CENTRAL BUREAU OF INVESTIGATION versus ARVIND KHANNA on 17 October 2019

1. Leave granted.

2. This criminal appeal is filed by the Central Bureau ofInvestigation (for short ‘CBI’), through the Investigating Officer, CBI/SPE, ACP, New Delhi, aggrieved by the common judgment and orderdated 30.11.2015, passed by the High Court of Delhi at New Delhi inCrl. M.C. No. 2784 of 2011 and Criminal M.C. No. 3342 of 2011.

3. The aforesaid Criminal Miscellaneous Cases were filed underSection 482 of the Code of Criminal Procedure (for short ‘Cr.P.C.’).Vide Crl. M.C. No. 2784 of 2011, the respondent-petitioner soughtquashing of First Information Report (for short ‘F.I.R.’) bearing No.RC-AC-1-2007-A-0003 dated 02.04.2007, charge sheet dated 13.12.2010and the order dated 05.07.2011, passed by the learned Additional ChiefMetropolitan Magistrate-01 (ACMM), Patiala House Courts, New Delhi.

4. By order dated 05.07.2011, the Additional Chief MetropolitanMagistrate took cognizance of the offence under Section 35 read withSection 3 of Foreign Contribution (Regulation) Act, 2010 (for short‘FCRA, 2010’) and issued summons to the respondent-petitioner. VideCrl. M.C. No. 3342 of 2011, the respondent-petitioner sought quashingof the order dated 20.08.2011, passed by the learned Revisional Court inCriminal Revision No. 02/2011, filed by the appellant herein.

5. While allowing the Revision Petition, order dated 05.07.2011was substituted providing that deemed cognizance has been taken underSection 23 read with Section 4 of the Foreign Contribution (Regulation)Act, 1976 (for short ‘FCRA, 1976’).

6. By the aforesaid common order passed by the High Court, inexercise of powers under Section 482 of Cr.P.C., the operating portionof the order, as contained in paragraph 82, reads as under:

“In view of the facts recorded above and the law discussed, I amof the opinion that the material placed on record with chargesheetby prosecution is not sufficient even to frame charge against thepetitioner. Therefore, I hereby quash the FIR mentioned abovewith all proceedings emananting thereto with liberty to the CentralGovernment to compound the case of the petitioner under Section41(1) FCRA, 2010.”

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A7. The respondent-petitioner was a Member of LegislativeAssembly (MLA), Punjab from 24.02.2002 to 27.02.2007.

8. During the said period from 06.03.2002 to 04.03.2006, hereceived a sum of Rs. 9,04,84,770/- (Rupees Nine Crores Four LacsEighty-Four Thousand Seven Hundred and Seventy Only) from eightBforeign entities, one of these is an entity known as ‘New HeavenNominees’. The other seven entities are managed by an entity knownas ‘CI Law Trust’.

9. On the ground, that the foreign contribution received by therespondent-petitioner was in violation of provisions under FCRA, 1976,Cthe appellant herein on 02.04.2007, registered the crime in F.I.R. No.RC-AC-1-2007-A-0003 under Section 23(1) read with Section 4(1) ofFCRA, 1976.

10. It was the case of the respondent-petitioner, that the fundswhich were received, were gifts from his father, Mr. Vipin Khanna, anDIndian passport holder. It was his case that the foreign entities throughwhom such funds were sent, were holding the same on behalf of hisfather, Mr.Vipin Khanna. After completing the investigation, charge-sheetwas filed and by order dated 05.07.2011, the Additional Chief MetropolitanMagistrate had taken cognizance under Section 35 read with Section 3of FCRA, 2010. As the offence was committed, when the FCRA, 1976Ewas in force, the appellant-CBI has filed Criminal Revision Petition No.2 of 2011 before the Revisional Court i.e. the Special Judge, CBI-03,New Delhi. The Revisional Court, by order dated 20.08.2011, on theground that the learned Additional Chief Metropolitan Magistrate, NewDelhi has committed a “jurisdictional error”, by proceeding under theFwrong provision of law, allowed the Revision Petition, thereby providingthat cognizance is deemed to have been taken under Section 23 readwith Section 4 of the FCRA, 1976.

11. So far as such order passed by the Revisional Court isconcerned, respondent-petitioner has questioned the same, mainly onGthe ground that the said order was passed without notice to him. At thesame time, the respondent sought quashing of the F.I.R., charge-sheetand further consequential order, on the ground that the amount which hehas received, is a gift from his father, Mr. Vipin Khanna, who is anIndian passport holder. The foreign entities, through whom such fundswere sent, were holding the same on behalf of his father. The respondent H

relied on the statement allegedly given by his father, Mr. Vipin Khanna,on 11.07.2006 and also the statement dated 13.04.2007, issued on behalfof New Heaven Nominees’, stating that the funds which were sent,were from funds standing to the credit of respondent’s father, Mr. VipinKhanna. It was also pleaded that Income Tax Authorities, vide orderdated 11.12.2010, in proceedings under Section 147 of the Income TaxAct, 1961, accepted the said receipts as gift, and the same is confirmedby order dated 15.04.2014, passed by the Income Tax Appellate Tribunalin ITA Nos. 1915 to 1917/DEL of 2010.

