Madras High Court
Muthukrishna Varadarajulu vs Chief Enforcement Officer, ... on 30 November, 2000
Equivalent citations: 2001CRILJ1924
ORDER Akbar Basha Khadiri, J.
1. The short point that arises in this Criminal Original Petition is whether refusal to receive the summons under Section 40(3) of the Foreign Exchange Regulation Act, 1973 (hereinafter referred to as 'the Act') would attract offence under Section 56 of the Act.
2. The brief facts necessary to deal with the instant controversy are as follows :--
The petitioner Muthu Krishna Varadarajulu is a resident of Singapore. He is running several business concerns at Singapore. The petitioner is an Indian citizen. He is the holder of the Indian Passport issued by the High Commission of Singapore. He is a non-resident Indian. He is the Chairman of Mountamount Singapore Private Ltd., which was trading in cashew nuts in association with the other two companies known as Nagova Exim Private Limited and Sadeco Sari Private Limited. Both were incorporated at Singapore. Regarding trade, the respondent herein and various enforcement agencies conducted raids at the premises of the Indian companies which have dealings with the petitioner's company. In the course of the investigation, the respondent sent summons to the petitioner to appear for enquiry. He had received four summons right from 29th October, 1996 to 31st December, 1996. But, he was unwell and was undergoing treatment at Singapore. Therefore, every time, the petitioner sent a reply stating that he is unable to appear before the Enforcement Officer due to health and each time, he has enclosed the relevant medical certificate issued by the authorities of the hospitals run by the Singapore Government. The respondent had instituted proceedings under Section 56 of the Act, holding that the petitioner had wilfully disobeyed the summons issued by the respondent, on the basis of which, the learned Additional Chief Metropolitan Magistrate (E.O. II), Egmore, Madras, has taken the matter on E.O.C.C. No. 16 of 1997 and issued summons to the petitioner to appear before the Court.
3. Now, the petitioner has come forward with the instant Criminal Original Petition to quash the proceedings, inter alia, contending that there had been no violation of provision of Section 40 of the Act and even otherwise such violation does not amount to an offence under Section 56 of the Act.
4. Heard both the sides. Section 40 of the Act recites as under :--
40. Power to summon persons to give evidence and produce documents--
(1) Any Gazetted Officer of Enforcement shall have power to summon any person whose attendance he considers necessary either to give evidence or to produce a document during the course of any investigation or proceeding under this Act.
(2) A summons to produce documents may be for the production of certain speci-fied documents or for the production of all documents of a certain description in the possession or under the control of the per-son summoned.
(3) All persons so summoned shall be bound to attend either in person or by au-thorised agents, as such officer may direct; and all persons so summoned shall be bound to state the truth upon any subject respecting which they are examined or make statements and produce such documents as may be required :
Provided that the exemption under Section 132 of the Code of Civil Procedure, 1908 (5 of 1908), shall be applicable to any requi-sition for attendance under this Section (4) Every such investigation or proceeding as aforesaid shall be deemed to be judicial proceeding within the meaning, of Sections 193 and 228 of the Indian Penal Code (45 of 1860).
Section 56 of the Act recites as under :--
56. Offences and prosecution --
(1) Without prejudice to any award of penalty by the adjudicating officer under this Act, if any person contravenes any of the provisions of this Act (other than Section 13, Clause (a) of Sub-section (1) of Section 18, Section 18A, Clause (a) of Sub-section (1) Of Section 19, Sub-section (2) of Section 44 and Sections 57 and 58 or of any rule, direction or order made thereunder, he shall upon conviction by a Court, be punishable --
(i) in the case of an offence the amount or value involved in which exceeds one lakh of rupees, with imprisonment for a term which shall not be less than six months, but which may extend to seven years and with fine;
Provided that the Court may, for any adequate and special reasons to be mentioned in the judgment, impose a sentence of imprisonment for a term of less than six months;
(ii) in any other case, with imprisonment for a term which may extend to three years or with fine or with both.
