Delhi District Court
Enforcement . vs . S.K Jain & Anr. on 7 October, 2014
IN THE COURT OF SH. AJAY GARG
ADDITIONAL CHIEF METROPOLITAN MAGISTRATE01,
NEW DELHI DISTRICT: PATIALA HOUSE COURTS: DELHI
IN THE MATTER OF
Enforcement . Vs. S.K Jain & Anr.
CC No. 24/1 (107/1/96)
O R D E R
07.10.2014 This order shall dispose of the instant complaint filed by the Enforcement Directorate (herein after referred to as ED) against the accused J.K Jain and S.K Jain U/s. 61 (2) (ii) r/w with section 56 of Foreign Exchange Regulation Act, 1973 for offences committed u/sec. 8 (1), 8 (2) and 14 of the said Act.
BRIEF FACTS.
1. On 03.05.1991 during CBI raid at business premises of M/s Bhilai Engineering Corporation a diary marked as M207/93 (2) was seized. The following entries appearing under the date 6th November (Monday) in the diary marked 'M207/93(2)' are the basis of instant complaint which allegedly pertains to the conversion of U.S dollars into Indian rupees at unauthorized rates. The entries are as follows: Enf. Vs. S. K. Jain & Anr. U/S: 56 of FERA CC No. 24/1 1 Of 17 "168 20.30 8,27,586.20 200 20.50 9,75,609.75 18,03,195.95 say 1.86 million 250.00 20.50 12,19,512.10"
2. The complainant explains that the above entries relate to the conversion of Indian Rs. 1,68,00,000/ @ Rs. 20.30 per U.S $ (equivalent to U.S $ 8,27,586.20); Rs. 2,00,00,000/ @ Rs. 20.50 per U.S. $ (equivalent to U.S. $ 9,75,609.75) and Rs.2,50,00,000/ @ Rs. 20.50 per U.S. $ (equivalent to U.S. $ 12,19,512.10) in all totalling Rs. 6.18 crores converted to a total of U.S. $ 30,22,708.05 during the period November, 1989. The complainant correlated these entries with the entries appearing on page 1 and the reverse of page 1 of the another seized diary marked 'M209/93'.
3. On these allegations the Enforcement Directorate served a show cause Notice XIX upon both the accused J.K Jain and S.K Jain and initiated adjudication proceedings and instant complaint simultaneously. After perusal of the instant complaint, cognizance was taken. Both the Enf. Vs. S. K. Jain & Anr. U/S: 56 of FERA CC No. 24/1 2 Of 17 accused were summoned and documents alongwith the copy of complaint were supplied to them. PreCharge evidence was recorded. Arguments on charge heard.
CONTENTIONS
4. Ld. Senior Advocate Sh. A. K. Panda appearing for the complainant submits that at the time of charge only a prime facie case has to be seen and the defence, if any, raised by the accused persons can not be considered at this stage. He further submits that adjudication proceedings and criminal prosecution are independent to each other and exoneration in adjudication proceedings has no bearing in the criminal prosecution. He contended that FERA being a special legislation cannot be equated with the general evidence law for appreciation of evidence. He also contended that in FERA u/s 59 & 72 , presumptions are against the accused which they have to rebut by leading positive evidence. He further contended that statement of S.S Sandhu, Mukul Jain, Daniel P. Rambel and Pawan Jain recorded u/s 40 of FERA also fortifies the stand of ED and sufficient enough to make out a prima facie case against accused, thus charges should be framed against them. He also contended that as the accused persons despite opportunity being given refused to explain the above said entry claiming the protection of Article 20 (3) of the Constitution of India on the ground that the answer to the question tends to incriminate them Enf. Vs. S. K. Jain & Anr. U/S: 56 of FERA CC No. 24/1 3 Of 17 raises adverse presumption against the accused persons which they have to rebut by leading positive evidence. In support of his contentions, he relied upon the following judgements:
(i). Standard Chartered Bank and others v. Directorate of Enforcement and others, 2006 (1) JCC 488: 2006(4) SCC 278.
(ii). Prem Singh Chawla Vs. Directorate of Enforcement; 1987 Crl.
L.J. 1579.
(iii). Poolpandi & Ors. Vs. Superintendent, Central Excise & Ors.; (1992) 3 SCC 259.
(iv). Directorate of Enforcement Vs. Deepak Mahajan & Anr; MANU/SC/0422/1994.
(v). Central Bureau of Investigation Vs. State of Rajasthan & Ors; (1996) 9 SCC 735.
(vi). Enforcement Directorate & Anr. Vs. M. Samba Siva Rao & Ors. (2000) 5 SCC 431.
