Five Questions We Have to Ask Before the Birla-Sahara Payoff Case is Buried Forever

The time has come for the judges of the Supreme Court to sit together to apply their minds and devise a way for these serious documents to be thoroughly investigated.

Corruption continues to remain one of the most serious problems of our society. Narendra Modi and the Bharatiya Janata Party won the 2014 Lok Sabha election riding on the back of the anti-corruption campaign and promising a government which would swiftly deal with corruption and the problem of black money. The reality however, seems far from what was promised.

In October 2013, the income tax (IT) department and the Central Bureau of Investigation conducted simultaneous raids at various establishments of the Aditya Birla group of companies. In these raids, cash worth Rs 25 crore was recovered from their corporate office in Delhi along with a large number of documents, note-sheets, informal account books, emails, computer hard disks and the like. The CBI quickly handed all the papers over to the IT department, which did an investigation in this matter. The department questioned the DGM accounts, Anand Saxena, who was the custodian of the cash which was recovered. He said that the cash was received by the company from various hawala dealers, who used to come almost daily or sometimes on alternate days and give Rs 50 lakhs or 1 crore in cash. The IT department also questioned one such hawala dealer whom Anand Saxena had mentioned, and this dealer also admitted that he had been doing that.

Saxena also said that this cash would thereafter be delivered to certain persons, specified by the group president, Shubhendu Amitabh. And apart from himself, four other senior officer – whom he named – were deputed to deliver the cash. Saxena further said that he did not know the purpose behind the cash payments to those persons.

From ‘Gujarat CM’ to ‘Gujarat Alkalis and Chemicals’

Some of the documents noting the cash received and payments made were in the handwriting of Anand Saxena, which indicated Rs 7.5 crores paid to the ministry of environment, with the noting of  “(Project J)” scribbled next to the entry. The documents also showed various other payments for environmental clearances of Birla projects. The dates of these payments could easily be correlated with the environmental clearances obtained for these projects.

The emails recovered from the computer of Shubhendu Amitabh revealed a number of messages which indicated payments to various DRI (Directorate of Revenue Intelligence) officials for the purpose of slowing down/dropping investigations, which the agency was conducting against the under-invoicing of coal exports and other irregularities by the Birla group of companies.

Amitabh’s emails also contained one cryptic entry which said “Gujarat CM 25 crores (12 paid rest ?)”. When he was questioned about this entry, he said that ‘Gujarat CM’ meant ‘Gujarat Alkalis and Chemicals’. When asked as to whether there was any other place where he had referred to Gujarat Alkalis and Chemicals as ‘Gujarat CM’, Amitabh could not answer. He also could not produce any document which could indicate any dealing between Gujarat Alkalis and Chemicals and the Birla group for Rs 25 crores.

The IT department then prepared a detailed appraisal report in which it concluded that the explanations given by Shubhendu Amitabh about the various payments etc. were not believable and that this matter needs to be further investigated. Unfortunately however, the department did not send the matter to the Central Bureau of Investigation for investigation under the Prevention of Corruption Act – even though the payments to DRI officials, the environment ministry and ‘Gujarat CM’ etc prima facie, all appeared to have been made to public servants, which constitute offences under the Prevention of Corruption Act. The CBI would have been the designated investigating agency for this investigation.

It is not surprising that the UPA government of Manmohan Singh – which was in power when the Birla raid and recoveries took place – did not have this matter pursued, because most of the payments mentioned in the diaries were for officials of the UPA government. However, even after coming to power, the Modi government, which obviously was in the know of this IT department investigation, did not pursue the matter. Modi in his election rallies at several times mentioned the “Jayanti tax”, which had to be paid by companies for environmental clearances to then environment minister, Jayanti Natarajan. And any investigation of the recovered papers from Birla would have substantiated that. The reason for Modi’s reluctance to probe the Birla papers can only be attributed to that one entry – of ‘Gujarat CM’ for 25 crores – which any reasonable person would assume referred to him, for he was the ‘Gujarat CM’ at the time the Birla people made their noting.

