Is Recovery of Money Without Proof of Demand Sufficient for Conviction? Supreme Court Explains

Supreme Court of India, in P. Somaraju v. State of Andhra Pradesh (2025 INSC 1263), delivered on 28 October 2025, reaffirmed a crucial tenet of anti-corruption jurisprudence — mere recovery of tainted money is not enough to convict a public servant unless the prosecution proves the twin essentials of “demand” and “acceptance.” Suspicion, no matter how strong, cannot substitute for proof.

The judgment not only restores the primacy of evidentiary rigour under the Prevention of Corruption Act, 1988 (PC Act) but also delineates the boundaries of appellate interference with a trial-court acquittal.

Background of the Case

The appellant, P. Somaraju, served as an Assistant Commissioner of Labour at Hyderabad in 1997. The complainant, S. Venkat Reddy, was a licensed labour contractor running two establishments—Swetha Enterprises and Sindhu Enterprises—seeking renewal of labour licences for 1997-1998.

According to the prosecution, Somaraju demanded ₹ 9,000 as illegal gratification to renew three licences. On 25 September 1997, the complainant allegedly paid ₹ 3,000 and was told to pay the remaining ₹ 6,000 within two days. The complainant then approached the Anti-Corruption Bureau (ACB) the next morning and lodged a written complaint.

A trap was organised for 26 September 1997, during which the complainant entered the appellant’s office carrying the phenolphthalein-treated notes. He claimed that, upon demand, he placed the cash in the appellant’s left-side drawer. The trap team later recovered the tainted currency from that drawer, though the hand-wash test on the appellant’s fingers was negative.

The Trial Court (Principal Special Judge for SPE & ACB Cases) acquitted the accused in 2003, holding that the prosecution had failed to prove both demand and acceptance. Andhra Pradesh High Court in 2011 reversed this verdict and convicted the appellant under Sections 7 and 13(1)(d) read with 13(2) of the PC Act. The matter eventually reached the Supreme Court.

Issues Before the Supreme Court

1. Whether the High Court was justified in reversing an acquittal without finding the trial court’s view perverse or unsupported by evidence.
2. Whether mere recovery of tainted money, without credible proof of demand and acceptance, is sufficient to sustain a conviction under Sections 7 and 13(1)(d) of the PC Act.
3. Whether procedural irregularities—like absence of corroboration, inconsistent witness statements, and negative hand-wash results—vitiated the prosecution’s case.

Reappraisal of Evidence

Findings of the Trial Court

The Trial Court’s meticulous reasoning revolved around several inconsistencies:

• The complainant’s application for licence renewal had already been duly processed; hence a bribe demand appeared implausible.
• The complaint misnamed the accused as “Rama Raju” instead of “Soma Raju,” an error never corrected during the pre-trap proceedings.
• The complainant asserted that he wrote the complaint in the morning of 25 September 1997, yet alleged that the demand occurred that evening—a chronological impossibility.
• The mediator witness (Rajender), instructed to observe the transaction, remained outside the office during the crucial period; thus there was no independent corroboration of demand or acceptance.
• The attendant Mohd. Abbas later testified that ACB officers coerced him and that the complainant had been alone in the chamber when the appellant stepped out to the restroom.
• The hand-wash test yielded no colour change, indicating the appellant never handled the money.

The court accepted the defence version that the complainant, taking advantage of the appellant’s brief absence, planted the currency in the drawer. It therefore acquitted the accused.

Findings of the High Court

The High Court reversed the acquittal, reasoning that clever public servants often avoid handling bribe money directly by instructing complainants to drop it into drawers or files, thereby escaping detection in phenolphthalein tests. It concluded that the negative hand-wash result could not exonerate the accused and convicted him based primarily on the recovery of tainted notes.

Supreme Court’s Analysis and Reasoning

The Bench of Justice Prashant Kumar Mishra and Justice Joymalya Bagchi firmly disagreed with the High Court’s approach and restored the acquittal.

1. Limits on Appellate Interference with Acquittal

The Court reiterated the canonical five-point test from Chandrappa v. State of Karnataka (2007 4 SCC 415):

• An appellate court has full power to reappreciate evidence but must respect the double presumption of innocence.
• If two reasonable views are possible, the appellate court should not disturb the acquittal.
• Interference is justified only when the trial court’s view is perverse or results in a miscarriage of justice.

Applying this, the Bench held that the trial court’s reasoning was coherent, evidence-based, and not perverse. The High Court had merely substituted its own opinion without addressing the detailed findings below.

