Jain to Sahara Birla Diaries: What may happen if the Yeddyurappa Diaries issue reaches the courts

The Caravan has accessed documents which reveal that the Income Tax Department is in possession of copies of diary entries in the handwriting of prominent BJP leader and the former Chief Minister of Karnataka, BS Yeddyurappa.

What has come to be known as the Yeddyurappa Diaries allegedly note payoffs amounting to over Rs 1,800 crore to the BJP’s national leaders, its central committee, as well as judges and advocates.

The implications of this revelation might be fully known in the days to come. However, what would be the legal implications of these documents? Can the same be used against Yeddyurappa and other political bigwigs? The matter is not without a precedent and might very well weigh in favour of Yeddyurappa, especially if a petition in the nature of public interest litigation is filed in any High Court or the Supreme Court. (yeddyurappa bjp )

This is because of a very similar precedent which was decided by the Supreme Court more than two years ago – the Sahara Birla payoffs.

Sahara Birla: What were the documents?

In 2016, a plea by NGO Common Cause came up for hearing before the Supreme Court. The plea sought a SIT probe into the evidence gathered against the Sahara Group and the Aditya Birla Group regarding bribing of politicians. The applicant had alleged that the Central Bureau of Investigation (CBI) had conducted raids on the premises of Aditya Birla group industries in four cities on October 15, 2013 followed by another raid by the Income Tax Department on the very next day. It was submitted that the CBI transferred the incriminating documents to the Income Tax Department. The laptop of Mr. Shubhendu Amitabh, Group Executive President, was seized during the raid. An e-mail containing a cryptic entry referring to political functionaries was also recovered from the laptop. (yeddyurappa bjp)

It was also submitted that during the investigation, top officials of the Birla Group admitted that large amounts of cash were routed by the Sahara Group through hawala transactions. The Income Tax Department prepared a detailed appraisal report on the hawala transactions. Some extracts of the report were filed as an annexure to the petition.

With respect to the Sahara Group, incriminating documents and cash amounting to Rs. 135 crores were seized. Certain documents were filed in the form of printouts of Microsoft Excel sheets, showing cash receipt of over Rs. 115 crores and cash outflow of over Rs. 113 crores during a short period of 10 months. The log suggested that cash was transferred to several important public figures.

Thus, in a nutshell, the documents seized during the raids allegedly evidenced bribing of high-ranking officials and politicians including then Gujarat Chief Minister Narendra Modi.

The Court’s reactions

From the very beginning, the Court showed its inclination to junk the plea. Various remarks by different judges who heard the matter made this evident. The matter was initially being heard by a Bench of Justices JS Khehar and Arun Mishra.

When it came up for hearing on November 25, 2016, a document by Sahara was cited by advocate Prashant Bhushan, who was appearing for the petitioner.

Justice Khehar (who had heard the SEBI Sahara case for a long time before recusing himself) remarked that none of the documents of Sahara were genuine. He remarked,

“Are you relying on Sahara’s documents? They never have genuine documents. That is why I recused from hearing their case.”

Subsequently, Bhushan cited the computer entry found from raids at Birla’s premises, which dealt with payments made to the then Chief Minister of Gujarat Narendra Modi. (yeddyurappa bjp)

The Bench was, however, far from impressed.

“Anybody can make a computer entry against a Chief Minister or Prime Minister. Can we order a probe based on all that? Bring better material.”

Referring to Attorney General Mukul Rohatgi, who was appearing for the Central government, Justice Khehar remarked,

“I can make a computer entry against, say, Rohatgi’s name and that cannot form the basis for an SIT probe.”

The Court then granted three weeks’ time to the petitioner to produce better material to satisfy the Court that the matter warrants a probe. During the subsequent hearings, the petitioner sought additional time to file documents which had come into their possession. The Bench of Justices Khehar and Arun Mishra were not inclined to grant the same. This led to advocate Prashant Bhushan citing conflict of interest on the part of Justice Khehar, since he was slated to take over as the next Chief Justice of India and the files pertaining to the same was pending before the government. (yeddyurappa bjp)

Justice Khehar eventually recused and the matter was sent before another Bench of Justice Arun Mishra and Justice Amitava Roy.

The judgment

The matter was heard by the above Bench on January 11. The Court heard the case for the whole day before dismissing the case.

In its order, the Court emphasised that high Constitutional functionaries cannot be investigated without cogent material.

“There has to be some cogent material which is prima facie reliable…in case we do not insist for the same and order investigation, process of law can be misused and no democracy can function if investigation is set in motion against high Constitutional functionaries without cogent material”.

The Court felt obliged to be “on guard while ordering investigation against any important constitutional functionary, officer, or any person in the absence of some cogent legally cognizable material.”

An Excel sheet containing details of inflow and outflow of cash was referred to by the court in its judgment as “random log”.

“The random log suggests that cash was transferred to several important public figures. Copies of the random pages have been filed as Annexure A-8.” 

Jain Hawala case (CBI vs VC Shukla)

Regarding the admissibility of the materials placed before it, the Court placed reliance on its judgment in CBI v. VC Shukla. In the Jain judgment, a 3 Judge Bench ( Justices M.K. Mukherjee, S.P. Kurdukar and K.T. Thomas), the Court had considered whether entries in Jain Hawala diaries, notebooks and files containing loose sheets of papers not in the form of “Books of Accounts” can be admissible under Section 34 of Indian Evidence Act. It had held that such entries in loose papers/sheets are irrelevant and not admissible, and that only entries in books of accounts regularly kept are admissible. Even in the case of books of account, such evidence is only corroborative and independent evidence is necessary to ascertain the trustworthiness of the entries in the books of account, the Court held in that case.

Kapil Sibal citing American Jurisprudence, Proof of Facts (Volume 34, Second Series) had argued in the Jain Hawala case :

“The entry should have been made at or near the time of the transaction recorded – not merely because this is necessary in order to assure a fairly accurate recollection of the of the matter, but because any trustworthy habit of making regular business records will ordinarily involve the making of the record contemporaneously. The rule fixes no precise time’ each case must depend on its own circumstances.”

Thus combining these factors, the Court turned down the plea for probe in Sahara Birla payoffs, holding,

“We are constrained to observe that the Court has to be on guard while ordering investigation against any important constitutional functionary, officers or any person in the absence of some cogent legally cognizable material. When the material on the basis of which investigation is sought is itself irrelevant to constitute evidence and not admissible in evidence, we have apprehension whether it would be safe to even initiate investigation. In case we do so, the investigation can be ordered as against any person whosoever high in integrity on the basis of irrelevant or inadmissible entry falsely made, by any unscrupulous person or business house that too not kept in regular books of accounts but on random papers at any given point of time.”

BS Yeddyurappa Diary

Whether the Yeddyurappa diaries are “books of account” or “loose sheets” is one question. Even if they are books of account, whether the same would be admissible as evidence without independent evidence would be the next question. In any case, Constitutional courts are empowered to dismiss such a petition in limine.

In this context, it remains to be seen whether anyone will choose to take the Yeddyurappa Diaries issue further. If it does eventually find itself to the courts, the government and the accused are likely to place reliance on the judgment in Sahara Birla payoffs to seek dismissal of the matter.

Read the judgment in Sahara-Birla Payoffs below: