M. Natarajan vs State

S.R. Singharavelu, J.—The Criminal Revision Petition is preferred against the order passed by the learned Principal Special Judge for CBI

Cases, Chennai in Crl. M.P. No. 146 of 2005 in C.C. No.6 of 2004, dated 18.04.2005. The Criminal Original Petition is filed to quash the

proceedings in C.C.No.6 of 2004, on the file of Principal Special Judge for CBI Cases (VIII Addl.), Chennai.

The brief facts mentioned in the Crl. O.P., which can also be applied in the Revision Case, are as follows:-

One Dr. S. Balakrishnan (3rd accused) purchased a Lexus car, which was sent by ship to Madras in July 1994. Yogesh Balakrishnan (4th

accused), who is the son of 3rd accused, delivered certain documents for getting clearance of the said car from the Customs Department. One of

the said documents was the letter dated 08.09.1994 of 1st accused, the present petitioner, who is the publisher of a magazine called

TAMIlARASI"", which was commenced in the year 1992. The 1st accused is also the author of bi-monthly magazine ""PUDIYA PARVAI"", which

was commenced in the year 1993. One Baskaran (2nd accused) was assisting the petitioner/1st accused, and he was also in-charge of the said

publications. Allegation of criminal conspiracy among the above said four accused in getting customs clearance for the importing of Toyata car,

under the condition of transfer of residence to India for permanent settlement, was made on the footing that they produced forged fabricated

invoice dated 13.07.1993 showing undervalue of the car and also wrongly mentioning that the car was purchased in the year 1993, so as to fulfil

the condition precedent for importing the said car.

There was also a letter said to have been given by the petitioner/1st accused, on the basis of which ''Foreign Inward Remittance certificate

(FIRC) was obtained by Accused Nos.1 to 4, with the connivance of 5th accused, the Manager of the bank, and also some other customs officials

regarding whom prosecution was not instituted and only departmental action was mooted. If the correct year of the purchase of car, namely, 1994

was mentioned, that would be a deviation of the condition precedent for importing the said car. Therefore, it was wrongly mentioned as if it was

purchased in the year 1993; forged invoice dated 13.07.1993 for undervaluing the car was said to have been issued; FIRC was also obtained by

production of a letter dated 08.09.1994. Thus, the clearance of the car was made on 08.04.1994 by knowing fully well that the car was not

purchased in the year 1993, that the original cost of the car was more than the declared value that the FIRC was obtained on wrong representation

and that the importer Dr. Balakrishnan produced forged document, causing wrongful loss of Rs.4 lakhs to the Government of India by way of

customs duty.

Based upon the above allegation, case was registered on 22.04.1998 against Accused Nos.3 to 5 and the customs officials. But before ever

charge sheet was filed on 30.01.2004, materials were gathered indicating the above involvement of 1st and 2nd accused and therefore, charge

sheet was directed against them also. The case was posted in the month of April, 2004 for receiving copies by the accused. Balakrishnan (3rd

accused) did not appear in court and therefore, non-bailable warrant was pending against him in the above case of C.C.No.6 of 2004 on the file of

the learned Principal Special Judge for C.B.I. Cases, Chennai. In the meantime, 4th accused, the son of 3rd accused, filed Crl.M.P.No.301 of

2004 for return of the passport and that was dismissed, against which revision in Crl.R.C.No.1563 of 2004 was filed on 11.04.2005, in which

direction was issued by this Court to split up the case against 3rd accused, against whom NBW was pending, and to proceed and dispose of the

case against others, within a time-frame. Subsequently, the trial commenced, in which 22 witnesses were examined; 82 documents were marked

on the side of the prosecution. The case stood posted on 05.09.2005 for examination of Defence Witnesses. It is, in the meantime, 1st accuse filed

discharge application in Crl.M.P.No.146 of 2005, on the file of the learned Principal Special Judge for CBI cases, Chennai, which was dismissed

on 18.04.2005, finding that the relief of ""KVSS"" is to be considered only in the course of trial of the case and declined to give any finding with

respect to the discharge; against which, the petitioner preferred this Revision Case, besides, subsequently filing Crl.O.P.No.21636 of 2005 for

quashing. Simultaneously, on 02.05.2005, 1st accused filed W.P.215 of 2005, on the file of Supreme Court, wherein a direction was issued on

13.05.2005 for early disposal of this Revision Case as well as the direction to 1st accused to move for stay, before the High Court. On such

direction, in Crl.M.P.No.3565/2005, this Court dismissed the stay petition filed by 1st accused, on 24.05.2005. Thus, the Revision Case and the

Crl. O.P. were filed.

The contention of the learned counsel for the petitioner is three fold;

(1) petitioner has no role with respect to the production of documents for clearance of the car;

(2) the concept that while framing charges, materials found in documents u/s 173 of the Criminal Procedure Code alone are to be looked into, is

erroneous, in view of the observation made by the Supreme Court in Sushila Rani Vs. Commissioner of Income Tax and Another, and Central

Bureau of Investigation, SPE, SIU (X), New Delhi Vs. Duncans Agro Industries Ltd., Calcutta, ;

(3) u/s 239 of the Criminal Procedure Code, accused shall be given an opportunity of being heard.

