AMAN BHATIA versus STATE (GNCT OF DELHI) (01/05/2025) — Supreme Court headnote

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Summary

A licensed stamp vendor was convicted under Sections 7 and 13(1)(d) read with 13(2) of the Prevention of Corruption Act, 1988 for allegedly demanding Rs 12 for a Rs 10 stamp paper. The Supreme Court held that licensed stamp vendors are public servants under Section 2(c)(i) of the PC Act, since the discount they receive under the Delhi Province Stamp Rules, 1934 is remuneration by the Government for performing a public duty, but set aside the conviction because the demand and acceptance of illegal gratification were not proved beyond reasonable doubt.

Issues

Whether a licensed stamp vendor falls within the definition of public servant in Section 2(c)(i) of the Prevention of Corruption Act, 1988.
If so, whether the appellant's conviction under Sections 7 and 13(1)(d) read with Section 13(2) of the PC Act is sustainable on the evidence.

Provisions considered

Section 2(c)(i) read with Section 2(b), Prevention of Corruption Act, 1988Section 2(c)(i) covers any person in the service or pay of the Government or remunerated by the Government by fees or commission for the performance of any public duty, and Section 2(b) defines public duty as one in which the State, the public or the community has an interest. The Court read the three limbs as disjunctive, held that the heart of the third limb is remuneration by the Government for performance of a public duty while fees or commission merely indicate the mode, and construed the definition purposively and widely in light of the statute's object. (¶¶ 7, 11, 15, 16, 17, 18, 37, 39, 41, 44, 45, 48, 67.1, 67.2, 67.3, 67.4)
Rules 1(f), 1(g), 22, 26, 28(vii), 28(xiii), 28(xx) and 34, Delhi Province Stamp Rules, 1934The Rules define licensed agents and vendors, provide for licensing, require vendors to sell stamps on immediate payment without demanding any consideration exceeding the stamp's value, and provide (Rule 28(xx) and Rule 34) that the vendor's remuneration is a discount allowed under orders of the local Government. The Court held that the discount between procurement cost and face value is the vendor's remuneration and the only form of commission contemplated, and that it is contingent on the Government's orders under the Rules. (¶¶ 19, 20, 21, 22, 23, 24, 25, 26, 27, 67.4)
Sections 3, 5, 6, 13, 14, 15, 17, 33, 35, 40, 42 and 62, Indian Stamp Act, 1899Surveyed to show that the Act is a fiscal enactment whose provisions ensure that instruments are duly stamped and revenue secured; the Government remunerates licensed stamp vendors because they facilitate the availability of stamps on its behalf, which is an important public duty essential to revenue collection. (¶¶ 28, 29, 30, 31, 32)
Section 194H, Income Tax Act, 1961The appellant relied on Ahmedabad Stamp Vendors Association, which held that the vendor's discount is not commission under Section 194H because stamps are sold to vendors on a principal-to-principal basis. The Court held that commission in Section 194H is not analogous to commission in Section 2(c)(i) of the PC Act, which turns on remuneration for public duty rather than on the nature of the relationship. (¶¶ 33, 34, 35, 37, 40)
Sections 7 and 13(1)(d) read with Section 13(2), Prevention of Corruption Act, 1988Demand of illegal gratification is the sine qua non of both offences; mere recovery of tainted money without proof of demand is insufficient (Neeraj Dutta; P. Satyanarayana Murthy). Where there is no demand, acceptance of an offer can constitute an offence under Section 7 only on clear evidence that the public servant knowingly and voluntarily accepted the offer. On the evidence the demand was not proved and the conviction was set aside. (¶¶ 50, 51, 52, 53, 54, 55, 56, 66, 67.5)
Section 20, Prevention of Corruption Act, 1988The presumption arises only for offences under Sections 7 and 11, not Section 13(1)(d), and is contingent on proof that the gratification was accepted, which can follow only when demand is proved; the totality of the evidence, including defence suggestions, must be considered. As demand and acceptance were not proved, no presumption arose. (¶¶ 63, 64, 65, 66)

