Dipesh Chandak Vs. Union
of India  Insc 552 (17 September 2004)
S. N. Variava & A. K.
Mathur (Arising out of Slp (Crl.) No. 2740 Of 2002) S. N. Variava, J.
This Appeal is against the Judgment of the High Court of Patna dated 21st March, 2002.
Briefly stated the facts are as follows:
The Appellant is an accused in a number of cases pertaining to the Fodder
Scam in the Animal Husbandry Department of Bihar. He has, along with others,
been accused of misappropriation of the funds of the Animal Husbandry
Department and of fraudulent withdrawals from the State Exchequer by issuing
fake bills for supplies never made to the Animal Husbandry Department. The
Appellant has been, on 28th August, 1998, granted a pardon by the Special
Judge, CBI, on the condition that he makes a full and complete disclosure.
On the basis of the statement made by the Appellant, the Deputy Commissioner
of Income Tax, Central Circle-I, Patna, issued a show-cause-notice to the
Appellant as to why prosecution should not be initiated against him, under
Sections 277 and 278 of the Income Tax Act, for having filed false returns of
income tax. The Appellant replied to the show-cause-notices, inter alia,
stating that he has been granted a pardon under Section 306 of the Criminal
Procedure Code and thus the show-cause-notice was not maintainable for an
offence under Sections 277 and 278 of the Income Tax Act. This contention was
not accepted by the Commissioner of Income Tax, who opined that the pardon was
restricted only to offences under the Indian Penal Code. Accordingly, a
Complaint Case No. 157(C)/2000 has been registered under Sections 277 and 278
of the Income Tax Act. The Court of Economic Offences, Patna, has taken
cognizance and issued summons.
The Appellant filed a Petition under Section 482 of the Criminal Procedure
Code for quashing this complaint. By the impugned Judgment that Petition has
been dismissed, inter alia, on the ground that as yet the terms of the pardon
have not been fulfilled.
It is held that till full evidence is given by the Appellant and the trial
of all cases is concluded he continues to be an accused and, therefore, cannot
claim immunity from prosecution.
Mr. Lahoty, on behalf of the Appellant, submitted that the Appellant has
been granted pardon under Section 306 of the Criminal Procedure Code. He
submitted that under sub-section 2 of Section 306 the pardon is, amongst
others, in respect of any offence punishable with imprisonment which may extend
to seven years or more. He submitted that such a pardon would operate not just
for offences under the Indian Penal Code but would also cover offences under
other statutes. He submitted that for an offence under Sections 277 and 278 the
sentence may extend to seven years. He submitted that by virtue of the pardon
no prosecution could have been launched against the Appellant under these
Mr. Lahoty relied upon the case of Bipin Behari Sarkar vs. The State of West
Bengal reported in [1959 SCR 1324], wherein it has been held as follows:
"Section 339(1) of the Code provides that "where a pardon has been
tendered under s. 337 or s. 338, and the Public Prosecutor certifies that in
his opinion any person who has accepted such tender has, either by willfully
concealing anything essential or by giving false evidence, not complied with
the condition on which the tender was made, such person may be tried for the
offence in respect of which the pardon was so tendered, or for any other
offence of which he appears to have been guilty in connection with the same
matter". The proviso to this sub-section prohibits the trial of such
person jointly with any of the other accused and that such person shall be
entitled to plead at such trial that he had complied with the condition upon
which such tender was made. The provisions of this section clearly pre-suppose
that the pardon which had been tendered to a person had been accepted by him
and that thereafter that person had willfully concealed anything essential or
had given false evidence and therefore had not complied with the condition on
which the tender was made to him. Section 337 of the Code, under which a pardon
is tendered, shows that such tender is made on the condition that the person to
whom it is tendered makes a full and true disclosure of the whole of the
circumstances within his knowledge relative to the offence and to every other
person concerned whether as a principal or an abettor to the commission
thereof. Sub-section (2) of this section requires that every person who has
accepted a tender shall be examined as a witness in the court of the Magistrate
taking cognizance of the offence and in the subsequent trial, if any. It is
clear, therefore, that a mere tender of pardon does not attract the provisions
of s. 339. There must be an acceptance of it and the person who has accepted
the pardon must be examined as a witness. It is only thereafter that the
provisions of s. 339 come into play and the person who accepted the pardon may
be tried for the offence in respect of which the pardon was tendered, if the
Public Prosecutor certifies that in his opinion he has, either willfully
concealed anything essential or had given false evidence and had not complied
with the condition on which the tender was made." Relying on this case,
Mr. Lahoty submitted that the High Court was not right in stating that as yet
the Appellant was an accused. He submitted that the pardon would continue to
operate unless and until it has been revoked under Section 308 of the Criminal
Mr. Lahoty also relied upon the case of State vs. Hiralal G. Kothari and
others reported in [1960 (2) SCR 355], wherein it has been held that the person
to whom pardon is tendered is expected to state the whole truth including
details of any other subsidiary offence which might have been committed in the
course of the commission of the offence for which pardon is tendered. It has
been held that the pardon tendered must include the subsidiary offence, even
though if the subsidiary offence alone was committed no pardon could have been
tendered for the same. He also relied upon the case of Harumal Paramanand vs.