Learned counsel for the petitioner drew my attention to the various provisions of Finance Act 2/98 and more particularly, section 86 in Chapter

IV of the special enactment and also to the Kar Vivad Samadhan Scheme of 1998 (KVSS) which was framed with effect from 01.09.1998 under

the Rules of the said Act; which also provides for Form of Declaration to settle customs duty. Thus, according to Rule 3(1)(b) of the Rules, 3rd

accused filed declaration in Form -1B, u/s 88 of the said Act. On 27.02.1998, the customs Department issued Certificate of Intimation u/s 90(1)

of the Act, determining the amounts u/s 88(f) of the said Act, as Rs.2,84,325/-, which was remitted by 3rd accused, on 18.03.1999. This final

settlement was arrived at between the parties as against the arrears of tax of Rs.5,68,649/-. It is, in spite of this compromise, to the dismay of this

petitioner, he was charge sheeted under sections 420, 467, 471, 120B, IPC and u/s 13(2) and 13(1)(d) of Prevention of Corruption Act and the

case was taken on file in C.C.No.6 of 2004, on the file of the learned Principal Special Judge for CBI cases, Chennai; and to the utter dismay of

this petitioner, action already mooted against the Customs Department officials for alleged connivance with this petitioner was dropped with a

suggestion that departmental action could be proceeded against them. It is, therefore, this petitioner preferred Crl.M.P.No.146 of 2005 in

C.C.No.6 of 2004, on the file of the learned Principal Special Judge for CBI cases, Chennai, u/s 239 Cr.P.C. stating that the filing of final report is

in gross violation of ""KVSS"" and that it is contrary to the observations made in Hira Lal Hari Lal Bhagwati Vs. C.B.I., New Delhi, .

Learned Public Prosecutor, at the outset, relied upon the decision in M/s. Bhaskar Industries Ltd. Vs. M/s. Bhiwani Denim and Apparels Ltd.

and Others, and contended that the Crl.O.P. filed u/s 482 of Criminal Procedure Code as well as the Revision Case filed u/s 239, Criminal

Procedure Code, cannot co-exist simultaneously. A reading of the observation made in the above judgment makes the Revision Case maintainable,

and on which also arguments was advanced by the learned counsel for the petitioner. Without going into the technicalities of the matter, even if

either quashable or dischargeable points are available on the side of the petitioner, remedy in the appropriate proceedings may be given, and if

such remedy is not available in either of the cases, then both have to be dismissed.

The learned Public Prosecutor immediately cited the decision of the Supreme Court in State of Orissa v. Debendra Nath Padhi 2004 (8)

Supreme 568 which overruled the decision in the case of Sushila Rani and Dunkans Agro Industries Ltd. stated supra.

After referring to various case laws including the above cited cases, it was decided in the above cited decision in Devendranath Padhi''s case

that at the stage of framing of charge, material as produced by the prosecution alone is to be considered and not the one produced by the accused.

In that case, it was contended on behalf of the State that the contention made in Satish Mehra Vs. Delhi Administration and Another, , runs counter

to the views expressed by this Court, in large number of decisions, which amounts to upsetting well settled legal propositions and making nugatory

amendments made in Code of Criminal Procedure from time to time and would result in conducting a mini trial at the stage of framing of charge or

taking cognizance. It was observed that such a course would not only be contrary to the object and the scheme of the Code, but would also result

in total wastage of the court time because of conducting of two trials, one at the stage of framing charge and the other after the charge is framed. In

that case, reliance was also placed on behalf of the accused on some observations made in Minakshi Bala Vs. Sudhir Kumar and Others, , to the

effect that in exceptional cases, the High Court can look into only those documents which are unimpeachable and can be legally translated into

relevant evidence is misplaced for the purpose of considering the point in issue in these matters. Actually, in that case, it was held that once charges

are framed u/s 240, Cr.P.C. the High Court in its revisional jurisdiction would not be justified in relying upon documents other than those referred

to in Sections 239 and 240 Cr.P.C; nor would it be justified in invoking its inherent jurisdiction u/s 482 Cr.P.C. to quash the same, except in those

rare cases, where forensic exigencies and formidable compulsions justify such a course. It was further observed by adding that in such exceptional

cases, the High Court can look into only those documents which are unimpeachable and can be legally translated into relevant evidence. Finally,

after considering the entire arguments, it was decided in Debendra Nath Padhi''s case as follows:

As a result of aforesaid discussion, in our view, clearly the law is that at the time of framing charge or taking cognizance the accused has no

right to produce any material. Satish Mehra''s case holding that the trial court has powers to consider even materials which accused may produce

at the stage of Section 227 of the Code has not been correctly decided"".

