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
JUDGMENT [Arising out of SLP (Crl..) No.996 of 2006] S.B. SINHA, J.
Delay condoned.
Leave granted.
Interpretation and/or application of the \021Kar Vivad Samadhan Scheme 1998\022 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, \021the Company\022) 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 \021cotton mens ensemble\022 under the \021Duty Exemption Entitlement Certificate\022 (for short, \021the Scheme\022). Upon scrutiny the application, a recommendation, however, was made to allow the said company to import \021cotton fabrics of 44 inch widths\022. 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 chargesheet, 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 \021Kar Vivad Samadhan Scheme, 1998\022. It came into force with effect from the 1st day of September, 1998.
\021Declarant\022 has been defined in Section 87(a) to mean a person making a declaration under Section 88. \021Disputed tax\022 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. \021Indirect tax enactment\022 has been defined in Section 87(j) in the following terms :
\023(j) \023indirect tax enactment\024 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;\024
Section 87(k) of the Act defines the \021person\022 to mean :
\023(k) \023person\024 includes \026
(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.\024
Section 88, inter alia, provides :
\02388. 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 :-
\005 \005 \005
(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.\024
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 :
\02395. The provisions of this Section shall not
apply \026
\005 \005 \005
(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.\024
The principal questions which arise for consideration are \026 (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 \021public servants\022 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 \021person\022 and a \021declarant\022. 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, \021declarant\022 means a person making a declaration. The applicability of the provisions of the Act must be judged in the aforesaid context.
The definition of \021person\022 must be read having regard to term \021declarant\022 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 \021prosecution\022 assumes significance. The term \021prosecution\022 would include institution or commencement of a criminal proceeding. It may include also an inquiry or investigation. The terms \021prosecution\022 and \021cognizance\022 are not interchangeable. They carry different meanings. Different statutes provide for grant of sanction at different stages.
\021In initio\022 means in the beginning. The dictionary meaning of \021initiation\022 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 \021prosecution has been instituted\022 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 :
\02314. This raises the incidental
question: What is meant by \023taking cognizance
of an offence\024 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.\024
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 :
\02314. 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\005.\024
[Emphasis supplied]
The observations in the said judgment must be held to have been made in the factual matrix obtaining therein and not de\022hors 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 :
\023\005On 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.\024
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 :
\02326. 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.\024
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 :
\023\005When the Tribunal has set aside the levy of
penalty, the criminal proceedings against the
appellants cannot survive for further
consideration\005\024
In 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 :
\023\005It 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\005.\024
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 :
\023\005Non-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)
\0234. 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.\024 [See also Union of India v. Pramod Gupta (Dead) by Lrs. and Others \026 (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.