2003 INSC 0438 SUPREME COURT IN INDIA Hira Lal Hari Lal Bhagwati Versus C.B.I., New Delhi 2.5.2003 (Brijesh Kumar and A.R. Lakshmanan, JJ. ) Criminal Appeal No. 676 of 2003. JUDGMENT Dr. AR. Lakshmanan, J. - Leave granted. 2. These two appeals arise out of the final judgment and order passed by the High Court of Delhi at New Delhi in Criminal Miscellaneous (M) Nos. 360/2002 and 447/2002 filed under Section 482 of the Criminal Procedure Code read with Article 227 of the Constitution of India by the appellants herein seeking the invocation of the inherent powers of the High Court for quashing the F.I.Rs and the proceedings initiated in pursuance thereto, as also the process issued by the Chief Metropolitan Magistrate, Delhi. The learned single Judge of the Delhi High Court, by the impugned final orders, held against the appellants that obtaining from the Ministry of Health Customs Duty Exemption Certificate, that was meant for `actual user' on false assertion makes out the offence under Section 120B read with Section 420 of the Indian Penal Code. 3. The respondents herein (Central Bureau of Investigation, New Delhi) initiated criminal proceedings under Section 120B read with Section 420 of the Indian Penal Code against the appellants on the ground that the appellants in conspiracy with the Director of Gujrat Cancer and Research Institute, Mr. T.B. Patel (deceased), Secretary of the Gujrat Cancer Society. Mr. N. L. Patel and Dr. Viral C. Shah with each other have cheated the Government of India in terms of evasion of Customs Duty and by concealment of facts obtained Customs Duty Exemption Certificate in respect of MRI and Lithotripsy machines and by violating the provisions of `actual user' conditional as per Import Export Policy and Customs Notification No. 279/83 dated 30.9.1983 and Customs Notification No. 64/88 dated 1.3.1988 during the year 1987-90, despite acknowledge the fact that the Customs Duty has been paid by the appellants to the Customs Department and settled under the Kar Vivad Samadhan Scheme, 1998. In the instant case, two machines were imported into India by the Gujarat Cancer Society (hereinafter referred to as "the GCS") who availed of the duty exemption on the basis of the exemption certificate issued in the name of the Gujarat Cancer and Research Institute (hereinafter referred to as "the GCRI") on a bona fide premise that since all the activities of the GCRI were funded by the GCS and all the operations of GCS were carried out through the GCRI and that they are akin to holding any subsidiary company, the same coudl be done. The Customs Authority raided the premises of the GCRI and seized the machines and necessary paper work on the ground that the exemption certificate was issued in the name of GCRI and not in the name of the GCS and thus the GCS was not entitled to exemption and was, therefore, liable to pay Customs Duty. The machines were immediately released on giving a usual undertaking. ON 11.10.1991, Show Cause Notice was issued to the GCS which was replied to by them. The Collector of Customs, Bombay by an order dated 10.4.1993 held that the GCS was liable to pay the Customs Duty, thus denying the concessional duty benefit under Customs Notification Nos. 279/1983 and 64/1988 and demanded a duty of Rs. 2,16,80,444/- under Section 28 of the Custom Act, 1962 read with the proviso to the said Section. The said duty was to be paid by the importer - GCS and Canbank Financial Services as well as ICICI being joint holder of the said imported machines. However, considering the charitable and philanthropic activities of the GCS, no prosecution was recommended and only a token redemption fine of Re. 1/- was imposed. No penalty was imposed on the above said financial organisations, namely, Canbank Financial Services and ICICI as they were acting as a lessor, who had extended financial extension to the above charitable organisation for import of sophisticated machines. A personal penalty was imposed on M/s. Shah Diagnostic Institute Pvt. Ltd., Ahmedabad and its Director, Dr. Viral C. Shah jointly under Section 112 A the Customs Act, 1962. 4. Against the order of the Collector of Customs, the appellants preferred appeals before the Customs, Excise and Gold (Appellate) Tribunal, West Regional Branch, Bombay which confirmed the findings of the Collector of Customs. 5. Against the order of the Customs, Excise& Gold (Appellate) Tribunal, the GCS came up in appeal before this Court in Civil Appeal No. 31/1999. Whilst the matter was pending before this Court, the Government of India launched the Kar Vivad Samadhan Scheme, 1998, whereby whoever takes the benefit under the said Scheme is granted immunity from prosecution from any offence under the Customs Act including the offence of evasion of duty. In accordance with the Kar Vivad Samadhan Scheme, 1998, the GCS has agreed to deposit the stipulated amount of over Rs. 98 lakhs which had already been deposited earlier and withdraw the Civil Appeal pending before this Court. On 19.7.1999, a certificate for full and final settlement of tax arrears in respect of the Kar Vivad Samadhan Scheme, 1998 was issued to the GCS. The said Certificate, inter alia, certified the receipt of payment from the GCS towards full and final settlement of tax arrears determined in the order dated 10.2.1999 of the Designated Authority and further granting immunity to the GCS from any proceedings for prosecution from any offence under the Customs Act, 1962 or from the imposition of penalty under the said enactment, of the matters covered in the declaration made by the GCS. 6. However, a case was registered against the appellants on 6.1.1999 by the respondent alleging that the appellants in conspiracy with the Director of the GCRI, Mr. T.B. Patel (deceased), Secretary of the GCS, Mr. N.L. Patel and Dr. Viral C. Shah had cheated the Government of India in terms of evasion of Customs Duty and by violating the provisions of `actual user' condition as per Import Export Policy during the year 1987-88. A charge sheet was prepared for commission of offence under section 120B read with Section 420 of the Indian Penal Code. On presentation of the said charge sheet, the trial Court by its order took cognizance and summoned the appellants. The appellants were furnished copies of the charge sheet. In the meantime, the appellants preferred Special Criminal Applications before the High Court of Gujarat at Ahmedabad seeking quashing of the FIR. However, the same was disposed of as withdrawn on the ground of jurisdiction with a liberty to file a fresh petition before an appropriate Court. Thereupon the appellants filed Criminal Miscellaneous (Main) Petitions under Section 482 of the Code of Criminal Procedure read with Article 227 of the Constitution of India in the High Court of Delhi at New Delhi seeking an appropriate order/directions to the respondent quashing the FIR concerned. The learned single Judge of the High Court of Delhi, by his final order, dismissed the said petitions. Hence these two appeals by way of special leave petitions. 7. We have heard Shri P. Chidambaram, learned senior counsel, appearing for the appellants in both the appeals and Shri K.K. Sood, learned Additional Solicitor General, appearing for the respondent. 