Delhi District Court
Cbi vs . M/S Cross & Ors. on 10 November, 2010
IN THE COURT OF SH. SANJAY BANSAL ADDITIONAL CHIEF METROPOLITAN MAGISTRATE-02 (NORTH) DELHI Case No. 260/2 Unique Case ID No. : 02401R0000911987 CBI Vs. M/s CROSS & Ors. RC No. : 1/87- CIU (E) I PS : CBI U/s. 23 of the Foreign Contribution (Regulation) Act, 1976 Date of institution: 18.08.1987 Judgment Reserved on: 25.10.2010 Date of Judgment: 10.11.2010 JUDGMENT
a) Serial No. of the case 02401R0000911987
b) Date of commission of In the year 1985
the offence
c) Name of the Sh. K.E. B. Rangarajan
complainant
d) Name of the accused 1. M/s. Comprehensive Rural Operations person, and his Service Society (CROSS), Plot No.6, parentage and address 7, 8, Medipally, Uppal Mandan, Hyderabad
2. Sh. M. Kurian S/o Sh. Mathai Kurian R/o 1-69, Snehapuri Nacharam, Hyderabad RC No.1/87-CIU (E) I CBI v. M/s CROSS etc. Page 1 of 13
3. Dr. L.V. Aziraiah, President, M/s. CROSS, C.S.I. Rayalseema Diocese, Caddapah-516001
4. Mrs. Vijayam, Vice President, M/s. CROSS, Prakash Nilayam, 12-13-623 Nagarjuna Nagar, Hyderabad
5. Mr. G.B. Thomas, Treasurer, M/s. CROSS, A.S.W. Consultant YMCA, Tarnaka, Hyderabad (already expired)
6. Sh. M.V. Sastri, Secretary, M/s. CROSS, A.S.W. Consultant YMCA, Tarnaka, Hyderabad
7. Sh. N.N. Chary, Joint Secretary, M/s. CROSS, 1-102, Srinagar, Colony, Nacharam, Hyderabad
e) Offence complained U/s. 23 of the Foreign Contribution or proved (Regulation) Act, 1976
f) Plea of the accused Not guilty claimed trial
g) The final order Accused M/s CROSS and M. Kurian are convicted; other accused are acquitted
h) Date of such order 10/11/2010 BRIEF STATEMENT OF THE REASONS FOR THE DECISION OF THE CASE:
1. In the present case chargesheet has been filed by the CBI after conducting the investigations. The allegations are that there is a society known as M/s Comprehensive Rural Operations Service Society (M/s CROSS). It is a registered society. There is a Governing Body/ Executive RC No.1/87-CIU (E) I CBI v. M/s CROSS etc. Page 2 of 13 Body which is responsible for conducting the affairs of the society. Through an Ordinance issued by the President of India, the Foreign Contribution Regulation (Amendment) Act, 1985 came into force from 01.01.1985 amending the Foreign Contribution (Regulation) Act, 1976 (for short "the Act"). Now, w.e.f said date as per Section 6(1) (a) of the said Act, an association could not accept foreign contribution unless it was registered with the Central Government in accordance with the rules made under said Act. The Foreign Contribution (Regulation) Rules, 1976 (for short "the Rules") were also enacted. M/s CROSS applied to the Government of India for registration on 27.11.1984. As per provisions of the said Act, M/s CROSS also intimated bank account number in which foreign contributions were to be received. This bank account number was SB-288 in State Bank of India, Main Branch, Bank Street, Hyderabad.
2. One M/s Hilfsweric Der Evangelischen Kirchen Der Schneiz (M/s HEKS) is a Foreign Agency of the Federation of Protestant Churches in Switzerland. M/s HEKS gave contribution of Rs. 3.65 lacs to M/s CROSS vide two Demand Drafts i.e. one for Rs. 2 Lacs dt. 1.1.85 and another for Rs.
1.65 Lacs dt. 26.6.85. An agreement was also executed between M/s HEKS and M/s CROSS to finance a project "Polycraft Training Centre".
