2003 Supreme(SC) 542

2003(4) Supreme 274
Supreme Court of India
(From Delhi High Court)
Brijesh Kumar & AR. Lakshmanan, JJ.
Hira Lal Hari Lal Bhagwati —Appellant
versus
C.B.I., New Delhi —Respondent
Criminal Appeal No. 676 of 2003
(@ SLP (Crl.) No. 1363/2002)
With
Criminal Appeal No. 677 of 2003
Decided on 2-5-2003
Counsel for the Parties :
For the Appearing Parties : K.K. Sood, Additional Solicitor General, P. Chidambaram, Sr. Advocate, Sunil Dogra, Ms. Sayali Phatak, Ms. Rashi Malhotra, Devang S. Nanavati, Saurin Mehta, Mrs. Nirmala Gupta, Rajeev Sharma and P. Parmeswaran, Advocates.

Important point
If an assessee takes the option under the Kar Vivad Samadhan Scheme, he obtains immediate immunity under any proceeding under any and all laws in force.

Headnote:Indian Penal Code, 1860—Sections 120B and 420—Conspiracy for cheating Government of India in terms of evasion of customs duty—Criminal prosecution—Petition for quashing FIR—Two machines were imported by Gujarat Cancer Society who availed exemption of duty on basis of exemption certificate—Exemption certificate issued in name of Gujarat Cancer and Research Institute and not in name of Gujarat Cancer Society—GCS was held liable to pay Customs Duty—GCS agreed to deposit stipulated amount under Kar Vivad Samadhan Scheme 1998—GCS immuned from any criminal proceedings pursuant to certificates issued under the scheme—Prosecution of appellants in their capacity as office bears of GCS—Whether sustainable—(No).

       As per Dr. AR. Lakshmanan, J.

       Held : In our view, in the present case, the alleged criminal liability stands compounded on a settlement with respect to the civil issues and, therefore, the First Information Report was erroneously issued and was totally unwarranted. From the aforesaid judgment, the proposition that follows in the instant case is that the Kar Vivad Samadhan Scheme, 1998 issued by the Government of India was a voluntary Scheme whereby if the disputed demand is settled by the Authority and pending proceedings are withdrawn by an importer, the balance demand against an importer shall be dropped and the importer shall be immuned from penal proceedings under any law in force. We are, therefore, of the opinion that this judgment squarely comes in the face of any argument sought to be propounded by the respondent that the Kar Vivad Samadhan Scheme, 1998 does not absolve the appellants from criminal liability under the Indian Penal Code. The learned single Judge of the High Court of Delhi, in our opinion, has not appreciated the fact that the continuance of the proceedings in the instant case would only tantamount to driving the present appellants to double jeopardy when they had been honourably exonerated by the Collector of Customs by their adjudication and further the GCS of which one of the appellants is the General Secretary in which capacity he is accused in the present case was granted amnesty under the Kar Vivad Samadhan Scheme, 1998. In our opinion, the present case does not warrant subjecting a citizen especially senior citizens of the age of 92 & 70 years to fresh investigation and prosecution on an incident or fact situation giving rise to offence under both the Customs Act and the Indian Penal Code when the matter has already been settled. Likewise, the respondent herein has initiated criminal proceedings against Accused No.2 & Accused No.1, inter alia, on the ground alleging that the appellants in conspiracy with the co-accused named therein with each other have cheated the Government of India in terms of evasion of Customs Duty and by concealment of facts obtained CDEC in respect of MRI and Lithotripsy machines and by violating the provisions of actual user condition as per Import Export Policy and Customs Notification No. 279/83 dated 30.9.1983 and Customs Notification No. 64/88 dated 1.3.1988 during the year 1987-90, despite acknowledging the fact that Customs Duty has been paid by the appellants to the Customs Department and settled and that commission of offences under Section 120B read with Section 420 of the Indian Penal Code are made out. In our view, under the penal law, there is no concept of vicarious liability unless the said statute covers the same within its ambit. In the instant case, the said law which prevails in the field i.e. the Customs Act, 1962 the appellants have been therein under wholly discharged and the GCS granted immunity from prosecution. It is well established principle of law that the matter which has been adjudicated and settled need not to be dragged into the criminal courts unless and until the act of the appellants could have been described as culpable. The true fact and import of the Kar Vivad Samadhan Scheme, 1998, in our view, is that once the said Scheme is availed of and all the formalities complied with including the payment of the duty, the immunity granted under the provisions of the Customs Act, 1962 also extends to such offences that may prima facie be made out on identical allegations i.e. of evasion of Customs Duty and violation of any Notification issued under the said Act. In our view, there is no prima facie case made out in respect of the alleged offence under Section 120B read with Section 420 of the Indian Penal Code and, therefore, the charge sheet and the process ­issued thereunder has to be quashed. (Paras 29 to 31)

       As the Customs Duty has been paid by the GCS, there is no fraudulent or dishonest intention on the part of the GCS or its office bearers to retain the property. Moreover, there is no inducing on the part of the GCS or its office bearers intentionally to retain the property in view of the fact that the Customs Duty has been paid by the GCS and, therefore the ingredients of the offence of cheating are missing for issuing the process against the appellants and, therefore, the same, in our view, is liable to be quashed and set aside. (Para 35)

       As per Brijesh Kumar, J.

        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. (Para 44)