Delhi District Court
Cbi vs . Navyug Industries. on 21 July, 2016
IN THE COURT OF Ms. VANDANA JAIN
ACMM-02 (CENTRAL) : DELHI
CBI Vs. Navyug Industries.
RC No. : 8(S)/89/SPE/CBI/SI/IX
U/s : 5 of Import & Export (Control) Act 1947
& 120-B IPC
Date of Institution :20.12.1990
Date of reserving of order : 29.06.2016
Date of announcement : 21.07.2016
Unique I. D. No. : 02401R0001351990 & 29/2016
JUDGMENT
1. Serial No. of the case : 251/90
2. Name of the Complainant : S. Raja Shekar Dy Chief Controller of
Imports & Exports, Office of the Jt.
Chief Controller of Imports & Exports,
Ludhiana.
3. Date of incident : 12.09.1986
4. Name of accused persons : (1) Brij Mohan Dhawan S/o Narain
Singh Dhawan R/o EK-187,
Phagwara Gate, Jallandhar, Punjab.
(since expired)
(2) Bhushan Kumar Dhwan
S/o Brij Mohan Dhawan, R/o EK-187,
Phagwara Gate, Jallandhar, Punjab.
5. Offences : U/s 5 Imports & Exports (Control) Act
1947 & 120-B IPC.
RC No. 8(S)/89/SPE/CBI/SI/IIX Page no. 1 of 41
6. Plea of accused : Pleaded not guilty
7. Final Order : Accused Bhushan Kumar Dhawan
convicted u/s 5 Imports & Exports
(Control) Act 1947.
8. Date of such Order : 21.07.2016.
BRIEF REASONS FOR SUCH DECISION:
1. The present complaint case was filed by S. Raja Shekar, Deputy Chief Controller of Imports & Exports, office of the Joint Chief Controller of Imports & Exports, Ludhiana, on the basis of the investigation conducted by CBI. The brief facts of the present case are that M/s Navyug Industries, Sanjay Gandhi Nagar, G.T. Road, Bye Pass, M-24, Industrial Area, Jalandhar, Punjab, a partnership firm came into existence on 09.03.1961 with accused Brij Mohan Dhawan and one Satish Kumar as the partners. They were carrying on the business of manufacturing, sale and purchase of agricultural instruments and hand tools etc. The aforesaid partnership was dissolved and new partnership deed was executed on 30.07.1980 between Brij Mohan Dhawan and his son Bhushan Kumar Dhawan both R/o EK-187, Phagwara, Jalandhar with the sole purpose of manufacturing hand tools.
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2. From the period 1985-86, both accused persons alongwith some accused persons entered into criminal conspiracy with object to obtain duty free advance import license and to misutilize imported material by not fulfilling the obligation of the same.
3. Further stated that in pursuance of the said criminal conspiracy accused Bhushan Kumar Dhawan applied before office of Deputy Chief Controller of Imports & Export (hereinafter referred as Dy. CCI & E) vide their application on 25.06.1985 for grant of duty free advance import license for 750 Metric Tonnes of CRCA/MS Sheets for Rs. 27,00,000/- (Twenty Seven Lacs) alongwith necessary enclosures such as export performance certificate, chartered engineer certificate, TR receipts and SSI certificate etc. The application was received in the office of Dy. CCI & E, Amritsar on 12.07.1985 and after processing the same and after clearance from advance license committee meeting no. 15/86 on 26.07.1985, Delhi issued import license no. P/L/3081211 dated 04.09.1985 for Rs 26,73,000/- for the import of 742.5 Metric Tonnes of CRCA/MS Sheets signed by Sh SP Chhibar, the then Assistant Chief Controller in the office of Dy. CCI & E, Amritsar in favour of M/s Navyug Industries, M-24, Industrial Area, Jallandhar alongwith Duty Exemption RC No. 8(S)/89/SPE/CBI/SI/IIX Page no. 3 of 41 Entitlement Certificate (hereinafter referred as DEEC) book bearing no. 0119957 for imports and exports with the port of registration at Bombay.
4. The said license was issued on export production programme on regular export basis without any export order as per para 492) of Appendix-19 of the Import Policy 85 to 88 which was in force. The said license was subject to mandatory conditions (1) that M/s Navyug Industries would export 675 Metric Tonnes of Metal Boxes, hand tools, ratched pipe dye, threadres took boxes, carpenter trisquare and builders hardware etc for a f.o.b. value of Rs. 40,50,000/- within a period of nine months from the date of clearance of the first consignment or 30 days after the date of clearance of the first consignment or which ever is earlier; (2) that the goods imported vide this license shall be utilized in accordance with the provisions of the Export Notification dated 09.06.1978 and other conditions as per the conditions sheet attached. That in pursuance of the above criminal conspiracy accused Brij Mohan Dhawan and Bhushan Dhawan spend a cash credit account no. 1202 on 06.06.1985 in Punjab National Bank, Industrial Area, Jallandhar and another current account no. 2404 on 20.06.1985 in the same branch M/s Navyug Industries opened yet RC No. 8(S)/89/SPE/CBI/SI/IIX Page no. 4 of 41 another current account no. 203 in Punjab & Sind Bank, International Banking Division, Dilwada Building, Nariman Point, Bombay on 14.10.1985.
5. Accused Brij Mohan Dhawan contacted one Rajesh Khanna, an import REP license dealer of Delhi who in turn introduced him to BD Malvi, partner of M/s VK Enterprises, 85, Modi Street, Bombay (CHA) for importing the material against the said license in 1985 from Hungary. That the documents of the license in question were processed by M/s VK Enterprises on the license of 2 CHAs, one Vasudev Ranchhodds & Co., 366, Katha Bazar, Bombay and another Sakarchand G. Shah, 300, Shaheed Bhagat Singh Road, Bombay. The customs purpose bills of entry no. 2868/88-89, 2868/90-91 and 663/39 were passed from customs house, Bombay. The declaration attached to the Customs purpose B.Es No. 2868/88-89 and 2868/90-91 bears the signature of accused Brij Mohan Dhawan.
