Case: M. Natarajan Vs. State

3. Following facts will highlight the controversy involved.4. One Dr.S. Balakrishnan, purchased the Toyota Lexus Car which was sent by Ship to Madras Port in July, 1994. His son Yogesh Balakrishnan presented certain documents for getting clearance of the said car from the Customs Department. One such document was a letter dated 8.9.1994 authored by the appellant herein Shri M. Natarajan who is the publisher of a magazine called "Tamilarasi" which publication had commenced in the year 1992. He is also the author ofmagazine "Pudiya Paarvai" which surfaced in the year 1993. One Baskaran was said to be assisting the appellant being the incharge of these publications. The said letter dated 8.9.1994 which was used by accused Yogesh Balkrishnan was authored by the appellant and addressed to the Manager, Indian Bank, Abiramapuram, Madras on behalf of Tamilarasi publication to the followinginvite reference to the various remittances made by our purchase creditors on 22.6.94 into our account, and would like to inform you that a sum of Rs.12 lacs remitted relates to the remittances made by our Foreign buyers of our weekly and fortnightly magazines.Kindly issue a Foreign Inward certificate for this sum of Rs.12the basis of this letter the Foreign Inward Certificate, as sought for by the appellant, was issued by the bank. Ultimately the said car was cleared and was allowed to be imported.5. A First Information Report came to be lodged at the instance of Central Bureau of Investigation, Chennai for offences under Sections 120B read with Section 420, 468, 471 IPC and Section 13(2) read with section 13(1)(d) of the Prevention of Corruption Act. In that First Information Report, four accused were arrayed, they being, (i) Shri S. Senthivel, Commissioner of Customs (Retd.), Chennai, (ii) Shri Hariharan, former Asstt. Collector Customs, Chennai, (iii) Shri Raja Manoharan, Former Apprising Officer, Customs, Chennai and (iv) Shri Balakrishnan. It was suggested in the report that in the year 1994 the four accused persons entered into a criminal conspiracy in Chennai to cheat the Department of Customs, Government of India in the matter of assessment of duty on a car imported by fourth accused and in pursuance of the said conspiracy, the fourth accused, in connivance with Accused Nos.1 to 3 imported Toyata Lexus Car CS 300 of engine capacity 3000 CC bearing Engine No.2320283150 and Chassis No. JT50 and had sought customs clearance under the condition of transfer of residence to India for permanent settlement by producing forged and fabricated invoice LEX00077 dated 13.7.1993 showing the value of 21405 as if the car was purchased in 1993 for that value. In pursuance of this conspiracy A1 to A3 fraudulently and dishonestly abused their official position and cleared the car on 8.9.1994 after allowing 19% depreciation on the cost of the car, knowing fully well that firstly the car was not purchased in the year 1993 and the original cost of the car was more than the declared value and further that the importer was producing forged documents and thereby had caused wrongful loss of Rs.4 lakhs to the Government of India by way of customs duty. On the basis of this the investigation was started by the CBI.6. Ultimately, however, thewas filed against the present appellant and the four other accused, namely, (i) Shri V. Bhaskaran, (ii) Shri S. Balakrishnan, (iii) Shri Yogesh Balakrishnan and (iv) Smt.Sujaritha Sundarajan. In theit was stated that the first accused (appellant herein) was Director of Tamilarasi Publication, the second accused was a private individual and authorized signatory to operate the current account of M/s.Tamilarasi Publication, the third accused was a private individual, the fourth accused was also a private individual and the fifth accused was the Branch Manager, Indian Bank, Abiramipuram Branch, Chennai and Smt.R. Bhavanai, Approver was working as the Assistant Manager, Indian Bank, Abiramipuram, Chennai in the year 1994. In theit was stated that the accused had conspired to cheat the Government of India and to commit act of criminal misconduct and in furtherance of the conspiracy, the appellant and the second accused fabricated documents for the purpose of clearing the imported Lexus Car which was imported by the third and fourth accused in order to take advantage of the provisions of Transfer of Residence and pay less customs duty, though they fully knew that the car was manufactured in the year 1994 which wasto be manufactured in the year 1993 and in pursuance of the said conspiracy, the fifth accused misued and abused her official position as the Branch Manager of the Indian Bank, issued the 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 the same, knowing very well that the Current Account No.872 of M/s.Tamilarasi had not received any foreign remittance, though