CASE NO.: Appeal (crl.) 1100 of 2006 PETITIONER: State, CBI RESPONDENT: Sashi Balasubramanian & Anr. DATE OF JUDGMENT: 31/10/2006 BENCH: S.B. Sinha & Dalveer Bhandari JUDGMENT:
J U D G M E N T
[Arising out of SLP (Crl..) No.996 of 2006]
S.B. SINHA, J.
Delay condoned.
Leave granted.
Interpretation and/or application of the Kar Vivad
Samadhan Scheme 1998 framed under the Finance (No.2) Act,
1998 is in question in this appeal which arises out of a
judgment and order dated 20.01.2005 passed by the High
Court of Madras in Crl.OP Nos.31422 and 36254 of 2004.
Shorn of all unnecessary details, the fact of the
matter is as under :
One M/s Best Fabrics (for short, the Company) had
applied for an advance licence on 29.01.1993 from the
Office of the Joint Director General of Foreign Trade,
Chennai for import of cotton fabrics showing the export
order for 47136 sets of cotton mens ensemble under the
Duty Exemption Entitlement Certificate (for short, the
Scheme). Upon scrutiny the application, a recommendation,
however, was made to allow the said company to import
cotton fabrics of 44 inch widths. As the item was not
figuring in the standard input and output norms book, the
file was placed before Respondent No. 1, Smt. Sashi
Balasubramanian, by Sri V. Rajpriyan, Respondent No. 2
herein, for placing before the Zonal Advance Licensing
Committee for recommendations as regards quantity and
description of the goods to be allowed for import.
Approval for advance licence was granted by Smt. Sashi
Balasubramanian. On allegations in regard to the grant of
the said licence, a First Information Report was lodged on
02.03.1995 for commission of offences under Sections 120-B,
420 and 471 of the Indian Penal Code, Section 13(2) read
with Section 13(1)(d) of the Prevention of Corruption Act,
1988 and Section 136 of the Customs Act, 1962.
The Company and its Directors, however, in the
meanwhile filed an application in terms of the Scheme.
Declarations were filed on 31.12.1998. The charge-sheet in
the criminal case was filed on 12.04.1999.
Originally, there were seven accused; three out of them
were the private parties, namely, M/s Best Fabrics, Shri S.
Vaidyanathan and Shri Bharath Bhushan Goyal. Smt. Sashi
Balasubramanian, Respondent No.1 herein, was the Deputy
Director General of Foreign Trade and Shri V. Rajpriyan ,
Respondent No.2 herein, was the Controller of Exports and
Imports. Apart from Respondents herein, two other
officials were also arrayed as accused persons in the charge-
sheet, namely, Shri S. Ramanathan, Assistant Collector and
Shri A. Sivaram Kumar, Apprising Officer.
Accused Nos. 1 to 4 filed an application for quashing
the criminal proceedings as against them before the High
Court of Madras, which was registered as CC No. 34 of 1999.
It is stated that by an order dated 29.04.2004, the said
application has been allowed. No appeal is said to have
preferred therefrom.
Respondents thereafter filed an application before the
High Court with the self-same prayer, which by reason of the
impugned judgment has been allowed.
Appellant is, thus, before us.
Mr. Vikas Singh, the learned Additional Solicitor
General appearing on behalf Appellant urged :
(i) Having regard to the nature of the Scheme, the High
Court committed a manifest error in opining that as the
private parties became entitled to immunity from
prosecution, the official respondents would also be
covered thereby.
(ii) The High Court misconstrued and misinterpreted the
provisions of Section 95 (iii) of the Act.
(iii) Public Servants were not entitled to any relief
under the said Scheme and far less immunity from
prosecution.
Dr. Manish Singhvi and Mr. T. Raja, the learned
counsel appearing on behalf of Respondents, on the other
hand submitted :
(i) The High Court cannot be said to have acted illegally
and without jurisdiction, as Respondents herein were
also entitled to the benefit of immunity scheme.
(ii) The doctrine of parity is applicable in the instant
case, and, thus, as other accused similarly situated
had been held to be entitled to the benefit of
declaration dated 31.12.1998 made under the Scheme,
there is no reason as to why Respondents would not be
entitled thereto.
