REPORTABLE

IN THE SUPREME COURT OF INDIA  

CIVIL ORIGINAL JURISDICTION  

WRIT PETITION (CIVIL) NO. 176  OF 2009  

RAM JETHMALANI & ORS.          …PETITIONERS

                                         VERSUS

UNION OF INDIA & ORS. …RESPONDENTS

WITH

I.A.NO.1  OF 2009

O R D E R I

“Follow the money” was the short  and simple advice  

given  by  the  secret  informant,  within  the  American  

Government,  to  Bob  Woodward,  the  journalist  from  

Washington  Post,  in  aid  of  his  investigations  of  the  

Watergate Hotel break in. Money has often been claimed, by  

economists, to only be a veil that covers the real value and  

the economy. As a medium of exchange, money is vital for  

the  smooth  functioning  of  exchange  in  the  market  place.

However, increasing monetization of most social transactions  

has  been viewed as  potentially  problematic  for  the  social  

order, in as much as it signifies a move to evaluating value,  

and ethical desirability, of most areas of social interaction  

only in terms of price obtained in the market place.

2. Price based notions of value and values, as propounded  

by some extreme neo-liberal  doctrines, implies that the  

values that ought to be promoted, in societies,  are the  

ones  for  which  people  are  willing  to  pay  a  price  for.  

Values, and social actions, for which an effective demand  

is not expressed in the market, are neglected, even if lip  

service is paid to their essentiality. However, it cannot be  

denied that not everything that can be, and is transacted,  

in  the  market  for  a  price  is  necessarily  good,  and  

enhances social welfare. Moreover, some activities, even  

if costly and without being directly measurable in terms of  

exchange value, are to be rightly viewed as essential. It is  

a well established proposition, of political economy, and of  

statecraft,  that  the  State  has  a  necessary  interest  in  

determining,  and influencing,  the  kinds  of  transactions,  

and social actions, that occur within a legal order. From  

prevention of certain kinds of harmful activities, that may  

range from outright crimes, to regulating or controlling,  

and  consequently  mitigating,  socially  harmful  modes  of  

social and economic production, to promotion of activities  

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that  are  deemed  to  be  of  higher  priority,  than  other  

activities  which  may  have  a  lower  priority,  howsoever  

evaluated  in  terms  of  social  utility,  are  all  the  

responsibilities  of  the  State.  Whether  such activities  by  

the State result in directly measurable benefits or not is  

often not the most important factor in determining their  

desirability;  their  absence,  or  their  substantial  

evisceration, are to be viewed as socially destructive.

3. The  scrutiny,  and  control,  of  activities,  whether  in  the  

economic, social or political contexts, by the State, in the  

public interest as posited by modern constitutionalism, is  

substantially  effectuated  by  the  State  “following  the  

money.” In modern societies very little gets accomplished  

without transfer of money. The incidence of crime, petty  

and  grand,  like  any  other  social  phenomena  is  often  

linked to transfers of monies, small  or large. Money, in  

that sense, can both power, and also reward, crime. As  

noted by many scholars, with increasing globalization, an  

ideological  and  social  construct,  in  which  transactions  

across borders are accomplished with little or no control  

over  the quantum, and mode of  transfers  of  money in  

exchange for various services and value rendered, both  

legal  and  illegal,  nation-states  also  have  begun  to  

confront complex problems of cross-border crimes of all  

kinds.  Whether  this  complex  web  of  flows  of  funds,  

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instantaneously, and in large sums is good or bad, from  

the perspective of lawful and desired transactions is not at  

issue in the context of the matters before this Court.

4. The worries of this Court that arise, in the context of the  

matters placed before us, are with respect to transfers of  

monies,  and  accumulation  of  monies,  which  are  

unaccounted  for  by  many  individuals  and  other  legal  

entities in the country, in foreign banks. The worries of  

this  Court  relate not merely to the quantum of monies  

said to have been secreted away in foreign banks,  but  

also the manner in which they may have been taken away  

from the country, and with the nature of activities that  

may have engendered the accumulation of such monies.  

The  worries  of  this  Court  are  also  with  regard  to  the  

nature of activities that such monies may engender, both  

in terms of the concentration of economic power, and also  

the fact that such monies may be transferred to groups  

and individuals who may use them for unlawful activities  

that  are  extremely  dangerous  to  the  nation,  including  

actions against the State. The worries of this Court also  

relate  to  whether  the  activities  of  engendering  such  

unaccounted monies, transferring them abroad, and the  

routing them back to India may not actually be creating a  

culture  that  extols  the  virtue  of  such  cycles,  and  the  

activities  that  engender  such  cycles  are  viewed  as  

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desirable  modes  of  individual  and  group  action.  The  

worries of this court also relate to the manner, and the  

extent to which such cycles are damaging to both national  

and international attempts to combat the extent, nature  

and intensity of cross-border criminal activity. Finally, the  

worries of this Court are also with respect to the extent of  

incapacities,  system  wide,  in  terms  of  institutional  

resources,  skills,  and  knowledge,  as  well  as  about  

incapacities of ethical nature, in keeping an account of the  

monies generated by various facets of social action in the  

country, and thereby developing effective mechanisms of  

control.  These  incapacities  go  to  the  very  heart  of  

constitutional  imperatives  of  governance.  Whether  such  

incapacities are on account of not having devoted enough  

resources towards building such capacities, or on account  

of a broader culture of venality in the wider spheres of  

social and political action, they run afoul of constitutional  

imperatives.

5. Large amounts of unaccounted monies, stashed away in  

banks located in jurisdictions that thrive on strong privacy  

laws  protecting  bearers  of  those  accounts  to  avoid  

scrutiny,  raise  each and every  worry  delineated above.  

First  and  foremost,  such  large  monies  stashed  abroad,  

and  unaccounted  for  by  individuals  and  entities  of  a  

country, would suggest the necessity of suspecting that  

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they  have  been  generated  in  activities  that  have  been  

deemed to be unlawful. In addition, such large amounts of  

unaccounted  monies  would  also  lead  to  a  natural  

suspicion  that  they  have  been  transferred  out  of  the  

country  in  order  to  evade  payment  of  taxes,  thereby  

depleting the capacity of the nation to undertake many  

tasks that are in public interest.

6. Many schools of thought exist with regard to the primary  

functions of the State, and the normative expectations of  

what  the role  of  the  State  ought  to  be.  The questions  

regarding which of those schools provide the absolutely  

correct view cannot be the criteria to choose or reject any  

specific  school  of  thought  as  an  aid  in  constitutional  

adjudication. Charged with the responsibility of having to  

make decisions in the present, within the constraints of  

epistemic  frailties  of  human  knowledge,  constitutional  

adjudicators willy-nilly are compelled to choose those that  

seem to provide a reasoned basis for framing of questions  

relevant,  both  with  respect  to  law,  and  to  facts.  

Institutional economics gives one such perspective which  

may  be  a  useful  guide  for  us  here.  Viewed  from  a  

functional perspective, the State, and governments, may  

be seen as coming into existence in order to solve, what  

institutional  economists  have  come  to  refer  to  as,  the  

coordination  problems  in  providing  public  goods,  and  

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prevent the disutility that emerges from the moral hazard  

of  a  short  run  utility  maximizer,  who  may  desire  the  

benefits of goods and services that are to be provided in  

common to the public, and yet have the interest of not  

paying for their production.

7. Security  of  the  nation,  infrastructure  of  governance,  

including those that relate to law making and law keeping  

functions,  crime  prevention,  detection  and  punishment,  

coordination of the economy, and ensuring minimal levels  

of material, and cultural goods for those who may not be  

in a position to fend for themselves or who have been left  

by  the  wayside  by  the  operation  of  the  economy  and  

society, may all be cited as some examples of the kinds of  

public goods that the State is expected to provide for, or  

enable  the  provision  of.  In  as  much  as  the  market  is  

primarily  expected  to  cater  to  purely  self  centered  

activities  of  individuals  and  groups,  markets  and  the  

domain of purely private social action significantly fail to  

provide  such  goods.  Consequently,  the  State,  and  

government, emerges to rectify the coordination problem,  

and provide the public goods.

8. Unaccounted  monies,  especially  large  sums  held  by  

nationals and entities with a legal presence in the nation,  

in  banks  abroad,  especially  in  tax  havens  or  in  

jurisdictions with a known history of silence about sources  

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of monies, clearly indicate a compromise of the ability of  

the State to manage its affairs in consonance with what is  

required from a constitutional  perspective. This is so in  

two respects. The quantum of such monies by itself, along  

with the numbers of individuals or other legal entities who  

hold such monies, may indicate in the first instance that a  

large volume of activities, in the social and the economic  

spheres within the country are unlawful and causing great  

social  damage, both at the individual  and the collective  

levels. Secondly, large quanta of monies stashed abroad,  

would also indicate a substantial weakness in the capacity  

of the State in collection of taxes on incomes generated  

by individuals and other legal entities within the country.  

The generation of such revenues is essential for the State  

to undertake the various public goods and services that it  

is constitutionally mandated, and normatively expected by  

its  citizenry,  to  provide.  A  substantial  degree  of  

incapacity, in the above respect, would be an indicia of  

the degree of failure of the State; and beyond a particular  

point, the State may spin into a vicious cycle of declining  

moral authority, thereby causing the incidence of unlawful  

activities in which wealth is sought to be generated, as  

well  as instances of  tax evasion,  to increase in volume  

and in intensity.

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9. Consequently, the issue of unaccounted monies held by  

nationals, and other legal entities, in foreign banks, is of  

primordial importance to the welfare of the citizens. The  

quantum of such monies may be rough indicators of the  

weakness of the State, in terms of both crime prevention,  

and also of tax collection. Depending on the volume of  

such monies, and the number of incidents through which  

such monies  are  generated  and secreted away,  it  may  

very well reveal the degree of “softness of the State.”

10.The concept of a “soft state” was famously articulated by  

the Nobel Laureate, Gunnar Myrdal. It is a broad based  

assessment  of  the  degree  to  which  the  State,  and  its  

machinery, is equipped to deal with its responsibilities of  

governance.  The  more  soft  the  State  is,  greater  the  

likelihood that there is an unholy nexus between the law  

maker, the law keeper, and the law breaker.

