Madras High Court
The Enforcement Officer vs Ranjiv Batra on 28 July, 2011
Author: K.B.K.Vasuki
Bench: K.B.K.Vasuki
IN THE HIGH COURT OF JUDICATURE AT MADRAS Dated: 28.7.2011 Coram THE HONOURABLE MS. JUSTICE K.B.K.VASUKI Crl.R.C.Nos.1426 and 1427 of 2005 The Enforcement Officer Enforcement Directorate Govt. of Tamil Nadu Shastri Bhavan, No.26, Haddows Road, Chennai-6. .. Petitioner in both revisions Vs. Ranjiv Batra Director M/s.Kiran Overseas Ltd. .. Respondent in Crl.RC.No.1426/05 M/s.Kiran Overseas Ltd. .. Respondent in rep. by Ranjiv Batra Crl.RC.No.1427/05 Prayer:- Criminal Revisions are filed under Sections 397 and 401 Cr.P.C against the common order dated 25.8.2005 made in M.P.Nos.2507 and 2508 of 2004 on the file of the Additional Chief Metropolitan Magistrate, E.O.I, Egmore, Chennai. For Petitioner : Mr.M.Dhandapani in both cases For Respondent : M/s.Sivanandh and Associates in both cases COMMON ORDER
This criminal revisions are filed by the complainant-cum- Enforcement Officer, Enforcement Directorate against the common order made in M.P.Nos.2507 and 2508 of 2004 discharging the accused from being proceeded against for violation of Sections 18(2) and 18(3) of Foreign Exchange Regulation Act 1973.
2.The respondents in both the revision petitions are arrayed as A1 and A2. A1 is the company represented by A2 dealing in export business. The Enforcement Directorate was informed on 13.5.1997 by the Assistant General Manager, Indian Bank, Thousand Lights Branch with enclosures on 13.5.1997 about the grant of export credit facilities to M/s.Kiran Overseas Ltd pending realisation of export proceeds on account of export made on M/s.Avia Exports Ulansi, Moscow to the tune of Rs.14,83,64,754/-. In pursuance of the same, a reference was made to RBI to ascertain the actual position regarding the exports outstanding of the accused company and as to whether, RBI granted any extension of time and the same was replied by RBI that an extension of time application from M/s.Kiran overseas Ltd., through its authorised dealer i.e, Indian Bank is received by RBI. As such, both the company and its Managing Director Ranjiv Batra were summoned to appear along with records and Ranjiv Batra in response to the same, appeared for the enquiry along with the records relating to outstanding export bill and relating to the efforts made to get extension of time for realisation of proceeds including institution of suit against M/s.Avia Exports, Ulanski, Moscow in the High court of Judicature at Mumbai by the company, as also supported by its authorised dealer.
3.After the investigation, adjudication proceedings are initiated against the Managing Director and its company for violation of Sections 18(2) and 18(3) of Foreign Exchange Regulation Act 1973 for their failure to take any steps to seek extension of time from RBI and to take reasonable steps for the payment of exported and sold goods. The accused are issued due notice and are given due opportunity to place their case and thereafter, adjudication proceedings is completed and final order was passed on merits on 29.3.2004 and the adjudication proceedings ended in favour of M/s.Kiran Overseas Limited by dropping further proceedings on the ground that all the possible efforts taken by the company and its authorised dealer, to recover the money and nothing remained to be done on their part. The order of the adjudicating authority is challenged by the Enforcement Directorate before the Appellate Tribunal.
4.Even during pendency of the adjudication proceedings, the Enforcement Directorate initiated criminal prosecution for the offence punishable under Section 56 of FERA 1973 and the same was taken on file as CC.No.445/2002 against M/s.Kiran Overseas Ltd and Ranjiv Batra arraying them as A1 and A2. As the adjudication order came to be passed pending criminal proceedings, A1 and A2 filed two separate applications in M.P.Nos.2507 and 2508/2004 for discharging them from the charges on the strength of the order passed by the adjudicating authority in dropping the charges against the noticees.