3. It is alleged that M/s CROSS instead of depositing the Demand Drafts in the bank account which was declared in the application to the Government of India, deposited the said Demand Drafts in some other bank account i.e. 6605, Canara Bank, M.G. Road, Secunderabad on 7.1.85 and 26.6.85 respectively. Thus the accused contravened the provision of Section RC No.1/87-CIU (E) I CBI v. M/s CROSS etc. Page 3 of 13 6 (1)(b) of the said Act which is punishable U/s 23 of the said Act. After obtaining sanction from the Central Government, prosecution was lodged against M/s CROSS, Sh. M. Kurian, Dr. L.V. Azaraiah, Mrs. Vijayam, Sh. G.B. Thomas, Sh. M.V. Sastri and Sh. N.N. Chary.
4. All the accused were summoned, Section 207 Cr.PC was complied with. During pendency of the case, accused G.B. Thomas expired. Charge was framed against all the remaining accused on 19.05.03 for the offence punishable U/s 23 of the said Act. All the accused pleaded not guilty and claimed trial. The accused society pleaded through accused M. Kurian.
5. To prove its case, CBI examined as many as 10 witnesses. These are PW1 Sh. N.R. Kini, PW2 Sh. G.Jayraman, PW3 Sh. R.N.Nayak, PW4 Ms. Sarojini Samraj, PW5 Sh. K.E.B Rangarajan, PW6 Sh. Arun Kumar, PW7 Sh. N.Ramaraju, PW8 Sh. K. Aepherf, PW9 Sh. P. Stanislaous and PW10 Sh. Harbans Singh.
6. Statements of all the accused were recorded. They did not lead any defence evidence. However, certified copy of judgments of Hon'ble High Court of Andhra Pradesh was placed on record.
7. I have heard Ms. Shashi Vishwakarma Ld. APP for the CBI, Sh. Devraj, Ld. Counsel for all the accused. I have perused the record.
8. PW1 is from Canara Bank, Hyderabad. He deposed about handing over four Demand Drafts to the IO. The receipt memo is Ex.PW1/A. The demand drafts were cleared vide Ex.PW1/B to Ex.PW1/E.
9. PW2 is from State Bank of India. He deposed about handing over documents to the IO vide receipt Ex.PW2/1. He identified signatures of RC No.1/87-CIU (E) I CBI v. M/s CROSS etc. Page 4 of 13 G.B. Thomas, Treasurer and accused M. Kurian, Director on Ex.PW2/B which is the specimen signature card. He also deposed about deposit slips of various cheques/drafts. Account No. 288 was opened in the branch of the State Bank of India.
10. PW3 is also from Canara Bank, but M.G.Road Branch, Secunderabad, A.P. He deposed about operation of A/c No. 6605 in the said bank by accused society. He produced record regarding deposit of two demand drafts of Rs. 2 Lacs and 1.65 Lacs in the said account.
11. PW4 deposed that she was the Secretary of M/s CROSS for one year. At that time Mr. G.B. Thomas was President and accused Mr. M. Kurian was the Executive Director. She identified signatures of accused M. Kurian on a letter dated 14.04.1987 which is Ex.PW3/1 and letter dated 07.04.87 which is Ex.PW3/2. She also identified signatures of accused M. Kurian on account opening form of Account No. 288 as well as 6605. Similarly, she identified signatures of M. Kurian on various other documents also. In cross-examination she stated that she was never a member of M/s CROSS but was only the Secretary.
12. PW5 deposed that he was Assistant Director, FCRA, from May,1984 to April, 1988. He had scrutinized the accounts of the accused society in this case. He deposed that M/s CROSS filed an application for registration form (FC-8) which is Ex.PW2/H. He deposed that in the application SB Account No. 288 was given. He deposed that the application of M/s CROSS was allowed and it was registered. He deposed further that vide letter Ex.PW2/J, the accused society submitted form FC-3 which is RC No.1/87-CIU (E) I CBI v. M/s CROSS etc. Page 5 of 13 Ex.PW2/K for the period ending 30.06.85. Further, vide letter Ex. PW2/L, the accused society submitted FC-3 Form Ex. PW2/M & N for the period ending January to June 1985. He scrutinized the accounts and gave detailed report which is Ex.PX-8 in RC No. 1/87. He also conducted inspection after authorisation and gave further report which is Ex. PX-10. Nothing has come out in cross-examination.
