MANOHAR LAL SHARMAversusCENTRAL BUREAU OF INVESTIGATION & ORS.

                           [2017] 10 S.C.R. 562


A                      MANOHAR LAL SHARMA
                                     v.
           CENTRAL BUREAU OF INVESTIGATION & ORS.
                     (Wnt Petition (Crl.) No.65 of20 I6)
B
                            OCTOBER09,2017
     [ADARSH KUMAR GOEL AND UDAY UMESH LALIT, JJ.].
           Panama Paper Leaks Case- Tax evasion by some individuals/
    entities by way of offshore bank accounts/business - Petitioner
C   sought direction to the CBI to conduct an investigation/inquiry
    against the Indian offshore bank account holders, revealed in
    "Panama Papers" and further to register FIR and conduct
    investigation against Securities and Exchange Board ofIndia (SEBI)
    Chairman, his associate directors, share brokers and companies -
D   Averments made in the Petition that "Panama Paper Leaks" report
    (information relating to tax evasion by some individuals/entities
    posted on a website) were not acted upon by the concerned
    authorities, particularly SEEi resulting in seriousfinancial loss to
    the general public and protection ofblack money hoarders - Held:
E   In instant case, the Special Investigation Team(SIT) has already been
    constituted under the orders of the Supreme Court - The terms of
    reference of the SIT covers the subject matter ofthis petition which
    is also clear from the notification issued by the Ministry ofFinance
    - Further, the Government of India, Department of Revenue vide
    office memorandum has constituted Multi Agency Group(MAG) to
F   go into issues arising out of "Panama Papers" - Reports of MAG
    to be submitted to the SIT and MAG to carry out any direction which
    SIT or Supreme Court may give in tlie other pending writpetition
    being WP(C) No.176 of 2009 - Writ petition disposed of -
    Prevention of Money Laundering Act, 2002 (PMLA, 2002) -
G    Unlawful Activities (Prevention) Act, 1967 (UAPA, 1967)-s.51A-
    SEBI (Foreign Portfolio Investors) Regulations, 2014 (FPI
    Regulations)
          Public Interest Litigation - Scope of- Held: Public Interest
    Litigation is a mechanism by which Court can initiate action for
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                                     562
     MANOHARLALSHARMA v. CENTRALBUREAUOF                                      563
              INVESTIGATION & ORS.

 protection of rights of public on account of inaction of any public .A
 authority or to oversee any abuse of power by the public
 authority-At the same time, the PJL weapon is to be used with great.
 caution keeping in mind the fact that governance is the basicfanction
 of the Executive - Unless there is a clear abuse ofpower or.failure
 of governance, the Court may not interfere.                           B
       CRIMINAL ORIGINAL JURISDICTION : Writ Petition
 (Criminal)No.65 OF2016
       Under Article 32 of the Constitution oflndia.
                                  WITH·                                       c
        S.L.P. (Civil) No.13908of2016.
        Atul Babasaheb Dakh, Adv. for the Petitioner.
        Petitioner-in-person.
       ChanderUday Singh, P. S. Narasimha, Ms.A.shaR. S., Mrs.Anil D
 Katiyar, K. Parameshwar, Rishi Gaulam, Bhargava V. Desai,Akshat
 Malpani, Ms. Meenakshi G., Rajat Nair, Ritin Rai, Mukesh Kumar
 Maroria, H. S. Parihar, Ad vs. for the Respondents.
       The following Order of the Court was delivered:
                                                                              E
                                ORDER~·

 WRIT PETITION (CRL.) NO. 65 OF 2016
         1. This petition seeks a direction to the CBI to conduct an
  investigation/inquiry against the Indian offshore bank account holders,
. revealed in "Panama Papers", and to file their report before this Hon'ble   F
  Court. Direction has also been sought to register FIR and conduct
  investigation against the Securities and Exchange Board of India (SEBI)
  Chairman, his associate directors, share brokers and companies .
       . 2. Averments in the petition are that "Panama Paper Leaks" report G
 (which refers to information relating to tax evasion by some individuals/
 entities by way of offshore bank accounts/business to evade tax.
 International .Consortium oflnvestigation Journalists (ICU) posted the
 documents on its website.) have not been acted upon by the concerned
 authorities, particularly the SEBI resulting in serious financial loss to the
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564           SUPREME COURT REPORTS                         [2017] 10 S.C.R.


