STATE CBI versus SASHI BALASUBRAMANIAN AND ANR.

Citation: [2006] SUPP. 7 S.C.R. 914 · Decided: 31-10-2006 · Supreme Court of India · Bench: S.B. SINHA · Disposal: Appeal(s) allowed

Judgment (excerpt)

A 
STATE. CBI 
\I, 
SASH! BALASUBRAMANIAN AND ANR. 
OCTOBER 31, 2006 
B 
[S.B. SINHA AND DALVEER BHANDARI, JJ.] 
Finance (No.2.), Act 1998; Sections 87(a), 87(k), 88, 91 & 95-Penal 
Code, 1860 ; Sections 120-B, 420 & 471-Prevention of Corruption Act, 
f' 
c 
1988; Section 13(2) & 13(J)(d)-Customs Act, 1962; Section 136-Kar Vivadh 
Samadhan Scheme, 1998 -A/legation of irregularities in grant of Advance 
Licence to a company-Criminal complaint was lodged against the Company 
and its Directors and public servants-High Court quashed the criminal 
proceedings against the Company and its Directors on the ground of their 
... 
filing of a declaration under the Finance Act and thereby seeking immunity 
D from criminal proceedings -High Court also quashed the criminal proceedings 
. ' 
against the public servants on the same ground-Correctness of-Held, public 
servants will not come within the purview of the Finance Act and hence are 
not entitled to the benefit under the Schem. 
,... 
E 
A company made an application for grant of an advance licence 
before the Office of the Joint Director General of Foreign Trade for import 
of cotton fabrics under Duty Exemption Entitlement Scheme. Since the 
item was not figuring in the Standard Import and Export Norms Book, 
respondent No. 2 -Controller of Exports and Imports, placed the 
application file befor.e respondent No. I - Deputy Director General of 
F Foreign Trade, for recommendations. Respondent no. I granted advance 
licence to the company. On allegations of irregularities committed in the 
grant of advance licence to the company, a First Information Report was 
lodged against the company and its two Directors and four public servants 
which included the respondents for commission of offences under sections 
120-B, 420 and 471 IPC, under section 13(2) read with section 13(1)(d) of 
G the Prevention of Corrupt ion Act, 1988 and under section 136 of the 
Customs Act, 1962. The company and its Directors filed an application 
under Kar Vivad Samadhan Scheme, 1998 framed under the Finance Act, 
' ~ 
1998 and sought immunity from criminal prosecution. The respondents 
also filed an application under the Samadhan Scheme and thereafter filed 
H 
914 
t 
• 
STATE. CI3l 1•. SASH! BALASUBRAMANIAN [S.B. SINHA. J.] 
915 
a petition before High Court for quashing of the criminal proceedings on A 
that ground. The High Court quashed the criminal proceedings against 
the respondents. 
The State, in appeal to this Court, contended that the respondents, 
who are public servants, are not entitled to seek immunity from 
prosecution under the Kar Vivad Samadhan Scheme, 1998; and that the 
High Court misconstrued and misinterpreted the provisions of Section 
9S(iii) of the Finance Act, 1998. 
B 
The respondents contended that they are also entitled to the benefit 
under the Samadhan Scheme as other accused by application of the C 
doctrine M parity; that section 9S(iii) of the Finance Act cannot be invoked 
since it is impermissible in law to split up the offences between private 
parties and public servants; that the charges against all the accused 
including them formed part of the same transaction and hence either all 
or none should be proceeded against; that even if the allegations against 
them are taken to be correct and accepted in its entirety, the same does D 
not constitute any offence as alleged at all; and that this appeal is not 
maintainable since no appeal was filed by the State against other public 
servants after quashing of criminal proceedings by the High Court. 
Allowing the appeal, the Court 
HELD:l.1. Proceedings contemplated under the Finance Act, 1998 
must have a nexus with arrears of tax. Public servants, who can never 
E 
file a declaration under section 88 of the Act, would not come within the 
purview of the Act. There exists a distinction between a 'person' defined 
under section 87 and a 'declarant' under section 87(a) of the Act. The F 
definition of 'person' must be read having regard to term 'declarant' i.e. 
who files a declaration. 1921-A, B, Cl 
1.2. A public servant is enjoined with a duty to enforce tax 
enactments. A declaration in terms of section 88 can be filed by a declarant 
for determination of the tax arrear under the Scheme at the rates specified G 
thereunder. Public servants, therefore, cannot take the benefit of the 
Scheme. 1922-El 
2.1. Section 9S(iii) of the Act would be attracted if, inter a/ia, any 
_.. 
prosecution for any offence enumerate

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