Court sets up SIT to probe black money cases, says names will be disclosed only if wrongdoing involved
Nikhil Kanekal, Mint 5/7/2011
The Supreme Court took the onus of investigating money that Indians may have stashed in secret foreign accounts and on which taxes have not been paid, continuing to display an activist streak that has discomfited the government.
The court created a new special investigative team (SIT) to investigate such instances of black money being secreted in overseas accounts in foreign banks and appointed two of its former judges, B.P. Jeevan Reddy and M.B. Shah as chairman and vice-chairman of the body, respectively.
While the United Progressive Alliance (UPA) government chose not to respond to the court’s criticism, claiming it hadn’t seen the “text of the judgement”, the opposition seized the opportunity to attack the government, and an analyst cautioned that the court may have over-reached itself.
The SIT has come from a previously appointed high-powered committee, comprising 10 top officials of government agencies, which was set up as a response to a public interest litigation on retrieving black money filed by senior lawyer Ram Jethmalani and some public figures in 2009.
The high-powered committee includes the revenue secretary, deputy director of the Reserve Bank of India, chairman of the Central Board of Direct Taxes, director general of revenue intelligence, director general of narcotics control, director of foreign intelligence office, joint secretary of foreign trade and the directors of the Central Bureau of Investigation, the Intelligence Bureau and the Enforcement Directorate.
On Monday, the court added the director of the Research and Analysis Wing to the newly-created SIT.
The Union government has been directed to pass a notification to formalize the appointment of the SIT, which in turn has been mandated to pursue the black money probe with vigour, starting with the case of Pune-businessman Hasan Ali Khan and his associates Kashinath Tapuriah and Chandrika Tapuriah.
“The Supreme Court is clearly violating the constitutional separation of powers. What will two judges do? Will they go after everybody or just Hasan Ali and some others? The danger in my view is that the court will undermine its own legitimacy,” said Pratap Bhanu Mehta, president of Centre for Policy Research, a New Delhi-based think tank.
The court’s stinging criticism had an overarching concern for the general failure of governance in the country. In an order that went well beyond the domains of black money, the bench unleashed denigration upon the government, asking why “incapacities” were prevailing “system-wide”.
Justice B. Sudershan Reddy, who will retire on Thursday, delivered the 53-page order along with justice Surinder Singh Nijjar. Reddy began his order with a reference to a line immortalized in the story of the Watergate scandal in the US (and its cinematic retelling). “Follow the money”, the bench said, while taking a critical view of the government for its slowness in the investigation.
“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 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 individuals who may use them for unlawful activities that are extremely dangerous to the nation, including actions against the state.”
The court said that information on the identity of people who had money in foreign accounts would be disclosed if investigators had reason to believe that there was wrongdoing involved. Identity of individuals with show-cause notices against them would become known to the public, while that of the rest would be withheld in the interests of their privacy.
The court also observed that the double-taxation avoidance agreement between India and Germany, which the government was using as a shield to protect the information, was not a valid argument.
The court expressed concerns over the cyclical nature of black money that it believed was causing damage to the economy and not allowing people from the lower economic classes to come out of their poverty. And it could not have made its distrust in the government more clear: “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 the country, and thereby developing effective mechanisms of control. These incapacities go to the very heart of constitutional imperatives of governance.”
The Bharatiya Janata Party (BJP) said the order highlighted the trust deficit in the government’s relationship with the judiciary. “BJP welcomes the decision of the Supreme Court to appoint an SIT in view of the government’s failure to bring back black money stashed in foreign banks. This is a slap in the government’s face. This is proof that even courts don’t believe the government has the ability to bring back the money,” said BJP spokesperson Prakash Javadekar.
The high-powered committee, constituted by the court on 25 April, has met only once, on 9 June. The panel has asked for recommendations from citizens on how to curb the black money problem (at email@example.com). It is not yet clear whether SIT will also seek suggestions from the public since the panel had not received any substantial inputs, according to a finance ministry official, who did not want to be named. For now, the Supreme Court has asked the finance ministry to provide infrastructure support to SIT.
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