Madras High Court
V. Bhaskaran vs The Special Director Of Enforcement, ... on 13 November, 2002
Equivalent citations: [2003]116COMPCAS404(MAD), [2003]44SCL526(MAD)
Author: P.D. Dinakaran
Bench: P.D. Dinakaran
ORDER P.D. Dinakaran, J.
1. Heard Mr. M. Aravind Subramanian for the petitioner and the learned Additional Solicitor General for the respondents.
2. A criminal case is sought to be initiated against the petitioner and another person by name M. Natarajan with respect to the purchase of a foreign Car, namely, Toyoto-Lexus bearing Registration No. TN-09-Q-9999, from one Dr. S. Balakrishnan of London in contravention to Section 8(1) and 9(1) a read with Section 64(2) of the Foreign Exchange Regulation Act (hereinafter referred to as "The Act" ) for the offence punishable under Section 56 of the said Act read with Sections 49(3) and 49(4) of the Foreign Exchange Management Act, 1999 invoking section 61 of the Act, which reads as follows:-
"SECTION 61:-COGNIZANCE OF OFFENCES:
((1) Notwithstanding anything contained in section 29 of the Code of Criminal Procedure, 1973 (2 of 1974), it shall be lawful for any metropolitan magistrate and for any magistrate of the first class to pass a sentence of imprisonment for a term exceeding three years or of fine exceeding five thousand rupees on any person convicted of an offence punishable under section 56) (2) No court shall take cognizance
(i) of any offence punishable under Sub-Section (2) of Section 44 or sub-section (1) of section 58,-
(a) where the offence is alleged to have been committed by an officer of enforcement not lower in rank than an Assistant Director of Enforcement, except with the previous sanction of the Central Government;
(b) where the offence is alleged to have been committed by an officer of Enforcement lower in rank than an Assistant Director of Enforcement, except with the previous sanction of the Director of Enforcement; or
(ii) of any offence punishable under Section 56 or Section 57, except upon a compliant in writing made by-
(a) the Director of enforcement; or
(b) any officer authorised in writing in his behalf by the Director of Enforcement or the Central Government; or
(c) any officer of the Reserve Bank authorised by the Reserve Bank by a general or special order:
Provided that where any such offence is the contravention of any of the provisions of this Act or of any rule, direction or order made thereunder which prohibits the doing of an act without permission, no such complaint shall be made unless the person accused of the offence has been given an opportunity of showing that he had such permission."
3. Proviso to Section 61(2)(ii) of the Act contemplates an opportunity of the person against whom a criminal action is sought to be initiated to show whether he had obtained any special or general permission from the Reserve Bank of India contemplated under Sections 8 and 9 read with Sections 56 and 57 of the Act.
4. Before initiating any such criminal action against the petitioner, by a memorandum dated 5.4.2002, the respondents permitted the petitioner and the other person to inspect the documents relied upon by the department by themselves or by their lawyers or their authorized representatives, if they so desire, at the office of the Deputy Director, Enforcement Directorate, Shastri Bhavan, Third Floor, Third Block, No. 26, Haddows road, Chennai-34 after fixing an appointment with him in advance on any working day, but, the petitioner failed to avail the said opportunity of inspecting the documents. On the other hand by letters dated 29.4.2002, 6.5.2002, 15.5.2002 and 25.5.2002, the petitioner made repeated requests to drop the said criminal action.
5. Having proposed to initiate action based on the materials collected with the respondents and finding no good or sufficient reason to drop the proceedings, the respondents decided to lodge a criminal complaint before the concerned Metropolitan Magistrate. Accordingly, they issued an opportunity notice dated 21.5.2002, which is impugned in the above writ petition, requesting the petitioner and the other person to show whether they had obtained any permission from the Reserve Bank of India as contemplated under Sections 8 and 9 read with Sections 56 and 57 of the Act, before proceeding with the criminal case. In this regard, I am obliged to refer Sections 8,9,56 and 57 and 61 of the Act.