(vii). Union of India Vs. Hassan Ali Khan & Anr. SLP (Crl.) No. 6114 of 2011.
(viii). State of Bihar Vs. Murad Ali Khan & Ors. (1988) 4 SCC 655.
(ix). P. Jayappan Vs. S.K. Perumal, First Income Tax Officer, Tuticorin; 1984 (Supp) SCC, 437.
(x). Rashtriya Mill Mazdoor Sangh, Nagpur Vs. Model Mills, Nagpur & Another; 1984 (Supp) SCC 443.
Enf. Vs. S. K. Jain & Anr. U/S: 56 of FERA CC No. 24/1 4 Of 17
(xi). Sanghi Brothers (Indore) Private Limited Vs. Sanjay Choudhary & Ors. (2008) 10 SCC 681.
(xii) M/s. Kanungo & Company Vs. Collector of Customs & Ors. 1973 (2) SCC 438.
(xiii) State of Gujarat Vs. Mohammed Atik & Ors. 1998 (4) SCC 351.
(xiv) Amrik Singh Saluja Vs. Union of India & Anr. on 16.04.2014 by Justice S. Murlidhar.
5. Per contra Ld defence counsel argued that the instant complaint is based on the surmises and presumptions raised by the Enforcement Directorate themselves without having any evidence to this effect. He further submits that the entire case of the Enforcement Directorate is based on the above said entries in Diary M207/93(2) Ex. PW1/B(PW6/A) without having any evidence to show that it pertains to any acquisition, sale or purchase of any foreign exchange which is sine qua non for invoking the instant provisions of FERA. He submits that Enforcement Directorate failed to explain as to from whom, when and where the foreign exchange was obtained. He further submitted that mere entry ipso facto does not connotes any transaction or foreign currency and on the mere basis of these figures, it is not possible to conclude that the said entries pertains to acquisition, sale or purchase of foreign exchange by the accused. While refuting the contentions of ED he argued that unlike police cases, the instant prosecution is launched on the basis of a complaint whereby the entire evidence has Enf. Vs. S. K. Jain & Anr. U/S: 56 of FERA CC No. 24/1 5 Of 17 been adduced by the complainant and subjected to crossexamination by defence and no further evidence can be led by the ED. Therefore if the entire evidence led by the ED is not able to make out a case against accused persons, proceeding further would be a futile exercise.
Ld. defence counsel further contended that presumption u/s 59, 72 FERA are available only if ED initially discharged their burden to make out a prima facie case, however, in the instant case they have not discharged their initial burden of proof and therefore, it cannot be shifted to accused.
He further submitted that on the basis of these very facts the Enforcement Directorate has also initiated adjudication proceedings wherein accused J. K. Jain was exonerated on merits by the adjudication authority vide order no SDE(SKP) III/74/2005 dated 31.03.2005 . He also submitted that this entire diary was declared a very weak piece of evidence while exonerating accused S.K Jain in the adjudication proceedings initiated on the basis of another similar entry of this very diary by Hon'ble Delhi High Court in Criminal Appeal no340/2008. The relevant portion of the said judgment is reproduced herein:
"What is significant is that this is not a case where a confession was initially made under Section 40 FERA which thereafter was retracted.
Enf. Vs. S. K. Jain & Anr. U/S: 56 of FERA CC No. 24/1 6 Of 17
Here the noticee either declined to answer or gave an answer which did not help the ED since he claimed that had no knowledge of the entries in the diaries. Mr. Panda sought to contend that the said answers should be construed as either false or misleading or both. The Appellant said that he was unable to explain the entries because they were not written by him. The latter part of the answer was a fact since the entries were admittedly made by Mr. J.K Jain. While Mr. J.K Jain claimed that he did so on the instructions of Mr. S.K Jain, the AO itself noted that there was no evidence whatsoever to show involvement of Mr. J.K Jain in the transactions of foreign exchange. The Supreme court has in the V.C Shukla Case held that the socalled 'admission' in relation to the entries by Mr. J.K Jain in his statement under Section 40 FERA cannot be used against Mr. L.K Advani or Mr. V.C Shukla. It was, however, clarified that they could be proved against the Jains as admissions under Section 187 read with Section 21 IEA provided they relate to 'any fact in issue or relevant fact.' The initial burden of proving that the entries related to 'any fact in issue or relevant fact' was on the ED. This it could have discharged by placing before the SD credible substantive evidence gathered through independent investigation conducted abroad and here. The above entries in the diaries were at best corroborative and not substantive evidence.