5.It is contended by the accused that as the criminal complaint is initiated on the same set of facts, which is already discussed and decided in favour of the accused in the adjudication proceedings, the criminal proceeding is without any legal basis and is unwarranted and unsustainable in law and continuation of the same, is only an empty formality. The same is seriously objected to by the complainant/ Enforcement Directorate on the ground that the order of the adjudicating officer dropping the charges levelled in the show cause notice is not a bar for launching prosecution against the accused and the adjudication proceedings and the prosecution proceedings are entirely different and distinct and the same cannot be treated as simultaneous and the innocence of the accused can be decided only after full-fledged trial. The trial court, by a common order dated 25.8.2005, found that the adjudication and criminal proceedings are both based on same set of facts, as such the decision taken by the adjudicating authority on merits in dropping further proceedings renders the criminal proceedings based on no other material, to be unsustainable. Hence, the present criminal revisions by the Enforcement Directorate before this court.
6.Heard the rival submissions made on both sides.
7.The facts that the first accused company had export dealing with the foreign company and part of the sale proceeds was alone recovered and huge balance remains to be recovered and the application filed by the company seeking extension of time to RBI is pending consideration by RBI and the company has also filed a civil suit at Bombay High court against the foreign buyer for recovery of the amount due to the company and the adjudication proceedings initiated by the department under Section 50 for violation of Sections 18(2) and 18(3) of FERA ended in favour of the company by dropping the charges laid against the company and the correctness of the order is pending decision before the Appellate Board at the instance of the Enforcement Directorate and the Enforcement Directorate has also simultaneously initiated criminal proceedings against the company and the Managing Director for the alleged commission of the offences for violation of Sections 18(2) and 18(3) of FERA 1973 for its failure to get extension of time from RBI and for its failure to take all reasonable steps to recover the money from the foreign buyer, which is also the subject matter of the earlier adjudication proceedings under appeal before the appellate board, are not seriously denied.
8.The point that arises for consideration herein is as to whether, when the adjudication in the criminal proceedings are under the same set of facts, the order of the adjudicating authority dropping the proceedings against the noticee operates as an issue estoppel in the criminal case against those accused.
9.The Supreme Court as early as in 1962 in Shanti Prasad Jain v. Director of Enforcement arising out of old Act FERA 1947 (AIR 1962 SC 1764) answered in negative the question as to whether the prosecution in respect of any offence under the Act has to wait for the outcome of adjudication to be completed. It is observed by our Supreme Court that "the purpose of the Act is to bring the accused to book, more so in case of a serious offence and it could not have been the intention of the legislature to await a long time for an adjudication to be completed by way of an appeal and a second appeal and then only to commence the prosecution".
10.The Constitution Bench of our Hon'ble Apex court has in the judgment reported in AIR 1970 SC 962 (The Assistant Collector of Customs, Bombay and another v. L.R.Melwani and another), following the earliest judgments cited below, laid down the principle that the proceedings before the adjudicating authority was not a "prosecution" and the adjudicating authority cannot be construed as "Court" and "the issue estoppel rule is a facet of the doctrine of autre fois acquit. But before an accused can call into aid the above rule, he must establish that in a previous lawful trial before the competent court, he has secured a verdict of acquittal, which verdict is binding on his prosecutor... The proceedings before the Collector of Customs, is not a "prosecution", and the decision of the Collector does not amount to a verdict of acquittal in favour of the accused". In order to get the benefit of Section 403 Cr.P.C or Article 20(2), it is necessary for an accused person to establish that he had been tried by a "Court of competent jurisdiction" for an offence and he is, after lawful trial, convicted or acquitted of that offence and the said conviction or acquittal is in force and he is, for the same offence or on the same facts for any other offence, not liable to be tried again.... viz., (i) 1950 AC 458 (Sambasivan v. Public Prosecutor, Federation of Malaya (ii) AIR 1953 SC 325 (Maqbool Hussain v. State of Bombay) (iii) AIR 1956 SC 415 (V 43) (Pritam Singh v. State of Punjab) (iv) AIR 1959 SC 375 (V 46) (Thomas Dana v. State of Punjab) and (v) AIR 1960 SC 239 (V 47) (N.R.Ghosh v. State of West Bengal).
