Delhi High Court
Surkhi Lal vs Union Of India (Uoi) on 31 May, 2005
Equivalent citations: 131(2006)DLT12
Author: Manju Goel
Bench: Manju Goel
JUDGMENT Manju Goel, J.
Page 1626
1. This petition under Sections 482 Cr.P.C. seeks quashing of proceedings against the petitioner in the case titled Shri Mahendra, IO, DRI v. Karim Yusuf and Ors. pending in the court of ACMM, New Delhi for offence punishable under Sections 120-B IPC read with Section 135 of the Customs Act, 1962 and Section 85 of the Gold Control Act, 1968. The petitioner, Surkhi Lal, is one of the five accused in the case. Accused Karim Yusuf @ Sunil is absconding whereas accused Durga Dass Sharma is dead. The accused now facing trial are Ravinder Bali, Satya Narain Aggarwal and the present petitioner. In the morning of 19.4.1996 at around 10.30, accused No. 2, Ravinder Bali, was found driving a scooter with accused No. 1, Karim Yusuf, sitting on the pillion holding two canvas bags. The scooter was intercepted and on search 250 gold biscuits of foreign markings valuing Rs. 62.5 lakhs approximately were recovered and seized under the Customs Act, 1962 and Gold Control Act, 1968 on the plea that the same were smuggled and are liable to be confiscated. During search from the premises of accused No. 2, currency notes amounting Page 1627 to Rs. 29.63 lakhs and certain other recoveries were made. Following disclosure by accused Nos.1 & 2 the house of Satya Narayan Aggarwal was also searched and Indian currency notes amounting to Rs. 6,77,750/- and ten smuggled gold biscuits valuing Rs. 2.5 lakhs and certain other documents were also seized. About accused Nos.4 & 5 it was alleged in the complaint that they were knowingly concerned in fraudulent evasion of the prohibitions imposed in the importation of the gold into India by Section 14 of the Foreign Exchange Regulation Act, 1973 and had committed offence punishable under Section 135 of the Customs Act. There was, however, no evidence against the petitioner of any kind. No evidence against the petitioner was mentioned in the order sanctioning prosecution. The show cause notice was adjudicated by Shri Sidharth Kak, Commissioner of Customs, who passed an order dated 31.3.1992 examining the facts. He found that 260 foreign marked gold biscuits were smuggled into India from village Passur, Jammu border by Musataq and handed over to Pt. Durga Dass Sharma or his son Surkhi Lal who sent their carrier for delivering the same to Karim Yusuf at the residence of Ravinder Bali. Sidharth Kak imposed a penalty of Rs. 1 lakh upon the petitioner under the Customs Act, 1962 and Rs. 1 lakh under the Gold Control Act, 1968. The petitioner then preferred an appeal before the Customs, Excise and Gold (Control) Appellate Tribunal (in short `CEGAT'), New Delhi being appeal No. C-1547/92-NB and G-1/93-NB being two appeals under the Customs Act and Gold Control Act. CEGAT set aside the order of Sidarth kak and passed the following order:
"Heard both sides. We have gone through the statements of Shri Karin Yusuf @ Sunil and Ravinder Bali @ Satish. Both of them stated that Pandit Durga Dass Sharma on receipt of smuggled gold from Pakistan arranged for sending of the same to Delhi on commission basis. Shri Durga Dass Sharma used to bring the gold himself or sent it through his son Surkhi, the appellant, or Bhutto or through some other carrier. There is no evidence of any witness to the fact that the recovered gold was brought by the appellant. No statement of Durga Dass Sharma or Surkhi, appellant was recorded under Section 108 of the Customs Act. In the show cause notice also the allegation against the appellant is that Shri Durga Dass Sharma used to bring the gold himself to Delhi or he sent it through his son appellant Surkhi. There is no allegation that recovered gold was brought to Delhi by appellant Surkhi.
We have gone through the case record and find that there is no evidence to connect appellant Surkhi with the recovered gold or currency. The appeals are allowed."
2. After receipt of the order the petitioner applied to ACMM, New Delhi for dropping the proceedings. The ACMM, however, declined the prayer and hence the present petition with the prayer to quash the proceedings against the petitioner in the afore-mentioned criminal complaint on the ground that the continuation of those proceedings is an abuse of the process of law. The prayer is vehemently opposed by the prosecution. It is contended that the decision in the adjudication proceedings cannot be a bar to the criminal prosecution. Both sides have relied upon the number of judgments of the Supreme Court and various High Courts in support of their respective contentions.