Held

The PC Act replaced the 1947 Act with a much wider definition of public servant whose emphasis, as the notes on clauses show, is on public duty rather than on the employing or remunerating authority. The definition deserves a wide and purposive construction that advances the object of curbing corruption; where two constructions are possible the one that eradicates corruption is to be preferred (Ram Singh; Mansukhbhai Kanjibhai Shah). (¶¶ 8, 9, 10, 11, 12, 13, 14, 67.1)
Section 2(c)(i) has three independent, disjunctive parts: a person in the service of the Government, a person in the pay of the Government, and a person remunerated by the Government by fees or commission for performing a public duty. For a stamp vendor the questions are whether he is remunerated by the Government through fees or commission and whether that remuneration is for the performance of a public duty. (¶¶ 16, 17, 18, 39)
Under the 1934 Rules a licensed vendor procures stamps from the treasury at a discount and sells at face value; the difference is his remuneration, the only form of commission the Rules contemplate, and it exists by virtue of his licence and the local Government's orders under Rule 28(xx). Without the discount there would be no incentive to vend stamps. The vendor is therefore remunerated by the Government. (¶¶ 24, 25, 26, 27, 48, 67.4)
The Stamp Act is a fiscal statute aimed at securing revenue by ensuring instruments are duly stamped; the Government remunerates stamp vendors because they facilitate access to stamps on its behalf, a highly important public duty essential for revenue collection. (¶¶ 28, 32)
The term commission in Section 194H of the Income Tax Act is not stricto sensu the same as in Section 2(c)(i) of the PC Act. Even accepting that stamps are sold to vendors on a principal-to-principal basis, the definition of public servant turns on the expressions remunerated by the Government and for the performance of any public duty, not on the mode of remuneration or the strictness of the relationship; the terms fees or commission are indicative, not determinative. Ahmedabad Stamp Vendors Association does not govern the PC Act question. (¶¶ 33, 34, 36, 37, 38, 40, 41, 42, 43)
The nature of the duty, not the manner of appointment or mode of remuneration, determines whether a person is a public servant; a person remunerated by the Government for a public duty, or holding an office by which he is required to perform a public duty, is a public servant. Stamp vendors across the country, performing an important public duty and receiving remuneration from the Government for it, are public servants within Section 2(c)(i). (¶¶ 44, 45, 46, 47, 48, 67.2, 67.3)
Demand of illegal gratification is the sine qua non of offences under Sections 7 and 13(1)(d); mere recovery of tainted currency without proof of demand does not establish the offence or that the public servant abused his position (Neeraj Dutta, five-Judge Bench; P. Satyanarayana Murthy). This was not a case of an offer by the bribe-giver accepted without demand; such acceptance requires clear and cogent evidence that the public servant was aware of the offer and accepted it knowing it to be illegal gratification. (¶¶ 50, 51, 52, 53, 54, 55)
The allegation of demand did not emerge clearly, let alone beyond reasonable doubt: the panch witness, positioned next to the complainant at an otherwise empty counter, could not recall any demand of Rs 12 and the Raid Officer did not hear the conversation; the prosecution examined no other witness on demand; there was an unexplained delay of about three hours between the seizure (4:15 PM) and the Investigating Officer being called (7:15 PM); and since both the Rs 10 note the appellant was lawfully entitled to receive and the Rs 2 note were smeared with phenolphthalein, the pink hand-wash could not establish acceptance of illegal gratification. (¶¶ 56, 57, 58, 59, 60, 61, 62, 67.5)
The presumption under Section 20 is drawn only for offences under Sections 7 and 11, not Section 13(1)(d), and arises only once acceptance of gratification as motive or reward is proved, which in turn requires proof of demand; the totality of the evidence must support the sole conclusion that the public servant accepted the amount. As demand and acceptance were not established, no presumption arose and the conviction could not be upheld. (¶¶ 63, 64, 65, 66)

Result

Appeal allowed; conviction and sentence under Sections 7 and 13(1)(d) read with Section 13(2) of the Prevention of Corruption Act, 1988, as recorded by the Special Judge and affirmed by the High Court, set aside; bail bonds discharged; pending applications disposed of.