In our opinion, the appeal is required to be
dismissed for more than one reason. The fact that the
adjudicating officer chose to drop the proceedings
against the appellant herein does not absolve the
appellant of the criminal liability incurred by him by
virtue of the operation of Section 40 read with Section
56 of the Act. The offence under Section 56 read with
Section 40 of the Act is an independent offence. If the
factual allegations contained in the charge are to be
proved eventually at the trial of the criminal case, the
appellant is still liable for the punishment
notwithstanding the fact that the presence of the
appellant was required by the adjudicating officer in
connection with an enquiry into certain alleged
violations of the various provisions of the Act, but at a
subsequent stage the adjudicating officer opined that
there was either insufficient or no material to proceed
against the appellant for the alleged violations of the
Act, is immaterial. The observations made by this
Court in Roshanlal Agarwal (supra), in our opinion,
must be confined to the facts of that case because this
Court recorded such a conclusion “having regard to
the material existing against the respondent and the
reasons and findings given in the aforesaid
orders…..”. The said case cannot be read as laying
down a general statement of law that the prosecution
of the accused, who is alleged to be guilty of an
offence of not responding to the summons issued by a
lawful authority for the purpose of either an inquiry or
investigation into another substantive offence, would
not be justified. Exonerating such an accused, who
successfully evades the process of law and thereby
commits an independent offence on the ground that
he is found to be not guilty of the substantive offence
would be destructive of law and order, apart from
being against public interest. Such an exposition of
law would only encourage unscrupulous elements in
the society to defy the authority conferred upon the
public servants to enforce the law with impunity. It is
also possible, in certain cases that the time gained by
such evasive tactics adopted by a person summoned
itself would result in the destruction of the material
which might otherwise constitute valuable evidence
for establishing the commission of a substantive
offence by such a recalcitrant accused.
Secondly, an appeal against the conclusion of the
adjudicating officer that the proceedings against the
appellant herein for the alleged violation of the various
provisions of the FERA Act are required to be dropped
has not even attained finality. Admittedly, such an
order of the adjudicating officer confirmed by the
statutory appellate authority is pending consideration
in an appeal before the High Court. Though, in our
opinion, the result of such an appeal is immaterial for
determining the culpability of the appellant for the
alleged violation of Section 40 read with Section 56,
we must record that the submission made on behalf of
the appellant in this regard itself is inherently
untenable.
For all the abovementioned reasons, we do not
see any merit in the appeal. We are also of the
opinion that the entire approach adopted by the
appellant is a sheer abuse of the process of law. Any
other view of the matter would only go to once again
establishing the notorious truth stated by Anatole
France that – “the law in its majestic equality, forbids
the rich as well as the poor to sleep under bridges, to
beg in the streets and to steal bread”.
The appeal is dismissed with exemplary costs
quantified at rupees ten lakhs to be paid to the
Supreme Court Legal Service Authority.
REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO.1406 OF 2009
VIJAY MALLYA …APPELLANT
VERSUS
ENFORCEMENT DIRECTORATE,
MIN. OF FINANCE ...RESPONDENT
Citation; JULY 13, 2015
Citation;(2015) 8 SCC799
1. This appeal has been preferred against judgment
and order dated 21st May, 2007 of the High Court of
Delhi at New Delhi in Criminal Revision Petition No.554
of 2001.
2. Brief facts necessary for decision of this appeal
are that the appellant was summoned by the Chief
Enforcement Officer, Enforcement Directorate, under
Section 40 of the Foreign Exchange Regulation Act,
1973 (“the Act”) with his passport and correspondencePage 2
Criminal Appeal No.1406 of 2009
relating to a transaction with Flavio Briatore of M/s.
Benetton Formula Ltd., London, to which the appellant,
as Chairman of United Breweries Ltd., was a party.
Allegation against the appellant was that he entered
into an agreement dated 1st December, 1995 with the
earlier mentioned English Company for advertisement
of ‘Kingfisher’ brand name on racing cars during
Formula-I World Championships for the years 1996,
1997 and 1998 providing for fee payable. Requisite
permission of the Reserve Bank of India was not taken
which was in violation of provisions of Sections 47(1) &
(2), 9(1)(c) and 8(1) of the Act. Approval was later
sought from Finance Ministry for payment on 19th
June, 1996, which was rejected on 4th February, 1999.
Since the appellant failed to appear in response to
summons issued more than once, a complaint dated
8
th March, 2000 under Section 56 of the Act was filed
before the Additional Chief Metropolitan Magistrate,
New Delhi. The trial court after considering the
material on record summoned the appellant and
2 Page 2 of 16Page 3
Criminal Appeal No.1406 of 2009
framed charge against him under Section 56 of the
Act.