it was one of thethat only foreign remittances could be used for payment of customs duty, thereby the accused had caused loss to the Customs Department of Rs.It was suggested further that third accused had fraudulently and dishonestly imported the Lexus Car by ship while the fourth accused Yogesh Balakrishna has handed over five documents to Shri Janaki Raman of M/s.Samba Sivam & Company, Chennai for getting the car cleared. It was further stated in thethat the original sale invoice of the car dated 13.7.1994 was replaced and substituted with another photocopy of fabricated invoice by changing the date to 13.7.1993 for the purposes of clearing the car under the provisions of Transfer of Residence since otherwise the car could not be cleared under the said provisions. This was done by the fourth accused in connivance with the first accused. It was suggested that the assessment of the car was done on the basis of the fabricated documents. This assessment was made on Cost Insurance Freight value which suggested that consignment was imported directly by the manufacturer to the country of the buyer as a new car. It was further suggested that the third accused falsely declared and showed that the car was one year old, when in fact, it was not. He had also filed a false affidavit that the car was in use for more than one year before he came to India for permanent settlement. The accused had also filed fake First Registration Certificate showing the first registration on 15.7.1993 whereas the car itself was manufactured in March, 1994. It was, therefore stated that Accused Nos.1 to 4 had submitted documents for the clearance of the car imported by the third and fourth accused knowing them to be false documents for taking advantage of the provisions of Transfer of Residence scheme. It was clarified that for taking advantage of the scheme of Transfer of Residence, the Customs duty has to be paid in foreign exchange or otherwise it should be through an account where there is foreign inward remittances and for this purpose the Branch Manager of the Bank in which the account lies has to issue a certificate mentioning that the concerned account is receiving or had received foreign remittances. While the appellant herein and second accused Shri Balakrishnan very well knew that the Current Account bearing No.872 at Indian Bank, Abiramipuram, Chennai did not receive any foreign inward remittance, got a false certificate issued by Smt.Sujarita Sudararajan, the fifth accused, Branch Manager of the bank on the basis of a false letter presented by the first accused and on the basis of that the Branch Manager had issued foreign inward remittance certificate dated 8.9.1994 to the effect that the Lexus Car can be cleared from the Customs. She had also directed her Assistant Manager Smt.Bhavani to modify the certificate and issue the same to Shri M. Natarajan, appellant and Shri Bhaskaran, second accused. Thus the certificate was used by the four accused persons (A1 to A4) for the purposes of clearing the imported car, knowing fully well that the Current Account No.872 did not receive any foreign exchange remittance.7. Thetherefore, went to show that the acts of accused Nos.1 to 5 constituted offences punishable under Section 120B IPC read with Sections 420, 467, 471 IPC and Section 13(2) read with Section 13(1) (d) of the Prevention of Corruption Act, 1988. It was pointed out further that the other accused persons named in the FIR, who were government officials, were not sent for trial as the Departmental action for major penalty was recommended against them. It was further pointed out that Smt.Bhavani, original Accused No.6 was granted tender of pardon by the 2nd Metropolitan Magistrate, Egmore, Chennai while fifth respondent was already dismissed from service and as such no sanction order was required under the law.8. Thiswas filed on 30th January, 2004 and the case was posted in the month of April, 2004 for receiving copies by the accused. The case was split up as Non Bailable Warrant was pending against the third accused and had remained unexecuted. The trial commenced against the other accused in which 22 witnesses were examined, 82 documents were marked and the case stood posted for 5.9.2005 for examination of the Defence Witnesses. However, in the meantime, the resent appellant filed a discharge application vide Criminal M.P. No.146 of 2005 on the file of the learned Principal Special Judge for CBI Cases, Chennai. This Criminal M.P. was dismissed on 18.4.2005 against which order a Revision Petition being Criminal Revision No.538 of 2005 came to be filed. Besides this the appellant also filed a Criminal Original Petition being Criminal O.P. No.21636 of 2005 for quashing the proceeding under trial. It seems that the appellant had approached this Court also and this Court had issued a direction on 13.5.2005 