A general public and protection ofblackmoney hoarders. Reference has
  been made to certain individuals who are said to be having offshore
  undisclosed bank accounts and who have manipulated the capital market.
  It is alle_ged that the SEBI has failed to perform its functions as capital
  market regulatory. The black money kept in foreign accounts can be
B used to facilitate terrorism, money laundering, tax evasion, corruption,
  crimes etc. Funds of the offshore accounts are circulated in Indian stock
  market via participatory notes. The Special Investigation Team(SIT) on
  black money constituted by this Court vide order dated 4tl• July, 2011 in
  Writ Petition (Civil) No.176 of2009 has revealed various transactions.
C The report shows failure of the SEBI in doing its statutory duty. The
  petition refers to newspaper reports as the main source of infonnation.
           3. Counter affidavit has been filed by the Ministry ofFinance and
  Economic Affairs stating that the Government has constituted a Multi
  Agency Group (MAG) consisting of officers of the Central Board of
D Direct Taxes (CBDT), Reserve Bank of India (RBI), Enforcement
  Directorate (ED), and Financial Intelligence Unit (FIU). Member
  (Investigation) CBDT is the convener of the MAG. MAG is to ensure
  speedy and coordinated investigation in the cases of persons whose
  names have appeared in "Panama Paper Leaks". The MAG is monitoring
E the progress ofvarious investigating agencies. Till the filing ofthe affidavit
  dated 27th September, 20 I 6, six reports had been submitted to the MAG
  The SIT on black money constituted by this Court was rebrularly updated
  on such issues. Holding of offshore bank accounts is regulated by
  Notification dated 21 ' 1 January, 2016, Indian residents can open offshore
  accounts only with the general or special permission ofthe RBI. Further
F reference has been made to policies and orders issued in this regard.
  Investigation ofIndian foreign assets/bank accounts has been conducted
  and is st~! being conducted.
         4. Additional affidavit was filed by the Department ofEconomic
   Affairs on 6th April, 2017 on the question whether a separate SlT was
 G required, apart from SIT already constituted under the orders of this
   Court. It was submitted that investigation was being conducted with all
   seriousness and at the fastest possible pace. Foreign assets are hidden
   beneath multiple layers of shell companies/trusts. The Department has

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     MANOHARLALSHARMA v. CENTRALBUREAUOF                                  565
              INVESTIGATION & ORS.

 received infonnation under tax treaties and Mutual Legal Assistance A
 Treaty (MLAT). The Income Tax Department has taken necessary
 proceedings in the matter. Investigation is being made about the names
 of persons disclosed in "Panama Paper Leaks".
         5. An affidavit has also been filed by the SEBI stating that the
 SEBI has put in place the necessary guidelines under the Prevention of B
 Money Laundering Act, 2002 (PMLA, 2002 ). SEBI has also isstted
 Circular dated 23rd October, 2009 to give effect to Section 51 A of the
 Unlawful Activities (Prevention) Act, 1967 (UAPA, 1967). All entities
 operating in Securities Market are governed by the fratilework put in
 place by SEBI. Special reference has been made to SEBI (Foreign C
 Portfolio Investors) Regulations, 2014 (FPI Regulations). The RBI has
 also issued directions to checkAnti Money Laundering (AML)/Combating
 Financial Terrorism(CFT).
       6. The Committee on Rationalization oflnvestment Routes and
 Monitoring ofForeign Portfolio Investments recommended categorization D
 ofFPls on the basis ofrisk profiling in compliance to the FATF (Financial
 Action Task Force) recommendations, as per which the FPls are
 categorized in Category (I), Category (ll) and Category (lll).
        7. We have heard the petitioner in-person, learned Additional
  Solicitor Geneqtl Shri P.S. Narasimha, learned senior counsel for the E
· SEBI Shri Ch~der Uday Singh and perused the record.
        8. Public Interest Litigation is a mechanism by which this Court
 can initiate action for protection ofrights ofpublic on account of inaction
 ofanypublic authority or to oversee any abuse of power by the public F
 authority. At the same time, the,PIL weapon is to be used with great
 caution keeping in mind the fact that governance is the basic function of
 the Executive. Unless there is a clear abuse of power or failure of
 governance, the Court may not interfere.
        9. In the present case, SIT has already been constituted under G
 the orders of this Court which comprises of two former judges of this
 Court. The terms of reference of the SIT covers the subject matter of
 this petition also which is clear from the notification dated 29'h May,
 2014 issued by the Ministry of Finance which inter alia is as follows:
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566    SUPREME COURT REPORTS                         ·~ [2017] 10 S.C.R.



