Madras High Court
A.I. Shamsudeen Etc. vs Special Director, Enforcement, ... on 16 March, 1994
Author: Pratap Singh
Bench: Pratap Singh
ORDER
1. The accused in E.O.C.C. Nos. 312, 317, 380, 320, 296, 270, 319, 288, 339, 342, 366, 335, 314, 353, 306, 283, 275, 491, 316, 381 and 494 of 1993 on the file of Additional Cheif Metropolitan Magistrate, Egmore, Madras have filed these petitions under section 482, Cr.P.C. praying to call for the records in the above cases and quash the same.
2. In E.O.C.C. 312, 93, the respondent has filed the complaint against the petitioner in Crl. O.P. No. 9755 of 1993, for offence under Section 57 of the Foreign Exchange Regulation Act, 1973 (which I shall hereinafter refer to as 'FERA'). The allegations in the complaint are briefly as follows :
The Special Director of Enforcement initiated adjudication proceedings against the accused for contravention of certain sections of the FERA and by his order dated 28-10-1989, imposed a total penalty of Rs. 2,50,000/- to the accused and directed the accused to deposit the penalty imposed, within 45 days of the date of receipt of the said order, at the Office of the Enforcement Directorate, Madras. The said order was served on the accused. In spite of repeated notices, the accused had not paid the penalty of Rs. 2,50,000/-. Failure to pay the penalty, imposed by the Special Director of Enforcement, within 45 days from the date of receipt of the order is an offence punishable under Section 57 of FERA. Hence the complaint.
3. In E.O.C.C. 317/93, the respondents have filed the complaint against the petitioner in Crl. O.P. No. 9756, for offence under Section 57 of the FERA on similar allegations, with regard to the penalty of Rs. 50,000/- imposed by the Special Director of Enforcement, in his order dated 23-10-1989. In E.O.C.C. 380/93, the respondents have filed the complaint against the petitioner in Crl. O.P. 9902/93, for offence under section 57 of the FERA in respect of the penalty of Rs. 4 lakhs imposed on 12-3-1991, on similar allegations. Likewise, in E.O.C.C. Nos. 320/93, 296/93, 270/93 and 319/93, the respondents in the concerned Crl. O.Ps. have filed the complaint against the petitioners for offence under section 57 of the FERA, on similar allegations, with regard to the penalty of Rs. 8,50,000/- Rs. 5 lakhs, Rs. 2 lakhs and Rs. 4 lakhs respectively. Likewise, in E.O.C.C. Nos. 288, 274, 339, 149, 366, 335 and 314 of 1993, the respondents in the concerned Crl. O.P. have filed the complaints against the petitioners for offence under section 57 of the FERA, on similar allegations, with regard to the penalty of Rs. 50,000/-, Rs. 50,000/-, Rs. 70,000/-, Rs. 1 lakh, Rs. 5 lakhs, Rs. 1,25,000/- and Rs. 1,80,000/- respectively. Likewise, in E.O.C.C. 353, 306, 283, 275, 491, 316 and 494 of 1993, the respondent in the concerned Crl. O.Ps. have filed complaints against the petitioners for offence under section 57 of the FERA, on similar allegations with regard to the penalty of Rs. 5 lakhs, Rs. 1 lakh, Rs. 50,000/-, Rs. 1 lakh, Rs. 10,05,000/-, Rs. 2,02,500/-, Rs. 1 lakhs and Rs. 1 lakh respectively.
4. The first submission made by the learned counsel appearing for the petitions is that these complaints were filed for offence under Section 57 of FERA, on the allegations that accused have not paid the penalties imposed in the adjudication orders for contravention of the previous of FERA, within the stipulated time and that the accused have filed appeals against those adjudication orders before the Appellate Board that the said appeals are pending. The learned counsels would add that if those appeals were allowed and the adjudication orders, imposing penalties were set aside, the premises on which these complaints were laid would be no longer there and so the filing of the complaints is premature and that the respondent/complainants ought to have waited till the disposal of those appeals and the complaints, at this stage, which are premature, are liable to be quashed. With regard to this submission, Mr. P. Rajamanickam the learned Special Public Prosecutor for the respondents, would submit that no stay of operation of adjudication orders are passed by the Appellate Board and so the respondents/complainants need not wait indefinitely till the disposal of the appeals. He would add that the submission that these complaints are premature, cannot be sustained.
