Supreme Court of India
RAM JETHMALANI AND ORS.versusUNION OF INDLA AND ORS.
- Citation
- 2011 INSC 434
- Decided
- 4 July 2011
- Disposal
- Hearing Adjourned
Holding
The Court ordered the conversion of the High Level Committee into a Special Investigation Team headed by retired Supreme Court judges and directed disclosure of the German‑sourced documents, holding that the DTAA does not prohibit such disclosure in public court proceedings.
Summary
The Supreme Court entertained a writ petition filed by former Union Law Minister Ram Jethmalani and others alleging that large sums of unaccounted money were being held by Indian individuals and entities in foreign banks, notably involving Hassan Ali Khan and the Tapurias, and that the Union of India had been sluggish in investigating these matters. The petitioners sought the conversion of a High Level Committee into a Special Investigation Team (SIT) and disclosure of documents and names of account holders obtained from Germany under the India‑Germany Double Taxation Avoidance Agreement (DTAA). The Court found the Union’s explanations for the delay unsatisfactory, noted the serious constitutional implications of a "soft" state, and held that the DTAA does not bar disclosure of such information in public court proceedings. It ordered the High Level Committee to be reconstituted as a SIT headed by two retired Supreme Court judges and directed the Union to disclose the German‑sourced documents, subject to privacy safeguards. The judgment balanced the right to privacy under Article 21 against the petitioners’ right to seek redress under Article 32, emphasizing the State’s duty to assist the Court in upholding fundamental rights.
Issues considered
- The adequacy of the Union of India's investigation into alleged unaccounted monies and whether a Special Investigation Team should be constituted.
- Whether the Union of India can refuse disclosure of documents and names of bank account holders on the ground of the India‑Germany DTAA and privacy concerns.
- The interpretation of Article 26 of the DTAA regarding disclosure in public court proceedings.
- The balance between the right to privacy (Article 21) and the right to petition the Supreme Court under Article 32.
- The applicability of constitutional principles, including the basic structure doctrine, to treaty interpretation.
Legislation cited
- Constitution of Indias. Article 14, s. Article 19, s. Article 21, s. Article 32
- India‑Germany Double Taxation Avoidance Agreements. Article 26(1), s. Article 26(2)
- Vienna Convention on the Law of Treaties, 1969s. Article 31
Subjects
unaccounted moneyblack moneyforeign bank accountsdouble taxation agreementright to privacyArticle 32Special Investigation Teamsoft statetax evasionconstitutional lawadministrative law
Judgment
• [2011) 8 S.C.R. 725
RAM JETHMALANI AND ORS. A
v.
UNION OF INDlA AND ORS.
(Writ Petition (Civil) No. 176 of 2009.)
JULY 04, 2011
B
[B. SUDERSHAN REDDY AND SURINDER SINGH
NIJJAR, JJ.]
Administrative law:
c
Writ petition filed by former Union law minister -
Allegation regarding transfers and accumulation of
unaccounted monies by many individuals and other legal
entities in foreign banks - Petition specifically named Hassan
Ali and Tapurias as party to such illegal activities - Supreme D
Court expressed its concern not merely to the quantum of
monies said to have been secreted away in foreign banks, but
also the manner in which they may have been taken away from
the country and also expressed worries also with regard to the
nature of activities that such monies may engender, both in E
terms of the concentration of economic power, and also the
fact that such monies may be transferred to groups and
individuals who may use them for unlawful activities that are
extremely dangerous to the nation - Union of India did not
give satisfactory explanation for slowness of the pace of F
investigation - It was only upon the insistence and
intervention of Supreme Court that the Enforcement
Directorate initiated and secured custodial interrogation over
Hassan Ali Khan - Union of India explicitly acknowledged that
there was much desired with the manner in which the
investigation had proceeded prior to the intervention of the G
Court - Union of India, on account of its more recent efforts
to conduct the investigation with seriousness led to the
securing of additional information, and leads, which could aid
in further investigation - During the continuing interrogation
725 H
726 SUPREME COURT REPORTS [2011] 8 S.C.R. •
A of Hassan Ali Khan and the Tapurias, undertaken at the
behest of the Supreme Court, many names of important
persons, including leaders of some corporate giants,
politically powerful people, and international arms dealers
cropped up - Supreme Court proposed to the Union of India
B that the High Level Committee constituted by it be converted
into a Special Investigation Team, headed by two retired
judges of the Supreme Court of India - Union of India to issue
appropriate notification and publish the same forthwith.
Concept of a "soft state" - Held: Is a broad based
C assessment of the degree to which the State, and its
machinery, is equipped to deal with its responsibilities of
governance - The more soft the State is, greater the
likelihood that there is an unholy nexus between the law
maker, the law keeper, and the law breaker - The issue of
D unaccounted monies held by nationals, and other legal
entities, in foreign banks, is of primordial importance to the
welfare of the citizens - The quantum of such monies may
be rough indicators of the weakness of the State, in terms of
both crime prevention, and also of tax collection - Depending
E on the volume of such monies, and the number of incidents
through which such monies are generated and secreted away,
it may very well reveal the degree of "softness of the State."
Public function - Responsibilities of State - Discussed.
F
Fragmentation of administration - Effect of - Discussed.
Double Taxation Avoidance Agreement:
Writ petition - Allegation regarding transfers of monies,
G and accumulation of monies, which are unaccounted for by
many individuals and other legal entities in the country, in
foreign banks - Disclosure sought by the petitioners of certain
documents relied upon by the Government - Supreme Court
strongly disapproved the stand taken by the Government that
H the names of the tax evaders was a "secret" and could not be
• RAM JETHMALANI AND ORS. v. UNION OF INDIA
AND ORS.
727
revealed under the lndo German Double Taxation Avoidance A
Agreement - The said agreement, by itself, did not proscribe
the disclosure of the relevant documents and details of the
same, including the names of various bank account holders
in Liechtenstein - The agreement between Germany and
India is with regard to various issues that crop up with respect B
to German and Indian citizens' liability to pay taxes to
Germany and/or India - It does not even remotely touch upon
information regarding Indian citizens' bank accounts in
Liechtenstein that Germany secures and shares that have no
bearing upon the matters that are covered by the double c
taxation agreement between the two countries - In fact, the
"information" that is referred to in Article 26 is that which is
"necessary for carrying out the purposes of the lndo-German
DTAA - Instead the agreement specifically provides that the
information may be disclosed in public court proceedings,
0
which the instant proceedings are - The proceedings in the
instant matter relate both to the issue of tax collection with
respect to unaccounted monies deposited into foreign bank
accounts, as well as with issues relating to the manner in
which such monies were generated, which may include
activities that are criminal in nature also - Therefore, the E
information sought does not faff within the ambit of this
provision - It is disingenuous for the Union of India, under
these circumstances, to repeatedly claim that it is unable to
reveal the documents and names as sought by the petitioners
on the ground that the same is proscribed by the said F
agreement.
Vienna Convention of the Law of Treaties, 1969:
Article 31 - Interpretation of treaties - General Rule of
Interpretation - Held: It provides that a treaty shall be G
interpreted in good faith in accordance with the ordinary
meaning to be given to the terms of the treaty in their context
and in the light of its object and purpose - While India is not
a party to the Vienna Convention, it contains many principles
of customary international law, and the principle of H
728 SUPREME COURT REPORTS [2011) 8 S.C.R. •
A interpretation, of Article 31 provides a broad guideline as to
what could be an appropriate manner of interpreting a treaty
in the Indian context also.
Constitution of India, 1950:
B Article 32 - Writ petition - In the writ proceeding,
petitioner seeking certain documents referenced by the Union
of India - Held: Constitution guarantees the right, pursuant
to Clause (1) of Article 32, to petition Supreme Court on the
ground that the rights guaranteed under Part Ill of the
C Constitution have been violated - This provision is a part of
the basic structure of the Constitution - Clause (2) of Article
32 empowers the Supreme Court to issue "directions or orders
or writs, including writs in the nature of habeas corpus,
mandamus, prohibition, quo warranto and certiorari, whichever
D may be appropriate for the enforcement of any of the rights
conferred by" Part Ill - This is also a part of the basic structure
of the Constitution - In order that the right guaranteed by
Clause (1) of Article 32 be meaningful, and particularly
because such petitions seek the protection of fundamental
E rights, it is imperative that in such proceedings the petitioners
are not denied the information necessary for them to properly
articulate the case and be heard, especially where such
information is in the possession of the State - To deny
access to such information, without citing any constitutional
F principle or enumerated grounds of constitutional prohibition,
would be to thwart the right granted by Clause (1) of Article
32 - Burden of asserting, and proving, by relevant evidence
a claim in judicial proceedings would ordinarily be placed
upon the proponent of such a claim, however, the burden of
G protection of fundamental rights is primarily the duty of the
State - Consequently, unless constitutional grounds exist, the
State may not act in a manner that hinders the Supreme
Court from rendering complete justice in such proceedings
- The State has the duty, generally, to reveal all the facts and
H information in its possession to the Court, and also provide
0
• RAM JETHMALANI AND ORS. v. UNION OF INDIA
AND ORS.
729
the same to the petitioners - This is so, because the A
petitioners would also then be enabled to bring to light facts
and the law that may be relevant for the Court in rendering
its decision - However, revelation of details of bank accounts
of individuals, without establishment of prima facie grounds
to accuse them of wrong doing, would be a violation of their B
rights to privacy - Details of bank accounts can be used by
those who want to harass, or otherwise cause damage, to
individuals - No conclusion can be drawn as to whether those
who have not been investigated, or only partially investigated
and proceedings not initiated have committed any wrong c
doing - There is no presumption that every account holder
in banks of Liechtenstein has acted unlawfully - In these
circumstances, it would be inappropriate to order disclosure
of such names, even in the context of proceedings under
Clause (1) of Article 32.
D
Article 21 - Right to privacy is an integral part of right to
life - The rights of citizens, to effectively seek the protection
of fundamental rights, under Clause (1) of Article 32 have to
be balanced against the rights of citizens and persons under
Article 21 - The notion of fundamental rights, such as a right E
to privacy as part of right to life, is not merely that the State is
enjoined from derogating from them - It also includes the
responsibility of the State to uphold them against the actions
of others in the society, even in the context of exercise of
fundamental rights by those others - The revelation of details F
of bank accounts of individuals, without establishment of
prima facie grounds to accuse them of wrong doing, would be
a violation of their rights to privacy - Details of bank accounts
can be used by those who want to harass, or otherwise cause
damage, to individuals - No conclusion can be drawn as to G
whether those who have not been investigated, or only partially
investigated and proceedings not initiated have committed
any wrong doing.
