Delhi High Court
M/S Rare Creations Limited vs Union Of India And Another on 16 April, 2009
Author: G.S. Sistani
Bench: G.S. Sistani
21
IN THE HIGH COURT OF DELHI AT NEW DELHI
+ WP(CRL.)No. 223-25/2006
# M/s Rare Creations Limited .... Petitioner
& Others
Through: Mr.R.K. Handoo, Mr.Atul Sharma
and Mr.Aditya Chaudhary, Advs.
Versus
Union of India and Another ..... Respondents
Through: Mr.K.Singhal for
Mr.Vineet Malhotra, Adv.
ORDER
% 16.04.2009 CORAM: HON'BLE MR. JUSTICE G.S. SISTANI
1. Whether reporters of local papers may be allowed to see the
Judgment ? Yes
2. To be referred to the Reporter or not? Yes
3. Whether the Judgment should be reported in the Digest? Yes G.S. SISTANI, J. (ORAL):
1. The present petition filed under Article 226 and 227 of the Constitution of India read with Section 482 of the Code of Criminal Procedure has been filed by the petitioners seeking an appropriate writ, order or direction in the nature of a writ of certiorari quashing the complaint dated 2.5.2002 being 361/2002 pending in the court of Additional Chief Metropolitan Magistrate, New Delhi instituted by the respondents under Section 56 of the Foreign Exchange Act, 1973 read with Section 49 (3) and (4) of the Foreign Exchange Management Act, 1999.
2. Brief facts which have led to filing of the present petition are as under.W.P. (C) No. 223-25-2006 Page 1 of 19
3. Petitioner No. 1 is a company incorporated under the Companies Act, 1956 and carried on the business of manufacture and export of leather garments from 1990 upto 1997. The petitioner Nos.2 and 3 are the Directors of the petitioner No. 1. The respondent No. 1 is Union of India. The respondent No.2 is the Chief Enforcement Officer in the Enforcement Directorate in FEMA, 1999 and is working under the direct control of respondent No. 1.
4. It is stated that the Foreign Exchange Regulation Act, 1973 (hereinafter referred to as FERA) was repealed and was substituted by the Foreign Exchange Management Act, 1999 (hereinafter referred to as FEMA). The FEMA came to into force on 1.6.1999.
The respondent No.2 had filed a complaint against the petitioners under Section 56 of FERA, 1973 on the ground that the petitioners have not put in reasonable efforts to receive or recover the export outstanding amount to the tune of Rs. 2,00,15,984/- under the exports made under various GR/RF forms for the alleged violations of Section 18(2) and 18(3) of FERA, 1973.
5. Learned counsel for the petitioner submits that the present complaint is a gross abuse of the process of law and the same has been filed by suppressing and withholding material facts. He submits that 31.05.2002 was the last date when the complaint under Section 56 of FERA could be filed and taken cognizance of. The respondent No.2 with a predetermined mind to prosecute the petitioners and in a hurry to meet the deadline of 31.05.2002, filed the complaint bearing No. 361/2002, before the learned Additional Chief Metropolitan Magistrate, New Delhi.
W.P. (C) No. 223-25-2006 Page 2 of 19
6. Learned counsel for the petitioner submits that during the period of 1990 upto 1997, when petitioner No.1 was carrying on the business of manufacture and export of leather garments, the cumulative exports of goods to its foreign buyers was for a total sum of Rs. 11,63,14,306.50 and against which it had received payment amounting to Rs.10,52,58,489.40. The outstanding value for which the petitioner No.1 did not receive payment is Rs.1,10,55,817.10.
7. Since the marginal part of the payment of the outstanding was not realized by the petitioners, as a result whereof, the Reserve Bank of India vide its letter dated 17.11.97 called upon the petitioners to furnish details of shipment, proceeds of which were not accounted by the petitioners although the stipulated period for realization had elapsed. The petitioner No.1 vide its letter dated 18.12.1997 confirmed to the Reserve Bank of India that the petitioner No.1 had taken all possible steps to effect the recoveries. In the meantime, petitioner No.1 submitted an application on 31.03.1999 with the Bank of Maharashtra seeking grant of extension from Reserve Bank of India for realization of the export proceeds in respect of the suit filed in this Court, by the petitioners against a Foreign Buyer, being suit No. 2995/1995 entitled as "Rare Creations Limited Vs. Amber International and Others".