11.When a catchall word like “crimes” is used, it is common  

for people, and the popular culture to assume that it is  

“petty  crime,”  or  crimes  of  passion  committed  by  

individuals. That would be a gross mischaracterization of  

the  seriousness  of  the  issues  involved.  Far  more  

dangerous are the crimes that threaten national security,  

and  national  interest.  For  instance,  with  globalization,  

nation states are also confronted by the dark worlds of  

international  arms  dealers,  drug  peddlers,  and  various  

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kinds of criminal networks, including networks of terror.  

International  criminal  networks  that  extend  support  to  

home-grown  terror  or  extremist  groups,  or  those  that  

have  been  nurtured  and  sustained  in  hostile  countries,  

depend on networks of formal and informal,  lawful  and  

unlawful  mechanisms  of  transfer  of  monies  across  

boundaries of nation-states. They work in the interstices  

of  the micro-structures  of  financial  transfers  across the  

globe, and thrive in the lacunae, the gaps in law and of  

effort. The loosening of control over those mechanisms of  

transfers,  guided  by  an  extreme  neo-liberal  thirst  to  

create a global market that is free of the friction of law  

and  its  enforcement,  by  nation-states,  may  have  also  

contributed  to  an  increase  in  the  volume,  extent  and  

intensity  of  activities  by  criminal  and  terror  networks  

across the globe.

12.Increasingly, on account of “greed is good” culture that  

has  been  promoted  by  neo-liberal  ideologues,  many  

countries face the situation where the model of capitalism  

that the State is compelled to institute, and the markets it  

spawns,  is  predatory  in  nature.  From mining  mafias  to  

political operators who, all too willingly, bend policies of  

the State to suit  particular  individuals  or  groups in the  

social  and  economic  sphere,  the  raison  d’etre  for  

weakening the capacities and intent to enforce the laws is  

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the lure of the lucre. Even as the State provides violent  

support  to  those  who  benefit  from  such  predatory  

capitalism, often violating the human rights of its citizens,  

particularly it’s poor, the market begins to function like a  

bureaucratic machine dominated by big business; and the  

State begins to function like the market, where everything  

is available for sale at a price.

13.The paradigm of governance that has emerged, over the  

past three decades, prioritizes the market, and its natural  

course, over any degree of control of it by the State. The  

role  for  the  State  is  visualized  by votaries  of  the  neo-

liberal  paradigm  as  that  of  a  night  watchman;  and  

moreover it is also expected to take its hands out of the  

till  of  the  wealth  generating  machinery.  Based  on  the  

theories of Arthur Laffer, and pushed by the Washington  

Consensus, the prevailing wisdom of the elite, and of the  

policy  makers,  is  that  reduction  of  tax  rates,  thereby  

making  tax  regimes  regressive,  would  incentivise  the  

supposed genius  of  entrepreneurial  souls  of  individuals,  

actuated  by  pursuit  of  self-interest  and  desire  to  

accumulate great economic power. It was expected that  

this  would  enable  the generation  of  more wealth,  at  a  

more rapid pace, thereby enabling the State to generate  

appropriate  tax  revenues  even  with  lowered  tax  rates.  

Further, benefits were also expected in moral terms – that  

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the lowering of tax rates would reduce the incentives of  

wealth  generators  to  hide  their  monies,  thereby saving  

them from the guilt  of tax evasion. Whether that is an  

appropriate model of social organization or not, and from  

the perspective of constitutional adjudication, whether it  

meets the requirements of constitutionalism as embedded  

in the texts of various constitutions, is not a question that  

we want to enter in this matter.

14.Nevertheless, it would be necessary to note that there is  

a fly in the ointment of the above story of friction free  

markets that would always clear, and always work to the  

benefit  of  the  society.  The  strength  of  tax  collection  

machinery  can,  and  ought  to  be,  expected  to  have  a  

direct bearing on the revenues collected by the State. If  

the  machinery  is  weak,  understaffed,  ideologically  

motivated to look the other way, or the agents motivated  

by  not  so  salubrious  motives,  the  amount  of  revenue  

collected by the State would decline, stagnate, or may not  

generate the revenue for the State that is consonant with  

its responsibilities. From within the neo-liberal paradigm,  

also emerged the under-girding current of thought that  

revenues  for  the  State  implies  a  big  government,  and  

hence a strong tax collecting machinery itself  would be  

undesirable. Where the elite lose out in democratic politics  

of  achieving ever decreasing tax rates, it  would appear  

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that state machineries in the hands of the executive, all  

too willing to promote the extreme versions of the neo-

liberal paradigm and co-opt itself in the enterprises of the  

elite,  may  also  become  all  too  willing  to  not  develop  

substantial  capacities to monitor and follow the money,  

collect  the lawfully  mandated taxes,  and even look the  

other way. The results, as may be expected, have been  

disastrous across many nations.

15.In  addition,  it  would  also  appear  that  in  this  miasmic  

cultural  environment  in  which  greed  is  extolled,  

conspicuous consumption viewed as both necessary and  

socially valuable, and the wealthy viewed as demi-gods,  

the agents of the State may have also succumbed to the  

notions of the neo-liberal paradigm that the role of the  

State ought to only be an enabling one, and not exercise  

significant control. This attitude would have a significant  

impact on exercise of discretion, especially in the context  

of  regulating  economic  activities,  including  keeping  an  

account  of  the  monies  generated  in  various  activities,  

both  legal  and illegal.  Carried  away by the ideology of  

neo-liberalism, it is entirely possible that the agents of the  

State entrusted with the task of supervising the economic  

and social activities may err more on the side of extreme  

caution, whereby signals of wrong doing may be ignored  

even when they are strong. Instances of the powers that  

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be ignoring publicly visible stock market scams, or turning  

a blind eye to large scale illegal mining have become all  

too familiar, and may be readily cited. That such activities  

are  allowed  to  continue  to  occur,  with  weak,  or  non-

existent,  responses  from  the  State  may,  at  best,  be  

charitably ascribed to this broader culture of permissibility  

of all manner of private activities in search of ever more  

lucre. Ethical compromises, by the elite – those who wield  

the powers of the state, and those who fatten themselves  

in  an  ever  more  exploitative  economic  sphere-  can  be  

expected to thrive in an environment marked by such a  

permissive attitude, of weakened laws, and of weakened  

law enforcement machineries and attitudes.

16.To the above, we must  also add the fragmentation of  

administration. Even as the range of economic, and social  

activities  have  expanded,  and  their  sophistication  

increased by leaps and bounds, the response in terms of  

administration by the State has been to create ever more  

specialized agencies, and departments.  To some degree  

this  has  been  unavoidable.  Nevertheless,  it  would  also  

appear that there is a need to build internal capacities to  

share  information  across  such  departments,  lessen  the  

informational asymmetries between, and friction to flow of  

information  across  the  boundaries  of  departments  and  

agencies, and reduce the levels of consequent problems in  

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achieving coordination. Life, and social action within which  

human life becomes possible, do not proceed on the basis  

of specialized fiefdoms of expertise. They cut across the  

boundaries  erected  as  a  consequence  of  an  inherent  

tendency of experts to specialize. The result, often, is a  

system  wide  blindness,  while  yet  being  lured  by  the  

dazzle  of  ever  greater  specialization.  Many  dots  of  

information, now collected in ever increasing volume by  

development  of  sophisticated  information  technologies,  

get  ignored  on  account  of  lack  of  coordination  across  

agencies,  and  departments,  and  tendency  within  

bureaucracy to jealously guard their own turfs. In some  

instances,  the  failure  to  properly  investigate,  or  to  

prevent,  unlawful  activities  could  be  the  result  of  such  

over-specialization, frictions in sharing of information, and  

coordination across departmental and specialized agency  

boundaries.

17.If the State is soft to a large extent, especially in terms  

of  the  unholy  nexus  between the  law makers,  the  law  

keepers, and the law breakers, the moral authority, and  

also the moral incentives, to exercise suitable control over  

the  economy  and  the  society  would  vanish.  Large  

unaccounted monies are generally an indication of that. In  

a recent book, Prof. Rotberg states, after evaluating many  

failed and collapsed states over the past few decades:

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“Failed states offer unparalleled economic opportunity  – but only for a privileged few. Those around the ruler  or ruling oligarchy grow richer while their less fortunate  brethren starve. Immense profits are available from an  awareness  of  regulatory  advantages  and  currency  speculation and arbitrage. But the privilege of making  real  money  when  everything  else  is  deteriorating  is  confined  to  clients  of  the  ruling  elite….  The  nation- state’s  responsibility  to  maximize  the  well-being  and  prosperity of all its citizens is conspicuously absent, if it   ever  existed….  Corruption  flourishes  in  many  states,  but in failed states it  often does so on an unusually   destructive  scale.  There  is  widespread  petty  or  lubricating  corruption  as  a  matter  of  course,  but  escalating  levels  of  venal  corruption  mark  failed  states.” 1

18.India finds itself in a peculiar situation. Often celebrated,  

in popular culture, as an emerging economy that is rapidly  

growing,  and  expected  to  be  a  future  economic  and  

political  giant  on  the  global  stage,  it  is  also  popularly  

perceived, and apparently even in some responsible and  

scholarly  circles,  and  official  quarters,  that  some of  its  

nationals and other legal entities have stashed the largest  

quantum  of  unaccounted  monies  in  foreign  banks,  

especially in tax havens, and in other jurisdictions with  

strong laws of secrecy. There are also apparently reports,  

and analyses,  generated by Government of  India itself,  

1  “The Failure and Collapse of Nation-States – Breakdown, Prevention and Repair” in “WHEN STATES  FAIL: CAUSES AND CONSEQUENCES”, Rotberg, Robert I., Ed. Princeton University Press (2004).

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which place the amounts of such unaccounted monies at  

astronomical levels.

19.We do not wish to engage in any speculation as to what  

such analyses, reports, and factuality imply with respect  

to the state of the nation. The citizens of our country can  

make, and ought to be making, rational assessments of  

the  situation.  We  fervently  hope  that  it  leads  to  

responsible,  reasoned  and  reasonable  debate,  thereby  

exerting  the  appropriate  democratic  pressure  on  the  

State, and its agents, within the constitutional framework,  

to bring about the necessary changes without sacrificing  

cherished,  and  inherently  invaluable  social  goals  and  

values  enshrined  in  the  Constitution.  The  failures  are  

discernible  when  viewed  against  the  vision  of  the  

constitutional  project,  and  as  forewarned  by  Dr.  