3. The appellant challenged the order of the
Magistrate dated 9th August, 2001 in above
Criminal Complaint No.16/1 of 2000 and also
sought quashing of proceedings in the said complaint
before the High Court by filing Criminal Revision
Petition No.554 of 2001 on the ground that willful
default of the appellant could not have been inferred
and that there was non-application of mind in the
issuance of summons as well as in framing the charge
which was in violation of procedure laid down under
Section 219 of the Criminal Procedure Code. The
charge related to failure of the appellant to appear on
four occasions, i.e., 27th September, 1999, 8th
November,1999, 26th November, 1999 and 3rd January,
2000. In respect of first date, it was submitted that
the trial court itself accepted that the service of
summons was after the time for appearance indicated
in the summons. In respect of second and third dates,
the appellant had responded and informed about his
3 Page 3 of 16Page 4
Criminal Appeal No.1406 of 2009
inability to appear and for the last date, summons was
not as per procedure, i.e., by registered post. It was
submitted
that composite charge was against Section 219 of the
Criminal Procedure Code.
4. The High Court rejected the contentions by
holding that framing of composite charge could not be
treated to have caused prejudice so as to vitiate the
proceedings. It was further observed that default of
the appellant in relation to summons
dated 15th September, 1999 for attendance on 27th
September, 1999 could not be taken into account and
to that extent the charge was liable to be deleted but
with regard to the defaults in relation to summons
dated 7th October, 1989, 8th November, 2009
and 21st December, 1999, the proceedings were not
liable to be interfered with as the appellant could
contest the matter before the trial court itself in the
first instance.
5. We have heard Shri F.S. Nariman, learned senior
counsel for the appellant and Shri K. Radhakrishnan,
4 Page 4 of 16Page 5
Criminal Appeal No.1406 of 2009
learned senior counsel for
the respondent.
6. When the matter came up for hearing before this
Court earlier, a statement was made on behalf of the
appellant that the appellant expressed regret for not
responding to the summons on which learned senior
counsel for the respondent took time to ascertain
whether the complaint could be withdrawn.
Thereafter, it was stated that withdrawal of the
complaint may have impact on other matters and for
that reason withdrawal was not possible. However,
the question whether the non compliance was
deliberate was required to be examined. Learned
senior counsel for the appellant submitted that the
default was not deliberate, intentional or willful which
may be punishable under Section 56 of the Act and
the appellant had sent reply and sought a fresh date
on two occasions.
7. It was further submitted that subsequent events
which were not gone into by the High Court may also
be seen. The complaint was filed on 8th March, 2000.
5 Page 5 of 16Page 6
Criminal Appeal No.1406 of 2009
During pendency of the complaint, the Act (FERA) was
repealed on 1st June, 2000. Still, show cause notice
dated 13th March, 2001 was issued to which reply was
given and the adjudicating officer vide order dated
10th January, 2002 dropped the proceedings on merits.
The Appellate Board dismissed the Revision Petition
filed by the Department on 16th March, 2004. Against
the said order, Criminal Appeal No.515 of 2004 was
pending in the High Court.
8. It was submitted that having regard to repeal of
the Act and exoneration of the appellant by the
departmental authorities (even though an appeal was
pending in the High Court), this Court in the
circumstances of the case ought to quash
proceedings, following law laid down in Dy. Chief
Controller of Import and Export vs. Roshan Lal
Agarwal1 as follows :
“13. In view of the findings recorded by us,
the learned Magistrate has to proceed with
the trial of the accused-respondents. Shri
Ashok Desai, learned Senior Counsel has,
however, submitted that the Imports and
Exports (Control) Act, 1947 has since been
repealed and in the departmental
proceedings taken under the aforesaid Act,
1
(2003) 4 SCC 139
6 Page 6 of 16Page 7
Criminal Appeal No.1406 of 2009
the Central Government has passed orders
in favour of the respondents and, therefore,
their trial before the criminal court at this
stage would be an exercise in futility. He
has placed before us copies of the orders
passed by the Additional Director General of
Foreign Trade on 16-8-1993 and also by the
Appellate Committee Cell, Ministry of
Commerce, Government of India on
13-3-1997 by which the appeals preferred
by the respondents were allowed by the
Appellate Committee and the
accused-respondents were exonerated.
Having regard to the material existing
against the respondents and the reasons
and findings given in the aforesaid orders,
we are of the opinion that no useful purpose
would be served by the trial of the
accused-respondents in the criminal court
at this stage. The proceedings of the
criminal cases instituted against the
accused-respondents on the basis of the
complaints filed by the Deputy Chief
Controller of Imports and Exports are,
therefore, quashed”.
