Yashovardhan Birla … v. Heard Both Sides For Final Disposal

Sknair IN THE HIGH COURT OF JUDICATURE AT BOMBAYCRIMINAL APPELLATE JURISDICTION CRIMINAL WRIT PETITION NO. 2143 OF 2018 Yashovardhan Birla… Petitioner Vs.Assistant Director of Income Tax (Inv.) & Anr.… Respondents. ... Mr. Haresh Jagtiani, Sr. Counsel a/w Mr. Siddhesh Bhole a/w Mr.Rayden Fernandes and Nilhil Ghate I/b Mr. Haresh Jagtiani andAssociates for Petitioner. Mr. A.C. Singh, Additional Solicitor General a/w Mr. SureshKumar & Geetika Gandhi for the Respondent No.1.Mr. P.H. Gaikwad and Mrs. N.S. Jain, APP for the Respondent-State. ... CORAM : PRAKASH D. NAIK, J. DATE : 05[th ]JULY, 2018. P.C. 1.Heard both sides for final disposal. 2.The petitioner has invoked jurisdiction of this Court under Article 227 of Constitution of India as well as to inherent powersunder Section 482 of Code of Criminal Procedure challenging theorder dated 12[th] April, 2018 passed by the Court of AdditionalChief Metropolitan Magistrate 38[th] Court, Ballard Pier, Mumbai as well as the Letter of Request dated 13[th] April, 2018 in CC192/SW/15. 3.The brief facts which are necessary to adjudicate the issueinvolved in this matter are as follows:- (a)Complaint was filed by the respondent No.1 in the Court oflearned 38[th] Additional Chief Metropolitan Magistrate's Court,Ballard Pier, Mumbai on 4[th] September, 2015 alleging offencesunder Section 277 of Income Tax Act,1961, Sections 181, 186, 191read with Section 193 of Indian penal Code. Learned Magistratehas taken cognizance of the said complaint and the same ispending in the said Court. The petitioner has been impleaded asaccused in the said complaint. The petitioner appeared before thetrial Court and furnished bail bond. (b)Petitioner filed Writ Petitions bearing Nos. 1208 of 2016,1209 of 2016, 1210 of 2016, 1211 of 2016, 1212 of 2016, 1213 of16, 1324 of 2016 and 1326 of 2016 in this Court seekingdirections to Income Tax Settlement Commission who had rejectedthe application of petitioner dated 30[th] March, 2016 for settling hiscases for assessment years 1998-99 to 2014-15 vide order dated12[th] April, 2016. This Court by order dated 3[rd] August, 2016 and10[th] August, 2016 set aside order dated 12[th] April, 2016 passed byIncome Tax Settlement Commission and Order dated 30[th] March, Sknair 906-wp-2143-18.odt 2016 passed by Assessing Officer, thereby restoring application ofsettlement on the file of Commissioner. The petitioner filed stayapplication dated 18[th] July, 2016 and 19[th] September, 2016 beforethe trial Court, on the ground that the order of SettlementCommission would have directed bearing on the complaint. Therespondent opposed the application by filing reply on 18[th]December, 2017. Application was adjourned to 12[th] February,2018. (c)Since the application seeking settlement was rejected on 27[th]September, 2017. The said order was challenged by preferringWrit Petition No. 862 of 2018. The Writ Petition was heard by thisCourt and interim order was passed on 6[th] April 2018 granting stayad-interim against assessing officer proceeding further withscheduled dated of 12[th] April, 2018 for conducting assessment.The order of stay was thereafter extended on 20[th] April, 2018. (d)On 12[th] February, 2018, the proceedings pending before thetrial Court were adjourned to 2[nd] July, 2018. The learnedMagistrate was on leave. On 9[th] April, 2018, the respondentpreferred an application before the Court of learned Magistrate fortaking the matter on board vide Exh.15. In view of the request,the trial Court was pleased to take the matter on board and on the Sknair 906-wp-2143-18.odt same day application vide Exh.16 was filed before the learnedMagistrate under Section 166-A of the Code of CriminalProcedure. The application was put up for hearing on 12[th] April,2018. (d)On 12[th] February, 2018, the proceedings pending before thetrial Court were adjourned to 2[nd] July, 2018. The learnedMagistrate was on leave. On 9[th] April, 2018, the respondentpreferred an application before the Court of learned Magistrate fortaking the matter on board vide Exh.15. In view of the request,the trial Court was pleased to take the matter on board and on the Sknair 906-wp-2143-18.odt same day application vide Exh.16 was filed before the learnedMagistrate under Section 166-A of the Code of CriminalProcedure. The application was put up for hearing on 12[th] April,2018. (e)On 12[th] April, 2018, the advocate for the department washeard and the learned Magistrate was pleased to pass order on thesaid application. The learned Magistrate directed issuance ofLetter of Request requesting Foreign Country Government ofBailiwick of Guernsey to make investigation in this particularaccount of accused and to submit that report to Court as early aspossible. (f)On 13[th] April,2018, the respondent No.1 moved the court fortaking the matter on board by preferring application Exh.17. Inthe application Exh.17, it was stated that in view of order dated12[th] April, 2018, there is urgency to send a proforma to Minister ofHome Affairs India at the earliest. The Court then proceeded topass the order of Letter of Request in the form annexed to thepetition. Subsequently, the petitioner learnt about the orderspassed by the learned Magistrate and hence preferred presentpetition challenging the said order. 