Ambedkar, have been on account of the fact that man has  

been vile, and not the defects of a Constitution forged in  

the  fires  of  wisdom  gathered  over  eons  of  human  

experience.  If  the  politico-bureaucratic,  power  wielding,  

and business classes bear a large part of the blame, at  

least some part of blame ought to be apportioned to those  

portions  of  the  citizenry  that  is  well  informed,  or  is  

expected  to  be  informed.  Much  of  that  citizenry  has  

disengaged itself with the political process, and with the  

masses.  Informed  by  contempt  for  the  poor  and  the  

1

downtrodden,  the  elite  classes  that  have  benefited  the  

most,  or  expects to benefit  substantially  from the neo-

liberal policies that would wish away the hordes, has also  

chosen to forget that constitutional mandate is as much  

the  responsibility  of  the  citizenry,  and  through  their  

constant  vigilance,  of  all  the  organs  of  the  state,  and  

national institutions including political parties. To not be  

engaged in the process, is to ensure the evisceration of  

constitutional content. Knee jerk reactions, and ill advised  

tinkering  with  the constitutional  framework are  not  the  

solutions. The road is always long, and needs the constant  

march of the citizenry on it. There is no other way. To  

expect instant solutions, because this law or that body is  

formed,  without  striving  to  solve  system  wide,  and  

systemic,  problems  that  have  emerged  is  to  not  

understand  the  demands  of  a  responsible  citizenry  in  

modern constitutional republican democracies.

20.These matters before us relate to issues of large sums of  

unaccounted  monies,  allegedly  held  by  certain  named  

individuals, and loose associations of them; consequently  

we  have  to  express  our  serious  concerns  from  a  

constitutional  perspective.  The  amount  of  unaccounted  

monies, as alleged by the Government of India itself  is  

massive.  The  show  cause  notices  were  issued  a  

substantial  length  of  time  ago.  The  named  individuals  

1

were very much present in the country. Yet, for unknown,  

and  possibly  unknowable,  though  easily  surmisable,  

reasons the investigations into the matter proceeded at a  

laggardly pace. Even the named individuals had not yet  

been questioned with any degree of  seriousness.  These  

are  serious  lapses,  especially  when  viewed  from  the  

perspective of larger issues of security, both internal and  

external, of the country.

21.It is in light of the above, that we heard some significant  

elements of the instant writ petitions filed in this Court,  

and at this stage it is necessary that appropriate orders  

be issued. There are two issues we deal with below: (i)  

the appointment of a Special Investigation Team; and (ii)  

disclosure, to the Petitioners, of certain documents relied  

upon by the Union of India in its response.

II

22.The instant writ petition was filed, in 2009, by Shri. Ram  

Jethmalani,  Shri.  Gopal  Sharman,  Smt.  Jalbala  Vaidya,  

Shri.  K.P.S.  Gill,  Prof.  B.B.  Dutta,  and  Shri.  Subhash  

Kashyap,  all  well  known  professionals,  social  activists,  

former bureaucrats  or  those who have held responsible  

positions  in  the  society.  They  have  also  formed  an  

organization called Citizen India, the stated objective of  

1

which is said to be to bring about changes and betterment  

in the quality of governance, and functioning of all public  

institutions.

23.The  Petitioners  state  that  there  have  been  a  slew  of  

reports, in the media, and also in scholarly publications  

that  various  individuals,  mostly  citizens,  but  may  also  

include non-citizens, and other entities with presence in  

India, have generated, and secreted away large sums of  

monies,  through  their  activities  in  India  or  relating  to  

India, in various foreign banks, especially in tax havens,  

and  jurisdictions  that  have  strong  secrecy  laws  with  

respect  to  the  contents  of  bank  accounts  and  the  

identities  of  individuals  holding  such  accounts.  The  

Petitioners  allege  that  most  of  such  monies  are  

unaccounted, and in all probability have been generated  

through unlawful  activities,  whether  in  India  or  outside  

India, but relating to India. Further, the Petitioners also  

allege that a large part of such monies may have been  

generated within India, and have been taken away from  

India, breaking various laws, including but not limited to  

evasion of taxes.

24.The  Petitioners  contend:  (i)  that  the  sheer  volume  of  

such  monies  points  to  grave  weaknesses  in  the  

governance  of  the  nation,  because  they  indicate  a  

significant lack of control over unlawful activities through  

2

which such monies are generated, evasion of taxes, and  

use of unlawful means of transfer of funds; (ii) that these  

funds are then laundered and brought back into India, to  

be used in both legal and illegal activities; (iii) that the  

use of various unlawful modes of transfer of funds across  

borders,  gives  support  to  such  unlawful  networks  of  

international  finance;  and (iv) that in as much as such  

unlawful  networks  are  widely  acknowledged  to  also  

effectuate  transfer  of  funds  across  borders  in  aid  of  

various crimes committed against persons and the State,  

including  but  not  limited  to  activities  that  may  be  

classifiable  as  terrorist,  extremist,  or  unlawful  narcotic  

trade,  the  prevailing  situation  also  has  very  serious  

connotations for the security and integrity of India.

25.The  Petitioners  also  further  contend  that  a  significant  

part of such large unaccounted monies include the monies  

of  powerful  persons in India,  including leaders of many  

political  parties.  It  was  also  contended  that  the  

Government of India, and its agencies,  have been very  

lax in terms of keeping an eye on the various unlawful  

activities generating unaccounted monies, the consequent  

tax  evasion;  and that  such laxity  extends to efforts  to  

curtail the flow of such funds out, and into, India. Further,  

the Petitioners also contend that the efforts to prosecute  

the  individuals,  and  other  entities,  who  have  secreted  

2

such monies in foreign banks, have been weak or non-

existent.  It  was  strongly  argued  that  the  efforts  at  

identification of such monies in various bank accounts in  

many  jurisdictions  across  the  globe,  attempts  to  bring  

back  such  monies,  and  efforts  to  strengthen  the  

governance framework to prevent further outflows of such  

funds, have been sorely lacking.

26.The  Petitioners  also  made  allegations  about  certain  

specific  incidents  and  patterns  of  dereliction  of  duty,  

wherein  the  Government  of  India,  and  its  various  

agencies, even though in possession of specific knowledge  

about the monies in certain bank accounts,  and having  

estimated  that  such  monies  run  into  many  scores  of  

thousands  of  crores,  and upon issuance of  show cause  

notices  to  the  said  individual,  surprisingly  have  not  

proceeded  to  initiate,  and  carry  out  suitable  

investigations,  and  prosecute  the  individuals.  The  

individual specifically named is one Hassan Ali Khan. The  

Petitioners also contended that Kashinath Tapuria, and his  

wife  Chandrika  Tapuria,  are  also  party  to  the  illegal  

activities of Hassan Ali Khan.

27.Specifically,  it  was  alleged  that  Hassan  Ali  Khan  was  

served  with  an  income  tax  demand  for  Rs.  40,000.00  

Crores  (Rupees  Forty  Thousand  Crores),  and  that  the  

Tapurias were served an income tax demand notice of Rs.  

2

20,580.00  Crores  (Rupees  Twenty  Thousand  and  Five  

Hundred  and  Eighty  Crores).  The  Enforcement  

Directorate, in 2007, disclosed that Hassan Ali Khan had  

“dealings  amounting  to  1.6  billion  US  dollars”  in  the  

period 2001-2005. In January 2007, upon raiding Hassan  

Ali’s residence in Pune, certain documents and evidence  

had  been  discovered  regarding  deposits  of  8.04  billion  

dollars with UBS bank in Zurich. It is the contention of the  

Petitioners that, even though such evidence was secured  

nearly four and half years ago, (i) a proper investigation  

had  not  been  launched  to  obtain  the  right  facts  from  

abroad; (ii) the individuals concerned, though present in  

India, and subject to its jurisdiction, and easily available  

for  its  exercise,  had  not  even  been  interrogated  

appropriately; (iii) that the Union of India, and its various  

departments,  had  even  been  refusing  to  divulge  the  

details and information that would reveal the actual status  

of  the  investigation,  whether  in  fact  it  was  being  

conducted at all, or with any degree of seriousness; (iv)  

given the magnitude of amounts in question, especially of  

the  demand  notice  of  income  tax,  the  laxity  of  

investigation indicates multiple problems of serious non-

governance,  and  weaknesses  in  the  system,  including  

pressure from political quarters to hinder, or scuttle, the  

investigation,  prosecution,  and  ultimately  securing  the  

2

return of such monies; and (v) given the broadly accepted  

fact that within the political class corruption is rampant,  

ill-begotten wealth has begun to be amassed in massive  

quantities  by  many  members  in  that  class,  it  may  be  

reasonable  to  suspect,  or  even  conclude,  that  

investigation  was  being  deliberately  hindered  because  

Hassan  Ali  Khan,  and  the  Tapurias,  had  or  were  

continuing to handle the monies of such a class. The fact  

that both Income Tax department, and the Enforcement  

Directorate routinely, and with alacrity, seek the powers  

for long stretches of custodial interrogation of even those  

suspected  of  having  engaged  in  money  laundering,  or  

evaded taxes, with respect to very small amounts, ought  

to  raise  the  reasonable  suspicion  that  inaction  in  the  

matters concerning Hassan Ali  Khan, and Tapurias, was  

deliberately engineered, for nefarious reasons.

28.In addition, the Petitioners also state that in as much as  

the  bank  in  which  the  monies  had  been  stashed  by  

Hassan Ali Khan was UBS Zurich, the needle of suspicion  

has to inexorably turn to high level political interference  

and hindrance to the investigations. The said bank, it was  

submitted,  is  the  biggest  or  one  of  the  biggest  wealth  

management companies in the world. The Petitioners also  

narrated the mode, and the manner, in which the United  

States  had  dealt  with  UBS,  with  respect  to  monies  of  

2

American citizens secreted away with  the said  bank.  It  

was also alleged that UBS had not cooperated with the  

U.S.  authorities.  Contrasting  the  relative  alacrity,  and  

vigour,  with  which  the  United  States  government  had  

pursued the matters, the Petitioners contend the inaction  

of Union of India is shocking.

29.The Petitioners further allege that in 2007, the Reserve  

Bank  of  India  had  obtained  some  “knowledge  of  the  

dubious character” of UBS Security India Private Limited,  

a  branch  of  UBS,  and  consequently  stopped  this  bank  

from  extending  its  business  in  India  by  refusing  to  

approve its takeover of Standard Chartered Mutual Funds  

business in India. It was also claimed by the Petitioners  

that the SEBI had alleged that UBS played a role in the  

stock  market  crash  of  2004.  The  said  UBS  Bank  has  

apparently  applied for  a  retail  banking license in  India,  

which was approved in principle by RBI initially. In 2008,  

this license was withheld on the ground that “investigation  

of  its  unsavoury  role  in  the Hassan Ali  Khan case was  

pending  investigation  in  the  Enforcement  Directorate.”  

