Black money issue: Supreme Court sets SIT on black stash

The Supreme Court on Monday set up a special investigation team, headed by two former SC judges BP Jeevan Reddy and MB Shah, to look into black money stashed in foreign banks. The court has also authorised the team to order prosecution wherever necessary.

Directing the government to issue a notification for the SIT, a bench of Justice B Sudershan Reddy and Justice SS Nijjar said the team would be in charge of investigation, initiation of proceedings and prosecution — criminal or civil — and look into the unaccounted money of Pune stud farm owner Hassan Ali Khan and the Tapurias.

While the top court would continue to monitor the Hassan Ali case filed by a group of citizens, including Ram Jethmalani, two years ago, the SIT would encompass the government’s “high-level committee”. The government had formed the committee after the court criticised its inefficiency in the case.

Expanding the scope of investigation in the interest of the nation, the judges said the team would look into black money cases — pending or new ones.

These cases could be of “any other known instances of Indians stashing unaccounted money in foreign banks or other entities operating in India”, the court said.

The SIT would also prepare a comprehensive action plan, including the creation of necessary institutional structures that would enable and strengthen the country’s fight against black money. The court also directed the Centre and all state governments and their agencies to cooperate with the SIT. Also, the Centre would have to help the SIT with finances, material, legal, diplomatic and intelligence resources during its investigations inside or outside the country.  

The court pulled up the Centre for continuing to shoddily handle the Hasan Ali case even after petitioner Jethmalani gave specific examples. While Khan was served with a Rs40,000 crore income tax notice, the Tapurias were served with a Rs20,580 crore notice.

In 2007, the Enforcement Directorate had disclosed that Khan “dealings” during 2001-2005 could run up to $1.6 billion. During a raid at Khan’s Pune home in January 2007, officials seized documents and evidence regarding $8.4 billion in deposits with the UBS Bank in Zurich.

Despite all this, Khan was never questioned, the petitioners alleged. Moreover, the Centre and its agencies refused to give out status details of the investigation.

The lax investigations might be an indicator of multiple problems such as serious non-governance, a weak system, political pressures to slow down or scuttle the inquiry, the petitioners said.

Since it is an accepted fact that politicians are generally corrupt and many have stashed black money in foreign banks, it would be reasonable to conclude that investigations were not foolproof as Khan and the Tapurias were acting as conduits for such politicians, the petitioners said.  

This case was strong enough for the Supreme Court to realise the magnitude of the problem. The judges were taken aback when they were told that Khan whose passport had been impounded following SC instructions had got a new passport from Patna, possibly with a politician’s help.