6. That the import was made from foreign supplier F.M. Noradin & Co. of Singapore on DP basis i.e. documents are to be retired on payments through the account no. 203 of Punjab National Bank, RC No. 8(S)/89/SPE/CBI/SI/IIX Page no. 5 of 41 Nariman Point, Bombay. Sh. B.D. Malvi after clearance of the imported goods against the license vide bill of entry no. 2868/88-89, 2868/90-91 and 663/39 from Bombay Customs and Bombay Port handed over the goods to Brij Mohan Dhawan at Bombay itself and to this effect accused Brij Mohan Dhawan has signed on the three challans for having received the imported goods of the license in question.
7. The clearance of the first consignment on 13.12.1985 goes to prove that the export obligation period of the above license expired on 12.09.1986 i.e. nine months from the date of clearance of the first consignment. Accused Brij Mohan Dhawan vide application dated 31.12.1986 submitted to the office of Dy. CC I & E, Amritsar for extension of the time to fulfill the export obligation. In his application dated 31.12.1986, accused Brij Mohan Dhawan has confirmed the complete importation of the raw material of the license in question. However, the said application was rejected by the office of CC I & E, New Delhi.
8. It is further stated that accused persons by not fulfilling the export obligation and by misutilizing the imported goods in contravention of the RC No. 8(S)/89/SPE/CBI/SI/IIX Page no. 6 of 41 conditions of license had wasted the foreign exchange equivalent to Rs. 26,73,000/- and caused a further loss to the exchequer from earning foreign exchange equivalent to Rs 40,50,000/- against exports as required under the license. Not only this, the accused also earned illegal gains of Rs 32,65,410/- a sum which was exempted from payment towards customs duty at the time of import.
9. As per the mandatory conditions of the license in question, M/s Navyug Industries did not fulfill the conditions relating to export obligation utilization of goods as per the license in question within the stipulated period. M/s Navyug Industries was ultimately declared to be a defaulter on 04.12.1987 by the office of Dy. CC I & E, Amritsar.
10. It was prayed in the said complaint that accused persons be summoned and tried for the offence u/s 120-B read with Section 5 of the Imports & Exports (Control) Act, 1947.
11. On the basis of the complaint, both accused persons were summoned after taking cognizance. Accused persons appeared in pursuance of summons. Copy of documents and the complaint were RC No. 8(S)/89/SPE/CBI/SI/IIX Page no. 7 of 41 supplied to them and thereafter matter was listed for pre charge evidence.
12. Complainant filed list of witnesses. On the basis of investigation conducted by CBI, CBI cited 49 witnesses out of which 29 witnesses were examined.
13. PW-1 K.B. Kamat, Senior Manager from Canara Bank and he handed over the pay in slip and demand draft to the CBI.
During his cross examination before framing of charge and after charge, he has stated that demand draft was not prepared in his presence and he was not posted at that time in the branch and he has no personal knowledge of this case.
14. PW-2 is Govind Ram, he was working with M/s Export Linkers, Qutab Road, Delhi from 1981 to 1985 as their representative dealing with license. He was introduced to Brij Mohan Dhawan (deceased) by Davinder Murgai partner of M/s Export Linkers. He collected import license on behalf of Brij Mohan Dhawan and his firm Navyug Industries from the office of Dy CC I & E, Amritsar by giving receipt in writing and RC No. 8(S)/89/SPE/CBI/SI/IIX Page no. 8 of 41 thereafter handed over the license to Brij Mohan Dhawan at Jallandhar.
During his cross examination, he stated that he handed over authority letter given to him by Brij Mohan Dhawan to Dy. CC I & E and he did not collect any receipt from Brij Mohan Dhawan while handing over the documents to him.
He was cross examined after charge and stated that all the interactions during process of collection of license was only with accused Brij Mohan Dhawan and nobody else.
15. PW-3 is S. Raja Shekar, stated that he was working as a Deputy Director General, Foreign Trade at the time of incident in Ludhiana and had filed complaint against M/s Navyug Industries and its partner Brij Mohan Dhawan before the court and the complaint was made on the basis of investigation conducted by CBI which was initiated upon the complaint from his department. On receiving investigation report, he applied his mind and found the case fit for lodging the complaint.
