Delhi District Court
Ed vs Sunil Madnani Page No. 1/14 on 5 January, 2019
IN THE COURT OF MS. GURMOHINA KAUR,
Additional Chief Metropolitan Magistrate - I
Patiala House Courts, New Delhi
Case No. 18935/2016
Date of Institution : 27.05.2002
Date of reserving judgement : 19.11.2018
Date of pronouncement : 05.01.2019
In re:
Enforcement Directorate
through
Sh. R.K. Rawal
[Chief Enforcement Officer]
Ministry of Finance, Govt. of India,
6th Floor, Lok Nayak Bhawan, Khan Market,
New Delhi.
Versus
Sh. Sunil Madnani
Proprietor
of M/s. Sunil Enterprises,
E-4/15, Jhandewalan Extn.
New Delhi - 55
JUDGMENT :
1. Briefly stated, the facts of the case alleged in the complaint are that information was received from the Reserve Bank of India (RBI), New Delhi vide letter dated 15.02.1996 that export proceeds to the tune of Rs. 3,53,14,653.00 were pending realization in the name of M/s Sunil Enterprises in respect of exports made during the years 1994-95, pursuant to which enquiries were made u/s 33(2) of the Foreign Exchange Regulation Act ED Vs Sunil Madnani Page No. 1/14 (FERA), 1973 with Bank of Madura Ltd., E-4 Connaught Place, New Delhi and Oriental Bank of Commerce (OBC), Overseas Branch, Panchkuian Road, New Delhi, which revealed that M/s Sunil Enterprises effected shipment of goods valued at US $ 8,75,550.00 and US $ 2,55,837.34 respectively, out of which US $ 40,000.00 was realised by the said M/s Sunil Enterprises leaving a total balance of US $ 10,91,387.34 (equivalent to Rs. 3,53,14,653.00) unrealised and 12 GR forms were pending realization in the name of the Accused Sunil Madnani, the proprietor of M/s Sunil Enterprises. Further as per the complaint, the OBC, Panchkuian Road vide their letter dated 22.09.1999 and Bank of Madura Ltd., Connaught Place, vide their letter dated 07.09.1999 informed that the Accused was the proprietor of the said exporting firm, due to which the Accused was examined u/s 40 of the FERA, 1973, on 28.10.1999, wherein he inter-alia stated that there were approximately 12 GRs pending realization and these outstandings pertain to exports made during the year 1994-1995. The complaint further mentioned that it was discovered that the said M/s Sunil Enterprises, New Delhi, without any permission from the RBI, refrained from taking any action to retrieve the pending export proceeds, which had the effect of securing that the export value to the tune of US $ 10,91,387.34 in respect of the aforesaid goods, had not been received in India by the said M/s Sunil Enterprises, New Delhi, within the prescribed period or the time extended by the RBI in the prescribed manner.
2. It is further noted as per the complaint that an Opportunity Notice u/s 61(2) of FERA, 1973, was given to the Accused Sunil Madnani by the Enforcement Directorate to state in writing within the prescribed period on the receipt of the notice, whether he had, in terms of Section 18(2) & (3) of FERA, 1973, obtained any general or special permission from the RBI in respect of the aforesaid export, but the Accused failed to produce any such permission despite service of notice. Subsequent to such failure, the Enforcement Directorate through Chief Enforcement Officer Sh. R.K. Rawal/the ED Vs Sunil Madnani Page No. 2/14 complainant filed the present complaint for the offence punishable under section 56 of the FERA, 1973, in terms of Section 49(3) & (4) of Foreign Exchange Management Act (FEMA), 1999, against the Accused Sunil Madnani.
3. As this complaint was filed by a public servant in discharge of his public duties, hence recording of preliminary evidence was dispensed with and the complaint was proceeded further. After going through the complaints and documents and arguments raised by the Ld. SPP, summons was issued to the Accused under Section 204 of the CrPC and the Pre-charge evidence was lead by the complainant. Cognizance of the offence was taken.
4. On completion of the pre charge evidence, a prima facie charge under Section 18(2) of the FERA, 1973 r/w Central Government Notification No. F- 1/61/EC/73- 1 & 3, both dated on 01.01.1974 and Section 18(3) of FERA, 1973, punishable u/s 56 of the FERA, 1973 r/w Section 49(3) & (4) of FEMA, 1999, was made out against the Accused vide order dated 20.04.2015, to which he pleaded not guilty and requested trial.
