If Exoneration on Merits, Criminal Prosecution on Same Set of Facts Can Not be Allowed to Continue

Recently, a three judge bench of hon’ble Supreme Court in Radheshyam Kejriwal  Vs State of West Bengal & Anr. {(2011) 3 SCC 581; Decided on 18.02.2011} held as follows (per majority) (SCC para 37, 38 and 39).

“19……………. There may appear to be some conflict between the views in the case of Standard Chartered Bank and others vs. Directorate of Enforcement and others (2006) 4 SCC 278 and Assistant Collector of Customs, Bombay and another vs. L.R. Melwani and another AIR 1970 SC 962, holding that adjudication proceeding and criminal proceeding are two independent proceedings and both can go on simultaneously and finding in the adjudication proceeding is not binding on the criminal proceeding and the judgments of this Court in the case of Uttam Chand and others vs. Income Tax Officer, Central Circle, Amritsar (1982) 2 SCC 543, G.L. Didwania and Another vs. Income Tax Officer and Another 1995 Supp (2) SCC 724,and K.C. Builders and Another vs. Assistant Commissioner of Income Tax (2004) 2 SCC 731, wherein this Court had taken a view that when there is categorical finding in the adjudication proceeding exonerating the person which is binding and conclusive, the prosecution cannot be allowed to stand. Judgments of this Court are not to be read as statute and when viewed from that angle there does not seem any conflict between the two sets of decisions. It will not make any difference on principle that latter judgments pertain to cases under the Income Tax Act. The ratio which can be culled out from these decisions can broadly be stated as follows:-

(i) Adjudication proceeding and criminal prosecution can be launched simultaneously;

(ii) Decision in adjudication proceeding is not necessary before initiating criminal prosecution;

(iii) Adjudication proceeding and criminal proceeding are independent in nature to each other;

(iv) The finding against the person facing prosecution in the adjudication proceeding is not binding on the proceeding for criminal prosecution;

(v) Adjudication proceeding by the Enforcement Directorate is not prosecution by a competent court of law to attract the provisions of Article 20 (2) of the Constitution or Section 300 of the Code of Criminal Procedure;

(vi) The finding in the adjudication proceeding in favour of the person facing trial for identical violation will depend upon the nature of finding. If the exoneration in adjudication proceeding is on technical ground and not on merit, prosecution may continue; and

(vii) In case of exoneration, however, on merits where allegation is found to be not sustainable at all and person held innocent, criminal prosecution on the same set of facts and circumstances can not be allowed to continue underlying principle being the higher standard of proof in criminal cases.

In our opinion, therefore, the yardstick would be to judge as to whether allegation in the adjudication proceeding as well as proceeding for prosecution is identical and the exoneration of the person concerned in the adjudication proceeding is on merits. In case it is found on merit that there is no contravention of the provisions of the Act in the adjudication proceeding, the trial of the person concerned shall be an abuse of the process of the court.”