Litigation

Judicial setback

Print edition : February 03, 2017

Prashant Bhushan, petitioner in the case. Photo: Sushil Kumar Verma

The Supreme Court’s dismissal of the plea to order a court-monitored investigation into the alleged Sahara-Birla payoffs to high-profile political leaders and public servants marks a crisis of credibility.

“BE you ever so high, the law is above you” is the precept the Supreme Court has often cited to justify its decisions. On January 11, however, it seemed to give this precept a new twist when it reasoned that to help democracy survive in India, high constitutional functionaries deserve immunity from investigation on the basis of information that suggests commission of cognisable offences by them.

This reasoning, which appears bizarre and is clearly inconsistent with the rule of law, came from a bench of Justices Arun Mishra and Amitava Roy on an interlocutory application (I.A.) in a pending case filed by Common Cause, a non-governmental organisation, seeking a court-monitored investigation into alleged payoffs by the Sahara and Birla group companies to high-profile political leaders and civil servants.

Information about the payoffs surfaced during raids conducted by the Income Tax Department on these companies, which led to the recovery of several incriminating documents.

In its I.A. (No.3 of 2016) Common Cause sought directions to the Income Tax Department for the production of records of the seized material and for an investigation by a Special Investigation Team (SIT) into the evidence of corruption, bribery and black money brought out by them.

The Aditya Birla Group is a corporate giant having major business activities in mining, textiles, metals, cement, chemicals and so on. During the investigation into coal block allocations to the group company Hindalco Industries, the Central Bureau of Investigation (CBI) conducted simultaneous search operations in four cities—New Delhi, Mumbai, Secunderabad and Bhubaneswar—on October 15, 2013.

Documents seized during the search are said to have revealed massive bribery of politicians and officials of various Ministries by the group over several years. The search at the group’s office on Parliament Street, New Delhi, yielded incriminating documents and unaccounted cash amounting to Rs.25 crore.

The CBI, instead of conducting a thorough scrutiny of the seized documents, transferred them to the Income Tax Department, which examined them, questioned those involved, and prepared an appraisal report.

Of the seized documents, one is a handwritten notebook containing 49 pages. It contains records of transactions relating to receipt and payment of unaccounted cash amounts under various heads during the July 2010-March 2012 period. The second is a bunch of 16 loose sheets which record several unaccounted transactions. Pages nine and ten contain records of certain money transactions.

The Income Tax Department interrogated senior officers of the Birla group, including deputy general manager (accounts), Anand Kumar Saxena, who made some startling revelations. He claimed that the 49-page notebook was maintained by him and that he had made the entries in his handwriting to record the unaccounted cash transactions of the group. He also said the Rs.25 crore seized from the New Delhi office of the group was unaccounted cash that had not been recorded in the regular books of accounts of the company. He stated that he was the custodian of the almirahs in which the cash was kept and that he was in charge of handling cash received at this premises from time to time and keeping it in safe custody.

He also said that he followed the direction of Subhendu Amitabh, group executive president, when it came to receiving the cash and also regarding its disbursal or payment to various individuals. He said he received the cash from local hawala operators on a regular basis. Saxena also gave the names and designations of four senior officers of the company through whom such disbursal or payment in cash was made.

The Income Tax Department disbelieved the claim of Subhendu Amitabh that the Rs.25 crore belonged to him and that it was his unaccounted income. The I.A. disclosed that emails seized by the Income Tax Department from Subhendu Amitabh’s laptop showed evidence of bribery of officials of the Department of Revenue Intelligence (DRI).

The seized records, according to the I.A., revealed payments or proposed payments of Rs.7.50 crore made from January 9, 2012, to February 2, 2012, under the heading “Project-J—Environment and Forest”. The I.A. noted that during the tenure of the then Minister for Environment and Forests, as many as 13 projects of the Aditya Birla group companies were cleared by the Ministry of Environment and Forests (MoEF).

Subhendu Amitabh’s laptop was also found to contain evidence of highly incriminating money transactions, according to the I.A. An email dated November 16, 2012, contained the cryptic entry, “Gujarat CM – 25 crore (12 Done –rest?)”. When he was questioned about this, Subhendu Amitabh told the Income Tax Deparment that “these were purely personal notes. Not meant for SMS or email transmission. And the first note is only to note for my knowledge and consumption—a business development at Gujarat Alkali Chemicals, a company engaged in caustic soda.” The I.A. submitted that the transaction could have been easily verified by checking the accounts of Gujarat Alkali Chemicals since this has to be an “on the book transaction”.

If, on the contrary, the words “Gujarat CM” are to be interpreted as the Chief Minister of Gujarat, then the reference is obviously to Prime Minister Narendra Modi, who was the Chief Minister of the State then.

