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REPORTABLE

  IN THE SUPREME COURT OF INDIA CIVIL  ORIGINAL JURISDICTION

INTERLOCUTORY APPLICATION NOS. 3 AND 4 OF 2017        IN

 WRIT PETITION(CIVIL) NO. 505 OF 2015

COMMON CAUSE (A REGISTERED SOCIETY) AND OTHERS Petitioner(s)

Versus UNION OF INDIA AND OTHERS Respondent(s)

         O R D E R

1. We have heard learned counsel for the parties at length, as to Interlocutory Application Nos. 3 and 4 of 2017 filed in Writ Petition(Civil) No.505 of 2015.

2. The  writ  petition  has  been  filed  by  the  Common Cause (A registered Society) and others for issuance of appropriate writ for setting aside the appointment made by  the  Union  of  India,  of  Respondent  No.2  Mr.  K.V. Chaudhary  as  Central  Vigilance  Commissioner  and  Mr. T.M.  Bhasin  as  Vigilance  Commissioner  on  various

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grounds  as  enumerated  in  the  petition,  pointing  out that these persons are not of impeccable integrity.   

3. In  I.A.  No.3/2016  it  is  averred  that,  Central Bureau  of  Investigation  (in  short  'the  C.B.I.') conducted raid on the premises of Aditya Birla group industries in four cities on 15.10.2013, followed by another raid by the Income Tax Department on the very next day.  The raid by the C.B.I. reportedly led to recovery  of  incriminating  documents  and  unaccounted cash amounting to Rs.25 crores.  It is submitted that C.B.I. transferred the incriminating documents to the Income Tax Department.  The laptop of Mr. Shubhendu Amitabh,  Group  Executive  President  was  seized  during the  raid.  An  E-mail  dated  16.11.2012  containing  a cryptic entry was also recovered from the said laptop referring to political functionaries.  When Mr. Amitabh was questioned about the transactions, he stated that “these were purely personal notes. Not meant for SMS or e-mail transmission. And the first note is only to note for  my  knowledge  and  consumption  –  a  business development at Gujarat Alkali Chemicals” it does not relate  to  any   political  functionary.   During investigation,  top  officials  of  the  Birla  Group

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admitted that large amounts of cash  were routed by the Group  through  hawala.   The  Income  Tax  Department prepared  a  detailed  appraisal  report  on  the  Hawala transactions.   Some  extracts  of  the  report  dated 27.2.2014 have been filed as Annexure A-5. A direction has already been issued by this Court to the CBI on 12.10.2015  to  enquire  into  these,  even  though  they might be unrelated to the Coal Block Allocation cases. The CBI has not taken any concrete action.  The CBI is trying to protect the influential personalities named in  the  documents  seized  and  is  shielding  powerful corporate entities. It has been alleged that Respondent No.2 has also tried to shield the offenders.

4. With respect to Sahara Group, it is averred that the  Income  Tax  Department  raided  Sahara  India  Group offices in Delhi and Noida on 22.11.2014.  During the raid,  incriminating  documents  and  cash  amounting  to Rs.135 crores had been seized.  Certain documents have been filed in the form of printouts of the Excel sheet showing cash receipt of over Rs.115 crores and cash outflow of over Rs.113 crores during a short period of 10  months.   The  random  log  suggests  that  cash  was transferred  to  several  important  public  figures.

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Copies of the random pages have been filed as Annexure A-8.  The pages Annexure A-9 and A-10 have been filed which  contain  the  proposal  and  regarding  the  actual payments  which  were  made  to  large  number  of  top political leaders of the country.  

5. It is also averred that certain complaints to CBI, CBDT, CVC, SIT,  Enforcement Directorate and Settlement Commissioner have been made but without avail. In spite of  that,  the  Income  Tax  Settlement  Commission  gave immunity  to  the  Sahara  Group  of  Companies  vide  its order dated 11.11.2016 which has been filed along with I.A. No.4.