8. Before considering the rival submissions of the respective counsel appearing on either side, it is useful to reproduce the short order passed by the learned single Judge of the High Court of Delhi on 4.3.2002 which reads as under : "This petition has been filed with a prayer to quash FIR No. R.C.1(E)/99/EOW-1/DLI under Section 120B r/w 420 IPC and the proceedings initiated in pursuance thereto. It is the case of the petitioner that petitioner has compound the offence by taking recourse to Kar Vivad Samadhan Kar Vivad Samadhan Scheme, 1998 and that no prosecution for offence after compounding of offence can be instituted. He draws my attention to a judgment of the Supreme Court in Smt. Sushila Rani v. Commissioner of Income Tax & Anr., 2002 Vol. II AD Apex Decision, where the Supreme Court has held that: "The appellant in the course of the declarations filed specifically stated that any adjustment of refunds towards tax arrears of the appellant by the Department in the earlier years without following the mandatory procedure of Section 245 of the Act would still remain as tax arrears for the purpose of the KVSS and it is on that basis the declarations were accepted by the Department. Having accepted the claim of the appellant on that basis, it will not be permissible for the respondents now to turn around and take a different stand." The case of the prosecution is that this is not a question of mere evasion of custom duties but it is a question of obtaining custom duty exemption certificate from the Ministry of Health by making a false assertion that the machines imported are for actual user. The compounding of offence subsequent thereto only indicates that a certificate was falsely induced from the Ministry of Health. Having heard learned counsel for parties and having gone through the judgment relied upon by learned counsel for the petitioner, I am of the view that obtaining a certificate, that was meant for actual user, on false assertion, makes out the offence. Crl.M.(M) 360/2002 is dismissed." 9. Learned Senior counsel appearing for the appellants submitted that to the show cause notice, the appellant had sent a proper reply and after hearing the case of the GCS, the Collector of Customs, Bombay held that the GCS was liable to pay the Customs Duty but in view of the activities of the Society and the bona fides of the Society, and considering charitable and philanthropic activities of the Society, no prosecution was recommended and moreover, only a token redemption fine of Re. 1/- was imposed. Thus, he submitted that the concerned authorities were satisfied that there was no intention to evade the Customs Duty as stated by the authorities. It was further submitted that the GCS was immuned from any criminal proceedings pursuant to the Certificates issued under the Kar Vivad Samadhan Scheme, 1998 and the present appellants are being prosecuted in their capacity as office bearers of the GCS. As the Customs Duty has already been paid, the Central Government has not suffered any financial loss. Moreover, as per the Kar Vivad Samadhan Scheme, 1998, whoever is granted the benefit under the Kar Vivad Samadhan Scheme, 1998 is granted immunity from prosecution from any offence under the Customs Act, 1962, including the offence of evasion of duty. In the circumstances, the complaint filed against the appellants is unsustainable and that the appellants are reputed persons who had never even contemplated committing any violation of law or thought of taking undue advantage of the exemption Notification in respect of the two machines, it acted bona fide in the belief, that since the machines were being imported, purely for the benefit of the cancer patients of the GCRI, by such importation, cancer patients would be benefited, as they would get diagnosis and treatment in the GCRI itself and would not have to go to Bombay and other places. He further contended that the impugned order passed by the High Court of Delhi is bad in law and fact inasmuch as the learned single Judge has erred in passing the impugned order, dismissed the petitions filed under Section 482 of the Criminal Procedure Code on the basis of an erroneous reading and a total misterpretation of the judgment and despite the well-settled principle of law cited by the petitioners. In this context, he cited the judgment of this Court in the case of Sushila Rani (Smt) v. Commissioner of Income Tax and Another, (2002) 2 SCC 697. He also cited the judgment of this Court in the case of Central Bureau of Investigation, SPE, SIU(X), New Delhi v. Duncans Agro Industries Ltd., Calcutta, (1996) 5 SCC 591. Placing reliance on the above judgments, he urged that the alleged criminal liability stands compounded on a settlement with respect to the civil issues and, therefore, the FIR was erroneously issued and was totally unwarranted. He further submitted that under the penal law, there is no concept of vicarious liability unless the said statute covers the same within its ambit. In the instant case, the said law which prevails in the field i.e. the Customs Act, the appellants have been therein under wholly discharged and the GCS granted immunity from prosecution. He also contended that the learned single Judge failed to appreciate that the GCS had taken the benefit of the Assembly Scheme of Kar Vivad Samadhan Scheme, 1998 and, therefore, implicating the appellants being office bearers of the Society under Section 120B read with Section 420 of the Indian Penal Code is against the purpose and object of the said Scheme, and, therefore, there is no prima facie case against the appellants in respect of the alleged offence. He further submitted that evasion of Customs Duty, in the present case, was predominantly a civil case and that the ingredients of criminal offence were missing/wanting and whcih liability, in any case, stood settled and that, therefore, in such a scenario, the appellants to undergo an agony of a long criminal trial would be an abuse of process of Court and against the interest of justice. 10. He invited our attention to the pleadings, in particular, the F.I.R., the Annexures of the S.L.Ps, the provisions of the Kar Vivad Samadhan Scheme, 1998, the relevant provisions of the Indian Penal Code, the Customs Act, 1962 and the rulings relied on by him. 11. Shri K.K. Sood, learned Additional Solicitor General, appearing for the respondent, submitted that the material gathered in the investigation clearly show and establish commission of offences by the accused persons indicating the appellants herein under Sections 420 and 120B of the Indian Penal Code and that there is no infirmity in the order of the Chief Metropolitan Magistrate taking cognizance or in the order of the High Court declining to quash criminal proceedings at the interlocutory stage. He further submitted that the criminal proceedings in respect of which cognizance has been taken by the Court can be interfered with or quashed only if the allegations even if taken on their face value do not satisfy or make out the ingredients of offences alleged and no offence is at all made out or there is legal or statutory impediment in prosecuting the accused person. He submitted that none of these grounds exist in the present case. According to him, in the present case, material on record clearly show and establish commission of offences under the Indian Penal Code by the appellants and since ther charges are supported by documentary evidence which establish the same, there is no warrant or justification or basis for seeking the relief of quashing the criminal proceedings. He further submitted that the High Court has rightly declined to quash the criminal proceedings and, therefore, the same does not call for any interference by this Court. In regard to the judgments cited by Shri P. Chidambaram, learned senior counsel appearing for the appellants, he submitted that the reliance placed upon those judgments is also without any merit and in the present case, material on record clearly show and establish the criminal conspiracy to cheat the Government and actually cheating the Government of India pursuant to the same and that it is not a civil dispute as has been sought to be made out and that the conduct of the