11.The next judgment of the Supreme Court, which dealt with this aspect in detail is 2006 (4) SCC 278 (Standard Chartered Bank and others v. Directorate of Enforcement and others), wherein, the notices were issued under the Foreign Exchange Regulation Act, 1973 (hereinafter referred to as 'FERA') for showing cause as to why adjudication proceedings for imposition of penalty under Sections 50 and 51 of FERA be not initiated against the appellant Bank. The bank filed Writ petition challenging the relevant sections of FERA as unconstitutional being violative of Articles 14 and 21 of the Constitution and for prohibition restraining the authorities under FERA from proceeding with the proposed adjudication and the proposed prosecution, in terms of the Act. The civil appeals arising out of the writ petition came up before two judges bench of the Hon'ble Supreme Court and the same was referred to three judges bench and three judges bench of the Hon'ble Supreme Court referred the same to the Constitution Bench. The Constitution Bench decided among other issues, the issue relating to the nature of the proceedings under Sections 50 and 51 of FERA Act and answered in negative the contentions raised on the side of the appellants. The appellants therein advanced the following contentions that on the scheme of the Act, it was incumbent on the Directorate of Enforcement to first adjudicate in terms of Section 51 of FERA and only if satisfied, proceed with the prosecution under Section 56 of the Act and under the scheme of FERA, the adjudication proceedings must first be commenced and only after they are completed, the Directorate of Enforcement can, in the light of the findings in the adjudication for penalty, decide to initiate a prosecution and seek to impose or not to impose further punishment under Section 56 of the Act and it is only the adjudication proceedings which would give an idea to the authorities under the Act as to the gravity of the violation and the opportunity to decide whether the contravention deserved also a punishment by way of prosecution and they would decide whether the penalty imposed under Section 50 of the Act is adequate or not. If in the adjudication proceedings it is found that the alleged offender has not infringed any of the provisions of the Act, there will be no occasion for the Directorate of Enforcement to prosecute the person concerned. It would then be incongruous and unreasonable for the Directorate of Enforcement to prosecute a person for violating FERA, when in the adjudication proceedings against him, it had been found that the person had not violated any of the provisions of FERA. The Scheme of FERA should be understood as indicating that there should first be an adjudication and thereafter, if the Directorate of Enforcement feels that the penalty is inadequate, to consider the launching of a prosecution. The contention so raised on the side of the appellants is negatived by the Supreme Court and the Hon'ble Supreme Court has in the discussion held at para 20 onwards of its judgment referred to the following judgments. (i) (1984) 3 ECC 319 (Mad) (A.S.G.Jothimani Nadar v. Dy. Director, Enforcement Directorate (ii)2003 Cri LJ 2197 (AP) (Anilkumar Aggarwal v. K.C.Basu (iii) AIR 1984 SC 1693 (P.Jayappan v. S.K.Perumal) (iv) (2004) 2 SCC 731 (K.C.Builders v. CIT) (arising out of Income Tax Act), (v) AIR 1970 SC 962 (Assistant Collector of customs v. L.R.Melwani).
12.The Supreme Court has by drawing the support from the earlier judgments referred to above, laid down that there is no reason to restrict the scope of any of the provisions of the Act, especially in the context of the presence of without prejudice clause in Section 56 of the Act dealing with offences and prosecutions.... It is laid down by Apex Court that the Act subserves a twin purpose. One to ensure that no economic loss is caused by the alleged contravention by the imposition of an appropriate penalty after an adjudication under Section 51 of the Act and two, to ensure that the tendency to violate is curbed by imposing an appropriate punishment after a due prosecution in terms of Section 56 of the Act and the provisions of the Act should be interpreted to hold that an adjudication has to precede a prosecution cannot be accepted as there is nothing in the provisions of the Act justifying such a construction. On the scheme of the Act, the two proceedings are seen to be independent and the launching of the one or the other or both is seen to be controlled by the respective provisions themselves.