Lastly he submitted that the diaries that are dealt with in the Crl. Appeal no. 340 of 2008 by the Hon'ble High Court ( M209/93 and M 207(3)/93); are also the diaries involved in the present case. In diary M 207(3)/93, the entry reflected on the page dated "9 October Monday"
relates to V.K Beri whch is the subject matter of CC 108/1 which has Enf. Vs. S. K. Jain & Anr. U/S: 56 of FERA CC No. 24/1 7 Of 17 been dealt with by the Hon'ble High Court whereas the entry reflected on page dated "6 November Monday" in the same diary relates to 1.68 crores which is the subjectmatter in the present case. Henceforth, since the above mentioned entry relating to V.K Beri has been comprehensively dealt with by the Hon'ble High Court in Crl. Appeal no. 340 of 2008; likewise the entry relating to 1.68 crores which is reflected in the same diary; the same principles and observations should apply as have been upheld by the Hon'ble High Court. Therefore, in view of exoneration of accused J.K Jain on merits in adjudication proceedings and exoneration of accused S.K Jain by Delhi High Court in similar case arising out of this very diary, the instant criminal prosecution against the accused persons is liable to be quashed and accused persons are entitled to be discharged as held by the Hon'ble Supreme Court in case titled as Radhey Shyam Kejriwal Vs State of West Bengal & ANR 2006 (1) JCC 488.
6. Record perused. Considered.
FINDINGS QUA ACCUSED J.K JAIN
7. I have carefully perused the order passed by the adjudication authority i.e. Sh. S. K. Panda, Special Director vide order no SDE(SKP) III/74/2005 Dated 31.03.2005 and found it to be passed on the merits. No additional evidence apart from the evidence considered by the adjudicating authority has been placed on record by the complainant.
Enf. Vs. S. K. Jain & Anr. U/S: 56 of FERA CC No. 24/1 8 Of 17
Relevant portion of the said order read as follows;
"The transactions referred in the present memorandum is also reflected in the seized diary marked M207/93(2). There is no doubt that this seized diary is written by Sh. J.K Jain under instructions of Sh. S.K Jain who was his employer. There is also no evidence to show that by writing the alleged transactions in the said seized diary he has otherwise acquired/converted or failed to surrender the foreign exchange. So the charges against Sh. J.K Jain does not survive."
8. The Hon'ble Supreme Court in the case of Radhey Shyam Kejriwal Vs State of West Bengal & ANR 2006 (1) JCC 488 after considering the law laid down in the case of Standard Chartered Bank (Supra) referred by the complainant herein, held so : "We find substances in the submission of Mr. Shran. There may appear to be some conflict between the views in the case of Standard Charted Bank (supra) and L.R Melwani (supra) holding that adjudication proceeding and criminal proceeding are two independent proceedings and both can go on simultaneously and finding in the adjudication proceedings is not binding on the criminal proceeding and the judgements of this Court in the case of Uttam Chand (supra), G.L Didwania (Supra) and K.C Builders (supra) wherein this Court had taken a view that when there is categorical findings in the adjudication proceedings exonerating the person which is binding and conclusive, the prosecution cannot be allowed to stand. Judgments of This Court are not to be read as statute and when viewed from that angle there does not seem any conflict between the two sets of decision. It will not make any difference on principle that latter judgments pertain to Enf. Vs. S. K. Jain & Anr. U/S: 56 of FERA CC No. 24/1 9 Of 17 cases under the Income Tax Act. The ratio which can be culled out from these decisions can broadly stated as follows."
(i) Adjudication proceeding and criminal prosecution can be launched simultaneously;
(ii) Decision in adjudication proceeding is not necessary before initiating criminal prosecution.
(iii) Adjudication proceeding and criminal proceeding are independent in nature to each other.
(iv) The finding against the person facing prosecution in the adjudication proceeding is not binding on the proceeding for criminal prosecution.
(v) Adjudication proceeding by the Enforcement Directorate is not prosecution by a competent court of law to attract the provision of Article 20 (2) of the Constitution or Section 300 of the Code of Criminal Procedure.
(vi) The findings in the adjudication proceedings in favour of the person facing trial for identical violation will depend upon the nature of finding. If the exoneration in adjudication proceedings is on technical ground and not on merit, prosecution may continue; and
(vii) In case of exoneration, however on merits where allegation is found to be not sustainable at all and person held innocent, criminal prosecution on the same set of facts and circumstances can not be allowed to continue underlying principle being the higher standard of proof in Enf. Vs. S. K. Jain & Anr. U/S: 56 of FERA CC No. 24/1 10 Of 17 criminal cases.
