A) ABSTRACT / HEADNOTE

This case concerns the interpretation and application of Section 5(3) of the Prevention of Corruption Act, 1947, particularly the statutory presumption arising from possession of pecuniary resources disproportionate to a public servant’s known sources of income. The appellant, C.S.D. Swamy, serving as Director of Fertilizers in the Ministry of Agriculture, was prosecuted under Sections 5(1)(a) and 5(1)(d) of the Act for alleged habitual acceptance of bribes and receipt of valuable presents by abusing his official position. While specific instances of bribery under Section 5(1)(a) could not be proved due to unreliable witness testimony, the prosecution established that during 1947–48 the appellant had deposits exceeding ₹91,000 in his bank accounts, far exceeding his known income from salary. The High Court invoked Section 5(3), placing the burden on the accused to “satisfactorily account” for the disproportionate wealth. His explanation, resting solely on unsworn statements and lacking corroborative evidence, was found inadequate. The Supreme Court affirmed that Section 5(3) does not create a new offence but alters the evidentiary burden, enabling conviction under Section 5(1)(d) solely on the presumption if unrebutted. The Court rejected the contention that failure to prove bribery charges under Section 5(1)(a) nullifies the charge under Section 5(1)(d). The appeal was dismissed, upholding the conviction and six months’ rigorous imprisonment.

Keywords: Prevention of Corruption Act 1947, Section 5(3) presumption, disproportionate assets, burden of proof, criminal misconduct, satisfactory account, evidentiary burden, public servant corruption.

B) CASE DETAILS

i) Judgement Cause Title:
C.S.D. Swamy v. The State

ii) Case Number:
Criminal Appeal No. 177 of 1957

iii) Judgement Date:
21 May 1959

iv) Court:
Supreme Court of India

v) Quorum:
B.P. Sinha, P.B. Gajendragadkar, K.N. Wanchoo, JJ.

vi) Author:
Justice B.P. Sinha

vii) Citation:
1960 (1) SCR 461

viii) Legal Provisions Involved:

• Section 5(1)(a), 5(1)(d), 5(3) – Prevention of Corruption Act, 1947

• Section 106 – Indian Evidence Act, 1872

• Section 161 – Indian Penal Code, 1860

• Section 342 – Code of Criminal Procedure, 1898 (as applicable at the time)

• Section 114 – Indian Evidence Act, Illustration (a)

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

x) Case Related to Law Subjects:
Criminal Law, Anti-Corruption Law, Evidence Law

C) INTRODUCTION AND BACKGROUND OF JUDGEMENT

The appellant served as Director of Fertilizers during a period of acute fertilizer scarcity post-World War II. The Government’s fertilizer imports were tightly controlled, creating opportunities for corruption. Allegations surfaced of bribery and abuse of position for personal gain in dealings with importers, particularly concerning ammonium sulphate supplies. After departmental and quasi-judicial inquiries—including one by Justice Rajadhyaksha—criminal proceedings commenced. The Special Judge convicted the appellant under Section 5(1)(d), applying the presumption under Section 5(3). The High Court affirmed, prompting the appeal to the Supreme Court.

D) FACTS OF THE CASE

The prosecution alleged that the appellant, in conspiracy with others, habitually received bribes and presents in connection with fertilizer import and distribution. A key witness, Patel, claimed to have paid ₹10,000 as a bribe. However, the courts found the bribery evidence unreliable, especially due to uncorroborated accomplice testimony. While specific instances of illegal gratification failed, bank records revealed large deposits: approximately ₹73,000 in cash and ₹18,000 by cheques over two years, vastly disproportionate to the appellant’s official income. The appellant’s explanations included past savings, gratuity, provident fund, sale of personal assets, loans, and gifts from family, but he produced no documentary or witness evidence. Both trial and appellate courts held that the statutory presumption under Section 5(3) applied.