8. Learned counsel for the petitioner submits that prior to filing of the complaint, the petitioner had received a communication/summons dated 06.05.1999 from the Enforcement Directorate to appear before the Enforcement Officer on 02.06.1999 alongwith the documents as stated in the said notice. Learned counsel submits W.P. (C) No. 223-25-2006 Page 3 of 19 that in response to the summons, the petitioner had issued communications dated 01.06.1999 as well as 17.06.1999. In the communication dated 17.06.1999, the petitioner gave detailed information alongwith the action taken report and the steps taken for realization of the amounts to the Enforcement Officer, Foreign Exchange Regulation Act, Govt. of India, Lok Nayak Bhawan, 6th Floor, Khan Market, New Delhi. In the said communication petitioner also gave details of the outstanding bills and the bill amounts with respect to consignments. The communication also detailed that a suit for recovery was instituted against M/s.Amber International for Rs.41,12,960/- and the suit was at the final stage and petitioner was hoping for favourable results. With respect to the shipment made to M/s.Kenwright Limited, a legal notice was issued and the petitioner was contemplating filing a suit for recovery, which during the course of hearing learned counsel for the petitioner submits, was filed.
9. As for the shipment made to RLE INC it was brought to the notice of the department that a theft had occurred in the godown of the buyer and various dresses had been stolen and thus the complete garments were not available, although an advance of 20,000 US$ was received at the first instance and thereafter further payment of 19,497 US$ were received out of which one cheque of Rs.10,000 US$ got bounced due to insufficient funds and the buyer had expressed his inability to pay the balance. With respect to consignment sold to M/s.Om Imports a part payment stood received and further payments were not received due to financial W.P. (C) No. 223-25-2006 Page 4 of 19 problems being faced by the buyer and the petitioner apprised the department that they had approached the RBI.
10. In reply to the petitioner's letter dated 17.6.1999, the respondents vide letter dated 11/14.10.1999, requested the petitioner to disclose the position of suit filed by the petitioners against M/s Amber International, USA in the Delhi High Court and also sought other information in terms of the said letter. Learned counsel for the petitioner submits that although details had already been supplied, still the petitioner replied vide its communication dated 24.10.1999 and the present position was informed to the department.
11. It is submitted that the respondents again vide their letter dated 22.11.2000 sought further information from the petitioners, who vide their letter dated 29.12.2000 filed a reply and also requested the concerned officer of the respondents to refer to their earlier letters/representation submitted.
12. Learned counsel for the petitioner submits that in spite of the various communications as detailed hereinabove the petitioner was issued a statutory opportunity notice dated 11.2.2002 under Section 61 (2) of the Foreign Exchange Regulation Act. Bare reading of this opportunity notice, copy of which has been placed on record, would show that there is no mention of the several correspondences exchanged between the petitioner and the respondent. The contention of learned counsel is that the opportunity notice is devoid of material particulars, suppresses material facts and thus was issued as an empty formality and W.P. (C) No. 223-25-2006 Page 5 of 19 cannot be said to be a notice in the eyes of law. He submits that on this ground alone the complaint is liable to be quashed.