(iii) Section 95 of the Act cannot be invoked for the
said offence and in that view of the matter, it is
impermissible in law to split up the offences between
private parties and the public servants, particularly
when charges had been framed under Section 120-B of the
Indian Penal Code.
(iv) As the charges formed part of the same transaction,
either all the persons involved therein may be
proceeded against or none at all.
(v) Section 95(iii) of the Act, as the High Court has
rightly opined, must be held to be inapplicable in the
facts and circumstances of the case.
(vi) In any event, even if the allegations made against
Respondents are taken to be correct and accepted in
its entirety, the same does not constitute any offence
as alleged or at all.
An additional submission was made by Mr. T. Raja that
his client having worked under the orders of Smt. Sashi
Balasubramanian, cannot be said to have committed any
offence at all.
The Parliament enacted the Finance Act, 1998. It came
into force with effect from 29.03.1998. Chapter IV of the
said Act provides for the Kar Vivad Samadhan Scheme, 1998.
It came into force with effect from the 1st day of
September, 1998.
Declarant has been defined in Section 87(a) to mean a
person making a declaration under Section 88. Disputed
tax has been defined in Section 87(f) to mean the total tax
determined and payable, in respect of an assessment year
under any direct tax enactment but which remains unpaid as
on the date of making the declaration under Section 88.
Indirect tax enactment has been defined in Section 87(j)
in the following terms :
(j) indirect tax enactment means the
Customs Act, 1962 (52 of 1962) or the Central
Excise Act, 1944 (1 of 1944) or the Customs
Tariff Act, 1975 (51 of 1975) or the Central
Excise Tariff Act, 1985 (5 of 1986) or the
relevant Act and includes the rules or
regulations made under such enactment;Section 87(k) of the Act defines the person to mean :
(k) person includes
(i) an individual,
(ii) a Hindu undivided family,
(iii) a company,
(iv) a firm
(v) an association of persons or a body of individuals,
whether incorporated or not,
(vi) a local authority,
(vii) every artificial juridical person, not falling
within any of the preceding sub-clauses;
(viii) assessee, as defined in rule 2 of the Central
Excise Rules, 1944;
(ix) exporter as defined in clause (20) of section 2 of
the Customs Act, 1962 (52 of 1962);
(x) importer as defined in clause (26) of section 2 of
the Customs Act, 1962 (52) of 1962);
(xi) any person against whom proceedings have been
initiated and are pending under any direct tax enactment
or indirect tax enactment.
Section 88, inter alia, provides :
88. Subject to the provisions of this
Scheme, where any person makes, on or after
the 1st day of September, 1998 but on or
before the 31st day of December, 19998, a
declaration to the designated authority in
accordance with the provisions of section 89
in respect of tax arrear, then,
notwithstanding anything contained in any
direct tax enactment or indirect tax
enactment or any other provision of any law
for the time being in force, the amount
payable under this Scheme by the declarant
shall be determined at the rates specified
hereunder, namely :-
(f) where the tax arrears is payable under the indirect
tax enactment –
(i) in a case where the tax arrear
comprises fine, penalty or interest
but does not include duties
(including drawback of duty, credit
of duty or any amount representing
duty) or cesses, at the rate of
fifty per cent, of the amount of
such fine, penalty or interest, due
or interest, due or payable as on
the date of making a declaration
under section 88,
(ii) in any other case, at the rate of
fifty per cent, of the amount of
duties (including drawback of duty,
credit of duty or any amount
representing duty) or cess due or
payable on the date of making a
declaration under section 88.
A declaration is required to be filed in the form
prescribed therefor. Time and manner of payment of tax
arrears is provided for in Section 90. Section 91 provides
for immunity from prosecution and imposition of penalty in
certain cases. Section 95 provides for exceptions as
regards the applicability of the Scheme, Clause (iii)
whereof, which is relevant for our purpose, reads as under :
95. The provisions of this Section shall not
apply
(iii) to any person in respect of whom
prosecution for any offence punishable
under Chapter IX or Chapter XVII of the
Indian Penal Code (45 of 1860), the
Foreign Exchange Regulation Act, 1973
(46 of 1973), the Narcotic Drugs and
Psychotropic Substances Act, 1985 (61 of
1985), the Terrorists and Disruptive
Activities (Prevention) Act, 1987 (28 of
1987), the Prevention of Corruption Act,
1988 (49 of 1988), or for the purpose of
enforcement of any civil liability has
been instituted on or before the filing
of the declaration or such person has
been convicted of any such offence
punishable under any such enactment.The principal questions which arise for consideration
are
(i) Whether the Scheme is applicable in relation to a
public servant ?