The Sahara smoking gun

In November 2014, while the Modi government was in office, the IT department raided the Sahara group of companies. In this raid, Rs 137 crore in cash was recovered from the corporate office, along with several computer spreadsheets and note sheets. These recovered documents also showed payments made to public servants. One particular spreadsheet mentioned in detail the dates, amounts and sources from which a total of Rs 115 crore in cash was received during the year 2013 to 2014, with the transactions being on 40 to 50 different days. On the other side was the disbursement of this cash (Rs 113 crore out of this 115 crore, to be precise) to various people. The disbursement details were consummate and exhaustive as they contained the dates, the amounts, the person who was paid the cash, the place where it was paid as well as the person who went and delivered the cash. In this spreadsheet, the largest recipient with nine entries against his name was ‘Gujarat CM Modi Ji’. As per the entries, he was paid a total of Rs 40 crore in nine instalments. The second biggest recipient was the Madhya Pradesh chief minister Shivraj Singh Chouhan, with Rs 10 crore on two dates. There are also payments of  Rs 4 crore to the Chhattisgarh chief minister and a payment of Rs 1 crore to the Delhi chief minister (who was Sheila Dixit at that time), among other people. Other recovered note sheets contain details of payments made in 2010 to various persons.

Each of these documents was seized and signed by the IT officials, two witnesses and an officer of Sahara. However, again, despite the highly incriminating nature of these documents, the IT department, shockingly, did not hand these over for investigation to the CBI under the Prevention of Corruption Act.

The IT department appraisal report on this is still not available, but we get a hint on what it concluded on the matter from the order of the Income Tax Settlement Commission, which came thereafter. The Sahara company had moved the Settlement Commission for settling the case with the IT department under Section 245C of the Income Tax Act. One of the issues before the Settlement Commission was whether  or not the payments mentioned in the spreadsheets should be added to the income of Sahara as undisclosed income. The IT department in its statement said that these payments were clearly genuine since (a) these were accounts maintained over a period of time, (b) that the cash received shown in the spreadsheets matched with the ledger entries of MarCom – the Marketing Communication Company of Sahara. This meant that the dates on which cash was withdrawn from MarCom matched the dates and amounts on which the cash is seemed to be received on these spreadsheets from MarCom. And (c) that the explanations given by Sahara – which sought to question the validity of these documents – were contradictory and did not appear to be correct.

It was clear, therefore, that Sahara had not come with clean hands and yet the Settlement Commission absolved Sahara of all criminal liabilities under the Income Tax Act by asking the company to pay tax of a thousand odd crore rupees on their concealed income.

Even more interestingly, this case was decided by the Settlement Commission in record time – in virtually three hearings in less than three months, with the ruling coming on November 10, 2016. It was also settled by just two members of the commission since the third member had been transferred out by the government.

Enter Chowdary the CVC

For a long time, these documents remained buried within the Income Tax department and eventually surfaced sometime towards the end of 2016, which was when I received copies. They showed prima facie offences under the Prevention Of Corruption Act, which needed a thorough investigation in accordance with the Supreme Court judgement of the Jain hawala case, where the recovery of cryptic entries in a diary – which only mentioned initials and amounts paid – was held by the Supreme Court to be enough to merit a thorough court-monitored investigation. It is another matter that despite this ruling,  the CBI in its investigation into the Jain diaries did not examine the assets of the public servants involved and filed the chargesheet only on the basis of the diaries recovered and thereafter this chargesheet was quashed by the Delhi high court on the grounds that diaries by themselves cannot be enough evidence for prosecuting anybody.

When I received the Birla-Sahara documents, I also noticed that the person in charge of  the income tax investigations was K. V. Chowdary, who, at the relevant period was holding the charge of member, investigations, in the IT department. In June 2015, he was appointed by the Modi government as the country’s Chief Vigilance Commissioner (CVC). This appointment was challenged by Common Cause in the Supreme Court on various grounds – of scuttling tax investigations and also being involved in the “Stock Guru” scam, in which IT officials working under him were found to have taken crores in bribes from Stock Guru company in return for favours from the IT investigation department.