accused persons is criminal in nature and material on record clearly establish commission of criminal offences by them. Thus, he would submit that the judgment in the case of Duncans Agro Industries Ltd., Calcutta (supra) has no application to the present case. Referring to the plea that the duty payable has been subsequently paid, he submitted, that such payment is not a ground for quashing criminal liability. According to him, the judgment in the case of Sushila Rani (supra) dealt with proceedings under the Income Tax Act and held that once the matter is settled under the Kar Vivad Samadhan Scheme, 1998, such settlement cannot be reopened except under specified grounds and that the stated grounds do not exist in the said case and that there is nothing in the said judgment warranting the plea of the appellants, in the present case, that criminal proceedings under the Indian Penal Code are prohibited merely because disputes concerning tax have been settled under the Kar Vivad Samadhan Scheme, 1998. According to him, such settlement only protects the individual form prosecution under the taxing Statute which is a limited protection and limited to the proceedings under the taxing Statute only. Coming to the certificate issued by the authorities under the Kar Vivad Samadhan Scheme, 1998, he submitted that the certificate issued by the authorities under the said Scheme cannot be the ground and basis for quashing the criminal proceedings. According to him, a perusal of the certificate woudl show that the settlement under the Kar Vivad Samadhan Scheme, 1998 gives immunity only from prosecution under relevant taxing Statute and hot under the Indian Penal Code. Concluding his arguments, he submitted that the criminal proceedings cannot be quashed merely on account of the fact that Customs Duty payments has been settled. 12. Before proceeding to consider the rival submissions, it is beneficial to refer to certain annexures filed along with the special leave petitions. The true copy of the agreement dated 28.4.1988 between the GCS and Dr. Viral C. Shah has been filed. This agreement was made at Ahmedabad on 28.2.1987 entered into between the GCS on the one part and Dr. Viral C. Shah as the second part. The relevant clauses of the agreement are extracted below: "(1) The Gujarat Cancer Society shall acquire ESWL and MRI machines in its own name and for this Dr. Viral Shah shall make necessary arrangements for the construction of the buildings for housing the said two equipments by way of arranging donations to the Society of an amount equivalent to the total cost of construction of premises required for the instalment of said machines. The Society shall contract the required premises in a portion of the land in the hospital complex and on completion the said building, the ownership of the said premises so constructed shall vest with the Society. (2) The overall control in regard to appointment of all categories of staff and running and maintenance of these two equipments will be with the Gujarat Cancer & Research Institute, Ahmedabad as per the tripartite agreement with the Govt. of Gujarat, the Gujarat Cancer Society, and the Gujarat Cancer and Research Institute. (3) Raising of loan, Dr. Shah will arrange for the Society procuring finance from financial institutions including leasing company or companies for meeting the cost for the matching out the purchases of procuring such finance the said machines may be mortgaged or leased to leasing company or financial institution which in turn will be leased out to the Society. (4) In consideration of the Society having entrusted the running and maintaining the said machine to the said Dr. Shah as herein provided the said Dr. Shad shall pay to the Society rental which shall be equivalent to the amount of monthly instalment and interest and/or hire charges payable by the Society to the financial institutions and/or the leasing company from whom the finances shall have procured for the said machines. ---------------------------------------------------- (6) The Institute agrees that Dr. Shah through the Gujarat Cancer Society shall be entitled to work, run, and maintain the said two machines for a maximum period of ten years and Dr. Shah or his nominees shall be responsible for the repairs and replacements of parts thereof, during the said period." The First Information Report filed as Annexure P-2 along with the S.L.P. is as under : Shri Rajveer Singh, DY. SP. CBI/EOW -I/NEW 2. Dr. DELHI. Joint 3. Viral Sh. INFORM Secre 1. Sh. C. D.D. ATION Plac tary, N.L. Shah, Delhi Patel, e of Minis Patel, Direc , Nam Secre The Joint occu Mum e of try of 12 Na Direc tor tary RC is Secretary , rrenc bai comp Healt 0- me tor M/s. Gujar regist Ministry 06.0 e h and B and Gujar Shah at Ac ered Invest of Health and liant 1.19 with Famil at Diagn "R.C.1(E)/9 Ahm and Off r/ add Canc tio and igatin & Family 99 at State y Canc osis 9- edab Infor enc w res er n invest g Welfare, EOW.I.DLI 16.0 Date Welfa er Instit Socie tak igatio Offic Governme ad matio e 42 s of 0 and re, Resea ute durin n 0 acc ty, en n er nt of hrs. time Gove rch (P) g the with IP use Ahm taken India, of year addre rnme C. d Instit Ltd., edaba up. New occu 1987 ss nt of ute Mum Delhi vide d& rrenc India, Ahme bai -90. other his D.O. e New dabad and s No. C-180 Delhi . Ahme 11/5/96- unkn . dabad own. VIG (PT) . dated 22/24.12.9 8 has sent a copy of the report dated D.O. F.No. IMP/CD W/1/1/97- RC (GUJ- 4), dated 17.08.199 8 submitted by Sh.P. Rosha, Chairman of Special Committe e appointed by HOn'ble High Court, Delhi to inquire into the import of equipment s against Customs Duty exemption certificate for use in Charitable Hospitals. The Hon'ble High Court, Delhi has approved the suggestion to refer the matter to CBI for registratio n of case and investigati on. According ly, the Joint Ministry of Health and Family Welfare, Governme nt of India, New Delhi has requested CBI to investigate the matter." 13. Our attention was drawn to the Rosha Committe e Report dated 17.08.199 8 and applicatio n dated 15.10.198 7 for import licence for import of LITHO ESWL Equipmen t by `actual users' (Non- Industrial) . There is another applicatio n for import of another machine. The agreement copy was also enclosed for ready reference to the Joint Chief Controller, Import and Export Trade Organisati on, Ahmedaba d. Along with the applicatio n, the agreement between the GCS, the GCRI and the State Governme nt of Gujarat was also enclosed as Annexure No.4. 14. Our attention was also drawn to the Text of the Kar Vivad Samadhan Scheme, 1998, under Chapter IV of Finance (No.2) Act, 1988. Our attention was further drawn to the Memoran dum to Finance (No.2) Bill, 1998 explaining the provision of the Kar Vivad Samadhan , 1998. The said Scheme seeks to provide a quick and voluntary settlement of tax dues outstandin g as on 31.3.1988, both in various direct tax enactment s as well as indirect taxes enactment s by offering waiver of a part of the arrears taxes and interest and providing immunity against institution of prosecutio n and imposition of penalty. The assessed on his part shall seek to withdraw appeals pending before various appellant Authoritie s and Courts. The Kar Vivad Samadhan Scheme, 1998 comes into force on the first day of September , 1998 and ends on 31st day of December, 1998. The Kar Vivad Samadhan Scheme, 1998 is applicable to tax arrears outstandin g as on 31.3.1998 under various direct tax enactment s and indirect tax enactment . Clauses 3 & 4 of the Memoran dum to Finance (No.2) Bill, 1998 read as under : "3. A person desiring to avail the scheme is required to file a declaratio n in the prescribed form before the designated authority notified for this