(ii) When does a prosecution start ?;
(iii) Whether the offences enumerated under Section
95(iii) are excluded from immunity in terms of Section 91
of the Act ?
The Scheme provides for an exception to the general
law. It provides for the mode and manner in which the
arrears of tax was to be collected. It dealt with direct
and indirect taxes only. Ex facie public servants would
not come within the purview of the Act.
Counsel for Respondents, however, suggest that public
servants would also come within the purview of the Act as
against them also proceedings had been initiated.
Section 2(k)(xi), while defining a person undoubtedly
embraces within its fold those against whom proceedings
have been initiated, but the same relate to direct or
indirect tax enactments. Proceedings contemplated under the
Act must have a nexus with arrears of tax. Public servants
who can never file a declaration would not, in our
considered view, come within the purview thereof.
Of course, there exists a distinction between a
person and a declarant. However, declaration is to be
filed by a person who would come within the purview of the
said term, as has been stated in the interpretation clause
contained in Section 2(k) of the Act. Section 88 provides
for a declaration to be made by a person and, declarant
means a person making a declaration. The applicability of
the provisions of the Act must be judged in the aforesaid
context.
The definition of person must be read having regard
to term declarant i.e. who files a declaration.
A public servant is enjoined with a duty to enforce
tax enactments. A declaration in terms of Section 88 can be
filed by a declarant for determination of the tax arrear
under the Scheme at the rates specified thereunder. Public
servants, therefore, cannot not take the benefit of the
scheme. Section 90 provides for the time and manner of
payment of tax arrear. The amount of arrear of tax is
required to be determined within a period of sixty days from
the date of receipt of the declaration under Section 91,
whereupon a certificate is to be granted in such form as may
be prescribed. The certificate is granted only to the
declarant, which would contain the particulars of tax
arrears and the sum payable after such determination towards
full and final settlement of tax arrears.
The immunity under the scheme is an not absolute one.
The designated authority may impose certain conditions while
making an inquiry contained in Section 90.
The immunity granted is subject to the conditions
provided in Section 90. The immunity is in relation to
institution of any proceeding for prosecution for any
offence. Such offence may be either under the direct tax
enactment or indirect enactment. Immunity is also granted
from imposition of penalty under such enactments. However,
immunity also extends to matters covered under the
declaration under Section 88. Section 95 provides for an
exception to the Scheme. Once the provisions of Section 95
are attracted, the Scheme shall not apply. A determination
might have been made although the Scheme was not applied,
but the same may not per se confer a right of obtaining any
immunity in terms of Section 91 of the Act. Clause (iii)
of Section 95 while laying down the exceptions, enumerates
offences under Chapter IX or Chapter XVII of the IPC and
certain other statutes. It also makes an exception, if a
proceeding for enforcement of any civil liability has been
instituted. Clause (iii) of Section 95 would be attracted
if, inter alia, any prosecution for any offence enumerated
thereunder has been instituted on or before the filing of
the declaration.
The First Information Report in regard to the offences
committed, as indicated hereinbefore, was lodged on
02.03.1995. The investigation started immediately
thereafter. The investigation was being carried on by the
Central Bureau of Investigation (Economic Offences Wing).
Only at a much later stage, namely, more than three years
thereafter, i.e. on 31.12.1998, declarations were filed.
Charge-sheet in the criminal case was filed on 12.04.1999.
It is in the aforementioned context, interpretation of
the word prosecution assumes significance. The term
prosecution would include institution or commencement of
a criminal proceeding. It may include also an inquiry or
investigation. The terms prosecution and cognizance are
not interchangeable. They carry different meanings.
Different statutes provide for grant of sanction at
different stages.
