The State Of Gujarat vs Paresh Nathalal Chauhan

CIVIL APPEAL NO. /2024 ARISING OUT OF SLP (C) NO. 666 /2021

THE STATE OF GUJARAT & ANR. …. APPELLANT(S)

VERSUS

PARESH NATHALAL CHAUHAN …RESPONDENT(S)

JUDGMENT

PAMIDIGHANTAM SRI NARASIMHA, J.

1. Leave granted.

2. We are called upon to expunge a portion from the interim order of

the High Court and dispose of the appeal as it is represented to us that

the respondent is not interested in initiating proceedings against the

officers in the present matter. We have accepted the request and hereby

dispose of the appeal.

3. The portion sought to be expunged is the observation of the High

Court that the good faith clause in Section 157 of the GST Act1, may

1 “157. Protection of action taken under this Act.—(1) No suit, prosecution or other legal Signature Not Verified proceedings shall lie against the President, State President, Members, officers or other Digitally signed by RAVI ARORA employees of the Appellate Tribunal or any other person authorised by the said Appellate Date: 2024.04.06 11:05:22 IST Reason: Tribunal for anything which is in good faith done or intended to be done under this Act or the rules made thereunder.

(2) No suit, prosecution or other legal proceedings shall lie against any officer appointed or authorised under this Act for anything which is done or intended to be done in good faith under this Act or the rules made thereunder.” 1 not be available to the officers of the State as their conduct, according

to the High Court, “may not” justify protection. We have expunged that

portion of the order because the context as well as the conclusions of

the High Court are wrong. We will explain this after indicating the

relevant facts.

4. This civil appeal arises out of an interim order passed by the High

Court of Gujarat2 in a writ petition filed by the respondent seeking a

direction for protection from arrest under section 69 read with section

132 of the GST Act. The High Court is still examining the writ petition,

but by the interim order impugned herein, it criticised the prolonged

stay of the search party at the residence of the respondents as

unauthorized and illegal. We need not deal with the merits of the issue

as the matter is still pending before the High Court, more so when the

respondent has submitted that he is not interested in proceeding

against the officers and seeks a quietus to the issue.

5. In fact, while issuing notice in the appeal on 16.07.2021, this

Court passed the following order. The order is indicative of the limited

scrutiny sought to be made by this Court and it is evident from the

following:

“Without in any manner condoning the conduct of the officers which has been commented upon, what persuades us to issue notice is the fact that there are observations to the effect that the statutory protection available to the officers would not be a defence in case proceedings were to be initiated against those officers by the original

2 In Special Civil Application No. 18463 of 2019, order dated 24.12.2019.

2 petitioners or their family members and such an observation has been made in the absence of the officers.

Issue notice limited to the aforesaid aspect returnable in six weeks.”

6. The relevant portion in the order of the High Court that the

statutory protection should not be made available to the officers is in

paragraph 28 and it is relevant for us to extract the same.

“28. Lastly the court may sound a word of caution to the authorities exercising powers under the GST Acts. Sub-section (2) of section 157 of the GST Acts says that no suit, prosecution or other legal proceedings shall lie against any officer appointed or authorized under the Act for anything which is done or intended to be done in good faith under the Act or the rules made thereunder. An action like the present one which is not contemplated under any statutory provision and which infringes the fundamental rights’ of citizens under article 21 of the Constitution of India may not be protected under this section. An action taken may be said to be in good faith if the officer is otherwise so empowered and he exceeds the scope of his authority. However, in a case like the present one where the authorization was for search and seizure of goods liable to confiscation, documents, books or things and the concerned officer converted it into a search for a person and in investigation, which is not otherwise backed by any statutory provision, it may be difficult to accept that such action was in good faith. Protection of such action under section 157 of the GST Acts may unleash a regime of terror insofar as the taxable persons are concerned.”

7. In the above-referred paragraph, the High Court was of the view

that the protection contemplated under section 157 of the GST Act,

which is in the nature of a good faith clause, “may not” be available to

the officers. This is the issue with which we are concerned, and we will

dwell upon it.

8. A good faith clause, explained in the vocabulary of the rights and

duties regime, can be said to be a provision of immunity to a statutory

functionary. Such provisions are in recognition of public interest in

protecting a statutory functionary against prosecution or legal 3 proceedings. This immunity is limited. It is confined to acts done

honestly and in furtherance of achieving the statutory purpose and

objective. Section 3(22) of the General Clauses Act, 1897 best explains

‘good faith’ as an act done honestly, whether it is done negligently or

not.3 Good faith clauses in statutes providing immunity against suits,

prosecution or other legal proceedings against officials exercising

statutory power are therefore limited by their very nature, that far, and

no further. The scope and ambit of good faith has been explained in a

number of decisions of this Court,4 which need not be elaborated herein

again.

9. A good faith clause in a statute will therefore be a defense. If

successfully pleaded, it not only legitimises the action but also protects

the statutory functionary from any legal action. If a statutory

functionary invokes the defence of good faith in a suit, prosecution or

other legal proceedings initiated against him, it is for the court or a

judicial body to consider, adjudicate, and determine whether the claim

that the action was done in good faith is made out or not. Such a

scrutiny, enquiry, or examination is done only in a proceeding against

the statutory functionary. This Court has held that the scrutiny

3 Section 3(22) of the General Clauses Act, 1897 defines ‘good faith’ as follows:

“3. Definitions.—In this Act, and in all Central Acts and Regulations made after the commencement of this Act, unless there is anything repugnant in the subject or context,— (22) a thing shall be deemed to be done in “good faith” where it is in fact done honestly, whether it is done negligently or not;”

4 See Goondla Venkateswarlu v. State of AP, (2008) 9 SCC 613, paras 22 and 23; Army

Headquarters v. CBI (2012) 6 SCC 228, paras 69-78. 4 whether the act is done in good faith or not would depend upon the

facts and circumstances of each case.5

10. It is in the above referred context that we have examined the

observations made by the High Court in Paragraph 28 extracted

hereinabove. The High Court was not conducting a suit, prosecution,

or other legal proceeding against a statutory functionary. We have no

doubt that the High Court was conscious of the principles governing

good faith clauses and therefore couched its displeasure and distress

by stating that such officials “may not” be protected or that it “may be

difficult” to accept the contention of good faith. We are of the opinion

that these observations are in the nature of advance rulings. This is

because even before the initiation of a suit, prosecution or legal

proceeding, the High Court expressed a tentative opinion. If such

observations remain, they will affect the integrity and independence of

that adjudication, compromising the prosecution and the defence

equally.

11. We say no more than reiterate that a citizen of this country has a

right of accountability, for which he is entitled to initiate and adopt

such legal remedies as are available to him, and in such proceedings

the statutory functionary is equally entitled to take a defense of good

faith. It is for the court to adjudicate and decide.

5 See, for example, Army Headquarters (supra), paras 76-78.

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12. In view of the above, we expunge paragraph 28 and dispose of the

appeal.

……..……………………………….J. [Pamidighantam Sri Narasimha]

……….………………………….J. [Aravind Kumar]

New Delhi;

March 12, 2024

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