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TMI Blog2006 (10) TMI 147X X X X Extracts X X X X X X X X Extracts X X X X ..... ons of the Act was in question. Yet again there cannot be any equality in illegality. We, therefore, are of the opinion that the impugned judgment cannot be sustained. It is set aside accordingly. The High Court, however, did not go into the merits of the matter. It proceeded on the basis that the continuation of the prosecution as against the respondents was unsustainable in law. Although prosecution as against the respondents herein may be held to be maintainable, in our opinion, they are entitled to contend that even if the materials brought on record are given face value and taken to be correct in their entirety, no case has been made out as against them. The appeal is allowed, the impugned judgment is set aside with the aforementioned observations. - CRL.A. 1100 OF 2006 - - - Dated:- 31-10-2006 - Judge(s) : S. B. SINHA., DALVEER BHANDARI JUDGMENT The judgment of the court was delivered by S.B. SINHA J.- Delay condoned. Leave granted. Interpretation and/or application of the Kar Vivad Samadhan Scheme, 1998, framed under the Finance (No. 2) Act, 1998, is in question in this appeal which arises out of judgment and order dated January 20, 2005, pas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said application has been allowed. No appeal is said to have preferred therefrom. The respondents thereafter filed an application before the High Court with the self-same prayer, which by reason of the impugned judgment has been allowed. The appellant is, thus, before us. Mr. Vikas Singh, the learned Additional Solicitor General, appearing on behalf the appellant urged: (i) Having regard to the nature of the Scheme, the High Court committed a manifest error in opining that as the private parties became entitled to immunity from prosecution, the official respondents would also be covered thereby. (ii) The High Court misconstrued and misinterpreted the provisions of section 95(iii) of the Act. (iii) Public servants were not entitled to any relief under the said Scheme and far less immunity from prosecution. Dr. Manish Singhvi and Mr. T. Raja, learned counsel appearing on behalf of the respondents, on the other hand submitted: (i) The High Court cannot be said to have acted illegally and without jurisdiction, as the respondents herein were also entitled to the benefit of immunity scheme. (ii) The doctrine of parity is applicable in the instant case, and, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r not, (vi) a local authority, (vii) every artificial juridical person, not falling within any of the preceding sub-clauses; (viii) assessee, as defined in rule 2 of the Central Excise Rules, 1944 (1 of 1944); (ix) exporter as defined in clause (20) of section 2 of the Customs Act, 1962 (52 of 1962); (x) importer as defined in clause (26) of section 2 of the Customs Act, 1962 (52 of 1962); (xi) any person against whom proceedings have been initiated and are pending under any direct tax enactment or indirect tax enactment." Section 88, inter alia, provides: "88. Subject to the provisions of this Scheme, where any person makes, on or after the 1st day of September, 1998, but on or before the 31st day of December, 1998, a declaration to the designated authority in accordance with the provisions of section 89 in respect of tax arrear, then, notwithstanding anything contained in any direct tax enactment or indirect tax enactment or any other provision of any law for the time being in force, the amount payable under this Scheme by the declarant shall be determined at the rates specified hereunder, namely:- (f) where the tax arrear is payable under the indirect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dings had been initiated. Section 87(k)(xi), while defining a person undoubtedly embraces within its fold those against whom proceedings have been initiated, but the same relate to direct or indirect tax enactments. Proceedings contemplated under the Act must have a nexus with arrears of tax. Public servants who can never file a declaration would not, in our considered view, come within the purview thereof. Of course, there exists a distinction between a person and a declarant. However, declaration is to be filed by a person who would come within the purview of the said term, as has been stated in the interpretation clause contained in section 87(k) of the Act. Section 88 provides for a declaration to be made by a person and declarant means a person making a declaration. The applicability of the provisions of the Act must be judged in the aforesaid context. The definition of person must be read having regard to the term declarant, i.e., who files a declaration. A public servant is enjoined with a duty to enforce tax enactments. A declaration in terms of section 88 can be filed by a declarant for determination of the tax arrear under the Scheme at the rates specified the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at interpretation of the word "prosecution" assumes significance. The term "prosecution" would include institution or commencement of a criminal proceeding. It may include also an inquiry or investigation. The terms "prosecution" and "cognizance" are not interchangeable. They carry different meanings. Different statutes provide for grant of sanction at different stages. "In initio" means in the beginning. The dictionary meaning of "initiation" is cause to begin. Whereas some statutes provide for grant of sanction before a prosecution is initiated, some others postulate grant of sanction before a cognizance is taken by the court. However, the meaning of the word may vary from case to case. In its wider sense, the prosecution means a proceeding by way of indictment or information, and is not necessarily confined to prosecution for an offence. The term "prosecution has been instituted" would not mean when charge-sheet has been filed and cognizance has been taken. It must be given its ordinary meaning. The Legislature with a definite purpose thought of granting an exemption from the operation of the Act, if no prosecution is initiated under the provisions of the statute specif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not