Page 1628
3. After hearing the counsels and examining the judgments of the Supreme Court and various High Courts, particularly that of this court, I am of the opinion that the petitioner's contention has force. To understand the development of the law on the subject, the chronological restatement of the judgments cited can be made. The earliest in point of time is the judgment in the case of The Assistant Collector of Customs, Bombay and Anr. v. L.R.Melwani and Anr. reported as , which was a case under the Sea Customs Act, 1878. The point raised before the Supreme Court in that case was primarily related to protection under Article 20(2) of the Constitution and Section 403 of the Code of Criminal Procedure, 1898. It was found that the bar did not apply to cases where the accused had only been given relief in departmental adjudication because such adjudication did not actually amount to trial by a criminal court and acquittal by the same. The conclusion of the court was that the criminal prosecution of the accused for alleged smuggling was not barred merely because the proceedings were earlier instituted against him before the Collector of Customs. Adjudication before the Collector of Customs was not a prosecution nor the Collector of Customs was a court and, therefore, the rule of autre fois acquit could not be invoked. In that case the accused had been given benefit of doubt in the earlier proceedings of the Collector of Customs and it was held that it did not amount to verdict of acquittal in favor of accused. Accordingly despite the departmental adjudication having ended in favor of the accused the prosecution was allowed to continue.
4. As against this in the case of Uttam Chand and Ors. v. Income Tax Officer, Central Circle, Amritsar reported as , the Supreme Court held that when the Income-tax Appellate Tribunal on a appraisal of the material on record found that the accused Janak Rani was a partner of the assessed firm and that the firm was genuine, the assessed could not be prosecuted for filing false returns. The Supreme Court quashed the prosecution. The obvious import of this judgment is that the department itself having found no falsity in the return could not have continued the prosecution on the same adjudication.
5. In P. Jayappan v. S.K.Perumal, First Income-tax Officer, Tuticorin reported as AIR 1984 SC 1693, the Supreme Court ruled that the pendency of re-assessment proceedings could not act as a bar to the institution of criminal proceedings. The defense raised in that case was that the prosecution could not be launched until the re-assessment proceedings initiated is complete. It is clear that the point raised in the matter was some what different, namely, whether while the re-assessment proceedings are going on or some departmental adjudication was in progress, the criminal complaint can be simultaneously filed and pursued.
Page 1629
6. The subsequent judgments on this aspect have, however, taken note of another aspect, namely, although the second prosecution may not be barred under Article 20(2) of the Constitution of India, it will be totally undesirable to continue the prosecution as that would only be a futile exercise and only an abuse of the process of law. In G.L. Didwania v. Income Tax Officer reported as 1999 (108) ELT 16 (SC), the Supreme Court after examining the earlier decision in Uttam Chand (Surpa) and P.Jayappan (Supra) passed the following observations:
"4. In the instant case, the crux of the mater is attracted and whether the prosecution can be sustained in view of the order passed by the Tribunal. As noted above, the assessing authority held that the appellant-assessed made a false statement in respect of income of Young India and Transport Company and that finding has been set aside by the Income-tax Appellate Tribunal. If that is the position then we are unable to see as to how criminal proceedings can be sustained.
5. Mr. A.Raghuvir, learned Senior Counsel appearing for the department, submitted that the fact whether the firm is a genuine firm, still remains as a question to be resolved and, therefore, the proceedings cannot be quashed at this stage. We do not agree. The whole question is whether the appellant-assessed made a false statement regarding the income which according to the assessing authority has escaped assessment. So far as this issue is concerned, the finding of the Appellate Tribunal is conclusive. Therefore, as held in Uttam Chand's case , the prosecution cannot be sustained. Accordingly, the proceedings are quashed and the appeal is allowed."
7. Thus even without going into the question whether Article 20(2) applied to the case, the Supreme Court ruled in definite terms that once the department itself had found that the allegations against the accused were not true, the criminal proceedings should not go on.
8. Similarly in the case of P.S. Rajya v. State of Bihar reported as 1996 SCC (Cri) 897, the accused was exonerated in the departmental proceedings of the charge of acquisition of assets disproportionate to income on the basis of a report of the Central Vigilance Commission. The Supreme Court held that the charge in the departmental proceedings and the charge in the criminal proceedings were identical and if the charge could not be established in the departmental proceedings one wonders what is there further in the prosecution to proceed against the appellant.
9. In Santram Paper Mills v. Collector of Central Excise, Ahmedabad reported as 1997 (96) ELT 19 (SC), on some more different facts the Supreme court held that the criminal court had to determine the guilt of the accused on the merits of the criminal case alone. The dispute in the appeal was whether the Page 1630 product manufactured by the appellant was wrapping/packing paper or mill board. For the relevant period the appellant filed a classification list treating the said product as wrapping/packing paper. The classification was approved by the authorities. Later the authorities wanted to treat the paper as mill board. The show cause notice issued to the appellant was confirmed and an appeal preferred by the appellant before the Tribunal failed. The appellant then approached the Supreme Court in an appeal which was dismissed. The Supreme Court did not actually go into the question involved in the present case. There is nothing more in this judgment except that the criminal court has to determine the subject on its own merits uninhibited by the finding of the Tribunal. Thus, although, this judgment has been relied upon by the prosecution the same is not quite on the point.