purpose. The designated authority shall pass an order within sixty days of the declaratio n determinin g the amount payable in accordanc e with the provisions of the Scheme and grant a certificate indicating the particulars of tax arrears and the sum payable and intimate the same to the declare. THe declarant will pay the sum payable as determine d by designated authority within thirty days of the passing of such order. The order passed by the designated authority shall be conclusive and shall not be reopened n any other proceedin gs or under any law for the time being in force. Where the declarant has filed an appeal or reference before any Authority, Tribunal or Court, notwithsta nding anything contained in any other provision of law for the time being in force, such appeal, reference or reply shall be deemed to have been withdrawn . Where writ petitions have been filed before the High Court or Supreme Court the declarant shall move an applicatio n for withdrawi ng such petitions and furnish the proof of the same along with the intimation . Any amount paid in pursuance of declaratio n made under the Scheme shall not be refundable under any circumsta nces. 4. The designated authority shall subject to the conditions provided in the Scheme grant immunity from prosecutio n or penalty under the relevant Acts in respect of matters covered in the declaratio n." Section 87 (h) of the Kar Vivad Samadhan Scheme, 1998 defines "direct tax enactment " which reads thus: ""direct tax" means the Wealth-tax Act, (27 of 1957) or the Gift-tax Act, 1958 (18 of 1958) or the Income- tax Act, 1961 (43 of 1961) or the interest- tax Act, 1974 (45 of 1974) or the Expenditu re-tax Act, 1987 (35 of 1987)." Sub- clause (j) of Section 87 defines "indirect tax enactment " which reads thus: "indirect tax enactment " means Customs Act, 1962 (52 of 1962) or the Central Excise Act, 1944 (1 of 1944) or the Customs Tariff Act, 1975 (51 of 1975) or the Central Excise Tariff Act, 1985 (5 of 1986) or the relevant Act and includes the rules or regulation s made under such enactment ." 15. The present case comes under the tax arrears payable under the indirect tax enactment . Section 89 of the Kar Vivad Samadhan Scheme, 1998 deals with particulars to be furnished in declaratio n and Section 90 of the Scheme deals with time and manner of payment of tax arrears. Clause (2) of Section 90 provides that the declarant shall pay, the sum determine d by the Designate d Authority within thirty days of the passing to the Designate d Authority along with proof thereof and the Designate d Authority shall thereupon issue the certificate to the declarant. Clause (3) of Section 90 of the said Scheme provides that every order passed under sub- section (1), determinin g the sum payable under this Scheme shall be conclusive as to the matters stated therein and no matter covered by such order shall be reopened in any other proceedin g under the direct tax enactment or indirect tax enactment or under any other law for the time being in force. Sub- clause (4) of Section 90 of the said Scheme provides that where the declarant has filed an appeal or reference or a reply to the show- cause notice against any order or notice giving rise to the tax arrears before any authority or Tribunal or Court, then, notwithsta nding anything contained in any other provisions of any law for the time being in force, such appeal or reference or reply shall be deemed to have been withdrawn on the day on which the order referred to in sub- section (2) is passed. 16. It is pertinent to notice that the First Informatio n Report was filed on 6.1.1999 and the Certificate under the Kar Vivad Samadhan Scheme, 1998 was issued to the appellants on 19.7.1999 by the Commissi oner of Customs (Adjudicat ion) & Designate d Authority (KVSS- 98). It is also to be noticed that Section 95 of the Kar Vivad Samadhan Scheme, 1998 provides that the provisions the said Scheme, 1998 provides that the provisions of this Scheme shall not apply in certain cases. Under Section 95(ii)(a) of the said Scheme, in a case where prosecutio n for any offence punishable under any provisions of any direct tax enactment has been instituted on or before the date of filing of the declaratio n under Section 88, in respect of any tax arrears in respect of such case under such indirect tax enactment , this Scheme shall not apply. Clauses (ii) and (iii) of Section 95 of the Kar Vivad Samadhan Scheme, 1998, which are relevant for our purpose are reproduce d hereunder: "(ii) in respect of tax arrears any indirect tax enactment - (a) in a case where prosecutio n for any offence punishable under any provisions of any indirect tax enactment has been instituted on or before the date of filing of the declaratio n under Section 88, in respect of an tax arrear in respect of such case under such indirect tax enactment . (b) in a case where show cause notice or a notice of demand under and indirect tax enactment has not been issued; (c) in a case where no appeal or reference or writ petition is admitted and pending before any appellate authority or High Court or the Supreme Court or no, applicatio n for revision is pending before the Central Governme nt on the date of declaratio n made under Section 88; (iii) to any person in respect of whom prosecutio n for any offence punishable under Chapter IX or Chapter XVII of the Indian Penal Code (45 of 1860), the Foreign Exchange Regulatio n Act, 1973 (46 of 1973), the Narcotic Drugs and Psychotro pic Substance s Act, 1985 (61 of 1985), the Terrorists and Disruptive Activities (Preventio n) Act, 1987 (28 of 1987), the Prevention of Corruptio n Act,1988 (49 of 1988), or for the purpose of enforceme nt of any civil liability has been instituted on or before the filing of the declaratio n or such person has been convicted of any such offence punishable under any such enactment ." 17. Sections 166 to 177 of Chapter IX of the Indian Penal Code deal with offences relating to public servants. Likewise, Sections 378 to 462 of Chapter XVII of the Indian Penal Code deal with offences against property. Thus immunity is granted to the persons in respect of whom the offence is punishable under Chapter IX or Chapter XVII of the Indian Penal Code. 18. Annexure P-1 is the Certificate issued to the GCS under the Kar Vivad Samadhan Scheme, 1998, Form-4 (Rule 5[b]). This certificate has been issued for full and final settlement of tax arrears under Section 90(2) read with Section 91 of the Finance (No.2) Act, 1998 in respect of Kar Vivad Samadhan Scheme, 1998. Before issuing the certificate, the Commissi oner of Customs (Adjudicat ion) & Designate d Authority (KVSS- 98) takes into considerat ion the following facts: (a) that the Gujarat Cancer Society, Ahmedaba d had made declaratio n under Section 88 of the Finance (No.2) Act, 1998; (b) that the designated authority by order dated 10.2.1999 determine d the amount of Rs. 98,40,222/ - payable by the declarant in accordanc e with the provisions of the Kar Vivad Samadhan Scheme, 1998; (c) that the certificate is granted towards full and final settlement of tax arrears as per the details given in the certificate; (d) That the Civil Appeal No. 31/1999 filed by the GCS, Ahmedaba d in this Court under Section 130E of the Customs Act, 1962 against the judgment and order Nos. 758 to 761/98- b2 passed by the Customs, Excise and Gold (Control) Tribunal, New Delhi was withdrawn . The order was passed by this Court on 16.3.1999 and a copy of the said order was produced before the authorities as proof of such withdrawa l in accordanc e with the provisions contained in the proviso to sub- section (4) of Section 90. (e) The declarant has paid Rs. 98,40,222/ - being the sum determine d by the Designate d Authority. 