5. At the stage of post-charge evidence, in support of its case, the complainant examined six witnesses.
a. PW-1 is Chief Enforcement Officer Sh. R.K. Rawal who is the complainant in the present case and has filed the complaint marked Ex. PW-1/A. He was authorised to file the complaint vide notification marked Ex.PW-1/B. He stated during his cross examination that he had knowledge of the facts of the case from record, not in his personal capacity.
b. PW-2 is Sh. S.K. Mangla who was the Asst. Manager, Foreign Exchange Division, RBI, New Delhi. He deposed during his ED Vs Sunil Madnani Page No. 3/14 examination-in-chief that export proceeds to the tune of Rs. 2,73,00,160.00 were outstanding against M/s Sunil Enterprises, and further deposed that there was no record available with the RBI regarding grant of extension of time for recovery of export proceeds or exemption to the form by the RBI. He further stated that the banker of M/s Sunil Enterprises had not sent any further information to the RBI in respect of the aforesaid export. During his cross examination, he stated that he had no knowledge whether the Accused had written letters to the RBI with regard to the abovementioned export, and that he has currently retired from the RBI. The detailed receipts from the computer are marked Ex. PW-2/A and PW-2/B. c. PW-3 is Sh. P.K. Suman who was the Enforcement Officer posted in Delhi Zonal Office in the year 1999, who conducted the inquiry u/s 40 of the FERA, 1973. He deposed that he had recorded the statement of the Accused Sunil Madnani, proprietor of Sunil Enterprises, marked Ex. PW-3/A, which was written by the Accused himself.
d. PW-4 is Sh. Balwant Singh who was the Manager, Oriental Bank of Commerce (Overseas Branch), Panchkuian Road, New Delhi. He deposed that vide letter dated 22.09.1999 marked Ex. PW- 4/A, the department was informed regarding the non-realization of export proceeds by the party against the GR No. AD 544131 to AD 544134 and AD 544175, which was approximately in the sum of Rs. 79,97,475.25. The Bank has also sent the concerned GR Forms marked Ex. PW-4/A1 to A5 and the statement Ex. PW- 4/A6 along with the letter Ex. PW-4/A7. He stated in his cross examination that the statements made by him were on the basis ED Vs Sunil Madnani Page No. 4/14 of the documents on record since Mr. Pradeep Bhaskar, Chief Manager, was dealing with the matter and the facts are known to Mr. Bhaskar, not PW-4. He further stated that he had no knowledge whether the Accused had given any letter or had any correspondence with regard to the present case qua extension of time for realization of export proceeds.
e. PW-5 is Sh. Jagdev who was posted as Sepoy in the Delhi Zonal Office, Enforcement Directorate, New Delhi. He deposed that the OPN issued by Sh. S Vanketesh, EO on 10.05.2002 was given to him to serve upon the Accused. He further stated that on 15.05.2002, he had personally visited the residence of Sh. Sunil Madnani at 526, New Rajinder Nagar, Double Storey, New Delhi- 110060 and served upon him the OPN and obtained his signature on the copy acknowledging the receipt of the OPN. The OPN is marked Ex. PW-5/A and the report of service is Ex. PW-5/B. He confirmed in his cross examination that no signature of the Accused was present on the OPN Ex. PW-5/A. f. PW-6 is Sh. Satpal who was the LDC, Enforcement Directorate, Delhi Zonal Office, New Delhi. He appeared before the court to produce the dispatch register of the department, the relevant page marked Ex. PW-6/A.
6. No other witnesses were examined by the Complainant and hence, complainant evidence was closed.
7. The statement of the Accused Mr. Sunil Madnani was recorded u/s 313 of Cr.P.C. on 27.03.2018 wherein he denied the entire incriminating evidence ED Vs Sunil Madnani Page No. 5/14 that has come on record against him and further stated replied that he had been falsely implicated in the case.
