Diaries as evidence

The Supreme Court has acquitted L.K. Advani and V.C. Shukla in the Jain hawala case. However, in admitting that the Jain diaries are admissible evidence, the court has paved the way for prosecution in cases where the payoffs indicated are corroborated by other evidence.

THE acquittal of L.K. Advani and V.C. Shukla of the charges of corruption and criminal conspiracy in the Jain hawala case overshadowed certain other important aspects of the Supreme Court verdict that was delivered on March 2. One of these is the reversal of the position the Delhi High Court had taken on the admissibility of the Jain diaries as evidence. A three-member Bench of the apex court, comprising Justices M.K. Mukherjee, S.P. Kurdukar and K.T. Thomas, ruled that one of the diaries presented by the prosecution was admissible as evidence under Section 34 of the Indian Evidence Act, 1872.

Justice M. Shamim of the Delhi High Court, who too had acquitted Advani and Shukla, had taken the view that the entries made in the Jain diaries "can be used only by way of corroboration to other pieces of evidence" that the prosecution had at its disposal. In other words, the diaries could not be used as lead or sole evidence. The Central Bureau of Investigation (CBI), which investigated the cases, had appealed to the apex court against this order.

While reversing this position of the High Court, the apex court held that the entries in one of the diaries, MR 71/91, would be admissible under Section 34 of the Indian Evidence Act. In doing so, the court interpreted the provisions of Section 34 to give them their "ordinary, natural and grammatical meaning" and not a restrictive meaning since the context or the principle of construction did not warrant it.

According to Section 34, "entries in books of account, regularly kept in the course of business, are relevant" as evidence. Both prosecution and defence counsel placed emphasis on the interpretation of the key words in the section. Defence counsel Kapil Sibal argued that while the diaries and spiral pads recovered from the residence of the Jains were "books" within the meaning of Section 34, they were not admissible as evidence since neither were they "books of account" nor were they "regularly kept" in the course of "business". Sibal argued that "account" meant a formal statement of money transactions between parties arising out of a contractual or a fiduciary relationship. His contention was that these "books of account" did not relate to a "business" nor were they "regularly kept".

Additional Solicitor-General Altaf Ahmed, who appeared for the prosecution, argued that the High Court's interpretation of the words "books of account" and "business" in the above section was a truncated view. It disabled law from "dealing with illicit business and situations connected therewith, such as the case in hand where a conspiracy was hatched to receive money through hawala channels and other sources and to distribute it as bribes to politicians to influence favourable decisions from them."

He argued that the word "business" under Section 34 should receive the widest possible meaning and should be understood and construed to mean and include all such efforts of people, which, by varied methods of dealing with each other, were designed to improve their individual economic conditions and satisfy their desires.

The apex court interpreted the words "account", "books of account", "business" and "regularly kept" in a general sense. Since the entries made in the document in question were totalled and balanced, the court held that the document was a "book of account" recording monetary transactions that were duly reckoned, rather than a memorandum book. While interpreting the word "business", it upheld earlier judgments to mean a real, substantial and systematic or organised course of activity or conduct with a set purpose. Since the Jains carried on their activities continuously in an organised manner with a set purpose (be it illegal) to augment their own resources, the court ruled that MR 71/91 was a book of account kept in the course of business. In deciding that the "books of account" were indeed "regularly kept", the court relied on the relevance of the nature of occupation of the parties involved.

However, the Supreme Court dismissed the appeal of the CBI on the ground that there was no independent evidence to indicate that the amounts paid by the Jain brothers, were actually received by the "recipients". Hence, the Bench observed that the recipients could not be held liable under Section 34. The Judges observed: "Since, however, an element of self-interest and partisanship of the entrant to make a person - behind whose back and without whose knowledge the entry is made - liable cannot be ruled out, the additional safeguard of insistence upon their independent evidence to fasten him with such liability has been provided for in Section 34 by incorporating the words 'such statements shall not alone be sufficient to charge any person with liability'."

Referring to the statements of the four witnesses who had admitted receipts of payments as shown against them in MR 71/91, the Supreme Court held that they could at best be proof of reliability of the entries so far as they were concerned and not others. In other words, it maintained that the statements of the witnesses could not be independent evidence under Section 34 as against the two respondents in this case.

One important implication of the apex court's ruling is that it has changed the perception about the cohesiveness of the Jain diaries/hawala case in which, it was believed, all the accused would stand or fall together. In admitting that the diaries are admissible evidence, the court has paved the way for the prosecution to proceed at least in those cases where the payoffs indicated in the diaries have been corroborated by other evidence. The CBI had filed 34 charge-sheets in the court of the Special Judge against powerful individuals across the political spectrum. While the investigative agency claims to have obtained corroborative evidence against most of the accused either through independent investigation of their bank accounts, passports, official documents, circumstantial evidence or in the form of evidence relating to favours rendered as quid pro quo for payments, it remains to be seen which of these will stand fresh judicial scrutiny in the light of the present judgment. The Special Courts dismissed most of these cases, some of them at the stage of charge-sheeting itself, on various grounds. The CBI has appealed to the higher courts in respect of every case.

The apex court also went into the conspiracy theory under Section 10 of the Indian Evidence Act, 1972. Counsel for the CBI had submitted that material collected during the investigation and placed on record clearly established the existence of a general conspiracy among the accused Jains to promote their economic interest by corrupting public servants. He had also contended that a number of separate conspiracies with similar purpose had been hatched between the Jains and various public servants. However, since the agency had failed to file a charge-sheet against the Jains for having entered into a criminal conspiracy among themselves, the court did not even consider the matter. Statements made by certain witnesses, which were furnished by the CBI, were found to be either irrelevant to the charges of conspiracy or insufficient as reasonable ground to believe that all of them had conspired together.

The CBI appears to have bungled in not having framed a charge of conspiracy among the accused Jains to offer illegal gratification to Advani and Shukla. It had framed charges of two separate conspiracies, in both of which the Jains together figured as the common party and Advani and Shukla as the other. Advani had been accused of receiving Rs.25 lakhs from the Jains when he was a member of Parliament (besides the Rs. 35 lakhs he allegedly received when he was not an MP). In the charge-sheet filed against Shukla and the Jains, it was alleged that during 1988-91, when Shukla was an MP and a Cabinet Minister, he allegedly received Rs. 39 lakhs from the Jains. The Jains were charged with abetment under Section 12 of the Prevention of Corruption Act (PCA).

The court held that since it found no prima facie evidence of corruption under Section 7 of the PCA against Advani and Shukla, the question of abetment did not arise. Advani's name did not even figure in M 71/91, the diary admitted as evidence and in the case of Shukla, the evidence was insufficient, the court said. The Bench held that where no offence had been committed, the question of aiding or abetting it did not arise.

Since no prima facie case had been established against the two respondents, the Bench did not deem it necessary to go into the question of whether an MP came within the definition of a 'public servant' under the PCA so as to make the respondents liable for prosecution for alleged commission of offences that attracted the provisions of the Act.