1996 Supreme(SC) 491

1996(3) Supreme 346
SUPREME COURT OF INDIA
B.P. Jeevan Reddy and K.S. Paripoornan, JJ.
Phiroze Dinshaw Lam Etc. -Appellants
versus
Union of India & Ors. -Respondents
Civil Appeal Nos. 4089, 4092-94 of 1996
(Arising out of SLP (C) Nos. 20048-51 of 1991)
With
Civil Appeal Nos. 4090-91 of 1996
(Arising out of SLP (C) Nos. 19431 & 19508 of 1991)
Decided on 28-2-1996

Headnote:Criminal Procedure Code, 1973-Section 340-Central Excise and Salt Act, 1944-Section 4-Proceedings under-Demand notices for including value of C.F.Cs in value of refrigerators for purpose of value under Section 4-Writ petitions-Company indulged in an act of fabricating evidence-Writ petition allowed de hors the said fabricated material-SLP-High Court directed to look into relevancy, admissibility and validity of that evidence-Writ petition disposed of providing for payment of duties by the Company-No order relating to fabrication of evidence by the Company-Revenue did not ask for a direction to prosecute Company for fabrication-Prayer made for prosecution after a period of 15 months-Company has paid up all amounts due-An order levying penal interest would meet ends of justice instead of direction for prosecution-Company shall pay penal interst at the rate of twenty percent p.a. on amounts withheld by it.

       Held : The Godrej did indulge in an act of fabricating evidence which was unworthy of such a major company. It sought to buttress its case before the learned Single Judge on the basis of the said documents. It is another matter that they succeeded in their writ petition de hors the said fabricated material. When, however, the letter of Sri Hathi was discovered during the searches conducted by the Revenue in June, 1987 and its misdeed stood exposed, Godrej was put on the defensive. The initiative passed to Revenue which contended not only that the writ petition filed by Godrej should be dismissed on the said ground but that it should be dealt with in a manner that it serves as a lesson to others. It is for this reason that the Special Leave Petition filed by the Revenue was allowed by this Court and the matter sent back to the High Court for deciding the writ petition in the light of the said letters. The High Court was asked to look into the relevancy, validity and admissibility of the said letters - which admittedly included the genuineness of the letters. With this turn of events, Godrej naturally became nervous. It did not want to proceed with the writ petition. It approached the Central Excise authorities at various levels for a settlement but that did not materialise. It also sought ot withdraw its writ petition, which was opposed by the Revenue. But what happened when the writ petition came up for hearing before the learned Single Judge is important. The writ petition was disposed of under what is called "Minutes of the Order" providing for payment of duties by Godrej subject to certain observations. The Order neither refers to the contention of the Revenue relating to fabrication of evidence by Godrej nor does it refer to any request of Revenue to dismiss the writ petition on the ground of fraud sought to be perpetrated by Godrej. The Order does not also say that any request was made by the Revenue to direct the prosecution of Godrej, its officers and dealers responsible for the said Act. (Para 14)

       Further Held : While we agree that the Division Bench was not wrong in making the direction which it did on the merits of the case, it does not appear to have bestowed sufficient attention to the above aspect and its impact while deciding upon the expediency contemplated by Section 340 of the Criminal Procedure Code. The Division Bench should have considered whether it is expedient to direct prosecution when the learned Single Judge had chosen not to make such a direction - for one or the other reason pointed out above and on account of the silence on the part of Revenue for a period of fifteen months. It is quite possible that the Revenue was satisfied with the Order ("Minutes of the Order") dated March 12, 1990 but changed its minds after fifteen months. It is not a question of jurisdiction or power but one touching the question of "expediency" contemplated by Section 340 of the Criminal Procedure Code. (Para 15)

       On a consideration of the relevant circumstances mentioned supra including the fact that Godrej has paid up all amounts due accepting the contentions of the Revenue, we think that an order levying penal interest would meet the ends of justice instead of the direction for prosecution made in the impugned order. (Para 16)

       Godrej and Boyce Manufacturing Company Private Limited shall pay penal interest at the rate of twenty percent per annum on all the amounts which were withheld by it, for the period commencing March 1, 1979, whether on the basis of the Order of the learned Single Judge of the Bombay High Court dated March 10, 1984 (allowing Writ Petition No. 1110/83) or otherwise as well as on the amounts which it had obtained by way of refund but which it ultimately paid back to the Revenue. The interest shall be payable for the period commencing from the date when the said amount/amounts became due and payable and ending with the last date of full payment. (Para 17)