In initio means in the beginning. The dictionary
meaning of initiation is cause to begin. Whereas some
statutes provide for grant of sanction before a prosecution
is initiated, some others postulate grant of sanction
before a cognizance is taken by Court. However, meaning
of the word may vary from case to case. In its wider sense,
the prosecution means a proceeding by way of indictment or
information, and is not necessarily confined to prosecution
for an offence.
The term prosecution has been instituted would not
mean when charge-sheet has been filed and cognizance has
been taken. It must be given its ordinary meaning.
The Legislature with a definite purpose thought of
granting an exemption from the operation of the Act, if no
prosecution is initiated under the provisions of the statute
specified thereunder. Chapter IX of the Penal Code deals
with public servants. Chapter XVII thereof deals with
offences relating to property. Offences under other
enactments are of serious nature. Thus, presumably
commission of offences under the other Acts enumerated
therein were considered to be serious enough by the
Parliament, so as to exclude the application of the Scheme,
which includes Prevention of Corruption Act.
In any view of the matter, an immunity is granted only
in respect of offences purported to have been committed
under direct tax enactment or indirect tax enactment, but by
no stretch of imagination, the same would be granted in
respect of offences under the Prevention of Corruption
Act. A person may commit several offences under different
Acts; immunity granted in relation to one Act would not
mean that immunity granted would automatically extend to
others. By way of example , we may notice that a person may
be prosecuted for commission of an offence in relation to
property under the Indian Penal Code as also under another
Act, say for example, the Prevention of Corruption Act.
Whereas charges under the Prevention of Corruption Act may
fail, no sanction having been accorded therefor, the charges
under the Penal Code would not.
The High Court has not held that the offences alleged
against Respondents are so inextricably connected that it
cannot be separated so much so that in the event if it be
held that private parties cannot be proceeded with at all,
the case against public servants, would invariably fail.
We, thus, as at present advised, do not intend to delve deep
into the said question. However, to be fair to learned
counsel, we may notice the decisions cited at the bar.
Reliance placed by Mr. Singhvi on Devarapalli
Lakshminarayana Reddy and Others v. V. Narayana Reddy and
Others [(1976) 3 SCC 252] has no application to the facts
and circumstances of the present case. The question which
arose for consideration therein was required to be
determined in the context of the provisions of Sections 200
and 202 of the 1898 Code vis-`-vis Sections 200 and 202 of
the 1973 Code. The question was as to whether cognizance is
taken before issuance of process or not. It in that
context, it was stated :
14. This raises the incidental
question: What is meant by taking cognizance
of an offence by a Magistrate within the
contemplation of Section 190? This expression
has not been defined in the Code. But from
the scheme of the Code, the content and
marginal heading of Section 190 and the
caption of Chapter XIV under which Sections
190 to 199 occur, it is clear that a case can
be said to be instituted in a court only when
the court takes cognizance of the offence
alleged therein. The ways in which such
cognizance can be taken are set out in
clauses (a), (b) and (c) of Section 190(1).
Whether the Magistrate has or has not taken
cognizance of the offence will depend on the
circumstances of the particular case
including the mode in which the case is
sought to be instituted, and the nature of
the preliminary action, if any, taken by the
Magistrate. Broadly speaking, when on
receiving a complaint, the Magistrate applies
his mind for the purposes of proceeding under
Section 200 and the succeeding sections in
Chapter XV to the Code of 1973, he is said to
have taken cognizance of the offence within
the meaning to Section 190(l)(a). It, instead
of proceeding under Chapter XV, he has, in
the judicial exercise of his discretion,
taken action of some other kind, such as
issuing a search warrant for the purpose of
investigation, or ordering investigation by
the police under Section 156(3), he cannot be
said to have taken cognizance of any
offence.
Institution of a prosecution and institution of a
complaint case in a criminal court stand on different
footings. Whereas summons to an accused in a complaint case
can be issued only upon taking cognizance of the offence,
the same would not mean in a case where first information
report has been lodged resulting in initiation of
investigation or where it has been referred to police or
other authorities for enquiry; even then a prosecution may
not be held to have been initiated at that stage.
What transpires from the said decision is that whereas
before cognizance is taken, application of mind on the part
of the court is imperative, taking action of some other kind
would not mean that cognizance has been taken. In some
cases, even after lodging of the F.I.R., a preliminary
enquiry which may not be an investigation into the crime,
may be initiated.