By relying upon the above judgment, the learned Public Prosecutor would argue that as per section 239 Cr.P.C. only materials u/s 173

Cr.P.C. can be looked into and no other evidence produced on the side of the accused could be canvassed. Thus, the learned Public Prosecutor

put an embargo upon the consideration of ""KVSS"" in which final settlement was arrived at between the parties regarding the arrears of customs

duty. Let us now see in detail about the applicability of KVSS Scheme, which according to petitioner will enable him to get discharge from the

prosecution. In case it could not form any basis for discharge or quash, then however unimpeachable it be, no useful purpose would thereby flow

to petitioner.

Before ever testifying the utility of KVSS Scheme in favour of petitioner, the chance of statutory exclusion u/s 95 of the Act shall have to be

dealt with. Section 95 of the said Act provides exclusion of the provisions of the Scheme to certain categories and 95(iii) provides that the

provisions of such Scheme do not apply to any person in respect of whom prosecution for any offence punishable under Chapter IX or Chapter

XVII of the Indian Penal Code, the Foreign Exchange Regulation Act, 1973. the Prevention of Corruption Act, 1988, or for the purpose of

enforcement of any civil liability has been instituted on or before the filing of the declaration.

Learned counsel for the petitioner further submitted that this exception clause may not be applicable against the petitioner, because no

prosecution was instituted before filing of the declaration by 3rd accused which was done in this case on 18.01.1999; as first information report in

this case was registered on 22.04.1998; charge sheet was filed on 17.03.2004. If only the statutory exclusion u/s 95 of the Act is not applicable,

then it can be further gone to the aspect of utility of the said Scheme to support the case of discharge of the petitioner.

Earnest endeavour was made on the side of the State that ""KVSS"" could not be applied in certain cases as provided u/s 95 of Finance Act 2

of 1998. Section 95(ii) of Kar Vivad Samadhan Scheme Rules runs as follows:-

95(ii) in respect of tax arrear under any indirect tax enactment,-

(a) in a case where prosecution for any offence punishable under any provisions of any indirect tax enactment has been instituted on or before the

date of filing of the declaration u/s 88, in respect of any tax arrear in respect of such case under such indirect tax enactment;

(b) in a case where show cause notice or a notice of demand under any indirect tax enactment has not been issued;

(c) in a case where no appeal or reference or writ petition is admitted and pending before any appellate authority or the High Court or the

Supreme Court or no application for revision is pending before the Central Government on the date of declaration made u/s 88;

Section 95(iii) of Kar Vivad Samadhan Scheme runs as follows:

(iii) to any person in respect of whom prosecution for any offence punishable under Chapter IX or Chapter XVII of the Indian Penal Code (45 of

1860), the Foreign Exchange Regulation Act, 1973 (46 of 1973), the Narcotic Drugs and Psychotropic Substances Act, 1985 (61 of 1985), the

Terrorist and Disruptive Activities (Prevention) Act, 1987 (28 of 1987), the Prevention of Corruption Act, 1988 (49 of 1988), or for the purpose

of enforcement of any civil liability has been instituted on or before the filing of the declaration or such person has been convicted of any such

offence punishable under any such enactment"".

True, this provision of the Scheme shall not apply to any person in respect of whom prosecution for any offence punishable under Chapter IX

or Chapter XVII of IPC, etc., has been instituted on or before filing of the declaration, etc. In this case, the first information report was registered

on 22.04.1998 and the charge sheet was filed on 30.01.2004 and the declaration was made on 18.01.1999. It is incorrect on the part of the

learned Public prosecutor to say that the registering of a case on the basis of first information report made, amounts to institution of prosecution.

What is institution of prosecution, as held in Assistant Collector of Customs and Another Vs. L.R. Malwani and Another, is as follows:

Prosecution would mean an initiation or starting of proceeding of criminal nature in a court of law or a judicial tribunal in accordance with the

procedure prescribed in the statute which creates the offence and regulates the procedure"".

It has been held in Balkishan A. Devidayal Vs. State of Maharashtra, that the mode of initiating prosecution by submitting a report u/s 173

read with clause (b) of 190 of the Code is not, therefore, available to an officer of the Railway Protection Force, etc. The only mode of initiating

prosecution of the person against whom he has successfully completed the inquiry, is by making a complaint u/s 190(1)(a) of CrPC to the

Magistrate empowered to try the offence.

The learned counsel also relied upon section 154 CrPC and other connected provisions under Chapter XII of the said Code. Those provisions

deal only with the investigation by the concerned police officer. Even u/s 170 CrPC, if, upon an investigation, it appears to the officer in charge of

the police station that there is sufficient evidence or reasonable ground, such officer shall forward the accused to the Magistrate upon a police

report and request the Magistrate to take cognizance of the offence and to try the accused or commit him for trial. It is at that stage only, there can

be institution of prosecution before a court of law making the accused to undergo the process of prosecution. Even as per section 225 CrPC, in

every trial before a Court of Session, the prosecution shall be conducted by a Public Prosecutor and u/s 226 CrPC, it is stated that when the

accused appears or is brought before the Court in pursuance of a commitment of the case u/s 209, the prosecutor shall open his case by describing

the charge brought against the accused and stating by what evidence he proposes to prove the guilt of the accused. u/s 244 CrPC also it is stated

that when, in any warrant case instituted otherwise than on a police report, the accused appears or is brought before a Magistrate, the Magistrate

shall proceed to hear the prosecution and take all such evidence as may be produced in support of the prosecution.

