Holding

The material is inadmissible and irrelevant under Section 34 of the Evidence Act, and therefore no case exists to direct a Special Investigation Team; the applications are dismissed.

Summary

The petitioners, Common Cause and others, sought a court‑ordered Special Investigation Team to probe alleged hawala transactions and cash seizures involving the Aditya Birla and Sahara groups, relying on documents seized in raids such as loose sheets, pen‑drives and laptop data. The respondents opposed, contending that the material was not maintained as regular books of account and therefore inadmissible under Section 34 of the Evidence Act, a view supported by the Income Tax Settlement Commission’s finding that the documents were not genuine. The Court examined whether such material could justify directing an investigation or constitute a cognizable offence. Relying on precedents (V.C. Shukla, Bhajan Lal, Lalita Kumari), the Court held that loose sheets and electronic extracts are irrelevant and lack evidentiary value, and that ordering an investigation without cogent, admissible evidence would be unsafe. Consequently, the applications for constituting a SIT were dismissed.

Issues considered

Whether the documents seized (loose sheets, electronic data) are admissible under Section 34 of the Evidence Act to justify a criminal investigation.
Whether a court may order the constitution of a Special Investigation Team based solely on such material.
Whether the alleged transactions constitute a cognizable offence warranting investigation under the Code of Criminal Procedure.
Whether the material satisfies the test laid down in Bhajan Lal and V.C. Shukla for admissibility and evidentiary value.

Legislation cited

Code of Criminal Procedure, 1973s. 155(2), s. 156(1)
Income Tax Act, 1961s. 245
Indian Evidence Act, 1872s. 34

Subjects

Evidence Act Section 34admissibility of loose sheetsSpecial Investigation Teamcognizable offencehawala transactionsIncome Tax Settlement Commissionconstitutional functionaryinterlocutory applicationwrit petitioninvestigation order

Judgment

[2017] l S.C.R. 1015

COMMON CAUSE (A REGISTERED SOCIETY) AND OTHERS A
v.
UNION OF INDIA AND OTHERS
(Interlocutory Application Nos. 3 and 4of2017)
In B

(Writ Petition (Civil) No. 505 of2015)
JANUARY II, 2017
, [ARUN MISHRAAND_AMITAVA ROY, JJ.]
In~estigqtion - Investigation by special investigation team
c
(SIT) -Raids c01rducted in the Bir/a and Saharrr_Group ofCoinpariies
- Seizure of incriminating materials - IA s filed seeking constitution
of SIT and direct investigation against the various functionaries!
officers stated therein and other entries on loose sheets - Held:
Loose sheets of papers are wholly irrelevant as evidence being not D
admissible uls. 34 so as to constitute evidence with respect to the
transactions mentioned therein being of no evidentiary value -
Court has to_ be on guard while ordering investigation against any
important c.onstitutional functionary, officers or any person in the
absence of some cogent legally cognizable materia{ - When the
E
material on the basis of which investigation is sought is itself
irrelevant to constitute evidence and not admissible in· evidence,
there_ is qpprehension whether it would ·be safe to even initiate
investigation:_ T,here has to be some relevant and admissible evidence
and some cogent reason, which is prima facie reliable and supported
by son_le other circumsta~ces pointing out towards the allegations F
leveled - In absence thereof, the process of /ail• could be abused
against all and sundry very easily to achieve ulterior goals and
then no democracy could survive in case investigations are lightly
· set in motion against important constitutional functionaries - On
·facts, the materials placed on record either in the case of Bir/a or in
G
the case of Sahara not maintained in regular course of busif!l!_§.S
and.thus, lack in required reliability to be made the foundation of a
po/ice investigation
.
- In case of Sahara,
' .
Income- Tax Settlement
~

~-Commission recorded a finding that transactions noted in the
documents were not genuine and thus, did not attach any evidentiary
H
IOI5
1016 SUPREME COURT REPORTS [20 l 7] I S.C.R. ·

