Preparing Note-Sheets, Bills Without Dishonest Intent Not 'Attempt' To Commit Corruption Under Section 15 PC Act: Supreme Court

The Supreme Court recently set aside the conviction of public servants and a contractor under the Prevention of Corruption Act (PC Act) and the Indian Penal Code (IPC) in a case arising out of alleged irregularities in the proposal and billing for the installation of a hand pump.

A Bench of Justices J K Maheshwari and Atul S Chandurkar held that merely preparing note-sheets, calling for quotations, approving the lowest quotation, issuing a work order and preparing bills, without proof of any dishonest or fraudulent intention, does not amount to an "attempt" to commit criminal misconduct under the unamended Section 15 read with Sections 13(1)(c) and 13(1)(d) of the Prevention of Corruption Act, 1988.

The same material was also insufficient to establish offences of cheating and forgery under the IPC, Court held.

The case related to a hand pump in Gwalior that was ultimately not found to have been installed.

The allegations against the accused, including an Executive Engineer, were mainly based on the preparation of a note-sheet, inviting and receiving quotations, approval of the lowest bidder, issuance of the work order and preparation of bills for the proposed installation of the hand pump.

According to the prosecution, since the hand pump was not found at the site, these acts amounted to an attempt to commit criminal misconduct under the unamended Section 15 of the PC Act. Some of the accused were also charged with offences under the IPC.

'Attempt' under the Prevention of Corruption Act

While examining the case, the Bench said it was necessary to first determine the scope of the unamended Section 15 of the Prevention of Corruption Act.

Court explained that Section 15 punishes an attempt to commit offences covered under Sections 13(1)(c) and 13(1)(d) of the unamended Act. Section 13(1)(c) dealt with dishonest or fraudulent misappropriation of property entrusted to a public servant, while Section 13(1)(d) covered obtaining any valuable thing or pecuniary advantage by corrupt or illegal means or by abusing official position.

The Bench said that even to establish an "attempt" under Section 15, the prosecution must first prove foundational facts showing dishonest or fraudulent intention.

"Thus, even for the purpose of proving an attempt under Section 15, the prosecution is required to establish foundational facts indicating a dishonest or fraudulent intention either to misappropriate property or to obtain a pecuniary advantage. In the absence of such material, mere preparation of official records or processing of a proposal would not by itself satisfy the requirements of the provision," Court held.

Why did the Supreme Court acquit the accused?

The Bench noted that the Panchnama only showed that the hand pump was not found installed when the inspection was carried out.

"In our considered view, the said circumstance by itself is not sufficient to establish the existence of a dishonest or fraudulent intention on the part of the appellants. At the highest, it may indicate that the work had not been executed in the manner contemplated or that certain irregularities had occurred in processing the proposal," Court observed.

The judges further pointed out that the Panchnama did not indicate that any money had been dishonestly misappropriated or that the accused had obtained any pecuniary advantage for themselves or anyone else.

Court also found that the prosecution had relied on an enquiry report without proving how the enquiry was conducted, what evidence was collected or whether any effort had been made to verify the factual position regarding the proposed installation of the hand pump.

"The said enquiry report has not been proved by the prosecution. The report, therefore, does not furnish any substantive material from which a dishonest or fraudulent intention can be inferred against the appellants," the Bench held.

Rejecting the State's reliance on Section 20 of the Prevention of Corruption Act, Court said the statutory presumption under that provision applies only to offences under Sections 7, 11 and Sections 13(1)(a) and 13(1)(b), and not to allegations under Sections 13(1)(c) and 13(1)(d), which were involved in the present case.

"Once the presumption is held to be inapplicable, the prosecution is required to establish the necessary ingredients of the offences by independent evidence," the Bench said.

Court further referred to Section 25 of the IPC, which defines the expression "fraudulently", and emphasised that an intention to defraud is an essential ingredient of the offence.

It also noted that the complainant, at whose instance the proceedings had been initiated, had died before his testimony could be recorded. No other witness spoke of any arrangement or conduct suggesting that the accused intended to misappropriate public funds or obtain an unlawful financial benefit.

"The material brought on record only establishes that a note sheet was prepared, quotations were invited, quotations were submitted, bills were prepared and certain official processes were undertaken. However, from these circumstances alone, it is not possible to conclude that the appellants had acted with the intention of dishonestly misappropriating public funds or obtaining any pecuniary advantage," the Bench held.

Court also noted that there was no evidence to show that the accused had attempted to pocket any public money.

The prosecution had argued that because a large number of hand pumps were proposed to be installed, there was a possibility of substantial wrongful loss to the public exchequer.

Rejecting this contention, the Bench observed: "Such an argument is founded entirely on conjecture. Criminal liability cannot rest upon possibilities or suspicion. It is a settled principle that suspicion, however strong, cannot take the place of proof".

Holding that the prosecution had failed to prove the essential ingredients of offences under the unamended Section 15 read with Sections 13(1)(c) and 13(1)(d) of the Prevention of Corruption Act, the court also found that the IPC charges under Sections 420, 467, 468 and 471 could not survive.

"Once the foundational allegation of dishonest or fraudulent intention remains unproved, the charges under Sections 420, 467, 468 and 471 of the IPC (now Section 318, 338, 336 and 340 of the BNS, respectively) also cannot be said to have been established on the basis of the material brought on record," the Bench held.

The Supreme Court accordingly allowed the appeals and set aside the convictions recorded by both the trial court and the Madhya Pradesh High Court.

Case Title: R N Karaiya Vs The State of Madhya Pradesh

Bench: J K Maheshwari and Atul S Chandurkar

Date of Judgment: May 13, 2026