THE PRL COMMR OF ICOME TAX-2, vs. M/S KKD CO-OP BUILDING SOCY LTD., KAKINADA

IN THE HIGH COURT OF JHARKHAND AT RANCHI Cr. Appeal (SJ) No.423 of 2016 ----- Uma Shankar Malviya.

.......... Appellant. -Versus- 1. The State of Jharkhand through C.B.I. 2. Vinay Kumar Jalan.

.......... Respondents. ----- CORAM : HON’BLE MR. JUSTICE RAJESH SHANKAR ----- For the Appellant : Mr. Anshuman Sinha, Advocate For the CBI : J.C. to Mr. Rajeev Sinha, ASGI ----- Order No.13

Date: 07.05.2019 1. The present appeal is directed against the order dated 30.01.2016 passed by the Special Judge, CBI Ranchi in connection with Cr. Misc. No.1/2013 along with Cr. Misc. No.03/2015 whereby and whereunder the petition filed by the petitioner under Section 340 of the Code of Criminal Procedure has been dismissed. 2. The factual background of the case is that pursuant to the order dated 4.8.2010 passed in W.P. (PIL) Nos.4770 of 2008 and 2255 of 2009, the CBI took up the investigation of Vigilance Case No.9 of 2009 dated 02.07.2009, which relates to commission of various offences punishable under the Indian Penal Code and the Prevention of Corruption Act, 1988. Accordingly, an FIR was instituted against Madhu Koda, the then Chief Minister of Jharkhand, Kamlesh Singh, Bhanu Pratap Shahi and Bandhu Tirkey (the Ex. Ministers of Government of Jharkhand) and on that basis R.C Case No. 05(A)/2010-AHD-R dated 11.08.2010 was registered under Sections 409, 420, 423, 424, 465 and 120B of the Indian Penal Code and Sections 7, 10, 11 and 13(2) read with Section 13(1)(e) of the Prevention of Corruption Act, 1988. During the course of investigation, the Central Bureau of Investigation conducted a raid at the official premises of a Chartered Accountant, namely, Vinay Kumar Jalan (respondent no.2 herein) on 25.05.2011 and seized return papers of some persons, including the appellant, his wife and other family members. On 26.05.2011 the respondent no.2 made statement under Section 164 Cr.P.C. disclosing that a trust was formed by Bhanu Pratap Shahi, the then Minister, in the name of “Dehati Asthapana Nyas”. He further stated that he had been knowing the appellant since 2007 and on his instruction to furnish the list of donors of the above said trust, the appellant furnished the said list and

-2- on that basis a return was prepared and handed over with power of attorney to the appellant, who brought back the same after obtaining the signatures of those persons and thus the same was submitted in the Income Tax Department by the law firm owned by the respondent no.2. The appellant filed a petition for initiating an enquiry under Section 340 Cr.P.C. for taking action against the respondent no.2 before the Special Judge, CBI, Ranchi, which was registered as Cr. Misc. No.01/2013. However, the said petition was rejected vide order dated 30.09.2013. Thereafter, the appellant preferred an appeal before this Court, being Cr. Appeal (SJ) No.960 of 2013. The said appeal was disposed of vide order dated 24.04.2015 by remanding the matter to the concerned court below. The appellant again filed Cr. Misc. No.3 of 2015 before the Special Judge, CBI, Ranchi which was clubbed with Cr. Misc. No.01/2013 and both were rejected vide order dated 30.01.2016. 3. The learned counsel for the appellant submits that the donors, namely, Jitendra Sharma, Amar Singh, Ramesh Agrawal, Narayan Choudhary and Niketa Roy whose PAN cards are of 08.12.2000, 20.06.2003, 20.05.2003 and of the year 2003, respectively, have been furnished much prior to 2009 and as such the statement made by Vinay Kumar Jalan (respondent no.2) under section 164 Cr.P.C on 26.05.2011 is completely false and concocted. It is further submitted that the respondent no.2 has falsely dragged the appellant in the present case, as would be apparent from his deposition made in another case i.e. R.C Case No.52(A) of 1996 as P.W.60 who during his cross- examination made on 01.03.2007 disclosed that he created 800 PAN in the names of 800 bogus persons. As per his deposition, he purchased 500 photographs from different studios for obtaining PAN Cards. He also deposed that he got the signatures of his three juniors, namely, Jiwant Kumar Das, Binod Kumar Choudhary and Shri Manoranjan on the bogus files and a draft was prepared in respect of 500 bogus files. Curiously enough, the respondent no.2, while defending the case of “Dehati Ashtahpana Nyas” in I.T.A No.127/Ran/2010 before the Income Tax Commissioner has himself supported those documents and their donors and, accordingly, the appeal was allowed in his favaour vide order dated 11.07.2011. It is

