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2. Messrs. Parle (Exports) Pvt. Ltd. ('Parle') of Andheri, (West), Bombay, were negotiating with Messrs. Union Beverages at Sharjah and Messrs. Mohd. Nazel Al-Sayer & Sons, Kuwait, and Messrs. Dhofar Beverages Co., Salalah, for export of their concentrates with a view to enabling the foreign collaborators bottle and sell their products in Kuwait and Sharjah. As Parle had to face razor-sharp competition from other entrenched international giants like Pepsi Cola, 7-UP, Canada Dry, etc., the collaborators advised Parle to follow the practice of the international companies in honing a blitz advertising campaign as a sale promotion strategy. Earlier, the Reserve Bank of India had permitted Parle to send publicity material free of cost to the tune of Rs. 3.33 lacs but Parle discovered to their dismay that the product cannot capture market unless it is backed by high profile and expensive publicity drive. The publicity material sent earlier proved to be extremely inadequate and Parle on 1-2-1977 wrote to Reserve Bank of India requesting them to release foreign exchange of 25% of the F.O.B. value of the product viz., concentrate supplied for preparation and exhibition of publicity material like film for cinema and T.V. - huge neon signs - radio jingle in local language - automatic vending machines - audio visual aids - transparencies printed on plastic etc. to be manufactured in foreign countries. Parle assured the bank that the foreign exchange remittance would be decreased progressively to 15% and 10% in the succeeding and subsequent years.

3. On 21st March, 1977, the Reserve Bank of India sought clarifications from Parle on various points including whether Parle are entitled to a share in the profits of the foreign associates or whether the profit is confined to those realised on exports only. Parle replied on 22nd March 1977, giving the break-up of the sale of concentrates advertising expenses etc., and made it clear that they are not entitled to share in the profits of any foreign associates. As regards the technical know-how, Parle clarified that they do not get any reimbursement for the same because it is an international business practice for companies supplying concentrates to render technical assistance to the bottling plants as and when such service is needed. Simultaneously, on 3rd June 1977, the Dy. Controller of Reserve Bank of India wrote to the Joint Controller of the Exchange Control Department recommending release of foreign exchange for advertising purpose. He also stipulated that Parle should forego the cash incentives in full but this condition was later-on withdrawn. The letter ends with the observation :-

5. The Joint Controller was asked to advice the Company to apply for approval of Government under Section 27 of the Act, which was accordingly done by the company. The matter stood there.

6. Messrs. Parle (Exports) Pvt. Ltd., Mr. Ramesh J. Chauhan and Mr. H. M. Golwala, two Directors of Parle, are being prosecuted before the Additional Chief Metropolitan Magistrate, 8th Court, Esplanade, Bombay, for having committed offence under Section 27(1) read with Section 56 of the Act. An application was made by the accused persons under Section 245(2) of the Criminal Procedure Code for their discharge which application having been dismissed by the Additional Chief Metropolitan Magistrate, 8th Court, Esplanade, Bombay, the accused have preferred the present Criminal Writ Petition.