been defined in the Code. But from the scheme of the Code, the content and marginal heading of section 190 and the caption of Chapter XIV under which sections 190 to 199 occur, it is clear that a case can be said to be instituted in a court only when the court takes cognizance of the offence alleged therein. The ways in which such cognizance can be taken are set out in clauses (a), (b) and (c) of section 190(1). Whether the Magistrate has or has not taken cognizance of the offence will depend on the circumstances of the particular case including the mode in which the case is sought to be instituted, and the nature of the preliminary action, if any, taken by the Magistrate. Broadly speaking, when on receiving a complaint, the Magistrate applies his mind for the purposes of proceeding under section 200 and the succeeding sections in Chapter XV to the Code of 1973, he is said to have taken cognizance of the offence within the meaning to section 190(1)(a). If, instead of proceeding under Chapter XV, he has, in the judicial exercise of his discretion, taken action of some other kind, such as issuing a search warrant for the purpose of investigation, or ordering investigation by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce falls in the category of sections mentioned in section 195 of the Criminal Procedure Code." The observations in the said judgment must be held to have been made in the factual matrix obtaining therein and not dehors the same. In the instant case, resorting to any device or camouflage has not been alleged. It is also not a case that the provisions of the Indian Penal Code or the Prevention of Corruption Act cannot be said to have any application, although linked with an offence under section 136 of the Customs Act. An ultimate purpose of commission of an offence may be to commit one offence under one statute, but indisputably in the process thereof offences under other statutes may also be committed. In Hira Lal Hari Lal Bhagwati v. CBI [2003] 5 SCC 257; [2003] 262 ITR 466 this court indisputably proceeded to hold that the immunity was qua offence but the appellants therein before this court were the assessees. The prosecution was also launched therein after a declaration was made. We may also notice that Brijesh Kumar J. in his concurring but separate judgment took into consideration the fact situation obtaining therein, namely, initiation of a criminal proceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his favour; but the same must have a direct nexus with his criminal liability. He would not acquire any immunity only because civil and criminal liabilities have some connection, however, remote the same may be. The connection between the two types of liabilities must be direct and proximate. If in incurring the civil liability, he has committed offences wherewith determination thereof has no nexus, the immunity would not extend thereto. We will give a simple example. A person while obtaining undue favour from an authority under the indirect tax enactment, offers a bribe. Obtaining of an undue favour resulting in prosecution under the indirect tax enactment may be a separate offence, but involvement of the public servant qua offences under the Prevention of Corruption Act would be a separate and distinct one. It is one thing to say that an Act constitutes both civil and criminal wrong and in the self same fact, when compounding of offence is effected in relation to the civil dispute, the High Court may be justified in quashing a complaint under the criminal case as was done in Central Bureau of Investigation, SPE, SIU (X) v. Duncans Agro Industries Ltd. [1996] 5 SCC 591 ; [199 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me at all. The said decision, therefore, cannot have any application whatsoever. Reliance has also been placed on Central Bureau of Investigation v. Akhilesh Singh [2005] 1 SCC 478. In that case, out of the three accused, two were discharged and in that view of the matter it was held that the basis of alleged conspiracy by the respondent therein with Dr. Sanjay Singh lost its substratum. It was in the factual matrix of the case exercise of jurisdiction by the High Court under section 482 of the Code of Criminal Procedure was held to be not to be suffering from any illegality or infirmity. We may, however, notice that in R.K. Garg v. Union of India [1981] 4 SCC 675, it was held that only because exemption had been granted in relation to purchase of bearer bonds, the same would not mean that the offender shall stand immuned from other offences also. Bhagwati J. speaking for the majority opined: "It will be seen that the immunities granted under section 3, subsection (1) are very limited in scope. They do not protect the holder of special bearer bonds from any inquiry or investigation into concealed income which could have been made if he had not subscribed to or acquired specia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the concealed income even though it be invested in special bearer bonds. The whole object of the impugned Act is to induce those having black money to convert it into white money by making it available to the State for productive purposes, without granting in return any immunity in respect of such black money, if it could be detected through the ordinary processes of taxation laws without taking into account the fact of purchase of special bearer bonds..." We may at this stage deal with another contention, viz., that if in the connected matter where other public servants were parties, no appeal having been filed from the judgment of the High Court by the CBI, this appeal would not be maintainable. This aspect of the matter has been considered by a three-judge Bench of this court in Government of West Bengal v. Tarun K. Roy [2004] 1 SCC 347, wherein it was categorically stated: "...Non-filing of an appeal, in any event, would not be a ground for refusing to consider a matter on its own merits. 29. In State of Bihar v. Ramdeo Yadav [1996] 3 SCC 493 wherein this court noticed Debdas Kumar [1991] Supp 1 SCC 138 by holding: '4. Shri B.B. Singh, learned counsel for the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X
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