However, it seems that the RBI reversed its decision in  

2009, and no good reasons seem to be forthcoming for  

the reversal of the decision of 2008.

30.The Petitioners contend that such a reversal of decision  

could  only  have  been  accomplished  through  high  level  

2

intervention,  and that it  is  further  evidence of  linkages  

between members of the political class, and possibly even  

members  of  the  bureaucracy,  and  such  banking  

operations,  and the illegal  activities  of  Hassan Ali  Khan  

and the Tapurias.  Hence, the Petitioners argued, in the  

circumstances it would have to be necessarily concluded  

that the investigations into the affairs of Hassan Ali Khan,  

and the Tapurias, would be severely compromised if the  

Court does not intervene, and monitor the investigative  

processes  by  appointing  a  special  investigation  team  

reporting directly to the Court.

31.The learned senior counsel for the Petitioners sought that  

this  Court  intervene,  order  proper  investigations,  and  

monitor continuously, the actions of the Union of India,  

and any and all governmental departments and agencies,  

in these matters. It was submitted that their filing of this  

Writ Petition under Article 32 is proper, as the inaction of  

the  Union  of  India,  as  described  above,  violates  the  

fundamental rights – to proper governance, in as much as  

Article 14 provides for equality before the law and equal  

protection of the law, and Article 21 promises dignity of  

life to all citizens.

32.We  have  heard  the  learned  senior  counsel  for  the  

Petitioners,  Shri.  Anil  B.   Divan,  the  learned  senior  

counsel  for  interveners,  Shri.  K.K.  Venugopal,  and  the  

2

learned senior counsel for the petitioners in the connected  

Writ Petition, Shri. Shanti Bhushan. We have also heard  

the learned Solicitor General, Shri. Gopal Subramaniam,  

on behalf of the respondents.

33.Shri. Divan, specifically argued that, having regard to the  

nature of the investigation, its slow pace so far, and the  

non-seriousness on the part of the respondents, there is a  

need to constitute a Special  Investigation Team (“SIT”)  

headed by a former judge or two of this court. However,  

this particular plea has been vociferously resisted by the  

Solicitor General. Relying on the status reports submitted  

from time to time,  the learned Solicitor  General  stated  

that all possible steps were being taken to bring back the  

monies  stashed  in  foreign  banks,  and  that  the  

investigations in cases registered were proceeding in an  

appropriate  manner.  He expressed his  willingness for  a  

Court monitored investigation. He also further submitted  

that  the  Respondents,  in  principle,  have  no  objections  

whatsoever  against  the  main  submissions  of  the  

Petitioners.

34.The  real  point  of  controversy  is,  given  above,  as  to  

whether there is a need to constitute a SIT to be headed  

by  a  judge  or  two,  of  this  court,  to  supervise  the  

investigation.

2

35.We  must  express  our  serious  reservations  about  the  

responses  of  the  Union  of  India.  In  the  first  instance,  

during  the  earlier  phases  of  hearing  before  us,  the  

attempts were clearly evasive, confused, or originating in  

the  denial  mode.  It  was  only  upon  being  repeatedly  

pressed by us did the Union of India begin to admit that  

indeed the investigation was proceeding very slowly.  It  

also became clear to us that in fact the investigation had  

completely stalled, in as much as custodial interrogation  

of Hassan Ali Khan had not even been sought for, even  

though he was very much resident  in India.  Further,  it  

also now appears that even though his passport had been  

impounded, he was able to secure another passport from  

the  RPO  in  Patna,  possibly  with  the  help  or  aid  of  a  

politician.

36.During  the  course  of  the  hearings  the  Union  of  India  

repeatedly  insisted  that  the  matter  involves  many  

jurisdictions, across the globe, and a proper investigation  

could be accomplished only through the concerted efforts  

by  different  law enforcement  agencies,  both  within  the  

Central Government, and also various State governments.  

However, the absence of any satisfactory explanation of  

the slowness of the pace of investigation, and lack of any  

credible answers as to why the respondents did not act  

with  respect  to  those  actions  that  were  feasible,  and  

2

within the ambit of powers of the Enforcement Directorate  

itself, such as custodial investigation, leads us to conclude  

that  the  lack  of  seriousness  in  the  efforts  of  the  

respondents are contrary to the requirements of laws and  

constitutional obligations of the Union of India. It was only  

upon the insistence and intervention of this Court has the  

Enforcement  Directorate  initiated  and  secured  custodial  

interrogation over  Hassan Ali  Khan.  The Union of  India  

has explicitly  acknowledged that there was much to be  

desired with the manner in which the investigation had  

proceeded prior to the intervention of this court. From the  

more recent reports,  it  would appear that the Union of  

India, on account of its more recent efforts to conduct the  

investigation with seriousness, on account of the gravitas  

brought  by  this  Court,  has  led  to  the  securing  of  

additional  information,  and  leads,  which  could  aid  in  

further investigation. For instance, during the continuing  

interrogation  of  Hassan  Ali  Khan  and  the  Tapurias,  

undertaken for the first time at the behest of this Court,  

many names of  important persons,  including leaders of  

some  corporate  giants,  politically  powerful  people,  and  

international  arms dealers have cropped up. So far,  no  

significant  attempt  has  been  made  to  investigate  and  

verify  the  same.  This  is  a  further  cause  for  the  grave  

concerns  of  this  Court,  and  points  to  the  need  for  

2

continued, effective and day to day monitoring by a SIT  

constituted by this  Court,  and acting on behalf,  behest  

and direction of this Court.

37.In light of the fact that the issues are complex, requiring  

expertise  and  knowledge  of  different  departments,  and  

the  necessity  of  coordination  of  efforts  across  various  

agencies and departments, it was submitted to us that the  

Union  of  India  has  recently  formed  a  High  Level  

Committee,  under  the  aegis  of  the  Department  of  

Revenue in  the Ministry  of  Finance,  which  is  the  nodal  

agency  responsible  for  all  economic  offences.  The  

composition of the High Level Committee (“HLC”) is said  

to be as follows: (i) Secretary, Department of Revenue,  

as the Chairman; (ii) Deputy Governor, Reserve Bank of  

India; (iii) Director (IB); (iv) Director, Enforcement; (v)  

Director,  CBI;  (vi)  Chairman,  CBDT; (vii)  DG, Narcotics  

Control  Bureau;  (vii)  DG,  Revenue  Intelligence;  (ix)  

Director, Financial Intelligence Unit; and (x) JS (FT & TR-

I), CBDT. It was also submitted that the HLC may co-opt,  

as necessary, representation not below the rank of Joint  

Secretary  from the Home Secretary,  Foreign  Secretary,  

Defense Secretary and the Secretary, Cabinet Secretariat.  

The Union of India claims that such a multi-disciplinary  

group and committee would now enable the conducting of  

an  efficient  and  a  systematic  investigation  into  the  

3

matters  concerning  allegations  against  Hassan Ali  Khan  

and  the  Tapurias;  and  further  that  such  a  committee  

would also enable the taking of appropriate steps to bring  

back  the  monies  stashed  in  foreign  banks,  for  which  

purposes a need may arise to register further cases. The  

Union of India also claims that the formation of such a  

committee  indicates  the  seriousness  with  which  it  is  

viewing the entire matter.

38.While  it  would  appear,  from  the  Status  Reports  

submitted to this Court, that the Enforcement Directorate  

has moved in some small measure, the actual facts are  

not comforting to an appropriate extent. In fact we are  

not  convinced  that  the  situation  has  changed  to  the  

extent  that  it  ought  to  so  as  to  accept  that  the  

investigation would now be conducted with the degree of  

seriousness that is warranted. According to the Union of  

India the HLC was formed in order to take charge of and  

direct  the  entire  investigation,  and  subsequently,  the  

prosecution. In the meanwhile a charge sheet has been  

filed against Hassan Ali Khan. Upon inquiry by us as to  

whether the charge-sheet had been vetted by the HLC,  

and its inputs secured, the counsel for Union of India were  

flummoxed. The fact was that the charge-sheet had not  

been given even for the perusal of the   HLC, let alone  

securing its  inputs,  guidance and direction.  We are not  

3

satisfied by the explanation offered by the Directorate of  

Enforcement  by  way  of  affidavit  after  the  orders  were  

reserved.  Be it  noted that  a nodal  agency was set  up,  

pursuant to directions of this Court in Vineet Narain case  

given many years ago. Yet the same was not involved and  

these matters were never placed before it. Why?

39.From the status reports, it is clear that the problem is  

extremely complex, and many agencies and departments  

spread across the country have not responded with the  

alacrity, and urgency, that one would desire.  Moreover,  

the Union of India has been unable to answer any of the  

questions  regarding  its  past  actions,  and  their  

implications, such as the slowness of the investigation, or  

about grant of license to conduct retail banking by UBS,  

by reversing the decision taken earlier to withhold such a  

license on the grounds that  the  said  bank’s  credentials  

were suspect. To this latter query, the stance of the Union  

of India has been that entry of UBS would facilitate flow of  

foreign investments into India. The question that arises is  

whether  the  task  of  bringing  foreign  funds  into  India  

override all other constitutional concerns and obligations?

40.The  predominant  theme  in  the  responses  of  Union  of  

India before this court has been that it is doing all that it  

can  to  bring  back  the  unaccounted  monies  stashed  in  

various banks abroad. To this is added the qualifier that it  

3

is  an  extremely  complex  problem,  requiring  the  

cooperation  of  many  different  jurisdictions,  and  an  

internationally  coordinated  effort.  Indeed  they  are  

complex.  We  do  not  wish  to  go  into  the  details  of  

arguments about whether the Union of India is, or is not,  

doing necessary things to achieve such goals. That is not  

necessary for the matters at hand.