A value to the entries on loose papers, pen drive, hard disk, computer
loose papers, computer printouts - Materials-in question not good
enough to constitute offences to direct the registration of F.I.R. and
investigation therein - Materials should qualify the test as per the
Bhajan Lal's case - Thus, materials not only irrelevant but also
legally inadmissible u!s.34, more so with respect to third parties
B
and considering th~- explanation made· by Bir/a and Sahara Group,
it would not be legally justified, safe, just and proper to direct
investigation - IA 's dismis!ff!d -. Evidence Act, 1872 - s. 34.
Lalita Kumari v. Government ~f Utfar Pradesh and
Ors. 2014 (2) SCC l: [2013] 14 SCR 713 - referred
c to.
C.B.J. v. v.c. Shukla 1998 (3) sec 410 : (1998] 1
SCR 1153; State of Haryana and Ors. v. Bhajan Lal
and Ors. 1992 Supp (1) SCC 335 : (1991] 1 Suppl.
SCR 387 - relied on.

CIVIL ORIGINAL JURISDICTION: Interlocutary Application
-~ Nos. 3 and 4 of20l 7 in Writ Petition (Civil) No. 505 of20l 5.

Under Article 32 of the Constitution oflndia.
· Shanti Bhushan, Sr. Adv., Prashant Bhushan, Pramod Dayal,
F N ikunj Dayal, Ms. Paya! Dayal, Pranav Sachdeva, Ms. Neha Rathi,
. Advs. for the Petitioners.
Mukul Rohatgi, AG, Tushar Mehta, ASG, Ms. V. Mohana,
C. A. Sundaram, Sr.. Advs., Abhinav Mukherji, Ms. Binu Tanita,
Ms. Meenakshi Grover, Raj iv· Rathore, M, .K. Maroria, Ms. S_ushma
G Suri, Braj Kishore Mishra, Amit Bhagat, Shekhar Kumar, G. Ramakrishna
P~asad, Suyodhan Byrapanehi, Mohd·. Wasay Khan, Ms. Filza Moon is,
Bharat J. Joshi, Jagat Ar6ra, Raj at Arora, Ms. Ritu Arora," Anuvrat
Sharma; Cb.ir11g..Shroff, Heman! Arya, Ms. Neha Shangaran, Advs. for
the Resp6ndents.
H
COMMON CAUSE (A REGISTERED SOCIETY) AND OTHERS 1017
v. UNION OF lNDIA AND OTHERS

The following.Order of the Court was delivered: A
ORDER
1. We have heard learned counsel for the parties at length, as to
Interlocutory Application Nos. 3 and 4 of2017 filed in 'Nrit Petition( Civil)
No.505 of2015.
B
2. The writ petition has been filed by the Common Caus.e (A
registered Society) and othersfor issuance of appropriate.writ for setting
aside the appointment made by the Union oflndia, of Respondent No.2
Mr. K.V. Chaudhary as Central Vigilance Commissioner and Mr. T.M.
Blil!sin as Vigilance Commissioner on various grounds as enumerated in
the petition, pointing outthatthese persons are not of impeccable integrity. c
3. In I.A. No.3/2016 it ls averred that, Central Bureau of
Investigation (in short 'the C.B.l.') conducted raid on the premises of
Aditya Birla group industries in four cities on 15.10.2013, followed by
anothe~ raid by the Income Tax Depa,:tment on the very next day. The
·.raid by the C.B.I. reportedly led to recovery of incriminating documents D
and unaccount"ecfcash amounting 'tu Rs.25 crores. It is submitted that
C.B.l. transferred the incriminaiing documents to the Income Tax
Department. The laptop of Mr. Shubhendu Amitabh, Group Executive
President was seized during the raid. An E-maii ·dated 16.11.2012
containin'g a ·cryptic entry was also recovered from the said laptop' E
referring to political functionaries. When Mr. Amitabh was questioned
about the transactions, he stated that "theeye ,were purely personal notes.
Not meant for SMS or e-mail transmission. And the first note is only to
note for my knowledge and consumption - a business development at
Gujarat Alkali Chemicals'' it does not relate to any political functionary.
During investigation, top officials ofthe_Bjrla Group admitted that large F
· amounts of cash we.re routed by the' Group through hawala. The Income
Tax. Department prepared a detailed appraisal report on the Hawala
transactions. Some extracts of the report dated 27.2.2014 have been
filed as Annexure A-5. A direction has already been issued by this Court
the CBI on 12.10.2015 to enquire into these, even though they migfit
G
be unrelated to the Coal Block Allocation cases. The CBi has not taken
any concrete action. The CBI is trying to protect the influential
personalities name<} in the documents seized and is shielding powerful
corporate entities. It has been alleged that Respondent Noc2 has also
0