He was cross examined by counsel for accused persons wherein he stated that license was applied at Amritsar officer and was also given at Amrisar. He admitted the goods which were imported had to come at Bombay port to the place of manufacturing at Jallandhar. He has further RC No. 8(S)/89/SPE/CBI/SI/IIX Page no. 9 of 41 stated that production programme basis license to import is given on the basis of past performance and no orders are existing at the time of given of license. He denied the suggestion that case could have been filed in Jallandhar, Amritsar and Bombay only but not at Delhi. He further admitted that notice u/s 4-L of the Import & Export (Control) Act 1947 has been issued to the accused. He pleaded his ignorance with respect to fact that Punjab & Haryana High Court has stayed the notice vide its interim stay order dated 14.04.1989 which was subsequently confirmed vide order dated 10.01.1990. He further admitted that on the basis of show cause notice, department proceedings are held and in case of any adverse order against him, he has right to appeal or revision. He further admitted that accused had written for extension of export period and they had written 3-4 letters. He further stated that competent authority has rejected the request for export obligation. He pleaded his ignorance with respect to fact that whether any information has been sent to accused or not. He also pleaded ignorance whether those letters for extension period has been put up before the Advance License Committee (hereinafter referred as ALC). He admitted that export situation fluctuates with the entry of different countries. He pleaded his ignorance with respect to the fact that whether accused had RC No. 8(S)/89/SPE/CBI/SI/IIX Page no. 10 of 41 moved any application for change of items for the export purpose. He was further cross examined after charge and he stated that it is the right of the exporter to get his letter for extension of the export period placed before the ALC and the exporter has to be informed about the rejection of the extension letter and when the rejection order is communicated to the exporter, he has right to appeal or file revision petition as per law. He has stated that he has not seen the minutes of meeting of the ALC to the effect that letter of extension dated 31.12.1986 had been considered and rejected by ALC and stated that minutes were given to the CBI. He pleaded his ignorance with respect to the fact whether those minutes have been placed on record on not. He submitted that signed minutes of the meeting of the committee are not included in the list of documents given to CBI. He denied the suggestion that letter dated 31.11.1986 was not placed before the ALC. He also denied the suggestion that no minutes of meeting rejecting the letter dated 31.12.1986 were prepared and was not placed before licensing authority. He also denied the suggestion that same were not communicated to the accused for the reason that same was not placed before committee. He also stated that he agreed that complaint filed is pre mature without communicating the rejection of parties for extension RC No. 8(S)/89/SPE/CBI/SI/IIX Page no. 11 of 41 of time.
16. PW-4 is R. Sanehwan stated that in the year 1988, he was posted as Chief Controller of Import & Export in office of Joint CC I & E, New Delhi and he had handed over the file to CBI vide letter dated 08.01.1990 Ex. PW4/A. He was cross examined by accused persons wherein he stated that he was not aware about the provision that department was under
an obligation to give the first extension of export obligation after charging certain dues. He stated that he was not working in the department relating to advance import license. He submitted that file was handed over to CBI by some other official. He submitted that he was not aware about the facts of this case.
17. PW-5 is S.P. Chibbar, Assistant Chief Controller in the office of JCCI & E in Amritsar in the year 1988 and remained there from 1983 to 1988. He stated that he received application for grant of import license from M/s Navyug Industries which were processed and which was forwarded to Head Office, New Delhi for placing the same before ALC.
ALC proved the same and forwarded the minutes to him for the issuance of import license. He made check sheet containing note dated RC No. 8(S)/89/SPE/CBI/SI/IIX Page no. 12 of 41 05.09.1985 for issuance of license and the license was given alongwith condition sheet and DEC book bearing his signature. It was mentioned in the condition sheet that firm should execute legal agreement for Rs. 36,57,500/-. The firm executed the legal agreement which is Ex. PW5/D bearing his signature. As per condition sheet the export obligation period expired on 12.09.1986 and after nine months from the date of importation of first consignment of the goods. Parties did not fulfill its export obligation and sent letters which were forwarded to head office at their end. Parties were directed to deposit the amount as they had been declared defaulter. The said letter was signed by one Chander Parkash who worked with him.
He was cross examined by defence counsel. He admitted that goods were imported from Bombay and received by parties at Punjab. Parties were supposed to correspond through Amritsar. He further stated that he cannot say the firm had bank account either at Punjab or at Bombay through which the transaction was done. He admitted that during that time, there was a terrorism in Punjab. He admitted that import related to iron sheets but pleaded ignorance in respect of the fact that iron is subject to rusting. He also admitted that final authority for approving the extension of the export obligation is the ALC. He was RC No. 8(S)/89/SPE/CBI/SI/IIX Page no. 13 of 41 not the member of the same. He stated that in case, parties applied for extension of license, it used to be sanctioned by them, if it was for a reasonable period of time but if it was considerably delayed, the matter was referred to the committee. He admitted that in such case, action could not be taken on their own and the application used to forwarded in such a case. He further stated that he had seen letter dated 25.07.1987 for extension of the export obligation submitted by M/s Navyug Industries which was processed in his office and letter was directly addressed to Export Commissioner and copy was endorsed to their office and the letter contained request for change of description of the item to be exported. He stated that they waited for a short while for the decision of ALC before finally declaring the firm as defaulter. He admitted that ALC of it own, would decide the application sent it for extension and the applicant did not have to take decision from the ALC. Witness was confronted with portion of note sheet dated 11.11.1997 at page 12 of the note sheet of the office of Dy.CC I & E wherein it was recorded that last chance to the firm has to be given to get the decision from Export Commissioner and in this regard letter Ex. PW5/H were sent to the firm. He further stated that they did not reject or accept the proposal on their own if the matter was already pending before ALC. He RC No. 8(S)/89/SPE/CBI/SI/IIX Page no. 14 of 41 further stated that he had seen the note Ex PW5/I which is in the hand of Darshan Singh. He has signed note dated 04.06.1987 which is Ex. PW5/J. He admitted that there is only one pasting regarding ALC at page no. 10. He admitted that Ex. PW5/K contained committee rejected the request. He further stated that office received a consolidated list from the committee of various cases and the relevant clipping is taken out and pasted in concerned file. He denied suggestion that matter was never put up before ALC and letter Ex. PW4/E was addressed to chief controller. He further stated that chief controller forwarded them the rejection vide clipping Ex. PW5/K. He admitted that it cannot be known from noting Ex. PW5/K as to which of the application was rejected. The undertaking is Ex. PW5/D was given by the father of Bhushan Kumar Dhawan who was partner of the firm.