41.What is important is that the Union of India had obtained  

knowledge,  documents  and  information  that  indicated  

possible  connections  between Hassan Ali  Khan,  and his  

alleged  co-conspirators  and  known  international  arms  

dealers. Further, the Union of India was also in possession  

of  information  that  suggested  that  because  the  

international arms dealing network, and a very prominent  

dealer  in  it,  could  not  open  a  bank account  even in  a  

jurisdiction  that  is  generally  acknowledged to  lay  great  

emphasis on not asking sources of money being deposited  

into its banks, Hassan Ali Khan may have played a crucial  

role in opening an account with the branch of the same  

bank  in  another  jurisdiction.  The  volume  of  alleged  

income taxes owed to the country, as demanded by the  

Union of India itself, and the volume of monies, by some  

accounts  US $8.04 billion,  and some other  accounts  in  

excess of Rs. 70,000 crores, that are said to have been  

routed through various bank accounts of Hassan Ali Khan,  

3

and  Tapurias.  Further,  from  all  accounts  it  has  been  

acknowledged that  none of  the named individuals  have  

any known and lawful sources for such huge quantities of  

monies.  All  of  these  factors,  either  individually  or  

combined,  ought  to  have  immediately  raised  questions  

regarding the sources being unlawful  activities,  national  

security, and transfer of funds into India for other illegal  

activities, including acts against the State. It was only at  

the  repeated  insistence  by  us  that  such  matters  have  

equal, if not even greater importance than issues of tax  

collection, has the Union of India belatedly concluded that  

such  aspects  also  ought  to  be  investigated  with  

thoroughness.  However,  there  is  still  no  evidence  of  a  

really serious investigation into these other matters from  

the national security perspective.

42.The fact remains that the Union of India has struggled in  

conducting  a  proper  investigation  into  the  affairs  of  

Hassan Ali Khan and the Tapurias. While some individuals,  

whose names have come to the adverse knowledge of the  

Union of  India,  through the more recent investigations,  

have  been  interrogated,  many  more  are  yet  to  be  

investigated. This highly complex investigation has in fact  

just begun. It is still too early to conclude that the Union  

of India has indeed placed all the necessary machinery to  

conduct a proper investigation. The formation of the HLC  

3

was a necessary step, and may even be characterized as  

a welcome step. Nevertheless, it is an insufficient step.

43.In light of the above, we had proposed to the Union of  

India that the same HLC constituted by it be converted  

into a Special Investigation Team, headed by two retired  

judges of the Supreme Court of India. The Union of India  

opposes the same, but provides no principle as to why  

that would be undesirable, especially in light of the many  

lapses and lacunae in its actions in these matters spread  

over the past four years.

44.We  are  of  the  firm  opinion  that  in  these  matters  

fragmentation  of  government,  and  expertise  and  

knowledge,  across  many  departments,  agencies  and  

across various jurisdictions, both within the country, and  

across the globe, is a serious impediment to the conduct  

of  a  proper  investigation.  We  hold  that  it  is  in  fact  

necessary to create a body that coordinates, directs, and  

where  necessary  orders  timely  and  urgent  action  by  

various institutions of  the State.  We also hold that  the  

continued involvement of this Court in these matters, in a  

broad oversight capacity, is necessary for upholding the  

rule  of  law,  and  achievement  of  constitutional  values.  

However,  it  would  be  impossible  for  this  Court  to  be  

involved  in  day  to  day  investigations,  or  to  constantly  

monitor each and every aspect of the investigation.

3

45.The resources of this court are scarce, and it  is  over-

burdened with the task of rendering justice in well over a  

lakh  of  cases  every  year.  Nevertheless,  this  Court  is  

bound to uphold the Constitution, and its own burdens,  

excessive as they already are, cannot become an excuse  

for it to not perform that task. In a country where most of  

its  people  are  uneducated  and  illiterate,  suffering  from  

hunger and squalor,  the retraction of the monitoring of  

these matters by this Court would be unconscionable.

46.The issue is  not  merely whether the Union of  India is  

making  the  necessary  effort  to  bring  back  all  or  some  

significant part of the alleged monies. The fact that there  

is  some  information  and  knowledge  that  such  vast  

amounts may have been stashed away in foreign banks,  

implies  that  the State has the primordial  responsibility,  

under the Constitution, to make every effort to trace the  

sources  of  such  monies,  punish  the  guilty  where  such  

monies  have  been  generated  and/or  taken  abroad  

through  unlawful  activities,  and  bring  back  the  monies  

owed to the Country. We do recognize that the degree of  

success,  measured  in  terms of  the  amounts  of  monies  

brought  back,  is  dependent  on  a  number  of  factors,  

including  aspects  that  relate  to  international  political  

economy and relations, which may or may not be under  

our control. The fact remains that with respect to those  

3

factors that were within the powers of the Union of India,  

such as investigation of possible criminal nexus, threats to  

national security etc., were not even attempted. Fealty to  

the Constitution is not a matter of mere material success;  

but, and probably more importantly from the perspective  

of the moral authority of the State, a matter of integrity  

of effort on all the dimensions that inform a problem that  

threatens the constitutional projects. Further, the degree  

of seriousness with which efforts are made with respect to  

those various dimensions can also be expected to bear  

fruit in terms of building capacities, and the development  

of necessary attitudes to take the law enforcement part of  

accounting or following the money seriously in the future.

47.The merits of vigour of investigations, and attempts at  

law  enforcement,  cannot  be  measured  merely  on  the  

scale  of  what  we  accomplish  with  respect  to  what  has  

happened in the past. It would necessarily also have to be  

appreciated from the benefits that are likely to accrue to  

the country in preventing such activities in the future. Our  

people  may  be  poor,  and  may  be  suffering  from  all  

manner  of  deprivation.  However,  the  same  poor  and  

suffering masses are rich, morally and from a humanistic  

point of view. Their forbearance of the many foibles and  

failures of those who wield power, no less in their name  

and behalf than of the rich and the empowered, is itself  

3

indicative of their great qualities, of humanity, trust and  

tolerance.  That  greatness  can  only  be  matched  by  

exercise of every sinew, and every resource, in the broad  

goal of our constitutional project of bringing to their lives  

dignity. The efforts that this Court makes in this regard,  

and will make in this respect and these matters, can only  

be conceived as a small and minor, though nevertheless  

necessary,  part.  Ultimately  the  protection  of  the  

Constitution and striving to promote its vision and values  

is an elemental mode of service to our people.

48. We note that in many instances, in the past, when issues  

referred to the Court have been very complex in nature,  

and yet  required  the intervention  of  the  Court,  Special  

Investigation Teams have been ordered and constituted in  

order to enable the Court, and the Union of India and/or  

other  organs  of  the  State,  to  fulfill  their  constitutional  

obligations. The following instances may be noted: Vineet  

Narain v Union of India2, NHRC v State of Gujarat3, Sanjiv  

Kumar v State of Haryana4, and Centre for PIL v Union of  

India5.

49.In light of the above we herewith order:

(i) That the High Level Committee constituted by  

the Union of India, comprising of (i) Secretary,  2 (1996) 2 SCC 199 3 (2004) 8 SCC 610 4 (2005) 5 SCC 517 5 (2011) 1 SCC 560.

3

Department of Revenue; (ii) Deputy Governor,  

Reserve Bank of India; (iii) Director (IB); (iv)  

Director,  Enforcement;  (v)  Director,  CBI;  (vi)  

Chairman,  CBDT;  (vii)  DG,  Narcotics  Control  

Bureau;  (vii)  DG,  Revenue  Intelligence;  (ix)  

Director, Financial Intelligence Unit; and (x) JS  

(FT & TR-I), CBDT be forthwith appointed with  

immediate  effect  as  a  Special  Investigation  

Team;

(ii) That  the  Special  Investigation  Team,  so  

constituted, also include Director, Research and  

Analysis Wing;

(iii) That the above Special Investigation Team, so  

constituted,  be  headed  by  and  include  the  

following former eminent judges of this Court:  

(a)  Hon’ble  Mr.  Justice  B.P.  Jeevan Reddy  as  

Chairman;  and  (b)  Hon’ble  Mr.  Justice  M.B.  

Shah  as  Vice-Chairman;  and  that  the  Special  

Investigation  Team  function  under  their  

guidance and direction;

(iv) That  the  Special  Investigation  Team,  so  

constituted,  shall  be  charged  with  the  

responsibilities  and  duties  of  investigation,  

initiation  of  proceedings,  and  prosecution,  

whether in the context of appropriate criminal  

3

or civil proceedings of: (a) all issues relating to  

the  matters  concerning  and  arising  from  

unaccounted monies of Hassan Ali Khan and the  

Tapurias;  (b)  all  other  investigations  already  

commenced and are pending, or awaiting to be  

initiated,  with  respect  to  any  other  known  

instances  of  the  stashing  of  unaccounted  

monies in foreign bank accounts by Indians or  

other  entities  operating  in  India;  and  (c)  all  

other  matters  with  respect  to  unaccounted  

monies  being  stashed  in  foreign  banks  by  

Indians or other entities operating in India that  

may arise in the course of such investigations  

and proceedings. It is clarified here that within  

the  ambit  of  responsibilities  described  above,  

also lie  the responsibilities  to ensure that the  

matters  are  also  investigated,  proceedings  

initiated  and  prosecutions  conducted  with  

regard  to  criminality  and/or  unlawfulness  of  

activities  that  may  have  been  the  source  for  

such  monies,  as  well  as  the  criminal  and/or  

unlawful  means  that  are  used  to  take  such  

unaccounted monies  out  of  and/or  bring such  

monies back into the country, and use of such  

monies  in  India  or  abroad.  The  Special  

4

Investigation Team shall  also be charged with  

the responsibility of preparing a comprehensive  

action plan, including the creation of necessary  

institutional  structures  that  can  enable  and  

strengthen  the  country’s  battle  against  

generation  of  unaccounted  monies,  and  their  

stashing  away  in  foreign  banks  or  in  various  

forms domestically.

(v) That  the  Special  Investigation  Team  so  

constituted  report  and  be  responsible  to  this  

Court, and that it shall be charged with the duty  

to  keep  this  Court  informed  of  all  major  

developments  by  the  filing  of  periodic  status  

reports, and following of any special orders that  

this Court may issue from time to time;

(vi) That  all  organs,  agencies,  departments  and  

agents of the State, whether at the level of the  

Union  of  India,  or  the  State  Government,  

including  but  not  limited  to  all  statutorily  

formed  individual  bodies,  and  other  

constitutional  bodies,   extend  all  the  

cooperation  necessary  for  the  Special  

Investigation  Team  so  constituted  and  

functioning;

4

(vii) That  the  Union  of  India,  and  where  needed  

even  the  State  Governments,  are  directed  to  

facilitate  the  conduct  of  the  investigations,  in  

their  fullest  measure,  by  the  Special  

Investigation  Team  so  constituted  and  

functioning,  by  extending  all  the  necessary  

financial,  material,  legal,  diplomatic  and  

intelligence  resources,  whether  such  

investigations or portions of such investigations  

occur inside the country or abroad.