SECTION 8:- RESTRICTIONS ON DEALING IN FOREIGN EXCHANGE:-
(1) Except with the previous general or special permission of the Reserve Bank, no person other than an authorised dealer shall in India, and no person resident in India other than an authorised dealer shall outside India, purchase or otherwise acquire or borrow from, or sell, or otherwise transfer or lend to or exchange with, any person not being an authorised dealer, any foreign exchange:
Provided that nothing in this sub-section, shall apply to any purchase or sale of foreign currency effected in India between any person and a money-changer.
Explanation: For the purpose of this sub-section, a person who deposits foreign exchange with another person or opens an account in foreign exchange with another person, shall be deemed to lend foreign exchange to such other person.
(2) Except with the previous general or special permission of the Reserve Bank, no person, whether an authorised dealer or a money-changer or otherwise, shall enter into any transaction which provides for the conversion of Indian currency into foreign currency or foreign currency into Indian currency at rates of exchange other than the rates for the time being authorised by the Reserve Bank.
(3) Where any foreign exchange is acquired by any person, other than an authorised dealer or a money-charger, for any particular purpose, or where any person has been permitted conditionally to acquire foreign exchange, the said person shall not use the foreign exchange so acquired otherwise than for that purpose or, as the case may be, fail to comply with any condition to which the permission granted to him is subject, and where any foreign exchange so acquired cannot be so used or the conditions cannot be complied with, the said person shall, within a period of thirty days from the date on which he comes to know that such foreign exchange cannot be so used or the conditions cannot be complied with, sell the foreign exchange to an authorised dealer or to a money-changer.
(4) For the avoidance of doubt, it is hereby declared that where a person acquires foreign exchange for sending or bringing into India any goods but sends or brings no such goods or does not send or bring goods of a value representing the foreign exchange acquired, within a reasonable time or sends or brings any goods of a kind, quality or quantity different from that specified by him at the time of acquisition of the foreign exchange, such person shall, unless the contrary is proved; be presumed not to have been able to use the foreign exchange for the purpose for which he acquired it or, as the case may be, to have used the foreign exchange so acquired otherwise than for the purposes for which it was acquired.
(5) Nothing in this section shall be deemed to prevent a person from buying from any post office, in accordance with any law or rules made thereunder for the time being in force, any foreign exchange in the form of postal orders or money orders.
SECTION 9:- RESTRICTIONS ON PAYMENTS (1) Save as may be provided in and in accordance with any general or special exemption from the provisions of this sub-section which may be granted conditionally or unconditionally by the Reserve Bank, no person in, or resident in, India shall-
(a) make any payment to or for the credit of any person resident outside India;
(b) receive, otherwise than through an authorised dealer, any payment by order or on behalf of any person resident outside India.
Explanation:-For the purposes of this clause, where any person in, or resident in, India receives any payment by order or on behalf of any person resident outside India through any other person (including an authorised dealer) without a corresponding inward remittance from any place outside India, then, such person shall be deemed to have received such payment otherwise than through an authorised dealer;
(c) draw, issue or negotiate any bill of exchange or promissory note or acknowledge any debt, so that a right (whether actual or contingent) to receive a payment is created or transferred in favour of any persons resident outside India;
(d) make any payment to, or for the credit of, any person by order or on behalf of any person resident outside India;
(e) place any sum to the credit of any person resident outside India;
(f) make any payment to, or for the credit of, any person or receive any payment for, or by order or on behalf of, any person as consideration for or in association with-
(i) the receipt by any person of a payment or the acquisition by any person of property outside India;
(ii) the creation or transfer in favour of any person of a right (whether actual or contingent) to receive payment or acquire property outside India;
(g) draw, issue or negotiate any bill of exchange or promissory note, transfer any security or acknowledge any debt, so that a right (whether actual or contingent) to receive a payment is created or transferred in favour of any person as consideration for or in association with any matter referred to in clause (f).
