovered. Following investigation and sanction, a charge sheet was filed charging Accused No.1 under Sections 7 and 13(1)(d) read with 13(2) of the Prevention of Corruption Act, 1988 and Section 201 of the Indian Penal Code, while Accused Nos.2 and 3 were charged under Section 201 read with Section 34 of the Indian Penal Code.

The Trial Court convicted all three accused in April 2018. Aggrieved, Accused No.1 filed Criminal Appeal No. 894 of 2018, and Accused Nos. 2 and 3 filed Criminal Appeal No. 866 of 2018. Appellants argued that sanction was granted mechanically, electronic voice evidence was inadmissible for non-compliance with Section 65B of the Indian Evidence Act, and no direct money was recovered from Accused No.1. They relied on precedent cases including STATE BY POLICE INSPECTOR, KARNATAKA LOKAYUKTHA, BANGALORE v. M. NANJUNDA, SURAJ MAL v. STATE (DELHI ADMINISTRATION) ( "(1979)4 SCC 725": 1979 CaseBase(SC) 354), C.M. GIRISH BABU v. CBI, STATE OF KERALA v. C.P. RAO ( "(2011) 6 SCC 450": 2011 CaseBase(SC) 998), MUKUT BIHARI v. STATE OF RAJASTHAN ( "(2012) 11 SCC 642": 2012 CaseBase(SC) 272), MOHD. IQBAL AHMED v. STATE OF ANDHRA PRADESH ( "(1979)4 SCC 172": 1979 CaseBase(SC) 302), CENTRAL BUREAU OF INVESTIGATION v. PRAMILA VIRENDRA KUMAR AGARWAL & ANR., and CBI v. ASHOK KUMAR AGGARWAL to argue that recovery alone without proved demand cannot sustain conviction.

Accepting the arguments, the High Court allowed both appeals, set aside the Special Court's conviction and sentence orders, and acquitted all three appellants of all charges.

Case Details:
Case No.: Criminal Appeal No. 894 of 2018 c/w Criminal Appeal No. 866 of 2018
Case Title: G K Nagaraj v. The State of Karnataka c/w Hanumanthappa & Anr. v. The State by the Police Inspector
Appearances:
For the Petitioner(s): Sri. B. M. Siddappa, Adv. (for Crl.A. 894/2018), Sri. S. V. Desai, Adv. (for Crl.A. 866/2018)
For the Respondent(s): Sri. B. S. Prasad, Standing Counsel

Source: 2026 CaseBase(KAR) 12804