13.The Supreme Court has also observed that Section 23-D of FERA 1947 had a proviso, which indicated that the adjudication for the imposition of penalty should precede the making of a complaint in writing to the court concerned for prosecuting the offender. It is further observed by the Supreme Court that "the absence of a similar proviso to Section 56 or to Section 51 of the present Act (1973), is also a clear indication that the legislature intended to treat the two proceedings as independent of each other. The Supreme court upheld the view of the Calcultta High Court in the judgement challenged before the same, that a complaint under Section 56 of FERA can never be said to be premature, if it is instituted before the awarding of penalty, under section 50 of the Act, and such criminal proceedings being an independent proceeding can be initiated during the pendency of an adjudication under section 51 of FERA 1973. The Supreme Court has in this context, pointed out the reference made by the full bench decision of the Madras High Court in A.S.G.Jothimani Nadar v. Dy. Director, Enforcement Directorate (1984) 3 ECC 319 (Mad) and that of the Andhra Pradesh High court in Anilkumar Aggarwal v. K.C.Basu (2003 Cri LJ 2197) (AP) and AIR 1984 SC 1693 P.Jayappan v. S.K.Perumal) which also taken the same view. It is ultimately concluded by the Supreme Court "there is no justification in accepting the argument that unless an adjudication proceeding under Section 51 of the Act is completed, a prosecution under Section 56 of FERA cannot be initiated. Both proceedings can simultaneously be launched and can simultaneously be pursued... There is nothing in the Act to indicate that a finding in an adjudication is binding on the Court in a prosecution under Section 56 of the Act. There is no indication that the prosecution depends upon the result of the adjudication. The finding in one is not conclusive in the other to automatically absolve the liability of the accused.
14.The Delhi High court has also had an occasion to consider this issue in its judgment reported in 2007 (1) JCC 220 (Sunil Gulati v. R.K.Vohra) and 2010 (256) ELT 27 (Del.) (Medisphere Marketing Ltd. v. Inspector Customs Preventive). The Delhi High Court in para 24 of its judgment reported in 2007 (1) JCC 220 (Sunil Gulati v. R.K.Vohra) referred to the earlier judgments of the Apex court in the cases of (1999 (108) ELT 16 (SC)) G.L.Didwania and another v. Income Tax Officer and another and (1982 (2) SCC 543) Uttam Chand v. Income Tax Officer, Central circle, Amritsar, taking a different view that when there is categorical finding exonerating the person by the Tribunal /departmental proceedings which are conclusive, prosecution cannot sustain. The Delhi High court also pointed out that though the decision of the Apex court in the cases of Assistant Collector of Customs v. L.R.Malwani and Santram Paper Mills v. Collector of Central Excise appears to be in conflict in expressing two views, there is no such conflict and these judgments deal with different situations.
15.The same view is also expressed by the Delhi High court in the judgment reported in 2010 (256) ELT 27 (Del) (cited supra) wherein, the Delhi High Court has distinguished the circumstances under which the Supreme Court laid down the observation in the judgment reported in 2006(4) SCC 278 (Standard Chartered Bank and others v. DRI) to the effect that the finding in adjudication proceedings are not to be viewed as binding and conclusive on the criminal proceedings. The two different circumstances under which the observation of the Supreme Court in Standard chartered bank case and Uttam Chand and PS Rajya v. State of Bihar (1996) 9 SCC 1 stand distinguished, are discussed in paras 10 and 11 of its judgement reported in 2010 (256) ELT 25 (Del.) (cited supra), which read as follows:
"10. In the first place it requires to be noticed that this Court in Sunil Gulati noted that the central issue in Standard Chartered Bank was whether criminal proceedings could be launched simultaneous with departmental proceedings and that question was answered in the affirmative. The question whether, after the criminal proceedings were launched simultaneously, the exoneration in the adjudication proceedings would impact the pending criminal proceedings was not answered directly in Standard Chartered Bank but in the earlier judgments of the Supreme Court including Uttam Chand.
11. This Court views the observations Standard Chartered Bank to the effect that the finding in adjudication proceedings are not to be viewed as binding and conclusive on the criminal proceedings, while not overruling the earlier judgments Uttam Chand and PS Rajya v. State of Bihar (1996) 9 SCC 1, as meaning this: if the Department is able to show the total exoneration, there is some other independent evidence, not considered in the adjudication proceedings, on the basis of which the conviction could be obtained in the criminal court, then and only then can it be said that the findings of the departmental/adjudication proceedings will not bind the criminal court. If there is no other independent evidence and on the very same material which forms the basis of the prosecution there has been an exoneration in the departmental proceedings, which has attained finality, then it will be futile to keep the criminal proceedings on the same material pending in the criminal courts."
