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2011 (4) Supreme 657
SUPREME COURT OF INDIA
B. Sudershan Reddy and Surinder Singh Nijjar, JJ.
Ram Jethmalani & Ors. — Petitioners
versus
Union of India & Ors. — Respondents
Writ Petition (Civil) No. 176 of 2009
with
I.A.No.1 of 2009
Decided on : 4-7-2011
(b) Judicial Review – Unaccounted monies stashed abroad – Even named individuals not yet questioned with any degree of seriousness – Deprecated. (Para 20)
(c) Administrative Law – Stashing of unaccounted monies abroad and related matters – The State has the primordial responsibility, under the Constitution, to make every effort to trace the sources of such monies, punish the guilty where such monies have been generated and/or taken abroad through unlawful activities, and bring back the monies owed to the Country. (Para 46)
(d) Judicial Review – Special Investigation Teams – Merits of vigour of investigations, and attempts at law enforcement, would necessarily also have to be appreciated from the benefits that are likely to accrue to the country in preventing such activities in the future – For this purpose constitution of Special Investigation Teams often becomes necessary. (Paras 47 and 48)
(1996) 2 SCC 199; (2004) 8 SCC 610; (2005) 5 SCC 517; (2011) 1 SCC 560 – Relied upon
(e) Judicial Review – Double Taxation Agreement (DTAA) with Germany – Article 26 – There is no absolute bar of secrecy – Instead, the agreement specifically provides that the information may be disclosed in public court proceedings – The Agreement does not and cannot cover matters concerning another independent nation-State, i.e., Liechtenstein. (Paras 56 to 58)
(f) Interpretation of Treaties – The DTAA with Germany can only be interpreted to mean that the government cannot bind India in a manner that derogates from Constitutional provisions, values and imperatives – Court proceedings referred to in Article 26(1) cannot be interpreted to be limited to double taxation proceedings only – Such interpretation would be contrary to the basic structure of the Constitution. (Paras 61 and 62)
(2004) 10 SCC 1 – Relied upon
(g) Constitution of India – Article 32(1) – Provision is part of basic structure of the Constitution – Petitioners seeking to protect their fundamental rights cannot be denied information necessary therefor in absence of any constitutional principle or enumerated grounds of constitutional prohibition. (Para 67)
(h) Constitution of India – Part III – In the task of upholding of fundamental rights, the State cannot be an adversary. (Para 68)
(i) Constitution of India – Articles 32 and 19 – Information sought under Article 32 can be denied only under exceptions carved out in Article 19(2). (Para 70)
(j) Constitution of India – Article 21 – Right to privacy is an integral part of right to life – Revelation of details of bank accounts of individuals, without establishment of prima facie grounds to accuse them of wrong doing, would be a violation of their rights to privacy – Names of those individuals with bank accounts in Liechtenstein, with respect of whom investigations have been concluded, either partially or wholly, and show cause notices issued and proceedings initiated may be disclosed. (Para 77)
Facts of the case:
The issue in this case relates to various facets transfers and accumulation of monies, which are unaccounted for by many individuals and other legal entities in the country, in foreign banks.
Finding of the Court:
Large unaccounted monies are generally an indication of a soft State especially in terms of the unholy nexus between the law makers, the law keepers, and the law breakers, resulting in vanishing moral authority, and also the moral incentives, to exercise suitable control over the economy and the society.
Result:
Special Investigation Team constituted and directions given.
ORDER
I
“Follow the money” was the short and simple advice given by the secret informant, within the American Government, to Bob Woodward, the journalist from Washington Post, in aid of his investigations of the Watergate Hotel break in. Money has often been claimed, by economists, to only be a veil that covers the real value and the economy. As a medium of exchange, money is vital for the smooth functioning of exchange in the market place.
However, increasing monetization of most social transactions has been viewed as potentially problematic for the social order, in as much as it signifies a move to evaluating value, and ethical desirability, of most areas of social interaction only in terms of price obtained in the market place.
2. Price based notions of value and values, as propounded by some extreme neo-liberal doctrines, implies that the values that ought to be promoted, in societies, are the ones for which people are willing to pay a price for. Values, and social actions, for which an effective demand is not expressed in the market, are neglected, even if lip service is paid to their essentiality. However, it cannot be denied that not everything that can be, and is transacted, in the market for a price is necessarily good, and enhances social welfare. Moreover, some activities, even if costly and without being directly measurable in terms of exchange value, are to be rightly viewed as essential. It is a well established proposition, of political economy, and of statecraft, that the State has a necessary interest in determining, and influencing, the kinds of transactions, and social actions, that occur within a legal order. From prevention of certain kinds of harmful activities, that may range from outright crimes, to regulating or controlling, and consequently mitigating, socially harmful modes of social and economic production, to promotion of activities that are deemed to be of higher priority, than other activities which may have a lower priority, howsoever evaluated in terms of social utility, are all the responsibilities of the State. Whether such activities by the State result in directly measurable benefits or not is often not the most important factor in determining their desirability; their absence, or their substantial evisceration, are to be viewed as socially destructive.
3. The scrutiny, and control, of activities, whether in the economic, social or political contexts, by the State, in the public interest as posited by modern constitutionalism, is substantially effectuated by the State “following the money.” In modern societies very little gets accomplished without transfer of money. The incidence of crime, petty and grand, like any other social phenomena is often linked to transfers of monies, small or large. Money, in that sense, can both power, and also reward, crime. As noted by many scholars, with increasing globalization, an ideological and social construct, in which transactions across borders are accomplished with little or no control over the quantum, and mode of transfers of money in exchange for various services and value rendered, both legal and illegal, nation-states also have begun to confront complex problems of cross-border crimes of all kinds. Whether this complex web of flows of funds, instantaneously, and in large sums is good or bad, from the perspective of lawful and desired transactions is not at issue in the context of the matters before this Court.
4. The worries of this Court that arise, in the context of the matters placed before us, are with respect to transfers of monies, and accumulation of monies, which are unaccounted for by many individuals and other legal entities in the country, in foreign banks. The worries of this Court relate not merely to the quantum of monies said to have been secreted away in foreign banks, but also the manner in which they may have been taken away from the country, and with the nature of activities that may have engendered the accumulation of such monie
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