He was further cross examined after charge. He stated that his office was not supposed to make any enquiry with regard to grounds raised in the extension letter which was to be sent to ALC through his office. He gave the same answer with respect to extension letter dated 31.12.1986. The question was put to the witness as to whether he had communicated to the accused firm that extension letter dated 31.12.1986 has been rejected by ALC to which he stated that rejection RC No. 8(S)/89/SPE/CBI/SI/IIX Page no. 15 of 41 of the request for extension was intimated vide letter dated 14.01.1987 which is mark PW5/D1 at page no. 42 of the licensing file which bears his signature. He also stated that except for Ex. PW5/K & PW5/D1, there is no other document on the file which shows that request vide letter dated 31.12.1986 was considered and rejected by ALC.
18. PW-6 is Rajesh Khanna, he was a partner of export linkers from 1981 and he used to deal in sale, purchase transfer of import license particularly in North India. He stated that Smt Bimla Rani W/o Davinder Nath was the other partner of the aforesaid firm and Davinder nath introduced Brij Mohan Dhawan and his son Bhushan Dhawan of Navyug Industries. They wanted CRCA sheets advance license and the application was typed in their office and signed by Brij Mohan Dhawan. He further stated that accused Brij Mohan Dhawan had not signed, though in typing Bhushan Kumar is written. He introduced Brij Mohan Dhawan to Chartered Accountant, B.D. Malvi of Bombay of BD Enterprises. The import documents were given by them and they also paid clearance charges to Bombay firm.
He was not cross examined by accused persons.
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19. PW-7 is Dev Dutt Khanna, lecturer in college and was also practising privately. He had seen letter dated 26.06.1985 which is Ex. PW7/A bearing his signature and he had given the certificate after verifying the same which was brought by Brij Mohan Dhawan.
During, his cross examination after charge, he stated that he visited the factory of Navyug industries 3-4 times, prior to giving his certificate. He further stated that he only know Brij Mohan Dhawan and Bhushan Kumar Dhawan has never approached him. He was not cross examined during pre charge evidence.
20. PW-8 Upkar Singh Kohli was manager of Punjab & Sindh Bank w.e.f 21.02.1990 to 12.06.1994. On 14.10.1985 M/s Navyug Industries opened current account no. 203 in Bombay Branch which was opened by Sh. Kuldeep Singh, the then manager and PW-8 identified his signature. It is also mentioned that M/s Navyug Industries collected the import documents and had further stated that M/s Navyug Industries has deposited various amounts. He saw the various credit and debit voucher bearing signature of Kuldeep Singh. He also stated that amounts were deposited on the basis of bank drafts which were transferred to the account of FIDC 31/205/85, 31/207/85, 31/208/85, RC No. 8(S)/89/SPE/CBI/SI/IIX Page no. 17 of 41 31/318/86 of M/s Navyug Industries. The import documents came to their bank from Indian Bank, Singapore and after deducting the commission, they remitted the balance amounts in dollars to Indian Bank, Singapore and import documents were handed over to firm for clearance of the goods.
21. PW-9 is Kuldeep Batra was working as a senior manager, New Bank of India, Karol Bagh Branch, New Delhi in the month of 1980 and the said bank has merged with Punjab National Bank now. He handed over the documents vide memo Ex. PW9/A to the CBI.
He was not cross examined by defence counsel.
22. PW-10 Ashok Kumar stated that he is proprietor of Vaid Enterprises w.e.f. 1984 and he knew the partners of Navyug Industries i.e. Brij Mohan Dhawan & Bhushan Kumar Dhawan. He was requested by Brij Mohan Dhawan to promote overseas sale of their firm Navyug Industries, Jallandhar. In this connection, he had visited Eurpoe, middle east and south east and he booked the order for which he used to get two percent commission. He stated that he can identify the signature of Brij Mohan Dhawan and Bhushan Kumar Dhawan. He identified RC No. 8(S)/89/SPE/CBI/SI/IIX Page no. 18 of 41 signature of Bhushan Kumar Dhawan at point Q1 on Ex. PW6/A. He was cross examined by defence counsel wherein he submitted that whenever he booked order, they were to be delivered during that period but militancy in Punjab was high. He denied the suggestion that time schedule for export could not be kept on account of terrorist activities in the state.
23. PW-11 is B.V. Narvekar stated that he was partner of M/s Vasudev Ranchhordass & Co and CHA firm since 1969. CHA are qualified persons by the customs department who can file bill of entires in customs for importing the goods on behalf of the firm. Bill of entry has been filed by him on behalf of Navyug Industries for clearing of CRCA sheets. He proved bills of entry Ex. PW1/A. He further stated that he handed over the bill of entry to B.D. Malvi for clearing the consignment of M/s Navyug Industries, Jallandhar. He further stated that B.D. Malvi had given him the import documents of M/s Navyug Industries.
24. PW-12 is B.D. Malvi stated that he was partner of M/s Vee Kay Enterprises and on the basis of bill entries, he got cleared the goods of M/s Navyug Industries in connection with advance license number mentioned therein and the import documents were handed over by one RC No. 8(S)/89/SPE/CBI/SI/IIX Page no. 19 of 41 Tejinder Singh. He was paid commission by M/s Navyug Industries for the professional services for clearing the goods. After clearing the goods, he handed over the goods to Brij Mohan Dhawan vide challan no. PW10/I, Ex PW10/J & Ex. PW10/K. He also stated that goods were transported to Jallandhar by parties itself.
During his cross examination, he stated that payment was made to him by one Rajesh Khanna.
25. PW-13 is Tajinder Singh who stated that Rajesh Khanna is the broker who used to buy import license and he introduced Rajesh Khanna to B.D. Malvi for clearing the goods on behalf of Navyug Industries.
26. PW-14 is Naresh Kumar who was a partner of M/s Sunrise Industries Corporation, Jallandhar which was manufacturing electric motor and water pumps.
He was not cross examined by defence counsel.
