Full Judgment Text
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CASE NO.:
Appeal (crl.) 676 of 2003
PETITIONER:
Hira Lal Hari Lal Bhagwati
RESPONDENT:
C.B.I., New Delhi
DATE OF JUDGMENT: 02/05/2003
BENCH:
Brijesh Kumar & A.R.LAKSHMANAN.
JUDGMENT:
JUDGMENT
(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
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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.
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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.