A) Abstract / Headnote

The Supreme Court examined the validity of the criminal charges under Section 109 IPC read with Sections 13(1)(e) and 13(2) of the Prevention of Corruption Act, 1988, and related issues concerning disproportionate assets. The accused, R.C. Sabharwal (father) and Puneet Sabharwal (son), challenged the proceedings based on their exoneration in income tax-related adjudications. The Court underscored that findings under the Income Tax Act, 1961, were not conclusive evidence in a corruption trial. The appeal to quash charges was dismissed, directing an expeditious trial.

Keywords: Disproportionate assets, Known sources of income, Income tax exoneration, Criminal prosecution, Framing of charge.

B) Case Details

i) Judgement Cause Title:
Puneet Sabharwal v. CBI

ii) Case Number:
Criminal Appeal No. 1682 of 2024

iii) Judgement Date:
19 March 2024

iv) Court:
Supreme Court of India

v) Quorum:
Justice Vikram Nath and Justice K.V. Viswanathan

vi) Author:
Justice K.V. Viswanathan

vii) Citation:
[2024] 3 S.C.R. 679

viii) Legal Provisions Involved:

1. Sections 13(1)(e) and 13(2), Prevention of Corruption Act, 1988
2. Section 109, Indian Penal Code, 1860
3. Income Tax Act, 1961

ix) Judgments Overruled by the Case (if any):
None specified.

x) Case is Related to which Law Subjects:
Criminal Law, Anti-Corruption Law, Income Tax Law.

C) Introduction and Background of Judgement

The appellants contested criminal charges related to disproportionate assets amassed during 1968–1995. The prosecution alleged that R.C. Sabharwal, an NDMC officer, acquired disproportionate assets totaling Rs. 2.05 crore. Puneet Sabharwal was accused of abetting this crime by participating in financial transactions and facilitating acquisitions under benami identities, including trusts and entities where he was the sole beneficiary.

The appellants sought to quash these charges, relying on income tax tribunal orders exonerating them of financial improprieties.

D) Facts of the Case

1. Role of the Accused:

   • R.C. Sabharwal served as Additional Chief Architect at NDMC. He allegedly misused his position to amass substantial assets disproportionate to his known income.
   • Puneet Sabharwal, his son, allegedly aided in the crime by participating in financial activities linked to benami trusts and entities.

2. Income Discrepancy:

   • Combined family income was Rs. 1.23 crore during the period, but assets worth Rs. 3.10 crore were found. Disproportionate assets of Rs. 2.05 crore remained unexplained.

3. Trust Involvement:

   • Properties were acquired in the name of Morni Devi Brij Lal Trust and similar entities. Puneet Sabharwal was alleged to be the trust’s sole beneficiary.

4. Exoneration in Income Tax Tribunal:

   • The Income Tax Appellate Tribunal ruled that certain income assessments were unjustified, exonerating the accused from tax liability.

5. Prosecution Charges:

   • Charges under Sections 13(1)(e) and 13(2) of the Prevention of Corruption Act and Section 109 IPC were framed against the appellants.

E) Legal Issues Raised

i) Whether income tax adjudications exonerating the accused can lead to quashing of criminal proceedings under the Prevention of Corruption Act.
ii) Whether Puneet Sabharwal’s minority during a portion of the relevant period impacts the charges against him.
iii) Applicability of findings in income tax proceedings to a criminal trial.

F) Petitioner / Appellant’s Arguments

1. Reliance on Income Tax Orders:
   The Income Tax Appellate Tribunal exonerated the appellants, finding no disproportionate assets. It ruled that the trust was not benami and the income belonged to the entities, not the appellants.

2. Minority of Puneet Sabharwal:
   For a significant part of the period, Puneet Sabharwal was a minor, making conspiracy allegations against him baseless.

3. No Probative Evidence:
   The charges rely solely on suspicion without material evidence to establish criminal intent or disproportionate assets conclusively.

4. Judicial Precedents:
   Relying on cases like Radheyshyam Kejriwal v. State of West Bengal and J. Sekar v. Directorate of Enforcement, the appellants argued that exoneration in civil proceedings bars criminal prosecution on identical facts.

G) Respondent’s Arguments

1. Scope of Criminal Trial:
   The income tax findings do not conclusively establish innocence under the Prevention of Corruption Act. Criminal prosecution investigates the lawfulness of the income’s source, which income tax proceedings do not determine.

2. Distinct Jurisdictions:
   The CBI and income tax authorities have different jurisdictions. Findings under one cannot nullify criminal charges under another.

3. Minority Argument Refuted:
   Puneet Sabharwal’s majority during the last seven years of the period justifies his inclusion in the charges.

4. Judicial Precedents:
   Cited State of Karnataka v. Selvi J. Jayalalitha, highlighting that income tax orders do not certify the legality of income sources in corruption cases.

H) Judgement

a. Ratio Decidendi:
The Court ruled that income tax exoneration is not conclusive proof for quashing corruption charges. Findings under different statutes have distinct scopes, and the criminal trial must independently adjudicate the allegations.

b. Obiter Dicta:
Income tax adjudications, while admissible, cannot be treated as conclusive proof in criminal proceedings under the Prevention of Corruption Act.

c. Guidelines:

• The trial court must evaluate income tax findings alongside other evidence.
• Strong suspicion suffices to frame charges; detailed scrutiny occurs at trial.

I) Conclusion & Comments

The Supreme Court reiterated the independent nature of criminal and civil proceedings. The reliance on Selvi J. Jayalalitha’s case clarified that income tax orders are not determinative in corruption cases. The dismissal highlights the necessity of completing trials, even in protracted litigation, to ensure justice.

J) References

a. Important Cases Referred:

1. State of Karnataka v. Selvi J. Jayalalitha, (2017) 6 SCC 263
2. Radheyshyam Kejriwal v. State of West Bengal, (2011) 3 SCC 581
3. Onkar Nath Mishra v. State (NCT of Delhi), (2008) 2 SCC 561

b. Important Statutes Referred:

1. Prevention of Corruption Act, 1988
2. Indian Penal Code, 1860
3. Income Tax Act, 1961