Allahabad High Court
A.H. Sons Com. & Others vs Asstt. Director & Others on 31 January, 2018
Author: Amar Singh Chauhan
Bench: Amar Singh Chauhan
HIGH COURT OF JUDICATURE AT ALLAHABAD AFR RESERVED Court No. - 20 Case :- CRIMINAL REVISION No. - 1138 of 1990 Revisionist :- A.H. Sons Com. & Others Opposite Party :- Asstt. Director & Others Counsel for Revisionist :- Atul Misra,Atul Mehra Counsel for Opposite Party :- A.G.A.,B.K.Raghuvanshi,S.S.Tewari Hon'ble Amar Singh Chauhan,J.
Heard Sri Atul Mehra, learned counsel for the revisionists, learned AGA for the State and Sri B.K. Raghuvanshi, learned counsel, appeared on behalf of Union of India.
The revisionists, M/s A.H. Sons Company and three others, have preferred this criminal revision against the order dated 27.2.1990 passed by Special Chief Judicial Magistrate, Allahabad in Case No. 40 of 1986 (Union of India vs. A.H. Sons and others) under section 56 of Foreign Exchange Regulation Act, 1973, (hereinafter referred to as the 'FERRA Act') District Varanasi whereby the discharge application was rejected and framed the charges under section 56 of the Act.
Brief facts which give rise to this revision are that the complaint was filed under section 56 of the FERRA Act with the allegation that accused no. 1 is the partnership firm having accused nos. 2 to 4 and Sri Ashfaq Hussain since deceased as its partners having their registered office at Post Box No. 143, Bhadohi - 221401, District Varanasi and as partners were incharge of and were responsible to the said firm for this conduct of business as well as the firm at the relevant time in terms of Section 68 of the FERRA Act. The accused firm and its partners are manufacturers and exporters of Indian handmade carpets and rugs to different countries outside India. During the year 1979-80, the accused persons exported handmade Woolen Carpets to various overseas countries through four invoices amounting to Rs. 4,58,996.20 under G.R.I. form and the accused persons did not repatriate this mentioned export proceeds of Rs. 4,58,996.20 in prescribed manner nor did they obtain any extension of time for repatriating these export proceeds from the Reserve Bank of India. The aforesaid payment having not been received by the accused persons within the prescribed time limit of six months from the date of shipments. Therefore, show cause notice was issued to the accused persons by the Special Director, Enforcement Directorate, New Delhi to show cause why adjudication proceedings should not be held against each of them for the contravention of the provisions of Section 18(2) read with 18(3) of the FERRA Act with Central Government Notification No.. F-1/67/EC/73-1 dated 01.01.1974. In the course of adjudication proceedings so held by the Special director of Enforcement, New Delhi, it was observed that the export proceeds in respect of the GRI form nos. CAD-733246 and CAD-733271 had been fully realized by the accused persons. As regards the other GRI forms, it was observed that the accused persons had realised part proceeds amounting to Rs. 13,960.57 in respect of balance two G.R.I. forms having a balance of Rs. 1,97,472.24 which is still to be realized by the accused persons through proper banking channel. The accused persons could not submit any documentary evidence to show that they actually made any effort to realise this outstanding balance of Rs. 1,97,472.24. The full export proceeds having not been realised by the accused persons within the prescribed time limit, the matter was considered by the Special Director of Enforcement, New Delhi and under his Adjudication Order No. SDE(M)/III/14/83 dated 10.6.1983 and imposed a penalty of Rs. 1,50,000/- on the accused no. 1 and Rs. 10,000/- on each of the accused persons nos. 2 to 4 and Shri Ashfaq Husain since deceased. Against the adjudication the appeal was filed in which penalty amount was reduced by the Appellat Board to the tune of Rs. 1,20,000/- on the accused no. 1 and to the tune of Rs. 7500/- to the accused person Nos. 2 to 4. The accused persons have made themselves liable for prosecution for contravention of Provision of FERA Act. All the accused persons were asked to submit reply but no reply was received from them.
After recording the statement under Section 244 Cr.P.C. charges were framed. The revisionists moved an application under section 245(2) Cr.P.C. for discharge on the ground that late Ashfaq Hussain was only responsible and in charge of the business of the firm relating to export for which offence has been committed by the firm. The revisionists were sleeping partners not knowing anything about the business of the firm and, therefore, not responsible for the conduct of the business of the firm and, therefore, revisionists were not in charge and responsible for the conduct of the business of the firm as such they are not guilty for violation of the provision of Section 18(2) and 18(3) of the FERRA Act and as such they may be discharged. The application was rejected by impugned order.