13. PW6 was posted as Joint Secretary, Govt. of India on 28.04.88. He had given the sanction order which is Ex.PW6/A. In cross-examination he denied the suggestion that he had not applied his mind in granting sanction.
14. PW7 is the Chartered Accountant. He had audited the accounts of M/s CROSS. He had prepared the balance sheet Ex.PW2/R. He identified signatures of accused M. Kurian on various documents.
15. PW8 deposed that he was working with M/s CROSS since 1976. He stated that there were different office bearers at different times. He deposed that Mr. M. Kurian, Mr. Stephen, Dr. Mrs. B. Vijayam, Mr. M.V. Shashtri and Mr. N.N. Chari were office bearers. This witness was declared hostile. In cross-examination by the CBI he admitted that he had forwarded FC-3 form to the Govt. of India vide letter dated 31.07.86. In cross-examination by the accused he stated that there is no post of Director Executive.
16. PW9 had also joined M/s CROSS in 1975 as Secretary to Executive Director, M. Kurian. In 1979, he became Field Officer . From May, 1986 to June-July 1987 he worked at Acting Director of the society. He also identified signatures of accused M. Kurian on various documents. He was also cross-examined. But nothing substantial has come out in the cross- RC No.1/87-CIU (E) I CBI v. M/s CROSS etc. Page 6 of 13 examination.
17. PW10 is the Investigating Officer. He deposed about investigation.
18. Statements of all the accused were recorded. None of the accused led any defence evidence.
19. Accused M. Kurian admitted having worked with M/s CROSS but stated that the demand drafts were deposited in the bank account of Canara Bank because there were instructions to this effect on the demand drafts itself.
20. Accused M.V. Shastri stated that he was not involved in receiving foreign inward remittances. He was not involved in opening of the bank account or any other work. He stated that he has been falsely implicated.
21. Accused Mrs. Vijayam also stated that she had never operated the bank account.
22. To the same effect is statement of accused N.N. Charry.
23. Accused L.V.Aziraiah also took the stand that he was not responsible for operation of the bank account.
24. Ld. APP for CBI argued that the prosecution has proved its case beyond all reasonable doubts. Ld. APP referred to various documents and submits that from these documents commission of the offence has been proved. On the other hand Ld. Counsels for the accused argued that firstly, no offence has been committed even if all the allegations are assumed as correct. Secondly, they argued that there is no evidence that only the accused who are being prosecuted were the only office bearers. They argued that vicarious liabilities has not been proved satisfactorily. RC No.1/87-CIU (E) I CBI v. M/s CROSS etc. Page 7 of 13
25. At the outset, it may be mentioned herein that there is no dispute, keeping in mind the documents and statements of the accused persons, that there is a society known as M/s CROSS; that this society submitted application to the Government for registration for the purpose of obtaining foreign contributions; that account no. 288 of SBI was intimated as the account in which foreign contributions were to be received; that demand draft of Rs.2 Lacs and 1.65 Lacs were received from M/s HEKS; that these demand drafts were deposited in Account No. 6605 of Canara Bank; and that receipt of this amount from M/s HEKS and its deposit in the bank account of Canara Bank was intimated to the Government through FC-3 forms (Ex. PW2/K and L). All these facts were admitted by Ld. Counsels for the accused during arguments as well. These admissions are also reflected in the statements of the accused u/s 313 Cr.P.C.
26. Ld. APP for CBI argued that though the society had intimated about receipt of the sum of Rs. 3.65 Lacs in the FC-3 form but still this does not absolve it from the offence. She submitted that receipt of foreign contribution in an account different from that which was declared in the application will be violation of Section 6 (1) (b) of the Act and it will be an offence punishable U/s 23 of the Act. Per contra, Ld. Counsels for the accused referred to the proviso to Section 6 (1) and urged that receiving the foreign contribution in another account will not be an offence.