13. Learned counsel for the petitioner has also drawn the attention of this court to the reply submitted by the petitioner to the opportunity notice dated 11.2.2002. In this reply the respondents were informed that the outstanding amount is approximately Rs.1.40 crores and not Rs.2.0 crores as mentioned in the notice. The department thereafter filed the complaint wherein the amount was again shown as over Rs.2.0 crores. Learned counsel for the petitioner submits that the figure in the complaint is relevant more so in view of the circular dated 05.07.2001 issued by the respondents. As per this circular, guidelines were issued with regard to prosecution under section 56 of the Foreign Exchange Regulation Act and as per Clause C- in Export cases, the prosecution was to be launched in case of non-realization of export proceeds worth Rs.2.0 crores or more and where non-realization was willful and mala fide. Learned counsel submits that the department has failed to follow the guidelines enshrined in the circular dated 05.07.2001 in view of the fact that the outstanding amount in the present case is Rs.1.40 crores. In support of his plea with regard to the outstanding amount, learned counsel for the petitioner has drawn the attention of the Court to the statement of account, and certificate issued by the bank of Maharashtra dated 03.10.2002 according to which the outstanding amount for Export Bills of the petitioner is Rs.1,40,45,882/-. Copy of this certificate has also been placed on record as Annexure P-22. W.P. (C) No. 223-25-2006 Page 6 of 19
14. Learned counsel for the petitioner further relies upon a communication dated 14.5.2002 issued by the Reserve Bank of India to the petitioner according to which, the Reserve Bank of India upon considering the case of the petitioner had advised the petitioner to apply for export/write off through the authorized dealer. Relevant portion of the said communication is reproduced below:
"Sub : Non-realisation of export proceeds Reference to your letter No. Nil dated 30.4.2004 Please refer to your letter dated 30.4.2002 on the captioned subject. In this connection you are advised to submit the following documents/ information through you're A.D. (1) Developments in the legal case for recovery against GR No.AB-963078, AD-769081, AD-
769158, AD-554987 and AD-554952 which was at a decree stage as per your letter dated 17.6.99 and approach the AD for release of GRS for which payment has been received.
(2) Apply for extn./write off through your AD alongwith relevant documents for GRS for which payment cannot be received."
15. It is submitted that the Reserve Bank of India vide their notice dated 4.4.2002 issued under Regulation 17(1) of the Foreign Exchange Management (Export of Goods and Services) Regulation, 2000 had called upon the petitioners to show cause within 21 days from the date of notice as to why the Reserve Bank of India should not issue directions to the petitioners under Sub Regulation (1) of Regulation 17 of the Foreign Exchange Management (Export of Goods and Services) Regulation, 2000. The petitioners vide their letter dated 30.04.2002 submitted their detailed representation W.P. (C) No. 223-25-2006 Page 7 of 19 with the Reserve Bank of India along with suit proceedings filed by the petitioners in this Court. Thereafter, the reserve Bank of India vide its letter dated 14.05.2002 after being satisfied with the submissions and the documents filed by the petitioners, directed the petitioners to apply for extension/write off through petitioners' authorized dealer (Bank of Mahrashtra) alongwith relevant documents for G.R.S., for which payment could not be received. The petitioners vide their letter dated 03.09.2002 requested its authorized dealer, Bank of Maharashtra for making corrections in the statement of outstanding payments and also to make the adjustment of the amounts received as part payment in respect of various outstanding GRs. On 03.10.2002, Bank of Maharashtra issued a certificate, certifying the outstanding position as on 19.2.1999 for the outstanding export bills of the petitioner No. 1.