4.It is submitted by the counsel for the petitioner that the Sknair impugned orders were passed without affording any opportunityto the petitioner. It is submitted that the proceeding before thetrial Court would due for hearing on 2[nd] July, 2018. However, therespondent No.1 had taken the matter on board on 9[th] April, 2018and thereafter the order was passed on 12[th] April, 2018 which wasfollowed by order dated 13[th] April, 2018. It is submitted that theproceedings are pending in the trial Court since 2015 and all of asudden, the application was preferred before the trial Court behindthe back of the petitioner wherein the said order was passed. Thetrial Court has erred in mechanically passing impugned orderdated 12[th] April, 2018 and issuing impugned Letter of Requestdated 13[th] April, 2018. No notice was given to petitioner or hisadvocate by respondent. The Court has exceeded jurisdictionunder Section 166A of Code of Criminal Procedure and Section105 of Code of Criminal Procedure. It was necessary to followprovisions envisaged under Section 105 C to 105 J of Code ofCriminal Procedure. The said provisions contemplate issuance ofshow cause notice as to why the properties should not be attached.The Writ Petition No. 862 of 2018 is pending in High Courtwherein the relief sought have bearing on maintainability ofcomplaint, in which impugned order was passed. The outcome of 5 of 15 Sknair 5 of 15 Sknair Settlement Commission would have direct bearing on thecomplaint. It is submitted that by stating that huge amount is lyingin the said account in foreign country respondent has tried tocause prejudice in the mind of Court. It is submitted that theapplication preferred by the Respondent No.1 also mentions inparagraph 16 that Income Tax Department through InternationalLegal Assistant intends to restrain the accused from transferringfunds and winding up of the entities, based in the Bailiwick ofGuernsey as it appears that the assets of said entities on which theaccused is beneficial owner are proceeds of crime. He furtherpointed out that in the application, the respondents have prayedfor issuance of Letter of Request and Letter of Rogatory to therelevant foreign court to issue an attachment order in respect ofsaid entities and also sought restrain order restraining transfer offunds from the said entities. It is thus submitted that consideringthe averments made in the application and the reliefs soughttherein the Court ought not to have passed the said orders withoutgiving an opportunity of hearing to the petitioner. It is submittedthat apart from the violation of principle of nature justice, even onmerits as the order was not warranted. It is submitted that thepowers under Section 166-A of Code of Criminal Procedure cannot be exercised in a private complaint which was pending before theCourt. It is therefore submitted that the impugned orders be setaside. 5.Mr. Anil Singh, learned Additional Solicitor Generalsubmitted that the complaint was filed invoking Section 277 ofIncome Tax Act 1966 and Section 181, 186, 191 read with 193 ofIPC. It is submitted that for initiating any proceedings underSection 166-A of Code of Criminal Procedure, there is no necessityof giving any notice to the persons against whom such action isinitiated. It is submitted that it is prerogative of the investigatingagency to seek of investigation contemplated under Section 166-Aof Code of Criminal Procedure. It is submitted that an applicationwas preferred only under Section 166-A of Code of CriminalProcedure which do not require issuance of show cause notice tothe person against whom the relief are sought. It is submitted thatin the application itself it was stated that there is sufficientevidence collected by the investigating agency with regards to theamounts in the said country in relation to the entities in which thepetitioner is the beneficiary and therefore the trial Court hasrightly passed said orders. It is submitted that there is no violationof principle of natural justice. The trial Court is empowered to Sknair pass such order. He relied upon the decision in the case of Unionof