16.The principles laid down by the Supreme Court in various other judgments and the applicability of the same for different circumstances as distinguished by the Delhi High court came up for discussion by our High court, while disposing of batch of criminal revisions in Crl.R.C.Nos.811 to 813 of 2005 in the Assistant Director, Enforcement Directorate, Chennai v. T.T.V.Dinakaran, wherein, the learned brother judge after detailed discussion, expressed his view in para 14 of the order as follows:
"14. This Court is of the view that the above observation of the Honourable Supreme Court does not preclude the jurisdiction of the criminal court taking into consideration the reasons given by the adjudicating authority while exonerating the accused person from the charges. As far as Section 56 of the FERA, 1973, is concerned, it commences with the words "Without prejudice to any award of penalty by the adjudicating officer......................" From the words 'award of penalty' it must be understood that the object is to prevent any contention that if a person is penalised by imposing penalty by an adjudicating officer, he should not be penalised once again by criminal court amounting to 'double jeopardy'. Therefore, even while no penalty is awarded the section 56 did not mean that the prosecution must proceed on any account. This Court is of the firm view that the Honourable Supreme Court would not have meant while rendering the Judgment in the Standard Chartered Bank cited supra, that even if the accused person is exonerated by the adjudicating authority, under any circumstance the criminal prosecution should not be quashed."
17.The learned brother judge has fully agreed with the view taken by the Delhi High court in its decision reported in 2010 (256) ELT 27 (Del.). The learned brother judge has also by applying the views of the Supreme Court in various cases dealing with different situation, culled out the principles at para 22 which reads as follows:
"22. In the appeal, if the order of the adjudication proceedings is set aside, then it is open to the complainant to proceed against the accused and it would not amount to autrefois acquit as per Section 300 Cr.P.C which reads as follows:
"300. Person once convicted or acquitted not to be tried for same offence.
(1) A person who has once been tried by a court of competent jurisdiction for an offence and convicted or acquitted of such offence shall, while such conviction or acquittal remains in force, not be liable to be tried again for the same offence, nor on the same facts for any other offence for which a different charge from the one made against him might have been made under sub-section (1) of section 221, or for which he might have been convicted under subsection (2) thereof.
(2) A person acquitted or convicted of any offence afterwards tried with the consent of ore State Government for any distinct offence for which a separate charges have been made against him at the former trial under sub-section (1) of section 220.
(3) A person convicted of any offence constituted by any act causing consequences which, together with such act, constituted a different offence from that of which he was convicted, may be afterwards tried for such last-mentioned offence, if the consequences had not happened or were not known to the court to have happened, at the time when he was convicted.
(4) A person acquitted or convicted of any offence constituted by any acts may, notwithstanding such acquittal or conviction be subsequently charged with, and tried for, any other offence constituted by the same acts which he may have committed if the Court by which he was first tried was not competent to try the offence with which he is subsequently charged.
(5) A person discharged under section 258 shall not be tried again for the same offence except with the consent of the court by which he was discharged or of any other court to which the first-mentioned court is subordinate.
(6) Nothing in this section shall affect the provisions of section 26 of the General Clauses Act, 1897 (10 of 1897) or of section 188 of this Code.
Explanation. The dismissal of a complaint, or the discharge of the accused, is not an acquittal for the purposes of this section.
18.This Court fully agrees with the views expressed by the Delhi High Court and Our High court in the batch of criminal revisions. The Supreme Court does not lay down any principle which takes away the jurisdiction of this court in considering the outcome, on merits, of the adjudication proceedings exonerating the accused person from the charges, in considering whether under given situation, criminal proceedings laid down against the accused can be allowed to go on. The Supreme Court has no where in Standard Chartered Bank case mentioned that despite the finding of the adjudicating authority in exonerating the accused, the criminal prosecution launched against the accused is bound to proceed. The Supreme Court has no where decided against the right available to the accused to seek discharge under the relevant provisions of Criminal Procedure Code and the jurisdiction of the Court concerned to consider the same on merits having regard to the standard of proof sought to be made available to the prosecution.
19.The present case in hand has to be viewed in the light of the legal basis as referred to above and in the light of the factual matrix involved herein. If so, the same would lead to an irresistable conclusion that as both the adjudication proceedings and criminal prosecution deal with the same violation and as the foundation for the prosecution has no further material in support of the criminal prosecution, exoneration of the accused in adjudication proceedings is binding on the criminal prosecution and the very foundation for the prosecution itself disappeared and the quashing of the prosecution has to be necessarily followed.