16. The sum and substance of the argument of learned counsel for the petitioner is that as per section 18(2) of the Foreign Exchange Regulation Act, the petitioner has to show reasonable steps which have been taken by it for the recovery of the export proceeds, and which it is submitted were duly taken. It would be useful to reproduce ground (E) of the petition, which reads as under:
"(E) Because the respondents have erred that the petitioners have not taken reasonable steps in as much as it is on record that the petitioners filed recovery suit in the Hon'ble High Court of Delhi and have also taken appropriate steps for recovery, it cannot be said that the petitioners have not taken reasonable steps to recover the amount. The petitioners submit that the combined reading of Section 18(2) and 18(3) of FERA, 1973 envisages inaction or a default on the part of the exporter by refraining from doing anything or refraining from taking any action as envisaged under Sub-Section 2 of Section 18 to take all reasonable steps to receive or W.P. (C) No. 223-25-2006 Page 8 of 19 recover the payment for the goods. Thus, it is only failure to take reasonable steps which would render the exporter liable for contravention of Section 18(2) and 18(3) of FERA, 1973, and not the fact that the amount has not been realized. In other words, Section 18(2) and 18(3) envisages that if an exporter has taken all reasonable steps to recover the value of the exported goods, he would not be said to have contravene the provisions of section 18(2) and 18(3) of FERA, 1973 even if the export proceeds or any part thereof remained unrealized. The petitioners submit that the determining factor is reasonable steps towards realization of outstanding payments. The petitioners submit that Sub-Section 3 of Section 18 does not specify as to what shall constitute reasonable steps. The petitioners submit that the reasonable steps have to be determined in the facts and circumstances of each case and the test would be "what a prudent businessmen would do in a particular situation of a case". Needless to say that business decision is always based on the conditions such as relationship with the buyers, in the sense of past business, product of future business and quantum of outstanding amount in relations to the total turn over, the likely effect on the buyers, if the complaint is made to the Government agency for action, etc. Thus as per law there cannot be any specific step or set of step that an exporter has to take as an uniformed standard for judging the reasonable steps taken by exporter for realization of export proceeds. The petitioners submit that even one step may suffice in any particular situation to recover the amount and would come within the purview of "all reasonable efforts while as number of steps may not qualify, and/or to be termed as all reasonable steps". The test being the adequacy of step and not the number of steps. Even if one step is adequate, it would be construed that the exporter has taken all reasonable steps to realize the proceeds and in such case, it cannot be alleged that the exporter has derelict and/or contravened Section 18(2) and 18(3) of FERA, 1973.
The material on record is replete to conclude that the petitioners have taken all reasonable proceeds and resultantly, the petitioners cannot be alleged to have contravened Section 18(2) and 18(3) of FERA, 1973, and the complaint is liable to be quashed."
17. Learned counsel for the petitioner also submits that in para 6 of the complaint it has been stated that Mr.Ajay Soni and Mr.M.K. Monga, Directors of M/s.Rare Creations Limited, during the W.P. (C) No. 223-25-2006 Page 9 of 19 relevant period were incharge and responsible to the said firm for the conduct of the day-to-day business of the company. However, it is contended that a bare reading of the complaint would show that the complaint lacks material particulars with respect to the role ascribed to the directors, who have already been made as parties to the complaint. Learned counsel submits that his case would be squarely covered by the decision of the Apex Court in the case of S.M.S. Pharmaceuticals Ltd. Vs. Neeta Bhalla & Anr. reported at JT 2005 (8) SCC 89, and the decision of a single judge of this Court in the case of Anil Kumar Vs. State and Anr. reported at (137) 2007 DLT 10. Learned counsel further submits that taking into consideration that neither the opportunity notice nor the complaint has considered the relevant facts on record and there has been a deliberate attempt on the part of the department to suppress material particulars, the complaint is a gross abuse of the process of the Court and thus is liable to be quashed. While relying upon Rukmini Narvekar Vs. Vijaya Satardekar & Ors. reported at JT 2000 (8) 11 SC 32 to buttress his argument, learned counsel submits that in exceptional cases, as the case in hand, in view of the wide powers conferred upon it under section 482 Cr.P.C. and Article 226 of the Constitution of India, in order to meet the ends of justice, the Court may look into the admitted documents between the parties and where continuance of prosecution would amount to an absurdity, it is open to the Court to quash the proceedings.
18. Learned counsel further submits that petitioners have obtained a decree against M/s.Amber International, to the tune of US $ W.P. (C) No. 223-25-2006 Page 10 of 19 75,000; Rs.85.0 lacs in the case of M/s.Kenwrite; and US $ 30,000 in the case of M/s.RLE, NY. The details of which are given herein below:
"(i) In regard to M/s.Amber International, petitioners filed civil suit before this Hon'ble Court which was decreed by this Hon'ble Court and the decree was sent for execution in pursuance of which US $ 75,000 are realized and the bankers have released the GRs in respect of the outstanding export for M/s.Amber International.
(ii) In respect of M/s.Kenwrite, again Civil Suit was filed and a decree has been passed by this Hon'lbe Court and in pursuance of the decree, respondent was directed by this Hon'ble Court to deposit Rs.85 lacs before the Hon'ble COurt which has been deposited with the Ld. Registrar of this Hon'ble Court.