Strong reliance has also been placed on Basir-ul-Haq
and Others v. State of West Bengal [(1953) SCR 836]. The
question which arose for consideration therein was whether
having regard to the nature of the offence allegedly
committed by the accused named therein, it was capable to be
split up. In the aforementioned context, it was held that
if the offences are inseparable or incapable of being split
up, the Court will have no other option but to pass a
judgment of acquittal, stating :
14. Though, in our judgment, Section 195
does not bar the trial of an accused person
for a distinct offence disclosed by the same
facts and which is not included within the
ambit of that section, it has also to be
borne in mind that the provisions of that
section cannot be evaded by resorting to
devices or camouflages. The test whether
there is evasion of the section or not is
whether the facts disclose primarily and
essentially an offence for which a complaint
of the court or of the public servant is
required. In other words, the provisions of
the section cannot be evaded by the device of
charging a person with an offence to which
that section does not apply and then
convicting him of an offence to which it
does, upon the ground that such latter
offence is a minor offence of the same
character, or by describing the offence as
being one punishable under some other section
of the Indian Penal Code, though in truth and
substance the offence falls in the category
of sections mentioned in Section 195 of the
Criminal Procedure Code.[Emphasis supplied]
The observations in the said judgment must be held to
have been made in the factual matrix obtaining therein and
not dehors the same.
In the instant case, resorting to any device or
camouflage has not been alleged. It is also not a case
that the provisions of the Indian Penal Code or the
Prevention of Corruption Act cannot be said to have any
application, although linked with an offence under Section
136 of the Customs Act.
An ultimate purpose of commission of an offence may be
to commit one offence under one statute, but indisputably in
the process thereof offences under other statutes may also
be committed.
In Hira Lal Hari Lal Bhagwati v. CBI, New Delhi
[(2003) 5 SCC 257] this Court indisputably proceeded to
hold that the immunity was qua offence but Appellants
therein before this Court were the assessees. The
prosecution was also launched therein after a declaration
was made.
We may also notice that Brijesh Kumar, J. in his
concurring but separate judgment took into consideration the
fact situation obtaining therein, namely, initiation of a
criminal proceeding after issuance of a declaration and
after withdrawal of the case, in the High Court in the
following terms :
On the one hand final settlement was made
after determining the tax liability on the
premise that the appellants were neither
convicted nor criminal proceedings were
pending, relating to any offence under
Chapter IX or XVII IPC, yet the criminal
proceedings are being prosecuted which is
apparently against the very spirit of the
Scheme promulgated under the Finance (No. 2)
Act of 1998. If a person against whom
criminal proceedings were pending, relating
to offence under Chapter IX or XVII IPC or
who stood convicted under any of the
provisions of those chapters, he would not
have been eligible to seek benefit under the
Scheme and after accepting that position and
the due settlement, there was no occasion to
initiate and continue the criminal
proceedings, which could bring about the
conviction of the same persons, in case
prosecution ended successfully in favour of
the State and against the appellants. If such
a condition is provided that on a particular
date a criminal proceeding should not be
pending against a person nor should he have
been convicted of an offence, as a condition
precedent for a settlement, and on that basis
a settlement is brought about, it does not
mean that later on, one could turn around and
get the declarant convicted for a criminal
offence too, after settlement of the
liability. More so, when in view of Section
90 sub-section (4) of the Scheme the
declarant is obliged to withdraw an appeal or
proceedings regarding tax liability pending
before the High Court or the Supreme Court,
which had also been done in the case in hand.
That is to say that on one hand the declarant
is not permitted to pursue the remedy,
regarding tax liability, which is already
pending before the courts of law, as they are
either deemed to be withdrawn by operation of
law or they have to be withdrawn by a
positive act of the party and yet prosecute
such persons for their conviction as well.
The declarant could not be dragged and chased
in criminal proceedings after closing the
other opening making it a dead end. It is
highly unreasonable and arbitrary to do so
and initiation and continuance of such
proceedings lack bona fides.
An accused may be discharged from a criminal case under
Section 245 of the Code, if his civil liability has been
determined in his favour; but the same must have a direct
nexus with his criminal liability. He would not acquire
any immunity only because civil and criminal liabilities
have some connection, however, remote the same may be.