tried'to shield the offenders.
H
. 1018 SUP\{.EME COURT REPORTS [2017] I S.C.R.

A 4. With respect to Sahara Group; it is averred that the Income
Tax Department raided Sahara India Group offices in Delhi and Noida
on 22.11.2014. D11ring the raid, incriminating documents and cash··
amounting to Rs.135 crores had been seized., Certain documents have
been filed in the form of printouts of the Excel sheet showing cash receipt
of 0~<0r Rs.115 crores and cash outflow of over RS.113 crores during a
B
short period of l 0 months. The random log suggests that cash was
transferred to seyeral important public figures. Copies of the rando~
pages have been filed as Annexure A-g. The pages Annexure A-9 and
A•i 0 have been. filed wl\ich conttin the proposal and regardingthe acfual
payments which Were made to large number of top political ·leaders of
c the country: ·
5. It is also averred that certain complaints tcrCBI, CBDT, CVC,
SIT, Enforcement Directorate and Settlement Commissioner have been
m;ide but without avail. In spite of that, the Income Tax Settlement
Commission gave immunity to the Sahara Group of Companies vide its
D order dated 11.11.2016 which has been filed alOng with I.A. No.4.
6. I.A. N.o.4 lias been filed by the petitioner pursuant. to the
,- direction given by .this Court to substantiate the docum.ents filed along
with I.A. Nci.3. l.A.No.4 contains more or less the same facts. Details
have be~n- given as to Birla Group that cash of Rs.25 crores was not
E accc;mnted for Tn the regular books cifaccounts ofAditya-Birla Group or
another co~pany. and it is also s_tilted ihat l\1r. Anand Saxena told the
Income Tax·Department that he was responsible for handling the cash
transactions and he had received cash from Mr. Jalutam.in the range of
Rs.50,00,000/-(rupees fifty lacs only). Mr. JaiUram is theAngadia, courier
of local Hawala oper.ators. However, it was stated that he was not aware
F about the payment made t9 anyone and he could not say to whom the
11naccounted money had been paid. E-mails dated 2.1.2013, 7.4.2013
and 3.5.2013 have been placed on record.
7. It is further submitted that during the search operation, it was
revealed that the proposed payment of Rs.7.5 crores had been made
G during the.period 9.l.2012 and 2.2.2012 with respect to "Project-J -
Environment & Forest", and that projects of the Aditya Birla dr0 up
companies .had been sanctioned by the Ministry of Environment and
Forest beiween 8'.11.201 I and 17.6.2013. The doc\lments .,-Annexure
Dis stated to.be related to Coal Block ofBirla Group ofCompanies by
H the Coal Ministry during the aforesaid period. E-mail dated l3.S.2013,
COMMON CAUSE (A REGISTERED SOClETY) AND OTHERS. 1019·
v. UNION OF INDIA AND OTHERS