6. I.A. No.4 has been filed by the petitioner pursuant to the direction given by this Court to substantiate the documents filed along with I.A. No.3.  I.A.No.4 contains more or less the same facts. Details have been given as to Birla Group that cash of Rs.25 crores was not accounted for in the regular books of accounts of Aditya-Birla Group or another company and it is also stated  that  Mr.  Anand  Saxena  told  the  Income  Tax Department  that  he  was  responsible  for  handling  the cash transactions and he had received cash from Mr.

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Jaluram in the range of Rs.50,00,000/- (rupees fifty lacs  only).  Mr.  Jaluram  is  the  Angadia,  courier  of local Hawala operators.  However, it was stated that he was not aware about the payment made to anyone and he could not say to whom the unaccounted money had been paid.  E-mails dated 2.1.2013, 7.4.2013 and 3.5.2013 have been placed on record.  

7. It  is  further  submitted  that  during  the  search operation, it was revealed that the proposed payment of Rs.7.5 crores had been made during the period 9.1.2012 and 2.2.2012 with respect to “Project-J – Environment & Forest”, and that 13 projects of the Aditya Birla Group companies  had  been  sanctioned  by  the  Ministry  of Environment and Forest between 8.11.2011 and 17.6.2013. The documents – Annexure D is stated to be related to Coal  Block  of  Birla  Group  of  Companies  by  the  Coal Ministry  during  the  aforesaid  period.   E-mail  dated 13.5.2013, relating to MOEF has also been placed on record.

8. It  is  averred  that  evidence  of  certain  highly incriminating money transactions was also found in the laptop  of  Mr.  Shubhendu  Amitabh.   An  E-mail  dated

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16.11.2012  containing  a  cryptic  entry,  has  been recovered  which  in  fact  does  not  relate  to  Gujarat Alkali  Chemicals  but  to  a  political  functionary  and that this fact ought to have been ascertained.

9. It  is  further  averred  in  the  application  that documents of Sahara also make out a case of cognizable offence and the role played by respondent No.2 should be enquired into.  The explanation given to the Income Tax Department on behalf of the Sahara Group by Mr. Sachin Pawar,  that exercise was done to implicate Mr. Dogra and to get him punished from the Management is unworthy  of  credence,  as  was  suggested  by  the Department.  However, the stand of department has been ignored and the Settlement Commission accepted the case set up by assessee and absolved Sahara from criminal and civil liability on different grounds, even after receiving a letter from the counsel of the common cause that he was going to file an application before this Court in the instant matter.

10. We have heard learned counsel for the parties at length.  It was submitted by Shri Shanti Bhushan and Mr. Prashant Bhushan, learned senior counsel appearing

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on behalf of the petitioners that it is a fit case for constitution  of  the  SIT  for  directing  investigation into  the  incriminating material  seized  in  the  raids conducted on the Birla and Sahara Group of Companies in question.

11. It  was  submitted  that  though  at  this  stage,  it cannot  be  said  conclusively  that  payments  have  been made, however, a prima facie case has been made out to direct  investigation  on  the  basis  of  the  materials recovered in the raids in question.  It has been argued that  the  order  passed  by  the  Settlement  Commission cannot be said to be in accordance with law and is self contradictory and has been passed in haste. The finding recorded therein cannot be relied upon and it is the bounden duty of this Court to direct investigation  as one  whosoever  high  is  not  above  law  and  this  Court being the constitutional Court and the highest Court of the  country  should  direct  investigation  into  the material collected in the raids of two business groups. The investigation by special investigation Team should not be only ordered, but it should be monitored by this Court.

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12. Shri  Shanti  Bhushan,  learned  senior  counsel  has also submitted that in the case of C.B.I. versus V.C. Shukla 1998 (3) SCC 410, this Court has laid down the law as to admissibility of material involved therein after  the  investigation  was  over  and  is  of  no applicability  in  this  case,  at  this  stage.   The allegations  which  are  reflected  by  the  materials collected indicates commission of cognizable offence. Relying  upon  the  decision  of  this  Court  in  Lalita Kumari versus State of U.P. 2014(2) SCC 1, he urged that it is the bounden duty of the Court to direct investigation  and  falsity  or  correctness  of  the documents  has  to  be  seen  in  course  of  the investigation.