The connection between the two types of liabilities must
be direct and proximate. If in incurring the civil
liability, he has committed offences wherewith
determination thereof has no nexus, the immunity would
not extend thereto.
We will give a simple example. A person while
obtaining undue favour from an authority under the indirect
tax enactment, offers a bribe. Obtaining of an undue favour
resulting in prosecution under the indirect tax enactment
may be a separate offence , but involvement of the public
servant qua offences under the Prevention of Corruption Act
would be a separate and distinct one.
It is one thing to say that an Act constitutes both
civil and criminal wrong and in the self same fact, when
compounding of offence is effected in relation to the civil
dispute, the High Court may be justified in quashing a
complaint under the criminal case as was done in Central
Bureau of Investigation, SPE, SIU (X), New Delhi v. Duncans
Agro Industries Ltd., Calcutta [(1996) 5 SCC 591], but it
is another thing to say that prosecution under other statute
would also fail. It is in that view of the matter, this
Court stated the law in the following terms :
26. After giving our careful
consideration to the facts and circumstances
of the case and the submissions made by the
respective counsel for the parties, it
appears to us that for the purpose of
quashing the complaint, it is necessary to
consider whether the allegations in the
complaint prima facie make out an offence or
not. It is not necessary to scrutinise the
allegations for the purpose of deciding
whether such allegations are likely to be
upheld in the trial. Any action by way of
quashing the complaint is an action to be
taken at the threshold before evidences are
led in support of the complaint. For quashing
the complaint by way of action at the
threshold, it is, therefore, necessary to
consider whether on the face of the
allegations, a criminal offence is
constituted or not.
Reliance has also been placed on K.C. Builders and
Another v. Assistant Commissioner of Income Tax [(2004) 2
SCC 731]. The question which arose for consideration
therein was as to whether mens rea is an essential
ingredient for imposition of penalty under Section 271(1)(c)
of the Income Tax Act. In that case, finding of
concealment and subsequent levy of penalties had been struck
down by the Tribunal. The assessment year was directed to
be corrected in terms of Section 154 of the Act. It was in
that fact situation, this Court opined that if the Tribunal
has set aside the order of imposing a penalty for
concealment, there would be no concealment in the eyes of
the law and, therefore, the prosecution should be proceeded
against the accused and, thus, further proceedings would be
illegal and without jurisdiction, stating :
When the Tribunal has set aside the levy of
penalty, the criminal proceedings against the
appellants cannot survive for further
considerationIn the fact of that case, it was held that the charge
of conspiracy had not been proved and no case had also been
made out for establishing the offence of cheating. The gist
of the prosecution case therein was that the accused had
filed false returns of income before the Department which
led concealment of income to evade tax. The question,
therefore, was as to whether there had been any concealment
of income at all. The said decision, therefore, cannot have
any application whatsoever.
Reliance has also been placed on Central Bureau of
Investigation v. Akhilesh Singh [(2005) 1 SCC 478]. In that
case, out of the three accused, two were discharged and in
that view of the matter it was held that the basis of
alleged conspiracy by the respondent therein with Dr. Sanjay
Singh lost its substratum. It was in the factual matrix of
the case exercise of jurisdiction by the High Court under
Section 482 of the Code of Criminal Procedure was held to
be not to be suffering from any illegality or infirmity.
We may, however, notice that in R.K. Garg etc. v. Union
of India and Others [(1981) 4 SCC 675], it was held that
only because exemption had been granted in relation to
purchase of bearer bonds, the same would not mean that the
offender shall stand immuned from other offences also.
Bhagwati, J. speaking for the majority opined :
It will be seen that the immunities granted
under Section 3, sub-section (1) are very
limited in scope. They do not protect the
holder of Special Bearer Bonds from any
inquiry or investigation into concealed
income which could have been made if he had
not subscribed to or acquired Special Bearer
Bonds. There is no immunity from taxation
given to the black money which may be
invested in Special Bearer Bonds. That money
remains subject to tax with all consequential
penalties, if it can be discovered
independently of the fact of subscription to
or acquisition of Special Bearer Bonds. The
only protection given by Section 3, sub-
section (1) is that the fact of subscription
to or acquisition of Special Bearer Bonds
shall be ignored altogether and shall not be
relied upon as evidence showing possession of
undisclosed money. This provision relegates
the Revenue to the position as if Special
Bearer Bonds had not been purchased at all.