In our opinion, therefore , the yardstick would to be judge as to whether allegation in the adjudication proceeding as well as proceeding for prosecution is identical and the exoneration of the person concerned in the adjudication proceeding is on merits. In case it is found on merit that there is no contravention of the provision of the Act in the adjudication, proceeding, the trial of the person concerned shall be in abuse of the process of the court.
9. Similarly in this case, the complete merits of the complaint case were examined in the adjudication proceedings and thereafter the accused J.K Jain was exonerated on merits. All material evidence against the accused was considered in the adjudication proceedings and after consideration of all the similar allegations as levelled in the complaint case, the adjudicating authorities came to the conclusion that there was no reliable evidence to prove the case of the complainant against accused J. K. Jain. I do not see any additional material allegations against the accused in the present complaint or the additional witnesses as were already discussed in the adjudication orders.
10. Hence, in view of the law laid down in Radhey Shyam Kejriwal Vs State of West Bengal & ANR 2006 (1) JCC 488, I am of the opinion that proceedings further against accused J.K Jain in the instant Enf. Vs. S. K. Jain & Anr. U/S: 56 of FERA CC No. 24/1 11 Of 17 case is an abuse of the process of the Court, therefore, the proceedings of the instant case against him are hereby dropped. Accused J. K. Jain is discharged/ released accordingly. FINDINGS QUA ACCUSED S.K JAIN.
11. The entire case of the complainant rest upon few figures or so called "entry" appearing on a page dated 6th November (Monday) in the diary no 'M207/93(2). In support ED has examined six witnesses. PW1 M.C Joshi, PW2 H.S Bawa, PW3 D. P. Singh and PW4 M. S Chauhan are the witnesses of search and recovery of the diary in question. PW5 R.K Rawal recorded the statement of accused S. K. Jain and J.K Jain u/s 40 of FERA. PW6 M.G Attri filed the instant complaint on behalf of ED and proved the entry in question as Ex.PW6/A (Z11Z12). However, these witnesses at the most have proved the recovery of the diary in question Ex.PW6/A containing entry Z/11Z/12 from the business premises of the accused persons and their statement recorded u/s 40 FERA and nothing more. The other recoveries are not the subject matter of this case.
12. Admittedly this is a complaint case whereby the complainant was accorded full opportunity to lead their best evidence to make out a case for commencing the trial. However, the entire evidence adduced by the complainant even if unrebutted is not sufficient to prove their case beyond reasonable doubt, proceeding further would be an Enf. Vs. S. K. Jain & Anr. U/S: 56 of FERA CC No. 24/1 12 Of 17 exercise in futile. Reliance can be placed on Ajay Kumar Ghose Vs. State of Jharkhand & Anr.(2009) 14 SCC 115, wherein it is held : Now, there is a clear difference in Sections 245(1) and 245(2) of Cr. PC. Under Section 245(1), the Magistrate has the advantage of the evidence led by the prosecution before him under Section 244 and he has to consider whether if the evidence remains unrebutted, the conviction of the accused would be warranted. If there is no discernible incriminating material in the evidence, then the Magistrate proceeds to discharge the accused under Section 245(1) Cr. PC.
13. There is no dispute that FERA is a special legislation and enjoys certain prerogatives which is not available to general enactments, however in any case it cannot override the principles of natural justice. Though the presumptions u/s 59 & 72 of FERA are against the accused but these presumptions can be invoked only if ED has discharged their initial burden of proof to make out a prima facie case. Under no circumstances mere writing of few numeric figures on a piece of paper without any independent evidence would amount to violation of any law be it FERA.
14. Further ED cannot seek reliance on the statement of S.S Sandhu, Mukul Jain, Daniel P. Rambel and Pawan Jain recorded u/s 40 FERA as neither they are the accused in this case nor tendered in evidence for subjecting them to crossexamination by defence, Enf. Vs. S. K. Jain & Anr. U/S: 56 of FERA CC No. 24/1 13 Of 17 therefore without giving an opportunity to impeach the credibility or veracity of a witness to the party against whom his statement is relied upon, would amount to mis carriage of justice. Hence these statements relied upon by the ED cannot be considered. The another contention raised by Ld. Senior Advocate pertaining to Article 20(3) of the Constitution of India also do not hold water as it was held to be legal and valid by the Hon'ble Delhi High Court in Criminal Appeal no. 340/2008 while observing that : It is, therefore, clear that for the purpose of FERA, the noticee can, to the extent that he is required by the ED officers to give answers that might tend to incriminate him in the criminal proceedings under FERA, decline to do so. The resultant position as far as the present case is concerned is that on the dates of their examination in April 1995 the Appellant and Mr. J.K Jain were 'accused' in terms of the FIR registered by the CBI and this continued till the filing of chargesheets by the CBI in January 1996. Therefore, the two noticees were entitled to invoke their right against selfincrimination under the Article 20(3) of the Constitution. No adverse inference could be drawn against them for having exercised that right. Even thereafter, since admittedly criminal proceedings were also launched against the noticees under Section 56 FERA, they continued to be 'accused'. Their refusal to explain the entries could not lead to an adverse inference being drawn against them.