27. PW-15 is Parmod Kumar. He was commission agent of Iron & Steel. M/s Navyug Industries sold the goods through him to Sunrise RC No. 8(S)/89/SPE/CBI/SI/IIX Page no. 20 of 41 Industries vide invoices Ex. PW15/1 to Ex. PW15/6. He exhibited sales tax form. He stated that payment was not made by purchaser party in his name.
He was cross examined by defence counsel wherein he stated that he is not aware of the name but he used to be called Bauji with whom he had transacted.
28. PW-16 is Nirmal Singh, broker of iron and steel and he had seen invoice through which Navyug industries sold goods to M/s Vikas Steel Manufacturing.
During cross examination he stated that dealing was done by Brij Mohan Dhawan.
29. PW-17 is Chanchal Kumari, UDC in the office of Deputy CC I & E in the year 1985, an application of M/s Navyug Industries was received on 12.07.1985 alongwith prescribed proforma and the application was marked to her. She prepared the check sheet and put up a note and put certain objections and forwarded for the recommendations of Head Office. After receipt of the approval of Head Office, draft copy of the license was put by her and, thereafter import license was issued RC No. 8(S)/89/SPE/CBI/SI/IIX Page no. 21 of 41 bearing initial of Sh. S.P. Chibbar. The said import license was forwarded to M/s Navyug Industries vide letter dated 05.09.1985 Ex. PW17/E.
30. PW-18 is Lawrence D' Seuza. He cleared the goods of M/s Navyug Industries from Bombay Port vide bill entry Ex. PW11/A. Ex. PW18/A is the BPT colony. The delivery order is Ex. PW18/B. He was not cross examined by defence counsel.
31. PW-19 is U.R. Thalkar was delivery clerk in 18 Indira Dock, BPT Warehouse at Bombay who delivered the CR sheets to the person of CHA on 18.04.1986 after obtaining his signature.
32. PW-20 is H.I. Sheikh retired from Bombay Port Trust. He allowed delivery of goods and made endorsement on the back of delivery order. He authorized to deliver the goods to the clearing agent.
33. PW-21 is Chander Kant Ganpta. He delivered the goods to person to CHA after order was passed by Shed Superintendent.
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34. PW-22 is P.L. Dwivedi, Assistant Commissioner of Customs Chief Commissioner's Unit, During period 1985-86 he was posted as Appraiser Group 7 DEEC, Exemption Section , New Custom House Bombay. He stated that he had seen the bill of entires which were passed by him and were sent to docks for physical checking and delivery and DEEC books of Navyug Industries which shows that Navyug Industries has not made any exports in token of fulfilling of the export obligations.
He was cross examined by defence counsel.
35. PW-23 is V.N. Rathore. He stated that in the year 1985-86 he was posted as clerk in Group 7 DEEC New Customs House Bombay. He stated that he seen Ex. PW5/C which is duty exemption entitlement certificate of M/s Navyug Industries containing entries of import made by the firm and it shows that accused firm had imported the goods but had not exported the same in fulfillment of the export obligation as there is no export entry in part E of the said books. He also stated that accused firm was to export 675 Metric Tonnes of metal boxes for FOB value of Rs 40,50,000/-.
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36. PW-24 is Vinod Kumar stated that he is partner of M/s Malhotra Enterprises. He had seen legal agreement Ex. PW5/D which contained his signature as a witness of said deal.
During his cross examination, he stated that he cannot identify the signature at point Q12 on Ex. PW5/D as they were not appended before him.
37. PW-25 is Subhash Chand Gupta. He stated that he started his firm M/s Mannu Sports in the year 1985. Navyug Industries was situated near his office. He recognise Bhushan Kumar Dhawan as he was his neighbour. He has stood as a witness to agreement Ex. PW5/D but he stated that he cannot identify the signature of Brij Mohan Dhawan on the same. He further stated that he might had signed Ex. PW5/D at Jallandhar but he do not remember when and whose instance he signed the agreement.
During his cross examination, he has stated that firm used to run by Late Brij Mohan Dhawan and he has not seen Bhushan Dhawan working in the said factory.
38. PW-26 is Dev Raj who stated that specimen signatures of RC No. 8(S)/89/SPE/CBI/SI/IIX Page no. 24 of 41 Gulshan Kumar Dhawan S/o Brij Mohan Dhawan were taken on 07.03.1990 by N.S. Yadav in his presence and search was conducted on that day in the premises of Navyug Industries in his presence.
During his cross examination, he stated that he cannot say whether Navyug Industries is situated in Jallandhar as he do not recollect now. He has stated that he accompanied CBI official in a private jeep.
39. PW-27 is NS Yadav, Inspector CBI had conducted the investigation in the present case. He stated that FIR was registered on 14.12.1989 against Navyug Industries, his partners Bhushan Kumar Dhawan and other unknown persons.
40. PW-28 is LK Batra who was working as Dy Chief Controller Import and Export in the office of DGFT.
41. PW-29 is Anil Kumar stated that in the year 1997-98 he was doing the casting job in the name and style of M/s Satyam Foundary at Jallandhar and he purchased the Taslas made out by CRC sheets from Navyug Industries through broker Pramod Kumar vide invoices bearing RC No. 8(S)/89/SPE/CBI/SI/IIX Page no. 25 of 41 signatures of the broker. He also issued ST 22 forms to M/s Navyug Industries with respect to these invoices.
During his cross examination, he has stated that his dealings were with Parmod Kumar and bills were given by Pramod Kumar and counterfoils ST22 were handed over to Parmod Kumar.