Alternatively, explanation of the appellant for non
appearance may be looked into on merits instead of
the same being left to the trial court.
9. Before we consider the submissions made, the
provisions of Section 40 and 56 of the Act may be
noticed which are as follows :
“Section 40 - Power to summon
persons to give evidence and produce
documents
(1) Any Gazetted Officer of
Enforcement shall have power to
summon any person whose attendance
he considers necessary either to give
evidence or to produce a document
7 Page 7 of 16Page 8
Criminal Appeal No.1406 of 2009
during the course of any investigation
or proceeding under this Act.
(2) A summon to produce documents
may be for the production of certain
specified documents or for the
production of all documents of a certain
description in the possession or under
the control of the person summoned.
(3) All persons so summoned shall be
bound to attend either in person or by
authorised agents, as such officer may
direct; and all persons so summoned
shall be bound to state the truth upon
any subject respecting which they are
examined or make statements and
produce such documents as may be
required:
Provided that the exemption under
section 132 of the Code of Civil
Procedure, 1908 (5 of 1908) shall be
applicable to any requisition for
attendance under this section.
(4) Every such investigation or
proceeding as aforesaid shall be
deemed to be a judicial proceeding
within the meaning of
sections 193 and 228 of the Indian
Penal Code, 1860 (45of 1860).
Section 56 - Offences and prosecutions
(1)Without prejudice to any award of
penalty by the adjudicating officer
under this Act, if any person
contravenes any of the provisions of
this Act [other than Section 13, Clause
(a) of sub-section(1) of (Section 18,
Section 18A), clause (a) of sub-section
(1) of Section 19, sub-section(2) of
Section 44 and Section 57 and 58] or of
any rule, direction or order made
thereunder, he shall, upon conviction
by a court, be punishable
(i) in the case of an offence the amount
or value involved in which exceeds one
lakh of rupees with imprisonment for a
term which shall not be less than six
months, but which may extend to
8 Page 8 of 16Page 9
Criminal Appeal No.1406 of 2009
seven years and with fine; Provided
that the Court may, for any adequate
and special reasons to be mentioned in
the judgment, impose a sentence of
imprisonment for a term of less than six
months;
(ii)in any other case, with imprisonment
for a term which may extend to three
years or with fine or with both.”
10. In Enforcement Directorate vs. M. Samba
Siva Rao2
, it was observed :
“3. xxxxxxxx
The Foreign Exchange Regulation Act, 1973
was enacted by Parliament, basically for the
conservation of the foreign exchange
resources of the country and the proper
utilisation thereof in the interest of
economic development of the country. The
Act having been enacted in the interest of
national economy, the provisions thereof
should be construed so as to make it
workable and the interpretation given
should be purposive and the provisions
should receive a fair construction without
doing any violence to the language
employed by the legislature. The provisions
of Section 40 itself, which confers power on
the officer of the Enforcement Directorate,
to summon any person whose attendance
he considers necessary during the course of
any investigation, makes it binding as
provided under sub-section (3) of Section
40, and the investigation or the proceeding
in the course of which such summons are
issued have been deemed to be a judicial
proceeding by virtue of sub-section (4) of
Section 40. These principles should be
borne in mind, while interpreting the
provisions of Section 40 and its effect, if a
person violates or disobeys the directions
issued under Section 40.”
2
(2000) 5 SCC 431
9 Page 9 of 16Page 10
Criminal Appeal No.1406 of 2009
11. The above observations clearly show that a
complaint is maintainable if there is default in not
carrying out summons lawfully issued. The averments
in the complaint show that the summons dated 21st
December, 1999 were refused by the appellant and
earlier summons were not carried out deliberately. The
averments in paras 3 and 4 of the complaint are as
follows :
“3. That the complainant issued a
summons dated 21.12.1999 under Section
40 of FERA, 1973 in connection with the
impending investigations for the
appearance of the accused on 3.1.2000 but
the same have been returned back by the
postal authorities with the remarks
“refused”.
It is submitted that the accused has
deliberately avoided his appearance before
the Investigating Officer and on account of
his non co-operative attitude the
investigation has come to a standstill.