13. Shri Mukul Rohatgi, learned Attorney General for India and Mr. Tushar Mehta, learned ASG have submitted that the material in question with respect to Sahara Group on the basis of which investigation is sought for, have been found by the Settlement Commission, in proceedings under Section 245D of the Income Tax Act, to be doubtful.  The documents which have been filed by the Birla as well as Sahara Group are not in the form of  account  books  maintained  in  regular  course  of

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business.  They are random sheets and loose papers and their  correctness  and  authenticity,  even  for  the purpose of income mentioned therein have been found to be  un-reliable  having  no  evidentiary  value,  by  the concerned authorities of income tax.  The documents of Birla Group are also the same.  They are not in the form of regular books of account and are random and stray materials and thus the case of Birla also stands on the same footing.

14. Placing implicit reliance of the decision of this Court  in  C.B.I.  versus  V.C.  Shukla  (supra),  it  was submitted that it is open to any unscrupulous person to make  any  entry  any  time  against  anybody’s  name unilaterally on any sheet of paper or computer excel sheet.  There being no further corroborative material with respect to the payment, no case is made out so as to direct an investigation, and that too against large number of persons named in the documents.  Such entries have been held to be prima facie not even admissible in V.C. Shukla’s case. He urged that in case investigation is ordered on the basis of such documents, it  would be very  dangerous  and  no  constitutional functionary/officer can function independently, as per

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the constitutional imperatives. No case is made out on the basis of material which is not cognizable in law, to direct investigation.

15. Before  dilating upon the issue canvassed in the application we make it clear that we have not examined the  main  writ  petitions  vis  a  vis  challenge  to  the appointments  of  respondent  Nos.2  and  3.  We  are examining only the merit of the I.A. No. 3 supported by I.A. No.4, as to whether a case is made out on the basis  of  materials  which  are  placed  on  record,  to constitute  SIT  and  direct  investigation  against  the various functionaries/officers which are projected in Annexure A-8, A-9 and A-10 and other entries on loose sheets and further monitor the same.

16. With respect to the kind of materials which have been placed on record, this Court in V.C. Shukla’s case (supra) has dealt with the matter though at the stage of discharge when investigation had been completed but same is relevant for the purpose of decision of this case also.  This Court has considered the entries in Jain  Hawala  diaries,  note  books  and  file  containing loose sheets of papers not in the form of “Books of

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Accounts”  and  has  held  that  such  entries  in  loose papers/sheets are irrelevant and not admissible under Section 34 of the Evidence Act, and that only where the entries are in the books of accounts regularly kept, depending on the nature of occupation, that those are admissible  

17. It  has  further  been  laid  down  in   V.C.  Shukla (Supra) as to the value of entries in the books of account,  that  such  statement  shall  not  alone  be sufficient  evidence  to  charge  any  person  with liability, even if they are relevant and admissible, and that they are only corroborative evidence. It has been held even then independent evidence is necessary as  to  trustworthiness  of  those  entries  which  is  a requirement to fasten the liability.

18. This Court has further laid down in V.C. Shukla (Supra) that meaning of account book would be spiral note  book/pad  but  not  loose  sheets.   The  following extract being relevant is quoted hereinbelow :-

“14. In  setting  aside  the  order  of  the  trial court, the High Court accepted the contention of the respondents that the documents were not admissible in  evidence  under  Section  34  with  the  following

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words:  "An  account  presupposes  the  existence

of  two  persons  such  as  a  seller  and  a purchaser, creditor and debtor. Admittedly, the alleged diaries in the present case are not records of the entries arising out of a contract. They do not contain the debits and  credits.  They  can  at  the  most  be described as a memorandum kept by a person for his own benefit which will enable him to  look  into  the  same  whenever  the  need arises  to  do  so  for  his  future  purpose. Admittedly the said diaries were not being maintained  on  day-to-day  basis  in  the course of business. There is no mention of the  dates  on  which  the  alleged  payments were made. In fact the entries there in are on  monthly  basis.  Even  the  names  of  the persons whom the alleged payments were made do not find a mention in full. They have been  shown  in  abbreviated  form.  Only certain 'letters' have been written against their names which are within the knowledge of only the scribe of the said diaries as to what they stand for and whom they refer to."

