M/S. LIPTON INDIA LTD. AND ANR.versusSTATE OF KARNATAKA AND ORS.

                   M/S. LIPTON INDIA LTD. AND ANR.                              A
                                  v.
                   STATE OF KARNATAKA AND ORS.

                            OCTOBER 8, 1996

                   [S.P. BHARUCHA AND S.C. SEN, JJ.]                            B

      Affidavit:

       Affidavit filed on behalf of State Government in a case pending before
High Court-High Court acted upon the said affidavit and decided the case C
accordingly-Statement made in the affidavit subsequently found to be incor-
rect-Another affidavit filed by the Chief Secretary of the State,· in response
to this Court's directions indicated that the authority concerned did not realise
the seriousness of swearing a false statement on oath and filing the said
affidavit before the High Court-Held, the High Court should be very vigilant
in accepting as correct a statement, even though it be made on oath, on behalf D
of the State Government-High Court's judgment set aside and the matter
remanded to High Court to be heard and decided afresh.

      CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 5425-29
of 1994.
                                                                                E
     From the Judgment and Order dated 13.6.94 of the Karnataka High
Court W.P. Nos. 274-78 of 1994.

     H.N. Salve, S. Ganesh, Ravinder Narain, Rajan Narain, Ms. Sonu
Bhatnagar and Sajan Narain for the J.B.D. & Co. for the Appellants.             p
     T.L. Vishwantha Iyer, K.H. Nobin Singh and M. Veerappa for the
Respondent.

      The following Order of the Court was delivered :
                                                                                G
     The judgment and order of a Division Bench of the High Court at
Karnataka in writ appeals is challenged, with special leave, by the assessee.

      During the course of the argument on 13th August, .1996, we found
that the Division Bench had proceeded upon the basis that Government
Order No. CI 138 SPC 90 (P) dated 27th September, 1990, had not been H
                                  299
    300                   SUPREME COURT REPORTS [1996) SUPP. 7 S.C.R.

A published in the State Government Gazette. The reason for doing so was
    · the stand of the State Government. In a rejoinder filed on behalf of the
      State Government.in the writ appeals, the following had been stated :

             "It is submitted that the Government Order dated 27.9.1990 (vide
             Annexure A) was not issued in exercise of its powers under Section
B            SA of the KST Act, 1957. It was neither published in the Official
             Gazette nor was laid before the Statement Legislature as con-
             templated under Sec~ion 89 of the Act."

                                                          (Emphasis supplied.)

C The averments in the rejoinder were verified on affidavit, as true to his
  knowledge, by R. Krishna Murthy, Deputy Commissioner of Commercial
  Taxes (Assessments VI). It was found during the course of the argument
  that the said Government Order had, in fact, been published in the State
  Government Gazette dated 7th March, 1991. We, therefore, passed the
D following order :
                  "It, therefore, becomes clear that the statement made in the_
             rejoinder verified on oath as aforementioned that the said Govern-
             ment Order was not published in the Official Gazette is false. It
             is, therefore, necessary to ascertain whether the other statement
E            in the rejoinder, namely, that the Government Order was not
             before the Legislature as contemplated under Section 39 of the
             Karnataka Sales Tax Act, is also incorrect. An enquiry must be
             made and an affidavit setting out the true position must be filed.

                It also becomes necessary to find out how a Deputy Commis-
F            sioner of Commercial Taxes could verify on oath as true to his own
             knowledge that a Government Order relating to his own depart-
             ment was not gazetted, when it was. It was either done out of gross
             negligence or deliberately to mislead the Court.

                 Having regard to the seriousness of what is involved, we direct
G
             that an affidavit in regard both to the compliance with Section 39
             and in regard to the Deputy Commissioner's affidavit be put on
             affidavit to be made by the Chief Secretary of the State of Kar-
             nataka. This shall be done within 3 weeks from today.

H               One week, thereafter, is given to the appellants to file an
                       LIPTON INDIA LTD. v. STAIB                         301

         affidavit in reply thereto. The matter is adjourned for 4 weeks. This   A
         shall be treated as part-heard.

           The State Government Gazette dated 7.3.91 is marked as
         Exhibit 'A' and shall be treated as a part of the record."

