‘Reveal names of Liechtenstein account holders against whom probe is over'

The Supreme Court on Monday rejected the Union government's claim of absolute immunity and directed it to disclose the names of those with bank accounts in Liechtenstein, as revealed by Germany, against whom investigations were concluded, either partially or wholly, and show-cause issued and proceedings initiated.

A Bench of Justices B. Sudershan Reddy and S.S. Nijjar, however, said: “the Union of India is exempted from revealing the names of those individuals who have accounts in banks of Liechtenstein and revealed to it by Germany, with respect of whom investigations/enquiries are still in progress and no information or evidence of wrongdoing is yet available.”

The court said that “without establishment of prima facie grounds to accuse them of wrongdoing 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.”

Pact with Germany

The Bench said:

“We have perused the agreement with Germany. We are convinced that the said agreement, by itself, does not proscribe the disclosure of the relevant documents and details of the same, including the names of various bank account holders in Liechtenstein. The redundancy, that the Union of 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.

“We have perused the documents in question, and 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, because the 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.”

The Special Investigation Team (SIT) constituted pursuant to the orders of this court “shall take over the matter of investigation of the individuals whose names have been disclosed by Germany as having accounts in banks in Liechtenstein, and expeditiously conduct the same. The SIT shall review the concluded matters also in this regard to assess whether investigations have been thoroughly and properly conducted or not and on coming to the conclusion that there is a need for further investigation shall proceed further in the matter.”

The court said, “The SIT 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 against generation of unaccounted monies, and their stashing away in foreign banks or in various forms domestically. The SIT shall be charged with the responsibilities and duties of investigation, initiation of proceedings, and prosecution, whether in the context of appropriate criminal or civil proceedings of all issues relating to the matters concerning and arising from unaccounted monies of Hassan Ali Khan and the Tapurias; all other matters with respect to unaccounted monies being stashed [away] in foreign banks by Indians or other entities operating in India that may arise in the course of such investigations and proceedings.”

The Bench asked the SIT to file periodic status reports to the court. It said, “The issue of black money has to be taken with a degree of seriousness and the State is primarily responsible to make all efforts to bring back into the country such wealth and punish people who have stashed away money in foreign banks. 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.”

The judges said: “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 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.”

The Bench said, “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: “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 indicate a compromise of the ability of the State to manage its affairs in consonance with what is required from a constitutional perspective. If the State is soft to a large extent, especially in terms of the unholy nexus between the lawmakers, law keepers, and law-breakers, the moral authority, and also the moral incentives, to exercise suitable control over the economy and society would vanish. Large unaccounted monies are generally an indication of that.”

The Bench directed the matter to be listed for further directions immediately after August 15.