A conjoint reading of all these provisions would only go to show that institution of prosecution can be done only before the court of law making

the accused liable for the punishment at the hands of the court after proving the evidence against him. The evidence was collected in the process of

investigation and even though investigation may lead to institution of prosecution, the materials gathered against the petitioner in order to

substantiate the guilt has to be placed before the Magistrate with a request to take cognizance of the case and it is at that stage when the offence

was taken cognizance of there becomes the institution of prosecution. It is in this view of the matter, registering an first information report on

22.04.1998 cannot be termed as institution of prosecution as provided u/s 95 of the Finance Act 2 of 1998. It is only the filing of charge sheet on

17.03.2004 that may amount to initiation of prosecution. Declaration was made on 18.01.1999. If only declaration precedes initiation of

prosecution, then there will be immunity. In this case, declaration precedes charge sheet. So, section 95 of the said Act gets excluded and is not

applicable to the present facts of the case. Therefore, the utility point of the KVSS Scheme can be gone into, so that it can be found that the said

Scheme can be successfully relied on or cannot be done so by the petitioner for the purpose of quashing or discharging.

After having made it clear that there is no statutory exclusion u/s 95 of the Act and that section 95 of the Scheme is not going to act against the

petitioner in excluding him from availing the benefits of the Scheme, then it was argued that as per section 91 of the said Act, there is immunity of

prosecution available in favour of the petitioner. It was further contended by the learned counsel for the petitioner that if this material of ""KVSS"" in

the final settlement arrived at between the parties was taken into consideration, then there shall be a discharge.

Learned counsel for the petitioner has drawn my attention to various provisions of the Finance Act 2 of 1998 and the ""KVSS"" framed

thereunder. That scheme was dealt with in Chapter IV of the said Act and sections 88, 90 and 91 of the said Act are to be looked into. Section

88, provides settlement of tax payable and according to which, where any person makes, on or after the 1st day of September 1998 but on or

before 31st day of December 1998, a declaration to the designated authority, 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 Scheme

by the declarant shall be determined.

Section 90 of the said Act provides time and manner of payment of tax arrears, according to which, within sixty days from the date of receipt

of the declaration u/s 88 of the said Act, the designated authority shall, by order, determine the amount payable by the declarant and grant a

certificate in such form to the declarant, setting forth therein the particulars of the tax arrears towards full and final settlement of tax arrears. If those

amount is paid, then according to section 91 of the said Act, immunity upon prosecution is granted.

Section 91 of the said Act provides that a designated authority shall grant immunity from instituting any proceedings for prosecution for any

offence under any direct tax enactment or indirect tax enactment, or from the imposition of penalty under any of such enactments, in respect of

matters covered in the declaration u/s 88 of the said Act.

In order to support the above contention, reliance was placed on Hiralal''s case. In that case also, there was allegation of cheating of the

Government of India in terms of evasion of customs duty and by concealment of facts and that Customs Duty Exemption Certificate was obtained

in respect of MRI and Lithotripsy machines and by violating the provisions of ""actual-user"" condition as per import-export policy and Customs

Notification during the year 1987-88, despite acknowledging the fact that the customs duty has been paid by the appellants to the Customs

Department and settled under KVSS 1998. Although there was demand of duty of Rs.2 crores u/s 28 of the Customs Act, 1962, considering the

charitable and philanthropic activities of Gujarat Cancer Society (GCS), no prosecution was recommended and only a token redemption fee of

Re.1 was imposed. In that case also, a Certificate of full and final settlement of tax arrears in respect of KVSS, 1998 was issued to the GCS on

19.07.1999. However, a case was registered against the appellants on 06.01.1999 by alleging that the appellants, in conspiracy with the Director

of Gujarat Cancer and Research Institute (GCRI) had cheated the Government of India in evasion of customs duty. A charge sheet was prepared

for the commission of offence u/s 120-B read with 420 IPC. Upon the charge sheet, cognizance was taken and summons were issued. Appellants

were furnished copies of the charge sheet. In the meantime, they preferred special criminal application before the High Court of Gujarat, seeking

quashing of first information report. Appellants also filed an application u/s 482 Cr.P.C. read with Article 227 of the Constitution of India seeking

an appropriate direction, quashing the first information report. Learned single Judge of the High Court of Delhi, dismissed the said petition. Hence,

two appeals were preferred by way of special leave petitions.