12. The appellant has filed an application, for issuance of LettersRogatory (LRs), which was allowed by the Trial Court vide order dated10.12.2007, for the purpose of collection of evidence from UnitedKingdom. Though they have received only part/incomplete execution ofsuch LRs, it was also the case of the respondent that FCRA, 1976 isrepealed and replaced by FCRA, 2010 with effect from 01.05.2011 andSection 4 of FCRA, 2010, now removes the requirement of priorpermission from Central Government, before receipt of foreigncontribution. Further, it was pleaded that though cognizance of offencewas taken under Section 35 read with Section 3 of FCRA, 2010 andsummons were issued to the respondent, however, on Revision filed bythe C.B.I, same was allowed without notice to him.

13. After FCRA, 2010 has come into force, on the ground thatoffence alleged against the respondent is now compoundable underSection 41 of the Act, respondent has filed an application dated 04.06.2012before the Ministry of Home Affairs, seeking compounding of offence.However, the Ministry of Home Affairs, by order dated 28.04.2014,rejected the same. Thereafter, the respondent filed Writ Petition (Criminal)No. 1168 of 2014 before the High Court, and the High Court vide orderdated 08.07.2014, allowed the petition and directed the authorities totake decision afresh after hearing the respondent-petitioner. Thereafter,no decision was taken.

14. Before the High Court, the quash petition filed by the respondentwas opposed by the appellant herein, stating that the petition filed underSection 482 Cr.P.C, by the respondent, is not maintainable, as theallegations made in the F.I.R and charge-sheet, prima facie disclosesthe commission of offence under Section 23 read with Section 4 of FCRAAct, 1976. The F.I.R. was registered on sanction by the Ministry ofHome Affairs, Government of India, vide letter dated 18.12.2006, by A

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Awhich, the appellant-C.B.I was authorized under Section 28 of the FCRA,1976, to investigate receipt of foreign funds amounting to Rs.9.60 croresby the respondent, who was the then MLA of Punjab, from eight overseasCompanies, without obtaining prior permission from the CentralGovernment. It was their case before the High Court that charge-sheetwas filed before the FCRA, 2010 came into force on 01.05.2011 and itBwas further pleaded on their behalf that the Revisional Court has rightlyheld that cognizance and summoning of the respondent is deemed tohave been taken under Section 3 read with Section 24 of FCRA, 1976.It was categorically pleaded that benefit of Section 41 of FCRA, 2010 isnot available to the respondent, as the same is available only for theCoffences committed under the Act of 2010.15. The High Court, in common impugned order, has observedparagraphs 60-62 as under:

“60. Admittedly, the amount in question has been received bythe petitioner from his father Mr. Vipin Khanna, who is an IndianDpassport holder. The foreign entities through whom such fundswere sent were holding the same on behalf of his father. To thiseffect, Mr. Vipin Khanna made a staement dated 11.07.2006,whereby stated that these funds were sent on his instructions tothe petitioner. Moreover, vide statement dated 13.04.2007, NewEHeaven Nominees’ stated that the funds sent to the petitioner byway of gifts were from funds standing to the credit of petitioner’sfather with them. Moreover, similar gifts or funds were also givento the petitioner’s siblings, namely, Mr. Aditya Khanna, Mr. NaveenKhanna and Ms. Vineeta Singh by Mr. Vipin Khanna, i.e, theirfather. The statement dated 10.08.2007 made by CI Law Trust,Fcorroborated that funds sent to the petitioner were paid by way ofgifts from funds standing to the credit of Mr. Vipin Khanna andfurther stated that similar gifts or funds were given to other siblingsmentioned above by father of the petitioner.

61. It is pertinent to mention that the Income Tax Authorities videorder dated 11.12.2010 passed by the Commissioner of IncomeTax (Appeals) in proceedings under Section 147 of the IncomeTax Act, 1961, that similar income received by the petitioner fromthe same CI Law Trust (formerly known as West Way) had beentreated as a ‘gift’ from the father of the petitioner. The aboveorder stands confirmed by order dated 15.04.2014 passed by the G

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Income Tax Appellate Tribunal in ITA Nos. 1915 to 1917/DEL/2010.

62. It is further important to note here that the Ministry of HomeAffairs by order dated 28.04.2014, rejected the compoundingapplication of the petitioner. Accordingly, the petitioner challengedsaid rejection order vide W.P.(Crl.) No. 1168/2014, which wasset aside by this Court vide order dated 08.07.2014 and directed afresh hearing to the petitioner.

Accordingly, a fresh hearing was granted on 09.03.2015, however,till date no decision is taken thereon by the Ministry.”