x x x x x x x x x x x x x x x  

17. From a plain reading of the Section it is manifest  that  to  make  an  entry  relevant thereunder it must be shown that it has been made in a book, that book is a book of account and that book of account has been regularly kept in the course of business. From the above Section it is  also  manifest  that  even  if  the  above requirements are fulfilled and the entry becomes admissible  as  relevant  evidence,  still,  the statement  made  therein  shall  not  alone  be sufficient  evidence  to  charge  any  person  with liability. It is thus seen that while the first part of the section speaks of the relevancy of the entry as evidence, the second part speaks, in a  negative  way,  of  its  evidentiary  value  for charging  a  person  with  a  liability.  It  will, therefore, be necessary for us to first ascertain

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whether the entries in the documents, with which we are concerned, fulfill the requirements of the above section so as to be admissible in evidence and  if  this  question  is  answered  in  the affirmative then only its probative value need be assessed.

18. “Book”  ordinarily  means  a  collection  of sheets of paper or other material, blank, written, or printed, fastened or bound together so as to form a material whole. Loose sheets or scraps of paper cannot be termed as “book” for they can be easily detached and replaced. In dealing with the word “book” appearing in Section 34 in Mukundram v. Dayaram1 a decision on which both sides have placed reliance, the Court observed:-  

"In  its  ordinary  sense  it  signifies  a collection  of  sheets  of  paper  bound together  in  a  manner  which  cannot  be disturbed  or  altered  except  by  tearing apart. The binding is of a kind which is not intended to the moveable in the sense of being undone and put together again. A collection  of  papers  in  a  portfolio,  or clip,  or  strung  together  on  a  piece  of twine  which  is  intended  to  be  untied  at will, would not, in ordinary English, be called a book. ... I think the term 'book' in  Section  34  aforesaid  may  properly  be taken to signify, ordinarily, a collection of sheets of paper bound together with the intention  that  such  binding  shall  be permanent and the papers used collectively in one volume. It is easier however to say what  is  not  a  book  for  the  purposes  of Section  34,  and  I  have  no  hesitation  in holding that unbound sheets of paper, in whatever  quantity,  though  filled  up  with one continuous account, are not a book of account within the purview of Section 34."  

We must observe that the aforesaid approach is in accord with good reasoning and we are in full agreement with it. Applying the above tests it must be held that the two spiral note books (MR 68/91 and MR 71/91) and the two spiral pads (MR

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69/91 and MR 70/91) are "books" within the meaning of Section 34, but not the loose sheets of papers contained in the two files (MRs 72/91 and 73/91).

x x x x x x x x x x x x x x x x x x  

20. Mr.  Sibal,  the  learned  counsel  for  the Jains, did not dispute that the spiral note books and the small pads are “books” within the meaning of Section 34. He, however, strongly disputed the admissibility of those books in evidence under the aforesaid  section  on  the  ground  that  they  were neither books of account nor they were regularly kept in the course of business. he submitted that at best it could be said that those books were memoranda kept by a person for his own benefit. According  to  Mr.  Sibal,  in  business  parlance “account”  means  a  formal  statement  of  money transactions  between  parties  arising  out  of contractual or fiduciary relationship. Since the books  in  question  did  not  reflect  any  such relationship and, on the contrary, only contained entries of monies received from one set of persons and payment thereof to another set of persons it could not be said, by any stretch of imagination that they were books of account, argued Mr Sibal. He next contended that even if it was assumed for argument's sake that the above books were books of account relating to a business still they would not be admissible under Section 34 as they were not regularly kept. It was urged by him that the words “regularly kept” mean that the entries in the books were contemporaneously made at the time the transactions took place but a cursory glance of the books would show that the entries were made therein long after the purported transactions took place.  In  support  of  his  contentions  he  also relied upon the dictionary meanings of the words 'account' and 'regularly kept'.”