20.In this case, the company and its Managing Director are originally charged for the violation of Sections 18(2) and 18(3) of the Act for failure of the company to obtain extension of time for recovery of the amount and failure to take all reasonable steps for recovery of the amount. The fact that the application of extension of time is duly filed by the company through its authorised dealer and the same is pending consideration before RBI, is not denied. The company has also taken all reasonable steps to recover the amount through other legal means and the suit is filed at High court, Mumbai. Thus, the company and its authorised officer has to the knowledge of the department taken all care and reasonable legal steps on their part and nothing remains to be done on their part and RBI has to consider the application for extension of time and the High court, Mumbai has to dispose of the suit on merits. Under such circumstances, the adjudicating authority has, after considering all the relevant facts and circumstances, found in para 44 at page 19 of its order as follows:
"44.Having regard to the facts on record and the findings hereinbefore, I find that, all considered, the charges against M/s.Kiran Overseas Ltd and its Directors in SCN-I get blunted and lose their sting in the background of the adequacy of the steps taken for recovery of the outstanding proceeds. The evidence brought on record appears to indicate that efforts put in were all that could have been possibly done in the circumstances especially when the authorised dealer itself had also admittedly made best efforts with the buyers but, however failed to succeed. Viewed in this perspective, the charges in SCN do not survive. As the charges against the noticee company are not sustained, the charges against noticee directors also get obliterated."
21.The adjudicating authority has by finding so, exonerated the company from the same charges for which the criminal prosecution is launched. The order of the adjudicating authority is the very foundation for seeking discharge of the accused in the criminal prosecution. As rightly argued by the learned counsel for the respondent/accused, it is not the case of the Enforcement Directorate that the adjudication proceedings is decided on technical point or without considering any other material factor, which is sought to be put forth during criminal trial. It is also not the case of the complainant that availability of any fresh material, after disposal of the adjudication proceedings, is brought to the notice of the complainant and in the event of the same being produced, it is likely to tilt the balance of the verdict against the accused herein. Only in this context, the principles laid down by the our Apex Court in the judgments reported in 1999 (108) ELT 16 (SC) (G.L.Didwania v. Income Tax Officer) and 1982 (2) SCC 543 (Uttam Chand v. Income Tax Officer) relied upon by the Delhi High court and our High court to the effect that "when the firm is not found to be guilty in the adjudication proceedings, the prosecution proceedings cannot be allowed to be sustained", has to be applied in full force. It is also to be remembered herein that the Constitution Bench of the Honb'le Apex Court in Standard Chartered Bank case neither referred to nor overruled the above referred earlier judgments of the Supreme Court.
22.The present case is the one which falls under the category of cases involving different situation similar to that of the situation dealt with in the earlier judgment of the Hon'ble Apex court, Delhi High court and our High court. In this context, the learned counsel for the revision petitioner has sought to question the correctness of the order of the learned Magistrate on different context that the order of the adjudicating authority, having been challenged in appeal and having become final and conclusive, cannot be called for in aid of the defence raised by the accused. This contention is also discussed by the learned brother judge in the batch of criminal revisions cited supra. The learned brother judge has in identical circumstances in paras 10 and 22 of his unreported decision observed that "there is no reason or ground to keep the criminal prosecution till the adjudication proceeding is completed by way of appeal and second appeal and in the event of the order of the adjudicating authority is being reversed in the appeal, it is open to the prosecution to proceed against the accused afresh and there is no bar under section 300 Cr.P.C for the prosecution and the same person with the consent of the court discharged or by any other court to which the first mentioned court is subordinate, may be tried again for the same offence for which, he was discharged under Section 258 Cr.P.C. and it would not amount to autrefois acquit as per section 300 Cr.P.C. as explanation II to Section 300 Cr.P.C is very clear that dismissal of the complaint or discharge of the accused, is not an acquittal for the purposes of Section 300 Cr.P.C." That being the legal and factual situation involved herein, this Court applying the same view, does not find any infirmity or illegality in the order passed by the Magistrate in discharging the accused for the present.
23.In the result, both the criminal revisions are dismissed with liberty given to the petitioner/complainant to initiate fresh proceedings against the respondents subject to the final outcome of the adjudicating proceedings.
rk To
1.The Additional Chief Metropolitan Magistrate, E.O.I, Egmore, Chennai