(2) if any person convicted of an offence under this Act (not being an offence under Section 13 or Clause (a) of Sub-section (1) of Section 18 or Section 18-A or Clause (a) of Sub-section (1) of Section 19 or Sub-section (2) of Section 44 or Section 57 or Section 58) is again convicted of an offence under this Act (not being an offence under Section 13 or Clause (a) of an offence under this Act, Section 18 or Section 18-A or Clause (a) of Sub-section (1) of Section 19 or Sub-section (2) of Section 44 or Section 57 or Section 58), he shall be punishable for the second and for every subsequent offence with imprisonment for a term which shall not be less than six months but which may, extend to seven years and with fine :
Provided that the Court may, for any adequate and special reasons to be mentioned in the judgment, impose a sentence of imprisonment for a, term of less than six months, (3) Where a person having been convicted of an offence under this Act (not being an offence under Section 13 or Clause (a) of Sub-section (1) of Section 18 or Section 18-A or Clause (a) of Sub-section (1) of Section 19 or Sub-section (2) of Section 44 or Section 57 or Section 58) is again convicted of an offence under this Act (not being an offence under Section 13 or Clause fa) of Sub-section (1) of Section 18 or Section 18-A or Clause (a) of Sub-section (1) of Section 19 or Sub-section (2) of Section 44 or Section 57 or Section 58) the Court by which such person is convicted may, in addition to the sentence which may be imposed on him under this section, by order, direct that person shall not carry on such business as the Court may specify, being a business which is likely to facilitate the commission of such offence, for such period not exceeding three years, as may be specified by the Court in the order.
(4) For the purpose of Sub-sections (1) and (2), the following shall not be considered as adequate and special reasons for awarding a sentence of imprisonmnt for a term of less than six months, namely--
(i) the fact that the accused has been convicted for the first time of an offence under this Act;
(ii) the fact that in any proceeding under this Act, other than a prosecution, the accused has been ordered to pay a penalty or the goods in relation to such proceedings have been ordered to be confiscated or any other penal action has been taken against him for the same offence.
(iii) the fact that the accused was not the principal offender and was acting merely as a carrier of goods or otherwise was a secondary party in the commission of the offence;
(iv) the age of the accused.
(5) For the purposes of Sub-sections (1) and (2), the fact that an offence under this Act has caused no substantial harm to the general public or to any individual shall be, an adequate and special reason for awarding a sentenc of imprisonment for a term of less than six months.
(6) Nothing in the proviso to Section 188 of the Code of Criminal Procedure, 1973 (2 of 1974) shll apply to any offence punishable under this Section
5. The question that has arisen is whether non-appearance would amount to contravention of provision of Section 40 of the Act? The learned counsel for the petitioner cited an authority reported in Itty v. Assistant Director, 1991 (2) KLT 441, where a single; Judge of the Kerala High Court was of the view that when a person has been sum- moned to appear by a competent authority, it means that he has been directed/ordered to appear before him, and that summons has to be obeyed but disobeyance is not contravention which is a matter coming under Section 174, I.P.C. The learned Judge was of the view that it was a legal fallacy to say that the failure to obey the summons as per Section 40(1) of the Act is a contravention of the provisions of the Act, Rule,'direction or order. The learned Judge further observed that it is clear from the fact that Section 56 of the Act mentions about offences with particular reference to amount or value involved in them, but it may not be possible to say that the violation of provisions of Section 40 could be computed in terms of value or amount to attract Section 56 of the Act. The learned Judge has pointed out that in terms, Section 56 could not apply to a case coming under Section 40 of the Act and if it is held otherwise, there is a (sic) possible for over-zealous officers to institute ill-motivated and vindictive prosecutions to harass innocent persons. The learned Judge referred to the dictionary meaning of the word 'contravention' and held that contravention would not mean to disobedience.
6. On the other hand, the learned Special Public Prosecutor submitted that the word 'contravention' referred to in Section 56 of the Act would include disobedience to summons. To stress his argument, the learned Special Public Prosecutor drew my attention to the decision reported in Enforcement Directorate v. M. Samba Siva Rao, 2000 Cri LJ 3170, where identical facts were involved. In that case, referring to the earlier decision rendered by this Court, Andhra Pradesh High Court and the decision reported in Itty v. Assistant Director cited supra, their Lordships of the Apex Court have clearly pointed out that the single Judge of the Kerala High Court had applied the ordinary rules of construction, that penal statutes should receive a strict construction and the person to be penalised must come squarely within the plain words of the enactment. Their Lordships have observed as under (at page 3173) :--
...We are unable to accept the constructions put in the aforesaid judgment as in our view clauses (i) and (ii) of Section 56(1) are material for deciding the quantum of punishment and further, there is no reason why the expression "in any other case in Section 56(1)(ii) should be given any restrictive meaning to the effect that it must be in relation to the money value involved as has been done by the Kerala High Court. The summons issued under Section 40, if not obeyed, must be held to be a contravention of the provisions of the Act and at any rate, a contravention of a direction issued under the Act, and therefore, such contravention would squarely come within the ambit of Section 56 of the Act. The question came up for consideration before a learned single Judge of the Madras High Court in the case of C. Sampath Kumar v. A.N. Dyaneswaram in Criminal O.P.Nos. 5468 and 5469 of 1996 and was disposed of by the learned Judge of the Madras High Court by judgment dated 1-8-97 (reported in 1999 (95) Com Cas 602). The Madras High Court also came to the conclusion that the entire Section 56 of the Act is identified and substantiated only in terms of the extent and value of the money involved in the offence, and therefore, violation or contravention of summons, issued under Section 40 of the Act unrelated to the money involved in the investigation cannot be held to be punishable under Section 56....
