R.K. GARG ETC. ETC. versus UNION OF INDIA & ORS. ETC.

Citation: [1982] 1 S.C.R. 947 · Decided: 20-10-1981 · Supreme Court of India · Bench: Y.V. CHANDRACHUD · Disposal: Dismissed

Cited by 37 judgment(s) · cites 2 · see the full citation network in Lexace

Judgment (excerpt)

R.K. GARG ETC. ETC. 
v. 
UNION OF INDIA & ORS. ETC. 
October 20, 1981 and November 13, 1981 
(Y.V. CHANDRACHUD, C.J., P.N. BHAGWATI, A.C. GUPTA, 
s. MuRTAZA FAZAL Au AND AMARENDRA NATH 
SEN, JJ.] 
947 
Special Bearer Bonds (Immunities and Exemptions) Ordinance, 1981 and 
Special Bearer Bonds (ImmunUies and Exemptions) Act, 1981-Constitution vali-
dity of-Whether infringes Art. 14-Act whether puts a premium on dishonesty. 
Constitution of India, 1950. 
Art. 14-Validity of classification-How to be determined. 
Art. 32-Judicial review·-Discharge of-Principles to be followed. 
Art. 123-0rdinance making power of President-Whether can extend to tax 
laws. 
A 
B 
c 
D 
Interpretation of statutes-Legislation on economic matters-Effect of crudi-
E 
ties, inequities and possibililies of abuse-Whether renders legislation invalid. 
The Special Bearer Bonds (Immunities and Exemptions) Ordinance, 1981 
was promulgated on January 12. 1981. It was repealed and replaced by the 
Special Bearer Bonds (Immunities and Exemptions) Act, 1981. The Act received 
the Presidential assent on March 27, 1981. Section 1 (3) of the Act stated that 
the Act was deemed to have come into force on January 12, 1981. The provi-
sions of the Ordinance and the Act were similar except section 4(2) of the Act 
which was worded slightly differently from the corresponding provision of the 
Ordinance. The Act provided for certain immunities to holders of Special 
Bearer Bonds, 1981, and for certain exemptions from direct taxes in relation 
to such Bonds and for matters connected lherewith. The object and purpose for 
which the Act was passed was to canalise for productive purposes black money, 
which had become a serious threat to the national economy and to provide for 
certain immunities and exemptions to render it possible for persons in posses5ion 
of black money to invest the same in the said Bonds. 
Section 3 of the Act provided for certain immunities to a person who had 
subscribed to or otherwise acquired Special Bearer Bonds. Clause (a) protected 
such a person from being required to disclose for any purpose whatsoever the 
n~ture and source of acquisition of the Special Bearer Bonds. Clause (b) prohi-
bited the commencement of any inquiry or investi~at·on a~ainst a person 00 the 
F 
G 
II 
B 
c 
D 
E 
F 
G 
H 
948 
SUPREME COURT REPORTS 
(198211 s.c.11 
ground of his having subscribed to or otherwise acquired the Special Bearer 
Bonds. Clause (c) provided that the fact of subscription to or acquisition of 
Special Beater Bonds shall not be taken into account and shall be inadmissible 
in evidence in any proceedings relating to any offence or the imposition of any 
penalty. Sub-section (2) of section (3) provided that the immunity granted under 
sub-section (I) shall not be available in relation to prosecution for any offence 
punishable under Chapter 9 or Chapter 17 of the Indian Penal Code or the 
Prevention of Corruption Act, 1957 or other similar law. 
Section 4 provided that without prejudice to fhe provisions of section 3 
subscription to, or acquisition of Speeial Bearer Bonds by any person shall not 
be taken into account for the purpose of any proceedings under the Income-tax 
Act, 1961, the Wealth-tax Act 1957 or the Gift-tax Act, 1958 and that no person 
who has subscribed to or has otherwise acquired the said Bonds shall be entitled 
to (a) claim any set-off under the Income-tax Act or to reopen any assessment 
or reassessment made under that Act on the ground that he has subscribed to or 
has otherwise acquired the said Bonds; (b) that any asset which is includible in 
his net wealth for any assessment year under the Wealth-tax Act has been conver-
ted into such bonds, and (c) that any asset held by him represents the considera-
tion received for the transfer of such Bonds. 
In their writ petitions to this Court assailing the constitutional validity of 
the Ordinance and the Act it was contended on behalf of the petitioners that : 
(J) since the Ordinance had the effect of amending the tax laws it was outside 
the competence of the President under Article 123, that the subject matter of the 
Ordinance was in the nature of a Money Bill which could be introduced only in 
the House of the People and passed according to the procedure provided in 
Articles 109 and 1101 the President had no power under Article 123 to issue the 
Ordinance by passing the special procedure provided in Articles 109 and 110 for 
the passing of a Money Bill and (2) th

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