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CASE NO.: Appeal (crl.)  1032 of 2004

PETITIONER: Dipesh Chandak

RESPONDENT: Union of India

DATE OF JUDGMENT: 17/09/2004

BENCH: S. N. Variava & A. K. Mathur

JUDGMENT: J U D G M E N T

(Arising out of SLP (Crl.) No. 2740 of 2002)

S. N. VARIAVA, J.

               Leave granted.                 This Appeal is against the Judgment of the High Court of  Patna dated 21st March, 2002.                 Briefly stated the facts are as follows: The Appellant is an accused in a number of cases pertaining to the  Fodder Scam in the Animal Husbandry Department of Bihar.  He has,  along with others, been accused of misappropriation of the funds of  the Animal Husbandry Department and of fraudulent withdrawals from  the State Exchequer by issuing fake bills for supplies never made to  the Animal Husbandry Department.  The Appellant has been, on 28th  August, 1998, granted a pardon by the Special Judge, CBI, on the  condition that he makes a full and complete disclosure.                 On the basis of the statement made by the Appellant, the  Deputy Commissioner of Income Tax, Central Circle-I, Patna, issued a  show-cause-notice to the Appellant as to why prosecution should not  be initiated against him, under Sections 277 and 278 of the Income  Tax Act, for having filed false returns of income tax.   The Appellant  replied to the show-cause-notices, inter alia, stating that he has been  granted a pardon under Section 306 of the Criminal Procedure Code  and thus the show-cause-notice was not maintainable for an offence  under Sections 277 and 278 of the Income Tax Act.  This contention  was not accepted by the Commissioner of Income Tax, who opined  that the pardon was restricted only to offences under the Indian Penal  Code.  Accordingly, a Complaint Case No. 157(C)/2000 has been  registered under Sections 277 and 278 of the Income Tax Act.   The  Court of Economic Offences, Patna, has taken cognizance and issued  summons.                 The Appellant filed a Petition under Section 482 of the  Criminal Procedure Code for quashing this complaint.  By the  impugned Judgment that Petition has been dismissed, inter alia, on  the ground that as yet the terms of the pardon have not been fulfilled.    It is held that till full evidence is given by the Appellant and the trial of  all cases is concluded he continues to be an accused and, therefore,  cannot claim immunity from prosecution.                 Mr. Lahoty, on behalf of the Appellant, submitted that the  Appellant has been granted pardon under Section 306 of the Criminal  Procedure Code.  He submitted that under sub-section 2 of Section  306 the pardon is, amongst others, in respect of any offence  punishable with imprisonment which may extend to seven years or  more.   He submitted that such a pardon would operate not just for  offences under the Indian Penal Code but would also cover offences  under other statutes.  He submitted that for an offence under Sections

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277 and 278 the sentence may extend to seven years.  He submitted  that by virtue of the pardon no prosecution could have been launched  against the Appellant under these Sections.                   Mr. Lahoty relied upon the case of Bipin Behari Sarkar  vs. The State of West Bengal reported in [1959 SCR 1324], wherein  it has been held as follows: "Section 339(1) of the Code provides that "where a pardon  has been tendered under s. 337 or s. 338, and the Public  Prosecutor certifies that in his opinion any person who has  accepted such tender has, either by willfully concealing  anything essential or by giving false evidence, not  complied with the condition on which the tender was  made, such person  may be tried for the offence in respect  of which the pardon was so tendered, or for any other  offence of which he appears to have been guilty in  connection with the same matter".  The proviso to this  sub-section prohibits the trial of such person jointly with  any of the other accused and that such person shall be  entitled to plead at such trial that he had complied with the  condition upon which such tender was made.  The  provisions of this section clearly pre-suppose that the  pardon which had been tendered to a person had been  accepted by him and that thereafter that person had  willfully concealed anything essential or had given false  evidence and therefore had not complied with the  condition on which the tender was made to him.  Section  337 of the Code, under which a pardon is tendered, shows  that such tender is made on the condition that the person  to whom it is tendered makes a full and true disclosure of  the whole of the circumstances within his knowledge  relative to the offence and to every other person  concerned whether as a principal or an abettor to the  commission thereof.  Sub-section (2) of this section  requires that every person who has accepted a tender shall  be examined as a witness in the court of the Magistrate  taking cognizance of the offence and in the subsequent  trial, if any.  It is clear, therefore, that a mere tender of  pardon does not attract the provisions of s. 339.   There  must be an acceptance of it and the person who has  accepted the pardon must be examined as a witness.  It is  only thereafter that the provisions of s. 339 come into play  and the person who accepted the pardon may be tried for  the offence in respect of which the pardon was tendered, if  the Public Prosecutor certifies that in his opinion he has,  either willfully concealed anything essential or had given  false evidence and had not complied with the condition on  which the tender was made."