relating to MOEF has also been placed on record. A
, 8. It is averred thai evidence ofceriiiin highly incriminating money
transactions was also found-in ihe laptop of Mr. Shubhendu Amitabh.
_An E-mail dated 16.11.2012 containing a cryptic entry, has been recovered
which in fact does not relate to Gujarat Alkali Chemicals but to a political
functionary and that this fact ought to have been ascertained. B
9, It is fl,!rther averred in the application that documents of Sahara
also inake out a.case of·cognizable offence and the role p[a~ied by
respondent No.2 should be enquired into. The explarnition given to the
Income Tax Department on behalf of the _Sahara Group'by Mr. Sachin
Pawar, that exercise was done to implicTtte Mr. Dogra and to get him c
punished from the Management is unworthy-of credence, as was
suggested .by the Department. However, the stand of department has
been ignored and the Settlement ComI)'lission accepted the case set up
by assessee and absolved Sahara from criminal and civil liability on
different grounds, even. after receiving a letter from the counsel of the
common cause that he was going to file an application before this Court D
. in the instant matter.
1-0. We haye heard learned counsel for the parties at length. It
was submitted by Shri Shanti Bhushan and Mr. Prashant Bhushan, learned
senior counsel appearing on behalf of the petitioners that it is a fit case
for constitution of the SIT for directing investiiation info the incriminating E
material seized in the raids conducted on the Birla and Sahara.Group of
Companies in ~uestion. . .
I]. It was .submitted that though ~is stage, it cannot be said .
conclusively that payments have been made, however, a priina facie
case has been made out to direct investigation on the basis of the· materials F
recovered' in the raids in question." It has been argued that the order
passed bythe s·ettlement Commission cannot be said to be in accordance
with law and is self contradictory and ha_s been . passed in haste.
. The
fmdin,S recorded therein cannot be relied upon and 'it is the bounden duty
of this Court to.direct investigation as one whosoever high is not above. G
· 1aw .and this. Court.being die constitutional Court and.the highest Court
of the country should-direct investigation into the material collected in.
· the raids of two busines&groups. The investigation by special investigatioi;i
Team
. should not-be
'
only ordered, but it should be monitored by 'this
Court. ·
1020 SUPREME COURT REPORTS [2017] 1 S.C.R.

-
A 12. Sh~i Shanti Bhushan, learned senior counsel has also submitted
that in the case ofC.B.I. versus V.C. Shukla 1998 (3) sec 410, this
Court has laid down the law as to admissibility of material involved therein
after the investigation was over and is ofno applicability in this ca"Se, at.
this stage. The allegations whiC!lare reflected by the materials collected
indicates commission of cognizable offence. Relying upon the decision
B
of this Court in Lalita Kumari versus State ofl!.P. 2014(2) SCC 1, he
urged that it is the bounde·n duty of the Court to direct investigation and
falsity or correctness of the documents has to be seen in course of the
investigation.
13. Shri Mukul Rohatgi, learned Attorney General for India and
c Mr. Tushar Mehta, learned ASG have submitted that the material in
question with respect to Sahara Group on the basis of which investigation
· is sought for, have been found by the Settlement Commission, in
proceedings 1:mder-8ection 245D.ofthe Income Tax Act, to be doubtful.
The docume_nts which have been filed by the Birla as well as Sahara
D Group are not in the forni of account books maintained in regular course
' of business. They are cttn1doin she'ets and loose papers and their
correctness and authenticity, even for the purpose of income mentioned·
therein have been found to be un-reliable having no evidentiary value, by
the concerned authorities of income_tax. The documents ofBirla Group
are also the same. They are hot in the formof regular books of account
E and are random and stray materials _and thus the case ofBirla also stands
on the.same footing.
14. Placing implicit reliance of the decision of this Court in C.B.I.
versus V.C. Shukla (supra), it was submitted t_hat it is open to any
· unscrupufous person to make any entry anytime against anybody's name
F _unilaterally on. any sh_ee( of paper or computer .e~cel sheet. Th.ere being
no further corroborative material witli respect to the payment, no case is
' made out so as to direct aninvestigatiori, and.that too against large number·
of persons named in the .documepts, Such entries have been held to be .
prima facie not even admissible inV.C. Shukla's case.He urged that in
·G case investigation is ordered on the basis of such documents, it would be
very dangerous· and no constitiitional functionary/officer can function
independently, as per the constitutional imperatives. No case is made
out on the basis of material which is not cognizable in law, to direct
investigation.