Treaties: Governments entering into treaties - Held: H
730 SUPREME COURT REPORTS [2011] 8 S.C.R.
A Such act of governments can only be lawful when exercised
within the four corners of constitutional permissibility - No
treaty can be entered into, or interpreted, such that
constitutional fealty is derogated from.
B Vineet Narain v Union of India (1996) 2 SCC 199:
1996(1) SeR 1053; NHRC v. State of Gujarat (2004) 8 sec
610; Sanjiv Kumar v State of Haryana (2005) 5 SCC 517;
Centre for PIL v Union of India (2011) 1 SCC 560; Union of
India v. Azadi Bachao Ando/an (2004) 10 SCC 1 - referred
C to.
Case Law Reference:
1996(1) SCR 1053 referred to Para 48
(2004) 8 sec 610 referred to Para 48
D
(2005) 5 sec 517 referred to Para 48
(2004) 10 sec 1 referred to Para 48
CIVIL ORIGINAL JURISDICTION : Writ Petition (Civil) No.
E 176 of 2009 etc.
With
SLP (C) No. 11032 of 2009.
W.P. (C) Nos. 37 of 2010 & 136 of 2011.
F
Gopal Subramanium, S.G., H.P. Raval, P.P. Malhotra,
ASG. Anil Divan, Rajinder Sachchar, Krishnan Venugopal,
Mukul Rohtagi, Rajiv Mohiti, l.P. Bagadia, J.S. Attri, Lata,
Krishnamurthi, R.N. Karanjawala, Manik Karanjawala, Sandeep
G Kapur, Ranvir Singh, Ravi Sharma, Pranav Diesh, Karan Kalia,
Arjun Mahajan (for Karanjawala & Co.), Gaurav Jain, Abha
Jain, Anuradha Mutatkar, Anagha S. Desai, Shyamohan,
Meenakshi Arora, Devansh Mohta, T.A. Khan, Arijit Prasad,
Kunal Bahri, B.V. Balaram Das, B. Krishna Prasad, Rajiv
H Nanda, Pratap Venugopal, Surekha Raman, Dileep Poolakkit,
RAM JETHMALANI AND ORS. v. UNION OF INDIA 731
AND ORS.
Namrta Sood, Anuj Sarma (for K.J. John & Co.) Kuldeep S. A
Parihar, H.S. Parihar, Sanjay Kharde, Asha Gopalan Nair,
Sadhana Sandhu, Anil Katiyar, Samir Ali Khan, Santosh Paul,
B.V. Reddy, Arvind Gupta, Arti Singh, Mohita Bagati, Ashok
Kumar Gupta-I for the appearing parties.
B
The following Order of the Court was delivered
ORDER
!
1. "Follow the money" was the short and simple advice
c
given by the secret informant, within the American Government,
to Bob Woodward, the journalist from Washington Post, in aid
- of his investigations of the Watergate Hotel break in. Money
has often been claimed, by economists, to only be a veil that
covers the real value and the economy. As a medium of 0
exchange, money is vital for the smooth functioning of exchange
in the market place. However, increasing monetization of most
social transactions has been viewed as potentially problematic
for the social order, in as much as it signifies a move to
evaluating value, and ethical desirability, of most areas of E
social interaction only in terms of price obtained in the market
place.
2. Price based notions of value and values, as
propounded by some extreme neo-liberal doctrines, implies F
that the values that ought to be promoted, in societies, are the
a
ones for which people are willing to pay price for. Values,
and social actions, for which an effective demand is not
expressed in the market, are neglected, even if lip service is
paid to their essentiality. However, it cannot be denied that G
not everything that can be, and is transacted, in the market for
a price is necessarily good, and enhances social welfare.
Moreover, some activities, even if costly and without being
directly measurable in terms of exchange value, are to be
rightly viewed as essential. It is a well established proposition, H
732 SUPREME COURT REPORTS [2011] 8 S.C.R.
A of political economy, and of statecraft, that the State has a
necessary interest in determining, and influencing, the kinds of
transactions, and social actions, that occur within a legal order.
From prevention of certain kinds of harmful activities, that may
range from outright crimes, to regulating or controlling, and
B consequently mitigating, socially harmful modes of social and
economic production, to promotion of activities that are deemed
to be of higher priority, than other activities which may have a
lower priority, howsoever evaluated in terms of social utility,
are all the responsibilities of the State. Whether such activities
c by the State result in directly measurable benefits or not is
often not the most important factor in determining their
desirability; their absence, or their substantial evisceration,
are to be viewed as socially destructive.
3. The scrutiny, and control, of activities, whether in the
D economic, social or political contexts, by the State, in the public
interest as posited by modem constitutionalism, is substantially·
effectuated by the State "following the money." In modern ·
societies very little gets accomplished without transfer of
money. The incidence of crime, petty and grand, like any other
E social phenomena is often linked to transfers of monies, small
or large. Money, in that sense, can both power, and also
reward, crime. As noted by many scholars, with increasing
globalization, an ideological and social construct, in which
transactions across borders are accomplished with little or no
F control over the quantum, and mode of transfers of money in
exchange for various services and value rendered, both legal
and illegal, nation-states also have begun to confront complex
problems of cross-border· crimes of all kinds. Whether this
complex web of flows of funds, instantaneously, and in large
G sums is good or bad, from the perspective of lawful and desired
transactions is not at issue in the context of the matters before
this Court.
4. The worries of this Court that arise, in the context of the
matters placed before us, are with respect to transfers of
H
RAM JETHMALANI AND ORS. v. UNION OF INDIA 733
AND ORS.
monies, and accumulation of monies, which are unaccounted A
for by many_individuals and other legal entities in the country,
in foreign banks. The worries of this Court relate not merely to
the quantum of monies said to have been secreted away in
foreign banks, but also the manner in which they may have
been taken away from the country, and with the nature of B
activities that may have engendered the accumulation of such
monies. The worries of this Court are also with regard to the
nature of activities that such monies may engender, both in
terms of the concentration of economic power, and also the
fact that such monies may be transferred to groups and c
individuals who may use them for unlawful activities that are
extremely dangerous to the nation, including actions against
the State. The worries of this Court also relate to whether the
activities of eingendering such unaccounted monies, transferring
. them abroad, and the routing them back to India may not D
actually be creating a culture that extols the virtue of such
cycles, and the activities that engender such cycles are viewed
as desirable modes of individual and group action. The worries
of this court also relate to the manner, and the extent to which
· such cycles are damaging to both national and international E
attempts to combat the extent, nature and intensity of cross-
border criminal activity. Finally, the worries of this Court are
also with respect to the extent of incapacities, system wide, in
terms of institutional resources, skills, and knowledge, as well
as about incapacities of ethical nature, in keeping an account
of the monies generated by various facets of social action in F
the country, and thereby developing effective mechanisms of
control. These incapacities go to the very heart of constitutional
imperatives of governance. Whether such incapacities are on
account of not having devoted enough resources towards
building such capacities, or on account of a broader culture of G
venality in the wider spheres of social and political action, they
run afoul of constitutional imperatives.
5. Large amounts of unaccounted monies, stashed away
in banks located in jurisdictions that thrive on strong privacy H
734 SUPREME COURT REPORTS (2011] 8 S.C.R.
A laws protecting bearers of those accounts to avoid scrutiny,
raise each and every worry delineated above. First and
foremost, such large monies stashed abroad, and unaccounted
for by individuals and entities of a country, would suggest the
necessity of suspecting that they have been generated in
B activities that have been deemed to be unlawful. In addition,
such large amounts of unaccounted monies would also lead to
a natural suspicion that they have been transferred out of the
country in order to evade payment of taxes, thereby depleting
the capacity of the nation to undertake many tasks that are in
c public interest.
6. Many schools of thought exist with regard to the primary
functions of the State, and the normative expectations of what
the role of the State ought to be. The questions regarding
which of those schools provide the absolutely correct view
D cannot be the criteria to choose or reject any specific school
of thought as an aid in constitntional adjudication. Charged
with the responsibility of having to make decisions in the
present, within the constraints of epistemic frailties of human
knowledge, constitutional adjudicators willy-nilly are compelled
E to choose those that seem to provide a reasoned basis for
framing of questions relevant, both with respect to law, and to
facts. Institutional economics gives one such perspective which
may be a useful guide for us here. Viewed from a functional
perspective, the State, and governments, may be seen as
F coming into existence in order to solve, what institutional
economists have come to refer to as, the coordination problems
in providing public goods, and prevent the disutility that
emerges from the moral hazard of a short run utility maximizer,
who may desire the benefits of goods and services that are to
G be provided in common to the public, and yet have the interest
of not paying for their production.
7. Security of the nation, infrastructure of governance,
including those that relate to law making and law keeping
functions, crime prevention, detection and punishment,
H
RAM JETHMALANI AND ORS. v. UNION OF INDIA 735
AND ORS.
coordination of the economy, and ensuring minimal levels of A
material, and cultural goods for those who may not be in a
position to fend for themselves or who have been left by the
wayside by the operation of the economy and society, may all
be cited as some examples of the kinds of public goods that
the State is expected to provide for, or enable the provision B
of. In as much as the market is primarily expected to cater to
purely self centered activities of individuals and groups, markets
and the domain of purely private social action significantly fail
to provide such goods. Consequently, the State, and
government, emerges to rectify the coordination problem, and c
provide the public goods.
8. Unaccounted monies, especially large sums held by
nationals and entities with a legal presence in the nation, in
banks abroad, especially in tax havens or in jurisdictions with
-a known history of silence about sources of monies, clearly D
indicate a compromise of the ability of the State to manage its
affairs in consonance with what is required from a constitutional
perspective. This is so in two respects. The quantum of such
monies by itself, along with the numbers of individuals or other
legal-entities who hold such monies, may indicate in the first E
instance that a large volume of activities, in the social and the
economic spheres within the country are unlawful and causing
great social damage, both at the individual and the collective
levels. Secondly, large quanta of monies stashed abroad, would
also indicate a substantial weakness in the capacity of the F
State in collection of taxes on incomes generated by individuals
and other legal entities within the country. The generation of
such revenues is essential for the State to undertake the various
public goods and services that it is constitutionally mand~ted,
and normatively expected by its citizenry, to provide. A G
substantial degree of incapacity, in the above respect, would
be an indicia of the degree of failure of the State; and beyond
a particular point, the $tate may spin into a vicious cycle of
declining moral authority, thereby causing the incidence of
unlawful activities in which wealth is sought to be generated, H
736 SUPREME COURT REPORTS [2011] 8 S.C.R.
A as well as instances of tax evasion, to increase in volume and
in intensity.