15. In order to substantiate the charge under Section 8 (1) & 8 (2) of Enf. Vs. S. K. Jain & Anr. U/S: 56 of FERA CC No. 24/1 14 Of 17 the FERA, 1973 at least the broad essential ingredients of the alleged charge has to be shown, but there is total absence of the ingredients even by way of allegation much less in matter of prima facie proof. There is no primafacie evidence to show that there was any by whom the payment was received. There is no evidence as to how the foreign exchange was acquired. Entry itself does not connote any transaction . Until there is a corroboration of the entry, no charge can be framed.
Even the Hon'ble Delhi High Court had the occasion to extensively dealt with the diary in question in the case of L.K Advani & Ors. Vs. CBI and made the following observation: (94)..The entries in the said diaries and losse sheets, assuming arguendo, even if they are considered as a piece of evidence admissible under the Evidence Act, the same are of little help to the prosecution. The entries therein can at the most be said to be a document within the meaning of Section 3 of the Evidence Act. However, mere production of the said documents does not lead us anywhere unless the contents of the said documents are proved by proper evidence. A document can be proved either by examining the writer of the said documents or by a person who is well versed with the handwriting of the maker of the said document or by a fingerprint and handwriting expert. However, even then the contents of the said document have to be proved still by a separate evidence like any other relevant fact.
It has been observed above that the entries in the books of account by themselves are not sufficient enough to fasten the liability on the head of a person against whom they are produced. They are not a Enf. Vs. S. K. Jain & Anr. U/S: 56 of FERA CC No. 24/1 15 Of 17 substantive piece of evidence. The said entries in the books of account can be used only by way of corroboration to other pieces of evidence which is led by a party. Admittedly there is no evidence with the prosecution besides the alleged entries in the diaries and in the loose sheets as conceded by the learned counsel for the C.B.I. Thus the alleged entries in the books of account by themselves are of no avail to the prosecution.
Admittedly there is no evidence with the prosecution to prove the contents and the truth of the entries in the said diaries and loose sheets, except the report of the fingerprint and handwriting expert and the statement of certain witnesses namely Pawan Jain, A.B Pathak and D.K Gupta which would simply prove the handwriting of Sh. J.K Jain and signatures of Sh. S.K Jain.
If the evidence before the Court is of such type which if un rebutted and unchallenged by way of cross examination would not be sufficient enough to convict the accused ultimately then the court would not be justified in the framing the charge against the accused. The court at that stage is under no obligation to make an elaborate enquiry by shifting and weighing the material to find out a case against the accused beyond reasonable doubt which it is required to do at the time of the final hearing.
Further the Honble Supreme Court in the case of CBI Vs. V.C Shukla & Ors(1998) 3 SCC 410 while dealing with these diaries held: Even correct and authentic entries in books of account cannot without independent evidence of their trustworthiness, fix a liability upon a person. Keeping in view the above principles, even if we proceed on the assumption that the entries made in MR 71/91 are correct and the Enf. Vs. S. K. Jain & Anr. U/S: 56 of FERA CC No. 24/1 16 Of 17 entries in the other books and loose sheets which we have already found to be not admissible in evidence under Section 34 are admissible under Section 9 of the Act to support an inference about the formers' correctness still those entries would not be sufficient to charge Shri Advani and Shri Shukla with the accusation levelled against them for there is not an iota of independent evidence in support thereof.
16. Similarly in the instant case there is no evidence against S.K Jain for putting him to trial for offence u/s 8(1) & 8(2) of FERA. The mere entry cannot establish the guilt of accused in the absence of any independent evidence. Hence in the above facts and circumstances, I am of considered opinion that no charge can be framed against S.K Jain, thus discharged.
Nothing further survives. Complaint stands dismissed.
Announced in the open Court on 07th October, 2014 AJAY GARG ACMM01/New Delhi District Patiala House Courts, New Delhi This order contains 17 pages and each page is signed by me.
Enf. Vs. S. K. Jain & Anr. U/S: 56 of FERA CC No. 24/1 17 Of 17