STATE OF KERALA versus MATHEW (M. M.) AND ANR.

Citation: [1979] 1 S.C.R. 264 · Decided: 18-08-1978 · Supreme Court of India · Bench: JASWANT SINGH · Disposal: Dismissed

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Judgment (excerpt)

A 
B 
c 
D 
E 
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G 
H 
264 
STATE OF KERALA 
v. 
MATHEW (M. M.) AND ANR. 
August 18, 1978 
[JASWANT SINGH AND P. S. KAILASAM, JJ.] 
Proof of account books of business in criminal trials, inf;rredients to 
be 
proved, explained-Presumption in favour of acts of public servants charged 
with bringing home economic and other crtmes-Kerala General Sales TU 
Act, 1963, Sections 46(1)(a), 46(1)(c) and 46(2)(c). 
During the course of a surprise raid by the Intelligence Wing of the Sales 
Tax Authorities for verification of accounts of the respondents pertaining to 
their sales tax returns submitted by them on the 18th of each of the months 
of February, March and April 1969, 
respondent No. 1 produced 
certain 
books of accounts viz. current note books, bill books, stock register of the 
sales and purchases and purchase bills in cutrent use relating to the "Kallu~ 
palam Lad's Jawellery Mart" business and placed the same in a room ad:. 
jacent to the firm's show room for inspection. While examining these account 
books, the inspecting party noticed some other account papers in the form of 
diarysize account books, ledger size account books, exercise 
account books 
lying on that very table. Finding that a number of transactions of sales and 
purchcise of the jewellery entered in the second set of account books noticed, 
by them, revealing a large turnover for the months of January, February and 
March 1969, these account books were seized. On the basis of the result of 
tbe 
aforesaid inspection 
three 
complaints 
were 
tiled 
under 
sections 
46(1)(a) (for submission of untrue returns), 46(1)(c) (for failure to keer 
true and complete accounts) and 46(2)(c) (for fraudulent evasion of tax) 
of the Kerala General Sales Tax Act, 1963 and the rules made thereunder. 
On a consideration of the evidence adduced in the case, the Trial Court acquit-
ted the respondents under s. 46 (2) ( c) 
but convicted them 
under 
section 
46(1)(a) and 46(1)(c) of the Act and imposed a fine of Rs. 600/· 
and 
Rs. 5001- respectively on each of the respondents 
under the aforesaid two 
counts. On appeal the Additional Sessions Judge, set aside the conviction and 
acquitted the 
respondents of the 
charges 
under Sections 
46(1)(a) 
and 
46(1)(c) of the Act as well. The State's 
appeal before the Kerala 
High. 
Court failed and hence the appeal by special leave. 
Dismissing the appeals the Court, 
HELD : 1. ·Courts of law have to judge evidence before them by applying 
the well recognised test of basic human probabilities. Some of the observa-
tions made by the Sessions Judge especially the one to the effect that 'the 
evidence of officers constituting the inspecting party is highly interested because 
they want that the accused are convicted' cannot be accepted as it runs counter 
to the well recognised principle that prima facie public servants must 
be 
presumed to act honestly, conscientiously and their evidence has to be as5es.sed 
on its intrinsic worth and cannot be discarded 
merely on the ground 
that 
being public servants they are interested in the success of their case. [268 A-C1 
KERALA V. M. M. MATHEW 
265 
2. The 1observations of the High Court to the effect that 'the mere fact that 
two sets of accounts which are conflicting are being maintained, it c;Jnnot be 
Ital.en that the accounts books evidencing less tum-over or profits are false. 
It may well be that the secret accounts are false and the other accounts are 
true. 
It is not unusual to find busine:!s men keeping two sets of accounts one 
the correct one and the other showing exaggerated turnover and profits, the 
purpose of the latter be-ing only to attrapt investments in dealing with the busi-
ness", cannot be accepted as statement of law. [268 C-D] 
-V. t-
3. Strong suspicions, strange coincidences and grave doubts cannot take the 
I 
place of Je&al proof. [269 Bl 
(a~ In the instant case, there is absolutely no legal evidence on the record 
to prove the secret books of account, the seizure of which was effected by or 
under the orders of the Inspecting Assistant Commissioner were recovered 
from a place which formed part of the business premises of the respondents 
-or was in their exclusive possession and control. [268 E-F] 
(b) The prosecution could 
have 
established that the secret books 
of 
account related to the business transections carried on by the· respondents and 
none else in a variety of ways viz. (1) by adducing satisfactory proof to the 
effect that the p

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