4. It is respectfully submitted that the
accused has been intentionally avoiding his
appearance before the Enforcement
Directorate knowing fully well that non
compliance of the directions made under
Section 40 of the Act renders the person
liable for prosecution in a Court of law under
Section 56 of the Act which is a non-bailable
offence. It is further submitted that by
virtue of Section 40(3) of the Act, the
accused was bound to appear before the
Officers of the Enforcement Directorate in
the best interest of investigation. Section
40(3) is reproduced below for kind perusal
and ready reference to this Hon’ble Court :
“Section 40(3) :
10 Page 10 of 16Page 11
Criminal Appeal No.1406 of 2009
(3) All persons so summoned shall be
bound to attend either in person or by
authorised agents, as such officer may
direct; and all persons so summoned shall
be bound to state the truth upon any
subject respecting which they are examined
or make statements and produce such
documents as may be required.”
It is respectfully submitted that non
compliance of any rule, directions or law is
punishable under Section 56 of the Act. The
accused willfully failed to appear before the
Enforcement Directorate at the given
venue, time and dates mentioned in the
respective summons and has thus,
contravened the provisions of Section 56 of
the Act.”
12. As regards summons dated 8th November, 1999,
learned senior counsel for the appellant has referred
to the explanation offered by the appellant. Letter
dated 22nd November, 1999 is as follows :
“As you will appreciate, I am the Chairman
of several public Companies both in India as
well as in the USA and, therefore, my
schedule is finalized several months in
advance. During the fiscal year end period,
the problem only gets compounded.
I would, therefore, request you to excuse
me from the personal appearance on
November 26, 1999 as I will be out of India.
I am willing to fix a mutually convenient
date to appear before you.”
13. From the tenor of the letter, it appears that it was
not a case of mere seeking accommodation by the
appellant but requiring date to be fixed by his
convenience. Such stand by a person facing
11 Page 11 of 16Page 12
Criminal Appeal No.1406 of 2009
allegation of serious nature could hardly be
appreciated. Obviously, the enormous money power
makes him believe that the State should adjust its
affairs to suit his commercial convenience.
14. In our opinion, the appeal is required to be
dismissed for more than one reason. The fact that the
adjudicating officer chose to drop the proceedings
against the appellant herein does not absolve the
appellant of the criminal liability incurred by him by
virtue of the operation of Section 40 read with Section
56 of the Act. The offence under Section 56 read with
Section 40 of the Act is an independent offence. If the
factual allegations contained in the charge are to be
proved eventually at the trial of the criminal case, the
appellant is still liable for the punishment
notwithstanding the fact that the presence of the
appellant was required by the adjudicating officer in
connection with an enquiry into certain alleged
violations of the various provisions of the Act, but at a
subsequent stage the adjudicating officer opined that
there was either insufficient or no material to proceed
against the appellant for the alleged violations of the
Act, is immaterial. The observations made by this
Court in Roshanlal Agarwal (supra), in our opinion,
must be confined to the facts of that case because this
Court recorded such a conclusion “having regard to
the material existing against the respondent and the
reasons and findings given in the aforesaid
orders…..”. The said case cannot be read as laying
down a general statement of law that the prosecution
of the accused, who is alleged to be guilty of an
offence of not responding to the summons issued by a
lawful authority for the purpose of either an inquiry or
investigation into another substantive offence, would
not be justified. Exonerating such an accused, who
successfully evades the process of law and thereby
commits an independent offence on the ground that
he is found to be not guilty of the substantive offence
would be destructive of law and order, apart from
being against public interest. Such an exposition of
law would only encourage unscrupulous elements in
the society to defy the authority conferred upon the
public servants to enforce the law with impunity. It is
also possible, in certain cases that the time gained by
such evasive tactics adopted by a person summoned
itself would result in the destruction of the material
which might otherwise constitute valuable evidence
for establishing the commission of a substantive
offence by such a recalcitrant accused.
15. Secondly, an appeal against the conclusion of the
adjudicating officer that the proceedings against the
appellant herein for the alleged violation of the various
provisions of the FERA Act are required to be dropped
has not even attained finality. Admittedly, such an
order of the adjudicating officer confirmed by the
statutory appellate authority is pending consideration
in an appeal before the High Court. Though, in our
opinion, the result of such an appeal is immaterial for
determining the culpability of the appellant for the
alleged violation of Section 40 read with Section 56,
we must record that the submission made on behalf of
the appellant in this regard itself is inherently
untenable.
16. For all the abovementioned reasons, we do not
see any merit in the appeal. We are also of the
opinion that the entire approach adopted by the
appellant is a sheer abuse of the process of law. Any
other view of the matter would only go to once again
establishing the notorious truth stated by Anatole
France that – “the law in its majestic equality, forbids
the rich as well as the poor to sleep under bridges, to
beg in the streets and to steal bread”.
17. The appeal is dismissed with exemplary costs
quantified at rupees ten lakhs to be paid to the
Supreme Court Legal Service Authority.
……..…………………………….J.
[ J. CHELAMESWAR ]
.….………………………………..J.