Referring to the decision rendered by this Court in C. Sampath Kumar v. A.N. Dyaneswaran (1999 (95) Comp Cas 602. Their Lordships of the Apex Court have observed as under :--
...Against the aforesaid judgment of the Madras High Court, the department had preferred appeals to this Court, which were registered as Criminal Appeal Nos. 143-144/98, but the question raised was not necessary to be answered before the Enforcement Authorities and were arrested by , the said Enforcement Authority and, therefore this Court kept the questions of law Open by its order dated 20th July, 1998. In yet another case, the question arose for consideration before the Madras High Court in Criminal O.P.No. 5718/96 and a learned single Judge did not agree with the earlier decision of the said High Court in Criminal O.P.Nos. 5468 and 5629 of 1996 and referred the matter to a Division Bench by his order dated 13th of August, 1997 and it was submitted at the Bar that the Division Bench has not yet disposed of the matter.
Their Lordships of the Apex Court agreed with the view expressed by the Andhra Pradesh High Court in P.V. Prabhakara Rao v. Enforcement Directorate, Hyderabad, 1998 Cri LJ 2507. Their Lordships of the Apex Court have held as under (at page 2515) :--
...The question came up for consideration before the Andhra Pradesh High Court in the case of P.V. Prabhakara Rao v. Enforcement Directorate, Hyderabad reported in 1998 Cri LJ 2507 and the said High Court has taken the view that failure to attend and give statement in pursuance of summons issued under Section 40 of the Act, clearly amounts to disobeyance of the directions given by the concerned authority and therefore, provision of Sub-section (1) of Section 56 applies. The learned Judge of Andhra Pradesh High Court interpreted the expression "in any other case" in clause (ii) of Section 56(1) to mean that the said provision would get attracted even though no amount or value is involved in the contravention in question. The aforesaid view of the Andhra Pradesh High Court appears to us, is the correct interpretation of the provisions contained in Sections 40 and 56 of the Act.
7. In the light of the recent pronouncement of the Apex Court, which has overruled the decision reported in Itty v. Assistant Director cited supra, I have no hesitation to hold that non-appearance before the respondent after receipt of summons would amount to disobedience warranting action under Section 56 of the Act.
8. The next contention raised by the learned counsel for the petitioner is that the petitioner had not disobeyed to the summons at all. According to him, he is a sick person, who is spending most of his time as in-patient in the hospital. The learned counsel referred to several medical certificates to the effect that the petitioner was suffering With Angina Pectoris, Coccydidemia, Lumbago, Hypothyroidism, Tropical Pulmonary Esinophilia, Gastritis and Cervical Spondylosis with Brachial Plexus Lesion and also the Calf Claudication and Chest pain due to Atherosclerosis.
9. Even if the illness alleged is true, with all these diseases, when the petitioner is pulling on and probably looking after all of his business affairs also, it cannot be said that he was so much desirable that he could not appear before the Enforcement Authority at all. Receipt of summons and reply every time that the petitioner is hospitalised certainly lead to a conclusion that the petitioner evading summons. Evasion to appear before the competent authority would certainly amount to disobedience. In that view of the matter, I am not prepared to accept the contention raised by the learned counsel for the petitioner that the petitioner had not disobeyed the summons.
10. The other plea raised by the petitioner that warrant issued by an Indian Court for non-compliance of summons could not be executable in Singapore and that offence under the Act is not extraditable. Such contention would indicate that the mind of the petitioner that he had made up his mind not to appear before the respondent. Though he had stated that he is prepared to co-operate, his laying conditions that a letter or rogatory should be issued and his statement should be recorded in Singapore, appear to be dictating terms to the respondent as to how they should hold enquiry. I am satisfied that a harmonious consideration of the contentions raised by the petitioner itself would go to show that he has no mind to obey the summons. When that is the case, he could not question the action contemplated under Section 56 of the Act. I am inclined to dismiss this Criminal. Original Petition. Accordingly, this Criminal Original Petition is dismissed. Consequently; Cri. M.P.No. 1127 of 1997 is also dismissed.