-3- further submitted that the appellant was the OSD of Bhanu Pratap Shahi, the then Minister of Labour, Health and Family Welfare Department, Government of Jharkhand from 2007 to 2009 and has been made accused only on the basis of the statement of the respondent no.2 and consequently the charge-sheet has been submitted against him. It is also submitted that the respondent no.2 had informed the appellant that the said statement was made by him due to the torture of the investigating officer. The respondent no.2 was knowing fully well that all 32 PAN Cards were his creation out of which, most were delivered to his own address and the returns were filed either by him or by his office. However, he made false statement under Section 164 Cr.P.C. on the basis of which the appellant has been implicated in the present case. As such, the ingredients prescribed under Section 340 of Cr.P.C. are present in the case, particularly in view of the fact that the respondent no.2 has given false statement under Section 164 Cr.P.C. to implicate the appellant in the present case. 4. The learned counsel for the CBI submits that the court below has given correct finding on the point referred to it by virtue of the order passed in Criminal Appeal (SJ) No.960 of 2013 which need not be interfered with. It is further submitted that R.C Case No. 52(A) of 1996 is entirely a different case lodged in connection with A.H.D. Scam and as such any evidence laid in that case will not help the case of the appellant more so when the evidence laid in the said case has no bearing or any connection with the present one. It is further submitted that the primary ingredient for commencing a proceeding under Section 340 Cr.P.C. is that there must be a false evidence given by any person, however, in the present case it has not yet been proved that the statement given by the respondent no. 2 under section 164 Cr.P.C was false and as such the court below has rightly rejected the application of the appellant. 5. Heard the learned counsel for the parties and perused the materials available on record. The thrust of the argument of the learned counsel for the appellant is that the respondent no. 2 has given false statement under Section 164 Cr.P.C. due to which the appellant has been made accused in R.C. Case No.05(A)/2010-AHD-R. In support of the said

-4- contention, heavy reliance has been placed on the evidence of the respondent no.2 laid in R.C Case No.52(A) of 1996. 6. Earlier, when the issue came up before a Bench of this Court in Criminal Appeal (SJ) No. 960 of 2013, the matter was remanded to the court below vide order dated 24.04.2015 with the following observations:- “However, learned counsel appearing for the petitioner submits that the accusation in R.C No. 52 of 1996 is there to the effect that signature of certain persons had been taken over the Income Tax returns and the signature of certain persons had been taken over the Income Tax returns and the signature of those persons have also been taken over the returns said to have been filed by ‘Sri Dehati Asthapana Trust”. “Thus, the question which does arise as to whether testimony made by P.W. 60 in R.C No. 52 of 1996 does have any relation with the accusation made by him against opposite party no. 2 under his statement made under section 164 of Cr.P.C? Some finding to this effect has been recorded by the trial court, but that does not seem to be in context of the statements made on behalf of the petitioner and, therefore, that finding needs to be recorded in the context of the submission and counter- submission made by the petitioner and the opposite party no. 2. Accordingly the matter is remanded back so that the Court may determine as to whether testimony of P.W. 60 relating to forgery of Income Tax returns has any connection with the accusation made by him in his 164 statement in relation to the present case against the petitioner.” 7. In pursuance of the order dated 24.04.2015, the appellant filed another miscellaneous petition i.e. Cr. Misc. No.3/2015 which was clubbed with the earlier petition i.e. Cr. Misc. No.1/2013 and the matter was heard afresh under the direction of this Court and the petitions of the appellant were again rejected by the court below on 30.01.2016. The relevant part of the impugned order dated 30.01.2016 is reproduced herein below:- “While going through the testimony of O.P No. 2 u/s 164 Cr.P.C, I find that there are some accusations made by him against the present petitioner and it is true that on the basis of his statement and other evidences the petitioner was made an accused in connection with his case. But as discussed earlier the nature and scope of section 340 demands that the falsity of the accusations must be determined before proceeding with an inquiry under this section. At this stage of R.C No. 05(A)/10-AHD-R truthfulness or genuineness of any statement u/s 164 Cr.P.C has got only a corroborative value and it cannot be used as substantive piece of evidence rather it can only be used to contradict that witness at a later stage of the proceedings. This fact has been reiterated time and again by the Hon’ble Apex Court also. Hence I find no substance in this line of argument made on behalf of the petitioner.

