Hira
Lal Hari Lal Bhagwati Vs. C.B.I., New Delhi [2003] Insc 261 (2 May 2003)
Brijesh Kumar & A.R.LAKSHMANAN. (arising out of S.L.P. (Crl.) No. 1356 of 2002) WITH
CRIMINAL APPEAL NO. OF 2003 (arising out of S.L.P. (Crl.) No. 1363 of 2002)
BRIJESH KUMAR, J.
I have the benefit of going through the detailed and elaborate judgment
prepared by brother Lakshmanan, J. I am in respectful agreement with the same.
I would, however, like to emphasise yet another aspect of the matter by reason
of which also it does not lie for the respondent, to initiate or continue the
criminal proceedings against the appellants.
Since the facts have been set out in detail, in the judgment of brother
Lakshmanan, J., it is not necessary to dwelve upon the factual position
anymore. It is true, so far the scheme and the terms under which determination
of liability is made thereunder, provides for immunity from initiation of
criminal proceedings under the Customs Act, in respect of the matters covered
under the declaration u/s 88 of the Scheme but more important in that regard
for this case is Section 95 of the Kar Vivad Samadhan Scheme , Chapter IV of
Finance (No.2) Act, 1998, which is quoted below :
"95, The provisions of this Scheme shall not apply (i) xx xx xx (ii) in
respect of tax arrear under any indirect tax enactment -, (a) in a case where
prosecution for any offence punishable under any provisions of any indirect tax
enactment has been instituted on or before the date of filing of the
declaration under section 88, in respect of any tax arrear in respect of such
case under such indirect tax enactment;
(b) xx xx xx (c) xx xx xx (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;
xxx xxx xxx" According to the above provision, a person will not be
eligible or entitled to take benefit of the Scheme against whom a prosecution
for punishment of an offence under Chapter IX or XVII of the IPC is pending on
or before the date of the declaration or such person has been convicted for any
of such offences indicated above. There is no dispute on the fact that on the
date the appellants submitted their declaration under Section 88 no prosecution
was pending nor they stood convicted for an offence falling in Chapter IX or
XVII of the IPC. Section 420 IPC falls in Chapter XVII of the IPC. The other
condition of eligibility so as to be entitled to take the benefit of the scheme
is that where any proceeding is pending in the High Court or the Supreme Court
against any order in respect of tax arrear, the declarant is obliged to
withdraw such appeal or proceeding and is further liable to furnish the proof
of such withdrawal as provided under Section 90 of the Scheme of 1998. The case
of the petitioner was settled, the tax liability was determined on 10.2.1999 by
the Designated Authority, and the certificate of full and final settlement was
issued on 19.7.1999. The appeal pending in this Court against the order of the
CEGAT was withdrawn by the appellants on 16.3.1999. It is thus obvious that
certificate of full and final settlement was issued in view of the fact that
the conditions enumerated above were fulfilled.
It appears that despite the statement of settlement having been filed under
Section 88 of the Act of 1998, an FIR was lodged and a case was registered on
6.1.1999 on the basis of which, later on a charge sheet was also submitted. On
the one hand final settlement was made after determining the tax liability on
the premises that the appellants were neither convicted nor criminal
proceedings were pending, relating to any offence under Chapter IX or XVII of
the IPC, yet the criminal proceedings are being prosecuted which is apparently
against the very spirit of the Scheme promulgated under the Finance (2) Act of
1998. If a person against whom criminal proceedings were pending, relating to
offence under Chapter IX or XVII of the 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 he should 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 clause
(iv) 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 on
one hand 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 bonafides.
In the background given above, there is every reason to legally infer that
the position as it stood, in regard to the criminal prosecution and conviction
on the date the declaration was filed, as conditions precedent to settlement
under the Scheme, would also stand finalized on full and final settlement of the
matter under the Scheme. That is to say the position that no criminal
prosecution was pending against the declarant on the date of filing of the
declaration nor he stood convicted for such an offence in relation to the
matter covered under the declaration, it would stand finalized with acceptance
of the declaration and settlement of the matter fully and finally. Later on,
the declarant could not be or continued to be subjected to criminal prosecution
to alter the position as it stood on the relevant date of the submission of
declaration and get him convicted for such offences in respect of which, if he
stood convicted earlier while filing statement he would not have been entitled
to seek the benefit under the Scheme. The appellants virtually foreclosed their
right to further pursue the proceedings before the authorities or courts of law
challenging the legality, validity or the tax liability in terms of the Scheme.
Undoubtedly, if the appellants' appeal which was pending in this Court against
the order of CEGAT relating to the tax liability, had been allowed it might
have affected the criminal proceeding too on merits. In certain circumstances,
it could be put up as a defence by the declarant, in the criminal case but in
terms of the scheme he was bound to withdraw his appeal. The criminal
prosecution could not be allowed to proceed by putting an end to a possible
defence, before hand. It certainly amounts to abuse of process of law. The
appeals thus deserve to be allowed. .., J.
(Brijesh Kumar) In the result, we allow the appeals and the order of the
High Court is set aside and the FIR No. R.C.1 (E)/99/EOW-1/DL1 and the
proceedings initiated in pursuance thereto against the appellants in the Court
of Chief Metropolitan Magistrate, Delhi under Section 420 read with 120-B of
the Indian Penal Code are quashed.
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