19. In exercise of the powers conferred by sub- section (2) of Section 90 read with Section 91 of the Finance (No.2) Act, 1998, the Designate d Authority issued the certificate to the declaratio n in the following terms: (a) Certifying the receipt of the payment from the declarant towards full and final settlement of tax arrears determine d in the order dated 10.2.1999 on the declaratio n made by the aforesaid declarant; (b) Granting immunity, subject to the provisions contained in the Kar Vivad Samadhan Scheme, 1998, from instituting any proceedin g for prosecutio n for any offence under the Customs Act, 1962, or from the imposition of penalty under said enactment , in respect of matters covered in the declaratio n made by the declarant; 20. It is thus crystal clear that the Commissi oner of Customs (Adjudicat ion) & Designate d Authority (KVSS- 98) granted immunity from instituting any proceedin g for prosecutio n for any offence under the Customs Act, 1962, or from the imposition of penalty under the said enactment , in respect of matters covered in the aforesaid declaratio n made by the declarant. After hearing the case of the GCS, as already noticed, the Collector of Customs, Bombay held that the GCS was liable to pay the Customs Duty but in view of the activities of the Society and the bona fides of the Society, and considerin g charitable and philanthro pic activities of the Society, no prosecutio n was recommen ded. Moreover, only a token redemptio n fine of Re.1/- was imposed. Thus it is seen that the Customs Authoritie s were satisfied that there was no intention to evade the Customs Duty. However, the Collector denied the GCS the concessio nal duty benefit under Customs Notificatio n Nos. 279/1983 and 64/1988 and demanded the duty of Rs. 2,16,80,44 4/- under Section 28 of the Customs Act, 1962 read with the proviso of the said Section. The said duty was to be paid by the GCS (Importer) and Canbank Financial Service as well as ICICI being the joint holder of the said imported machines. A personal penalty of Rs. 10 lakh was imposed on Dr. Viral C. Shah and M/s. Shah Diagnosis Institute Pvt. Ltd., Ahmedaba d and Bombay jointly under Section 112(a) of the Customs Act, 1962. 21. We have carefully gone through the Kar Vivad Samadhan Scheme, 1998 and the certificate issued by the Customs Authoritie s. In our opinion, the GCS is immuned from any criminal proceedin gs pursuant to the certificate s issued under the said Scheme and the appellants are being prosecuted in their capacity as office bearers of the GCS. As the Customs duty has already been paid, the Central Governme nt has not suffered any financial loss. Moreover, as per the Kar Vivad Samadhan Scheme, 1998 whoever is granted the benefit under the said Scheme is granted immunity from prosecutio n from any offence under the Customs Act, 1962 including the offence of evasion of duty. In the circumsta nces, the complaint filed against the appellants is unsustaina ble. 22. We shall now analyse the judgment in the case of Sushila Rani (supra). That case also refers to the Kar Vivad Samadhan Scheme, 1998. The appellant before this Court in that case is the widow of the original assessed under the Income Tax Act, 1961 for the Assessme nt Year 1988-89, the appeal was pending before the Commissi oner of Income Tax (Appeals) while for Assessme nt Years 1989-90 and 1991- 92, appeals were pending before the Income Tax Appellate Tribunal. The appellant requested the Departme nt to indicate or compute the tax arrears as per the Kar Vivad Samadhan Scheme, 1998 so that all disputes in relation to these three assessmen t years can be resolved. As there was no response from the Departme nt, the appellant submitted three separate declaratio ns under Sections 88 and 89 of the Kar Vivad Samadhan Scheme, 1998 and also pointed out the mandatory nature of Section 245 of the Act. Responde nt 1, on receipt of the declaratio ns for the three assessmen t years evaluated and verified the same in accordanc e with the provisions of the Kar Vivad Samadhan Scheme, 1998 and on being satisfied with the correctnes s of the declaratio n in every respect, issued on 26.2.1999 a statutory certificate prescribed in Form, 2-A and Rule 4(a) under the provision of Section 90(1) of the Kar Vivad Samadhan Scheme, 1998. On receipt of the said certificate under Section 90(1) of the Kar Vivad Samadhan Scheme, 1998, the appellant deposited the sum determine d and demanded the issue of certificate under Section 90(2) of the Scheme for the deemed withdrawa l of the appeal filed by the appellant for these years which were pending adjudicati on. Responde nt No.1 issued a certificate in Form 3 as required in favour of the appellant certifying the receipt of payments from the appellant towards full and final settlement of the tax arrears determine d in the order dated 26.2.1999 and granting immunity from instituting any proceedin g for prosecutio n of any offence under the Act or from imposing any penalty under the said Act. Thereafter on 11.8.1999 certificate was issued by the Departme nt to the effect that no arrears or demand of any kind is outstandin g against the appellant as per the records of the responden ts. On 26.10.199 9, the appellant submitted a representa tion requesting the responden ts to refund all the amounts along with interest as per the provisions of the Act upon the finalisatio n of the declaratio ns made by the appellant under the provisions of the Kar Vivad Samadhan Scheme. This claim resulted in the issue of a notice on 23.6.2000 under Section 90(1) of the Kar Vivad Samadhan Scheme calling upon the appellant to explain as to why, the certificate issued under Section 90(1) of the Scheme earlier be not amended, on the ground that the determinat ion made by the Departme nt for the three assessmen t years in question was on the Departme nt's wrong understan ding of the judgment of the Allahabad High Court. The appellant, thereupon, filed a writ petition challengin g the issuance of the notice on the ground that the same is without jurisdictio n. The High Court took the view that what is under challenge in the writ petition is only a show case notice and it would be open to the appellant to highlight the question relating to lack of jurisdictio n before the Commissi oner when the matter is taken up for further considerat ion. The High Court did not express any opinion on the facts of the case and disposed of the writ petition. Hence, the appeal by special leave. In paragraph s 6 and 8 of the judgment, this Court held, "An examinati on of the scheme of Sections 89, 90 and 91 KVSS would reveal that every person entitled to make a declaratio n under the said Scheme was obliged to submit the declaratio n on or before 31.1.1999; that a period of 60 days has been stipulated under Section 90(1) for the designated authority under the Scheme to determine the amount payable by the declarant and the certificate to this effect under Section 90(1) has to be granted by the designated authority after determinat ion towards full and final settlement of the tax arrears within a period of sixty days. Thereafter , except on ground of false declaratio n made by the declarant, every order passed under sub- section (1) of Section 90 determinin g the sum payable under the scheme, is absolutely conclusive as to the matters stated thereunder and no matter covered by such order can be reopened in any other proceedin g under any law for the time being in force. After this determinat ion under Section 90(1) KVSS, another certificate s is issued under Section 91 KVSS on the basis of which immunity is granted to the declarant from instituting any proceedin g for prosecutio n for any offence under any direct tax enactment or indirect tax enactment . 