H
COMMON CAUSE (A REGISTERED SOCIETY) AND OTHERS 1021
v. UNION OF INDIA AND OTHERS

15. Before dilating upon the issue canvassed in the application A
we make it clear that we have not examined the main writ petitions vis
a vis chall.enge to the appointments of respondent Nos.2 and 3.. We are
examining only the merit of the I.A. No. 3 supported by I.A. No.4, as to
whether a ~ase is made out on the basis of materials which are placed
on record, to constitute' SIT and direct investigation against the various
B
Junctionaries/officers which are projected in AnnexureA-8, A-9 and A-
l 0 and other entries on loose sheets and further monitor the same.
16. With respect to the kind of materials which have been placed
on record, this Court in V.C. Slmkla's case (suprafhas dealt with the
matter though at the stage of discharge when investigation had been
completed but same is relevant for the purpose of decision of this case c
also. This Court has considered the entries in Jain Hawala diaries, note
books and file containing loose sheets of papers not in the form of"Books
of Accounts" and hashe\d that such entries in loose papers/sheets are
irrelevant and not admissible under Section 34 of the Evidence Act, and
that only where the entries are in the.books of accounts regularly kept, D
depending on the nature df occupation, that those are admissible
1_7. It has further been laid down in V.C. Shukla (Supra) as to
the value of entries in the books of account, that such statement shall not
alone_ be sufficient evidence to charge any person with liability, even if
· they ate relevant and admissible, and that they are only corroborative E
evidence. It has been held even then independent evidence is necessary ·
as to· trustworthiness of those entries which is a requirement to fasten
the liability.
18. This Court has further laid down in V.C. Shukla (Supra) that
meaning of account book would be spiral note book/pad but not loose F
sheets. The following.extract being relevant is quoted herein below:-
"14; In s~tting aside the order of the trial court, the High
· Couit accepted the contention of the respondents that th~
documents :were not admissible in evidence under Section 34
with the following words:
G
·."An-account presupposes the existence of two persons
such as a seller and a pu~chaser, creditor and debtor.
Admittedly, the alleged diaries in the present case are not ·
records of the entries arising out of a contract. They do not
contain the debits and credits. They can at the most be
H
1022 SUPREME COURT REPORTS [2017) 1 S.C.R.

A described as a .memorandum kept by a person for his own
benefit which will enable him to look into the same whenever
.the nc;ed arises to do so for his future purpose. Admittedly
the said diaries. were not being maintained on day-to-day
basis in the course of business. There is no mention of the
daJes on which the alleged payments were made. In fact the
B
entries there in are on monthly basis. Even the names of the
pers9ns whom the alleged payments were made do not find
a mention in full. They have been shown in abbreviated form.
Only certain 'letters' have been written against their names
~which are within the knowledge of only the scribe of the
c said diaries as to what they stand for and whom they refer
to."
·x xx xx xx x xxX xx xx

17. From a plain reading of the Section it is manifest that to
make ah entry relevant thereunder it must be shown that it has
D been made in a bQQk, that book is a book ·of account and that
book of account has beenregularly kept in the course of business.
From th"e above Section it is also manifest that e'(en ifthe above/
requirements are fulfilled and the entry be~omes admissiljle as
relevant evidence, still, the statement made therein shall not alone
E be suffii;ient ·evidence to charge any person .with liability. It is
thus seen that while ·the first part of the section speaks of the·
relevancy ofthe·entry as evide11ce, the second part speaks, in .a'
negative way, ofits evidentiary value for charging a person with
a liability. It will, therefore,.be necessary for us to first ascertain
whether the entries in the documents, with which we are
F concerned, fulfill the requirements of the above section so as to
be admissible in evidence.and if this question is answered in the
affirmative then only its probative value need be assessed.
18, "Book" ordinarily means a collection -Of sheetf! of paper or
other material, blank, written, or printed, fastened or bound
G together so as to forin a materi?l .whole. Loose sheets or scraps.
of paper cannot be termed as "book" for they can be easily
detached and replaced. In dealing with the word "book" appearing
in Section 34 in Mukundram v. Dayaram' a decision on which
both sides have placed reliance, the Court observed:-
H
COMMON CAUSE (A REGISTERED SOCIETY) AND OTHERS 1023
v. UNION OF INDIA AND OTHERS

