TaxTMI 
TaxTMI 
2022 (4) TMI 758
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....elligence about evasion of Customs Duties by FAL, the DRI, Regional Unit, Hyderabad initiated investigation into the import of 180 LED Panels (5 LED Boards) from Hong Kong and Aerophile Helium Baloon from United Kingdom. The imports of FAL were made from Sigma Resources Group Incorporation, New York, USA (Sigma), which was also solely owned by the 2nd respondent. Sigma, in turn, purchased the goods from Strongbase Investment Ltd., and Benson International HK Ltd., both based in Hong Kong. Both the purchaser and vendor companies were owned by the 2nd respondent. The essence of the illegal transaction was that FAL paid small amounts to Sigma for the imports, but the Sigma and other entities paid huge amounts to the Benson International and Strongbase Investment Ltd., for the same imports. Lesser amounts were shown in invoices to FAL from Sigma to evade customs duty to Indian Government, among other illegal motives of money laundering. The Additional Director, DRI, Hyderabad issued orders for search on 28.12.2007. The petitioners, along with a team of other members, conducted search at the office premises of FAL and at the residence of the 2nd respondent. The 1st petitioner was one of....
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....d under the Customs Act, 1962 against the 2nd respondent and the same were pending before the Customs Authorities. Proceedings were also initiated under the Foreign Exchange Management Act, 2000 and Prevention of Money Laundering Act, 2002 by the concerned authorities. The Income Tax Department also initiated proceedings for evasion of tax against the 2nd respondent. 5. The 2nd respondent was arrested on 17.01.2008 and was produced before the Special Judge for Economic Offences, Hyderabad by the petitioners. It was further contended that the 2nd petitioner gave information to the press/media persons that FAL was involved in import of spurious aircraft spares and the same was published in all the local newspapers like Vartha, Surya, Andhra Prabha, Eenadu, New Indian Express, wherein the news was prominently published to the effect that according to the DRI officials, the 2nd respondent was importing spurious and damaged aircraft spares to FAL by sourcing from junk yard in USA and over invoicing FAL. The local media also covered the news on TV channels. 6. While the matter stood thus, the 2nd respondent lodged a private complaint before the XII Additional Chief Metropolitan Mag....
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....the witnesses, the Investigating Officer came to know that the said invoices were not issued by the Benson International Hong Kong Limited company and that the said invoices were forged, fake and were not genuine. Basing on the said evidence, the Investigating Officer considered that the petitioners being officials of DRI in criminal conspiracy with A1, brother of the 2nd respondent, tarnished the image of the 2nd respondent, misused their powers as public servants and created various documents alleged to have been retrieved from the laptop submitted by the 2nd respondent in their office on 08.01.2008, filed charge sheet against A1 to A3. 8. The charge sheet would further reveal that the petitioners in furtherance of their criminal conspiracy with A1, created false data as though it emanated from the laptop of the 2nd respondent, the petitioners along with A1 met at Benson Taj and Green Park Hotels, respectively, to conspire with each other before the date of search on 28.12.2007 and A1 and A2 were involved in exchange of monetary transactions between them. A1 had given a cheque bearing No.1544 dated 11.11.2008 of ICICI Bank to A2 and the same was debited into the account of A2.....
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....s only to evade the proceedings under the Customs Act, Income Tax Act and FEMA. It was a classic case of certain State Police Officers creating a flimsy case against Government Officers of DRI to help the 2nd respondent to evade the taxes, penalties and prosecution proceedings for violation of the Customs Act, Income Tax Act and Prevention of Money Laundering Act. The Letter of Rogatory affair was botched up and the evidence was rallied at the behest of the 2nd respondent. The allegations of GEQD report not bearing the serial number of one of the computer laptops seized was frivolous. The 1st petitioner immediately on observing the mischievous deposit in his account informed his superior officers and the Bank. The tax evasion and money laundering involved in import of LED Boards, Helium Balloon and Aircraft spares was evidenced by the banking transactions made by the 2nd respondent. The two disputed invoices and disputed emails were not the sole evidence. The damaged and discarded spares imported by the 2nd respondent and sold in the domestic market, was borne out by record. The allegation of meetings of the petitioners in hotels etc., were all created for the purpose of this case.....
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....ing search and seizure operation of DRI was tampered, the same should have been thrashed out only through the adjudicatory procedure provided under the Customs Act before the Tribunal. The genuineness or otherwise of the search and seizure could only be agitated by the 2nd respondent in those proceedings. Any other parallel proceedings on the allegations of fake documents was nothing but abuse of process of law and no government officer could perform any search or seizure in future if the frivolous complaint of the 2nd respondent was given any credence. 13. The learned Senior Counsel for the 2nd respondent, on the other hand, contended that no sanction under Section 197 Cr.P.C. was required as the petitioners were not shown to be removable from service by the State or Central Government or with the sanction by the Central Government. Section 4 of the Customs Act would provide that the Board may appoint such persons as it thinks fit to be officers of customs. Section 4(2) says that Board may also authorize such officers of the rank not below the Assistant Commissioner of Customs to appoint officers below that rank. The Senior Intelligence Officer and the Intelligence Officer were....