[ ADARSH KUMAR GOEL ]
NEW DELHI
JULY 13, 2015
Print Page
dismissed for more than one reason. The fact that the
adjudicating officer chose to drop the proceedings
against the appellant herein does not absolve the
appellant of the criminal liability incurred by him by
virtue of the operation of Section 40 read with Section
56 of the Act. The offence under Section 56 read with
Section 40 of the Act is an independent offence. If the
factual allegations contained in the charge are to be
proved eventually at the trial of the criminal case, the
appellant is still liable for the punishment
notwithstanding the fact that the presence of the
appellant was required by the adjudicating officer in
connection with an enquiry into certain alleged
violations of the various provisions of the Act, but at a
subsequent stage the adjudicating officer opined that
there was either insufficient or no material to proceed
against the appellant for the alleged violations of the
Act, is immaterial. The observations made by this
Court in Roshanlal Agarwal (supra), in our opinion,
must be confined to the facts of that case because this
Court recorded such a conclusion “having regard to
the material existing against the respondent and the
reasons and findings given in the aforesaid
orders…..”. The said case cannot be read as laying
down a general statement of law that the prosecution
of the accused, who is alleged to be guilty of an
offence of not responding to the summons issued by a
lawful authority for the purpose of either an inquiry or
investigation into another substantive offence, would
not be justified. Exonerating such an accused, who
successfully evades the process of law and thereby
commits an independent offence on the ground that
he is found to be not guilty of the substantive offence
would be destructive of law and order, apart from
being against public interest. Such an exposition of
law would only encourage unscrupulous elements in
the society to defy the authority conferred upon the
public servants to enforce the law with impunity. It is
also possible, in certain cases that the time gained by
such evasive tactics adopted by a person summoned
itself would result in the destruction of the material
which might otherwise constitute valuable evidence
for establishing the commission of a substantive
offence by such a recalcitrant accused.
Secondly, an appeal against the conclusion of the
adjudicating officer that the proceedings against the
appellant herein for the alleged violation of the various
provisions of the FERA Act are required to be dropped
has not even attained finality. Admittedly, such an
order of the adjudicating officer confirmed by the
statutory appellate authority is pending consideration
in an appeal before the High Court. Though, in our
opinion, the result of such an appeal is immaterial for
determining the culpability of the appellant for the
alleged violation of Section 40 read with Section 56,
we must record that the submission made on behalf of
the appellant in this regard itself is inherently
untenable.
For all the abovementioned reasons, we do not
see any merit in the appeal. We are also of the
opinion that the entire approach adopted by the
appellant is a sheer abuse of the process of law. Any
other view of the matter would only go to once again
establishing the notorious truth stated by Anatole
France that – “the law in its majestic equality, forbids
the rich as well as the poor to sleep under bridges, to
beg in the streets and to steal bread”.
The appeal is dismissed with exemplary costs
quantified at rupees ten lakhs to be paid to the
Supreme Court Legal Service Authority.
REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO.1406 OF 2009
VIJAY MALLYA …APPELLANT
VERSUS
ENFORCEMENT DIRECTORATE,
MIN. OF FINANCE ...RESPONDENT
Citation; JULY 13, 2015
Citation;(2015) 8 SCC799
1. This appeal has been preferred against judgment
and order dated 21st May, 2007 of the High Court of
Delhi at New Delhi in Criminal Revision Petition No.554
of 2001.
2. Brief facts necessary for decision of this appeal
are that the appellant was summoned by the Chief
Enforcement Officer, Enforcement Directorate, under
Section 40 of the Foreign Exchange Regulation Act,
1973 (“the Act”) with his passport and correspondencePage 2
Criminal Appeal No.1406 of 2009
relating to a transaction with Flavio Briatore of M/s.
Benetton Formula Ltd., London, to which the appellant,
as Chairman of United Breweries Ltd., was a party.
Allegation against the appellant was that he entered
into an agreement dated 1st December, 1995 with the
earlier mentioned English Company for advertisement
of ‘Kingfisher’ brand name on racing cars during
Formula-I World Championships for the years 1996,
1997 and 1998 providing for fee payable. Requisite
permission of the Reserve Bank of India was not taken
which was in violation of provisions of Sections 47(1) &
(2), 9(1)(c) and 8(1) of the Act. Approval was later
sought from Finance Ministry for payment on 19th
June, 1996, which was rejected on 4th February, 1999.
Since the appellant failed to appear in response to
summons issued more than once, a complaint dated
8
th March, 2000 under Section 56 of the Act was filed
before the Additional Chief Metropolitan Magistrate,
New Delhi. The trial court after considering the
material on record summoned the appellant and
2 Page 2 of 16Page 3
Criminal Appeal No.1406 of 2009
framed charge against him under Section 56 of the
Act.