-5- So far as the statements made on behalf of the petitioner regarding the admission made by O.P No. 2 while deposing as P.W. 60 in R.C No. 52/96 about having committed forgery of PAN Cards, it cannot be compared or contradicted with the statement made by him u/s 164 Cr.P.C in connection with the present R.C Case No. 05(A)/10-AHD-R because the petitioner was neither an accused nor a party to that proceeding. That R.C No. 52/96 was disposed of by the court of Spl. Judge IV, CBI, AHD Scam in the year 2012 and in his entire deposition as P.W. 60 the O.P No. 2 has stated nothing against the petitioner.” 8. In the case of Amarsang Nathaji as Himself and Karta and Manager v. Hardik Harshadbhai Patel & Ors., reported in (2017) 1 SCC 113, the Hon’ble Supreme Court has held as under:- “4. It is the main contention of the learned counsel for the appellant that while passing the order, as extracted above, the High Court has not followed the procedure contemplated under Section 340(1) CrPC. Section 340(1) CrPC reads as follows: “340. Procedure in cases mentioned in Section 195.— (1) When, upon an application made to it in this behalf or otherwise, any court is of opinion that it is expedient in the interests of justice that an inquiry should be made into any offence referred to in clause (b) of sub-section (1) of Section 195, which appears to have been committed in or in relation to a proceeding in that court or, as the case may be, in respect of a document produced or given in evidence in a proceeding in that court, such court may, after such preliminary inquiry, if any, as it thinks necessary— (a) record a finding to that effect; (b) make a complaint thereof in writing; (c) send it to a Magistrate of the First Class having jurisdiction; (d) take sufficient security for the appearance of the accused before such Magistrate, or if the alleged offence is non-bailable and the court thinks it necessary so to do, send the accused in custody to such Magistrate; and (e) bind over any person to appear and give evidence before such Magistrate.” 5. There are two preconditions for initiating proceedings under Section 340 CrPC: (i) materials produced before the court must make out a prima facie case for a complaint for the purpose of inquiry into an offence referred to in clause (b)(i) of sub- section (1) of Section 195 CrPC, and (ii) it is expedient in the interests of justice that an inquiry should be made into the alleged offence. 6. The mere fact that a person has made a contradictory statement in a judicial proceeding is not by itself always sufficient to justify a prosecution under Sections 199 and 200 of the Penal Code, 1860 (45 of 1860) (hereinafter referred to as “IPC”); but it must be shown that the defendant has intentionally given a false statement at any stage of the judicial proceedings