(viii) That  the  Special  Investigation  Team  also  be  

empowered  to  further  investigate  even where  

charge-sheets have been previously filed; and  

that  the  Special  Investigation  Team  may  

register further cases, and conduct appropriate  

investigations and initiate proceedings, for the  

purpose of  bringing back unaccounted monies  

unlawfully kept in bank accounts abroad.

50.We  accordingly  direct  the  Union  of  India  to  issue  

appropriate notification and publish the same forthwith. It  

is needless to clarify that the former judges of this Court  

so appointed to supervise the Special Investigation Team  

are  entitled  to  their  remuneration,  allowances,  perks,  

facilities as that of the judges of the Supreme Court. The  

Ministry of Finance, Union of India, shall  be responsible  

4

for  creating  the  appropriate  infrastructure  and  other  

facilities for proper and effective functioning of the Special  

Investigation Team at once.

III

51.We now turn our attention to the matter of disclosure of  

various documents referenced by the Union of India, as  

sought  by  the  Petitioners.  These  documents,  including  

names  and  bank  particulars,  relate  to  various  bank  

accounts,  of  Indian  citizens,  in  the  Principality  of  

Liechtenstein  (“Liechtenstein”),  a  small  landlocked  

sovereign  nation-state  in  Europe.  It  is  generally  

acknowledged that Liechtenstein is a tax haven.

52.Apparently,  as  alleged  by  the  Petitioners,  a  former  

employee of a bank or banks in Liechtenstein secured the  

names of some 1400 bank account holders, along with the  

particulars of such accounts, and offered the information  

to various entities. The same was secured by the Federal  

Republic  of  Germany (“Germany”),  which in turn,  apart  

from  initiating  tax  proceedings  against  some  600  

individuals,  also  offered  the  information  regarding  

nationals and citizens of other countries to such countries.  

It is the contention of the Petitioners that even though the  

Union of India was informed about the presence of the  

names of a large number of Indian citizens in the list of  

4

names revealed by the former bank employee, the Union  

of  India  never  made a  serious  attempt  to  secure  such  

information and proceed to investigate such individuals. It  

is  the  contention  of  the  Petitioners  that  such  names  

include the identities of prominent and powerful Indians,  

or the identities of individuals, who may or may not be  

Indian citizens, but who could lead to information about  

various powerful Indians holding unaccounted monies in  

bank  accounts  abroad.  It  is  also  the  contention  of  the  

Petitioners  that,  even  though  they  had  sought  the  

information  under  the Right  to  Information  Act  (2005),  

the Respondents had not revealed the names nor divulged  

the relevant documents. The Petitioners argue that such a  

reluctance is only on account of the Union of India not  

having  initiated  suitable  steps  to  recover  such  monies,  

and  punish  the  named  individuals,  and  also  because  

revelation of names of individuals on the list would lead to  

discovery of powerful persons engaged in various unlawful  

activities, both in generation of unlawful and unaccounted  

monies, and their stashing away in banks abroad.

53.It  was  also  alleged  by  the  Petitioners  that  in  fact  

Germany  had  offered  such  information,  freely  and  

generally to any country that requests the same, and did  

not  specify  that  the  names  and  other  information  

pertaining  to  such  names  ought  to  be  requested  only  

4

pursuant to any double taxation agreements it has with  

other countries. The Petitioners also alleged that Union of  

India has chosen to proceed under the assumption that it  

could have requested such information only pursuant to  

the double taxation agreement it has with Germany. The  

Petitioners  contend  that  the  Government  of  India  took  

such  a  step  primarily  to  conceal  the  information  from  

public gaze.

54.The response of the Union of India may be summed up  

briefly: (i) that they secured the names of individuals with  

bank accounts in banks in Liechtenstein, and other details  

with  respect  to  such  bank  accounts,  pursuant  to  an  

agreement of India with Germany for avoidance of double  

taxation and prevention of fiscal evasion; (ii) that the said  

agreement proscribes the Union of India from disclosing  

such names, and other documents and information with  

respect to such bank accounts, to the Petitioners, even in  

the  context  of  these  ongoing  proceedings  before  this  

court; (iii) that the disclosure of such names, and other  

documents  and  information,  secured  from  Germany,  

would  jeopardize  the  relations  of  India  with  a  foreign  

state; (iv) that the disclosure of such names, and other  

documents  and  information,  would  violate  the  right  to  

privacy of those individuals who may have only deposited  

monies in a lawful manner; (v) that disclosure of names,  

4

and other documents and information can be made with  

respect  to  those  individuals  with  regard  to  whom  

investigations are completed, and  proceedings initiated;  

and (vi) that contrary to assertions by the Petitioners, it  

was Germany which had asked the Union of India to seek  

the  information  under  double  taxation  agreement,  and  

that this was in response to an earlier request by Union of  

India for the said information.

55.For  the  purposes  of  the  instant  order,  the  issue  of  

whether the Union of India could have sought and secured  

the names, and other documents and information, without  

having to take recourse to the double taxation agreement  

is not relevant. For the purposes of determining whether  

Union of India is obligated to disclose the information that  

it  obtained, from Germany, with respect to accounts of  

Indian  citizens  in  a  bank  in  the  Principality  of  

Liechtenstein,  we need only  examine  the claims of  the  

Union of India as to whether it is proscribed by the double  

taxation  agreement  with  Germany from disclosing  such  

information. Further, and most importantly, we would also  

have  to  examine  whether  in  the  context  of  Article  32  

proceedings  before  this  court,  wherein  this  court  has  

exercised  jurisdiction,  the  Union  of  India  can  claim  

exemption  from  providing  such  information  to  the  

Petitioners,  and  also  with  respect  to  issues  of  right  to  

4

privacy of individuals who hold such accounts, and with  

respect  of  whom  no  investigations  have  yet  been  

commenced, or only partially conducted, so that the State  

has  not  yet  issued  a  show  cause  and  initiated  

proceedings.

56.We have perused the said agreement with Germany. We  

are convinced that the said agreement, by itself, does not  

proscribe  the  disclosure of  the relevant  documents  and  

details of the same, including the names of various bank  

account holders in Liechtenstein. In the first instance, we  

note that the names of the individuals are with respect to  

bank  accounts  in  the  Liechtenstein,  which  though  

populated  by  largely  German  speaking  people,  is  an  

independent and sovereign nation-state. The agreement  

between  Germany  and  India  is  with  regard  to  various  

issues that crop up with respect to German and Indian  

citizens’ liability to pay taxes to Germany and/or India. It  

does not even remotely touch upon information regarding  

Indian  citizens’  bank  accounts  in  Liechtenstein  that  

Germany secures and shares that have no bearing upon  

the  matters  that  are  covered  by  the  double  taxation  

agreement  between  the  two  countries.  In  fact,  the  

“information” that is referred to in Article 26 is that which  

is  “necessary  for  carrying  out  the  purposes  of  this  

agreement”,  i.e. the Indo-German DTAA. Therefore, the  

4

information sought does not fall within the ambit of this  

provision. It is disingenuous for the Union of India, under  

these circumstances, to repeatedly claim that it is unable  

to  reveal  the  documents  and  names  as  sought  by  the  

Petitioners on the ground that the same is proscribed by  

the  said  agreement.  It  does  not  matter  that  Germany  

itself  may  have  asked  India  to  treat  the  information  

shared as being subject to the confidentiality and secrecy  

clause  of  the  double  taxation  agreement.  It  is  for  the  

Union  of  India,  and  the  courts,  in  appropriate  

proceedings,  to  determine  whether  such  information  

concerns matters that are covered by the double taxation  

agreement  or  not.  In  any  event,  we  also  proceed  to  

examine the provisions of the double taxation agreement  

below,  to  also  examine  whether  they  proscribe  the  

disclosure  of  such  names,  and  other  documents  and  

information,  even  in  the  context  of  these  instant  

proceedings.

57.Relevant  portions  of  Article  26  of  the  double  taxation  

agreement with Germany, a copy of which was submitted  

by Union of India, reads as follows:

“1. The competent authorities of the Contracting  States  shall  exchange  such  information  as  is  necessary  for  carrying  out  the  purposes  of  this  Agreement.  Any  information  received  by  a  Contracting State shall be treated as secret in the  

4

same manner as information obtained under the  domestic laws of that State and shall be disclosed  only  to  persons  or  authorities  (including  courts  and  administrative  bodies)  involved  in  the  assessment  or  collection  of,  the  enforcement  or  prosecution in respect of, or the determination of   appeals in relation to, the taxes covered by this   Agreement. They may disclose the information in  public court proceedings or in judicial proceedings.

2. In no case shall the provisions of paragraph 1  be construed  so as to  impose on a Contracting  State the obligation:

(a) to carry out administrative measures at  variance  with  the  laws  and  administrative practice of that or of the  other Contracting State;

(b) to  supply  information  which  is  not  obtainable  under  the  laws  or  in  the  normal course of the administration of  that or of the other Contracting State;

(c) to  supply  information  which  would  disclose any trade, business, industrial,   commercial  or  professional  secret  or  trade  process,  or  information,  the  disclosure of which would be contrary to  public policy (order public)”

58.The  above  clause  in  the  relevant  agreement  with  

Germany would indicate that, contrary to the assertions of  

Union  of  India,  there  is  no  absolute  bar  of  secrecy.  

Instead  the  agreement  specifically  provides  that  the  

information may be disclosed in public court proceedings,  

4

which the instant proceedings are. The proceedings in this  

matter before this court, relate both to the issue of tax  

collection with respect to unaccounted monies deposited  

into foreign bank accounts, as well as with issues relating  

to  the  manner  in  which  such  monies  were  generated,  

which may include activities that are criminal  in nature  

also. Comity of nations cannot be predicated upon clauses  

of  secrecy  that  could  hinder  constitutional  proceedings  

such as these, or criminal proceedings.

59.The claim of  Union of  India  is  that the phrase “public  

court proceedings”, in the last sentence in Article 26(1) of  

the double taxation agreement only relates to proceedings  

relating to tax matters.  The Union of  India  claims that  

such an understanding comports with how it is understood  

internationally. In this regard Union of India cites a few  

treatises. However, the Union of India did not provide any  

evidence  that  Germany  specifically  requested  it  to  not  

reveal  the  details  with  respect  to  accounts  in  the  

Liechtenstein even in the context of proceedings before  

this court.

