2017 (1) TMI 1164 - SC - Income Tax

Offences to direct the registration of F.I.R. and investigation therein - Held that - The materials in question are not good enough to constitute offences to direct the registration of F.I.R. and investigation therein. The complaint should not be improbable and must show sufficient ground and commission of offence on the basis of which registration of a case can be ordered. The materials in question are not only irrelevant but are also legally inadmissible under Section 34 of the Evidence Act, more so with respect to third parties and considering the explanation which have been made by the Birla Group and Sahara Group, we are of the opinion that it would not be legally justified, safe, just and proper to direct investigation, keeping in view principles laid down in the cases of Bhajan Lal and V.C. Shukla (1990 (11) TMI 386 - SUPREME COURT ). In view of the materials which have been placed on record and the peculiar facts and circumstances projected in the case, we find that no case is made out to direct the investigation as prayed for.

Issues Involved
1. Legitimacy of the appointment of Central Vigilance Commissioner and Vigilance Commissioner.
2. Allegations of corruption and illegal transactions involving Aditya Birla Group and Sahara Group.
3. Admissibility and reliability of evidence obtained from raids.
4. Request for Special Investigation Team (SIT) to investigate the seized materials.
5. Legal standards for initiating investigations based on seized documents.

Detailed Analysis

1. Legitimacy of the Appointment of Central Vigilance Commissioner and Vigilance Commissioner:
The writ petition sought to challenge the appointments of Respondent No.2 as Central Vigilance Commissioner and Respondent No.3 as Vigilance Commissioner, alleging that these individuals were not of "impeccable integrity." However, the court clarified that it was not examining the main writ petitions concerning these appointments but was only addressing the interlocutory applications related to the materials seized during raids.

2. Allegations of Corruption and Illegal Transactions Involving Aditya Birla Group and Sahara Group:
The petitioners alleged that incriminating documents and unaccounted cash were found during raids on the premises of Aditya Birla Group and Sahara Group. The documents purportedly showed large sums of money routed through hawala and payments to political figures. The petitioners argued that these materials indicated cognizable offences and warranted investigation.

3. Admissibility and Reliability of Evidence Obtained from Raids:
The court analyzed the nature of the materials seized, which included loose sheets, random logs, and electronic data not maintained as regular books of accounts. Citing the precedent set in "C.B.I. versus V.C. Shukla," the court reiterated that such materials are irrelevant and inadmissible under Section 34 of the Evidence Act. The court emphasized that only entries in regularly kept books of accounts are admissible, and even then, they require corroborative evidence to establish liability.

4. Request for Special Investigation Team (SIT) to Investigate the Seized Materials:
The petitioners requested the constitution of an SIT to investigate the materials seized from the raids. They argued that a prima facie case existed based on the recovered documents. However, the court found that the materials lacked reliability and were not maintained in the regular course of business. The court also noted that the Income Tax Settlement Commission had found the transactions noted in the documents to be non-genuine and lacking evidentiary value.

5. Legal Standards for Initiating Investigations Based on Seized Documents:
The court underscored the importance of having "cogent legally cognizable material" before ordering an investigation against high-ranking officials or any individual. The court expressed concern that initiating investigations based on irrelevant or inadmissible entries could lead to abuse of the legal process. The court referred to the principles laid down in "State of Haryana versus Bhajan Lal," which allow for quashing FIRs if the allegations do not constitute a cognizable offence or are inherently improbable.

Conclusion
The court concluded that the materials seized from the Aditya Birla Group and Sahara Group were not sufficient to warrant an investigation. The documents were found to be irrelevant and inadmissible under the Evidence Act, and the explanations provided by the groups further diminished their reliability. Consequently, the court dismissed the interlocutory applications, finding no merit in the petitioners' request for an investigation.

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