27. To appreciate the contentions, it will be relevant to refer to the text of Section 6 (1) and the proviso as well as Section 23 of the Act. These provisions read as under:
"6. Certain association and persons receiving foreign contribution to give RC No.1/87-CIU (E) I CBI v. M/s CROSS etc. Page 8 of 13 intimation to the Central Government.-- (1) "No association [other than an organisation referred to in sub-section(1) of section 5] having a definite cultural, economical, educational, religious or social programme shall accept foreign contribution unless such association---
(a) registers itself with the Central Government in accordance with the rules made under this Act; and
(b) Agrees to receive such foreign contributions only through such one of the branches of a bank as it may specify in its application for such registration, and every association so registered shall give, within such time and in such manner as may be prescribed, an intimation to the Central Government as to the amount of each foreign contribution received by it, the source from which and the manner in which such foreign contribution was received and the purposes for which and the manner in which such foreign contribution was utilised by it:
Provided that where such association obtains any foreign contribution through any branch other than the branch of the bank through which it has agreed to receive foreign contribution or fails to give such intimation within the prescribed time or in the prescribed manner, or gives any intimation which is false, the Central Government may, by notification in the Official Gazette, direct that such association shall not, after the date of issue of such notification, accept any foreign contribution without the prior permission of the Central Government.
(1A) XXX.
(2) XXX.
23. Punishment for the contravention of any provision of the Act.-- (1) Whoever accepts or assists any person, political party or organisation in accepting, any foreign contribution or any currency from a foreign source, in contravention of any provision of this Act or any rule made thereunder, shall be punished with imprisonment for a term which may extend to five years, or with both.
(2) Whoever accepts any foreign hospitality in contravention of any provision of this Act or any rule made thereunder shall be punished with imprisonment for a term which may extend to three years, or with both."
28. After perusing the above provisions, at the first look, it appears that there is force in the contention of Ld. Counsels for the accused. However, on close scrutiny it will be revealed that the contention is misconceived. On the judicial file there are judgments of Hon'ble Delhi High court and Hon'ble Supreme Court from which it appears that the accused had approached Hon'ble Delhi High Court for quashing the present proceedings by taking shelter of the said proviso. Vide judgment dated 27.09.1999, Hon'ble Delhi RC No.1/87-CIU (E) I CBI v. M/s CROSS etc. Page 9 of 13 High Court had quashed the present proceedings relying upon the proviso to Section 6 (1) of the Act. It held that receiving foreign contribution in a different bank account was not an offence. However, this order of the Hon'ble High Court was set aside by Hon'ble Supreme Court vide judgment dated 26.03.01. Hon'ble Supreme Court had held that receipt of foreign contribution in a different account than that which was declared in the application will be a contravention of the provisions of the Act and will be an offence punishable U/s 23 of the Act. It observed that very purpose of the Act and the Rules would be frustrated if the interpretation of the High Court is accepted. The judgment of Hon'ble Supreme Court leaves no room for any doubt about this issue. The inescapable conclusion is that receipt of the foreign contribution in a different account will be an offence, whatsoever may be the explanation for the same.
29. Coming back to the facts, it is not in dispute that Rs. 3.65 Lacs were received by accused no. 1 society in a different bank account from that which was declared. As such accused no. 1 society has certainly committed the offence. Ld. Counsel for the accused referred to judgments of Hon'ble A.P. High Court. By these judgments, the Hon'ble High Court has quashed the proceedings against the accused society and also the show-cause notices against them. These judgments do not help the accused society at all. The issues in those cases were entirely different. Criminal liability was not decided there. Even otherwise, after the judgment of Hon'ble Apex Court, there is no scope for taking a different view on this aspect. Ld. Counsels also argued that on the DD itself there were instructions to deposit the same RC No.1/87-CIU (E) I CBI v. M/s CROSS etc. Page 10 of 13 in the account of Canara Bank. Thus the society had no option but to deposit the same in that account. No criminal liability can be fastened on the society on this account. This submission seems attractive but does not carry any weight. If there were instructions on the DD itself to the contrary, the society should have returned the same and got it corrected. Or it could have obtained prior permission from the Central Govt. to accept the same. The society cannot escape liability on this ground. Therefore, accused society is held guilty. The question which remains to be answered is whether the other accused persons are also liable within the parameters of S. 26 of the Act or not?
