What was the case?

• On May, 3, 1991 the Central Bureau of Investigation (CBI), New Delhi, searched the premises of J.K. Jain at G-36 Saket, New Delhi to work out an information received while investigating RC Case No. 5(S)/91 SIU (B)/CBI/New Delhi.

• In course of the search they recovered, besides other articles and documents, two diaries, two small note books and two files containing details of receipts of various amounts from different sources recorded in abbreviated forms of ditties and initials and details of payments to various persons recorded in similar fashion.

• Preliminary investigation taken up by the CBI to decode and comprehend those entries revealed payments amounting to Rs. 65.47 crores, out of which 53.5 crores had been illegally transferred from abroad through hawala channels, during the years 1988 to 1991 to 115 persons including politicians, some of whom were members of either Houses of parliament during the relevant period, officials of government and Public Sector Undertakings, and friends of S.K. Jain, B. R. Jain, and N.K. Jain, who are three brothers carrying on different businesses.

• It further revealed that the Jain brothers and J. K. Jain, who is their employee, had acted as middlemen in the award of certain big projects in the power sector of the Government of India to different bidders; that they had official dealings with politicians and public servants whose names were recorded in the diaries and the files; and that some of them had accepted illegal gratification other than legal remuneration from Jains as a reward for giving them and the companies they own and manage various contracts.

CBI Registered Case

• On such revelation the CBI registered a case on march 4, 1995 under Sections 7 and 12 of the prevention of Corruption Act, 1988 and Section 56 read with Section 8(1) of the Foreign Exchange Regulation Act, 1973 against the Jains, some public servants and others being and on completion of investigation filed 34 charge-sheets (challans) in the Court of the Special Judge, New Delhi against various politicians, Government servants and jains.

• In one of the above charge- sheets (C.S. No. 4 dated 16.1.1996) Shri Lal Krishna Advani, who at the material time was a member of the parliament, and the jains figure as accused and the another, Shri V. C. Shukla, also a member of parliament, along with the Jains.

• The common allegations made in the above two charge- sheets were that during the years 1988 to 1991 jains entered into a criminal conspiracy among themselves, the object of which was to receive unaccounted money and to disburse the same to their companies, friends, close relatives and other persons including public servants and political leaders of India.

• In pursuance of the said conspiracy S.K. Jain lobbied with various public servants and Government organisations in the power and steel sectors of the Government of India to persuade them to award contracts to different foreign bidders with the motive of getting illegal kickbacks from them.

• During the aforesaid period the jain brothers received Rs. 59,12, 11, 685/-, major portion of which came from foreign countries through hawala channels as kickbacks from the foreign bidders of certain projects of power sector undertakings and the balance from within the country. An account of receipts and disbursements of the monies was maintained by J.K. Jain in the diaries and files recovered from his house and jain brothers authenticated the same.

The case against Advani

As against Shri Advani the specific allegation in the charge-sheet in which he and jains figure as accused) was that he received a sum of Rs. 25 lacs from jains during his tenure as a member of the parliament, (besides a sum of Rs. 35 lacs which was received by him while he was not a member of the parliament). In the other charge-sheet filed against Shri Shukla and Jains, it was alleged that during the period 1988 to 1991, while shri Shukla was a member of the parliament and for some time a Cabinet Minister of the Central Government he received Rs. 39 lacs (approximately) from Jains. According to CBI the materials collected during investigation clearly disclosed that jains were in the habit of making payments to influential public servants and political leaders of high status expecting official favours from them and the above payments were made to Shri Shukla and Shri Advani with that oblique motive. Thereby, the CBI averred, the above persons committed offences under Section 120B I.B.C. and Section 13(2) read with Section 13(1) (d), 7 & 12 of the prevention of Corruption Act, 1988.

Cases at Special Judge of CBI and High Court

Special judge of CBI formed charges against Advani, Shukla, and Jains. Against these charges, these people moved to High court under Section 482 CrPC, and, High Court quashed the charges against them. Against the order of High Court, CBI moved to Supreme Court.

What was in the diaries?

There were-

• the two spiral note books,
• two small spiral pads,
• and two files, each containing some loose sheets of papers.