10. In K. Neelakanta Rao v. State of Andhra Pradesh reported as 2000 (122) ELT 7 (AP), the point decided was that the departmental adjudication proceedings and the criminal proceedings could go on side by side and it was held that so long as departmental proceedings did not arrive at a definitive conclusion in faovur of the accused the criminal case could not be stayed.
11. This court in a number of decisions examined this point. These are Munna Lal Khandelwal and Ors. v. B.Hazra, Enforcement Officer and Ors. reported as ; R.K.Goenka v. Collector of Customs and Anr. reported as 2002 [3] JCC 1793 and Crl.Rev.No. 420/98 titled M/s. Ashok Manufacturing Company Pvt. Ltd. and Ors. v. Sh. C.K. Moorjani decided on 31st October, 2000. In all these cases this court have unhesitatingly taken the view that if departmental proceedings have concluded in favor of the accused, he could not be again prosecuted in the criminal court as the same will be an abuse of the process of law.
12. The latest judgment of the Supreme Court in the case of K.C.Builders and Anr. v. The Assistant Commissioner of Income Tax reported as is based on finding of income-tax authorities. In this case the criminal prosecution was on the allegations that a conspiracy had been entered into between the accused appellants and they had filed false returns of income before the department which led to concealment of income to evade tax. The assessing authority had found concealment of income and the Assistant Commissioner of Income Tax levied penalties under Section 271(1)(c) of the Income Tax Act, 1961. The first appeal against the order of penalties for concealment of income before the C.I.T. (Appeals) failed. Thereafter the complaints were filed for different years in the court of Additional Chief Metropolitan Magistrate, Chennai for offences under Section 276C(2), 278B of the Income-tax Act and Sections 120B, 34, 193, 196 and 420 of IPC. The appellants thereafter preferred an appeal before the Income-tax Appellate Tribunal which after verifying the records found that the additions were on the basis of settlement between the assesseds and the department and represented voluntary offer made by the assesseds and, therefore, in such Page 1631 circumstances the Tribunal held that there was no concealment of income by the assessed and canceled the penalties. The Supreme Court held once the penalties were cancelled on the ground that there was no concealment, the quashing of prosecution under Section 276C was automatic. The following part of the judgment can be quoted with profit:
"If the Tribunal has set aside the order of concealment and penalties, there is no concealment in the eyes of law and, therefore, the prosecution cannot be proceeded with by the complainant and further proceedings will be illegal and without jurisdiction. The Assistant Commissioner of Income Tax cannot proceed with the prosecution even after the order of concealment has been set aside by the Tribunal. When the Tribunal has set aside the levy of penalty, the criminal proceedings against the appellants cannot survive for further consideration. In our view, the High Court has taken the view that the charges have been framed and the matter is in the stage of further cross-examination and, therefore, the prosecution may proceed with the trial. In our opinion, the view taken by the learned magistrate and the High Court if fallacious. In our view, if the trial is allowed to proceed further after the order of the Tribunal and the consequent cancellation of penalty, it will be an idle and empty formality to require the appellants to have the order of Tribunal exhibited as a defense document inasmuch as the passing of the order as afore-mentioned is unsustainable and unquestionable."
13. The legal principles that can be evolved from the series of judgments quoted above are as under:
a) Departmental proceedings are different from trial and so if the departmental proceedings end in favor of the accused the criminal trial is not hit by the principle of autre fois acquit.
b) the departmental proceedings and the criminal proceedings can proceed side by side.
c) if the departmental proceedings end in a finding in favor of the accused in respect of the allegations which also form the basis for the criminal proceedings then the departmental adjudication will remove the very basis of the criminal proceedings and in such situation the continuance of the criminal proceedings will be a futile exercise and an abuse of the process of the court.
14. In the present case CEGAT has found that the allegations against the petitioner were not based on any fact or evidence. The department has failed to prove before the CEGAT that the petitioner was in any way knowingly concerned in fraudulent evasion of prohibitions imposed in importation of gold into India. The department having failed to prove the allegations before the CEGAT cannot be allowed to continue the criminal proceedings for although the same may not be barred by Article 20(2) of the Constitution of India, the same would be a futile exercise, waste of judicial time and abuse of the process of law. I, therefore, allow the petition and quash the criminal proceedings vis-a-vis the petitioner.