(2) Nothing in sub-section (1)shall render unlawful-
(a) the making of any payment already authorised either with foreign exchange obtained from an authorised dealer or a money-changer under section 8 or with foreign exchange retained by a person in pursuance of an authorisation granted by the Reserve Bank;
(b) the making of any payment with foreign exchange received by way of salary or payment for services not arising from any business in, or anything done while in, India.
(3) Save as may be provided in, and in accordance with, any general or special exemption from the provisions of this sub-section, which may be granted conditionally or unconditionally by the Reserve Bank, no person shall remit or cause to be remitted any amount from any foreign country into India except in such a way that the remittance is received in India only through an authorised dealer.
(4) Nothing in this section shall restrict the doing by any person of anything within the scope of any authorisation or exemption granted under this Act.
(5) For the purposes of this section and section 19 "security" includes coupons or warrants representing dividents or interest and life or endowment insurance policies.
SECTION 56:- OFFENCES AND PROSECUTIONS (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 on 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 mentione4d 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 18A) 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 sub-section (1) of section 18 (or Section 18A) or clause (a) of sub-section (1) of Section 19, sub-section (2) of section 44 or sections 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 18A) or clause (a) of sub-section (1) of Section 19, or sub-section (2) of section 44 or sections 57 or section 58), is again 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 18A) or clause (a) of sub-section (1) of Section 19, or ub-section (2) of section 44 or sections 57 or section 58), the court by which such person is convicted may, in addition to any sentence which may be imposed on him under this section, by order, direct that 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 imprisonment 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 sentence 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), shall apply to any offence punishable under this section.
SECTION 57:- PENALTY FOR CONTRAVENTION OF ORDER MADE BY ADJUDICATING OFFICER, APPELLATE BOARD AND HIGH COURT:
If any person fails to pay the penalty imposed by the adjudicating officer of the Appellate Board or the High Court or fails to comply with any of his or its directions or orders, he shall upon conviction by a court, be punishable with imprisonment for a term which may extend to two years or with fine or with both.
SECTION 61:-COGNIZANCE OF OFFENCES:
((1) Notwithstanding anything contained in section 29 of the Code of Criminal Procedure, 1973 (2 of 1974), it shall be lawful for any metropolitan magistrate and for any magistrate of the first class to pass a sentence of imprisonment for a term exceeding three years or of fine exceeding five thousand rupees on any person convicted of an offence punishable under section 56) (2) No court shall take cognizance
(i) of any offence punishable under Sub-Section (2) of Section 44 or sub-section (1) of section 58,-
(a) where the offence is alleged to have been committed by an officer of enforcement not lower in rank than an Assistant Director of Enforcement, except with the previous sanction of the Central Government;
(b) where the offence is alleged to have been committed by an officer of Enforcement lower in rank than an Assistant Director of Enforcement, except with the previous sanction of the Director of Enforcement; or
(ii) of any offence punishable under Section 56 or Section 57, except upon a compliant in writing made by-
(a) the Director of enforcement; or
(b) any officer authorised in writing in his behalf by the Director of Enforcement or the Central Government; or
(c) any officer of the Reserve Bank authorised by the Reserve Bank by a general or special order:
Provided that where any such offence is the contravention of any of the provisions of this Act or of any rule, direction or order made thereunder which prohibits the doing of an act without permission, no such complaint shall be made unless the person accused of the offence has been given an opportunity of showing that he had such permission.
6. Mr. M. Aravind Subramanian, learned counsel for the petitioner contends that the petitioner is deprived of giving fair and reasonable opportunity to submit his effective reply to the impugned opportunity notice dated 21.5.2002, as the respondents have not furnished the copies of the documents relied upon by them; and that the time given to the petitioner to submit his effective reply to the impugned opportunity notice dated 21.5.2002 namely, five days from the date of receipt of the notice, is too short.