It was argued that by theory of estoppel, by having accepted the claim of appellants on the basis of KVSS, it is not permissible for the

respondents now to turn around and take a different stand in prosecuting them. It was further argued that the complaint filed against the appellants

is unsustainable and that the appellants are reputed persons, who had never contemplated committing any violation of law or thought of taking any

undue advantage of the exemption Notification under the Customs Act.

Learned counsel for the petitioner relied upon Sushila Rani Vs. Commissioner of Income Tax and Another, , and Central Bureau of

Investigation, SPE, SIU (X), New Delhi Vs. Duncans Agro Industries Ltd., Calcutta, and urged that the alleged criminal liability stood

compounded on a settlement with respect to the civil issues and, therefore, the FIR was erroneously issued and was totally unwarranted.

On behalf of the State, it was contended in that case that settlement under ""KVSS"" would only protect the individual from prosecution under

the taxation statute which is a limited protection and limited to the proceedings under the taxation statute only and it cannot be the ground and basis

for quashing the criminal proceedings. In short, it was argued by the State that the Scheme gives immunity only from prosecution under the relevant

taxing statute and not for any offence under the Indian Penal Code. It was held in para 15 of the judgment of Hiralal''s case that the said Scheme

seeks to provide a quick and voluntary settlement of tax dues outstanding as on 31.03.1998, both in various direct tax enactments as well as

indirect tax enactments by offering waiver of a part of the arrear taxes and interest and providing immunity against institution of prosecution and

imposition of penalty. After having gone through the Scheme and the Certificate issued by the Customs authority, it was held in Hiralal''s case that

GCS is immuned from any criminal proceedings pursuant to the certificates issued under the said Scheme and the appellants are being prosecuted

in their capacity as office bearers of the GCS and in that circumstance, the Government has not suffered any financial loss and the complaint filed

against the appellants was held as unsustainable.

Learned counsel drew my attention to the following portion of the judgment in its para 27 (Hiralal''s case) upon considering Sushila Rani''s

case.

On a reading of the judgment in the case of Sushila Rani, it is clear to us that if an assessee takes the option under this Scheme, he obtains

immediate immunity under any proceeding under any and all laws in force. As such the present proceedings initiated u/s 120-B read with Section

420 of the Indian Penal Code are bad and ought to have been quashed with immediate effect"".

To my notice, the following further observation made in that case was also drawn:-

The learned single Judge has not appreciated the fact that the continuance of the proceedings in the instant case would only tantamount to driving

the appellants to double jeopardy when they had been honourably exonerated by the Collector of Customs and the GCS of which one of the

appellants was granted amnesty under KVSS, 1998"".

It was further pointed out in para 30 of the said judgment, which runs as follows:-

...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"".

That is why in para 31 of the said judgment, it was held that there was no prima facie case made out in respect of the alleged offence u/s 120-B

read with 420 IPC and therefore, the charge sheet and the process issued thereunder were quashed. By relying upon this Scheme, learned counsel

for the petitioner contended that there shall be a discharge of the petitioner from the criminal proceedings and those proceedings are to be

quashed.

Insisting upon the aspect that the ""KVSS"" cannot be refused to be considered under the pretext of contents of section 239 CrPC as if only

documents filed u/s 173 CrPC by the police can be looked into and that no other evidence or material on the side of the accused be considered,

learned counsel for the petitioner pointed out that even u/s 239 CrPC, the Magistrate can discharge the accused, if he considers the charge against

him is groundless, only after giving the prosecution and the accused an opportunity of being heard.

Thus, according to the learned counsel for the petitioner, what is stated by the learned Public Prosecutor as if u/s 239 CrPC only documents of

police u/s 173 CrPC alone are to be looked into is erroneous. What is required is to consider documents filed u/s 173 CrPC along with the

representation to be made by the prosecution as well as the accused, after giving them an opportunity of being heard.

However, as held in the case of Minakshi Bala Vs. Sudhir Kumar and Others, , forensic exigencies formidable compulsions legally translatable

materials into relevant evidence may have to be looked into, in the event of those elements are available in the representation made by the accused,

after giving him an opportunity. In this connection, reliance was also placed upon the decision reported in R.S. Raghunath Vs. State of Karnataka

and another, and founded in para 102(6) which provides the categories of cases by way of illustration wherein held that such power could be

exercised either to prevent abuse of the process of any court or otherwise to secure the ends of justice, though it may not be possible to lay down

any precise, clearly defined and sufficiently channelised and inflexible guidelines or rigid formulae and to give an exhaustive list of myriad kinds of

cases wherein such power should be exercised. One such category is as follows:-

Where there is an express legal bar engrafted in any of the provisions of the Code or the concerned Act (under which a criminal proceeding is

instituted) to the institution and continuance of the proceedings and/or where there is a specific provision in the Code or the concerned Act,

providing efficacious redress for the grievance of the aggrieved party"".