9. Consequently, the issue of unaccounted monies held
by nationals, and other legal entities, in foreign banks, is of
primordial importance to the welfare of the citizens. The
9
quantum of such monies may be rough indicators of the
weakness of the State, in terms of both crime prevention, and
also of tax collection. Depending on the volume of such monies,
and the number of incidents through which such monies are 1
C generated and secreted away, it may very well reveal the
degree of "softness of the State."
10. The concept of a "soft state" was famously articulated
by the Nobel Laureate, Gunnar Myrdal. It is a broad based
assessment of the degree to which the State, and its
D machinery, is equipped to deal with its responsibilities of
goiternance. The more soft the State is, greater the likelihood
that there is an unholy nexus between the law maker, the law
keeper, and the law breaker.
E 11. When a catchall word like "crimes" is used •. it is
common for people, and the popular culture to assume that it
is "petty crime," or crimes of passion committed by individuals.
That would be a gross mischaracterization of the seriousness
of the issues involved. Far more dangerous are the crimes
that threaten national security, and national interest. For
F instance, with globalization, nation states are also confronted
by the dark worlds of international arms dealers, drug peddlers,
and various kinds of criminal networks, including networks of
terror. International criminal networks that extend support to
home-grown terror or extremist groups, or those that have been
G nurtured and sustained in hostile countries, depend on networks
of formal and informal, lawful and unlawful mechanisms of
transfer of monies across boundaries of nation-states. They
work in the interstices of the micro-structures of financial
transfers across the globe, and thrive in the lacunae, the gaps
H in law and of effort. The loosening of control over those
RAM JETHMALANI AND ORS. v. UNION OF INDIA 737
AND ORS.
mechanisms of transfers, guided by an extreme neo-liberal A
thirst to create a global market that is free of the friction of law
and its enforcement, by nation-states, may have also
contributed to an increase in the volume, extent and intensity
of activities by criminal and terror networks across the globe.
B
12. Increasingly, on account of "greed is good" culture
that has been promoted by neo-liberal ideologues, many
countries face the situation where the model of capitalism that
the State is compelled to institute, and the markets it spawns,
is predatory in nature. From mining mafias to political operators
who, all too willingly, bend policies of the State to suit particular C
individuals or groups in the social and economic sphere, the
raison d'etre for weakening the capacities and intent to enforce
the laws is the lure. of the lucre. Even as the State provides
violent· support to those who benefit from such predatory
capitalism, often violating the human rights of its citizens, D
particularly it's poor, the market begins to function like a
bureaucratic machine dominated by big business; and the
State begins to function like the market, where everything is
available for sale at a price.
E
13. The paradigm of governance that has emerged, over
the past three decades, prioritizes the market, and its natural
course, over any degree of control of it by the State. The role
for the State is visualized by votaries of the neo-liberal
paradigm as that of a night watchman; and moreover it is also F
expected to take its hands out of the till of the wealth generating
machinery. Based on the theories of Arthur Laffer, and pushed
by the Washington Consensus, the prevailing wisdom of the
elite, and of the policy makers, is that reduction of tax rates,
thereby making tax regimes regressive, would incentivise the G
· supposed genius of entrepreneurial souls of individuals,
actuated by pursuit of self-interest and desire to accumulate
great economic power. It was expected that this would enable·
the generation of more wealth, at a more rapid pace, thereby
enabling the State to generate appropriate tax revenues even H
738 SUPREME COURT REPORTS [2011] 8 S.C.R.
A with lowered tax rates. Further, benefits were also expected in
moral terms - that the lowering of tax rates would reduce the
incentives of wealth generators to hide their monies, thereby
saving them from the guilt of tax evasion. Whether that is an
appropriate model of social organization or not, and from the
B perspective of constitutional adjudication, whether it meets the
requirements of constitutionalism as embedded in the texts of
various constitutions, is not a question that we want to enter in
this matter.
14. Nevertheless, it would be necessary to note that there
C is a fly in the ointment of the above story of friction free markets
that would always clear, and always work to the benefit of the
society. The strength of tax collection machinery can, and ought
to be, expected to have a direct bearing on the revenues
collected by the State. If the machinery is weak, understaffed,
D 1deologically motivated to look the other way, or the agents
motivated by not so salubrious motives, the amount of revenue
collected by the State would dedine, stagnate, or may not
generate the revenue for the State that is consonant with its
responsibilities. From within the neo-liberal paradigm, also
E emerged the under-girding current of thought that revenues for
the State implies a big government, and hence a strong tax
collecting machinery itself would be undesirable. Where the
elite lose out in democratic politics of achieving ever
decreasing tax rates, it would appear that state machineries
F in the hands of the executive, all too willing to promote the
extreme versions of the neo-liberal paradigm and co-opt itself
in the enterprises of the elite, may also become all too willing
to not develop substantial capacities to monitor and follow the
money, collect the lawfully mandated taxes, and even look the
G other way. The results, as may be expected, have been
disastrous across many nations.
15. In addition, it would also appear that in this miasmic
cultural environment in which greed is extolled, conspicuous
consumption viewed as both necessary and socially valuable,
H
RAM JETHMALANI AND ORS. v. UNION OF INDIA 739
AND ORS.
and the wealthy viewed as demi-gods, the agents of the State A
· may have also succumbed to the notions of the nee-liberal
paradigm that the role of the State ought to only be an enabling
one, and not exercise significant control. This attitude would
have a significant impact on exercise of discretion, especially
in the context of regulating economic activities, including 8
keeping an account of the monies generated in various
activities, both legal and illegal. Carried away by the ideology
of neo-liberalism, it is entirely possible that the agents of the
State entrusted with the task of supervising the economic and
social activities may err more on the side of extreme caution, C
whereby signals of wrong doing may be ignored even when
they are strong. Instances of the powers that be ignoring publicly
visible stock market scams, or turning a blind eye to large
scale illegal mining have become all too familiar, and may be
readily cited. That such activities are allowed to continue to D
· occur, with weak, or non-existent, responses from the State
may, at best, be charitably ascribed to this broader culture of
permissibility of all manner of private activities in search of
ever more lucre. Ethical compromises, by the elite - those
who wield the powers of the state, and those who fatten
themselves in an ever more exploitative economic sphere- E
can be expected to thrive in an environment marked by such
a permissive attitude, of weakened laws, and of weakened
law enforcement machineries and attitudes.
16. To the above, we must also add the fragmentation of F
administration. Even as the range of economic, and social
activities have expanded, and their sophistication increased
by leaps and bounds, the response in terms of administration
by the State has been to create ever more specialized
agencies, and departments. To some degree this has been G
unavoidable. Nevertheless, it would also appear that there is
a need to build internal capacities to share information across
such departments, lessen the informational asymmetries
between, and friction to flow of information across the
boundaries of departments and agencies, and reduce the levels H
740 SUPREME COURT REPORTS [2011] 8 S.C.R.
A of consequent problems in achieving coordination. Life, and
social action within which human life becomes possible, do
not proceed on the basis of specialized fiefdoms of expertise.
They cut across the boundaries erected as a consequence of·
an inherent tendency of experts to specialize. The result, often,
8 is a system wide blindness, while yet being lured by the dazzle
of ever greater specialization. Many dots of information, now
collected in ever increasing volume by development of
sophisticated information technologies, get ignored on account
of lack of coordination across agencies, and departments,
C and tendency within bureaucracy to jealously guard their own
turfs. In some instances, the failure to properly investigate, or
to prevent, unlawful activities could be the result of such over-
specialization, frictions in sharing of information, and
coordination across departmental and specialized agency
boundaries.
D
17. If the State is soft to a large eXtent, especially in terms
of the unholy nexus between the law makers, the law keepers,
and the law breakers, the moral authority, and also the moral
incentives, to exercise suitable control over the economy and
E the society would vanish. Large unaccounted monies are
generally an indication of that. In a recent book, Prof. Rotberg
states, after evaluating many failed and collapsed states over
the past few decades:
"Failed states offer unparalleled economic opportunity -
F
but only for a privileged few. Those around the ruler or
ruling oligarchy grow richer while their less fortunate
brethren starve. Immense profits are available from an
awareness of regulatory advantages and currency
speculation and arbitrage. But the privilege of making
G real money when everything else is deteriorating is
confined to clients of the ruling elite .... The nation-state's
responsibility to maximize the well-being and prosperity
of all its citizens is conspicuously absent, if it ever
existed .... Corruption flourishes in many states, but in
H
RAM JEJHMALANI AND ORS. v. UNION OF INDIA 741
AND ORS.
failed states it often does so on an unusually destructive A1
scale. There is widespread petty or lubricating corruption
. as a matter of course, but escalating levels of venal
corruption mark failed states. '11
18. India finds itself in a peculiar situation. Often celebrated, 8
in popular culture, as an emerging economy that is rapidly
growing, and expected to be a future economic and political
giant on the global stage, it is also popularly perceived, and
apparently even in some responsible and scholarly circles,
and official quarters, that some of its nationals and other legal C
entities have stashed the largest quantum of unaccounted
monies in foreign banks, especially in tax havens, and in other
jurisdictions with strong laws of secrecy. There are also
apparently reports, and analyses, generated by Government
of India itself, which place the amounts of such unaccounted
monies at astronomical levels. D
19. We do not wish to engage in any speculation as to
what such analyses, reports, and factuality imply with respect
to the state of the nation. The citizens of our country can make,
and ought to be making, rational assessments of the situation. E
We fervently hope that it leads to responsible, reasoned and
reasonable debate, thereby exerting the appropriate
democratic pressure on the State, and its agents, within the
constitutional framework, to bring about the necessary changes
without sacrificing cherished, and inherently invaluable social F
goals and values enshrined in the Constitution. The failures
are discernible when viewed against the vision of the
constitutional project, and as forewarned by Dr. Ambedkar,
have been on account of the fact that man has been vile, and
not the defects of a Constitution forged in the fires of wisdom G
gathered over eons of human experience. If the politico-
bureaucratic, power wielding, and business classes bear ~
large part of the blame, at least some part of blame ought to
1. "The Failure and collapse of nation-States- Breakdown, prevention and
Repair" in "WHEN STATES FAIL: CAUSES AND CONSEQUENCES",
Rotberg, Robert I., Ed. Preinceton University Press (2004). H
742 SUPREME COURT REPORTS [2011] 8 S.C.R.
A be apportioned to those portions of the citizenry that is well
informed, or is expected to be informed. Much of that citizenry
has disengaged itself with the political process, and with the ·
masses. Informed by contempt for the poor and the
downtrodden, the elite classes that have benefited the most,
a or expects to benefit substantially from the neo-liberal policies
that would wish away the hordes, has also chosen to forget
that constitutional mandate is as much the responsibility of the
citizenry, and through their constant vigilance, of all the organs
of the state, and national institutions including political parties.
c To not be engaged in the process, is to ensure the evisceration
of constitutional content. Knee jerk reactions, and ill advised
tinkering with the constitutional framework are not the solutions.