If without taking into account the fact of
subscription to or acquisition of Special
Bearer Bonds and totally ignoring it as if it
were non-existent, any inquiry or
investigation into concealed income could be
carried out and such income detected and
unearthed, it would be open to the Revenue to
do so and it would be no answer for the
assessee to say that this money has been
invested by him in Special Bearer Bonds and
it is therefore exempt from tax or that he is
on that account not liable to prosecution and
penalty for concealment of such income. This
is the main difference between the impugned
Act and the Taxation Laws (Amendment and
Miscellaneous Provisions) Act, 1965. Under
the latter Act, where gold is acquired by a
person out of his undisclosed income, which
is the same thing as black money, and such
gold is tendered by him as subscription for
the National Defence Gold Bonds, 1980, the
income invested in such gold is exempted from
tax, but where Special Bearer Bonds are
purchased out of undisclosed income under the
impugned Act, the income invested in the
Special Bearer Bonds is not exempt from tax
and if independently of the fact of purchase
of the Special Bearer Bonds and ignoring them
altogether, such income can be detected, it
would be subject to tax. The entire machinery
of the taxation laws for inquiry and
investigation into concealed income is thus
left untouched and no protection is granted
to a person in respect of his concealed
income merely because he has invested such
income in Special Bearer Bonds. It is
therefore incorrect to say that as soon as
any person purchases Special Bearer Bonds, he
is immunised against the processes of
taxation laws. Here there is no amnesty
granted in respect of any part of the
concealed income even though it be invested
in Special Bearer Bonds. The whole object of
the impugned Act is to induce those having
black money to convert it into white money by
making it available to the State for
productive purposes, without granting in
return any immunity in respect of such black
money, if it could be detected through the
ordinary processes of taxation laws without
taking into account the fact of purchase of
Special Bearer Bonds.We may at this stage deal with another contention viz.
that if in the connected matter where other public servants
were parties, , no appeal having been filed from the
judgment of the High Court by the C.B.I., this appeal would
be maintainable. This aspect of the matter has been
considered by a three-Judge Bench of this Court in
Government of West Bengal v. Tarun K. Roy and Others [(2004)
1 SCC 347], wherein it was categorically stated :
Non-filing of an appeal, in any event,
would not be a ground for refusing to
consider a matter on its own merits. (See
State of Maharashtra v. Digambar10.)
29. In State of Bihar v. Ramdeo Yadav11
wherein this Court noticed Debdas Kumar1 by
holding: (SCC p. 494, para 4)
4. Shri B.B. Singh, the learned counsel
for the appellants, contended that though an
appeal against the earlier order of the High
Court has not been filed, since larger public
interest is involved in the interpretation
given by the High Court following its earlier
judgment, the matter requires consideration
by this Court. We find force in this
contention. In the similar circumstances,
this Court in State of Maharashtra v.
Digambar10 and in State of W.B. v. Debdas
Kumar1 had held that though an appeal was not
filed against an earlier order, when public
interest is involved in interpretation of
law, the Court is entitled to go into the
question.
[See also Union of India v. Pramod Gupta (Dead) by Lrs. and
Others (2005) 12 SCC 1]
In this case also public interest is involved as
interpretation of the provisions of the Act were in
question. Yet again there cannot be any equality in
illegality.
[See Secretary, State of Karnataka and Others v. Umadevi
(3) and Others [(2006) 4 SCC 1]
We, therefore, are of the opinion that the impugned
judgment cannot be sustained. It is set aside accordingly.
The High Court, however, did not go into the merit of
the matter. It proceeded on the basis that the continuation
of the prosecution as against Respondents was
unsustainable in law. Although prosecution as against
Respondents herein may be held to be not maintainable, in
our opinion, they are entitled to contend that even if the
materials brought on records are given face value and taken
to be correct in their entirety, no case has been made out
as against them.
The appeal is allowed, the impugned judgment is set
aside with the aforementioned observations. No costs.