16. Initially, cognizance was taken by the trial court underprovisions of FCRA, 2010. Aggrieved by the same, the appellant-CBIhas filed the Revision. The Revision Authority, by order dated 20.8.2011,has allowed the Revision. The Revisional Authority, in its order dated20.08.2011, has observed that the learned Additional Chief MetropolitanMagistrate, New Delhi, has committed a “jurisdictional error” and hasproceeded under the wrong provision of law. It was further observedthat while allowing the Revision, cognizance is deemed to have beentaken under Section 23 read with Section 4 of the FCRA, 1976.

17. About the order of the Revisional Authority, mainly it was thegrievance of the respondent that Revisional Authority has passed theorder, without giving notice and opportunity.

18. We have heard Sri Rana Mukherjee, learned senior counselfor the appellant and Sri Mahesh Jethmalani, learned senior counsel forthe respondent and perused the impugned order and other material placedon record.

19. After perusing the impugned order and on hearing thesubmissions made by the learned senior counsels on both sides, we areof the view that the impugned order passed by the High Court is notsustainable. In a petition filed under Section 482 Cr.P.C., the High Courthas recorded findings on several disputed facts and allowed the petition.Defence of the accused is to be tested after appreciating the evidenceduring trial. The very fact that the High Court, in this case, went into themost minute details, on the allegtions made by the appellant-C.B.I., andthe defence put-forth by the respondent, led us to a conclusion that theHigh Court has exceededits power, while exercising its inherentjurisdiction under Section 482 Cr.P.C.

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20. In our view, the assessment made by the High Court at thisstage, when the matter has been taken cognizance by the CompetentCourt, is completely incorrect and uncalled for.

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21. From a reading of the impugned order, it appears that theHigh Court has proceeded on the premise that the appellant has admittedBthe receipt of foreign contribution from his father Mr. Vipin Khanna,who is an Indian passport holder. Infact, it is not so. It is a case of theappellant-CBI, that the foreign contributions were received by therespondent from different entities in the foreign country, withoutpermission from the Government. On the other hand, the case of therespondent, in defence, is that he has received such funds from his fatherCMr. Vipin Khanna. The High Court has taken into consideration thestatement, alleged to have been made by Mr. Vipin Khanna on 11.07.2006and one of the statements given on behalf of one of the entities by thename ‘New Heaven Nominees’. It is a defence of the respondent thatthe foreign entities which have sent the funds to the respondent areDfrom available funds, standing to the credit of respondent’s father, Mr.Vipin Khanna.

22. The correctness of the defence whether such amounts werereceived by the respondent from his father or not is a serious factualdispute. It is not an admitted position, as recorded by the High Court.EThe correctness of the defence of the respondent is to be gone into onlyafter appreciating the evidence during the trial. Merely, by referring tostatements alleged to have been made by father of the respondent, Mr.Vipin Khanna, and also on behalf of one of the entities i.e New HeavenNominees’, the High Court has committed an error in recording a findingin favour of the respondent. The High Court also committed an error inFobserving that, even otherwise, there is material to show that funds wereindeed a gift from father of the respondent and the prosecution hasneither disputed the said fact as false nor alleged that the funds in questiondid not belong to the father of the respondent. The said observationmade by the High Court is also contrary to the record.

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23. When it is mainly the defence of the respondent that the fundswere received from his father, burden is on him to prove that he receivedsuch funds from his father, as such, no permission was required. Evenwith regard to applicability of provisions under FCRA, 1976, findings areto be recorded after trial.

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24. Learned senior counsel Sri Mahesh Jethmalani, appearing forthe respondent, in support of his argument, relied on the judgment of thisCourt, in the case of Ahmedabad Urban Development Authority v.Manilal Gordhandas and Ors.[1 ]Learned senior counsel also placedreliance on the judgment in the case of Mohit Alias Sonu and Anr. v.State of Uttar Pradesh and Anr.[2]. In this case, when the SessionsCourt refused to issue summons, on the ground that no prima facie caseis made out and when such order is challenged before the RevisionalCourt, it was held that it was incumbent upon the Revisional Court togive opportunity of hearing, as contemplated under sub-section (2) ofSection 4 of Cr.P.C.

25. So far as the order passed by the Revisional Authority isconcerned, if any adverse order is passed by the Revisional Court, withoutissuing notice to the respondent, it is open to the High Court to set asidethe order and remit the matter back for fresh consideration but, at thesame time, it is not open to allow the Revision in its entirety.

26. For the aforesaid reasons, this appeal is allowed, impugnedcommon order dated 30.11.2015 is set aside. It is open for the trial courtto proceed from the stage at which the proceedings were stopped and todecide the same in accordance with law, uninfluenced by any of thefindings and observations made by this Court or the High Court. So faras the order dated 20.08.2011, in Crl. Revision Petition No.02/2011, passedby the Special Judge, CBI-03, New Delhi, we quash the same and remitthe matter to the Revisional Court for fresh consideration, after issuingnotice to the respondent. The respondent, without waiting for any formalnotice, shall make his appearance before the Revisional Court within aperiod of four weeks from today. Thereafter, it is open to the RevisionalCourt to fix a date for hearing, and pass an appropriate order, on its ownmerits.

Ankit Gyan

Appeal allowed.

1 (1996) 11 SCC 482

2 (2013) 7 SCC 789

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