The road is always long, and needs the constant march of the
citizenry on it. There is no other way. To expect instant solutions,
0 because this law or that body is formed, without striving to
solve system wide, and systemic, problems that have emerged
is to not understand the demands of a responsible citizenry in
modern constitutional republican democracies.
20. These matters before us relate to issues of large
E sums of unaccounted monies, allegedly held by certain named
individuals, and loose associations of them; consequently we
have to express our serious concerns from a constitutional
perspective. The amount of unaccounted monies, as alleged
by the Government of India itself is massive. The show cause
F notices were issued a substantial length of time ago. The
named individuals were very much present in the country. Yet,
for unknown, and possibly unknowable, though easily
surmisable, reasons the investigations into the matter
proceeded 'at a' laggardly pace. Even the named individuals
G had not yet been questioned with any degree of seriousness.
These are serious lapses, especially when viewed from the
perspective of larger issues of security, both internal and
external, ofthe country.
21. It is in light of the above, that we heard some significant
H
RAM JETHMALANI AND ORS. v. UNION OF INDIA 743
AND ORS.
elements of the instant writ petitions filed in this Court, and at A .
this stage it is necessary that appropriate orders be issued.
There are two issues we deal with below: (i) the appointment
of a Special Investigation Team; and (ii) disclosure, to the
Petitioners, of certain documents relied upon by the Union of
India in its response. 9
ll
22. The instant writ petition was filed, in 2009, by Shri.
Ram Jethmalani, Shri. Gopal Sharman, Smt. Jalbala Vaidya,
Shri. K.P.S. Gill, Prof. 8.8. Dutta, and Shri. Subhash Kashyap, C
all well known professionals, social activists, former bureaucrats
or those who have held responsible positions in the society.
They have also formed an organization called Citizen India,
the stated,-objective of which is said to be to bring about
changes and betterment in the quality of governance, and D
functioning of all public institutions.
23. The Petitioners state that there have been a slew of
reports, in the media, and also in scholarly publications that
various individuals, mostly citizens, but may also include non- E
citizens, and other entities with presence in India, have
generated, a:id secreted away large sums of monies, through
their activities in India or relating to India, in various foreign
banks, especially in tax havens, and jurisdictions that have
strong secrecy laws with respect to the contents of bank
accounts and the identities of individuals holding such F
accounts. The Petitioners allege that most of such monies are
unaccounted, and in all probability have been generated through
unlawful activities, whether in India or outside India, but relating
to India. Further, the Petitioners also allege that a large part of
such monies may have been generated within India, and have G
been taken away from India, breaking various laws, including
but not limited to evasion of taxes. -
24. The Petitioners contend: (i) that the sheer volume of
such monies points to grave weaknesses in the governance H
744 SUPREME COURT REPORTS [2011) 8 S.C.R.
A of the nation, because they indicate a significant lack of cont~ol
over unlawful activities through which such monies are
generated, evasion of taxes, and use of unlawful means of
transfer of funds; (ii) that these funds are then laundered and
brought back into India, to be used in both legal and illegal
8 activities; (iii) that the use of various unlawful modes of transfer
of funds across borders, gives support to such unlawful
networks of international finance; and (iv) that in as much as
such unlawful networks are widely acknowledged to also
effectuate transfer of funds across borders in aid of various
C crimes committed against persons and the State, including
but not limited to activities that may be classifiable as terrorist,
extremist, or unlawful narcotic trade, the prevailing situation
also has very serio.us connotations for the security and integrity
of India.
D 25. The Petitioners also further contend that a significant
part of such large unaccounted monies include the monies of
powerful.persons in India, including leaders of many political
parties. It was also contended that the Government of India,
and its agencies, have been very lax in terms of keeping an
E eye on the various unlawful activities generating unaccounted
monies, the consequent tax evasion; and that such laxity
extends to efforts to curtail the flow of such funds out, and into,
India. Further, the Petitioners also contend that the efforts to
prosecute the individuals, and other entities, who have secreted
F such monies in foreign banks, have been weak or non-existent.
It was strongly argued that the efforts at identification of such
monies in various bank accounts in many jurisdictions across
the globe, attempts to bring back such monies, and efforts to
strengthen the governance framework to prevent further outflows
G of such funds, have been sorely lacking.
26. The Petitioners also made allegations about certain
specific incidents and patterns of dereliction of duty, wherein
the Government of India, and its various agencies, even though
in possession of specific knowledge about the monies in
H
RAM JETHMALANI AND ORS. v. UNION OF INDIA 745
AND ORS.
certain bank accounts, and having estimated that such monies A
run into many scores of thousands of crores, and upon issuance
of show cause notices to the said individual, surprisingly have
not proceeded to initiate, and carry out suitable investigations,
and prosecute the individuals. The individual specifically named
is one Hassan Ali Khan. The Petitioners also contended that B
Kashinath Tapuria, and his wife Chandrika Tapuria, are also
party to the illegal activities of Hassan Ali Khan.
27. Specifically, it was alleged that Hassan Ali Khan was
served with an income tax demand for Rs. 40,000.00 Crores C
(Rupees Forty Thousand Crores), and that the Tapurias were
served an income tax demand notice of Rs. 20,580.00 Crores
(Rupees Twenty Thousand and Five Hundred and Eighty
Crores). The Enforcement Directorate, in 2007, disclosed that
Hassan Ali Khan had "dealings amounting to 1.6 billion US IT
dollars" in the period 2001-2005. In January 2007, upon raiding
Hassan Ali's residence in Pune, certain. documents and
evidence had been discovered regarding deposits of 8.04
billion dollars with UBS bank in Zurich. It is the contention of
the Petitioners that, even though such evidence was secured
nearly four and half years ago, (i) a proper investigation had E
not been launched to obtain the right facts from abroad; (ii) the
individuals concerned, though present in India, and subject to
its jurisdiction, and easily available for its exercise, had not
even been interrogated appropriately; (iii) that the Union of
India, and its various departments, had even been refusing to F
divulge the details and information that would reveal the actual
status of the investigation, whether in fact it was being
conducted at all, or with any degree of seriousness; (iv) given
the magnitude of amounts in question, especially of the demand
- notice of income tax, the laxity of investigation indicates multiple G
problems of serio.us non-governance, and weaknesses in the
system, including pressure from political quarters to hinder, or
scuttle, the investigation, prosecution, and ultimately securing
the return of such monies; and (v) given the broadly accepted
fact that within the political class corruption is rampant, ill- H
746 SUPREME COURT REPORTS [2011] 8 S.C.R.
A begotten wealth has begun to be amassed in massive
quantities by many members in that class, it may be reasonable
to suspect, or even conclude, that investigation was being
deliberately hindered because Hassan Ali Khan, and the
Tapurias, had or were continuing to handle the monies of such
B a class. The fact that both Income Tax department, and the
Enforcement Directorate routinely, and with alacrity, seek the
powers for long stretches of custodial interrogation of even
those suspected of having engaged in money laundering, or
evaded taxes, with respect to very small amounts, ought to
c raise the reasonable suspicion that inaction in the matters
concerning Hassan Ali Khan, and Tapurias, was deliberately
engineered, for nefarious reasons.
28. In addition, the Petitioners also state that in as much
as the bank in which the monies had been stashed by Hassan
D Ali Khan was UBS Zurich, the needle of suspicion has to
inexorably tum to high level political interference and hindrance
to the investigations. The said bank, it was submitted, is the
biggest or one of the biggest wealth management companies
in the world. The Petitioners also narrated the mode, and the
E manner, in which the United States had dealt with UBS, with
respect to monies of American citizens secreted away with
the said baryk. It was also alleged that UBS had not cooperated
with the U.S. authorities. Contrasting the relative alacrity, and
vigour, with which the United States government had pursued
F the matters, the Petitioners contend the inaction of Union of
India is shocking.
29. The Petitioners further allege that in 2007, the Reserve
Bank of India had obtained some "knowledge of the dubious
G character'' of UBS Security India Private Limited, a branch of
UBS, and consequently stopped this bank from extending its
business in India by refusing to approve its takeover of
Standard Chartered Mutual Funds business in India. It was
also claimed by the Petitioners that the SEBI had alleged that
UBS played a role in the stock market crash of 2004. The
H
RAM JETHMALANI AND ORS. v. UNION OF INDIA 747
AND ORS.
said UBS Bank has apparently applied for a retail banking A
license in India, which was approved in principle by RBI initially.
In 2008, this license was withheld on the ground that
"investigation of its unsavoury role in the Hassan Ali Khan
case was pending investigation in the Enforcement
Directorate." However, it seems that ithe RBI reversed its B
decision in 2009, and no good reasons seem to be forthcoming
for the reversal of the decision of 2008.
30. The Petitioners contend that such a reversal of
decision could only have been accomplished through high level
intervention, and that it is further evidence of linkages between C
members of the political class, and possibly even members of
the bureaucracy, and such banking operations, and the illegal
activities of Hassan Ali Khan and the Tapurias. Hence, the
Petitioners argued, in the circumstances it would have to be
necessarily concluded that the investigations into the affairs of · D
Hassan Ali· Khan, and the Tapurias, would be severely
compromised if the Court does not intervene, and monitor the
investigative processes by appointing a special investigation
team reporting directly to the Court.
E
31. The learned senior counsel for the Petitioners sought
that this Court intervene, order proper investigations, and
monitor continuously, the actions of the Union of India, and any
and all governmental departments and agencies, in these
matters. It was submitted that their filing of this Writ Petition F
under Article 32 is proper, as the inaction of the Union of
India, as described above, violates the fundamental rights- to
proper governance, in as much as Article 14 provides for
equality before the law and equal protection of the law, and
Article 21 promises dignity of life to all citizens.
G
32. We have heard the learned senior counsel for the
Petitioners, Shri. Anil B. Divan, the learned senior counsel for
interveners, Shri. K.K. Venugopal, and the learned senior
counsel for the petitioners in the connected Writ Petition, Shri.
Shanti Bhushan. We have also heard the learned Solicitor H
•
748 SUPREME COURT REPORTS [2011] 8 S.C.R.
A General, Shri. Gopal Subramaniam, on behalf of the
respondents.
33. Shri. Divan, specifically argued that, having regard to
the nature of the investigation, its slow pace so far, and the
8 non-seriousness on the part of the respondents, there is a
need to constitute a Special Investigation Team ("SIT") headed
by a former judge or two of this court. However, this particular
plea has been vociferously resisted by the Solicitor General.