Page 1 of the book begins with the heading “A/C given upto 31st January on 31.1.1998;” and then follows serially numbered entries of various figures multiplied by `some other figures on the left hand column and the product thereof on the next column for each month commencing from January, 1990 to April, 1991. The overleaf of the page contains similar entries for the period from April, 1988 to December, 1989 and it ends with the words “2.77′ we have to receive“.

In the subsequent pages the book records monthly receipts of monies/funds from inconspicuous persons/entities during the period commencing from the month of February, 1988 to April 1991 maintained on ‘2 columns’ basis. So far as the names of the payees are concerned the same have also been recorded in abbreviated form, alphabets or words.

The entries, however, do not give any indication of any sale, purchase or trading and show only receipts of money from a set of persons and entities on one side and payments to another set of persons and entities on the other, both reckoned and kept monthly.

As regards the actual amounts received and disbursed, the figures which have been mentioned briefly against the respective names are not suffixed with any symbol, volume or unit so as to specifically indicate whether they are in lakhs, thousands or any other denomination. It is noticed that in most of the entries the figures against transactions extend to 2 places after decimal which seem to suggest that the figures in money column may be in thousands, but then in some of the months, namely, 11/88, 6/89, 10/90, 2/91, 3/91, 4/91, figures extend to 5 places after decimal point in money column.

This gives an impression that the figures are in lakhs; and this impression gains ground from other transactions. The other book contains, inter alia, entries relating to cash and fund received and disbursed in the months of February, March and April 1991 recorded in similar fashion as in above-mentioned book; expenses incurred in the month of March 91; and ‘political expenses as on 26.4.91’ with names of a number of persons mentioned thereunder through their initials or surnames and various amounts shown against their respective names in only figures running upto 2 points after decimal.

The other entries in this book seem to be wholly unconnected to the entries earlier referred to. The two small spiral pads also contain some entries relating to similar receipt and disbursement on certain days and in certain months during the above period – all written in similar fashion. So far as the two files containing some loose sheets of paper are concerned, in some of these papers accounts of money received and disbursed in one particular month or a period covering a number of months are written.

The Analysis of the Supreme Court

The Supreme Court analysed the case as follows- Section 34 of the Act reads as under:- ” Entries in books of account when relevant – Entries in book of account, regularly kept in the course of business, are relevant whenever they refer to a matter into which the court has to inquire but such statements shall not alone be sufficient evidence to charge any person with liability.”

• From a plain reading of the Section it is manifest that to make an entry relevant thereunder it must be shown that it has been made in a book, that book is a book of account and that book of account has been regularly kept in the course of business.

  From the above Section it is also manifest that even if the above requirements are fulfilled and the entry becomes admissible as relevant evidence, still, the statement made therein shall not alone be sufficient evidence, to charge any person with liability.  

• To ascertain whether a book of account has been regularly kept the nature of occupation is an eminent factor for weighment. The test of regularity of keeping accounts by a shopkeeper who has daily transactions cannot be the same as that of a broker in real estates. Not only their systems of maintaining books of account will differ but also the yardstick of contemporaneity in making entries therein.

• We find that the book has been regularly and systematically maintained. Whether the system in which the book has been maintained guarantees its correctness or trustworthiness is a question of its probative value and not of its admissibility as a relevant fact under Section 34.

• The other three books, would not however come within the purview of the above Section, for, even though some of the monetary transactions entered therein appear to be related to those in the main book, they (the three books) cannot be said to be books of account regularly kept.

The court considered some cases of courts where it was held that books alone cannot be sufficient to charge a person. The court said,

• A conspectus of the above decisions makes it evident that even correct and authentic entries in books of account cannot without independent evidence of their trustworthiness, fix a liability upon a person. Keeping in view the above principles, even if we proceed on the assumption that the entries made in book are correct to support an inference about the formers’ correctness still those entries would not be sufficient to charge Shri Advani and Shri Shukla with the accusations levelled against them for there is not an iota of independent evidence in support thereof.

• So far as Shri Advani is concerned Section 34 would not come in aid of the prosecution for another reason also. According to the prosecution case itself his name finds place only in one of the loose sheets (sheet No. 8) and not in book. Resultantly, in view of our earlier discussion, section 34 cannot at all be pressed into service against him.

Reference

Central Bureau of Investigation v. V C Shukla (1998)