3. The appellant challenged the order of the
Magistrate dated 9th August, 2001 in above
Criminal Complaint No.16/1 of 2000 and also
sought quashing of proceedings in the said complaint
before the High Court by filing Criminal Revision
Petition No.554 of 2001 on the ground that willful
default of the appellant could not have been inferred
and that there was non-application of mind in the
issuance of summons as well as in framing the charge
which was in violation of procedure laid down under
Section 219 of the Criminal Procedure Code. The
charge related to failure of the appellant to appear on
four occasions, i.e., 27th September, 1999, 8th
November,1999, 26th November, 1999 and 3rd January,
2000. In respect of first date, it was submitted that
the trial court itself accepted that the service of
summons was after the time for appearance indicated
in the summons. In respect of second and third dates,
the appellant had responded and informed about his
3 Page 3 of 16Page 4
Criminal Appeal No.1406 of 2009
inability to appear and for the last date, summons was
not as per procedure, i.e., by registered post. It was
submitted
that composite charge was against Section 219 of the
Criminal Procedure Code.
4. The High Court rejected the contentions by
holding that framing of composite charge could not be
treated to have caused prejudice so as to vitiate the
proceedings. It was further observed that default of
the appellant in relation to summons
dated 15th September, 1999 for attendance on 27th
September, 1999 could not be taken into account and
to that extent the charge was liable to be deleted but
with regard to the defaults in relation to summons
dated 7th October, 1989, 8th November, 2009
and 21st December, 1999, the proceedings were not
liable to be interfered with as the appellant could
contest the matter before the trial court itself in the
first instance.
5. We have heard Shri F.S. Nariman, learned senior
counsel for the appellant and Shri K. Radhakrishnan,
4 Page 4 of 16Page 5
Criminal Appeal No.1406 of 2009
learned senior counsel for
the respondent.
6. When the matter came up for hearing before this
Court earlier, a statement was made on behalf of the
appellant that the appellant expressed regret for not
responding to the summons on which learned senior
counsel for the respondent took time to ascertain
whether the complaint could be withdrawn.
Thereafter, it was stated that withdrawal of the
complaint may have impact on other matters and for
that reason withdrawal was not possible. However,
the question whether the non compliance was
deliberate was required to be examined. Learned
senior counsel for the appellant submitted that the
default was not deliberate, intentional or willful which
may be punishable under Section 56 of the Act and
the appellant had sent reply and sought a fresh date
on two occasions.
7. It was further submitted that subsequent events
which were not gone into by the High Court may also
be seen. The complaint was filed on 8th March, 2000.
5 Page 5 of 16Page 6
Criminal Appeal No.1406 of 2009
During pendency of the complaint, the Act (FERA) was
repealed on 1st June, 2000. Still, show cause notice
dated 13th March, 2001 was issued to which reply was
given and the adjudicating officer vide order dated
10th January, 2002 dropped the proceedings on merits.
The Appellate Board dismissed the Revision Petition
filed by the Department on 16th March, 2004. Against
the said order, Criminal Appeal No.515 of 2004 was
pending in the High Court.
8. It was submitted that having regard to repeal of
the Act and exoneration of the appellant by the
departmental authorities (even though an appeal was
pending in the High Court), this Court in the
circumstances of the case ought to quash
proceedings, following law laid down in Dy. Chief
Controller of Import and Export vs. Roshan Lal
Agarwal1 as follows :
“13. In view of the findings recorded by us,
the learned Magistrate has to proceed with
the trial of the accused-respondents. Shri
Ashok Desai, learned Senior Counsel has,
however, submitted that the Imports and
Exports (Control) Act, 1947 has since been
repealed and in the departmental
proceedings taken under the aforesaid Act,
1
(2003) 4 SCC 139
6 Page 6 of 16Page 7
Criminal Appeal No.1406 of 2009
the Central Government has passed orders
in favour of the respondents and, therefore,
their trial before the criminal court at this
stage would be an exercise in futility. He
has placed before us copies of the orders
passed by the Additional Director General of
Foreign Trade on 16-8-1993 and also by the
Appellate Committee Cell, Ministry of
Commerce, Government of India on
13-3-1997 by which the appeals preferred
by the respondents were allowed by the
Appellate Committee and the
accused-respondents were exonerated.
Having regard to the material existing
against the respondents and the reasons
and findings given in the aforesaid orders,
we are of the opinion that no useful purpose
would be served by the trial of the
accused-respondents in the criminal court
at this stage. The proceedings of the
criminal cases instituted against the
accused-respondents on the basis of the
complaints filed by the Deputy Chief
Controller of Imports and Exports are,
therefore, quashed”.