30. Ld. Counsels for the accused argued that there is no cogent evidence that the other accused persons were responsible for day to day affairs of the accused no. 1 society. For accused M. Kurian, it was argued that he was not the only person responsible for conduct of the business of the society. On the other hand Ld. APP for CBI argued that prosecution has proved the involvement of the other accused in the commission of the offence. Ld. APP referred to various documents showing that accused M. Kurian alongwith others was responsible for the conduct of business of the society.
31. There are several documents such as account opening forms etc. which bear signature of accused M. Kurian. These documents clearly show and prove that accused M. Kurian was responsible for the conduct of the business of the society. Keeping in view the provisions of Section 26 of the Act, it is held that accused M. Kurian was in charge of, and was responsible to the society for conduct of its business. And, therefore, he is liable. Ld. RC No.1/87-CIU (E) I CBI v. M/s CROSS etc. Page 11 of 13 Counsel for the accused argued that other office bearers have not been prosecuted by CBI and thus only M. Kurian cannot be held guilty. This contention is to be rejected since failure of the prosecution to prosecute some other persons does not absolve accused M. Kurian. Even otherwise, sanction was only for prosecuting the present accused persons. Ld. Counsel argued that there was no post of 'Executive Director' as admitted by the prosecution witnesses also and, therefore, accused M. Kurian cannot be held responsible. This contention also cannot be accepted. Mere designation is of no significance. Whether there was such a post or not is internal matter of the society. The prosecution cannot be thwarted against accused M. Kurian on this ground. It is apparent that he was actively involved in the activities of the society. Therefore, accused M. Kurian is held guilty.
32. Ld. Counsel for the accused argued that the amount received by the society from M/s HEKS was not "foreign contribution" within the meaning of the Act. This contention is also without any merits. The accused themselves have shown this amount in the FC3 Form and included it as "foreign contribution". Thus now they cannot be heard to say that it is not foreign contribution.
33. As far as other accused are concerned, it may be pointed out that the only factor by which they have been arrayed as accused is the fact of theirs being the office bearers of the accused society. By being office bearers alone, they cannot be held guilty. It was required of the prosecution to prove that these remaining accused were in charge of, and responsible to the society for conduct of its business; or that they were negligent or had RC No.1/87-CIU (E) I CBI v. M/s CROSS etc. Page 12 of 13 connived with the other accused. But the evidence on record is not sufficient to prove this. Ld. APP referred to the FC3 Forms where names of important office bearers are mentioned and these include names of these accused persons. Merely mentioning names in such a Form would not make them criminally liable. Some overt act on their part had to be shown by the prosecution which it has failed to show. Thus as far as accused namely Dr. L.V. Azaraiah, Mrs. Vijayam, Mr. M.V.Sastri and Mr. N.N. Charry are concerned, they are entitled for acquittal.
34. In the conclusion, it is held that accused society i.e. M/s CROSS and accused M. Kurian are held guilty and convicted for the offence punishable u/s 23 of the Foreign Contribution (Regulation) Act, 1976. The remaining accused i.e. Dr. L.V. Azaraiah, Mrs. Vijayam, Mr. M.V.Sastri and Mr. N.N. Charry are hereby acquitted.
35. Let the convicted accused be heard on sentence.
Announced in Open Court (SANJAY BANSAL)
today on 10th of November, 2011 Additional Chief Metropolitan
Magistrate-02/North/Delhi
RC No.1/87-CIU (E) I CBI v. M/s CROSS etc. Page 13 of 13