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....removable from his office save by or with the sanction of the Government is accused of any offence alleged to have been committed by him while acting or purporting to act in the discharge of his official duty, no Court shall take cognizance of such offence except with the previous sanction- (a) in the case of a person who is employed or, as the case may be, was at the time of commission of the alleged offence employed, in connection with the affairs of the Union, of the Central Government; (b) in the case of a person who is employed or, as the case may be, was at the time of commission of the alleged offence employed, in connection with the affairs of a State, of the State Government: Provided that where the alleged offence was committed by a person referred to in clause (b) during the period while a Proclamation issued under clause (1) of article 356 of the Constitution was in force in a State, clause (b) will apply as if for the expression" State Government" occurring therein, the expression" Central Government" were substituted." 16. The contention raised by the learned Senior Counsel for the 2nd respondent primarily was that the petitioners were no....
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.... 5. All Officers of the Narcotics Control Bureau. 6. All Assistant Directors of the Central Economic Intelligence Bureau. 18. Thus, the Central Government by notification entrusted to the officers mentioned in the notification specific functions like search, seizure and arrest as a functional necessity to prevent the problem of smuggling to combat the inability of the customs department to be present across the length and breadth of the country. Thus, the Central Government considered even Class-IV employees of the Customs Department working in any place in India and all the officers of the DRI as appointed by the Central Government by the above notification. The petitioners being the Senior Intelligence Officer and the Intelligence Officer of Customs appointed as Customs Officers under Section 4(1) of the Customs Act are undoubtedly 'public servants' acting in discharge of their official duties. Hence, sanction of Government is required before prosecuting them for any offences committed by them while discharge of their official duties. 19. Now the question that arises for consideration is whether the offences alleged against the petitioners can be considere....
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.... in discharge of his official duties? It is not the official duty of the public servant to fabricate the fake record and misappropriate the public funds etc. in furtherance of or in the discharge of his official duties. The official capacity only enables him to fabricate the record or misappropriate the public fund etc- It does not mean that it is integrally connected or inseparably inter linked with the crime committed in the course of same transaction, as was believed by the learned judge. Under these circumstances, we are of the opinion that the view expressed by the High Court as well as by the trial Court on the question of sanction is clearly illegal and cannot be sustained." 20.1. He further relied on the decision of the Hon'ble Apex court in State of Kerala v. V. Padmanabhan Nair (AIR 1999 SC 2405 supra), wherein it was held that: "That apart, the contention of the respondent that for offences under Sections 406 and 409 read with Section 120-B of the IPC sanction Under Section 197 of the Code is a condition precedent for launching the prosecution is equally fallacious. This Court has stated the correct legal position in Shreekantiah Ramayya Munnipalli v. State o....
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....t be a reasonable connection between the act and the official duty. It does not matter even if the act exceeds what is strictly necessary for the discharge of the duty, as this question will arise only at a later stage when the trial proceeds on the merits. What a court has to find out is whether the act and the official duty are so inter-related that one can postulate reasonably that it was done by the accused in the performance of official duty, though, possibly in excess of the needs and requirements of situation." 20.3. He also relied on the decision of the Hon'ble Apex Court in N.K. Ganguli v. CBI (2016) 2 SCC 143, wherein it was held that: "35. From a perusal of the case law referred to supra, it becomes clear that for the purpose of obtaining previous sanction from the appropriate government under Section 197 of CrPC, it is imperative that the alleged offence is committed in discharge of official duty by the accused. It is also important for the Court to examine the allegations contained in the final report against the Appellants, to decide whether previous sanction is required to be obtained by the respondent from the appropriate government before taking cogniza....
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....ng the objectionable act. If in doing his official duty, he acted in excess of his duty, but there is a reasonable connection between the act and the performance of the official duty, the excess will not be a sufficient ground to deprive the public servant from the protection. The question is not as to the nature of the offence such as whether the alleged offence contained an element necessarily dependent upon the offender being a public servant, but whether it was committed by a public servant acting or purporting to act as such in the discharge of his official capacity. Before Section 197 can be invoked, it must be shown that the official concerned was accused of an offence alleged to have been committed by him while acting or purporting to act in the discharge of his official duties. It is not the duty which requires examination so much as the act, because the official act can be performed both in the discharge of the official duty as well as in dereliction of it. The act must fall within the scope and range of the official duties of the public servant concerned. It is the quality of the act which is important and the protection of this section is available if the act falls with....