Relying on the status reports submitted from time to time, the
C learned Solicitor General stated that all possible steps were
being taken to bring back the monies stashed in foreign banks,
and that the investigations in cases registered were proceeding
in an appropriate manner. He expressed his willingness for a
Court monitored investigation. He also further submitted that
the Respondents, in principle, have no objections whatsoever
D against the main submissions of the Petitioners.
34. The real point of controversy is, given above, as to
whether there is a need to constitute a SIT to be headed by
a judge or two, of this court, to supervise the investigation.
E
35. We must express our serious reservations about the
responses of the Union of India. In the first instance, during the
earlier phases of hearing before us, the attempts were clearly
evasive, confused, or originating in the denial mode. It was
only upon being repeatedly pressed by us did the Union of
F India begin to admit that indeed the investigation was
proceeding very slowly. It also became clear to us that in fact
the investigation had completely stalled, in as much as
custodial interrogation of Hassan Ali Khan had not even been
sought for, even though he was very much resident in India.
G Further, it also now appears that even though his passport
had been impounded, he was able to secure another passport
from the RPO in Patna, possibly with the help or aid of a
politician.
H 36. During the course of the hearings the Union of India
RAM JETHMALANI AND ORS. v. UNION OF INDIA 749
AND ORS.
repeatedly insisted that the matter involves many jurisdictions, A
across the globe, and a proper investigation could be
accomplished only through the concerted efforts by different
law enforcement agencies, both within the Central Government,
and also various State governments. However, the absence of
any satisfactory explanation of the slowness of the pace of B
investigation, and lack of any credible answers as to why the
respondents did not act with respect to those actions that
were feasible, and within the ambit of powers of the
Enforcement Directorate itself, such as custodial investigation,
leads us to conclude that the lack of seriousness in the efforts c
of the respondents are contrary to the requirements of laws
and constitutional obligations of the Union of India. It was only
upon the insistence and intervention of this Court has the
Enforcement Directorate initiated and secured custodial
interrogation over Hassan Ali Khan. The Union of India has D
explicitly acknowledged that there was much to be desired
with the manner in which the investigation had proceeded prior
to the intervention of this court. From the more recent reports,
it would appear that the Union of India, on account of its more
recent efforts to conduct the investigation with seriousness, on E
account of the gravitas brought by this Court, has led to the
securing of additional information, and leads, which could aid
in further investigation. For instance, during the continuing
interrogation of Hassan Ali Khan and the Tapurias, undertaken
for the first time at the behest of this Court, many names of
important persons, including leaders of some corporate giants, F
politically powerful people, and international arms dealers have
cropped up. So far, no significant attempt has been made to
investigate and verify the same. This is a further cause for the
grave concerns of this Court, and points to the need for
continued, effective and day to day monitoring by a SIT G
constituted by this Court, and acting on behalf, behest and
direction of this Court. •
37. In light of the fact that the issues are complex, requiring
expertise and knowledge of different departments, and the H
750 SUPREME COURT REPORTS [2011] 8 S.C.R.
A necessity of coordination of efforts across various agencies
and departments, it was submitted to us that the Union of India
has recently formed a High Level Committee, under the aegis
of the Department of Revenue in the Ministry of Finance, which
is the nodal agency responsible for all economic offences.
B The composition of the High Level Committee ("HLC") is said
to be as follows: (i) Secretary, Department of Revenue, as the
Chairman; (ii) Deputy Governor, Reserve Bank of India; (iii)
Director (18); (iv) Director, Enforcement; (v) Director, CBI; (vi)
Chairman, CBDT; (vii) DG, Narcotics Control Bureau; (vii) DG,
c Revenue Intelligence; (ix) Director, Financial Intelligence Unit;
and (x) JS (FT & TR-I), CBDT. It was also submitted that the
HLC may co-opt, as necessary, representation not below the
rank of Joint Secretary from the Home Secretary, Foreign
Secretary, Defense Secretary and the Secretary, Cabinet
0 Secretariat. The Union of India claims that such a multi-
disciplinary group and committee would now enable the
conducting ofan efficient and a systematic investigation into
the matters concerning allegations against Hassan Ali Khan
and the Tapurias; and further that such a committee would
E also enable the taking of appropriate steps to bring back the
monies stashed in foreign banks, for which purposes a need
may arise to register further cases. The Union of India a(so
claims that the formation of such a committee indicates the
seriousness with which it is viewing the entire matter.
F 38. While it would appear, from the Status Reports
submitted to this Court, that the Enforcement Directorate has
moved in some small measure, the actual facts are not
comforting to an appropriate extent. In fact we are not convinced
that the situation has changed to the extent that it ought to so
G as to accept th.at the investigation would now be conducted
with the degree of seriousness that is warranted. According to
the Union of India the HLC was formed in order to take charge
of and direct the entire investigation, and subsequently, the
prosecution. In the meanwhile a charge sheet has been filed
H against Hassan Ali Khan. Upon inquiry by us as to whether the
RAM JETHMALANI AND ORS. v. UNION OF INDIA 751
AND ORS.
charge-sheet had been vetted by the HLC, and its inputs A
secured, the counsel for Union of India were flummoxed. The
fact was that the charge-sheet had not been given even for the
perusal of the HLC, let alone securing its inputs, guidance and
direction. We are not satisfied by the explanation offered by
the Directorate of Enforcement by way of affidavit after the B
orders were reserved. Be it noted that a nodal agency was set
up, pursuant to directions of this Court in Vineet Narain case
given many years ago. Yet the same was not involved and
these matters were never placed before it. Why?
39. From the status reports, it is clear that the problem is c
extremely complex, and many agencies and departments
spread across the country have not responded with the alacrity,
and urgency, that one would desire. Moreover, the Union of
India has been unable to answer any of the questions regarding
its past actions, and their implications, such as the slowness D
of the investigation, or about grant of license to conduct retail
banking by UBS, by reversing the decision taken earlier to
withhold such a license on the grounds thatthe said bank's
· credentials were suspect. To this latter query, the stance of the
Union of India has been that entry of UBS would facilitate flow E
·of foreign investments into India. The question that arises is
whether the task of bringing foreign funds into India override
all other constitutional concerns and obligations?
40. The predominant theme in the responses of Union of F
India before this court has been that it is doing all that it can
to bring back the unaccounted monies stashed in various banks
abroad. To this is added the qualifier that it is an extremely
complex problem, requiring the cooperation of many different
jurisdictions, and an internationally coordinated effort. Indeed G
they are complex. We do not wish to go into the details of
arguments about whether the Union of India is, or is not, doing
necessary things to achieve such goals. That is not necessary
for the matters at hand.
41. What is important is that the Union of India had H
752 SUPREME COURT REPORTS [2011] 8 S.C.R.
A obtained knowledge, documents and information that indicated
· possible connections between Hassan Ali Khan, and his alleged
co-conspirators and known international arms dealers. Further,
the Union of India was also in possession of information that
suggested that because the international arms dealing network,
B and a very prominent dealer in it, could not open a bank account
even in a jurisdiction that is generally acknowledged to lay
great emphasis on not asking sources of money being
deposited into its banks, Hassan Ali Khan may have played a
crucial role in opening an account with the branch of the same
c. bank in another jurisdiction. The volume of alleged income
taxes owed to the country, as demanded by the Union of India
itself, and the volume of monies, by some accounts US $8.04
billion, and some other accounts in excess of Rs. 70,000
crores, that are said to have been routed through various bank
accounts of Hassan Ali Khan, and Tapurias. Further, from all
0
accounts it has been acknowledged that none of the named
individuals have any known and :awful sources for such huge
quantities of monies. All of these factors, either individually or
combined, ought to have. immediately raised questions
regarding the sources being unlawful activities, national
E security, and transfer of funds into India for other illegal
activities, including acts against the State. It was only at the
repeated insistence by us that such matters have equal, if not
even greater importance than issues of tax collection, has the
Union of India belatedly concluded that such aspects also ought
F to be investigated with thoroughness. However, there is ~till no
evidence of a really serious investigation into these other
matters from the national security perspective.
42. The fact remains that the Union of India has struggled
G in conducting a proper investigation into the affairs of Hassan
Ali Khan and the Tapurias. While some individuals, whose
names have come to the adverse know.ledge of the Union of
India, through the more recent investigations, have been
interrogated, many more are yet to be investigated. This highly
H complex investigation has in fact just begun. It is still too early
RAM JETHMALANI AND ORS. v. UNION OF INDIA 753
AND ORS.
to conclude that the Union of India has indeed placed all the A
necessary machinery to conduct a proper investigation. The
formation of the HLC was a necessary step, and may even be
characterized as a welcome step. Nevertheless, it is an
insufficient step.
B
43. In light of the above, we had proposed to the Union
of India that the same HLC constituted by it be converted into
a Special Investigation Team, headed by two retired judges of
the Supreme Court of India. The Union of India opposes the
same, but provides no principle as to why that would be C
undesirable, especially in light of the many lapses and lacunae
in its actions in these matters spread over the past four years.
44. We are of the firm opinion that in these matters
fragmentation of government, and expertise and knowledge,
across many departments, agencies and across various D
jurisdictions, both within the country, and across the globe, is
a serious impediment to the conduct of a proper investigation.
We hold that it is in fact necessary to create a body that
coordinates, directs, and where necessary orders timely and
urgent action by various institutions of the State. We also hold E
that the continued involvement of this Court in these matters,
in a broad oversight capacity, is necessary for upholding the
rule of law, and achievement of constitutional values. However,
it would be impossible for this Court to be involved in day to
day investigations, or to constantly monitor each and every F
aspect of the investigation.
45. The resources of this court are scarce, and it is over-
burdened with the task of rendering justice in well over a lakh
of cases every year. Nevertheless, this Court is bound to uphold
the Constitution, and its own burdens, excessive as they already G
are, cannot become an excuse for it to not perform that task.
In a country where most of its people are uneducated and
· illiterate, suffering from hunger and squalor, the retraction of
the monitoring of these matters by this Court would be
unconscionable. H
754 SUPREME COURT REPORTS (2011] 8 S.C.R.
A 46. The issue is not merely whether the Union of India is ·
making the necessary effort to bring back all or some significant
part .of the alleged monies. The fact that there is some
information and knowledge that such vast amounts may have
been stashed away in foreign banks, implies that the State
B has the primordial responsibility, under the Constitution, to make
every effort to trace the sources of such monies, punish the
guilty where such monies have been generated and/or taken
abroad through unlawful activities, and bring back the monies
owed to the Country. We do recognize that the degree of
c success, measured in terms of the amounts of monies brought
back, is dependent on a number of factors, including aspects
that relate to international political economy and relations, which
may or may not be under our control. The fact remains that
with respect to those factors that were within the powers of the
0 Union of India, such as investigation of possible criminal nexus,
threats to national security etc., were not even attempted. Fealty
to the Constitution is not a matter of mere material success;
but, and probably more importantly from the perspective of the
moral authority of the State, a matter of integrity of effort on all
the dimensions that inform a problem that threatens the
E constitutional projects. Further, the degree of seriousness with
which efforts are made with respect to those various
dimensions can also be expected to bear fruit in terms of
building capacities, and the development of necessary attitudes
to take the law enforcement part of accounting or following the
F money seriously in the future.