for the early disposal of the Criminal Revision Petition. The High Court ultimately came to decide and dispose off the Criminal Revision Petition as well as Criminal Original Petition by a common judgment which is impugned before us.9. In the application for discharge as also in the Revision Petition before the High Court as well as in the Criminal O.P., the contention of the appellant was firstly that he had no role with respect to the production of documents for clearance of the car, secondly in a scheme, namely, Kar vivad Samadhan Scheme, 1998 (KVSS) floated vide Finance Act No.2 of 1998 which commenced from 1.9.1998, it was clearly provided that if asettles his dues regarding the direct and indirect taxes and once a final settlement is arrived at in pursuance of the scheme and once the payment is made as per the settlement, theearns a complete immunity in respect of the transaction which includes the prosecution from all or any of the offences. It was pointed out that third accused in pursuance of Rule 3(1)(b) of the Rules had filed a declaration in Formunder Section 88 of the Finance Act and the Customs Department had issued a certificate of intimation under Section 90(1) of the Finance Act and determined the tax under Section 88(f) of the Act as being Rs.2,84,325/which was remitted by the third accused on 18.3.1999. This final settlement was arrived at between the parties as against the original claim arrears of tax of Rs.In short, the appellant prayed that in respect of the transaction in question no prosecution could have been launched against the third accused or for that matter any other accused. For this the appellant relied on the reported decisions of this Court in Central Bureau of Investigation, SPE, SIU (X), New Delhi v. Duncans Agro Industries Ltd., Calcutta [(1996) 5 SCC 591] and Sushila Rani (Smt.) v. Commissioner of Income Tax & Anr. [(2002) 2 SCC 697] and Hira Lal Hari Lal Bhagwati v. CBI, New Delhi [(2003) 5 SCC 257] .10. As against this, it was argued before the learned Single Judge by the Public Prosecutor that firstly the Revision Petition under Section 239 Cr.P.C. could notwith the Criminal Original Petition under section 482 of the Cr.P.C. It was secondly suggested that the law laid down by this Court in Duncans Agros case and Sushila Ranis case (supra) was no more a good law because of the decision of this Court in State of Orissa v. Debendra Nath Padhi [(2005) 1 SCC 568] . It is also suggested by the Public Prosecutor that for the purposes of framing charges under the provisions of Cr.P.C. what may be seen is the material produced by the prosecution inand no other material. It was, therefore suggested by the learned Public Prosecutor that the court could not have looked into the KVSS, 1998 to find out as to whether there was an absolute immunity to theand other granted by that scheme and whether the appellate court utilized the alleged immunity.11. Learned Single Judge went into the details of the scheme. In that the learned Judge considered Sections 88, 90, 91 and 95 of the KVSS 1998 and also referred to the case law cited and posed before him a question in the followingthe 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 Hiralalsshort the learned Judge came to the conclusion that it is permissible to look into the KVSS 1998 though it was not the part and parcel of theand for that purpose in order to decide as to whether the prosecution was legally launched or not and could continue or not, the court could look into the KVSS 1998. For this, the learned Judge relied on the decision of this Court in State of Haryana & Ors. V. Bhajan Lal & Ors. [1992 Supp (1) SCC 335) and more particularly on the following observations regarding the circumstances under which interference under Section 482 Cr. P.C. wasthere 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 aggrievedour opinion, the learned Judge was right in examining the KVSS 1998 to decide whether it provided complete immunity from the prosecution since that was the mainstay of appellants attack against the prosecution.12. The learned Judge then undertook the detailed examination of the KVSS 1998 as also the case law and came to the conclusion that the acts complained of against the appellant were outside the declaration statement under Section 88 made by third accused. The acts complained of in the charge sheet did not have any connection with the declaration of statement (by accused no. 3) and the letter dated 8.9.1994 which was the basis for issuance of Foreign Inward Remittance certificate amounted to misrepresentation and false representation and it had no connection with the scheme whatsoever and as such the learned Judge came to dismiss the Revision Petition as well as Criminal O.P. under Section 482 Cr.P.C.13. It is on this background that we have to proceed to decide the present appeals.