"In its ordinary sense it signifies a collection of.sheets of A
paper. bound together in a manner which i:annot be disturbed
or altered except by tearing apart. The binding is of a kind
which is not intended to the moveable iri the sense of being
undone and put together again. A collection of papers in a
portfolio, or clip, or strung together on a piece of twine which
B
is intended to be untied at will, wou Id not, in ordinary English,
·be called a book .... I think the term 'book' in Section 34
aforesaid may properly be taken to signify, ordinarily, a
collection of sheets of paper bound together with the intention
that such binding shall be permanent and the papers used
collectively in one volume. It is easier however to say what · c
· is not a book for .the purposes of Section 34, and I have no ·
hesitation in holding that unbound sheets of paper, in whatever
quantity, though filled up with one continuous account, are
not a book ofac~oun~ within the purview of Section 34." .
We must observe that the aforesaid approach is in accord
with good reasoning and we are in full agreement with it. Applying
the above tests It must be held that the two spiral note books
(MR 68/91 and MR 71/91) and the two spiral pads (M)l 14 69/
91 and MR 70/91) are "books" within the meaning of Section -
34, but not the loose sheets of papers contained in the two files
(MRs 72/91 and ?S/91 ). - E
. (:.

xxxxxxxxxxxxxxxxxx
20. Mr. Sibal, the learned counsel for the·Jains, did not dispute
thatthe spiral note books and the small pads are "books" within
the meaning of Section· 34. He, however,
.
strQ[lgly disputed
.
the · F
admissibility ofthose books in evidence under the aforesaid section .
. on the grourn:j that they were neither books of account nor they
were regularly keptin the course of business. he submitted that
at best it could be said that those books were memoranda kept
by a person for his own benefit. According to Mr." Sibal, in
business parlance "account" means a formal statement of money G
transactions between parties arising out of contractual or fiduciary
relationship. Since the books in question did not reflect any such
relatlonslrtp and, on the contrary, only contained entries of monies
received from one set of persons and paymentthereof to_another
set of persons it could not be said, by any stretch of imagination
H
-
1024 SUPREME COURT REPORTS [2017] l S.C.R.

A that they were books of account, argued Mr Sibal. He next
contended that even if it was assumed for argument's sake that
the above books were books of account relating to a business
still they would not be admissible under Section 34 as theywere
not regularly kept. It was urged by him that the words "regularly
kept" mean that the entries in the books were contemporaneously
B
made at the time the transactions took place but a cursory glance
of the books would show thai the -entries were made therein
long after the purported transactions took place. In support of
his contentions he also relied upon the dictionary meanings of
the words 'accoun!' and 'regularly kept'."
c (Emphasis added by us)
19. With respect to evidentiary value ofregular account book,
this Court has laid down in V.C. Shukla,_thus; ·
"37. In Beni v. Bisan Dayal it was observed that entries in
books of account are not by themselves sufficient to charge any
.D person with liability, the reason being that a man cannot be allowed
to make evidence for himself by what he chooses to write in his
own books behind the back of the parties. There must be
independent evideri'ce of the transaction to which the entries relate
and in absence of such evidence no relief can be given to the
E party who relies upon such entries to support his claim against
another. In Hira Lal v. Ram Rakha the High Court, while
negativing a contention that it having been proved that the books ·
of account were regularly kept in the ordinary course of business
and that, therefore, all entries therein should be considered to be
relevant and to have been pr.oved, said that the rule as laid down
F in Section 34 of the Act that entries in the books of account
regularly kept in the course of business are relevant whenever
they refer to a matter in which the Court ha.s_ to enquire was
subject to the salient proviso that such entries shall not alone be
sufficient evidence to charge any pe•son with liability. It is not,
G therefore, enough merely to prove that the books have been
regularly kept in the course of business and the entries'therein
are correct. It is further incumbent upon the.person relying upon
those entries to prove that they were in .accordance with facts."
20. It is apparent from the aforesaid discussion that loose sheets
of papers are wholly irrelevant as evidence being not admissible un.der'
H
·COMMON CAUSE (A REGISTERED SOCIETY) AND OTHERS 1025
v. UNION OF INDIA AND OTHERS