47. The merits of vigour of investigations, and attempts at
law enforcement, cannot be measured merely on the scale of
what we accomplish with respect to what has happened in the
G past. It would necessarily also have to be appreciated from
the benefits that are likely to accrue to the country in preventing
such activities in the future. Our people may be poor, and may
be suffering from all manner of deprivation. However, the same
poor and suffering masses are rich, morally and from a
H humanistic point of view. Their forbearance of the many foibles
RAM JETHMALANI AND ORS. v. UNION OF INDIA 755
AND ORS.
and failures of those who. wield power, no less in their name A
.and behalf than of the rich and the empowered, is itself
indicative of their great qualities, of humanity, trust and
tolerance. That greatness can only be matched by exercise of
every sinew, and every resource, in the broad goal of our
constitutional project of bringing to their lives dignity. The efforts B
that this Court makes in this regard, and will make in this
respect and these matters, can only be conceived as a small
and minor, though nevertheless necessary, part. Ultimately the
protection of the Constitution and striving to promote its vision
and values is an elemental mode of service to our people. c
48. We note that in many instances, in the past, when
issues referred to the Court have been very complex in nature,
and yet required the intervention of the Court, Special
Investigation Teams have been ordered and constituted in order
to enable the Court, and the Union of India and/or"other organs D
of the State, to fulfill their constitutional obligations. The following
instances may be noted: Vineet Narain v Union of lndia 2,
NHRC v State of Gujarat3, Sanjiv Kumar v State of Haryana4,
!
and Centre for PIL v Union of lndia 5•
E
49. In light of the above we herewith order:
(i) That the High Level Committee constituted by the
Union of India, comprising of (i) Secretary,
Department of Revenue; (ii) Deputy Governor,
Reserve Bank of India; (iii) Director (IB); (iv) F
Director, Enforcement; (v) Director, CBI; (vi)
Chairman, CBDT; (vii) DG, Narcotics Control
Bureau; (vii) DG, Revenue Intelligence; (ix) Director,
Financial Intelligence Unit; and (x) JS (FT & TR-I),
CBDT be forthwith appointed with immediate G
2. (1996) 2 sec 199.
3. (2004) a sec 510.
4. (2005) 5 sec 517.
5. c2011) 1 sec 560. ·H
756 SUPREME COURT REPORTS [2011] 8 S.C.R.
A effect as a Special Investigation Team;
(ii) That the Special Investigation Team, so constituted,
also include Director, Research and Analysis Wing;
(iii) That the above Special Investigation Team, so
B constituted, be headed by and include the following
former eminent judges of this Court: (a) Hon'ble Mr.
Justice B.P. Jeevan Reddy as Chairman; and (b)
Hon'ble Mr. Justice M.B. Shah as Vice-Chairman;
and that the Special Investigation Team function
c under their guidance and direction;
(iv) That the Special Investigation Team, so constituted,
shall be charged with the responsibilities and duties
of investigation, initiation of proceedings, and
D prosecution, whether in the context of appropriate
criminal or civil proceedings of: (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
E initiated, with respect to any other 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
F banks by Indians or other entities operating in India
that may arise in the course of such investigations
and proceedings. It is clarified here that within the
ambit of responsibilities described above, also lie
the responsibilities to ensure that the matters are
G also investigated, proceedings initiated and
prosecutions conducted with regard to criminality
and/or unlawfulness of 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
H unaccounted monies out of and/or bring such
RAM JETHMALANI AND ORS. v. UNION OF INDIA 757
AND ORS.
monies back into the country, and use of such A
monies in India or abroad. The Special Investigation
Team shall also be charged with the responsibility
of preparing a comprehensive action plan, including
the creation of necessary institutional structures that
can enable and strengthen the country's battle 8
against generation of unaccounted monies, and
their stashing away in foreign ·banks or in various·
forms domestically.
(v) That the Special Investigation Team so constituted
report and be responsible to this Court, and that it
c
. shall be charged with the duty to keep this Court
informed of all major developments by the filing of
periodic status reports, and following of any special
orders that this Court may issue from time to time;
D.
(vi) That all organs, agencies,· departments and agents
of the State, whether at the level of the Union of
India, or the State Government, including but not
limited to all statutorily formed individual bodies,
and other constitutional bodies, extend all the E
cooperation necessary for the Special Investigation
Team so constituted and functioning;
(vii) That the Unionr of India, and where needed even the
·-·- -
State Governments, are ~irected to facilitate the
F
conduct of the investigations, in their fullest
measure, by the Special Investigation Team so
constituted and functioning, by extending all the
necessary financial, material, legal, diplomatic and
intelligence resources, whether such investigations
or portions of such investigations occur inside the G
country or abroad;
(viii) That the Special Investigation Team also be
empowered to further investigate even where
charge-sheets have been previously filed; and that H
1, . _
758 SUPREME COURT REPORTS [2011] 8 S.C.R.
A the Special Investigation Team may register further
cases, and conduct appropriate investigations ·and
initiate proceedings, for the purpose of bringing
back unaccounted monies unlawfully kept in bank
accounts abroad.
B
50. We accordingly direct the Union of India to issue
appropriate notification and publish the same forthwith. It is
needless to clarify that the former judges of this Court so
appointed to supervise the Special Investigation Team are
C entitled to their remuneration, allowances, perks, facilities as
that of the judges of the Supreme Court. The Ministry of Finance,
Union of India, shall be responsible for creating the appropriate
infrastructure and other facilities for proper and effective
functioning of the Special Investigation Team at once.
D Ill
51. We now turn our attention to the matter of disclosure
of various documents referenced by the Union of India, as
sought by the Petitioners. These documents, including names
E and bank particulars, relate to various bank accounts, of Indian
citizens, in the Principality of Liechtenstein ("Liechtenstein"), a
small landlocked sovereign nation-state in Europe. It is
generally acknowledged that Liechtenstein is a tax haven.
52. Apparently, as alleged by the Petitioners, a former
F employee of a bank or banks in Liechtenstein secured the
names of some 1400 bank account holders, along with the
particulars of such accounts, and offered the information to
various entities. The same was secured by the Federal
Republic of Germany ("Germany"), which in turn, apart from
G initiating tax proceedings against some 600 individuals, also
offered the information regarding nationals and citizens of other
countries to such countries. It is the contention of the Petitioners
that even though the Union of India was informed about the
presence of the names of a large number of Indian citizens in
H the list of names revealed by the former bank employee, the
RAM JETHMALANI AND ORS. v. UNION OF INDIA 759
AND ORS.
Union of India never made a serious attempt to secure such A
information and proceed to investigate such individuals. It is
the contention of the Petitioners that such names include the
identities of prominent and powerful Indians, or the identitie!)
of individuals, who may or may not be Indian citizens, but who
could lead to information about various powerful Indians holding B
unaccounted monies in bank accounts abroad. It is also the
contention of the Petitioners that, even though they had sought
the information under the Right to Information Act (2005), the
Respondents had not revealed the names nor divulged the
relevant documents. The Petitioners argue that such a c
reluctance is only on account of the Union of India not having
initiated suitable steps to recover such monies, and punish
the named individuals, and also because revelation of names
of individuals on the list would lead to discovery of powerful
persons engaged in various unlawful activities, both in 0
generation of unlawful and unaccounted monies, and their
stashing away in banks abroad.
53. It was also alleged by the Petitioners that in fact
Germany had offered such information, freely and generally to
any country that requests the same, and did not specify that E
the names and other information pertaining to such names
ought to be requested only pursuant to any double taxation
agreements it has with other countries. The Petitioners also
alleged that Union of India has chosen to proceed under the
assumption that it could have requested such information only F
pursuant to the double taxation agreement it has with Germany.
The Petitioners contend that the Government of India took such
a step primarily to conceal the information from public gaze.
54. The response of the Union of India may be summed
up briefly: (i) that they secured the names of individuals with G
bank accounts in banks in Liechtenstein; and other details
with respect to such bank accounts, pursuant to an agreement
of India with Germany for avoidance of double taxation and
prevention of fiscal evasion; (ii) that the said agreement
proscribes the ·Union of India from disclosing such names, H
760 SUPREME COURT REPORTS (2011] 8 S.C.R.
A and other documents and information with respect to such
bank accounts, to the Petitioners, even in the context of these
ongoing proceedings before this court; (iii) that the disclosure
of such names, and other documents and information, secured
from Germany, would jeopardize the relations of India with a
B foreign state; (iv) that the disclosure of such names, and other
documents and information, would violate the right to privacy
of those individuals who may have only deposited monies in
a lawful manner; (v) that disclosure of names, and other
documents and information can be made with respect to those
c individuals with regard to whom investigations are completed,
and proceedings initiated; and (vi) that contrary to assertions
by the Petitioners, it was Germany which had asked the Union
of India to seek the information under double taxation
agreement, and that this was in response to an earlier request
by Union of India for the said information.
0
55. For the purposes of the instant order, the issue of
whether the Union of India could have sought and secured the
names, and other documents and information, without having
to take recourse to the double taxation agreement is not
E relevant. For the purposes of determining whether Union of
India is obligated to disclose the information that it obtained,
from Germany, with respect to accounts of Indian citizens in a
bank in the Principality of Liechtenstein, we need only examine
the claims of the Union of India as to whether it is proscribed
F by the double taxation agreement with Germany from
disclosing such information. Further, and most importantly, we
would also have to examine whether in the context of Article
32 proceedings before this court, wherein this court has
exercised jurisdiction, the Union of India can claim exemption
G from providing such information to the Petitioners, and also
with respect to issues of right to privacy of individuals who
hold such accounts, and with respect of whom no investigations
have yet been commenced, or only partially conduct~d. so that
the State has not yet issued a show cause and initiated
H proceedings.
RAM JETHMALANI AND ORS. v. UNION OF INDIA 761
AND ORS.