Alternatively, explanation of the appellant for non
appearance may be looked into on merits instead of
the same being left to the trial court.
9. Before we consider the submissions made, the
provisions of Section 40 and 56 of the Act may be
noticed which are as follows :
“Section 40 - Power to summon
persons to give evidence and produce
documents
(1) Any Gazetted Officer of
Enforcement shall have power to
summon any person whose attendance
he considers necessary either to give
evidence or to produce a document
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Criminal Appeal No.1406 of 2009
during the course of any investigation
or proceeding under this Act.
(2) A summon to produce documents
may be for the production of certain
specified documents or for the
production of all documents of a certain
description in the possession or under
the control of the person summoned.
(3) All persons so summoned shall be
bound to attend either in person or by
authorised agents, as such officer may
direct; and all persons so summoned
shall be bound to state the truth upon
any subject respecting which they are
examined or make statements and
produce such documents as may be
required:
Provided that the exemption under
section 132 of the Code of Civil
Procedure, 1908 (5 of 1908) shall be
applicable to any requisition for
attendance under this section.
(4) Every such investigation or
proceeding as aforesaid shall be
deemed to be a judicial proceeding
within the meaning of
sections 193 and 228 of the Indian
Penal Code, 1860 (45of 1860).
Section 56 - Offences and prosecutions
(1)Without prejudice to any award of
penalty by the adjudicating officer
under this Act, if any person
contravenes any of the provisions of
this Act [other than Section 13, Clause
(a) of sub-section(1) of (Section 18,
Section 18A), clause (a) of sub-section
(1) of Section 19, sub-section(2) of
Section 44 and Section 57 and 58] or of
any rule, direction or order made
thereunder, he shall, upon conviction
by a court, be punishable
(i) in the case of an offence the amount
or value involved in which exceeds one
lakh of rupees with imprisonment for a
term which shall not be less than six
months, but which may extend to
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Criminal Appeal No.1406 of 2009
seven years and with fine; Provided
that the Court may, for any adequate
and special reasons to be mentioned in
the judgment, impose a sentence of
imprisonment for a term of less than six
months;
(ii)in any other case, with imprisonment
for a term which may extend to three
years or with fine or with both.”
10. In Enforcement Directorate vs. M. Samba
Siva Rao2
, it was observed :
“3. xxxxxxxx
The Foreign Exchange Regulation Act, 1973
was enacted by Parliament, basically for the
conservation of the foreign exchange
resources of the country and the proper
utilisation thereof in the interest of
economic development of the country. The
Act having been enacted in the interest of
national economy, the provisions thereof
should be construed so as to make it
workable and the interpretation given
should be purposive and the provisions
should receive a fair construction without
doing any violence to the language
employed by the legislature. The provisions
of Section 40 itself, which confers power on
the officer of the Enforcement Directorate,
to summon any person whose attendance
he considers necessary during the course of
any investigation, makes it binding as
provided under sub-section (3) of Section
40, and the investigation or the proceeding
in the course of which such summons are
issued have been deemed to be a judicial
proceeding by virtue of sub-section (4) of
Section 40. These principles should be
borne in mind, while interpreting the
provisions of Section 40 and its effect, if a
person violates or disobeys the directions
issued under Section 40.”
2
(2000) 5 SCC 431
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Criminal Appeal No.1406 of 2009
11. The above observations clearly show that a
complaint is maintainable if there is default in not
carrying out summons lawfully issued. The averments
in the complaint show that the summons dated 21st
December, 1999 were refused by the appellant and
earlier summons were not carried out deliberately. The
averments in paras 3 and 4 of the complaint are as
follows :
“3. That the complainant issued a
summons dated 21.12.1999 under Section
40 of FERA, 1973 in connection with the
impending investigations for the
appearance of the accused on 3.1.2000 but
the same have been returned back by the
postal authorities with the remarks
“refused”.
It is submitted that the accused has
deliberately avoided his appearance before
the Investigating Officer and on account of
his non co-operative attitude the
investigation has come to a standstill.
4. It is respectfully submitted that the
accused has been intentionally avoiding his
appearance before the Enforcement
Directorate knowing fully well that non
compliance of the directions made under
Section 40 of the Act renders the person
liable for prosecution in a Court of law under
Section 56 of the Act which is a non-bailable
offence. It is further submitted that by
virtue of Section 40(3) of the Act, the
accused was bound to appear before the
Officers of the Enforcement Directorate in
the best interest of investigation. Section
40(3) is reproduced below for kind perusal
and ready reference to this Hon’ble Court :
“Section 40(3) :
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Criminal Appeal No.1406 of 2009
(3) All persons so summoned shall be
bound to attend either in person or by
authorised agents, as such officer may
direct; and all persons so summoned shall
be bound to state the truth upon any
subject respecting which they are examined
or make statements and produce such
documents as may be required.”