Section 34 so as to constitute evidence with respect to the transactions A
mentioned therein being ofno evidentiary value. The entire prosecution
based upon such entries which led to the investigation was quashed by
this Court.
2 I. We are constrained to observe that the Court has to be on
guard while ordering investigation against any important constitutional B
functionary, officers or any person in the absence of some cogent legally
cognizable material. When the material on the basis of which investigation
is sought is itself irrelevant to constitute evidence and not admissible in
evidence, we have apprehension whether it would be safe to even initiate
investigation. In case we do so, the investigation can be ordered as against
any person whosoever high in integrity on the basis of irrelevant or c
inadmissible entry falsely made, by any unscrupulous person or business
house that too not kept in regular books of accounts but on random
papers at any given point of time. There has to be some relevant and
admissible evidence and some cogent reason, which is prima facie reliable
and that too, supported by some other circumstances pointing out that D
the particular third person against whom the allegations have been levelled
was in fact involved in the matter or he has done some act during that
period, which m,ay have co-relations with the random entries. In case
we do not insist for all these, the process of law can be abused against
all and sundry very easily to achieve ulterior goals and then no democracy
E
can survive in case investigations are lightly set in motion against important
constitutional functionaries on the basis of fictitious entries, in absence
of cogent and admissible material on record, lest liberty of an individual
be compromised unnecessarily. We find the materials which have been
placed on record either in the case of Birla or in the case of Sahara are
not maintained in regular course of business and thus·laek in required F
reUability to be made the foundation ofa police investigation.
22. In case of Sahara, in addition we have the adjudication by
the Income Tax Settlement Commission. The order has been placed on
record along with I.A.No.4.'<fhe Settlement Commission has observed
that the scrutiny of entries.on loose papers, computer prints~hard disk, G
pen drives etc. have revealed that the transactions noted on documents
. were not genuine and have no evidentiary value and that details in these
loose papers, computer print outs, hard disk and pen drive etc. do not
., comply with the requirement of the Indian Evidence Act and are not
admissible evidence. It further observed that the department has no
- H

1r
SUPREME COURT REPORTS [2017] 1 S.C.R.

A evidence to prove that entries in these loose papers and'._electronic data·
were kept regularly during the course "f business of the concerned
bqsiness house and the fact that these entries were fabriCated,-noll-
genuine was proved. It held as well that the PCIT/DR have not been
able to show and substantiate the nature and source of receipts as well
as nature and reason of payments and have failed to prove evidentiary
B
value of loose papers and electronic documents within the legal
P,aranieters. The Commission has also observed that Department•has ·
not peen able to make out a clear case of taxing such income in the
hands of the applicant firm on the basis ofthe~e documents. ·
23. It is apparent fliat the Commission has record.ed a finding
c that transactions noted in the documents were not genuine and thus has
not attached.any evidentiary value to the pen drive, ha~d disk, computer
loose papers, computer printouts. .
24. Since.it is not disputed that for entries relied on in these loose
papers and electronic data were not regularly kept during course ·of
D business, such entries were discussed in the order dated 11.l l.2016
passed in Sahara,'s case by the Settlement Commission and the documents
have not been relied upon by the Com.mission against assessee, and thus.
5ucJ1 dopuments have no evidentiary value against thin! parties. On th~
basis of the materials which have been placed on record, we are ofthe
E considered opinion that no case is made out to direct iavestjgation against
any of the persons named in the Birla's documents or in the docum~nts
A-8, A-9 and A-·l 0 etc. of Stihara. ·
25. This Court, in the decision ·ofLalita Kumari versus Government •
of Uttar Pradesh.and others, 2014(2) SCC 1 has laid down that when
F there is commission of offence apparent from the complaint and a
cognizable offence is made out, inv.estigation should normally be ordere~
and the falsity of the allegations can be ascertained during the course of
investigation. In our opinion, the decision ofLalita Kumari (supra) is of
no help to the petitioner for seeking direction for an investigation from a
Court on the basis of docu[llents which are irrelevant, an<I per se not
G . cognizable in law as piece of evidence and inadmissible in evidence-and
thus· a· roving in~uiry cannot be ordered on such legally unsustainable
material. . . .
26. In the case of State ofHary11na and Others versus Bhajan
Lal and others, 1992 Supp (I) SCC 335, this Co,urt has laid down principles·
H
COMMON CAUSE (A REGISTERED SOCIETY) AND OTHERS 1027
v. UNION OF INDIA AND OTHERS