56. We have perused the said agreement with Germany. A
We are convinced that the said agreement, by itself, does not
proscribe the disclosure of the relevant documents and details
of the same, induding the names of various ban~ account
holders in Liechtenstein. In the first instance, we note that the
names of the individuals are with respect to bank accounts in 8
the Liechtenstein, which though populated by largely German
speaking people, is an independent and sovereign nation-
state. The agreement between Germany and India is with
regard to various issues that crop up with respect to German
and Indian citizens' liability to pay taxes to Germany and/or c
India. It does not even remotely touch upon information
regarding Indian citizens' bank accounts in Liechtenstein that
Germany secures and shares that have no bearing upon the
matters that are covered by the double taxation agreement
between the two countries. In fact, the "information" that is D
referred to in Article 26 is that which is "necessary for carrying
out the purposes of this agreement", i.e. the Inda-German
DTAA. Therefore, the information sought does not fall within
the ambit of this provision. It is disingenuous for the Union of
India, under these circumstances, to repeatedly claim that it is E
unable to reveal the documents and names as sought by the
Petitioners on the ground that the same is proscribed by the
said agreement. It does not matter that Germany itself may
have asked India to treat the information shared as being
subject to the confidentiality and secrecy clause of the double
taxation agreement. It is for the Union of India, and the courts, F
in appropriate proceedings, to determine whether such
information concerns matters that are covered by the double
taxation agreement or not. In any event, we also proceed to
examine the provisions of the double taxation agreement
below; to also examine whether they proscribe the disclosure G
of such names, and other documents and information, even in
the context of these instant proceedings.
57. Relevant portions of Article 26 of the double taxation
agreement with Germany, a copy of which was submitted by
Union of India, reads as follows: H
762 ;:;UPREME COURT REPORTS [2011] 8 S.C.R.
A "1. The competent authorities of the Contracting States
shall exchange such information as is necessary for
carrying out the purposes of this Agreement. Any
information received by a Contracting State shall be
treated as secret in the same manner as information
B obtained under the domestic laws of that State and shall
be disclosed only to persons or authorities (including
courts and administrative bodies) involved in the
assessment or collection of, the enforcement or
prosecution in respect of, or the determination of appeals
c in relation to, the taxes covered by this Agreement. They
may disclose the information in public court proceedings
or in judicial proceedings.
2. In no case shall the provisions of paragraph 1 be
construed so as to impose on a Contracting State the
D obligation:
(a) to carry out administrative measures at variance
with the laws and administrative practice of that or
of the other Contracting State;
E (b) to supply information which is not obtainable under
·the laws or in the normal course of the
administration of that or of the other Contracting
State;
(c) to supply information which would disclose any
F trade, business, industrial, commercial or
professional secret or trade process, or
information, the disclosure of which would be
contrary to public policy (order public)"
58. The above clause in the relevant agreement with
G Germany would indicate that, contrary to the assertions of Union
of India, there is no absolute bar of secrecy. Instead the
agreement specifically provides that the information may be
disclosed in public court proceedings, which the instant
proceedings are. The proceedings in this matter before this
H court, relate both to the issue of tax collection with respect to
RAM JETHMALANI AND ORS. v. UNION OF INDIA 763
AND ORS.
unaccounted monies deposited into foreign bank accounts, A
as well as with issues relating to the manner in which such
monies were generated, which may include activities that are
criminal in nature also. Comity of nations cannot be predicated
upon clauses of secrecy that could hinder constitutional
proceedings such as these, or criminal proceedings. B
59. The claim of Union of India is that the phrase "public
court proceedings", in the last sentence·in Article 26(1) of the
double taxation agreement only relates to proceedings relating
to tax matters. The Union of India claims that such an
understanding comports with how it is understood C
internationally. In this regard Union of India cites a few treatises.
However, the Union of India did not provide any evidence that
. Germany specifically requested it to not reveal the details with
respect to accounts in the Liechtenstein even in the context of
proceedings before this court. D
60. Article 31, "General' Rule of Interpretation", of the
Vienna Convention of the Law of Treaties, 1969 provides that
a "treaty shall be interpreted in good faith in accordance with
the ordinary meaning to be given to the terms of the treaty in E
their context and in the light of its object and purpose." While
India is not a party to the Vienna Convention, it contains many
principles of customary international law, and the principle of
interpretation, of Article 31 of the Vienna Convention, provides
a broad guideline as to what could be an appropriate manner F
of interpreting a treaty in the ln~ian context also.
61. This Court in Union of India v. Azadi Bachao Andolan6,
approvingly noted F'rank Bennion's observations that a treaty
is really an indirect enactment, instead of a substantive
legislation, and that drafting of treaties is notoriously sloppy, G
whereby inconveniences obtain. In this regard this Court further
noted the dictum of Lord Widgery, C.J. that the words "are to
be given their general meaning, general to lawyer and layman
alike .... The meaning of the diplomat rather than the lawyer."
The broad principle of interpretation, with respect to treaties, H
764 SUPREME COURT REPORTS [2011) 8 S.C.R.
A and provisions therein, would be that ordinary meanings of
words be given effect to, unless the context requires or
ottierwise. However, the fact that such treaties are drafted by
diplomats, and not lawyers, leading to sloppiness in drafting
also implies that care has to be taken to not render any word,
B phrase, or sentence redundant, especially where rendering of
such word, phrase or sentence redundant would lead to a
manifestly absurd situation, particularly from a constitutional
perspective. The government cannot bind India in a manner
that derogates from Constitutional provisions, values and
c imperatives.
62. The last sentence of Article 26(1) of the double taxation
agreement with Germany, "[T]hey may disclose this information
in public court proceedings or in judicial decisions, n is
revelatory in this regard. It stands out as an additional aspect
D or provision, and an exception, to the preceding portion of the
said article. It is located after the specification that information
shared between contracting parties may be revealed only to
"persons or authorities (including courts and administrative
bodies) involved in the assessment or collection of, the
E enforcement or prosecution in respect of, or the determination
of appeals in relation to taxes covered by this Agreement."
Consequently, it has to be understood that the phrase "public
court proceedings" specified in the last sentence in Article
26(1) of the double taxation agreement with Germany refers to
F court proceedings other than those in connection with tax
assessment, enforcement, prosecution etc., with respect to
tax matters. If it were otherwise, as argued by Union of India,
then there would have been no need to have that last sentence
in Article 26(1) of the double taxation agreement at all. The
G last sentence would become redundant if the interpretation
pressed by Union of India is accepted. Thus, notwithstanding
the alleged convention 'of interpreting the last sentence only as
referring to proceedings in tax matters, the rubric of common
law jurisprudence, and fealty to its principles, leads us
H inexorably to the conclusion that the language in this specific
RAM JETHMALANI AND ORS. v. UNION OF INDIA 765
AND ORS.
treaty, and under these circumstances cannot be interpreted A
in the manner sought by Union of India.
63. While we agree that the language could have been
tighter, and may be deemed to be sloppy, to use Frank
Bennion's characterization, negotiation of such treaties are 8
conducted and secured at very high levels of government, with
awareness of general principles of interpretation used in
various jurisdictions. It is fairly well known, at least in Common
Law jurisdictions, that legal instruments and statutes are
interpreted in a manner whereby redundancy of expressions C
and phrases is sought to be avoided. Germany would have
been well aware of it.
64. The redundancy that would have to be ascribed to the
said last sentence of Article 26(1) of the double taxation
agreement with Germany, if the position of Union of India were D
to be accepted, also leads to a manifest absurdity, in the
· context of the Indian Constitution. Such a redundancy would
mean that constitutional imperatives themselves are to be set
aside. Modern constitutionalism, to which Germany is a major
contributor too, especially in terms of the basic structure E
· doctrine, specifies that powers vested in any organ of the
State have to be exercised within the four corners of the
Constitution, and further that organs created by a constitution
cannot change the identity of the constitution itself.
65. The basic structure of the Constitution cannot be
F
amended even by the amending power of the legislature. Our
Constitution guarantees the right, pursuant to Clause (1) of
Article 32, to petition this Court on the ground that the rights
guaranteed under Part Ill of the Constitution have been violated.
This provision is a part of the basic ~tructure of the Constitution. G
Clause (2) of Article 32 empowers this Court to issue "directions
or orders or writs, including writs in the nature of habeas
corpus, mandamus, prohibition, quo warranto and certiorari,
whichever may be appropriate for the enforcement of any of
the rights conferred by" Part Ill. This is also a part of the basic H
766 SUPREME COURT REPORTS [2011] 8 S.C.R.
A structure of the Constitution.
66. In order that the right guaranteed by Clause (1) of
Article 32 be meaningful, and particularly because such
petitions seek the protection of fundamental rights, it is
8 imperative that in such proceedings the petitioners are not
denied the information necessary for them to properly articulate
the case and be heard, especially where such information is
in the possession of the State. To deny access to such
information, without citing any constitutional principle or
C enumerated grounds of constitutional prohibition, would be to
thwart the right granted by Clause (1) of Article 32.
67. Further, in as much as, by history and tradition of
common law, judicial proceedings are substantively, though
not necessarily fully, adversarial, both parties bear the
D responsibility of placing all the relevant information, analyses,
and facts before this court as completely as possible. In most
situations, it is the State which may have more comprehensive
information that is relevant to the matters at hand in such
proceedings. However, som.e agents of the State may perceive ·
E that because these proceedings are adversarial in nature, the
duty and burden to furnish all the necessary information rests
upon the Petitioners, and hence the State has no obligation to
fully furnish such information. Some agents of the State may
also seek to cast the events and facts in a light that is
F favourable to the government in the immediate context of the
proceedings, even though such actions do not lead to
rendering of complete justice in the task of protection of
fundamental rights. To that extent, both the petitioners and this
Court would be handicapped in proceedings under Clause ( 1)
G of Article 32.
68. It is necessary for us to note that the burden of
asserting, and proving, by relevant evidence a claim in judicial
proceedings would ordinarily be placed upon the proponent of
such a claim; however, the burden of protection of fundamental
H . rights is primarily the duty of the State. Consequently, unless
RAM JETHMALANI AND ORS. v. UNION OF INDIA 767
AND ORS.
constitutional grounds exist, the State may not act in a manner A
that hinders this Court from rendering complete justice in such
proceedings. Withholding of information from the petitioners,
or seeking to cast the relevant events and facts in a light
favourable to the State in the context of the proceedings, even
though ultimately detrimental to the essential task of protecting B
fundamental rights, would be destructive to the guarantee in
Clause (1) of Article 32, and substantially eviscerate the
capacity of this Court in exercising its powers contained in
clause (2) of Article 32, and those traceable to other provisions
of the Constitution and broader jurisprudence of c
constitutionalism, in upholding fundamental rights enshrined in
Part Ill. In the task of upholding of fundamental rights, the State
cannot be an adversary. The State has the duty, generally, to
reveal all the facts and information in its possession to the
Court, and also provide the same to the petitioners. This is so, D
because the petitioners would also then be enabled to brin'g
to light facts and the law that may be relevant for the Court in
rendering its decision. In proceedings such as those under
Article 32, both the petitioner and the State, have to necessarily
be the eyes and ears of the Court. Blinding the petitioner
would substantially detract from the integrity of the process of E
judicial decision making in Article 32 proceedings, especially
where the issue is of upholding of fundamental rights.