7. When the above writ petition came up for admission on 13.8.2002, Mr. Kumar, learned Additional Central Government Standing Counsel took notice on behalf of the respondents. Thereafter, the matter was posted on 16.8.2002, on which date, there was no representation either by the petitioner or by his counsel and hence the matter was adjourned to 23.8.2002 and thereafter the matter was adjourned from time to time namely, 3.9.2002, 8.11.2002, 11.11.2002 and finally today. It is therefore clear that from the date of service of the opportunity notice, almost three months had passed. Even today, Mr. M. Aravind Subramanian, learned counsel for the petitioner reiterates the same contention that the petitioner was given only five days time to submit his explanation to the impugned opportunity notice. When a specific question was put to the learned counsel for the petitioner whether he had made any further representation in the meanwhile, he could only refer the reply dated 27.5.2002 of the petitioner made in response to the impugned opportunity notice, wherein the petitioner complained that the five days time given to submit the explanation was too short and also sought for the copies of the documents relied upon by the respondents in the above criminal case. I am unable to appreciate the grievance of the petitioner in this regard for two reasons:-
(i) When an opportunity was given to the petitioner as early as on 5.4.2002 to inspect the documents relied upon by the department, the petitioner failed to avail the said opportunity; and
(ii) in spite of lapse of three months since the service of the impugned opportunity notice dated 21.5.2002 on the petitioner, he had not chosen to submit his reply whether he had obtained any Special or General permission from the Reserve Bank of India contemplated under Sections 8 and 9 read with Sections 56 and 57 of the Act before purchasing the said foreign car.
8. Be that be, the procedure that is contemplated under proviso to section 61(2)(ii) of the Act before initiating criminal action against a person for the offence punishable under Section 56 of the Act, is to give an opportunity to such person to show whether he had obtained Special or General permission from the Reserve Bank of India either for dealing in Foreign Exchange or for the payments, is mandatory under Sections 8 and 9 of the Act, as any violation to the same would amount to an offence liable to be prosecuted by the respondents under Sections 56 and 57 of the Act referred to above. Section 61 of the Act provides the procedure to be followed and prescribes the jurisdiction of the court for proceeding with the criminal action for the offences punishable under Sections 56 and 57 of the Act. The opportunity contemplated under the proviso to section 61(2)(ii) of the Act is nothing but a preliminary opportunity to be offered to the petitioner before lodging the complaint with respect to the cognizance of the offence contemplated under Sections 56 and 57 of the Act. Section 61 of the Act does not, on the other hand, contemplates to furnish the documents relied upon by the respondent in the criminal case initiated against the petitioner, at this stage. Therefore, the grievance of the petitioner that the impugned opportunity notice suffers for non furnishing of the documents relied upon by the respondents is not only misconceived but also untenable in law. The question of furnishing the documents relied upon by the respondents at this stage is totally pre-mature. No doubt, the petitioner is entitled to have any document that is relied upon by the respondents in a criminal case at the appropriate stage namely at the stage of framing of charges but not at the very inception stage to lodge a complaint before the concerned Magistrate. The permission obtained from the Reserve Bank of India as contemplated under Sections 8 and 9 of the Act is the fact within the knowledge of the petitioner. If the petitioner had obtained any such permission, no document is required from the respondents to submit his explanation to the impugned opportunity notice. Sections 8 and 9 of the Act contemplate that the person, who proposed to deal with the Foreign Exchange or to make out the payments to get permission either special or general from the Reserve Bank of India. No document is required for the petitioner to inform the respondents that he had obtained such permission from the Reserve Bank of India, which is purely a question of fact within the knowledge of such person himself. From the above facts, it is clear that the petitioner is only attempting to protract the proceedings to which this court cannot be a party.
9. Hence, finding no merits, the above writ petition is dismissed with a direction to the concerned Magistrate to proceed with the matter expeditiously as the petitioner had already delayed the criminal action for a considerable time. Consequently, the connected W.P.M.P. is closed. No costs.