-6- or fabricated false evidence for the purpose of using the same at any stage of the judicial proceedings. Even after the above position has emerged also, still the court has to form an opinion that it is expedient in the interests of justice to initiate an inquiry into the offences of false evidence and offences against public justice and more specifically referred to in Section 340(1) CrPC, having regard to the overall factual matrix as well as the probable consequences of such a prosecution. (See K.T.M.S. Mohd. v. Union of India[K.T.M.S. Mohd. v. Union of India, (1992) 3 SCC 178 : 1992 SCC (Cri) 572] ). The court must be satisfied that such an inquiry is required in the interests of justice and appropriate in the facts of the case. 7. In the process of formation of opinion by the court that it is expedient in the interests of justice that an inquiry should be made into, the requirement should only be to have a prima facie satisfaction of the offence which appears to have been committed. It is open to the court to hold a preliminary inquiry though it is not mandatory. In case, the court is otherwise in a position to form such an opinion, that it appears to the court that an offence as referred to under Section 340 CrPC has been committed, the court may dispense with the preliminary inquiry. Even after forming an opinion as to the offence which appears to have been committed also, it is not mandatory that a complaint should be filed as a matter of course. (See Pritishv. State of Maharashtra [Pritish v. State of Maharashtra, (2002) 1 SCC 253 : 2002 SCC (Cri) 140] . 8. In Iqbal Singh Marwah v. Meenakshi Marwah [Iqbal Singh Marwah v. Meenakshi Marwah, (2005) 4 SCC 370 : 2005 SCC (Cri) 1101] , a Constitution Bench of this Court has gone into the scope of Section 340 CrPC. Para 23 deals with the relevant consideration: (SCC pp. 386-87) “23. In view of the language used in Section 340 CrPC the court is not bound to make a complaint regarding commission of an offence referred to in Section 195(1)(b), as the section is conditioned by the words “court is of opinion that it is expedient in the interests of justice”. This shows that such a course will be adopted only if the interest of justice requires and not in every case. Before filing of the complaint, the court may hold a preliminary enquiry and record a finding to the effect that it is expedient in the interests of justice that enquiry should be made into any of the offences referred to in Section 195(1)(b). This expediency will normally be judged by the court by weighing not the magnitude of injury suffered by the person affected by such forgery or forged document, but having regard to the effect or impact, such commission of offence has upon administration of justice. It is possible that such forged document or forgery may cause a very serious or substantial injury to a person in the sense that it may deprive him of a very valuable property or status or the like, but such document may be just a piece of evidence produced or given in evidence in court, where voluminous evidence may have been adduced and the effect of such piece of evidence on the broad concept of administration of justice may be minimal. In such circumstances, the court may not consider it expedient in the interest of justice to make a complaint.”

-7- 9. It would, thus, emerge that two conditions must be fulfilled for entertaining a complaint filed under Section 340 of Cr.P.C.; first is that a person has given false evidence in a proceeding before the court and second is that in the opinion of the court it is expedient in the interest of justice to make an inquiry of the offence committed by the concerned person. 10. In the present case, the deposition of the respondent no. 2, as recorded in R.C Case No.52(A) of 1996, has been relied upon by the appellant wherein he is said to have admitted that he created 800 PAN cards in the names of 800 bogus persons. According to the appellant, the respondent no.2 has further admitted that he had purchased 500 photographs from different studios for obtaining the PAN cards and he got the signatures of three of his juniors on the bogus files and a draft was prepared in respect of 500 bogus files. The appellant by taking shelter of the said deposition made by the respondent no.2 in R.C.52(A) of 1996 has contended that he had knowingly and wilfully given false statement against the appellant under Section 164 Cr.P.C. due to which the appellant got implicated in the present case. However, the said deposition of the respondent no.2 as P.W.60 was made in R.C. 52(A) of 1996 which was related to a firm run by one Mohammad Sayeed and his family member. In the said case, the appellant was neither made accused nor a witness and thus there can be no nexus between the statement given by the respondent no.2 under Section 164 Cr.P.C. in the present case and the evidence given by him in Court as P.W.60 in R.C. 52(A) of 1996. Moreover, for lodging any complaint under Section 340 Cr.P.C., the condition precedent is to form an opinion that it is expedient to do so in the interest of justice. The expediency is normally to be judged by the Court by not weighing the magnitude of injury suffered by the person affected due to such false evidence, rather the impact of such commission of the alleged offence upon administration of justice. The thrust of the argument of the learned counsel for the appellant is that due to the statement of the respondent no.2 given under Section 164 Cr.P.C., the appellant has suffered grave injury and mental agony. However, since the statement given under section 164 Cr.P.C. by the respondent no.2 is a corroborative piece of evidence and in absence of any substantive

-8- evidence, no judgment of conviction can be passed against an accused, I am of the view that no such grave injury would be caused in the administration of justice in not initiating a proceeding against the respondent no.2 under Section 340 Cr.P.C. at this stage. Nevertheless, the learned court below has given a finding of fact that there is no nexus between the deposition of Vinay Kumar Jalan (the respondent no.2) in R.C Case No.52(A) of 1996 and the statement made by him under Section 164 Cr.P.C. in connection with the present case. The appellant has also failed to show any material before this Court to establish that the statement made by the respondent no.2 in R.C Case No.52(A) of 1996 has any connection with the statement made by him under Section 164 Cr.P.C. in the present case so as to conclusively construe that he has made a false statement against the appellant so as to attract the provisions of Section 340 of Cr.P.C. 11. The present appeal is, accordingly, dismissed.

(Rajesh Shankar, J.) Sanjay/AFR