Relying on this case, Mr. Lahoty submitted that the High  Court was not right in stating that as yet the Appellant was an  accused.  He submitted that the pardon would continue to operate  unless and until it has been revoked under Section 308 of the Criminal  Procedure Code.                   Mr. Lahoty also relied upon the case of State vs. Hiralal  G. Kothari and others reported in [1960 (2) SCR 355], wherein it  has been held that the person to whom pardon is tendered is expected  to state the whole truth including details of any other subsidiary  offence which might have been committed in the course of the  commission of the offence for which pardon is tendered.  It has been  held that the pardon tendered must include the subsidiary offence,  even though if the subsidiary offence alone was committed no pardon  could have been tendered for the same.  He also relied upon the case  of Harumal Paramanand vs. Emperor reported in A.I.R. (1915) Sind  43, wherein it has been held that if there are more offences than one  and if anyone of them is an offence exclusively triable by the Sessions

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Court, then pardon could be granted even though the other offences  alleged or charged are not triable by the Sessions Court.  He further  relies upon the case of Shiam Sunder vs. Emperor reported in AIR  1921 Allahabad 234, wherein an approver in a dacoity case also  disclosed where arms possessed by the gang were kept.  After he was  released from the dacoity case he was prosecuted under the Arms Act  for possession of arms.  It was held that the illegal possession of arms  and ammunition was an offence in connection with the matter of  docoity.  It was held that arms were the implements of his trade and  crime and that it was impossible to separate the possession of the  arms from guilt as a dacoit.    It was held that he could not make a full  and true disclosure relating to the offence of dacoity without referring  to the arms possessed by the gang.   It was held that he could not be  prosecuted as the pardon covered even this act.   In this case, it has  also been pointed out that if, however, he had made disclosure in  respect of some other felony which was not connected with the felony  for which he has been prosecuted, even though that would not be  covered by the pardon, the Court should recommend to the  prosecution not to proceed against him in respect of that other  offence.                 Mr. Lahoty also relied upon the case of State (Govt. of  NCT of Delhi) vs. Prem Raj reported in (2003) 7 SCC 121, wherein  this Court has discussed the power of pardon and the power to  commute sentence.   This authority, in our view, is of no relevance to  the question in issue.                 Mr. Lahoty submitted that the pardon must necessarily  mean that no prosecution can be based in respect of the same offence.   He submitted that the offences for which the Appellant was being tried  were the same in respect of which he was now being sought to be  prosecuted under Sections 277 and 278 of the Income Tax Act.    He  submitted that the High Court was thus wrong in not quashing the  prosecution.                 On the other hand, Mr. Pathak, Additional Solicitor General  and Mr. B. Datta, Additional Solicitor General, submitted that the  prosecutions in respect of which pardon was granted were for  misappropriation of funds of the Animal Husbandry Department by  raising fake bills in respect of supplies never made to the Animal  Husbandry Department.  They submitted that that prosecution had  nothing to do with the filing of false returns and making a false  statement in the Income Tax Returns.  Reliance was placed on the  case of Jasbir Singh vs. Vipin Kumar Jaggi reported in (2001) 8  SCC 289, wherein the question was whether a person to whom  immunity has been granted under Section 64(1) of the Narcotic Drugs  and Psychotropic Substances Act, 1985 could be examined as a  witness even though he was an accused in the criminal case.   The  Trial Judge held that in the absence of any pardon having been  granted under Section 307 or Section 321 of the Criminal Procedure  Code an accused could not be examined as a witness for the  prosecution.   This Court held that there was no conflict between the  powers exercised under Section 307 of the Criminal Procedure Code  and by the Government under Section 64.  This Court held that even if  there was a conflict, the Narcotic Drugs and Psychotropic Substances  Act, 1985 being a special and later enactment, Section 64 would  prevail.  It was held that evidence could be given by the accused on  the basis of the immunity granted under Section 64.                 In our view, the High Court was not correct in concluding  that until evidence has been given by the Appellant the pardon could  not operate.  However, the fact remains that under Section 306  Cr.P.C. the pardon is granted in respect of the offence for which he  had been charged as an accused.  Of course, a pardon need not be  only in respect of an offence under the Indian Penal Code.   A person  may be charged, in respect of the same transaction or act, under the  Indian Penal Code and under some other Act, e.g. the Prevention of  Corruption Act.  The pardon would operate in respects of all offences  pertaining to that transaction.  However the pardon does not operate

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in respect of a transaction or act entirely unconnected with the offence  in respect of which pardon has been granted.  In this case, the pardon  has been granted for the offence of misappropriation of funds.  This  offence has nothing to do with filing of false returns by the Appellant.   The prosecution under Sections 277 and 278 is in respect of filing false  return and making of false declaration.  The pardon which has been  granted would not cover those offences.

               However, it is clear that to get benefit of the pardon the  Appellant has to make a full and frank disclosure regarding the  offences of misappropriation.  If he does not make a full and complete  disclosure, the pardon may be cancelled. If he makes a full and  complete disclosure he faces the prospect of being convicted in the  prosecution under Sections 277 and 278 of the Income Tax Act.   Article 20(2) of the Constitution of India enjoins that no person can be  compelled to be a witness against himself. To continue with the  prosecution would thus amount to forcing the Appellant to give  evidence against himself or to risk pardon being cancelled as he  cannot make a full and complete disclosure for fear of being convicted  in the other case.   Thus, even though the pardon may not extend to  these offences, in our view, this is a fit case where the Government  should consider not prosecuting the Appellant under these Sections.   To insist on so prosecuting may result in valuable evidence being lost  in the fodder scam cases.  

               We, therefore, direct that the prosecution under Sections  277 and 278 of the Income Tax Act will stand stayed till trial of the  cases in which pardon is granted is over.  If the Appellant makes a full  and complete disclosure, then, in our view, the prosecution under  Sections 277 and 278 should not be allowed to proceed.  We,  therefore, grant to the Appellant liberty to apply for quashing that  prosecution at that stage.

               Accordingly, the Appeal is disposed off with above  directions.