Thus the law is well settled that u/s 482 CrPC, the express legal bar engrafted either in the Code or in the concerned Act, providing efficacious

redress for the grievance of the aggrieved party is available, then an order u/s 482 CrPC can be well founded upon that legal bar. Thus the legal

bar and the constituent element that gives rise to such bar can be looked into not as of evidence on the side of defence but as a bone of contention

of the representation made by the accused and which representation was made by availing an opportunity of being heard, as provided u/s 239

CrPC itself. Thus not exactly the evidence on the side of the accused need be looked into but the forensic exigencies and formidable compulsions

and the legally translatable material relevant to the issue have to be considered and refusal to consider the same may amount to miscarriage of

justice and in fact, there is a legal command to consider those aspects. It is therefore the ""KVSS"" can be looked into and if it provides some

immunity against the prosecution now launched against this petitioner, then those benefits will enure to the accused. Thus, the crux of the question is

whether ""KVSS"" is applicable to the present facts of the case or not, and if not applicable, how the present case is different from the facts in issue

of Hiralal''s case.

The immunity of prosecution as provided u/s 91 of the said Act will be available at the hands of the designated authority for any offence under

direct tax enactment or indirect tax enactment or from the imposition of penalty in any of such an enactment, in respect of matters covered under

the declaration u/s 88 of the said Act.

In this context, it is worthy to mention Sections 88 and 91, which are as follows:

Settlement of tax payable:- Subject to the provisions of this Scheme, where any person makes, on or after the 1st day of September 1998 but

on or before 31st day of December 1998, a declaration to the designated authority, 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 Scheme by the declarant shall be determined, the rates specified hereunder namely...

Immunity from prosecution and imposititon of penalty in certain cases:- The designated authority shall, subject to the conditions provided in

section 90, grant immunity from instituting any proceeding for prosecution for any offence under any direct tax enactment or indirect tax enactment,

or from the imposition of penalty under any of such enactments, in respect of matters covered in the declaration u/s 88.

A reading of section 88 provides settlement of tax payable and it would show that a declaration to the designated authority between

01.09.1998 and 31.12.1998 in respect of tax arrears will make him entitle to determination of rate of tax specified thereunder; and that would be

with the non-obstante clause against anything contained in any direct tax enactment or indirect tax enactment or any other provision of law for the

time being in course. But such phraseology was not used in section 91 and what it provided is only immunity from instituting any prosecution for

any offence for any direct tax enactment or indirect tax enactment or such other enactment. That is also in respect of matters covered under the

declaration u/s 88.

Thus, it is clear that the immunity is only to offence under enactment of direct or indirect tax or ""any of such enactment""; thereby meaning that

the enactment shall be relating to tax. Thus, the immunity is only against offences found in the enactment of taxation. Immunity does not extend to

offences under IPC, which is not ""such enactment"" as covered u/s 91; that being not an enactment under taxation. Thus, even in respect of matters

covered under in the declaration u/s 88, there cannot be an immunity from offences excepting that are mentioned in the tax enactment. Section

87(h) of KVSS, 1998 defines ""direct tax enactment"" which reads as follows:-

87(h) ""direct tax enactment"" means the Wealth Tax Act, 1957 (27 of 1957) or the Gift Tax Act, 1958 (18 or 1958) or the Income Tax Act,

1961 (43 of 1961) or the Interest Tax Act, 1974 (45 of 1974) or the Expenditure Tax Act, 1987 (35 of 1987)"".

Section 87(j) of KVSS, 1998 defines ""indirect tax enactment"", which reads as follows:

87(j) ""indirect tax enactment"" means the Customs Act,1962 (52 of 1962) or the Central Excise Act,1944 (1 of 1944) or the Customs Tariff

Act,1975 (51 of 1975) or the Central Excise Tariff Act,1985 (5 of 1986) or the relevant Act and includes the rules or regulations made under

such enactment"".

Learned counsel for the petitioner submitted that if the provision of law is so admitted as claimed by the learned Public prosecutor, then there

cannot be absolving of offences of Indian Penal Code, subsequent to the compromise and final settlement made under ""KVSS"", as found in

Hiralaal''s case. As a matter of fact, in Hiralal''s case, FIR was filed on 06.01.1999 and the certificate under ""KVSS"" was issued to the appellants

on 19.07.1999 and it was held-

It is a well established principle of law that the matter which has been adjudicated and settled need not 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 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"".

It was further observed as follows:-

The grant of immunity by the Designated Authority (KVSS-98) from instituting any proceeding for prosecution for any offence under the Customs

Act, 1962, or from the imposition of penalty under the said enactment, in respect of matters covered in the declaration made by the declarant, the

decision of the Collector not to recommend prosecution and to impose only a token fine of Re.1 only show that the Customs Authorities were

satisfied that there was no intention to evade the customs duty. GCS is immune from any criminal proceedings pursuant to the certificate issued

under KVSS. The appellants are being prosecuted in their capacity as office-bearers of GCS. As the customs duty has already been paid, the

Central Government has not suffered any financial loss. Moreover, as per KVSS, 1998, whoever is granted the benefit under the said Scheme is

granted immunity from prosecution for any offence under the Customs Act, 1962 including the offence of evasion of duty. In the circumstances, the

complaint filed against the appellants is unsustainable....