(Emphasis  added  by  us)   

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19.  With  respect  to  evidentiary  value  of  regular account book, this Court has laid down in V.C. Shukla, thus;

“37.  In Beni v. Bisan Dayal it was observed that  entries  in  books  of  account  are  not  by themselves sufficient to charge any person with liability, the reason being that a man cannot be allowed to make evidence for himself by what he chooses to write in his own books behind the back of  the  parties.   There  must  be  independent evidence of the transaction to which the entries relate and in absence of such evidence no relief can be given to the party who relies upon such entries to support his claim against another.  In Hira  Lal  v.  Ram  Rakha  the  High  Court,  while negativing a contention that it having been proved that the books of account were regularly kept in the  ordinary  course  of  business  and  that, therefore,  all  entries  therein  should  be considered to be relevant and to have been proved, said that the rule as laid down in Section 34 of the  Act  that  entries  in  the  books  of  account regularly  kept  in  the  course  of  business  are relevant whenever they refer to a matter in which the  Court  has  to  enquire  was  subject  to  the salient proviso that such entries shall not alone be sufficient evidence to charge any person with liability.  It is not, therefore, enough merely to prove that the books have been regularly kept in the course of business and the entries therein are correct.  It is further incumbent upon the person relying upon those entries to prove that they were in accordance with facts.”

20.  It is apparent from the aforesaid discussion that loose  sheets  of  papers  are  wholly  irrelevant  as evidence being not admissible under Section 34 so as to constitute  evidence  with  respect  to  the  transactions

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mentioned therein being of no evidentiary value.  The entire prosecution based upon such entries which led to the investigation was quashed by this Court.

21. We are constrained to observe that the Court has to be on guard while ordering investigation against any important constitutional functionary, officers or any person in the absence of some cogent legally cognizable material.  When  the  material  on  the  basis  of  which investigation  is  sought  is  itself  irrelevant  to constitute evidence and not admissible in evidence,  we have  apprehension  whether  it  would  be  safe  to  even initiate  investigation.  In  case  we  do  so,  the investigation  can  be  ordered  as  against  any  person whosoever high in integrity on the basis of irrelevant or inadmissible entry falsely made, by any unscrupulous person or business house that too not kept in regular books of accounts but on random papers at any given point  of  time.   There  has  to  be  some  relevant  and admissible evidence and some cogent reason, which is prima facie reliable and that too, supported by some other  circumstances  pointing  out  that  the  particular third  person  against  whom  the  allegations  have  been levelled was in fact involved in the matter or he has

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done  some  act  during  that  period,  which   may  have co-relations with the random entries.  In case we do not insist for all these, the process of law can be abused against all and sundry very easily to achieve ulterior goals and then no democracy can survive in case investigations are lightly set in motion against important constitutional functionaries on the basis of fictitious entries, in absence of cogent and admissible material on record, lest liberty of an individual be compromised unnecessarily.  We find the materials which have been placed on record either in the case of Birla or in the case of Sahara are not maintained in regular course  of  business  and  thus  lack  in  required reliability  to  be  made  the  foundation  of  a  police investigation.  

22. In  case  of  Sahara,  in  addition  we  have  the adjudication by the Income Tax Settlement Commission. The  order  has  been  placed  on  record  along  with I.A.No.4.  The Settlement Commission has observed that the  scrutiny  of  entries  on  loose  papers,  computer prints, hard disk, pen drives etc. have revealed that the transactions noted on documents were not genuine and  have  no  evidentiary  value  and  that   details  in

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these loose papers, computer print outs, hard disk and pen drive etc. do not comply with the requirement of the  Indian  Evidence  Act  and  are  not  admissible evidence. It further observed that the department has no evidence to prove that entries in these loose papers and  electronic  data  were  kept  regularly  during  the course of business of the concerned business house and the  fact  that  these  entries  were  fabricated, non-genuine  was  proved.   It  held  as  well  that  the PCIT/DR have not been able to show and substantiate the nature and source of receipts as well as nature and reason of payments and have failed to prove evidentiary value of loose papers and electronic documents within the legal parameters. The  Commission has also observed that Department has not been able to make out a clear case  of  taxing  such  income  in  the  hands  of  the applicant firm on the basis of these documents.

23. It is apparent that the Commission has recorded a finding that transactions noted in the documents were not genuine and thus has not attached any evidentiary value  to  the  pen  drive,  hard  disk,  computer  loose papers, computer printouts.   