8. In support of its case, the Accused examined himself as a defence witness on moving an application u/s 315 CrPC which was heard and allowed. The Accused as DW-1 deposed that all the export proceeds had been realized at the current date and bank realization certificates in this regard are Ex. DW- 1/A1 to DW-1/A4. He placed on record the No-Due Certificate dated 30.03.2012 from his Banker, Oriental Bank of Commerce, Overseas Branch, New Delhi which is Ex. DW-1/B and other similar certificate issued by the other banker ICICI Bank dated 03.04.2012 which is Ex. DW-1/C. He placed on record the bank realization certificate in regard of the export proceeds realised earlier with respect to the exports marked Ex. DW-1/D and also the letters dated 12.11.1995, 05.12.1995 and 05.12.1995 to his bankers Bank of Madura Ltd., E-4, Connaught Place, New Delhi-110001 (which was later merged with ICICI Bank), for extension of period of remittance against the GR-I numbers mentioned therein which were marked Ex. DW-1/E1 to DW-1/E3. He further stated that the information dated 04.05.2012 from RBI, pursuant to his RTI application dated 29.03.2012, states to the effect that "the records available with the Foreign Exchange Department, RBI, do not show the said GR forms as outstanding against the name of M/s Sunil Enterprises" marked Ex. DW- 1/F. The FIR dated 08.12.1996 vide book number 75/96 Ex. DW-1/G, vide letter dated 05.05.2009, addressed to DW-1, is Ex. DW-1/H. He admitted during his cross examination that the document Ex. DW-1/E3 bearing the seal of Bank of Madurai Ltd., Branch Connaught Place has no date of receipt given by the Bank, and that he has not filed bank certificate of export proceeds of the year 1999 to 2009. He stated that after non-realization of export proceeds within six months, he had applied for extension of period of realization to the RBI through authorised dealer but till date no response has been received from the RBI. He has not been able to furnish any such documents regarding ED Vs Sunil Madnani Page No. 6/14 the same. He further admitted that he did not furnish the proof of realization in reply to the opportunity notice issued to him before filing of the complaint.
9. No other witnesses were examined by the Ld. Defence Counsel and hence, DE was closed and the matter was fixed for final arguments. Final arguments were heard on behalf of both the parties.
10. I have heard the Ld. SPP for the Complainant and Ld. Counsel for the Accused and perused the record carefully.
11. The relevant sections are reproduced herein below for ready reference:
Section 18(2) and (3) of the FERA, 1973, states as follows:
"(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 falling under sub-clause (ii) of clause (a) of sub-section (1), also that the sale of the goods is delayed to an extent which is ED Vs Sunil Madnani Page No. 7/14 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)."
Section 56 of the FERA, 1973, states as follows:
"(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;ED Vs Sunil Madnani Page No. 8/14
(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) or 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 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 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 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, 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.
ED Vs Sunil Madnani Page No. 9/14(4) For the purposes 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 complainant, 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 49(2) and (3) of the FEMA, 1999, states as follows:
"(2) On the dissolution of the said Appellate Board, the person appointed as Chairman of the Appellate Board and every other person appointed as Member and holding office as such immediately before such date shall vacate their respective offices and no such Chairman or other person shall be entitled ED Vs Sunil Madnani Page No. 10/14 to claim any compensation for the premature termination of the term of his office or of any contract of service.
(3) Notwithstanding anything contained in any other law for the time being in force, no court shall take cognizance of an offence under the repealed Act and no adjudicating officer shall take notice of any contravention under section 51 of the repealed Act after the expiry of a period of two years from the date of the commencement of this Act."
12. In the present case, the Ld. Counsel for the Defence has argued that the export proceeds received had been cleared as is seen from Ex. DW-1/A1 to DW-1/A4 and the information dated 04.05.2012 from RBI, pursuant to the RTI application of the Accused dated 29.03.2012, which also stated to the effect that "the records available with the Foreign Exchange Department, RBI, do not show the said GR forms as outstanding against the name of M/s Sunil Enterprises", marked Ex. DW-1/F.