42. Thereafter, matter was listed for arguments on charge.
43. Accused Brij Mohan Dhawan was expired and vide order dated 17.09.2001, order on charge u/s 120-B read with Section 420 IPC & Section 5 of Imports and Export Act 1947 was passed and charge was framed against accused on 11.10.2001.
44. Thereafter, matter was listed for post charge evidence wherein the opportunity was given for cross examination of the witnesses. Witnesses were cross examined by counsel for accused Bhushan Kumar Dhawan and for the firm.
45. Thereafter, prosecution evidence was closed.
46. Statement of accused Bhushan Kumar Dhawan u/s 313 Cr.P.C. was recorded wherein he denied the allegation and stated that he RC No. 8(S)/89/SPE/CBI/SI/IIX Page no. 26 of 41 wished to lead DE.
47. DW-1 is Petrus who stated that accused Bhushan Dhawan was friend of his father. Accused Brij Mohan Dhawan used to take advice relating to the accounts of the firm Navyug Industries and he used to do the work of M/s Navyug Industries and he was responsible to look after the day to day work of M/s Navyug Industries.
48. DW-2 is Ashok Kumar who stated that he used to do job work for M/s Navyug Industries in the year 1985 and he only used to deal with accused Brij Mohan Dhawan. He further stated that he had never seen Bhushan Kumar Dhawan running the factory.
49. DW-3 is Mukesh Dhwan who stated that earlier he was in the business of electronic goods from 1983 to 1990 and during this period accused Bhushan Kumar Dhawan used to help him in his work. Thereafter, defence evidence was closed.
50. Thereafter, final arguments heard on behalf of counsel for accused and Ld PP for CBI. Record perused.
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51. Ld counsel for accused has argued that legal undertaking which is Ex. PW5/D in respect of fulfilling of export obligation was signed by Brij Mohan Dhawan who had expired. He has further argued that accused Bhushan Kumar Dhawan was not a active partner in Navyug Industries and was not involved in any of the business of Navyug Industries. He has relied upon judgment "Sham Sunder and Ors Vs State of Haryana, Criminal Appeal No. 524 of 1989 decided on 21.08.1989" wherein it is observed that;-
"But we are concerned with a criminal liability under penal provision and not a civil liability. The penal proviso must be strictly construed in the first place. Secondly, there is no vicarious liability in criminal law unless the statute takes that also within its fold. Section 10 does not provide for such liability. It does not make all the partners liable for the offence whether they do business or not.
It is, therefore, necessary to add an emphatic note of caution in this regard. More often it is common that some of the partners of a firm may not even be knowing of what is going on day to day in the firm. There may be partners, better known as sleeping partners, who are not required to take part in the business of the RC No. 8(S)/89/SPE/CBI/SI/IIX Page no. 28 of 41 firm. There may be ladies and minors who were admitted for the benefit of partnership. They may not known anything about the business of the firm. It would be a travesty of justice to prosecute all partners and ask them to prove under the proviso to sub section (1) that the offence was committed without their knowledge. It is significant to note that the obligation for the accused to proved under the proviso that the offence took place without his knowledge or that he exercised all due diligence to prevent such offence arises only when the prosecution establishes that the requisite condition mentioned in sub section
91) is established. The requisite condition is that the partner was responsible for carrying on the business and was during the relevant time in charge of the business. In the absence of any such proof, no partner could be convicted. We, therefore, reject the contention urged by counsel for the State." Ld counsel for accused also relied upon judgments i.e. Monaben Ketanbhai Shah & Anr Vs State of Gujarat & ors, Crl. Appeal no. 850 of 2004 decided on 10.08.2004 and M/s K.G. Denim Ltd Vs M/s J.P. Knito Impex, Tiruppur Cr. Appeal No. 1440 & 1441 of 2002 decided on 05.02.2010", wherein it has been observed that only a partner who is RC No. 8(S)/89/SPE/CBI/SI/IIX Page no. 29 of 41 responsible for day to day affairs of the partnership firm can be made liable for the act of the firm and not the sleeping partner.
52. Ld counsel for accused has further argued that it was nowhere stated in letter of undertaking that the goods which have to be exported were to be manufactured out of the goods imported under advance license. Ld counsel for accused has further argued that accused had applied for extension of export period and rejection order has never been communicated to the accused persons. He has further stated that this court has no jurisdiction to try this case as the license was applied in Amirtsar and license was given at Amritsar and goods landed at Bombay port, therefore, jurisdiction could be either of Bomaby Court or Amritsar Court or of the Jallandhar Court where the firm was operating. Ld counsel has further argued that accused persons have imported CRCA sheets which are iron sheets and are subject to corrosion and the material which was imported started corroding and that is why the same had to be sold due to its perishable nature. Ld counsel argued that no offence is made out against the accused and he is entitled to be acquitted.
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53. Ld APP for State has argued that prosecution has proved entire facts beyond reasonable doubts and it is not disputed that accused has defaulted in exporting the finished product one of the goods he had imported and had also given undertaking and, therefore, he has committed offence Section 5 of Imports and Contral Act 1947 read with Section 120-B IPC.
54. In order to decide the case, let us first discuss the facts which are more or less admitted or have been proved by prosecution witness. It is not disputed that accused Brij Mohan Dhawan (since deceased) and Bhushan Kumar Dhawan were partners of Navyug Industries. It is further not disputed that application for advance license was applied by accused Brij Kumar Dhawan which is Ex. PW6/A. The signatures of Bhushan Kumar Dhawan on Ex. PW6/A are not disputed. The same has been proved. Ld counsel for accused Bhushan Kumar Dhawan argued that accused was a sleeping partner, however, the signature of accused on Ex PW6/A clearly shows that he had applied for advance license on behalf of firm and, therefore, he was actively involved in the process of getting license under obligation to export the goods as per the terms and conditions of the grant of license. Undoubtedly, Ex.