(iii) In respect of M/s. RLE, NY few GRs and the goods had been stolen and police report has been lodged in New York and culprits were apprehended and due to the persistent efforts of the petitioners US $ 30000 have been recovered after herculean."
19. In view of the above averments, learned counsel for the petitioner submits that the complaint instituted against the petitioner be quashed in the interest of justice.
20. The present petition is opposed by learned counsel for respondent primarily on the ground that petitioner has failed to take reasonable steps to recover the amount. It is contended that the steps taken by the petitioner are a mere eye wash as also the steps are neither reasonable nor adequate to satisfy the requirements of the provisions of Section 18 of the Foreign Exchange Regulation Act, 1973. It is contended that the suits were filed only with the intention of satisfying the legal requirements and not with the earnest desire to realize the proceeds. It is also contended that the fact of suits having been W.P. (C) No. 223-25-2006 Page 11 of 19 filed were duly intimated to the Reserve Bank of India and despite that, Reserve Bank of India did not grant any write off or extension of time as sought by the petitioners. On the contrary, as seen from Reserve Bank of India letter no.EX.DEL.NEPZ/417/16.18/0512/2001-02 dated 04.04.02, the petitioner's name was proposed for placing under caution list. Reserve Bank of India did not write off the amount as also nothing had been placed on record to show as to what was the result of the application made by the petitioner. It is contended that the figure of Rs.2.0 crores has been taken by the department based on a certificate of the bank dated 21.10.1999 and it is on the basis of this statement of account that the respondents had filed the complaint
21. I have heard learned counsel for the parties and given my thoughtful consideration to the matter. The attention of this court was drawn to paras 2, 3 and 4 of the complaint wherein the complainant has stated that during the years 1993-96 M/s.Rare Creations Limited had effected shipments of goods valued at Rs.2,00,15,984/-. It has further been stated in the complaint that the said M/s.Rare Creations Limited without any permission from Reserve Bank of India took or refrained from taking action which had the effect of securing that the export value of Rs.2,00,15,984/-.
22. In this case admittedly summons dated 06.05.1999 were issued by the respondents to the petitioners, and to which the petitioners replied vide letter dated 17.06.1999. Further in the communication of the department dated 11/14th October, 1999 W.P. (C) No. 223-25-2006 Page 12 of 19 while asking for further information, the Enforcement Directorate has acknowledged the letter dated 17.06.1999, which would show that the department had received the reply sent by the petitioner dated 17.06.1999. To the communication dated 11/14th October, 1999, the petitioner had issued a reply dated 24.10.1999 which also finds mention in a further communication issued by the Enforcement Directorate dated 22.11.2000. There is no quarrel to the propositions that ordinarily, while deciding a matter pertaining to quashing of the FIR or the complaint, the court has to read the complaint and not take into consideration the defence of the accused. However, the same is not an absolute proposition of law. I am fortified in my view by the decision referred to by learned counsel for the petitioner reported in Rukmini Narvekar (supra) wherein it was observed by the Apex Court that it cannot be said as an absolute proposition that under no circumstances can the Court look into the material produced by the defence at the time of framing of the charges. It was observed that, "We should also keep in mind that it is well settled that a judgment of the Court has not to be treated as a Euclid formula vide Dr. Rajbir Singh Dalal v. Chaudhari Devi Lal University, Sirsa & Anr. JT 2008 (8) SC 621. As observed by this Court in Bharat Petroleum Corporation Ltd. & Anr. v. N. R. Vairamani & Anr. AIR 2004 SC 4778, observations of Courts are neither to be read as Euclid's formula nor as provisions of the statute. Thus in our opinion while it is true that ordinarily defence material cannot be looked into by the Court while W.P. (C) No. 223-25-2006 Page 13 of 19 framing of the charge in view of D. N. Padhi's case (supra), there may be some very rare and exceptional cases where some defence material when shown to the trial court would convincingly demonstrate that the prosecution version is totally absurd or preposterous, and in such very rare cases the defence material can be looked into by the Court at the time of framing of the charges or taking cognizance. In our opinion, therefore, it cannot be said as an absolute proposition that under no circumstances can the Court look into the material produced by the defence at the time of framing of the charges, though this should be done in very rare cases, i.e. where the defence produces some material which convincingly demonstrates that the whole prosecution case is totally absurd or totally concocted. We agree with Shri Lalit that in some very rare cases the Court is justified in looking into the material produced by the defence at the time of framing of the charges, if such material convincingly establishes that the whole prosecution version is totally absurd, preposterous or concocted."