India and another -Vs- W.N.Chadha[1], in support of hisopportunity submission that of hearing was not required to begiven for invoking provisions of Section 166 A of Code of CriminalProcedure. It is submitted that from the title of the applicationpreferred before the trial Court it is clear that the relief was soughtonly under Section 166-A of Code of Criminal Procedure and notunder Section 105-C. It is submitted that for the reasons stated inthe application and the reasons assigned by the Court whileallowing the application, the interference of this Court is not calledfor. The investigation is required to be conducted expeditiously sothat amount lying in the account is not transferred and thereforein the interest of justice it was necessary to seek such reliefs fromthe Court. It is submitted that investigation contemplated underSection 166-A of Code of Criminal Procedure can be sought bypreferring application in the complaint. Such investigation wassought within the purview of the definition of investigationenumerated in the Code of Criminal Procedure. It is thussubmitted that the petition is devoid of merits and the samedeserves to be dismissed. Sknair 906-wp-2143-18.odt Sknair 906-wp-2143-18.odt 6.Having considered the rival submissions and perusal of thedocuments on record it is apparent that the complaint was filed bythe respondent before the competent court invoking the provisionsof the Income Tax Act as well as Indian Penal Code in the year2015 which is pending in the said Court. It appears that therespondent had gathered some information as stipulated in thecomplaint before the trial Court with regards to the account in theentities mentioned therein and therefore it was felt necessary toprefer an application. However, on perusal of the Roznama, it iscrystal clear that the complaint was listed before the Court on 12[th]February, 2018 and since the Court was on leave, the board wasdischarged and the proceedings were adjourned to 2[nd] July, 2018.In the circumstances, there was no occasion for the petitioner toappear before the trial Court on 9[th] April, 2018, 12[th] April, 2018 or13[th] April, 2018. The impugned order passed by the trial Courtproceeds on the basis that the accused and his advocate are foundabsent when repeatedly called out. It appears that the Court wasunder belief that the matter was due for hearing on that day orthat they were put to notice and in spite of that neither theadvocate nor the accused were present in the Court when theapplications was heard by the Court. It is seen that the application Sknair Exh.15 was moved before Court for taking the matter on board on9[th] April, 2018. It was stated that the complainant intends to filean application under Section 166 A read with 105 C of Code ofCriminal Procedure for issuing Letter of Request to the competentauthority for investigation. The said application was allowed andmatter was taken on board. The application vide Exh.16 seekingthe reliefs stated hereinabove was taken on record and the samewas posted for hearing on 12[th] April, 2018. While passingimpugned order, the Court was pleased to observe that on perusalof record it is found that the complainant has mentioned regardingthe accounts maintained by the accused in the foreign country i.eGovernment of Bailiwick of Guernsey. It is further observed thatin the said account there is huge amount of Rs.400 crorers andthere is apprehension that accused would transfer the said amountfrom the account to any other country. Hence, it is necessary toissue letter of request that the Government of Bailiwick ofGuernsey to investigate and to collect the evidence or material inrespect of the account maintained by the accused in the saidcountry and to examine orally any person supposed to beacquainted with the facts and circumstances of the case and torecord his statement made in the course of such examination and also require such person or any other person to produce anydocument or thing which may be in his possession pertaining tothe case and the alleged account of accused and forward allevidence so collected to the Court. The Court issued such Letter ofRequest calling for report as early as possible. also require such person or any other person to produce anydocument or thing which may be in his possession pertaining tothe case and the alleged account of accused and forward allevidence so collected to the Court. The Court issued such Letter ofRequest calling for report as early as possible. 