As counsel for Common Cause, we then decided to raise the Birla-Sahara papers issue in the pending case challenging the appointment of Chowdary itself, since the IT department’s decision to withhold these documents and not send them to the CBI for criminal investigation constituted a serious dereliction of duty on Chowdary’s part.

Prime Minister Narendra Modi and Chief Justice J.S. Khehar at a book release function. Credit: RSTV

Prime Minister Narendra Modi and Chief Justice J.S. Khehar at a book release function. Credit: RSTV

Knocking on the Supreme Court’s door

This application was heard in the Supreme Court on November 26, 2016 by a bench of Justice J.S. Khehar and Justice Arun Mishra.

In the hearing Justice Khehar said that these documents do not constitute any evidence for investigation and asked us to come back with better evidence. Just before the next date of hearing, I received the three volume Income Tax appraisal report from the Birla case and on that date I pleaded with the court that I should be given more time to analyse the appraisal report and file additional evidence. The court was reluctant to grant additional time and put up the matter to be heard only two days thereafter. By this time, however, the appointment of a new chief justice was coming close. Justice Khehar was the next in line of seniority but the clearance of his name had still not been given by the government despite his name having been  recommended by the outgoing chief justice. I told the court in the hearing that it would not be appropriate for it to push through with the hearing of this matter at a time when Justice Khehar’s appointment file is pending with the prime minister, since this case also involved investigations into the payments made to the prime minister as well. After showing some resentment and anger, the court reluctantly adjourned the matter to January 11, 2017.

Justice Khehar was sworn in as chief justice on January 4, 2017. On January 11, two senior judges who would normally have headed benches in the Supreme Court were made to sit with even more senior judges and a new bench was created headed by Justice Arun Mishra (who would not otherwise be heading a bench), with Justice Amitava Roy as the puisne judge. The Birla-Sahara matter was sent to this bench. The judges heard the matter at some length, and finally passed an order saying that since these were not regular books of accounts, therefore, in accordance with the Supreme Court judgement in the Jain hawala case, these did not constitute evidence on the basis of which any investigation could be ordered. In particular, they said that high constitutional functionaries cannot be subject to investigation on the basis of such loose papers. They also used the order of the Settlement Commission to say that the Settlement Commission did not find any proof of these documents being genuine and hence they did not represent the true state of affairs.

A little later, we discovered that while this case was being heard by Justice Arun Mishra along with Justice Khehar, Justice Misra had celebrated the wedding of his nephew from his official residence in Delhi as well as his residence in Gwalior. We were informed of this by Dushyant Dave, former president of the Supreme Court Bar Association, who had also attended the wedding reception. He stated that a large number of BJP leaders were present at the event. A photograph of Shivraj Singh Chouhan, the chief minister of Madhya Pradesh, attending the reception at Gwalior also appeared in a newspaper. This is significant because Chouhan was one of the alleged recipients of money in the Sahara spreadsheets – the very matter Justice Mishra was considering in court.

The Supreme Court has laid down a code of conduct which says that judges should maintain a degree of aloofness, consistent with their status – which means that they should obviously not socialise with politicians whose cases are likely to come up for hearing before them. It also says that judges should not hear and decide cases involving their friends and relatives. Putting these two together, it is obvious that if a judge invites politicians for personal functions at his residence, it can be safely assumed that these politicians are his personal friends and that the judge must not hear and decide cases involving them.

Kalikho Pul’s suicide note, the missing link

Shortly after the dismissal of our application, The Wire on February 8, 2017, made public the 60-page suicide note of the late Arunachal Pradesh chief minister Kalikho Pul. Kalikho Pul committed suicide on August 9, 2016, barely three weeks after he was unseated by a judgment of a constitution bench of the Supreme Court headed by Justice Khehar and Justice Dipak Misra. In his suicide note, which was found with his hanging body, and signed and initialled on every page, Pul details the alleged corruption of various politicians as well of persons closely related to senior members of the judiciary. In particular, the note shows that he is especially anguished at the corruption of the judiciary. He says that prior to the Supreme Court’s judgment in the case, which quashed president’s rule in Arunachal Pradesh and removed him from office, a demand of Rs 49 crore was made for a favourable judgement by Justice Khehar’s younger son Virendra Khehar. He also mentioned that another demand of Rs 37 crores was made by Aditya Mishra, described as the brother of Justice Dipak Misra, for a favourable judgement.