Emperor reported in A.I.R. (1915) Sind 43, wherein it has been held that if
there are more offences than one and if anyone of them is an offence
exclusively triable by the Sessions Court, then pardon could be granted even
though the other offences alleged or charged are not triable by the Sessions
Court. He further relies upon the case of Shiam Sunder vs. Emperor reported in
AIR 1921 Allahabad 234, wherein an approver in a dacoity case also disclosed
where arms possessed by the gang were kept. After he was released from the
dacoity case he was prosecuted under the Arms Act for possession of arms. It
was held that the illegal possession of arms and ammunition was an offence in
connection with the matter of docoity. It was held that arms were the
implements of his trade and crime and that it was impossible to separate the
possession of the arms from guilt as a dacoit. It was held that he could not
make a full and true disclosure relating to the offence of dacoity without
referring to the arms possessed by the gang. It was held that he could not be
prosecuted as the pardon covered even this act. In this case, it has also been
pointed out that if, however, he had made disclosure in respect of some other
felony which was not connected with the felony for which he has been
prosecuted, even though that would not be covered by the pardon, the Court
should recommend to the prosecution not to proceed against him in respect of
that other offence.
Mr. Lahoty also relied upon the case of State (Govt. of NCT of Delhi) vs.
Prem Raj reported in (2003) 7 SCC 121, wherein this Court has discussed the
power of pardon and the power to commute sentence. This authority, in our view,
is of no relevance to the question in issue.
Mr. Lahoty submitted that the pardon must necessarily mean that no
prosecution can be based in respect of the same offence.
He submitted that the offences for which the Appellant was being tried were
the same in respect of which he was now being sought to be prosecuted under
Sections 277 and 278 of the Income Tax Act. He submitted that the High Court
was thus wrong in not quashing the prosecution.
On the other hand, Mr. Pathak, Additional Solicitor General and Mr. B.
Datta, Additional Solicitor General, submitted that the prosecutions in respect
of which pardon was granted were for misappropriation of funds of the Animal
Husbandry Department by raising fake bills in respect of supplies never made to
the Animal Husbandry Department. They submitted that that prosecution had
nothing to do with the filing of false returns and making a false statement in
the Income Tax Returns. Reliance was placed on the case of Jasbir Singh vs.
Vipin Kumar Jaggi reported in (2001) 8 SCC 289, wherein the question was
whether a person to whom immunity has been granted under Section 64(1) of the Narcotic Drugs and
Psychotropic Substances Act, 1985 could be examined as a witness even
though he was an accused in the criminal case. The Trial Judge held that in the
absence of any pardon having been granted under Section 307 or Section 321 of
the Criminal Procedure Code an accused could not be examined as a witness for
the prosecution. This Court held that there was no conflict between the powers
exercised under Section 307 of the Criminal Procedure Code and by the
Government under Section 64. This Court held that even if there was a conflict,
Drugs and Psychotropic Substances Act, 1985
being a special and later enactment, Section 64 would prevail. It was held that
evidence could be given by the accused on the basis of the immunity granted
under Section 64.
In our view, the High Court was not correct in concluding that until
evidence has been given by the Appellant the pardon could not operate. However,
the fact remains that under Section 306 Cr.P.C. the pardon is granted in
respect of the offence for which he had been charged as an accused. Of course,
a pardon need not be only in respect of an offence under the Indian Penal Code.
A person may be charged, in respect of the same transaction or act, under the
Indian Penal Code and under some other Act, e.g. the Prevention of Corruption
Act. The pardon would operate in respects of all offences pertaining to that
transaction. However the pardon does not operate in respect of a transaction or
act entirely unconnected with the offence in respect of which pardon has been
granted. In this case, the pardon has been granted for the offence of
misappropriation of funds. This offence has nothing to do with filing of false
returns by the Appellant.
The prosecution under Sections 277 and 278 is in respect of filing false
return and making of false declaration. The pardon which has been granted would
not cover those offences.
However, it is clear that to get benefit of the pardon the Appellant has to
make a full and frank disclosure regarding the offences of misappropriation. If
he does not make a full and complete disclosure, the pardon may be cancelled.
If he makes a full and complete disclosure he faces the prospect of being
convicted in the prosecution under Sections 277 and 278 of the Income Tax Act.
Article 20(2) of the Constitution of India enjoins that no person can be
compelled to be a witness against himself. To continue with the prosecution
would thus amount to forcing the Appellant to give evidence against himself or
to risk pardon being cancelled as he cannot make a full and complete disclosure
for fear of being convicted in the other case. Thus, even though the pardon may
not extend to these offences, in our view, this is a fit case where the
Government should consider not prosecuting the Appellant under these Sections.
To insist on so prosecuting may result in valuable evidence being lost in
the fodder scam cases.
We, therefore, direct that the prosecution under Sections 277 and 278 of the
Income Tax Act will stand stayed till trial of the cases in which pardon is
granted is over. If the Appellant makes a full and complete disclosure, then,
in our view, the prosecution under Sections 277 and 278 should not be allowed
to proceed. We, therefore, grant to the Appellant liberty to apply for quashing
that prosecution at that stage.
Accordingly, the Appeal is disposed off with above directions.