Disproportionate Assets: A Loophole exploited by Law & Criminal alike

The Global Need

General Assembly resolution 58/4 of 31 October 2003 was adopted by the United Nations in response to the growing epidemic of ‘corruption’ throughout the global arena. The resultant convention or the United Nations Convention against Corruption (the “Convention”) reflects the determination displayed by the State Parties resolved to eradicate this plague from its roots.

‘The States Parties to this Convention, Concerned about the seriousness of problems and threats posed by corruption to the stability and security of societies, undermining the institutions and values of democracy, ethical values and justice and jeopardizing sustainable development and the rule of law,’

The above belief of the 187 State Parties to this Convention is proof of the fact of how grave a problem corruption has become and the same cannot be emphasized enough. Further proof can only be found in the very existence of this document which indicates the issue was no more confined to the demarcations of the States but is, in fact, a transnational issue.

The Fight on the Domestic Front

Given the above scenario, it comes as no surprise to even a cab driver on the streets of Delhi that India is not immune to this plague but is very much suffering from it. According to the Corruption Perceptions Index 2019, India holds the 80^th rank out of a total of 198 countries who were part of the study.

It may seem that India is still part of the better half, but a closer examination of the study, reveals that India only got an alarmingly low CPI score of 41 out of 100. Rather than a global epidemic, corruption is a more personal issue for each and every citizen of the country who must engage with the public sector in a manner that is beneficial to themselves, the same only being achieved by bribery and other dishonest means.

Therefore, India in accordance with Article 5 of the Convention enacted the Prevention of Corruption Act, 1947[1]. The anti-corruption legislation in effect as of this date is Prevention of Corruption Act, 1988 (the “Act”). Like any standard anti-corruption legislation, the Act seeks to define the idea of a public official who shall be subjected to the enforcement of the Act and goes on to list numerous activities which would be considered as corrupt and thus penalizes their commission by said public officials.

A specific provision of the Act which has garnered special attention over the years is S. 13 (1)(e)[2] or otherwise understood as the offence of criminal misconduct by way of possession of disproportionate assets. A number of cases of corruption as of this date have been brought to courts under the purview of this section and it is primarily because of the stringent nature of the statute which penalizes the mere possession of disproportionate assets. The statute states:

‘13. Criminal misconduct by a public servant

(1) A public servant is said to commit the offence of criminal misconduct, –

(e) if he or any person on his behalf, is in possession or has, at any time during the period of his office, been in possession for which the public servant cannot satisfactorily account, of pecuniary resources or property disproportionate to his known sources of income’

The Conflict between Practice and Law

A cursory glance of the above provision reveals that for a case to be made out under this provision the prosecution must establish (i) that the accused is a public servant (ii) the nature and extent of the pecuniary resources or property which were found in his possession (iii) his known sources of income (iv) that the assets in his possession are in fact disproportionate to his known sources of income.

Though the conclusion as to the above basic elements of this provision is indeed correct and the same has been established by all levels of courts time and time again, there are procedural aspects leading to the final case of the prosecution which cannot be gleaned by a mere reading of the statute. This is in reference to the arithmetic calculation of the ‘disproportionate assets’ for the possession of which the accused is on trial.

A case of disproportionate assets is investigated by the Central Bureau of Investigation. A typical charge-sheet submitted by the CBI making out a case under S. 13(1)(e) of the Act has four statements namely

1. Statement A: – Assets in the possession of the accused before the check period
2. Statement B: – Assets in the possession of the accused after the check period
3. Statement C: – Income of the accused during the check period
4. Statement D: – Expenditure of the accused during the check period

Thus, Disproportionate Assets is calculated as [(B-A) + D] – C. Essentially what is being done is that the difference of Statement A and Statement B reflects the assets acquired by the accused in the check period which is further added to his expenditure since they too reflect his assets which he used to gain something (food, water, electricity etc. , things which were consumed for daily sustenance) and the result is subtracted from his income and the difference (if any) is the disproportionate assets which now the accused must account for.

A term that must be noted here is ‘check period’ which basically refers to a period selected by the investigating officer at his discretion (it maybe 6 months or 2 years or may even be 10 years) during which the accused held said public office for the purpose of investigation. The period may encompass the entire time the accused held said office or might just be a portion of it.

This method of calculation of disproportionate assets on the face of it may seem sound but in cases may lead to direct contradiction to the statute it seeks to enforce. A very simple example of this is if assets came into the possession of the accused during the check period and by the end of the check period he does not remain in possession of the same in the nature of which brings him under the ambit of S.13(1)(e) of the Act, then according to the above-given calculation possession of said asset is never reflected. On the other hand, the statute states that mere possession should result in penalization. These two concepts are in direct conflict with each other.

Either one goes by the wording of the statute by which logic the concept of a check period is obviated and the entirety of the period for which public office is held should be under scrutiny or one goes by the procedural guidelines followed by the CBI, which make it arbitrary as to the very existence of disproportionate assets especially given the discretionary power of the investigating officer to select the check period. An obvious answer would be to follow the law as it is laid down which in fact would be a most effective crackdown on crime but as we will see it is not so in practice.

The above scenario is not a remote possibility since it is what happened in the case of CBI v. Sushil Dutt. The above-cited case was adjudicated by a Special Judge, Rouse Avenue Court, New Delhi. The circumstances as described already were such that money amounting to nearly Rs. 21 crores was credited into three accounts belonging to the accused during the check period chosen by the investigating officer, and the amounts were also debited in their entirety but for a measly amount of some thousands by the time the check period ended.

In this scenario, CBI according to their own formula should have but taken into consideration the amount in each bank account at the time of the ending of the check period. Where the money went after it was debited was not a consequence, in fact not a single asset purchased from said money was found to be in the name of the accused except for a vehicle that constituted a measly amount of Rs. 9 lakhs.

However, in an arbitrary fashion, CBI chooses to consider ten such credit transactions into the accounts in spite of numerous other totalling to nearly Rs. 5 crores. The fact that CBI chose to make a case based a mere Rs. 5 crores instead of a whopping Rs. 21 crores in accordance with the discretion placed in it just serve to perpetuate the problem that the Act was enacted to battle. The reasoning behind such a decision is but known to those responsible. Ultimately, the decision of the Judge to convict the accused based on the principle that mere possession is a crime regardless of what happened to the money after it was debited from the account and that none of it was actually used by the accused serves to defeat the purpose of the Act.

A need for Resolution

There is another aspect to also consider i.e. knowledge of the accused regarding the commission of the crime but that is a burden only shouldered by the accused once the prosecution has established their side of the case which it cannot till such a contradiction in statute and practice is resolved..

The case of the accused is currently in appeal before the Hon’ble High Court of Delhi so for all intents and purposes the jury is still out on this, however, there is a problem and, the lack of a uniform guideline as to what constitutes as disproportionate assets is one which needs to be remedied to solve an obviously serious global epidemic.

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[1] Repealed by Act 49 of 1988 (Prevention of Corruption Act, 1988)

[2] Prevention of Corruption Act, 1947 corresponding provision is S. 5(1)(e).

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About the Author: Mr Singh [a 2019 JGLS Graduate] is practicing advocate in Tis Hazari District Courts Delhi in the Chambers of Adv. Surender Chauhan

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