in regard to quashing the F.I.R. The Court can quash FIR also if situation A
warrant even before investigation takes place.in certain circumstances.
This Court has laid down thus:
"102. x·x xx x
( 1) Where the allegations made.in the first information report of
the complaint, even if they are taken at .their face value and B
accepted in their entirety do not prima fac{e constitute any offence
or make out a case against the accused ..
(2) Where the allegations in the first information report and other .
materials, if any, accompanying the FIR do not disclose a
cognizable offence, justifying an investigation by police officers c
under Section 156(1) of the Code except under an order of a
Magistrate within the purview of Section 155(2)°ofthe Code.
(3) Where the uncontroverted allegations.made in the FIR or
. complaint and the evidence collected in support of the same do
not disclose the commission ofany offence and make out a case~ D
: against the accused.
(4) Where tl)e allegations inthe FIR do not constitute a cognizable
offence but constitute only a non-cognizable offence, no
investigation is permitted by a police officer without an order of
a Magistrate as contemplated under Section 155(2) of the Code. E
(5) Where the allegations made in the FIR or complaint are so
absurd and inherently improbable on the basis ofwhich no prudent
person can ever reach a just conclusion that there is sufficient
ground for proc~eding against the accused.
F
(6) Where thet~ is an express legal bar engrafted in any of the
provisions of the Code or the concerned Act (under which a
criminal proceeding is instituted) to the institution and continuance·
of the proceedings and/or where there is a specific provision in
the Code or the concerned Act, providing efficacious redress
for the grievance of the aggrieved party. G
(7) Where a criminal proceeding is manifestly attended with mala
fide and/or where the proceeding is maliciously instituted with
an ulterior motive for wreaking vengeance on the accused and
with a view to spite him due to private and personal grudge.
'
- J

1028 SUPREME COURT REPORTS (2017} 1 S.C.R.

A 27. Considering the aforBsaid principles· which have been laid
dowt1, we. are of the opinion that the materials ·in questiofi ·arenot good
enough tci constitute offences to <;lirect the registration of F.I.R. and
investigati;n therein. The materials. should qualify the test as per the
aforesaid decision. The complaint should not be improbable and must
show sufficient ground and commission of pffence on the basis of which
B
registration of a case can be ordered. The materials in question are not
only irrelevant but are also legally inadmissible under.Section 34 of the
Evidence Act, more so with respect to third parties and considering the
explanation which have been made by the Birla Group and.Sahara Group,
we l!re of the opinion that it would not be legally justified, safe, just and
c proper to direct investigation, keeping in view principles laid down in the
cases ofBhajan Lal and V.C. Shukla (supra).
-
28. In view of the materials which have been placed on record
and the peculiar facts and circumstances proj~ted in the case, we find
that no case is made out. to. dfrect the investigation as
. prayed for.
D 29. Thus, we find no merit in Interlocutory Application No. 3
supported by I.A. No. 4. The applications deserve dismissal and are
hereby dismissed. ·

· Nidhi Jain Applications dismissed.
E

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