Raid on Sahara Group

The Income Tax Department raided the Sahara India group offices in Delhi and Noida on November 22, 2014. During the raids, incriminating documents and cash amounting to Rs.137 crore were seized. Common Cause’s counsel, Prashant Bhushan, got hold of a few pages of the seized documents which contain a record of cash transactions from May 2013 to March 2014. The pages were signed by the Income Tax Officer, one person from the Sahara group, and two witnesses at the time of the seizure. Some of the relevant documents are printouts of the three excel sheets showing cash receipt of over Rs.115 crore and cash outflow of over Rs.113 crore during the 10-month period, which was in the run-up to the general election. The I.A. claims that the documents contain enough information to initiate a thorough investigation.

Unlike the Jain hawala case in the 1990s, which also revealed payoffs to key personalities in public life cutting across political divides on the basis of diary entries, the case of Sahara stands on a better footing because it yielded a seizure of Rs.137 crore in cash. The excel sheet recovered from the computer of Sachin Pawar of the Sahara group shows great amount of detail: date and place of payment, person to whom cash is paid, and the person who has delivered the cash. It also shows corresponding cash received from different sources, primarily one M/s MARCOM. Unlike the Jain hawala case, which did not result in any convictions because the diary entries were not corroborated by the CBI, the Sahara-Birla payoff papers appear capable of yielding corroboration, only if the investigating authorities make an attempt.

The spreadsheet, it was alleged, carried details of two payments amounting to Rs.10 crore to the Chief Minister of Madhya Pradesh, Shivraj Singh Chouhan, one payment to the Chief Minister of Chhattisgarh, Raman Singh, and nine payments amounting to Rs.40 crore to the Chief Minister of Gujarat, who is also referred to as Modiji. Other recipients who were allegedly paid by the company include the then Delhi Chief Minister Sheila Dixit, who has denied the allegation.

The I.A. submitted that these details could be corroborated by checking the call records of the persons who delivered the money and to whom it was delivered. A copy of a note giving mobile numbers of the Sahara group employees who were involved in this was annexed with the I.A.

The Sahara group had approached the Income Tax Settlement Commission for relief. The Income Tax Department quotes Pawar as claiming that he recorded the incriminating entries in order to implicate another employee, V.S. Dogra, and get him punished by the management. The department, however, found Pawar’s version totally unconvincing. It noted that the seized documents appeared to be true and that the claims of having recorded transactions on a regular basis over a period of four-five years only for the sake of implicating Dogra was unbelievable.

The Settlement Commission, however, settled the case and absolved Sahara of all criminal and civil liability on specious grounds, despite the fact that Common Cause had sent the Commission a letter on November 8 requesting it not to allow any settlement. Both the Enforcement Directorate (E.D.) and the Financial Intelligence Unit (FIU) under the Ministry of Finance had found a large number of suspicious cash transactions on a very large number of accounts linked with the Sahara Group, the I.A. reveals.

The Citizen’s Whistleblowers Forum, headed by Justice A.P. Shah, former Chairperson of the Law Commission, has urged the Chairperson of the Central Board of Direct Taxes (CBDT) to investigate the Sahara-Birla payoff papers and to challenge the order passed by the Settlement Commission granting immunity to Sahara.

Common Cause’s I.A. was filed in a pending matter, which challenged the appointment of K.V. Chowdary as the Central Vigilance Commissioner (CVC). Chowdary was appointed Adviser to the SIT on Black Money on November 14, 2014, after he demitted office as Chairperson, CBDT. He was given supervisory charge on the subjects handled by Member (Investigation), CBDT, including investigations and subsequent actions. The I.A. alleged that there was a serious lapse on the part of the Income Tax Department under Chowdary when it failed to share the seized Sahara documents with the CBI and the SIT on Black Money.

The I.A. pointed out that after the Supreme Court’s judgment in the Lalita Kumari case (2014), it is a settled law that the registration of a first information report (FIR) is mandatory when the information discloses a cognisable offence. If the information given is found to be false, there is always an option to prosecute the complainant for filing a false FIR, the court had held.

The Supreme Court’s decision to dismiss the I.A. stems from its concurrence with Attorney General Mukul Rohatgi that for democracy to survive it is necessary to keep important constitutional functionaries such as the Prime Minister and Chief Ministers immune from investigations based on unproven allegations. While this may be true, in the Sahara-Birla pay off case the allegations against the constitutional functionaries were based on information that was duly verified by the investigating institutions, and this set the stage for further inquiry. The Supreme Court’s refusal to direct and monitor further investigation, therefore, marks a serious setback to making institutions, and those who run them, accountable.

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