In the instant case, under the said law which prevails in the field i.e. the Customs Act, 1962 the appellants have been wholly discharged and GCS

granted immunity from prosecution. It is a well established principle of law that the matter which has been adjudicated and settled need not be

dragged into criminal courts unless and until the act of the appellants could have been described as culpable. The true fact and import of

KVSS,1998 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 the present case, there is no prima facie case made out in respect of the alleged offence u/s 120-B read with Section 420 IPC and, therefore,

the charge sheet and the process issued thereunder has to be quashed. To bring home the charge of conspiracy within the ambit of Section 120-B

IPC, it is necessary to establish that there was an agreement between the parties for doing an unlawful act. It is difficult to establish conspiracy by

direct evidence. The ingredients of Section 420 IPC are also not made out. There is no reason as to why the appellants must be made to undergo

the agony of a criminal trial"".

In that case, the case of the petitioner was settled, the tax liability was determined on 10.02.1999 by the designated authority and the

certificate of full and final settlement was issued on 19.07.1999. Despite the statement of settlement having been filed u/s 88 of the Act of 1998, an

FIR was lodged and the case was registered on 06.01.1999 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 premise that the appellants were neither convicted nor criminal proceedings were

pending relating to any offence under Chapter IX and XVII IPC. Yet the criminal proceedings were initiated, which was apparently against the

very spirit of the Scheme promulgated under Finance Act 2 of 1998.

To mention again, offences founded upon the declaration u/s 88, as found in the statute was interpreted in Hiralal''s case and the above said

term was given an extension so as to include other 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. Now, in this case, the wrong statement that the car was of the year 1993 and the

incorrect particulars and statements given in order to obtain FIRC cannot be said that they are upon as allegations identical to the offences

mentioned in section 91. In other words, they cannot get the immunity extended by Hiralal''s case; as in that case, it was held that the immunity

extends to offences that may prima facie be made out on identical allegations i.e. evasion of customs duty and violation of any notification. As the

above allegations made in this case are not directly for evasion of customs duty etc., and as they are made for wrong importing and wrong

clearance of the car, the extended immunity in the Hiralal''s case may not be available in this case.

Again in Hiralal''s case, the materials attracting the offences u/s 420 IPC were founded only upon the statement of declaration u/s 88. But in

this case, it is not so. This is evident from the following Police Report u/s 173 CrPC.

During the year 1994 A1 to A5 and approver Smt. R. Bhavani, in the aforesaid capacities, conspired at Chennai and other places to cheat the

Government of India and to commit act of criminal misconduct and in furtherance of the said criminal conspiracy A1 and A2 fraudulently and

dishonestly, fabricated documents for the purpose of clearing the imported Lexus Car which was imported by A3 and A4, fraudulently and

dishonestly, in order to take advantage of the Transfer of Residence provision and pay less customs duty, knowing very well that the said car was

manufactured in the year 1994, misdeclared the same as if it was manufactured in the year 1993 and in pursuance of the said conspiracy Smt.

Sujarith Sundarrajan, A5, misused and abused her official position or by illegal means, as Branch Manager, Indian Bank, Abhiramapuram, Chennai

issued a Foreign Inward Remittance Certificate to the effect that the Lexus Car which was imported would be released by the Customs

Department on the basis of same, knowing very well that the Current Account No.872 of M/s. Tamilarasi Publications did not receive any foreign

remittances which is one of the pre-conditions for paying the customs duty under Transfer of Residence Provision, thereby caused a wrongful loss

of Rs.1,06,20,472/- and corresponding wrongful gain to themselves....

On 07.09.1994, Shri Yogesh Balakrishnan (A4), fraudulently and dishonestly, handed over the following documents to Shri Janaki Raman of M/s.

Samba Sivam & Co., Chennai for getting the car cleared by fabricating documents relating to the issue;

a) Xerox copy of Passport No.L-659853 in the name of S. Balakrishnan,

b) Xerox copy of Invoice No. LEX 00077 dated 13.07.1994 in favour of Dr. S. Balakrishnan for British Pounds 21405 (this figure is altered

figure as the actual cost of vehicle in British Pound 23905) issued by M/s. Lexus, UK.

c) Xerox copy of Bill of Entry dated 06.08.1994.

d) Blank signed Declaration Form.

e) First Registration Certificate purported to have been issued by London Central Vehicle Registration Office....

The original sale invoice pertaining to the purchase of Lexus car issued by M/s. Toyoto of UK bearing No. LEX 00077 dated 13.07.1994 was

replaced and substituted with another photo copy of fabricated invoice by changing the date to 13.07.1993 instead of 13.07.1994 for the purpose

of clearing the car under Transfer of Residence provision, otherwise the Car cannot be cleared under Transfer of Residence provisions by Shri

Yogesh Balakrishnan (A4) in connivance with Shri Natrajan (A1), Shri Bhaskaran (A2) and Shri Balakrishnan (A3)....