60.Article 31, “General Rule of Interpretation”, of the Vienna  

Convention of the Law of Treaties, 1969 provides that a  

“treaty shall  be interpreted in good faith  in  accordance  

with the ordinary meaning to be given to the terms of the  

treaty in their context and in the light of its object and  

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purpose.”  While  India  is  not  a  party  to  the  Vienna  

Convention,  it  contains  many  principles  of  customary  

international  law,  and the principle  of  interpretation,  of  

Article  31  of  the  Vienna  Convention,  provides  a  broad  

guideline as to what could be an appropriate manner of  

interpreting a treaty in the Indian context also.

61. This Court  in  Union of  India v.  Azadi  Bachao Andolan,6  

approvingly  noted  Frank  Bennion’s  observations  that  a  

treaty  is  really  an  indirect  enactment,  instead  of  a  

substantive  legislation,  and  that  drafting  of  treaties  is  

notoriously sloppy, whereby inconveniences obtain. In this  

regard  this  Court  further  noted  the  dictum  of  Lord  

Widgery,  C.J.  that  the  words  “are  to  be  given  their  

general  meaning, general  to lawyer and layman alike….  

The meaning of the diplomat rather than the lawyer.” The  

broad principle of interpretation, with respect to treaties,  

and provisions therein, would be that ordinary meanings  

of words be given effect to, unless the context requires or  

otherwise.  However,  the  fact  that  such  treaties  are  

drafted  by  diplomats,  and  not  lawyers,  leading  to  

sloppiness  in  drafting  also  implies  that  care  has  to  be  

taken  to  not  render  any  word,  phrase,  or  sentence  

redundant,  especially  where  rendering  of  such  word,  

phrase or sentence redundant would lead to a manifestly  

absurd  situation,  particularly  from  a  constitutional  6 (2004) 10 SCC 1

5

perspective.  The  government  cannot  bind  India  in  a  

manner  that  derogates  from  Constitutional  provisions,  

values and imperatives.

62.The last sentence of Article 26(1) of the double taxation  

agreement  with  Germany,  “[T]hey  may  disclose  this  

information  in  public  court  proceedings  or  in  judicial  

decisions,” is revelatory in this regard. It stands out as an  

additional aspect or provision, and an exception, to the  

preceding portion of the said article. It is located after the  

specification that information shared between contracting  

parties may be revealed only to “persons or authorities  

(including  courts  and administrative  bodies)  involved  in  

the  assessment  or  collection  of,  the  enforcement  or  

prosecution in respect of, or the determination of appeals  

in  relation  to  taxes  covered  by  this  Agreement.”  

Consequently,  it  has  to  be  understood  that  the phrase  

“public court proceedings” specified in the last sentence in  

Article  26(1)  of  the  double  taxation  agreement  with  

Germany refers to court proceedings other than those in  

connection  with  tax  assessment,  enforcement,  

prosecution etc., with respect to tax matters. If it were  

otherwise, as argued by Union of India, then there would  

have been no need to have that last sentence in Article  

26(1) of the double taxation agreement at all.  The last  

sentence  would  become redundant  if  the  interpretation  

5

pressed  by  Union  of  India  is  accepted.  Thus,  

notwithstanding the alleged convention of interpreting the  

last  sentence  only  as  referring  to  proceedings  in  tax  

matters,  the  rubric  of  common  law  jurisprudence,  and  

fealty  to  its  principles,  leads  us  inexorably  to  the  

conclusion that the language in this specific treaty, and  

under these circumstances cannot be interpreted in the  

manner sought by Union of India.

63.While  we  agree  that  the  language  could  have  been  

tighter, and may be deemed to be sloppy, to use Frank  

Bennion’s  characterization,  negotiation  of  such  treaties  

are  conducted  and  secured  at  very  high  levels  of  

government,  with  awareness  of  general  principles  of  

interpretation used in various jurisdictions. It is fairly well  

known, at least in Common Law jurisdictions, that legal  

instruments  and  statutes  are  interpreted  in  a  manner  

whereby redundancy of expressions and phrases is sought  

to be avoided. Germany would have been well aware of it.

64.The redundancy that would have to be ascribed to the  

said last sentence of Article 26(1) of the double taxation  

agreement with Germany, if the position of Union of India  

were to be accepted, also leads to a manifest absurdity, in  

the context of the Indian Constitution. Such a redundancy  

would  mean  that  constitutional  imperatives  themselves  

are to be set aside.  Modern constitutionalism, to which  

5

Germany is a major contributor too, especially in terms of  

the basic structure doctrine, specifies that powers vested  

in any organ of the State have to be exercised within the  

four corners of the Constitution, and further that organs  

created by a constitution cannot  change the identity  of  

the constitution itself.

65. The  basic  structure  of  the  Constitution  cannot  be  

amended even by the amending power of the legislature.  

Our Constitution guarantees the right, pursuant to Clause  

(1) of Article 32, to petition this Court on the ground that  

the rights guaranteed under Part III of the Constitution  

have been violated. This provision is a part of the basic  

structure  of  the  Constitution.  Clause  (2)  of  Article  32  

empowers  this  Court  to  issue  “directions  or  orders  or  

writs,  including  writs  in  the  nature  of  habeas  corpus,  

mandamus,  prohibition,  quo  warranto and  certiorari,  

whichever may be appropriate for the enforcement of any  

of the rights conferred by” Part III. This is also a part of  

the basic structure of the Constitution.

66.In  order  that  the  right  guaranteed  by  Clause  (1)  of  

Article 32 be meaningful,  and particularly because such  

petitions seek the protection of fundamental rights, it is  

imperative  that  in  such proceedings  the petitioners  are  

not denied the information necessary for them to properly  

articulate the case and be heard, especially where such  

5

information  is  in  the  possession  of  the  State.  To  deny  

access  to  such  information,  without  citing  any  

constitutional  principle  or  enumerated  grounds  of  

constitutional  prohibition,  would  be  to  thwart  the  right  

granted by Clause (1) of Article 32.

67.Further,  in  as  much  as,  by  history  and  tradition  of  

common  law,  judicial  proceedings  are  substantively,  

though not necessarily fully, adversarial, both parties bear  

the responsibility of placing all the relevant information,  

analyses,  and  facts  before  this  court  as  completely  as  

possible.  In  most  situations,  it  is  the  State  which  may  

have more comprehensive information that is relevant to  

the matters at hand in such proceedings. However, some  

agents  of  the  State  may  perceive  that  because  these  

proceedings  are  adversarial  in  nature,  the  duty  and  

burden to furnish all the necessary information rests upon  

the Petitioners, and hence the State has no obligation to  

fully furnish such information. Some agents of the State  

may also seek to cast the events and facts in a light that  

is favourable to the government in the immediate context  

of the proceedings, even though such actions do not lead  

to rendering of complete justice in the task of protection  

of fundamental rights. To that extent, both the petitioners  

and  this  Court  would  be  handicapped  in  proceedings  

under Clause (1) of Article 32.

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68.It  is  necessary  for  us  to  note  that  the  burden  of  

asserting,  and proving,  by relevant  evidence a claim in  

judicial proceedings would ordinarily be placed upon the  

proponent  of  such  a  claim;  however,  the  burden  of  

protection of fundamental rights is primarily the duty of  

the  State.  Consequently,  unless  constitutional  grounds  

exist, the State may not act in a manner that hinders this  

Court  from  rendering  complete  justice  in  such  

proceedings.  Withholding  of  information  from  the  

petitioners,  or  seeking  to  cast  the  relevant  events  and  

facts in a light favourable to the State in the context of  

the  proceedings,  even  though  ultimately  detrimental  to  

the essential task of protecting fundamental rights, would  

be destructive to the guarantee in Clause (1) of Article 32,  

and substantially eviscerate the capacity of this Court in  

exercising its powers contained in clause (2) of Article 32,  

and those traceable to other provisions of the Constitution  

and  broader  jurisprudence  of  constitutionalism,  in  

upholding fundamental rights enshrined in Part III. In the  

task of upholding of fundamental rights, the State cannot  

be an adversary.  The State has the duty,  generally,  to  

reveal all the facts and information in its possession to the  

Court, and also provide the same to the petitioners. This  

is so, because the petitioners would also then be enabled  

to bring to light facts and the law that may be relevant for  

5

the Court in rendering its decision. In proceedings such as  

those under Article 32, both the petitioner and the State,  

have to necessarily be the eyes and ears of the Court.  

Blinding  the  petitioner  would  substantially  detract  from  

the integrity of the process of judicial decision making in  

Article  32 proceedings,  especially  where the issue is  of  

upholding of fundamental rights.

69.Furthermore, we hold that there is a special relationship  

between Clause (1) of Article 32 and Sub-Clause (a) of  

Clause  (1)  of  Article  19,  which  guarantees  citizens  the  

freedom of speech and expression. The very genesis, and  

the  normative  desirability  of  such  a  freedom,  lies  in  

historical  experiences  of  the  entire  humanity:  unless  

accountable,  the  State  would  turn  tyrannical.  A  

proceeding under Clause (1) of Article 32, and invocation  

of the powers granted by Clause (2) of Article 32, is a  

primordial  constitutional  feature  of  ensuring  such  

accountability.  The  very  promise,  and  existence,  of  a  

constitutional  democracy  rests  substantially  on  such  

proceedings.

70.Withholding of  information  from the petitioners  by the  

State, thereby constraining their freedom of speech and  

expression before this Court,  may be premised only on  

the exceptions carved out, in Clause (2) of Article 19, “in  

the interests of sovereignty and integrity of India, security  

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of the State, friendly relations with foreign States, public  

order, decency or morality, or in relation to contempt of  

court, defamation or incitement to an offence” or by law  

that  demarcate  exceptions,  provided  that  such  a  law  

comports with the enumerated grounds in Clause (2) of  

Article 19, or that may be provided for elsewhere in the  

Constitution.

71.It  is  now  a  well  recognized  proposition  that  we  are  

increasingly being entwined in a global network of events  

and social action. Considerable care has to be exercised in  

this process, particularly where governments which come  

into being on account of a constitutive document, enter  

into  treaties.  The  actions  of  governments  can  only  be  

lawful  when  exercised  within  the  four  corners  of  

constitutional  permissibility.  No  treaty  can  be  entered  

into,  or  interpreted,  such  that  constitutional  fealty  is  

derogated from. The redundancy, that the Union of India  

presses, with respect to the last sentence of Article 26(1)  

of  the  double  taxation  agreement  with  Germany,  

necessarily transgresses upon the boundaries erected by  

our Constitution. It cannot be permitted.