5. I have carefully considered the first submission made by the learned counsels for the petitioners and Mr. P. Rajamanickam. In Crl. O.P. 8836/91, My learned brother Justice Arunachalam had occasion to consider a similar submission. In that case also, the complaint was filed for offence under section 57 of the FERA, 1973, for having failed to pay the penalty imposed by the Special Director, Enforcement, within 45 days of the receipt of the said order. The first submission made before the learned Judge was that against the order imposing penalty passed by the Special Director, Enforcement, the petitioner had preferred a statutory appeal with an application for stay, it is still pending disposal before the Foreign Exchange Regulation Appellate Board, New Delhi and no orders have been passed. Therefore, till the appeal is disposed of or an order is passed in the application for stay, the impugned prosecution cannot be held to be valid in the eye of law. The learned Judge had held that on this ground, the petitioner succeed and it has to be necessarily rejected. In Swamy, R. K. Managing Director etc. v. The Assistant Director, Enforcement Directorate etc., (1993) Mad LW (Crl) 407), while dismissing a similar petition to quash a prosecution, initiated against the petitioner therein under Section 57 of FERA, the same learned Judge has stated as follows :-
"........ S. 57 of the Act punished persons, who fail to pay the penalty within 45 days prescribed for payment of the penalty imposed, by the adjudicating authority. The offence is complete on non-payment within that period of 45 days. It may be that in certain cases hardship may be caused to the accused. But the law laid down by the Supreme Court in P. Jayppan v. S. K. Perumal is that", a mere expectation of success in some proceeding in appeal or reference under the Act cannot come in the way of the institution of the criminal proceedings. The learned counsel sought to distinguish the said decision, since it related to re-assessment proceedings under the Income-tax Act wherein certain offences under the Indian Penal Code were also involved. On a question of principle, I am unable to hold differently. Further S. Natarajan, J. as he then was, in Crl. M.P. 2288 of 1980 (A. S. G. Jothimani Nadar v. Deputy Director, Enforcement Directorate, Madras) had held, that under the Foreign Exchange Regulation Act, it was obvious that a criminal prosecution was an independent proceeding; not dependent upon the validity of the order of adjudication, nor was it a continuation of that adjudication proceeding. The courts cannot legitimate and have to interpret only the law as found in the statue. ....... The remedy, if any, for the petitioner to have the prosecutions not initiated, till the disposal of the statutory appeals will be at the doors of the legislature and not before this Court."
With respect, I am in total agreement with the view of Justice Arunachalam.
6. In T. R. Balasubramaniam v. Assistant Director, Enforcement Directorate, Madras (Crl. MP 1277 of 1974), Justice S. Natrajan (as he then was) had considered the quashing of the complaint filed in C.C. 2892/74, on the file of Chief Metropolitan Magistrate, Egmore, Madras, with regard to the penalty of Rs. 5 lakhs. In that case, the appeal against the order of penalty lies to the Appellate Board, but as a condition precedent, the entire penalty must be deposited unless the Appellate Board relaxes the condition and minimises the amount of deposit. Availaing the discretion granted to the Appellate Board the petitioner moved the Appellate Board, and obtained permission to furnish bank gurantee to the extent of Rs. 1 lakh for his appeal being entertained by the Board. Subsequently, the Board dismissed the appeal and against the dismissal, the petitioner has preferred A.S. 413/75 to the High Court and has also obtained an order of stay of collection proceedings in respect of penalty amount. In the meanwhile, the Assistant Director has filed the complaint before the Chief Metropolitan Magistrate, Egmore, Madras under section 23F of the FERA. The learned Judge had held that though, under the Act, there is no provision which directly prohibits the filing of a complaint during the pendency of a proceeding before the Appellate Board or the High Court, if the complaint under section 23F is allowed to be proceeded with during the pendency of the appeal proceedings, then anomelous results in certain cases are likely to follow. The learned Judge has held that to avoid such a ludicrous situation, the proper course to be followed by the authorities is to await the result of the proceedings before the Appellate Board or the High Court. This is a case where stay has been granted. Such is not the case in these petitions.
