Evidence – Commission of Enquiry – Statements made before commissioner cannot be used as evidence before civil or criminal court – Conclusions based on such statements cannot be used as Evidence:

The National Housing Bank drew a cheque on 3rd January, 1992, for an amount of Rs. 95.39 crore approximately on the Reserve Bank of India in favour of the State Bank of Saurashtra, a subsidiary of the appellant, which later merged with the appellant. Towards the end of April, 1992, the National Housing Bank found that it did not possess any bank receipts or supporting documents or any securities in respect of such transaction and addressed letters to the State Bank of Saurashtra requesting it to make delivery of bank receipts/securities or for return of the amount. The state bank of Saurashtra denied the existence of any “outstanding transaction”. The National Housing Bank filed a suit before the Special Court established under the Special Court (Trial of Offences Relating to Transactions in securities) Act, 1992 against (i) the State Bank of Saurashtra, (ii) HM, (iii) 2 employees of HM and (iv) the Custodian appointed u/s. 3(1) of the 1992 Act for recovery of an amount of Rs. 95.39 crore with interest alleging conspiracy, collusion and fraud between the defendants in the suit thereby causing loss to the National Housing Bank. The Special Court passed a decree in favour of the National Housing Bank and against the state bank of Saurashtra. The State Bank of Saurashtra challenged that part of the decree which was against, it and the National Housing Bank challenged that part of the decree of the Special Court directing it to deliver certain amounts to the Custodian:

The Hon’ble Court observed that u/s. 9A(1) of the Act, the Special Court has jurisdiction to adjudicate any matter or claim arising out of a transaction in securities entered into during the period specified in the section in which a notified person is involved in whatever capacity. Therefore, the Special Court was authorised by law to adjudicate the claim of the defendant, HM, without being shackled by the procedural fetters imposed under the code.

Further that though the 1992 Act declares that the Special Court is not bound by the Code of Civil procedure, 1908, it does not relieve the Special Court from the obligation to follow the Indian Evidence Act, 1872. The findings of even a statutory commission appointed under the Commissions of Inquiry Act, 1952, are not enforceable proprio vigore and the statements made before such commission are expressly made inadmissible in any subsequent proceedings civil or criminal. Therefore, courts are not bound by the conclusions and findings rendered by such commissions. The statements made before such commission cannot be used as evidence before any civil or criminal court. It should logically follow that even the conclusions based on such statements can also not be used as evidence in any court.

The Special Court had based its conclusions on Janakiraman Committee Report and the correspondence between the various parties (whose details are not even specified in the judgment).

The Court observed that the course adopted by the learned Judge of the Special Court of looking into the correspondence between the parties, which even according to the learned Judge had not been proved is not permissible in law. The Special Court Act though declares that the Court is not bound by the Code of Civil Procedure, it does not relieve the Special Court from the obligation to follow the Evidence Act. Further, the learned Judge extensively relied upon the second interim report of the Jankiraman Committee on the ground that the same was tendered by the 1st Defendant.

It is well settled by a long line of judicial authority that the findings of even a statutory Commission appointed under the Commissions of Inquiry Act, 1952 are not enforceable proprio vigore as held in Ram Krishna Dalmia vs. Justice S.R. Tendolkar and Ors.: AIR 1958 SC 538 and the statements made before such Commission are expressly made inadmissible in any subsequent proceedings civil or criminal.

In our view, the courts, civil or criminal, are not bound by the report or findings of the Commission of Inquiry as they have to arrive at their own decision on the evidence placed before them in accordance with law.

Therefore, Courts are not bound by the conclusions and findings rendered by such Commissions. The statements made before such Commission cannot be used as evidence before any civil or criminal court. It should logically follow that even the conclusions based on such statements can also not be used as evidence in any Court. Janakiraman Committee is not even a statutory body authorised to collect evidence in the legal sense. It is a body set up by the Governor of Reserve Bank of India obviously in exercise of its administrative functions, The Governor, RBI set up a Committee on 30th April, 1992 to investigate into the possible irregularities in funds management by commercial banks and financial institutions, and in particular, in relation to their dealings in Government securities, public sector bonds and similar instruments. The Committee was required to investigate various aspects of the transactions of SBI and other commercial banks as well as financial institutions in this regard.

The Court dismissed the suit.