8. We any notice that a certificate issued under Section 90(1) KVSS making a determinat ion as to the sum payable under KVSS, is conclusive as to the matter stated therein and cannot be reopened in any proceedin gs under any law for the time being in force, except on the ground of false declaratio n by any declarant. Therefore, before issue of a notice, there should be satisfactio n that the declarant has made a false declaratio n. There is no such allegation in the course of the notice issued. All that is stated is that "adjustme nts already made should have been taken into account when calculatin g the tax arrears. As such there is a mistake in calculatio n, which needs restificatio n". The whole basis of the notice is only that adjustmen ts already made had not been taken note of. If this is the basis of the issuance of the notice and not the false declaratio n and that informatio n was available with the Departme nt even at the time of the finalisatio n of the proceedin gs under Section 90 KVSS, we fail to understan d as to how the matter could be reopened at this stage. That informatio n in that regard." In that view of the matter, the notice issued is without jurisdictio n." 23. In that view of the matter, this Court allowed the appeal, set aside the order made by the High Court by allowing the writ petition filed by the appellant and quash the notice issued by the Departme nt calling upon ther appellant to explain as to why the order issued earlier under Section 90(1) KVSS be not amended. 24. On a reading of the judgment in the case of Sushila Rami (supra), it is clear to us that if an assessed takes the option under this Scheme, he obtains immediate immunity under any proceedin g under any and all laws in force. As such the present proceedin gs initiated under Section 120B read with Section 420 of the Indian Penal Code are bad and ought to have been quashed with immediate effect. 25. We shall now consider the judgment cited by learned senior counsel for the appellants in the case of Duncans Agro Industries Ltd. Calcutta, (supra), which, inter alia, held that, "In the facts of the case, it appears to us, that there is enough justificatio n for the High Court to hold that the case was basically a matter of civil dispute. The Banks had already filed suits for recovery of the dues of the Banks on account of credit facility and the said suits have been compromi sed on receiving the payments from the companies concerned . Even if an offence of cheating is prima facie constitute d, such offence is a compound able offence and compromi se decrees passed in the suits instituted by the Banks, for all intents and purposes, amounts to compound ing of the offence of cheating." It was further held that, "Consideri ng the fact that the claims of Banks have been satisfied and suits instituted by the Banks have been compromi sed on receiving payments, we do not think that the said complaint s should be pursued any further. In our view, proceedin gs further with the complaint s will not be expedient. " 26. In our view, in the present case, the alleged criminal liability stands compound on a settlement with respect to the civil issues and, therefore, the First Informatio n Report was erroneousl y issued and was totally unwarrant ed. From the aforesaid judgment, the propositio n that follows in the instant case is that the Kar Vivad Samadhan Scheme, 1998 issued by the Governme nt of India was a voluntary Scheme whereby if the disputed demand is settled by the Authority and pending proceedin gs are withdrawn by an importer, the balance demand against an importer shall be dropped and the importer shall be immuned from penal proceedin gs under any law in force. We are, therefore, of the opinion that this judgment squarely comes in the face of any argument sought to be propounde d by the responden t that the Kar Vivad Samadhan Scheme, 1998 does not absolve the appellants from criminal liability under the Indian Penal Code. The learned single Judge of the High Court of Delhi, in our opinion, has not appreciate d the fact that the continuan ce of the proceedin gs in the instant case would only tantamoun t to driving the present appellants to doubt jeopardy when they had been honorably exonerate d by Collector of Customs by their adjudicati on and further the GCS of which one of the appellants is the General Secretary in which capacity he is accused in the present case was granted amnesty under the Kar Vivad Samadhan Scheme, 1998. In our opinion, the present case does not warrant subjecting a citizen especially senior citizens of the age of 92 & 70 years to fresh investigati on and prosecutio n on an incident or fact situation giving rise to offence under both the Customs Act and the Indian Penal Code when the matter has already been settled. Likewise, the responden t herein has initiated criminal proceedin gs against Accused No. 2 & Accused No.1 inter alia, on the ground alleging that the appellants in conspiracy with the co- accused named therein with each other have cheated the Governme nt of India in terms of evasion of Customs Duty and by concealme nt of facts obtained CDEC in respect of MRI and Lithotrips y machines and by violating the provisions of `actual user' condition as per Import Export Policy and Customs Notificatio n No. 279/83 dated 30.9.1983 and Customs Notificatio n No. 64/88 dated 1.3.1988 during the year 1987- 90, despite acknowled ging the fact that Customs Duty has been paid by the appellants to the Customs Departme nt and settled and that commissio n of offences under Section 120B read with Section 420 of the Indian Penal Code are made out. 27. In our view, under the penal law, there is no concept of vicarious liability unless the said statute covers the same within its ambit. In the instant case, the said law which prevails in the field i.e. the Customs Act, 1962 the appellants have been therein under wholly discharged and the GCS granted immunity from prosecutio n. it is well establishe d principle of law that the matter which has been adjudicate d and settled need not to be dragged into the criminal courts unless and until the act of the appellants could have described as culpable. The true fact and import of then Kar Vivad Samadhan Scheme, 1998, in our view, is that once the said Scheme is availed of and all the formalities complied with including the payment of the duty, the immunity granted under the provisions of the Customs Act, 1962 also extends to such offences that may prima facie be made out on indentical allegations i.e. of evasion of Customs Duty and violation of any Notificatio n issued under the said Act. 28. In our view, there is no prima facie case made out in respect of the alleged offence under Section 120B read with Section 420 of the Indian Penal Code and, therefore, the charge sheet and the process issued thereunder has to be quashed. 29. To bring home the charge of conspiracy within the ambit of Section 120B of Indian Penal Code, it is necessary to establish that there was an agreement between the parties for doing an unlawful Act. It is difficult to establish conspiracy by direct evidence. 