Kedari Lal v. State of M.P.
Background
A government engineer in Madhya Pradesh was prosecuted under Section 13(1)(e) of the Prevention of Corruption Act for allegedly possessing assets disproportionate to his known income, with the gap calculated at about Rs. 4,08,077. He claimed much of that sum came from wedding gifts, a share in family partition, a bequest under his mother's will, and loans from relatives, all of which, he said, had been duly intimated to his department at the time and were also reflected in his Income Tax Returns. Both the Trial Court and the Madhya Pradesh High Court convicted him, holding that mere disclosure in tax returns was not enough unless the departmental conduct rules on accepting gifts/loans were strictly complied with.
Decision Breakdown
The Supreme Court held that "known sources of income" under Section 13(1)(e) requires only that income be lawfully received and properly intimated under the applicable rules, and found that every item the appellant relied on (gifts, partition share, inheritance, loans from relatives) was proved through witness testimony, contemporaneous departmental letters, and his Income Tax Returns filed even before the FIR was registered. Deducting these legitimately explained amounts left an unexplained gap of only Rs. 37,605, under 10% of his income over the relevant period, which, following its own precedents, the Court treated as not amounting to a punishable disproportion. It set aside the conviction, acquitted the appellant, and discharged his bail bonds.
Lesson Learnt
A public servant will not be convicted for "disproportionate assets" merely because large sums passed through their hands, if those receipts (gifts, inheritance, family loans) are genuine, properly disclosed to the employer at the time, and reflected in tax filings, and courts have historically treated an unexplained shortfall of under roughly 10% of income as too insignificant to sustain a corruption conviction.