13. Upon perusal of the facts and circumstances of the case, it is clear that it is see that the exports proceeds were subsequently cleared, but admittedly they were not cleared at the time of commission of the offence. Information was received by the Enforcement Directorate, Delhi Zonal Office, New Delhi, from the RBI, New Delhi vide letter dated 15.02.1996 that export proceeds to the tune of Rs. 3,53,14,653.00 were still pending realization in the name of M/s Sunil Enterprises in respect of exports made by him during the years 1994-95. The said M/s Sunil Enterprises, New Delhi, without any permission from the RBI refrained from taking action to recover the pending export proceeds, which had the effect of securing that the export value to the tune of US $ 10,91,387.34 in respect of the aforesaid goods, was not received in India by the said M/s Sunil Enterprises, New Delhi, within the prescribed period or the time extended by the RBI in the prescribed manner. Opportunity Notice u/s ED Vs Sunil Madnani Page No. 11/14 61(2) of FERA, 1973, was given to the Accused to state in writing within the prescribed period on the receipt of the notice, whether they had, in terms of Section 18(2) & (3) of FERA, 1973, obtained any general or special permission from the RBI in respect of the aforesaid export, but the Accused failed to produce any such permission despite service of notice, subsequent to which the present complaint was filed. Hence the argument of the Ld. Defence Counsel fails to hold merit.
14. The Ld. Defence Counsel has further argued that after non-realization of export proceeds within six months, the Accused had applied for extension of period of realization to the RBI through authorised dealer, but till date no response has been received from the RBI.
15. In this matter, it is apposite to state the view of the Hon'ble Delhi High Court in the case of Concorde Overseas Pvt. Ltd v. Appellate Tribunal [2014 (3) JCC 2181]:
"While it is true that in terms of Rule 8 of FERA Rules, an exporter is expected to realize the export proceeds within six months from the date of shipment, when an exporter is faced with a defaulting buyer who is outside the country, all that the exporter can do is apply to the RBI seeking extension of time......
......The key issue here is about the sincerity of the efforts made by COPL to realize the proceeds. What section 18(2) FERA expects is that there should be no deliberate attempt to refrain from realizing the export proceedings."ED Vs Sunil Madnani Page No. 12/14
16. A careful scrutiny of the facts and circumstances of the present case clearly shows that no documents have been placed on record to show that the Accused requested extension of time from the RBI. There is no document or any other piece of evidence to prove this aforesaid fact. Apart from merely stating his argument, no evidence has been placed on record to corroborate his claims. Further, PW-2 in his post-charge evidence deposed that there was no record available with the RBI regarding granting of extension of time or exemption of any type granted to the Accused by the RBI. PW-2 further stated that the banker of M/s Sunil Enterprises had not sent any further information to the RBI in respect of the aforesaid export. Hence, there is no prima facie proof of the defence that permission for extension of time had been sought from the RBI and of his efforts to realize the export proceeds within the given timeframe of six months. Merely stating the facts without relevant documents or records to corroborate the claims will not entitle the Accused to get the benefit of doubt as contemplated in the case of Concorde Overseas Pvt. Ltd v. Appellate Tribunal.
17. The entire evidence placed on record goes on to show that the export proceeds were not recovered by the Accused within the stipulated time period as per the provisions of the FERA, 1973, which is the main basis for filing the present case, and this fact was not disputed by the Accused during cross- examination either during the entire course of this trial. Further, even though the Accused had alleged that permission for extension of time was sought from the RBI to which no reply was received, he has not been able to produce any evidence on record to substantiate this claim. Hence, by the evidence adduced in the present case, the Complainant has been able to prove the guilt of the Accused beyond reasonable doubt.
ED Vs Sunil Madnani Page No. 13/1418. In these circumstances, I am of the opinion that the complainant has been able to successfully prove that the accused did not clear his export proceeds within the given time, and neither was any general or special permission given by the RBI qua the extension of the time for clearing of export proceeds in this case. Thus the Accused in the present case, Mr. Sunil Madnani, is hence convicted of the offences under section 18(2) of the FERA, 1973 r/w Central Government Notification No. F-1/61/EC/73- 1&3, both dated on 01.01.1974 and Section 18(3) of FERA, 1973, punishable u/s 56 of the FERA, 1973 r/w Section 49(3) & (4) of FEMA, 1999.
19. Ordered accordingly.
Announced in the open court
on 05.01.2019 (GURMOHINA KAUR)
ACMM-I (New Delhi), PHC
Code-DL-0427
ED Vs Sunil Madnani Page No. 14/14