It is respectfully submitted that non
compliance of any rule, directions or law is
punishable under Section 56 of the Act. The
accused willfully failed to appear before the
Enforcement Directorate at the given
venue, time and dates mentioned in the
respective summons and has thus,
contravened the provisions of Section 56 of
the Act.”
12. As regards summons dated 8th November, 1999,
learned senior counsel for the appellant has referred
to the explanation offered by the appellant. Letter
dated 22nd November, 1999 is as follows :
“As you will appreciate, I am the Chairman
of several public Companies both in India as
well as in the USA and, therefore, my
schedule is finalized several months in
advance. During the fiscal year end period,
the problem only gets compounded.
I would, therefore, request you to excuse
me from the personal appearance on
November 26, 1999 as I will be out of India.
I am willing to fix a mutually convenient
date to appear before you.”
13. From the tenor of the letter, it appears that it was
not a case of mere seeking accommodation by the
appellant but requiring date to be fixed by his
convenience. Such stand by a person facing
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Criminal Appeal No.1406 of 2009
allegation of serious nature could hardly be
appreciated. Obviously, the enormous money power
makes him believe that the State should adjust its
affairs to suit his commercial convenience.
14. In our opinion, the appeal is required to be
dismissed for more than one reason. The fact that the
adjudicating officer chose to drop the proceedings
against the appellant herein does not absolve the
appellant of the criminal liability incurred by him by
virtue of the operation of Section 40 read with Section
56 of the Act. The offence under Section 56 read with
Section 40 of the Act is an independent offence. If the
factual allegations contained in the charge are to be
proved eventually at the trial of the criminal case, the
appellant is still liable for the punishment
notwithstanding the fact that the presence of the
appellant was required by the adjudicating officer in
connection with an enquiry into certain alleged
violations of the various provisions of the Act, but at a
subsequent stage the adjudicating officer opined that
there was either insufficient or no material to proceed
against the appellant for the alleged violations of the
Act, is immaterial. The observations made by this
Court in Roshanlal Agarwal (supra), in our opinion,
must be confined to the facts of that case because this
Court recorded such a conclusion “having regard to
the material existing against the respondent and the
reasons and findings given in the aforesaid
orders…..”. The said case cannot be read as laying
down a general statement of law that the prosecution
of the accused, who is alleged to be guilty of an
offence of not responding to the summons issued by a
lawful authority for the purpose of either an inquiry or
investigation into another substantive offence, would
not be justified. Exonerating such an accused, who
successfully evades the process of law and thereby
commits an independent offence on the ground that
he is found to be not guilty of the substantive offence
would be destructive of law and order, apart from
being against public interest. Such an exposition of
law would only encourage unscrupulous elements in
the society to defy the authority conferred upon the
public servants to enforce the law with impunity. It is
also possible, in certain cases that the time gained by
such evasive tactics adopted by a person summoned
itself would result in the destruction of the material
which might otherwise constitute valuable evidence
for establishing the commission of a substantive
offence by such a recalcitrant accused.
15. Secondly, an appeal against the conclusion of the
adjudicating officer that the proceedings against the
appellant herein for the alleged violation of the various
provisions of the FERA Act are required to be dropped
has not even attained finality. Admittedly, such an
order of the adjudicating officer confirmed by the
statutory appellate authority is pending consideration
in an appeal before the High Court. Though, in our
opinion, the result of such an appeal is immaterial for
determining the culpability of the appellant for the
alleged violation of Section 40 read with Section 56,
we must record that the submission made on behalf of
the appellant in this regard itself is inherently
untenable.
16. For all the abovementioned reasons, we do not
see any merit in the appeal. We are also of the
opinion that the entire approach adopted by the
appellant is a sheer abuse of the process of law. Any
other view of the matter would only go to once again
establishing the notorious truth stated by Anatole
France that – “the law in its majestic equality, forbids
the rich as well as the poor to sleep under bridges, to
beg in the streets and to steal bread”.
17. The appeal is dismissed with exemplary costs
quantified at rupees ten lakhs to be paid to the
Supreme Court Legal Service Authority.
……..…………………………….J.
[ J. CHELAMESWAR ]
.….………………………………..J.
[ ADARSH KUMAR GOEL ]
NEW DELHI
JULY 13, 2015
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