7. In Plasticraft Industries v. Assistant Collector of Central Excise (1991 (52) ELT 168 (Mad), the prosecution was under Central Excise Act. In it, Justice Arunachalam has observed as follows :
"The Supreme Court in catena of decision has held that the pendency of an appeal before the appellate authorities against adjudication proceedings would not be a bar for the Criminal Proceedings to be proceeded within, since the criminal Court will have to decide the issues arising out of the criminal proceedings on the evidence let in before the Criminal Court independently. However, the observations of the Supreme Court in P. Jayappan v. S. K. Perumal, may be of some significance. The apex Court, while dealing with the pendency of the reassessment proceedings under the Income-tax Act, held that such proceedings cannot act as a bar to the institution of the criminal prosecution for offences, under the Income-tax Act and Indian Penal Code. The Institution of Criminal Proceedings cannot in such circumstances amount to an abuse of the process of Court. However, it may be that in an appropriate case, the Criminal Court may adjourn or postpone the hearing of a criminal case in exercise of its discretionary power under Section 309 of the Criminal Procedure Code, if the disposal of any proceeding under the Act which has a bearing on the proceedings before it is imminent so that it may take also into consideration the order to be passed therein. Even here the discretion should be exercised judicially and in such a way as not to frustrate the object of the Criminal Proceedings. There is no rigid which makes it necessary for a criminal Court to adjourn or postpone the the hearing of a case before it indefinitely or for an unduly long period, only because some proceedings which may have some bearing on it is pending elsewhere. On this aspect the learned counsel for the petitioners brought to my notice the judgment of the Gujarat High Court in Digvijay Cement Co. v. State of Gujarat, 1989 (22) ECR 638) (Gujarat) wherein S. S. Kapadia, J. held that when the matter was pending before the Tribunal and the possibility of allowing the appeal could not be ruled out, the petitioner cannot be said to have committed any offence and it was in the interest of justice, stay of criminal proceedings, could be ordered, till the hearing of the appeal pending before the Tribunal. Since I have quoted the view of the Supreme Court relating to exercise of such power in appropriate cases, as a general rule, the view of the Gujarat High Court cannot be accepted."
8. In A. R. Antulay v. R. S. Nayak, , it was held that deprivation of one statutory right of appeal would amount to denial of procedure established by law. In the instant case, the question that falls for consideration is whether because an appeal was filed to the Appellate Board, the consequence of nonpayment of penalty imposed in the adjudication order should be stopped till the disposal of the appeal. The question here is not deprivation of any right of appeal. In view of the settled law that filing of an appeal by itself would not stay the consequence of the original order, with which proposition alone we are now concerned, the above ruling is not germane to the point in issue in these batch of cases.
9. It was further contended that the proceedings culminating in the adjudication order is in the nature of civil proceeding and that statutory appeal is provided to the Appellate Board and the adjudication order gets merged in the Appellate Board's order and so when the appeal is pending, the criminal proceedings cannot be initiated for non-payment of the penalty imposed in the adjudication order under section 57 of the FERA, 1973. There cannot be any dispute with regard to the principle that original order gets merged with the order of the Appellate Board. But that does not mean that till the order of the Appellate Board is pronounced, the consequences of the original authority should get automatically stopped. So I am unable to accept either this submission. In Mohd. Hussain v. Dy. Suptd. Customs, and in M. R. Pratap v. Director of Enforcement (1969 Cri LJ 1582), it has been held that Section 23(1)(a) or 23D of the FERA are not criminal proceedings by virtue of Section 23F or 23D(1) proviso and they remain as civil proceedings.
10. In Balaji Oil Traders v. I.T.O. (1984) 150 ITR 128) : (1984 Tax LR 1186), complaint was filed for offence under section 276C and 277 of the Income-tax Act, 1961. The acts of the assessee that would constitute and offence under Section 276C and 277 of the Act arise only when he does or omits to do something in the discharge of his statutory obligation. Whether he evaded payment of tax, interest or penalty chargeable under the Act as provided under section 276C or made a false statement on verification etc., as provided under section 277 of the Act are required to be first ascertained on an examination of all the facts and circumstances of the case by the concerned I.T.O. It was held that if the appellate or revisional authority modifies the order of the subordinate authority holding that the acts or omission complained of either had not taken place or were not wilful the complainant cannot pursue his complaint on the strength of the facts earlier placed, which, in the altered situation, do not at all exist. It was further held that during the pendency of the appellate or revisional proceedings, to continue the prosecution in the criminal court would amount to prosecuting on uncertain facts which cannot be countenanced and that in such a case, the prosecution proceedings are liable to be quashed. With respect, in view of the consistent view of this Court, with which I agree, I do not apply the ratio of this case to the case on hand.
11. The next submission made by the learned counsels appearing for the petitions was that the court of Additional Chief Metropolitan Magistrate at Madras has got no jurisdiction to try these case in as much as the accused are in Kerala State and the orders of adjudication were not passed in Madras. This contention was rightly repelled by Mr. P. Rajamanickam by pointing out that in all these orders of adjudication, they were directed to pay the penalty amount at Madras and the failure to pay that amount gives the cause of action for filing of these complaints and so the learned Additional Chief Metropolitan Magistrate, Madras has got jurisdiction to try these cases. The sine qua non for the offence is non-payment of the penalty amount. They are bound to pay the penalty amount at Madras. As such, the court at Madras has got the jurisdiction to try these cases. Hence this submission also fails.
12. Since none of the submissions made by the learned counsels finds acceptance with me, these petitions fail and shall stand dismissed.
13. Petition dismissed.