      In response to that order, Cecil Noronha, Chief Secretary of the State     B
of Karnataka, has made an affidavit on 31st August, 1996. With respect to
the stand taken in the rejoinder about the publication of the said Govern-
ment Order in the State Government Gazette, the Chief Secretary states
that he found "from the enquiries made that Shri R. Krishna Murthy had
bona fide believed that no publication had been effected .. The said Govern-
ment Order was prepared and issued by the Commerce and Industries
                                                                                 c
Department of the State Government. The Office and Department of
Commercial Taxes to which Shri Krishna Murthy belongs had nothing to
do with the preparation of the Government Order in question. Shri R.
Krishna Murthy had himself personally looked through the back numbers
of the Karnataka Gazette for a period of 3 months after 27.9.90 having           D
regard to the normal practice of State Government's Notification under S.
SA of the KST Act being generally published within a week or two of their
date of issue. The statement made to the effect that there was no publica-
tion of the Government Order in question in Official Gazette could have
been circumscribed in respect of the period for which he made a thorough         E
search, namely three months, instead of making it an absolute statement.
However, in the circumstances of the .case, what Shri R. Krishna Murthy had
stated may not be constrned as gross negligence on his part". The Chief
Secretary goes on to state, "The conduct of Sri R Krishna Murthy in making
the statement which he did not know to be false at the time of its being
made, leads me to conclude that there had been no wilful intention to            F
mislead the Hon'ble High Court of Karnataka". Again, "In view of the
above, I respectfully submit that I am of the opinion that there was no gross
negligence or any deliberate intention to mislead the Hon'ble High Court on
the part of Sri R. Krishna Murthy".
                                                                                 G
                                                       (Emphasis supplied.)

       The said officer has also made an affidavit, in which he apologizes
and seeks pardon for his bona fide and unintended mistake. It was, he
states, his genuine impression that if the said Government Order had been
published in the State Government Gazette, it would have been published H
    302                   SUPREME COURT REPORTS (1996] SUPP. 7 S.C.R.

A within a reasonable time from its date and, on this basis, he carefully
    checked and examined all the Gazettes which were issued during the
    subsequent three month period and found that it had not been published.
    He, therefore, believed that it had not been published, "having made all
    sincere and diligent efforts ......".

B         The Government Order states that it issued from the Commerce and
    Industries Secretariat. A copy of the letter sending it for publication to the
    State Government Gazette was marked to the Commissioner for Commer-
    cial Taxes. The rejoinder makes the categoric statement that the said
    Government Order was not published only upon the basis that is was not
C   published in the State Government Gazettes of the following three months.
    No reference was made by the said officer to the Commerce and Industries
    Secretariat or the relevant files of his own department.

          The rejoinder filed by the said officer in the High Court categorically
    stated that the said Government Order was not published in the State
D   Government Gazette. The statement was made by the said officer as true
    to his knowledge. The statement was made on oath on behalf of the State
    Government. The statement was made in a pending proceeding before the
    High Court at Karnataka. The statement was made with the intention that
    the High Court should act upon it. The High Court did act upon the
E   statement. The statement now turns out to have been incorrect.

          The administration of the State of Karnataka represented by its Chief
    Secretary, does not find the said officer guilty of gross negligence. The
    Chief Secretary does not find it unpardonable that the statement was made
    on oath on behalf of the State Government in a pending proceeding before
F the High Court. We cannot agree. Whether the Chief Secretary thinks it
    necessary to take action against the said officer or not is not our concern.
  · Our concern is that the State Government made a statement on oath before
    the High Court that was incorrect and the judgment of the High Court
    accepts and proceeds upon the basis of that statement. The High Court's
G judgment must, thereforr be set aside and the matter remanded to the
    High Court to be heard and decided afresh.

        We must caution the High Court at Karnataka, having regard to what
  we have stated above, that it should be very vigilant in accepting as correct
  a statement, even though it be made on oath, on behalf of the State
H Government. It is unfortunate that we should have to say this of a State
                      LIPTONINDIALID. v. STAIB                          303

Government, but the record before us leaves us no option.                      A
      Learned counsel for the State Government now submits that we
should not make this general observation ill- respect of affidavits filed on
behalf of the State Government. As we have already stated, we have done
so because the Chief Secretary of the State of Karnataka does not seem
particularly troubled by the facts that a statement was made on oath on        B
behalf of the State Government before the High Court which was not
correct. He does not even think that the said officer was grossly negligent
in making the statement that the said Government Order was not gazetted
only on the basis of going through the Gazettes for the succeeding three
months. We must assume the other officers of the State Government will         C
be encouraged to make statements before the courts on oath upon as little
or no enquiry, expecting from the Chief Secretary the same unconcern.
                                                     I
       The appeals are allowed. The judgment and order under appeal is
set aside. The writ appeals (being Writ Appeal Nos. 274-278 of 1994) are
restored to the file of the High Court at Karnataka to be heard and decided    D
afresh, having regard to what .is stated in this judgment and order. The
Division Bench hearing the appeals will not be influenced by the judgment
and order under appeal before us. The appeals shall be heard and disposed
of with expedition and, as far as possible, within a period of four months
from today. Pending the disposal of the appeals, the order passed by this      E
Court on 30th August, 1994, shall continue to operate.

      The State of Karnataka shall pay to the appellants the costs of these
appeals and thrown away, quantified in the sum of Rs. 50,000 (Rupees fifty
thousand).

R.P.
                                                                               F
                                                          Appeals allowed.