E) LEGAL ISSUES RAISED

i) Whether failure to prove specific bribery under Section 5(1)(a) negates a conviction under Section 5(1)(d).
ii) Scope and effect of the statutory presumption under Section 5(3) of the Prevention of Corruption Act, 1947.
iii) Meaning of “known sources of income” and the burden of proof in such cases.
iv) Whether an unsworn statement without corroboration can rebut the presumption under Section 5(3).

F) PETITIONER / APPELLANT’S ARGUMENTS

i) The counsel argued that the prosecution failed to prove bribery allegations; hence, the presumption under Section 5(3) stood rebutted.
ii) The absence of evidence proving his statements false meant the benefit of doubt should be given.
iii) “Known sources of income” should include income sources within his knowledge; the prosecution failed to prove this.
iv) The bank deposits could be explained through legitimate means such as savings, allowances, gratuity, provident fund, loans, and asset sales.

G) RESPONDENT’S ARGUMENTS

i) The Solicitor-General contended that Section 5(3) merely creates an evidentiary rule, not a new offence, shifting the burden to the accused once disproportionate assets are shown.
ii) “Known sources of income” refers to sources discovered by the prosecution upon investigation, not hidden sources within the accused’s special knowledge.
iii) The appellant’s explanations lacked evidentiary backing; mere assertions do not amount to “satisfactory accounting.”
iv) Failure to prove bribery under Section 5(1)(a) does not affect the independent basis for conviction under Section 5(1)(d).

H) RELATED LEGAL PROVISIONS

i) Prevention of Corruption Act, 1947 – Sections 5(1)(a), 5(1)(d), 5(3): Define criminal misconduct, disproportionate assets, and the evidentiary presumption.
ii) Indian Evidence Act, 1872 – Sections 106 (special knowledge), 114 Illustration (a) (possession of stolen goods inference).
iii) Indian Penal Code, 1860 – Section 161 (illegal gratification by public servant).
iv) Code of Criminal Procedure, 1898 – Section 342 (accused’s statement).

I) JUDGEMENT

a. Ratio Decidendi

The Supreme Court held that once the prosecution proves possession of pecuniary resources disproportionate to the known sources of income, the presumption under Section 5(3) arises mandatorily, shifting the onus to the accused to satisfactorily account for the same. “Known sources” means those known to the prosecution after investigation. The appellant’s bare statements without corroboration failed to discharge this burden. Conviction under Section 5(1)(d) can stand even if charges under Section 5(1)(a) fail.

b. Obiter Dicta

The Court observed that “satisfactorily account” implies an explanation that is credible and supported by evidence, not merely plausible. Section 5(3) represents a statutory deviation from the general principle that the burden of proof rests solely on the prosecution.

c. Guidelines

• “Known sources of income” refers to those known to the prosecution through investigation.

• Section 5(3) requires an evidentiary burden on the accused to rebut the presumption by credible evidence.

• Conviction under Section 5(1)(d) can rest solely on the statutory presumption if unrebutted.

• Mere assertions or uncorroborated statements are insufficient to discharge the burden.

J) CONCLUSION & COMMENTS

The judgment clarifies the operation of Section 5(3) in disproportionate assets cases, emphasizing the shift in evidentiary burden and the mandatory nature of the presumption once the prosecution meets its initial threshold. It affirms that corruption cases can succeed even without direct proof of specific illegal gratification if unexplained wealth is established. This strengthens anti-corruption enforcement but also underscores the need for accused persons to maintain clear records and evidence of legitimate income to rebut such presumptions.

K) REFERENCES

1. Rex v. Carrbriant, (1943) 1 KB 607.

2. Otto George Gfeller v. The King, AIR 1943 PC 211.

3. Hate Singh Bhagat Singh v. State of Madhya Bharat, AIR 1953 SC 468.

4. Regina v. Dunbar, (1958) 1 QB 1.

5. Prevention of Corruption Act, 1947 – Sections 5(1)(a), 5(1)(d), 5(3).

6. Indian Evidence Act, 1872 – Sections 106, 114(a).

7. Indian Penal Code, 1860 – Section 161.

8. Code of Criminal Procedure, 1898 – Section 342.