7.The application preferred by the respondent No.1 givesdetails about said entities. It is prayed in the application that theLetter of Request and Letter of Rogatory be issued to the ForeignCourt to place restraint order restraining transfer of funds from theentities viz Banyan Tree Trust and Kinetic Holding Limited. Theapplicant further prayed that the Letter of Request or Letter ofRogatory be issued to the relevant foreign court to place a restraintorder on Confiance Limited restraining it from executing fundasset transfer away from entities stated therein. It was furtherprayed that Court may issue Letter of Request / Letter of Rogatoryto relevant foreign Court to issue attachment order in respect ofentitles though not based in Guernsey but managed from thatCountry by Confiance Limited. It is also pertinent to note that inthe application it is mentioned the Income Tax Departmentthrough International legal assistance intends to restrain theaccused from transferring funds and winding up of entities based Sknair in that country as it appears that the assets of said entities ofwhich the accused is beneficial owner are proceeds of crime. Onperusal of the letter, it can be seen that the assistance is soughtfrom the foreign country with regards to restraint order as well asthe attachment order. The letter also refers to Section 105-C ofCode of Criminal Procedure which relates to assistance in relationto orders of attachment or forfeiture of property. In the case ofUnion of India Vs. W.N.Chadha(Supra) the petitioner hadchallenged the order passed by High Court knocking down thevery registration of FIR and all proceedings arising thereonincluding issue of Letter of Rogatory. The contention ofrespondent before the High Court was that FIR does not disclosecommission of offence and Letters of Rogatory were issued withoutjurisdiction and without following principle of natural justice. Thesubmission was accepted by High Court that there was violation ofprinciple of natural justice. It is apparent that the letter ofRogatory was issued under Section 166-A of Code of CriminalProcedure. The steps to issue such letter were adopted wheninvestigation in pursuant to registration of FIR was in progress.The Hon'ble Supreme Court observed that rule of audi alterampartem is not attracted for investigation under Section 166A of Sknair Code of Criminal Procedure. The investigating officer is notdeciding any matter except collecting material for ascertainingwhether a prima-facie case is made out or not and a full enquiry incase of filing report under Section 173(2) of Code of CriminalProcedure follows in a trial before the Court or Tribunal beforefiling report and at that stage rule of audi alteram partem cannotbe applied. 8.In the present case, the proceedings were pending before thecompetent court, the matter was adjourned to 2[nd] July, 2018 andthe application was preferred on 9[th] April, 2018 by taking matteron board. The nature of prayers made in the application arehighlighted above. It is also alleged that the assets of whichpetitioner is owner are proceeds of crime. Letter of Request refersto invoking Section 105 C of Code of Criminal Procedure. TheLetter of Request also refers to restraint order and attachmentorder. In the circumstances stated hereinabove, it was expectedthat the trial Court ought to have given an opportunity to thePetitioner. However, one cannot ignore the purport of preferringthe application and apprehension expressed therein. In thecircumstances, the balance will have to be struck between theprinciple of natural justice and need for investigation into aspects 906-wp-2143-18.odt 906-wp-2143-18.odt as claimed in the application preferred by the respondents. In thecircumstances, I pass the following order. ORDER (i)Writ Petition is allowed partly allowed. (ii)Impugned order dated 12[th] April, 2018 and order issuing Letter of Request dated 13[th] April, 2018 are hereby set aside. Thematter is remanded back to the trial Court for hearing theapplication preferred by the respondent afresh. The petitioner beafforded an opportunity of hearing the application preferred by therespondent no.1. (iii)In the meantime, without prejudice to the rights / objectionsof both the parties and subject to the decision of the trial court inthe application preferred by the respondent No.1, the amount inthe entities which is subject matter of the application preferred bythe respondent no.1 may not be transferred to any other account;(iv)All points raised in this petition are kept open; (v)It is clarified that this Court has not made any observationson merits of the case and the trial Court shall decide theproceedings in accordance with law; Sknair (vi)The parties through their counsel to appear before the trialCourt on 1[st] August, 2018. The application be decided expeditiously; (vi)Petition stands disposed of. Digitally signedby SachidanandSachidanandKuttan NairKuttan NairDate:2018.07.1719:36:48 +0530 ( PRAKASH D. NAIK, J. )