RC No. 8(S)/89/SPE/CBI/SI/IIX Page no. 31 of 41 PW5/B which is letter of undertaking executed at the time of import of goods was signed by accused Brij Mohan Dhawan (since deceased). Perusal of Ex. PW5/B clearly shows that accused Brij Mohan Dhawan had signed "For Navyug Industries" i.e. on behalf of the firm and not in his individual capacity only. It is further pertinent to mention here that in order to get the import goods, the accused persons opened a current amount in Punjab & Sind Bank at Bombay branch. It is pertinent to mention here that account opening form i.e. PW8/A has been proved by PW-8 Upkar Singh who was manager of Punjab and Sind Bank, which bears signatures of Bhushan Kumar Dhawan. The person who is opening account in order to facilitate the import of goods cannot be said to be a sleeping partner. The signature of Bhushan Kumar Dhawan on Ex PW8/A have not been disputed. Though it is well settled principle that the person who is not involved in the day to day affairs of the firm cannot be said a active partner and cannot be made liable for the acts of the firm but here in the present case, the signature of accused Bhushan Kuamr Dhawan on application for grant of license Ex PW6/A and account opening form Ex PW8/A clearly shows that he was very much involved in the business of export carried out by M/s Navyug Industries and was very much responsible for getting advance license RC No. 8(S)/89/SPE/CBI/SI/IIX Page no. 32 of 41 and was an active partner of the firm. Establishing the fact the partner should do all the overt acts in order to be termed as active partner is not required. The testimony of other witnesses recorded during the prosecution evidence wherein they have stated that they have never seen Bhushan Kumar Dhawan working for Navyug Industries is irrelevant in view of the discussion made above.
55. The judgments Sham Sunder and Ors Vs State of Haryana, Criminal Appeal No. 524 of 1989 decided on 21.08.1989", Monaben Ketanbhai Shah & Anr Vs State of Gujarat & ors, Crl. Appeal no. 850 of 2004 decided on 10.08.2004 and M/s K.G. Denim Ltd Vs M/s J.P. Knito Impex, Tiruppur Cr. Appeal No. 1440 & 1441 of 2002 decided on 05.02.2010" relied upon by the counsel for accused are not applicable to the facts of the present case and by no stretch of imagination, accused Bhushan Kumar Dhawan could be said to be a sleeping partner.
56. Now, coming to the jurisdiction part, it is true that accused persons applied for advance license at Amritsar before Dy. CC I & E. It is also true that goods landed at Bombay port and manufacturing was RC No. 8(S)/89/SPE/CBI/SI/IIX Page no. 33 of 41 done at Jallandhar. At the same time, it is also a matter of record that though accused persons applied for advance license at Amritsar but the issuance of same was sanctioned by ALC which was based in Delhi and consequently as instructed, the Amritsar authority granted the license. Moreover, the letter for extension were written by accused on 17.01.1987 and 25.07.1987 to Chief Controller, Import & Export, New Delhi and Export Commissioner, New Delhi. Accused cannot be allowed to blow hot and cold at the same time as per his convenience. Therefore, this court has jurisdiction to entertain the same.
57. It is not disputed that advance license was issued to the accused. It is further not disputed that accused persons received imported goods from Bombay port and took them to Jallandhar. This facts has been proved by PW-12 B.D. Malvi, partner of Vee Kay Enterprise who was CA and accused persons were introduced to BD Malvi by PW-6 Rajesh Khanna who was partner of export linkers and dealt in sale, purchase and transfer of import license. The factum of import of goods has also proved by PW-22 PL Diwedi who has stated that he passed some bill of entries and he also proved DEEC books of Navyug industries which shows that Navyug Industry had not made any export in token of RC No. 8(S)/89/SPE/CBI/SI/IIX Page no. 34 of 41 fulfillment of export obligation. PW-23 V.N. Rathore who was clerk of in DEEC, New Customs House Bombay also proved DEEC certificate of Navyug Industries Ex. PW5/C containing entries of import made by firm which also shows that Navyug Industries had not exported the goods in fulfillment of export obligation and there is no export entry in said book. The legal agreement dated Ex. PW5/D clearly find mention of the export obligation which was to be fulfilled by Navyug Industries. In Ex. PW5/D, it is clearly mentioned that the firm shall export 675 Metal Boxes for storing Handtools, ratchet, pipe die, threaders, tool boxes, carpenters, try squares and builders hardware MSHOLD, fast shutters, books, buckets, oil canes, aldrops etc for an FOB value of Rs 40,50,0000/- within a period of nine months from the date of clearance of the first consignment of import or thirty days from the importation of first consignment whichever is admissible. It is pertinent to mention here that license was granted on 04.09.1985 and later on undertaking was executed on 06.12.1985. Therefore, the period of fulfillment of export obligation was from 06.12.1985 to 05.09.1986. It is an admitted fact that export obligation was not fulfilled by accused. The accused has not disputed that he sold the goods made out of goods imported i.e. CRC Sheets in the local market and PW-29 Anil Kumar is a witness to the RC No. 8(S)/89/SPE/CBI/SI/IIX Page no. 35 of 41 same.