2. Demand and Acceptance: The Cornerstones of Corruption Offences

Citing Rajesh Gupta v. State (CBI) (2022 INSC 359), the Court reiterated:

“Demand of illegal gratification is a sine qua non for the offence under Section 7. Mere recovery of currency notes does not constitute the offence unless demand and voluntary acceptance are proved beyond reasonable doubt.”

Similarly, it relied on Panna Damodar Rathi v. State of Maharashtra (1979 4 SCC 526) and Ayyasami v. State of Tamil Nadu (1992 1 SCC 304), emphasising that the complainant’s testimony, being that of an interested witness, requires independent corroboration.

In Somaraju’s case, there was no corroborative evidence—the mediator was outside, the second mediator was not examined, and the attendant’s version conflicted with the prosecution narrative. Hence, the essential element of demand remained unproven.

3. Negative Phenolphthalein Test

The Supreme Court observed that the High Court had mischaracterised the negative hand-wash test as the “first circumstance” in favour of the accused, whereas it was merely one of several factors considered by the trial court.

Importantly, since neither party alleged that the appellant handled the notes, the test result was logically neutral. However, the High Court’s inference that the appellant had devised a “clever method” to avoid detection was pure conjecture. The Supreme Court clarified that suspicion cannot replace proof.

4. Reliability of Witness Testimonies

The Bench carefully analysed inconsistencies:

• The complainant’s contradictory timeline and the incorrect name in the complaint eroded credibility.
• His unilateral decision to keep the mediator outside violated the DSP’s explicit instruction, leaving the alleged demand unverified.
• The investigating officer failed to question other staff or witnesses present in the office.
• The second mediator (Balaji) was inexplicably not examined.

These omissions, said the Court, “strike at the root of the prosecution's case.

5. Defence Evidence: A Plausible Version

Two defence witnesses — S. Ramulu Naik (DW-1), a union president, and Adv. Y. Veeranna Babu (DW-2) — testified that around 5:15 p.m., the appellant left for the toilet while the complainant was seen alone in the chamber. Their testimonies were consistent and credible, not impeached under cross-examination.

The Court held that their evidence could not be discarded merely because they had official dealings with the accused; they were “natural witnesses” present in the ordinary course of their duties.

The attendant Abbas’s written statement (Ex. D-1) further supported the defence, asserting that he heard the drawer open while the appellant was away and found the complainant alone in the room. The Supreme Court found the High Court’s rejection of this evidence unsustainable.

6. Presumption Under Section 20 PC Act

The statutory presumption of guilt arises only after demand and acceptance are proved. Since those foundational facts were absent, the presumption was never triggered. The Court noted that the High Court had reversed this logic—treating the presumption as automatic upon recovery—which was legally impermissible.

7. Administrative Context and Contract-Labour Rules

Though tangential, the Supreme Court clarified certain points on the Contract Labour (Regulation and Abolition) Act 1970 and the Central Rules 1971:

Under Rule 29(2), licences are deemed renewed if not rejected within a month; thus, contractors seldom need to repeatedly visit the office.

The appellant, as Assistant Commissioner of Labour, was lawfully empowered to demand inspection of registers to verify compliance. The High Court’s remark that this was a “creative procedure” to extort bribes was wholly unfounded.

Supreme Court’s Holding

After an exhaustive re-evaluation, the Bench held:

1. The trial court’s acquittal was reasonable and supported by evidence; hence interference was unwarranted.
2. The High Court’s conviction rested on speculation rather than proof.
3. Recovery of tainted money alone, absent proof of demand and acceptance, cannot sustain conviction under Sections 7 and 13(1)(d) r/w 13(2) PC Act.
4. The presumption under Section 20 arises only after foundational facts are established.

Accordingly, the Supreme Court allowed the appeal, set aside the High Court’s 2011 conviction, and restored the trial court’s 2003 acquittal. The appellant’s bail bonds were discharged.

Conclusion

The Supreme Court’s decision in P. Somaraju v. State of Andhra Pradesh is a vital reaffirmation of procedural fairness and evidentiary discipline in corruption trials. The Court decisively held that recovery of bribe money, without incontrovertible proof of demand and conscious acceptance, cannot sustain conviction.

By restoring the acquittal, the Bench underscored that criminal law values proof over presumption and fairness over fervour. The judgment sends a clear message: the fight against corruption must never erode the foundational safeguards of criminal justice.

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