A     "2. The terms ofreferences of the Special Investigation Team
      will be as per order dated 04.07.2011 ofHon'ble Suprepie Court
                                                           1
      and includes as under:-
       (i) The Speci?l lnvestigation Team shall function under the
       guidance and direction ofChairman and Vice Chairman.
B
       (ii) The said Special Investigation Team shall be charged with
       the responsibilities and duties of investigation, initiation of
       proceedings, and prosecution, whether in tli.e context of
       appropriate criminal or civil proceedings of:-     "
                                                                 -,
c         a) all issues relating to the matters concerning and arising
          from unaccounted monies of Hassan Ali Khan and the
          Tapurias;
          b) all other investigations already commenced and are
          pending, or awaiting to be initiated, with respect to any other
D         known instances of the stashing of unaccounted monies in
          foreign bank accounts by Indians or other entities operating
          in India; and
          c) all other matters with respect to unaccounted monies being
          stashed in foreign banks by Indians or other entities operating
E         in India that may arise in the course of such investigations
          and proceedings.
        (iii) It is also the responsibility of SIT to ensure that the matters
        are also investigated, proceedings initiated and prosecutions
        conducted with regard to criminality and/or unlawfulness of
F       activities that may have been the source for such monies, as
        well as the criminal and/or unlawful means that are used to
        take such unaccounted monies out ofand/or bring such monies
        back into the country, and use ofsuch monies in India or abroad.
        (iv) The Special Investigation Team shall also be charged with
G
        the responsibility of preparing a comprehensive action plan,
        including the creation of necessary institutional structures that
        can enable and strengthen the country's battle against generation


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    MANOHARLALSHARMA v. CENTRALBUREAUOF                                         567
             INVESTIGATION & ORS.

         of unaccounted monies, and their stashing away in foreign              A
         banks or in various forms domestically.
       3. The said Special ,Investigation Team should be responsible to
       the Hon'ble Supreme Court and that it shall be charged with the
       duty to keep Supreme Court informed ofall major developments
       by filing of periodic status reports and following of any special B
       orders that Supreme Court may issue from time to time; .
       4. All organs; agencies, departments and agents of the State,
       whether at the level ofthe Union·oflndia, or the State Gove1111hent,
       including but not !imited to all statutorily formed individual bodies,
       and other constitutional bodies, extend all the cooperation              C
       necessary for the functioning of Special investigation Team.
       5. The Union of India and where needed the State Governments
       will facilitate the conduct of the investigations, in their fullest
       measure, by the Special Investigation Team and functioning, by D
       extending all the necessary financial, material, legal, diplomatic
       and intelligence' resources, whether such investigations orportions
       ofsuch investigations occur inside the country or abroad.
       6. The Special Investigation Team also empowered to further
       investigate even "".here charge-sheets have been previously filed;       E
       and that the Special Investigation Team may register further cases,
       and conduct appropriate investigations and initiate proceedings,
       for the purpose ofbringing back unaccounted monies unlawfully
       kept in bank accounts abroad."
        10. The Government ofIndia, Department ofRevenue vide Office F
Memorandum dated 4•h April, 2016, has constituted MultlAgency Group
to go into the issues arising out of"Panama Papers". The reports of
MAG are being submitted for consideration by the SIT constituted by
this Court. We record the submission made on behalf oflearned counsel
for the respondents that further reports ofthe MAG will also be submitted G
to the SIT and MAG will carry out any direction which SIT may give or
this Court may give in pending writ petition being Writ Petition (Civil)
No.176of2009.


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568             SUPREME COURT REPORTS                          [2017] I0 S.C.R.


A           In view of the above, we do not consider it necessary to give any
      further direction as the concern ex pressed in the writ petition stands
      addressed.
            The petition is accordingly disposed of
      SPECIAL LEAVE PETITION (CIVIL) N0.13908 OF2016
B
              In view of the order passed in the above writ petition, this petition
      is also disposed of


 C    Ankit Gyan                                               Petitions disposed of