30. Likewise the ingredient s of Section 420 of the Indian Penal Code are also not made out. There is no reason as to why the appellants must be made to undergo the agony of a criminal trial as has been held by this Court in the case of G. Sagar Suri & Anr. v. State of U.P. & Ors. (2000) 2 SCC 636. In this case, this Court held that, "Jurisdicti on under Section 482 of the Code has to be exercised with great care. In exercise of its jurisdictio n the High Court is not to examine the matter superficial ly. It is to be seen if a matter, which is essentially of a civil nature, has been given a cloak of criminal offence. Criminal proceedin gs are not a short cut of other remedies available in law. Before issuing process a criminal court has to exercise a great deal of caution. For the accused, it is a serious matter. The Supreme Court has laid certain principles on the basis of which the High Court is to exercise its jurisdictio n under Section 482 of the Code. Jurisdictio n under this section has to be exercised to prevent abuse of the process of any court or otherwise to secure the ends of justice. Merely because the accused persons had already filed an applicatio n in the Court of Additional Judicial Magistrate for their discharge, it cannot be urged that the High Court cannot exercise its jurisdictio n under Section 482 of the Code. Though the Magistrate trying a case has jurisdictio n to discharge the accused at any stage of the trial if he considers the charge to be groundless but that does not mean that the accused cannot approach the High Court under Section 482 of the Code or Article 227 of the Constituti on to have the proceedin g quashed against them when no offence has been out against them and still why must they undergo the agony of a criminal trial." 31. Section 415 of the Indian Penal Code deals with cheating. To hold a person guilty of cheating as defined under Section 415 of the Indian Penal Code, it is necessary to show that he has fraudulent or dishonest intention at the time of making the promise with an intention to retain the property. In other words, Section 415 of the Indian Penal Code which defines cheating, requires deception of any person (a) inducting that person shall retain any property OR (b) intentional ly inducing that person to do or omit to do anything which he would not do or omit if he were not so deceived and which act or omission causes or is likely to cause damage or harm to that person, anybody's mind, reputation or property. In view of the aforesaid provisions , the appellants state that person may be induced fraudulent ly or dishonestl y to deliver any property to any person. The second class of acts set forth in the Section is the doing or omitting to do anything which the person deceived would not do or omit to de if he were not so deceived. In the first class of cases, the inducing must be fraudulent or dishonest. In the second class of acts, the inducing must be intentional but not fraudulent or dishonest. 32. In view of the aforesaid provisions of law, as the Customs Duty has been paid by the GCS, there is no fraudulent or dishonest intention on the part of the GCS or its office bearers to retain the property. Moreover, there is no inducing on the part of the GCS or its office bearers intentional ly to retain the property in view of the fact that the Customs Duty has been paid by the GCS and, therefore the ingredient s of the offence of cheating are missing for issuing the process against the appellants and, therefore, the same, in our view, is liable to be quashed and set aside. 33. Section 111 of the Customs Act, 1962 which provides for confiscati on of improperl y imported goods, etc. insofar as it is relevant reads thus: "Section 111. Confiscati on of improperl y imported goods, etc. - The following goods brought from a place outside India shall be liable to confiscati on - ------ ----- ------- (o) any goods exempted, subject to any condition, from duty or any prohibitio n in respect of the import thereof under this Act or any other law for the time being in force, in respect of which the condition is not observed unless the non- observanc e of the condition was sanctioned by the proper officer." 34. The question is whether the import of the machines in question was contrary to law in any manner and whether the machines are liable to be confiscate d under the Customs Act, 1962, the only provision relied upon by the learned counsel for the appellants is clause (o) in Section 111 of the Customs Act, 1962 which we have set out herein above. In our opinion, clause (o) of Section 111 of the Customers Act, 1962 is not attracted in the present case. The subsequen t proceedin gs initiated for confiscati on of the goods is of no relevance nor does it retrospecti vely render the import illegal. 35. This Court in Union of India & Another v. Sampat Raj Dugar and Another (AIR 1992 SC 1417) has, while considerin g the scope and ambit of Clause (o) of Section 111, observed as under: "Clause (o) contempla tes confiscati on of goods which are exempted from duty subject to a condition, which condition is not observed by the importer. Occasion for taking action under this clause arises only when the condition is not observed within the period prescribed , if any, or where the period is not so prescribed , within a reasonable period. It, therefore, cannot be said that the said goods were liable to be confiscate d on the date of their import under clause (o). 36. In other words, clause (o) is a new provision under which any goods exempted from duty or from import prohibitio n subject to certain conditions will become liable confiscati on if those conditions are not observed without the prior permissio n of the appropriat e officer. The penal clause is being introduced to check misuse of exemption s granted in respect of the goods imported. 37. It is settled law, by catena of decisions, that for establishin g the offence of cheating, the complaina nt is required to show that the accused had fraudulent or dishonest intention at the time of making promise or representa tion. From his making failure to keep up promise subsequen tly, such a culpable intention right at the beginning that is at the time when the promise was made cannot be presumed. It is seen from the records that the exemption certificate contained necessary conditions which were required to be complied with after importatio n of the machine. Since the GCS could not comply with it and, therefore, it rightly paid the necessary duties without taking advantage of the exemption certificate. The conduct of the GCS clearly indicates that there was no fraudulent or dishonest intention of either the GCS or the appellants in their capacities as office bearers right at the time of making applicatio n for exemption . As there was absence of dishonest and fraudulent intention, the question of committin g offence under Section 420 of the Indian Penal Code does not arise. We have read the charge sheet as a whole. There is no allegation in the First Informatio n Report or the Charge sheet indicating expressly or impliedly any intentional deception or fraudulent /dishonest intention on the part of the appellants right from the time of making the promise or misreprese ntation. Nothing has been said on what those misreprese ntations were and how the Ministry of Health was duped and what where the roles played by the appellants in the alleged offence. The appellants, in our view, could not be attributed any mens rea of evasion of customs duty or cheating the Governme nt of India as the cancer society is a non profit organizati on and, therefore, the allegations against the appellants leveled by the prosecutio n are unsustaina ble. Kar Vivad Samadhan Scheme Certificate along with the Duncan's and Sushila Rani's judgments clearly absolve the appellants herein from all charges and allegations under any other law once the duty so demanded has been paid and the alleged offence has been compound ed. It is also settled law that once a civil case has been compromi sed and the alleged offence has been compound ed, to continue the criminal proceedin gs thereafter would be an abuse of the judicial process. 38. In the result, both the appeals stands allowed. The orders of the High Court which are impugned in these appeals are set aside. 