Feeling aggrieved the revisionists came up before this court in revision.
It is submitted by learned counsel for the revisionists that it is settled preposition of law that by merely saying in the complaint that all the partners were responsible and in-charge for the conduct of the business of the firm is not sufficient it should be proved by the complainant by cogent evidence that all the partners were responsible and in-charge for the conduct of the business of the firm but the complainant has failed to prove the same except against late Ashfaq Hussain. He was the only partner handling the export business of the firm and he has died in the year 1985. From the aforesaid facts it is evidently clear that late Ashfaq Hussain was only responsible and in charge of the business of the firm relating to exports for which the offence has been committed by the firm. It is relevant to state here that the departmental proceedings under section 51 of the Act are civil in nature whereby certain penalty was imposed upon the firm as well as the applicants-revisionists and which was subsequently reduced in appeal under section 52 of the FERRA Act and the same cannot be equated with criminal proceedings because the criminal proceedings are not vicarious in nature that is to say that no one can be punished for criminal offence committed by some other person. From the aforesaid facts, it is apparent that the applicants/revisionists have no mens rea in violating the provision of the Act as the balance amount of the sale proceeds could not be repatriated due to the reasons beyond the control of the applicants-revisionists. It is further submitted that finding of the adjudication proceeding cannot be relied upon in criminal complaint filed by the Department.
The revisionists placed reliance on a case law of Sham Sundar and others vs. State of Haryana, AIR 1989 Supreme Court 1982 wherein the Hon'ble Supreme Court held as under:
"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 firm. There may be ladies and minors who were admitted for the benefits of partnership. They may not know 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) of S. 10 that the offence was committed without their knowledge. The obligation for the accused to prove 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 (1) 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. Thus where the documents produced by the prosecution do not indicate even remotely that all the partners were doing the business of the firm and there was no other evidence on record on this aspect, it could not be said that when the offence was committed all the partners were conducting the business of the firm. Therefore, they would not be liable for conviction."
Revisionists also relied upon a case law in Ajoy Kumar Ghose vs. State of Jharkhand and another, 2009 Legal Eagle (SC) 422, the Hon'ble Apex Court in paragraphs 13 and 14 of the judgement held as under:
"The essential difference of procedure in the trial of warrant case on the basis of a police report and that instituted otherwise than on the police report, is particularly marked in Sections 238 and 239 Cr.P.C. on one side and Sections 244 and 245 Cr.P.C., on the other. Under Section 238, when in a warrant case, instituted on a police report, the accused appears or is brought before the Magistrate, the Magistrate has to satisfy himself that he has been supplied the necessary documents like police report, FIR, statements recorded under sub-Section (3) of Section 161 Cr.P.C. of all the witnesses proposed to be examined by the prosecution, as also the confessions and statements recorded under Section 164 and any other documents, which have been forwarded by the prosecuting agency to the Court. After that, comes the stage of discharge, for which it is provided in Section 239 Cr.P.C. that the Magistrate has to consider the police report and the documents sent with it under Section 173 Cr.P.C. and if necessary, has to examine the accused and has to hear the prosecution of the accused, and if on such examination and hearing, the Magistrate considers the charge to be groundless, he would discharge the accused and record his reasons for so doing. The prosecution at that stage is not required to lead evidence. If, on examination of aforementioned documents, he comes to the prima facie conclusion that there is a ground for proceeding with the trial, he proceeds to frame the charge. For framing the charge, he does not have to pass a separate order. It is then that the charge is framed under Section 240 Cr.P.C. and the trial proceeds for recording the evidence. Thus, in such trial prosecution has only one opportunity to lead evidence and that too comes only after the charge is framed.