58. As far as contention of learned counsel for accused with regard to fact that firm Navyug Industries was not liable to export the goods manufactured out of import goods only, it is stated that clause 6 of legal agreement Ex. PW5/D is very important in this regard. Clause 6 of the legal agreement is provided as under:-
"In the event of the importer failing to fulfill, the export obligation undertaken by it a aforesaid, when the fulfillment of such obligation is prevented or delayed because of any law, order, proclamation, regulation or ordinance of the government, the government shall be free to take possession of the goods produced by the importer of the imported raw materials as the case may be, and take such action as it may considered necessary for the disposal/distribution in a manner and at a price may be decided the government in addition to recovering liquidated damages in terms of this agreement. The Importer shall also the liable to utilised for export. Any custom duty due under this agreement alongwith interest at 18% from the date of import of exempt material to the date payment of the duties shall without RC No. 8(S)/89/SPE/CBI/SI/IIX Page no. 36 of 41 prejudice to any other mode of recovery. The recoverable in accordance with the provision of Section 142 of the Customs Act 1962 and/or from any cash assistance payable to the importer. This shall however, be without prejudice to any other action that may be taken under the Import & Export (Control) Act 1947 and the order issued thereunder. In the event of the failure of the company to pay the liquidated damages on demand, such liquidated damages shall also be recoverable from any cash assistance payable to the company".
This clause clearly shows that good which were to be exported were to be manufactured out of imported raw material only i.e. CRC sheets. If this is not the interpretation, then what is the fun of importing good under duty free scheme.
59. PW-29 Anil Kumar has clearly stated that CRC sheets were converted into Tasla and were sold in the local market. This fact has not been disputed by the accused. Furthermore, accused had violated the terms of legal undertaking Ex. PW5/D. Furthermore, Ex. PW15/20 & Ex. PW15/21 shows that ST Form are dated 17.06.1985 meaning thereby that accused persons had sold the goods manufactured out of CRC RC No. 8(S)/89/SPE/CBI/SI/IIX Page no. 37 of 41 sheets (the goods which were imported) in June 1985 itself i.e before the period of fulfilling of export obligation expired which shows their intention of not exporting the goods which is in violation of undertaking given in Ex. PW5/D.
60. It is further important to mention here that accused persons moved an application for extension before the committee on 31.12.1986. Ld counsel for accused has argued that no intimation with respect to rejection of extension has been communicated to them. In this regard, it is stated that after request for extension was made vide letter dated 31.12.1986 which is Ex. PW10/E, another letter of extension was written on 25.07.1987 whereby accused sought grant of extension in the export obligation period and also change of description of export products. This letter was directly addressed to Export Commissioner, New Delhi, office of Dy CC I & E. This letter is Ex. PW5/G. In pursuance of this letter, one more letter was written on 01.08.1987 giving a reply to the show cause notice from the office of Import & Export, Amritsar and request was made to wait for decision of the Export Commissioner. After correspondence on 04.12.1987, a letter was written to Navyug Industries. Accused firm was declared defaulter RC No. 8(S)/89/SPE/CBI/SI/IIX Page no. 38 of 41 vide office noting Ex PW5/F. Ld counsel for accused has brought attention of this court towards the minutes of the office of Dy CC I & E, Amritsar whereby it is mentioned that license was granted to accused firm on 28.1.1986. It was noted down that export obligation period has expired on 06.09.1986 and now the firm may be asked to submit the details of export obligation which has been fulfilled. It was further noted down that extension of export obligation period had been applied by the parties and they are directed to get the extension. Even as on 13.01.1987, it was mentioned that export obligation period has expired since September 1986 and accused firm has not yet got the export orders and had applied for extension of the export obligation period. It was further mentioned "we may refer the license to DEEC and inform that (I) request of extension and export obligation period are to be considered by JC, CLA/CCI in terms of para 23 of application (ii) they have not fulfilled the export obligation within the export obligation period, they are required to pay custom duty and interest to the customs."
61. Thereafter, a note was posted in the same minutes PW5/K wherein it is mentioned that committee rejected the request for RC No. 8(S)/89/SPE/CBI/SI/IIX Page no. 39 of 41 extension in the export obligation period and decided that case be handed over to ECA Division for further necessary action. The case was listed for declaring firm as defaulter on 16.06.1987. Thereafter, again and again it was requested by accused firm that time be granted and ultimately the firm was declared as defaulter on 08.12.1987 vide Ex. PW5/I. Though, accused has stated that he was never intimated about the extension of export obligation period but at the same time in his letter dated 25.07.1987 addressed to Export Commissioner, it is nowhere stated that order on the extension of the accused persons vide letter dated 31.12.1986 has not been communicated to them. It is also pertinent to mention here that from September 1986, when the export obligation period was over, they got time of almost complete one year till July 1987 to export the goods and no action was taken by them. The department of Dy CC I & E has proved Ex PW5/K whereby it is mentioned that request for extension of the export obligation period was rejected.
62. Here, in the present case, it has already been proved that the accused had violated the terms and conditions of the legal undertaking executed by his father on behalf of Navyug Industries in which he was RC No. 8(S)/89/SPE/CBI/SI/IIX Page no. 40 of 41 also a partner by not fulfilling the export obligation. It is also pertinent to mention here that he had already sold finished products made out of raw material which was imported i.e. CRC sheets in the local market which was against the terms of letter of undertaking Ex. PW5/D. Accused was at liberty to pursue his case of rejection before the appropriate authority and it is not an appropriate forum for pursuing the same or to take that defence. In the present case, the guilt of accused Bhushan Kumar Dhawan u/s 5 of Imports and Exports (Control) Act 1947 has been proved beyond reasonable doubt.
63. Accused Bhushan Kumar Dhawan is held guilty for the charge framed for the offence u/s 5 of Imports and Exports (Control) Act 1947.
64. No evidence has been led by the prosecution on the point of conspiracy hatched by accused Bhushan Kumar Dhawan with his father before applying for license. Hence, accused Bhushan Kumar Dhawan is acquitted for the offence u/s 120-B IPC.
65. Let he be heard on point of sentence.
Announced in the open court (VANDANA JAIN)
on 21.07.2016 ACMM-02/CENTRAL
DELHI
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