Court's reasoning:
The argument is only to be rejected. It is not at this stage that we would consider the nature of offences under Section 132 of the Customs Act and/or those under the Indian Penal Code, under which the appellant is being charged. However, merely because there may be some overlapping in the two offences, it does not mean that the appellant cannot be tried under the offences covered under the Indian Penal Code. The Court would proceed to decide the question on the basis of the evidence led before it. We must hasten to add that merely because the appellant could be tried nder Section 132 of the Customs Act, it does not mean that he could not be tried for the offence committed under the Indian Penal Code. There is no such provision.In Hiralals case heavy reliance seems to have been placed on the judgment of Sushila Rani (Smt.) Vs. Commissioner of Income Tax & Anr. and of Central Bureau of Investigation, SPE, SIU (X), New Delhi Vs. Duncans Agro Industries Ltd., Calcutta. The learned Judges in their separate but concurrent judgments upheld the challenge and had quashed the proceedings relying on the KVSS 1998. The learned Judges noted the various provisions of the Scheme from Sections 86 to 98. It was also noted that FIR in that case was filed on 6.1.1999, while the certificate under KVSS 1998 was issued on 19.7.1999. Honble Lakshmanan, J. in paragraph 23It is thus crystal clear that the Commissioner of Customs (Adjudication) and Designated Authoritygranted immunity 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 aforesaid declaration made by the declarant. After hearing the case of the GCS, as already noticed, the Collector of Customs, Bombay held that the GCS was liable to pay the customs duty but in view of the activities of the Society and the bona fides of the Society, and considering the charitable and philanthropic activities of the Society, no prosecution was recommended. Moreover, only a token redemption fine of Re.1 was imposed." (Emphasis supplied).In paragraph 25, the learned Judge analyzed the judgment in Sushila Ranis case (supra), which was also under the KVSS 1998. Paragraph 6 and 8 of Sushila Ranis case were quoted by the learned Judge which suggested that once a certificate was granted under section 90 (1), it was absolutely conclusive as to the matter stated and no matter covered could be reopened in any other proceeding under any law for the time being in force. It is probably on the basis of observations in paragraph 6 of Sushila Ranis case, that the learned Judge made the observation in paragraph 27 which we have already quoted in para 13 of this judgment. We may at this stage itself point out that the observations in paragraphs 6 and 8 in Sushila Ranis case seem to have been made only in the pursuance of tax laws. The question of prosecution under some other offences (not under the Indirect Tax Act or the Direct Tax Act) was not there.20. A reference must be made, at this stage, to the judgment of this Court reported in Alpesh Navinchandras case (cited supra) which was again decided by the Division Bench consisting of Honble Lakshman and Kabir, JJ., the judgment was, however, authored by Honble Lakshmanan, J. This was the case of immunity granted under Sections 127H of the Customs Act, 1962, however, the appellant and his brother were preventively detained under COFEPOSA. The detention was challenged on the ground that once the immunity under Section 127H of the Customs Act was granted in respect of customs offences, after settling the taxes finally by the Settlement Commissioner, the preventive detention could not have been ordered by the authorities for the same reasons. The case of Hiralal (cited supra) was relied upon, which is clear from a reading of paras 17 and 46. This Court proceeded to hold in paras 46 and 47 of its judgment asAt the time of hearing, learned counsel for the petitioner relied upon Hira Lal Bhagwati Vs. CBI. According to learned counsel for the respondent the said relied upon case was a case of duty evasion and the appellant therein was booked by Customs Authority and therefore, customs duty was paid under KVS Scheme and further in the criminal proceedings under Sections120B and 420 IPCinitiated by CBI was quashed by this Court. Therefore, it is admitted that the above cited case is different from the present case as in the case in hand the detention order was issued under the COFEPOSA Act against the petitioner with objective to prevent the nefarious activities in future. Therefore, the immunity granted by the Settlement Commission from fine, penalty and prosecution under the provisions of the Customs Act and IPC have no bearing on the order of detention passed under the COFEPOSA Act. Therefore, it is contended that the detention order issued by the detaining authority is very much legal and the same needs to be upheld.47. The Settlement Commission was constituted with the aim and objective of settling the tax evasion issues and by virtue of disclosure by tax offender, they gain immunity from fine/penalty which is otherwise mandatory under the provisions of tax laws. But, such opportunity is only extended totax offenders but not available to habitual smugglers. For the persons involved in smuggling activities, other than the provisions made for the prosecution under the Customs Act, 1962, an equal deterrent is emphasized under the provisions of the COFEPOSA Act, 1974 i.e. provisions for preventive detention. Such preventive detention prohibits smugglers from