39. I have the benefit of going through the detailed and elaborate judgment prepared by brother Lakshman an, J. I am in respectful agreement with the same. I would, however, like to emphasise yet another aspect of the matter by reason of which also it does not lie for the responden t, to initiate or continue the criminal proceedin gs against the appellants. 40. Since the facts have been set out in details, in the judgment of brother Lakshman an, J., it is not necessary to dwelve upon the factual position anymore. It is true, so far the scheme and the terms under which determinat ion of liability is made thereunder , provides for immunity from initiation of criminal proceedin gs under the Customs Act, in respect of the matters covered under the declaratio n u/s 88 of the Scheme but more important in that regard for this case is Section 95 of the Kar Vivad Samadhan Scheme, Chapter IV of Finance (No.2) Act, 1998, which is quoted below: "95. The provisions of this Scheme shall not apply - (i) xx xx xx (ii) in respect of tax arrear under any indirect tax enactment -, (a) in a case where prosecutio n for any offence punishable under any provisions of any indirect tax enactment has been instituted on or before the date of filing of the declaratio n under section 88, in respect of any tax arrear in respect of such case under such indirect tax enactment : (b) xx xx xx (c) xx xx xx (iii) to any person in respect of whom prosecutio n for any offence punishable under Chapter IX or Chapter XVII of the Indian Penal Code (45 of 1860), the Foreign Exchange Regulatio n Act, 1973 (46 of 1973), the Narcotic Drugs and Psychotro pic Substance s Act, 1985 (61 of 1985), the Terrorists and Disruptive Activities (Preventio n) Act, 1987 (28 of 1987), the Prevention of Corruptio n Act, 1988 (49 of 1988), or for the purpose of enforceme nt of any civil liability has been instituted on or before the filing of the declaratio n or such person has been convicted of any such offence punishable under any such enactment ; xxx xxx xxx 41. According to the above provision, a person will not be eligible or entitle to take benefit of the Scheme against whom a prosecutio n for punishme nt of an offence under Chapter IX or XVII of the IPC is pending on or before the date of the declaratio n or such person has been convicted for any of such offences indicated above. There is not dispute on the fact that on the date of appellants submitted their declaratio n under Section 88 no prosecutio n was pending nor they stood convicted for an offence falling in Chapter IX or XVII of the IPC. Section 420 IPC falls in Chapter XVII of the IPC. The other condition of eligibility so as to be entitled to take the benefit of the scheme of 1998. The case of the petitioner was settled, the tax liability was determine d on 10.2.1999 by the Designate d Authority, and the certificate of full and final settlement was issued on 19.7.1999. The appeal pending in this Court against the order of the CEGAT was withdrawn by the appellants on 16.3.1999. It is thus obvious that certificate of full and final settlement was issued in view of the fact that the conditions enumerate d above were fulfilled. 42. It appears that despite the statement having been filed under Section 88 of the Act of 1998, an FIR was lodged and a case was registered on 6.1.1999 on the basis of which, later on a charge sheet was also submitted. On the one hand final settlement was made after determinin g the tax liability on the premises that the appellants were neither convicted nor criminal proceedin gs were pending, relating to any offence under Chapter IX or XVII of the IPC, yet the criminal proceedin gs are being prosecuted which is apparently against the very spirit of the Scheme promulgat ed under the Finance (2) Act of 1998. If a person against whom criminal proceedin gs were pending, relating to offence under Chapter IX or XVII of the IPC or who stood convicted under any of the provisions of those chapters, he would not have been eligible to seek benefit under the Scheme and after accepting that position and the due settlement , there was no occasion to initiate and continue the criminal proceedin gs, which could bring about the conviction of the same persons, in case prosecutio n ended successful ly in favour of the State and against the appellants. If such a condition is provided that on a particular date a criminal proceedin g should not be pending against a person nor he should have been convicted of an offence, as a condition precedent for a settlement , and on that basis a settlement is brought about, it does not mean that later on, one could turn around and get the declarant convicted for a criminal offence too, after settlement of the liability. More so, when in view of Section 90 clause (iv) of the Scheme the declarant is obliged to withdraw an appeal or proceedin gs regarding tax liability pending before the High Court or the Supreme Court, which had also been done in the case in hand. That is to say on one hand declarant is not permitted to pursue the remedy, regarding tax liability, which is already pending before the courts of law, as they are either deemed to be withdrawn by operation of law or they have to be withdrawn by a positive act of the party and yet prosecute such persons for their conviction as well. The declarant could not be dragged and chased in criminal proceedin gs after closing the other opening making it a dead end. It is highly unreasona ble and arbitrary to do so and initiation and continuan ce of such proceedin gs lack bonafides. 43. In the backgroun d given above, there is every reason to legally infer that the position as it stood, in regard to the criminal prosecutio n and conviction on the date the declaratio n was filed, as conditions precedent to settlement under the Scheme, would also stand finalized on full and final settlement of the matter under the Scheme. That is to say the position that no criminal prosecutio n was pending against the declarant on the date of filing of the declaratio n nor he stood convicted for such an offence in relation to the matter covered under the declaratio n, it would stand finalized with acceptanc e of the declaratio n and settlement of the matter fully and finally. Later on, the declarant could not be or continued to be subjected to criminal prosecutio n to alter the position as it stood on the relevant date of the submissio n of declaratio n and get him convicted for such offences in respect of which, if he stood convicted earlier while filing statement he would not have been entitled to seek the benefit under the Scheme. The appellants virtually foreclosed their right to further pursue the proceedin gs before the authorities or courts of law challengin g the legality, validity or the tax liability in terms of the Scheme. Undoubte dly, if the appellants' appeal which was pending in this Court against the order of CEGAT relating to the tax liability, had been allowed it might have affected the criminal proceedin gs too on merits. In certain circumsta nces, it could be put up as a defence by the declarant, in the criminal case but in terms of the scheme he was bound to withdraw his appeal. The criminal prosecutio n could not be allowed to proceed by putting an end to a possible defence before hand. It certainly amounts to abuse of process of law. The appeals thus deserve to be allowed. ..............., J. (Brijesh Kumar) 44. In the result, we allow the appeals and the order of the High Court is set aside and the FIR No. R.C.I. (E)/99/EO W-1/DL1 and the proceedin gs initiated in pursuance thereto against the appellants in the Court of Chief Metropolit an Magistrate , Delhi under Section 420 read with 120- B of the Indian Penal Code are quashed. --------- ###-------- --