72.We have perused the documents in question, and heard  

the  arguments  of  Union  of  India  with  respect  to  the  

double taxation agreement with Germany as an obstacle  

to  disclosure.  We  do  not  find  merit  in  its  arguments  

5

flowing from the provisions of double taxation agreement  

with Germany. However, one major constitutional issue,  

and concern remains. This is with regard to whether the  

names of individuals, and details of their bank accounts,  

with  respect  to  whom  there  has  been  no  completed  

investigations  that  reveal  wrong doing  and  proceedings  

initiated, and there is no other credible information and  

evidence currently available with the Petitioners that there  

has  been  any  wrong  doing,  may  be  disclosed  to  the  

Petitioners.

73.Right to privacy is an integral part of right to life. This is  

a cherished constitutional value, and it is important that  

human beings be allowed domains of  freedom that are  

free  of  public  scrutiny  unless  they  act  in  an  unlawful  

manner. We understand and appreciate the fact that the  

situation with respect to unaccounted monies is extremely  

grave.  Nevertheless,  as  constitutional  adjudicators  we  

always have to be mindful of preserving the sanctity of  

constitutional values, and hasty steps that derogate from  

fundamental  rights,  whether  urged  by  governments  or  

private  citizens,  howsoever  well  meaning they may be,  

have  to  be  necessarily  very  carefully  scrutinised.  The  

solution  for  the  problem  of  abrogation  of  one  zone  of  

constitutional  values  cannot  be  the  creation  of  another  

zone of abrogation of constitutional values. The rights of  

5

citizens, to effectively seek the protection of fundamental  

rights, under Clause (1) of Article 32 have to be balanced  

against the rights of citizens and persons under Article 21.  

The latter cannot be sacrificed on the anvil of fervid desire  

to find instantaneous solutions to systemic problems such  

as unaccounted monies,  for it  would lead to dangerous  

circumstances,  in  which  vigilante  investigations,  

inquisitions  and  rabble  rousing,  by  masses  of  other  

citizens could become the order of the day. The right of  

citizens to petition this Court for upholding of fundamental  

rights is granted in order that citizens, inter-alia, are ever  

vigilant  about  the  functioning  of  the  State  in  order  to  

protect  the  constitutional  project.  That  right  cannot  be  

extended  to  being  inquisitors  of  fellow  citizens.  An  

inquisitorial  order,  where  citizens’  fundamental  right  to  

privacy  is  breached  by  fellow  citizens  is  destructive  of  

social order. The notion of fundamental rights, such as a  

right to privacy as part of right to life, is not merely that  

the State is enjoined from derogating from them. It also  

includes  the responsibility  of  the  State  to  uphold  them  

against the actions of others in the society, even in the  

context of exercise of fundamental rights by those others.

74.An  argument  can  be  made  that  this  Court  can  make  

exceptions under the peculiar circumstances of this case,  

wherein the State has acknowledged that it has not acted  

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with the requisite speed and vigour in the case of large  

volumes  of  suspected  unaccounted  monies  of  certain  

individuals.  There  is  an  inherent  danger  in  making  

exceptions to fundamental principles and rights on the fly.  

Those exceptions,  bit  by bit,  would then eviscerate  the  

content  of  the  main  right  itself.  Undesirable  lapses  in  

upholding of fundamental rights by the legislature, or the  

executive, can be rectified by assertion of constitutional  

principles by this Court. However, a decision by this Court  

that  an  exception  could  be  carved  out  remains  

permanently as a part of judicial canon, and becomes a  

part  of  the constitutional  interpretation itself.  It  can be  

used in the future in a manner and form that may far  

exceed  what  this  Court  intended  or  what  the  

Constitutional  text  and  values  can  bear.  We  are  not  

proposing that  Constitutions  cannot  be interpreted  in  a  

manner  that  allows  the  nation-state  to  tackle  the  

problems it faces. The principle is that exceptions cannot  

be carved out willy-nilly,  and without forethought as to  

the damage they may cause.

75.One  of  the  chief  dangers  of  making  exceptions  to  

principles that have become a part of constitutional law,  

through aeons of human experience, is that the logic, and  

ease of seeing exceptions, would become entrenched as a  

part of the constitutional  order.  Such  logic would then  

6

lead to seeking exceptions,  from protective  walls  of  all  

fundamental rights, on grounds of expediency and claims  

that there are no solutions to problems that the society is  

confronting  without  the  evisceration  of  fundamental  

rights. That same logic could then be used by the State in  

demanding  exceptions  to  a  slew  of  other  fundamental  

rights, leading to violation of human rights of citizens on a  

massive scale.

76.It  is  indeed  true  that  the  information  shared  by  

Germany,  with  regard  to  certain  bank  accounts  in  

Liechtenstein,  also  contains  names  of  individuals  who  

appear to be Indians. The Petitioners have also claimed  

that names of all the individuals have been made public  

by certain segments of the media. However, while some  

of  the  accounts,  and  the  individuals  holding  those  

accounts, are claimed to have been investigated, others  

have not been. No conclusion can be drawn as to whether  

those who have not been investigated, or only partially  

investigated  and  proceedings  not  initiated  have  

committed any wrong doing. There is no presumption that  

every account holder in banks of Liechtenstein has acted  

unlawfully.  In  these  circumstances,  it  would  be  

inappropriate for this Court to order the disclosure of such  

names, even in the context of proceedings under Clause  

(1) of Article 32.

6

77.The revelation of details of bank accounts of individuals,  

without establishment of  prima facie grounds to accuse  

them of wrong doing, would be a violation of their rights  

to privacy. Details of bank accounts can be used by those  

who  want  to  harass,  or  otherwise  cause  damage,  to  

individuals. We cannot remain blind to such possibilities,  

and indeed experience reveals that public dissemination  

of banking details, or availability to unauthorized persons,  

has led to abuse. The mere fact that a citizen has a bank  

account  in  a  bank  located  in  a  particular  jurisdiction  

cannot be a ground for revelation of details of his or her  

account  that  the  State  has  acquired.  Innocent  citizens,  

including those actively working towards the betterment  

of  the  society  and  the  nation,  could  fall  prey  to  the  

machinations  of  those  who  might  wish  to  damage  the  

prospects of smooth functioning of society. Whether the  

State itself can access details of citizens bank accounts is  

a  separate  matter.  However,  the  State  cannot  compel  

citizens  to  reveal,  or  itself  reveal  details  of  their  bank  

accounts to the public at large, either to receive benefits  

from  the  State  or  to  facilitate  investigations,  and  

prosecutions  of  such  individuals,  unless  the State  itself  

has, through properly conducted investigations, within the  

four corners of constitutional permissibility, been able to  

establish prima facie grounds to accuse the individuals of  

6

wrong doing. It is only after the State has been able to  

arrive at a prima facie conclusion of wrong doing, based  

on material  evidence, would the rights of others in the  

nation  to  be  informed,  enter  the  picture.  In  the  event  

citizens,  other  persons  and  entities  have  credible  

information that a wrong doing could be associated with a  

bank account, it is needless to state that they have the  

right, and in fact the moral duty, to inform the State, and  

consequently  the  State  would  have  the  obligation  to  

investigate  the  same,  within  the  boundaries  of  

constitutional permissibility. If the State fails to do so, the  

appropriate courts can always intervene.

78.The major problem, in the matters before us, has been  

the inaction of the State. This is so, both with regard to  

the  specific  instances  of  Hassan  Ali  Khan  and  the  

Tapurias,  and also with respect to the issues regarding  

parallel  economy,  generation  of  black  money  etc.  The  

failure is not of the Constitutional values or of the powers  

available  to  the  State;  the  failure  has  been  of  human  

agency.  The  response  cannot  be  the  promotion  of  

vigilantism,  and  thereby  violate  other  constitutional  

values.  The  response  has  to  necessarily  be  a  more  

emphatic  assertion  of  those  values,  both  in  terms  of  

protection of an individual’s right to privacy and also the  

protection of individual’s right to petition this Court, under  

6

Clause  (1)  of  Article  32,  to  protect  fundamental  rights  

from evisceration  of  content  because  of  failures  of  the  

State.  The  balancing  leads  only  to  one  conclusion:  

strengthening of the machinery of investigations, and vigil  

by broader citizenry in ensuring that the agents of State  

do not weaken such machinery.

79.In light of the above we order that:

(i) The  Union  of  India  shall  forthwith  disclose  to  

the  Petitioners  all  those  documents  and  

information  which  they  have  secured  from  

Germany,  in  connection  with  the  matters  

discussed  above,  subject  to  the  conditions  

specified in (ii) below;

(ii) That  the   Union  of  India  is  exempted  from  

revealing the names of those individuals who have  

accounts in banks of Liechtenstein, and revealed  

to  it  by  Germany,  with  respect  of  who  

investigations/enquiries  are  still  in  progress  and  

no information or evidence of wrongdoing is yet  

available;

(iii) That  the  names  of  those  individuals  with  bank  

accounts  in  Liechtenstein,  as  revealed  by  

Germany,  with  respect  of  whom  investigations  

have  been  concluded,  either  partially  or  wholly,  

6

and show cause  notices  issued  and  proceedings  

initiated may be disclosed; and

(iv) That the Special  Investigation Team, constituted  

pursuant to the orders of today by this Court, shall  

take  over  the  matter  of  investigation  of  the  

individuals whose names have been disclosed by  

Germany  as  having  accounts  in  banks  in  

Liechtenstein,  and  expeditiously  conduct  the  

same. The Special Investigation Team shall review  

the concluded matters also in this regard to assess  

whether investigations have been thoroughly and  

properly conducted or not, and on coming to the  

conclusion  that  there  is  a  need  for  further  

investigation shall proceed further in the matter.  

After  conclusion  of  such  investigations  by  the  

Special Investigation Team, the Respondents may  

disclose  the  names  with  regard  to  whom show  

cause notices have been issued and proceedings  

initiated.

80.  Compliance reports shall be filed by Respondents, with  

respect of all the orders issued by this Court today. List for  

further  directions in  the week following the Independence  

Day, August 15, of 2011.

Ordered accordingly.

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…………………………………………J. (B. SUDERSHAN REDDY)

NEW DELHI, …………………………………………J. JULY  4, 2011. (SURINDER SINGH NIJJAR)

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