23. In the counter affidavit as well as during the course of hearing, learned counsel for the respondent has not disputed that the letters referred to hereinabove were issued by the petitioner herein. These communications are material information which was sent to the respondent and the respondent was duty bound to consider the contents of these communications and should have dealt with these letters in the opportunity notice dated 11.02.2002 and further the respondent was bound to consider W.P. (C) No. 223-25-2006 Page 14 of 19 these communications in the complaint. The opportunity notice is a statutory requirement and not an empty formality. The respondent could not have thus ignored the contents of these communications, which are material and integral to the dispute, subject matter of controversy.
24. The petitioner has also placed reliance on the order dated 29.10.2002 passed by the respondents with respect to the persons similarly situated, wherein the noticee company had taken effective steps to realize their outstanding export bills and thus it was held to be pre-mature to initiate adjudication proceedings and also held that the notice is not liable for contravention as alleged in the show cause.
25. The respondent has failed to point out or show how the case in hand is different in any way from the proceedings, subject matter of the order passed by the department, copy of which has been filed on record. Sub-section (2) and (3) of Section 18 of the Foreign Exchange Regulation Act, read as under:
"(2) Where any export of goods, to which a notification under clause (a) of sub-section (1) applies, has been made, no person shall except with the permission of the Reserve Bank, do or refrain from doing anything, or take or refrain from taking any action, which has the effect of securing-
(A) in a case falling under sub-clause (i) or sub-clause
(ii) of clause (a) of sub-section (1),- (a) that payment for the goods- (i) is made otherwise than in the prescribed manner, or (ii) is delayed beyond the period prescribed under clause (a) of sub-
section (1), or (b) that the proceeds of sale of the goods exported do not represent the full export value of the goods subject to such deductions, if any, as may be allowed by the Reserve Bank; and (B) in a case failing under sub-clause (ii) of clause (a) of sub-section (1), also that the sale of the goods is W.P. (C) No. 223-25-2006 Page 15 of 19 delayed to an extent which is unreasonable having regard to the ordinary course of trade:
Provided that no proceedings in respect of any contravention of the provisions of this sub-section shall be instituted unless the prescribed period has expired and payment for the goods representing the full export value has not been made in the prescribed manner within the prescribed period.
(3) Where in relation to any goods to which a notification under clause (a) of sub-section (1) applies the prescribed period has expired and payment therefor has not been made as aforesaid, it shall be presumed, unless the contrary is proved by the person who has sold or is entitled to sell the goods or to procure the sale thereof, that such person has not taken all reasonable steps to receive or recover the payment for the goods as aforesaid and he shall accordingly be presumed to have contravened the provisions of sub-section (2).
26. A bare reading of this section would show that there are two basic requirements which are to be fulfilled. As per the said sections, the petitioner should have taken reasonable steps to receive or recover the payment of goods and it is only upon failure to take reasonable steps, the exporter would be liable for contravention of section 18 (2) read with sub-section (3) of the Foreign Exchange Regulation Act. It may be noticed that these sections do not provide a mandatory requirement of recovery of the amount due.
27. In the light of the said provisions, in the case in hand, it was for the petitioner to satisfy the department as to the steps taken by the petitioner for recoveries. In the communication dated 17.06.1999, the petitioner had given full detail of the steps which had been taken by them for recoveries. Relevant portion of this communication reads as under:
W.P. (C) No. 223-25-2006 Page 16 of 19
"ACTION TAKEN: A suit of recovery amounting to Rs.41,12,960/- (Rupees Forty One Lac twelve thousand Nine Hundred and sixty) has been filed against the buyer in Delhi High Court vide suit No.2995 of 1995. The case is at the decree stage and we are hopeful of getting a favourable award. Complete details in respect of these consignments and the copy of referred suit is enclosed herewith from page Nos.001 to 045.