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24. Since it is not disputed that for entries relied on in  these  loose  papers  and  electronic  data  were  not regularly kept during course of business, such entries were   discussed in the order dated 11.11.2016 passed in Sahara's case by the Settlement Commission and the documents have not been relied upon by the Commission against  assessee,  and  thus  such  documents  have  no evidentiary value against third parties. On the basis of the materials which have been placed on record, we are of the considered opinion that no case is made out to  direct  investigation  against  any  of  the  persons named in the Birla's documents or in the documents A-8, A-9 and A-10 etc. of Sahara.

25. This Court, in the decision of Lalita Kumari versus Government of Uttar Pradesh and others, 2014(2) SCC 1 has laid down that when there is commission of offence apparent from the complaint and a cognizable offence is made out, investigation should  normally be ordered and the  falsity  of  the  allegations  can  be  ascertained during the course of investigation.  In our opinion, the decision of Lalita Kumari (supra) is of no help to the  petitioner  for  seeking  direction  for  an investigation from a Court on the basis of  documents

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which are irrelevant, and per se not cognizable in law as piece of evidence and inadmissible in evidence and thus a roving inquiry cannot be ordered on such legally unsustainable material.

26. In the case of State of Haryana and Others versus Bhajan  Lal  and  others,  1992  Supp  (1)  SCC  335,  this Court has laid down  principles in regard to quashing the F.I.R. The Court can quash FIR also if situation warrant  even  before  investigation  takes  place  in certain circumstances.  This Court has laid down thus:

“102. x x x x x  (1) Where the allegations made in the first information report  of  the  complaint,  even  if  they  are  taken  at their face value and accepted in their entirety do not prima facie constitute any offence or make out a case against the accused. (2) Where  the  allegations  in  the  first  information report and other materials, if any, accompanying the FIR do not disclose a cognizable offence, justifying an investigation by police officers under Section 156(1) of  the  Code  except  under  an  order  of  a  Magistrate within the purview of Section 155(2) of the Code. (3) Where the  uncontroverted allegations made in the

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FIR or complaint and the evidence collected in support of  the  same  do  not  disclose  the  commission  of  any offence and make out a case against the accused. (4) Where the allegations in the FIR do not constitute a  cognizable  offence  but  constitute  only  a non-cognizable offence, no investigation is permitted by a police officer without an order of a Magistrate as contemplated under Section 155(2) of the Code. (5) Where the allegations made in the FIR or complaint are so absurd and inherently improbable on the basis of which  no  prudent  person  can  ever  reach  a  just conclusion  that  there  is  sufficient  ground for proceeding against the accused. (6) 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. (7) Where a criminal proceeding is manifestly attended with  mala  fide  and/or  where  the  proceeding  is maliciously  instituted  with  an  ulterior  motive  for wreaking vengeance on the accused and with a view to

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spite him due to private and personal grudge. 27. Considering  the  aforesaid  principles  which  have been  laid  down,  we  are  of  the  opinion  that  the materials in question are not good enough to constitute offences  to  direct  the  registration  of  F.I.R.  and investigation  therein.   The  materials  should  qualify the test as per the aforesaid decision. The complaint should  not  be  improbable  and  must  show  sufficient ground and commission of offence on the basis of which registration of a case can be ordered.  The materials in  question  are  not  only  irrelevant  but  are  also legally inadmissible under Section 34 of the Evidence Act,  more  so  with  respect  to  third  parties  and considering the explanation which have been made by the Birla Group and Sahara Group, we are of the opinion that it would not be legally justified, safe, just and proper  to  direct  investigation,  keeping   in   view principles laid down in the cases of Bhajan Lal and V.C. Shukla (supra).   28. In view of the materials which have been placed on record  and  the  peculiar  facts  and  circumstances projected in the case, we find that no case is made out to direct the investigation as prayed for.

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29. Thus, we find no merit in Interlocutory Application No.  3  supported  by  I.A.  No.  4.  The  applications deserve dismissal and are hereby dismissed.

                                                                ........................J.

                     (ARUN MISHRA)

                 ........................J.                            (AMITAVA ROY)

New Delhi, January 11, 2017