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....same officer commits an act in course of service but not in discharge of his duty and without any justification therefor then the bar under Section 197 of the Code is not attracted. To what extent an act or omission performed by a public servant in discharge of his duty can be deemed to be official was explained by this Court in Matajog Dobey v. H. C. Bhari (AIR 1956 SC 44) thus: "The offence alleged to have been committed (by the accused) must have something to do, or must be related in some manner with the discharge of official duty ... there must be a reasonable connection between the act and the discharge of official duty; the act must bear such relation to the duty that the accused could lay a reasonable (claim) but not a pretended or fanciful claim, that he did it in the course of the performance of his duty." 12. If on facts, therefore, it is prima facie found that the act or omission for which the accused was charged had reasonable connection with discharge of his duty then it must be held to official to which applicability of Section 197 of the Code cannot be disputed." 20.5. The leaned counsel for the 2nd respondent further relied on the judg....
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.... petitioners relied upon the judgment of the Hon'ble Apex Court in D. Devaraja v. Owais Sabeer Hussain (2020) 7 SCC 695, wherein the Hon'ble Apex Court reiterated the law relating to the requirement of sanction to entertain and/or taking cognizance of an offence and the object of sanction for prosecution was stated as under: "66. Sanction of the Government, to prosecute a police officer, for any act related to the discharge of an official duty, is imperative to protect the police officer from facing harassive, retaliatory, revengeful and frivolous proceedings. The requirement of sanction from the government, to prosecute would give an upright police officer the confidence to discharge his official duties efficiently, without fear of vindictive retaliation by initiation of criminal action, from which he would be protected under Section 197 of the Code of Criminal Procedure, read with Section 170 of the Karnataka Police Act. At the same time, if the policeman has committed a wrong, which constitutes a criminal offence and renders him liable for prosecution, he can be prosecuted with sanction from the appropriate government. 67. Every offence committed by a police of....
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....ce thereof cannot be taken unless requisite sanction of the appropriate government is obtained under Section 197 of the Code of Criminal Procedure and/or Section 170 of the Karnataka Police Act." 23. Thus, the Hon'ble Apex Court held that sanction was required even when the acts were done in excess of duties and authorities of the public servants also, if they were reasonably connected to the discharge of their official duties. 24. In the present case, the allegations were made against the petitioners about tampering of evidence while they were conducting search at the office premises and at the residence of the 2nd respondent and seizure of certain documents. Thus, the offences were alleged to have been committed by the petitioners while they were performing their official duties of search for evidence and seizure of the documents in discharge of their official duty. Section 197 of the Code of Criminal Procedure if construed too narrowly, it can never be applied, as it is no part of an official's duty to commit an offence and never can be, as observed by the Hon'ble Apex Court in Shreekantiah Ramayya Munipalli and Anr. v. State of Bombay AIR 1955 SC 287. 25. No narrow....
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....se." 28. Sub-Section (1) of Section 155 of the Customs Act gives a protection to the Central Government or any officer of the Government or a local authority for anything which is done or intended to be done in good faith in pursuance of the Act or the rules or regulations. There is a bar on filing a suit, prosecution or other legal proceedings, if the act is done in good faith. 29. Learned counsel for the respondent No.2 relied upon the judgment of the High Court of Rajasthan at Jodhpur in Ravindra Kumar v. Union Of India 2017 (347) E.L.T. 269 (Raj.) wherein it was held that: "16. The words "no proceeding" appearing in subsection (2) of Section 155 of the Customs Act, in my humble opinion, do not include criminal prosecution, as for the protection pertaining to prosecution, there is specific provision under sub-section (1) of Section 155 of the Customs Act." He also relied on the judgment of the High Court of Delhi in Atul Dikshit v. Central Bureau of Investigation 2017 (348) E.L.T. 224 (Del.), wherein it was held that: "Limitation as prescribed under Section 155(2) of Customs Act would not be applicable to criminal proceedings/prosecution. Words 'no pro....
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....ious High Courts of Rajasthan, Delhi and Madras. But the Hon'ble Apex court in Costao Fernandes v. State at the instance of D.S.P., CBI, Bombay (1996) 7 SCC 516, wherein a Customs Officer had a scuffle with a person alleged of smuggling gold and caused his death and when the CBI sought to prosecute the Customs Officer, came down heavily and held that the protection under Section 155 of the Customs Act was available to the Customs Officer as the killing cannot be divorced from the performance of duty enjoined by Section 106 of the Customs Act, 1962 though the act might be in excess. In the present case also, the petitioners were searching the premises and seizing documents under Section 105 of the Customs Act, 1962 and the said official duty is inseparably linked to the allegation of interpolating two invoices and tampering with records seized under the cover of Panchanama. The allegations relate to the performance of official duties by the petitioners, hence, they were protected against the prosecution under Section 155(1) of the Customs Act, 1962. 31. Hence, I do not find any merit in the contention of the learned counsel for the 2nd respondent that the protection was available....