69. Furthermore, we hold that there is a special relationship
between Clause (1) of Article 32 and Sub-Clause (a) of Clause F
(1) of Article 19, which guarantees citizens the freedom of
speech and expression. The very genesis, and the normative
desirability of such a freedom, lies in historical experiences of
the entire humanity: unless accountable, the State would turn
tyrannical. A proceeding under Clause (1) of Article 32, and G
invocation of the powers granted by Clause (2) of Article 32,
is a primordial constitutional feature of ensuring such
accountability. The very promise, and existence, of a
constitutional democracy rests substantially on such •
proceedings. 1-1
768 SUPREME COURT REPORTS [2011] 8 S.C.R.
A 70. Withholding of information from the petitioners by the
State, thereby constraining their freedom of speech and
expression before· this Court, may be premised only on the
exceptions carved out, in Clause (2) of Article 19, "in the
interests of sovereignty and integrity of India, security of the
s State, friendly relations with foreign States, public order,
decency or morality, or in relation to contempt of court,
defamation or incitement to an offence" or by law that
demarcate exceptions, provided that such a law comports with
the enumerated grounds in Clause (2) of Article 19, or that
c may be provided for elsewhere in the Constitution.
71. It is now a well recognized proposition that we are
increasingly being entwined in a global network of events and
social action. Considerable care has to be exercised in this
process, particularly where governments which come into being
D on account of a constitutive document, enter into treaties. The
actions of governments can only be lawful when exercised
within the four comers of constitutional permissibility. No treaty
can be entered into, or interpreted, such that constitutional
fealty is derogated from. The redundancy, that the Union of
E India presses-, with respect to the last sentence of Article 26(1)
of the double taxation agreement with Germany, necessarily
transgresses upon the boundaries erected by our Constitution.
It cannot be permitted.
F 72. We have perused the documents in question, and
heard the arguments of Union of India with respect to the double .
taxation agreement with Germany as an obstacle to disclosure.
We do not find merit in its arguments flowing from the
provisions of double taxation agreement with Germany.
G However, one major constitutional issue, and concern remains.
This is with regard to whether the names of individuals, and
details of their bank accounts, with respect to whom there has
been no completed investigations that reveal wrong doing and
proceedings initiated, and there is no other credible information
and evidence currently available with the Petitioners that there
H
RAM JETHMALANI AND ORS. v. UNION OF INDIA 769
AND ORS.
has been any wrong doing, may be disclosed to the Petitioners. A
73. Right to privacy is an integral part of right to life. This
is a cherished constitutional value, and it is important that
human beings be allowed domains of freedom that are free of
public scrutiny unless they act in an unlawful manner. We 8
understand and appreciate the fact that the situation with
respect to unaccounted monies is extremely grave.
Nevertheless, as constitutional adjudicators we always have
to be mindful of preserving the sanctity of constitutional values,
and hasty steps that derogate from fundamental rights, whether C
urged by governments or private citizens, howsoever well
meaning they may be, have to be necessarily very carefully
scrutinised. The solution for the problem of abrogation of one
zone of constitutional values cannot be the creation of another
zone of abrogation of constitutional values. The rights of citizens,
to effectively seek the protection of fundamental rights, under D
Clause ( 1) of Article 32 have to be balanced against the rights
of citizens and persons under Article 21. The latter cannot be
sacrificed on the anvil of fervid desire to find instantaneous
solutions to systemic problems such as unaccounted monies,
for it would lead to dangerous circumstances, in which vigilante E
investigations, inquisitions and rabble rousing, by masses of
other citizens could become the order of the day. The right of
citizens to petition this Court for upholding of fundamental rights
is granted in order that citizens, inter-alia, are ever vigilant
about the functioning of the State in order to protect the F
constitutional project. That right cannot be extended to being
inquisitors of fellow citizens. An inquisitorial order, where
citizens' fundamental right to privacy is breached by fellow
citizens is destructive of social order. The notion of fundamental
rights, such as a right to privacy as part of.right to life, is not G
merely that the State is enjoined from derogating from them.
It also includes the responsibility of the State to uphold them
againstthe actions of others in the society, even in the context
of exercise of fundamental rights by those others.
H
770 SUPREME COURT REPORTS [2011] 8 S.C.R.
A 74. An argument ca~ be made that this Court can make
exceptions under the peculiar circumstances of this case,
wherein the State has acknowledged that it has not acted with
the requisite speed and vigour in the case of large volumes of
suspected unaccounted monies of certain individuals. There
B is an inherent danger in making exceptions to fundamental
principles and rights on the fly. Th0se exceptions, bit by bit,
would then eviscerate the content of the main right itself.
Undesirable lapses in upholding of fundamental rights by the
legislature, or the executive, can be rectified by assertion of
c constitutional principles by this Court. However, a decision by
this Court that an exception could be carved out remains
permanently as a part of judicial canon, and becomes a part
of the constitutional interpretation itself. It can be used in the
future in a manner and form that may far exceed what this
0 Court intended or what the Constitutional text and values can
bear. We are not proposing that Constitutions cannot be
interpreted in a manner that allows the nation-state to tackle
the problems it faces. The principle is that exceptions cannot
be carved out willy-nilly, and without forethought as to the
E damage they may cause.
75. One of the chief dangers of making exceptions to
principles that have become a part of constitutional law, through
aeons of human experience, is that the iogic, and ease of
seeing exceptions, would become entrenched as a part of the
F constitutional order. Such logic would then lead to seeking
exceptions, from protective walls of all fundamental rights, on
grounds of expediency and claims that there are no solutions
to problems that the society is confronting without the
evisceration of fundamental rights. That same logic could then
G be used by the State in demanding exceptions to a slew of
other fundamental rights, leading to violation of human rights
of citizens on a massive scale.
76. It is indeed true that the information shared by
Germany, with regard to certain bank accounts in Liechtenstein,
H also contains names of individuals who appear to be Indians.
RAM JETHMALANI AND ORS. v. UNION OF INDIA 771
AND ORS.
The Petitioners have also claimed that names of all the A
individuals have been made public by certain segments of the
media. However, while some of the accounts, and the
individuals holding those accounts, are claimed to have been
investigated, others have not been. No conclusion can be drawn
as to whether those who have not been investigated, or only B
partially investigated ~nd proceedings not initiated have
committed any wrong doing. There is no presumption that every
account holder in banks of Liechtenstein has acted unlawfully.
In these circumstances, it would be inappropriate for this Court
Ito order the disclosure of such names, even in the context of c
proceedings under Clause (1) of Article 32.
77. The revelation of details of bank accounts of
individuals, without establishment of prima facie grounds to
accuse them of wrong doing, would be a violation of their
rights to privacy. Details of bank accounts can be used by D
those who want to harass, or otherwise cause damage, to
individuals. We cannot remain blind to such possibilities, and
indeed experience reveals that public dissemination of banking
details, or availability to unauthorized persons, has led to abuse.
The mere fact that a citizen has a bank account in a bank E
located in a particular jurisdiction cannot be a ground for
revelation of details of his or her account that the State has
acquired. Innocent citizens, including those ~ctively working
towards the betterment of the society and the nation, could fall
prey to the machinations of those who might wish to damage F
the prospects of smooth functioning of society. Whether the
State itself can access details of citizens bank accounts is a
separate matter. However, the State cannot compel citizens
to reveal, or itself reveal details of their bank accounts to the
public at large, either to receive benefits from the State or to G
facilitate investigations, and prosecutions of such individuals,
unless the State itself has, through properly conducted
investigations, within· the four corners of constitutional
permissibility, been able to establish prima facie grounds to
accuse the individuals of wrong doing. It is only after the State H
772 SUPREME COURT REPORTS [2011] 8 S.C.R.
A has been able to arrive at a prima facie conclusion of wrong
doing, based on material evidence, would the rights of others
in the nation to be informed, enter the picture. In the event
citizens, other persons and entities have credible information
that a wrong doing could be associated with a bank account,
B it is needless to state that they have the right, and in fact the
moral duty, to inform the State, and consequently the State
would have the obligation to investigate the same, within the
boundaries of constitutional permissibility. If the State fails to
do so, the appropriate courts can always intervene.
C 78. The major problem, in the matters before us, has
been the inaction of the State. This is so, both with regard to
the specific instances of Hassan Ali Khan and the Tapurias,
and also with respect to the issues regarding parallel economy,
. generation of black money etc. The failure is not of the
D Constitutional values or of the powers available to the State;
the failure has been of human agency. The response cannot
be the promotion of vigilantism, and thereby violate other
constitutional values. The response has to necessarily be a
more emphatic assertion of those values, both in terms of
E protection of an individual's right to privacy and also the
protection of individual's right to petition this Court, under
Clause (1) of Article 32, to protect fundamental rights from
evisceration of ~ontent because of failures of the State. The
balancing leads only to one conclusion: strengthening of the
F machinery of investigations, and vigil by broader citizenry in
ensuring that the agents of State do not weaken such
machinery.
79. In light of the above we order that:
(i) The Union of India shall forthwith disclose to the
G
Petitioners all those documents and information
which they have secured from Germany, in
connection with the matters discussed above,
subject to the conditions specified in (ii) below;
H (ii) That the Union of India is exempted from revealing
RAM JETHMALANI AND ORS. v. UNION OF INDIA 773
AND ORS.
the names ofthose individuals who have accounts A
in banks of Liechtenstein,· and revealed to it by
Germany, with respect of who investigations/
enquiries are still in progress and no information or
evidence of wrongdoing is yet available;
8
(iii) That the names of those individuals with bank
accounts in Liechtenstein, as revealed by Geimany,
with respect of whom investigations have been
concluded, either partially or wholly, and show
cause notices issued and proceedings initiated
may be disclosed; and C
(iv) That the Special Investigation Team, constituted
pursuant to the orders of today by this Court, shall
take over the matter of investigation of the
individuals whose names have been disclosed by D
Germany as having accounts in banks in
Liechtenstein, and expeditiously conduct the same.
The Special Investigation Team shall review the
concluded matters also in this regard to assess
whether investigations have been thoroughly and E
properly conducted or not, and on coming to the
conclusion that there is a need for further
investigation shall proceed further in the matter.
After conclusion of such investigations by the
Special Investigation Team, the Respondents may F
disclose the names with regard to whom show
cause notices have been issued and proceedings
initiated.
80. Compliance reports shall be filed by Respondents,
with respect of all the orders issued by this Court today. List G
for further directions in the week following the Independence
Day, August 15, of 2011.
Ordered accordingly.
D.G. Matters adjourned. H
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