Even in the issuance of Foreign Inward Remittance Certificate, mis-declaration of the car that it was manufactured in the year 1993 and other

statement of declaration excluding that u/s 88 of Finance Act 2/88, was made by 1st accused also so as to formulate a prosecution. This was

found in following lines even in the petition u/s 227 CrPC filed by 1st accused in Cr.M.P.No.146 of 2005 in C.C.6 of 2004.

The prosecution case is that during the year 1994 A1 to A5 and approver Smt. R. Bhavani, in the aforesaid capacities, conspired at Chennai and

other places to cheat the Government of India and to commit act of criminal misconduct and in furtherance of the said criminal conspiracy A1 and

A2, fraudulently and dishonestly, fabricated documents for the purpose of clearing the imported Lexus Car which was imported by A3 and A4,

fraudulently and dishonestly, in order to take advantage of the Transfer of Residence provision and pay less customs duty, knowing very well that

the said car was manufactured in the year 1994, misdeclared the same as if it was manufactured in the year 1993 and in pursuance of the said

conspiracy Smt. Sujaritha Sundarrajan, A5, misused and abused her official position or by illegal means, as Branch Manager, Indian Bank,

Abhiramapuram, Chennai issued a Foreign Inward Remittance Certificate to the effect that the Lexus Car which was imported would be released

by the customs and thereby caused a wrongful loss of Rs.1,06,20,472/- and corresponding wrongful gain to themselves"".

The contents of declaration u/s 88 may be found in the columns of statutory Form-1B, wherein, besides name, status and address of the

declarant, the other substantive particulars required are the Commissionerate of Central Excise/Customs where assessed or from where a show

cause/demand notice issued regarding tax arrears, the reference number of the same along with description of seizure of goods and the pendency

of the departmental appeal and other remarks; with the amount of tax arrears and the balance amount payable as on the date of declaration. These

are the only materials which could be found in Form I-B declaration u/s 88 of the Act while alone is protected u/s 91 of the said Act. But if there is

a basis for prosecution away from the above materials, that prosecution has no immunity as per section 91.

Thus, it is evident in this case and more particularly against the petitioner (1st accused) that there are other statements made outside the

declaration of statement u/s 88; and those statements are based for commission of offence u/s 120-B read with 420 IPC. They all relate to

clearance of car. They do not have any connection with the declaration of statement made u/s 88 forming part of the subject matter of the customs

duty. As a matter of fact, the letter dated 08.09.1994 of 1st accused indicates that a sum of Rs.12 lakhs remitted by their purchase creditors relate

to the remittance made by their foreign buyers. This letter dated 08.09.1994 of 1st accused was the basis for issuance of Foreign Inward

Remittance Certificate. The case of the prosecution is that the material found in the above letter of 1st accused is nothing but misrepresentation and

false representation and that the falsity of which will be established in the course of trial. The petitioner has also relied upon certain other

remittances made on the next day of the above letter, in and by which, cash was shown to have been remitted from Indian buyers. Thus, prima

facie misrepresentation made in the above letter by 1st accused is established.

To sum up, even if the immunity was extended as provided in Hiralal''s case to other offences that may prima facie be made out on identical

allegations i.e. evasion of customs duty and violation of any notification issued under the said Act, the present facts of the case may not cover such

extended immunity. This is so because allegations of false representations in issuance of FIRC and other statements falsely made as if the car was

manufactured in 1993 are all matters directly connected to the clearance of the car, i.e. to say wrong import; and not to evasion of customs duty. If

the allegations in this case are ultimately only for evasion of customs duty and it is in that process only, some notifications were violated, then the

immunity extended in Hiralal''s case may be applied. Again it is a matter to be seen only in the course of trial as to the purport of the statements

made. It is another important point to see as to whether the statements and annexures to declaration u/s 88 are alone based for the prosecution. In

other words, in the absence of annexures to declaration u/s 88 in Form I-B, it may not be very much clear as to whether the prosecution against

the petitioner is founded on statements of accounts made elsewhere apart from the declaration u/s 88. This can be made clear only in the course of

trial. Since the tax was compromised, one cannot say that all the allegations made in the prosecution are only for evasion of customs duty and

violation of any notification. In what way issuance of FIRC will have connection of customs duty is made not known. Production of supporting

documents, which were found false on the side of prosecution, in order to wrongly obtain FIRC has a direct bearing upon the wrong import

instead of bearing with the evasion of customs duty. It is in this view of the matter, the facts of the case are different from that in Hiralal''s case. It is

the paramount duty of the petitioner to demonstrate how he is entitled for application of section 91 of the Act. One easy endeavour is to make it

available of all the annexures and statements in Form I-B u/s 88 and showing that they are alone the rock bottom for prosecution and nothing else.

That has not been done. Thus it becomes a triable point.

For the aforesaid reasons, both the criminal revision petition and criminal original petition are dismissed.