This suicide note contained a number of very serious allegations of corruption which obviously needed investigation, for which Pul’s eldest wife, Dangwimsai Pul, had been making requests to the government. However, the note remained uninvestigated and its copies were kept tightly under wraps and not made available to anybody.

The then governor of Arunachal Pradesh, J.P. Rajkhowa, himself went on record to say that he had recommended a CBI investigation into the very disturbing charges made in Pul’s suicide note. However, it still remained uninvestigated. And it was only in early February that a copy of this suicide note was obtained and published by The Wire, which published this note in the original Hindi and in an English translation, after redacting the name of the judges mentioned in the note. The unredacted note was thereafter published by the Campaign for Judicial Accountability and Reforms (CJAR) in the interest of transparency and to prevent the spread of rumours about the identities of the redacted names.

The questions that remain

The manner in which the Supreme Court buried the Birla-Sahara diaries investigation and the manner in which the government suppressed the suicide note of Kalikho Pul and did not order any criminal investigation into the matter, raise several disturbing questions:

  1. Was Chief Justice J.S. Khehar aware of the Kalikho Pul suicide note and that this note mentioned his name, thus raising allegations about a cash for judgment scam?
  2. Was Pul’s suicide note the reason that Chief Justice Khehar transferred the case deliberately to a bench headed by Justice Arun Mishra?
  3. Was Justice Khehar aware of Justice Arun Mishra’s close ties with the BJP leaders?
  4. Did the proximity of Justice Arun Mishra to the BJP – and in particular to some of the people specifically mentioned in the Birla-Sahara diaries as a recipient of black money (such as Shivraj Singh Chouhan, the chief minister of Madhya Pradesh, have a bearing on the decision to finally not order an investigation?
  5. Was the Kalikho Pul suicide note used as an instrument by the government to put pressure on the judges hearing the Birla-Sahara case?
  6. Did the Modi government decide to ignore Kalikho Pul’s suicide note (despite the fact that it contains serious charges of corruption against Congress leaders and the two senior most judges of the Supreme Court) so long as the judiciary does not order an investigation into the Birla-Sahara payoffs ?

It is a fundamental principle in law that even a reasonable apprehension of bias in the minds of the litigants constitutes a violation of natural justice and renders the judgment a nullity. The content of the documents recovered in the Birla-Sahara raids as well the contents of the Kalikho Pul suicide note are amongst the most lethal revelations of political corruption in the country and they raise questions about the highest constitutional positions in our country – the prime minister and the chief justice of India. In hardly any case does one obtain documentation which mentions in such detail, the payments made of large sums of money to political personalities and officials. The Kalikho Pul suicide note, in particular, is like a dying declaration and that too of a chief minister, which must be treated very seriously in law because of the jurisprudential maxim ‘nemo mariturus presumuntur mentri’ i.e. a man will not meet his maker with a lie in his mouth.

The people of India have known for a long time the pervasive and rampant corruption in the polity. Narendra Modi claimed to be above all this, but the Birla and Sahara documents suggest otherwise. The Kalikho Pul suicide note has shaken the faith of the people in the integrity of the highest levels of our judiciary. Burying the Birla-Sahara documents and the Kalikho Pul suicide note without investigation will not make the public suspicion go away. In fact, it would only strengthen those suspicions and irredeemably erode the fate of the people in the integrity of Modi and the judiciary. It is imperative, therefore,  that the contents of these documents are subjected to thorough and credible investigation. In fact, they pose one of the most serious challenges in independent India for the judiciary itself.

The time has come for the judges of the Supreme Court to sit together to apply their minds and devise a way for these serious documents to be thoroughly investigated. Nothing less than this is going to the restore the shaken faith of the people of this country in the highest political and judicial offices of this country.

Prashant Bhushan is an advocate and lead counsel for the NGO, Common Cause, in its public interest litigation in the Supreme Court on the appointment of K.V. Chowdary as Chief Vigilance Commissioner, where the Birla-Sahara matter was heard.