However, in a warrant trial instituted otherwise than on a police report, when the accused appears or is brought before the Magistrate under Section 244(1) Cr.P.C., the Magistrate has to hear the prosecution and take all such evidence, as may be produced in support of the prosecution. In this, the Magistrate may issue summons to the witnesses also under Section 244(2) Cr.P.C. on the application by prosecution. All this evidence is evidence before charge. It is after all this, evidence is taken, then the Magistrate has to consider under Section 245(1) Cr.P.C., whether any case against the accused is made out, which, if unrebutted, would warrant his conviction, and if the Magistrate comes to the conclusion that there is no such case made out against the accused, the Magistrate proceeds to discharge him. On the other hand, if he is satisfied about the prima facie case against the accused, the Magistrate would frame a charge under Section 246(1) Cr.P.C. The complainant then gets the second opportunity to lead evidence in support of the charge unlike a warrant trial on police report, where there is only one opportunity. In the warrant trial instituted otherwise than the police report, the complainant gets two opportunities to lead evidence, firstly, before the charge is framed and secondly, after the charge. Of course, under Section 245(2) Cr.P.C., a Magistrate can discharge the accused at any previous stage of the case, if he finds the charge to be groundless".
Per contra learned counsel for the CBI contends that adjudication proceedings were concluded in the year 1983 and applicants are not eligible to get any relief from this Hon'ble Court. All the departmental, adjudication and court proceedings were held as per law but the export proceeds could not be realized within the prescribed time limit of RBI which constitutes the offence under sections 18(2) and 18(3) of FERA Act, 1973.
Before adverting to the claim of the parties, it is necessary to quote the Section 68 of the FERA Act which is reproduced as below:
Offences by companies.-- (1) Where a person committing a contravention of any of the provisions of this Act or of any rule, direction or order made thereunder is a company, every person who, at the time of the contravention was committed, was in charge of, and was responsible to, the company for the conduct of business of the company as well as the company, shall be deemed to be guilty of the contravention and shall be liable to be proceeded against and punished accordingly:
Provided that nothing contained in this sub-section shall render any such person liable to punishment if he proves that the contravention took place without his knowledge or that he exercised all due diligence to prevent such contravention.
(2) Notwithstanding anything contained in sub-section (1), where a contravention of any of the provisions of this Act or of any rule, direction or order made thereunder has been committed by a company and it is proved that the contravention has taken place with the consent or connivance of, or is attributable to any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of the contravention and shall be liable to be proceeded against and punished accordingly. Explanation.--For the purposes of this section--
(i)"company" means any body corporate and includes a firm or other association of individuals; and
(ii)"director", in relation to a firm, means a partner in the firm.
In the instant case, the main ground of the revisionists is that they were sleeping partners and not knowing about the business of the firm. Late Ashfaq Hussain was only responsible. The question whether the revisionists are responsible for any offence as alleged is to be decided during trial and the complaint ought not to be dismissed at the threshold on the purported ground that there was no evidence to satisfy their allegations in the complaint. The applicants/revisionists no. 2 to 4 were responsible and in charge of the business of the firm relating to the export for which the offence has been committed by the firm. At the time of framing the charges, the responsibility on the shoulder of the Judge that right of the complainant also to be taken care as also that of the accused.
Hon'ble Apex Court in the case of Onkar Nath Mishra and others vs. State (NCT of Delhi) and another, (2008) 2 SCC 561, held as under:
"It is trite that at the stage of framing of charge the court is required to evaluate the material and documents on record with a view to finding out if the facts emerging therefrom, taken at their face value, disclosed the existence of all the ingredients constituting the alleged offence. At that stage the court is not expected to go deep into the probative value of the material on record. What needs to be considered is whether there is a ground for presuming that the offence has been committed and not a ground for convicting the accused has been made out. At that stage, even strong suspicion founded on material which leads the court to form a presumptive opinion as to the existence of the factual ingredients constituting the offence alleged would justify the framing of charge against the accused in respect of the commission of that offence."
Again, the Hon'ble Supreme Court in the case of Sajjan Kumar Vs. Central Bureau of Investigation, (2010) 9 SCC, held in paragraph 24 of the judgment as under:
"At the stage of framing of charge under section 228 Cr.P.C. or while considering the discharge petition filed under Section 227, it is not for the Magistrate or the Judge concerned to analyze all the materials including pros and cons, reliability or acceptability, etc. It is at the trial, the Judge concerned has to appreciate their evidentiary value, credibility or otherwise of the statement, veracity of various documents and is free to take a decision one way or the other."
In view of what has been discussed above, the impugned order passed passed by Special Chief Judicial Magistrate, Allahabad in Case No. 40 of 1986 (Union of India vs. A.H. Sons and others) District Varanasi is justified and does not suffer from any illegality or perversity.
Accordingly, the revision is dismissed.
Interim order, if any, stands vacated.
There is no order for cost.
Office to communicate this order to the court concerned.
Order Date :- 31.1.2018 Puspendra