ACTION TAKEN: Since persistent requests, reminders and visits to Russia have not yielded any results, we have resolved to institute legal proceedings against the buyer. A legal notice for recovery of Rs.61,62,000/- has been served upon the buyer and its agents. We shall soon file a proper suit for recovery. Complete information and relevant documents of above outsanding bills along with copy of Legal Notice and proof of service of notice is enclosed herewith from page Nos.046 to 063.
.... Against these shipments the buyer had sent an advance payment of Rs.20,000 and a further payment of 19,497 US Dollars, out of which one cheque of 10,000 U.S. Dollars got bounced due to insufficient funds and for remaining payment, on account of theft and on account of his inability to sell a partial garment, he expressed his inability to send any further payment. Complete documentation along with extensions filed with RBI, are enclosed at page Nos.064 to 109.
...... The buyer due to reported financial problems has not made any further payment and also is not available at earlier known address and contact number.
ACTION TAKEN: We have filed with RBI the required applications for extensions and followed up quite vigorously with the buyer. Complete information along with copies of ETX applications is enclosed herewith at page Nos.110 to 132."
28. During the pendency of this matter, it is not disputed that petitioner has realized US$ 75,000 pursuant to a decree passed by Delhi High Court arising out of a Civil Suit No.2995/1995, and another sum of Rs.85.0 lacs stands deposited with the Registrar of this court pursuant to the petitioner having filed a suit (Suit No.1830/1999) against M/s.Kenwrite. Further US$ 30,000 stands recovered from M/s.RLE as well as details have been given with W.P. (C) No. 223-25-2006 Page 17 of 19 respect to the steps taken against Century Export Bankers', who have accounted for part payment which would receive, but have now been accounted for by the bankers as well as RBI.
29. It has not been explained by the respondents as to why filing of a civil suit cannot be termed as reasonable steps taken and on what basis it cannot be said that these steps taken are a mere eye wash. In fact, the recoveries made and the decree so passed by this Court clearly show that the petitioner had taken not only reasonable steps taken but all possible steps to institute proceedings and thereafter steps to take recoveries and to gain the fruits of the decree.
30. Taking into consideration the certificate dated 3.10.2002 issued by a nationalized bank (Bank of Maharashtra), the genuineness of which has not been disputed by the department would show that the amounts outstanding were Rs.1,45,00,882/-. Furthermore, taking into consideration the circular dated 05.07.2001 (copy of which has been placed on record) as per clause 1 (C) of the guidelines, prosecution is to be filed where non-realization of export proceeds is Rs.2.0 crores or above and where non-realization is willful and mala fide. The sequence of events and undisputed documents placed on record show that the petitioner herein had taken all suitable and reasonable steps which a prudent person would take for recovery and recoveries were actually made, as well as taking into consideration that the basic requirement of a statutory notice has not been complied with. The respondents have in fact made an empty formality by issuing an opportunity notice without any W.P. (C) No. 223-25-2006 Page 18 of 19 application of mind, without considering the relevant events or the several replies given by the petitioner herein and thereafter went on file a complaint, in which for reasons best known to them, the respondents have failed to disclose the stand taken by the petitioner and the reasonable steps taken by the petitioner for the recovery of the outstanding export proceeds. In light of the above discussion and having regard to the settled position of law, proceeding with the present complaint would be a futile exercise and thus to prevent the abuse of the process and to meet the ends of justice, the present petition is allowed.
31. Consequently, complaint bearing No.361/2002 pending in the court of Additional Chief Metropolitan Magistrate, New Delhi instituted by the respondents under Section 56 of the Foreign Exchange Act, 1973 read with Section 49 (3) and (4) of the Foreign Exchange Management Act, 1999, stands quashed. No order as to costs.
G.S. SISTANI, J.
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