indulging in further smuggling activities. In the present case the investigation reveals the consistent involvement of the petitioner detenu and his brother, Kamlesh Navinchandra Shah in smuggling activities, therefore, the detaining authority on the basis of evidence placed before him felt it necessary to issue the detention orders in respect of both the detenus in order to prevent them from prejudicial activities in future. Accordingly, the impugned order is justifiable in the eye of the law and the present writ petition deserves to beour opinion, the rigour of the observations made in paragraph 27 in Hiralals case is removed by the observations made in paragraphs 46 and 47 in Alpesh Navinchandra Shahs case. It was contended that the legislature had created a Settlement Commission for generating revenue and had also made provisions for release of the goods on payment of duty and had also made provisions for granting immunity from prosecution under the Customs Act, 1962 under the Penal Code and also under the other Central law and, therefore, it was clear that the intention of the legislature was more on revenue aspect rather than prosecution and punishment aspect or in continuing with multiple litigations. And, therefore, it would be unjust, unfair and unreasonable if a person is made to suffer preventive detention mainly after his application for settlement is allowed to be proceeded with, and after realization of the customs duties not only the goods are ordered to be released but on considering the cooperation extended by him in the settlement proceedings, the Settlement Commission had also granted to him immunity from prosecution under the Customs Act, 1962 as well as under IPC. The reliance there, however, was being made not on KVSS 1998, but on the Scheme under section127H of the Customs Act, 1962which provided the immunity not only from the Customs Act offences but also from the Indian Penal Code and other central enactments. We must hasten to point out that at this juncture itself, the immunity under the KVSS 1998 does not refer to the offences under the Penal Code or under any other central law, but restricts itself under Section 90 (1) only to the offences under the direct tax enactment or indirect tax enactment and as such Section 127H of the Customs Act is much broader than Section 90(1) of Finance Act in its operation.21. The Court then in paragraph 46 of the above case held that the immunity granted by the Settlement Commission under the provisions of Customs Act and IPC had no bearing on the order of detention passed under the COFEPOSA Act. Thus inspite of the broader nature of section 127H of the Customs Act as compared with Section 90(1) of the Finance Act, this Court proceeded to hold that the detention under COFEPOSA Act was "outside the immunity". It was, therefore, clear that the rigour of observations made in paragraph 27 of Hiralals Case was taken away in paragraphs 46 of Alpesh Navinchandra Shahs case.22. It may be noted further that in Hiralals case the learned Judge had specifically found that there was no prima facie material as regards the offences under Sections 120B and 420 of the Indian Penal Code and that was also the reason why the prosecution was quashed. Such is not the ase here. It cannot again be forgotten that in Hiralals case the immunity was granted to thewhereas the appellant in the present case was neither an applicant under Section 90(1) nor was any immunity granted to him specifically. This aspect whether the immunity could be granted and could be enjoyed by any other person than the one who had made a declaration under Section 88 and was granted the immunity was considered in the subsequent judgment of this Court.In the above case, the question was whether the immunity granted under the KVSS 1998 could also cover proceedings under the Kerala Sales Tax Act in respect of the same assessee. The learned Judges again referred in paragraph 15 to Sushila Ranis case as also to Hiralals case and more particularly to the observations made in paragraphs 18 and 27, which we have already quoted above. The learned Judges then proceeded to hold that Hiralals case was distinguished in Sashi Balasubramanians case (cited supra) and held that the transfer of application of Salex Tax Act would not be covered by the immunity under KVSS, 1998. This Court in paragraph 33 observed asimmunity is granted only in respect of offences purported to have been committed under direct tax enactment or indirect tax enactment, but by no stretch of imagination, the same would be granted in respect of offences under the Prevention of Corruption Act. A person may commit several offences under different Acts; immunity granted in relation to one Act would not mean that immunity granted would automatically extend to others. By way of example, we may notice that a person may be prosecuted for commission of an offence in relation to property under the Penal Code as also under another Act, say for example, the Prevention of Corruption Act. Whereas charges under the Prevention of Corruption Act may fail, no sanction having been accorded therefore, the charges under the Penal Code wouldthis Court accepted the principle that the immunity could not cover certain other offences than those covered in direct and indirect tax enactments. The Court also accepted that the immunity could not be granted to any other person automatically merely it was granted to a taxpayer who had made declaration under Section 88 of the Finance Act.