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Foreign Exchange Regulation Act, 1973 – ss. 50, 51 and 56 – Scope and applicability of – Charges against the appellant for contravening the provisions of s.9(1)(f)(i) and s.8(2) r/w s.64(2) – Enforcement Directorate (ED) sought to prosecute appellant in a proceeding u/s.56 though on the self-same facts and cause of action, respondent-adjudicating authority had dropped charges framed against the appellant u/s.50 – Plea of appellant that standard of proof required to bring home the charge in a criminal case is much higher than the adjudication proceeding and once the appellant was exonerated in the adjudication proceeding, his prosecution was an abuse of the process of Court – Held (per majority): The yardstick would be to judge as to whether allegation in the adjudication proceedings and the proceedings for prosecution was identical and exoneration of the person concerned in the adjudication proceeding was on merits – In case it is found on merit that there was no contravention of the provisions of the Act in the adjudication proceedings, the trial of the person concerned shall be an abuse of the process of the court – In the instant case, in the adjudication proceeding on merit the adjudicating authority had categorically held that the charges against the appellant for contravening the provisions of s.9(1)(f)(i) and s.8(2) r/w s.64(2) were not sustainable – In the face of the finding by the Enforcement Directorate in adjudication proceeding that there was no contravention of any of the provisions of the Act, it would be unjust and an abuse of the process of the court to permit the Enforcement Directorate to continue with the criminal prosecution – Resultantly the appellant’s prosecution is quashed – Held (per minority): The scheme of the Act makes it clear that adjudication by the concerned authorities and prosecution are distinct and separate – The two proceedings are independent and irrespective of the outcome of the decision u/s.50, there cannot be any bar in initiating prosecution u/s.56 – In the light of the mandate of s.56, it is the duty of the Criminal Court to discharge the functions vested with it and give effect to the legislative intention, particularly, in the context of the scope and object of FERA which was enacted for economic development of the country and augmentation of revenue. The Enforcement Directorate alleged that the appellant had contravened the provisions of Section 8(2) and 9(1)(f)(i) of the Foreign Exchange Regulation Act, 1973 and accordingly rendered himself liable to imposition of penalty under Section 50 of the Act. Accordingly, adjudication proceeding as contemplated under Section 51 of the Act were instituted against him for the aforesaid contraventions. The adjudication officer (the Special Director) came to the conclusion that the allegation made against the appellant of contravention of the provisions of Section 8, 9(1)(f)(i) and Section 8(2) read with Section 64(2) of the Act were not sustainable. The Enforcement Directorate did not challenge this order and it attained finality. The Enforcement Directorate on the same allegation which was the subject matter of adjudication proceeding laid complaint against the appellant for prosecution under Section 56 of the Act before the Metropolitan Magistrate. After the issuance of process and exoneration in the adjudication proceeding, the appellant filed application for dropping the proceedings, inter alia, contending that on the same allegation the adjudication proceedings having been dropped and the appellant exonerated, his continued prosecution is an abuse of the process of the Court. The Metropolitan Magistrate rejected his prayer. Aggrieved, the appellant preferred criminal revision application which was dismissed by the High Court by the impugned order. In the instant appeal, dispute arose as to whether the Enforcement Directorate (ED) could prosecute the appellant in a proceeding under Section 56 of the FERA when on the self-same facts and cause of action, the respondent-adjudicating authority had dropped the charges framed against the appellant under Section 50 of the FERA. It was contended on behalf of the appellant that standard of proof required to bring home the charge in a criminal case is much higher than the adjudication proceeding and once the appellant was exonerated in the adjudication proceeding, his prosecution was an abuse of the process of Court. =Allowing the appeal (per majority), Per Chandramauli Kr. Prasad, J. (for Harjit Singh Bedi, J. and himself): HELD: 1. Section 50 of the Foreign Exchange Regulation Act, 1973 (FERA) provides for mandatory penalty and fixes the outer limit of such penalty on any person contravening the provisions of the Act which is to be adjudged by the Director of Enforcement or any other officer of the Enforcement not below the rank of an Assistant Director empowered by the Central Government. The procedure and the power to adjudicate penalty has been provided under Section 51 of the Act. From a plain reading of Section 51 of the Act it is evident that for adjudging the penalty under Section 51 of the Act for contravention of the provisions of the Act or any rule, direction or order made thereunder the adjudicating officer is to be satisfied that the person has committed the contravention after holding an inquiry in the prescribed manner and after giving the person concerned a reasonable opportunity of making representation. Thus besides the procedural requirement the sine qua non for imposition of penalty under Section 51 of the Act is that the adjudicating officer has to record its satisfaction that the person concerned has committed the contravention of any of the provisions of the Act or of any rule, direction or order made thereunder. [Paras 8, 9] [903-E-H; 904-A-G] 2. As would be evident from the preamble of the FERA, it was enacted for the conservation of foreign exchange resources of the Country and the proper utilization thereof in the economic development of the Country. The proceedings under Section 51 and 56 of the Act are independent of each other and the finding in an adjudication proceeding under Section 51 of the Act is not binding in the proceeding for prosecution under Section 56 of the Act and both can go hand in hand. Further, the prosecution can be launched even before conclusion of adjudication proceeding under Section 51 of the Act. [Paras 10, 11] [904-H; 905-H; 906-A-C] 3. The standard of proof in a criminal case is much higher than that of the adjudication proceeding. The Enforcement Directorate has not been able to prove its case in the adjudication proceeding and the appellant has been exonerated on the same allegation. The appellant is facing trial in the criminal case. Therefore, the determination of facts in the adjudication proceeding cannot be said to be irrelevant in the criminal case. However, the finding in an adjudication proceeding is not binding in the proceeding for criminal prosecution. A person held liable to pay penalty in adjudication proceeding cannot necessarily be held guilty in criminal trial. Adjudication proceedings are decided on the basis of preponderance of evidence of a little higher degree whereas in a criminal case entire burden to prove beyond all reasonable doubt lies on the prosecution. [Paras 15, 16] [909-H; 910-A-B; 911-F-G] 4. The yardstick would be to judge as to whether allegation in the adjudication proceeding as well as proceeding for prosecution is identical and the exoneration of the person concerned in the adjudication proceeding is on merits. In case it is found on merit that there is no contravention of the provisions of the Act in the adjudication proceeding, the trial of the person concerned shall be in abuse of the process of the court. [Para 19] [916-A-B] 5. In the instant case, in the adjudication proceeding on merit the adjudicating authority has categorically held that “the charges against Shri Radheshyam Kejriwal for contravening the provisions of Section 9(1)(f) (i) and Section 8(2) read with Section 64(2) of the Foreign Exchange Regulation Act, 1973 cannot be sustained”. In the face of the aforesaid finding by the Enforcement Directorate in adjudication proceeding that there is no contravention of any of the provisions of the Act, it would be unjust and an abuse of the process of the court to permit the Enforcement Directorate to continue with the criminal prosecution. [Para 23] [919-F-H; 910-A] 6. In the result the impugned judgment of the Metropolitan Magistrate and the order affirming the same by the High Court are set aside and appellant’s prosecution is quashed. [Para 24] [920-B] Standard Chartered Bank and others vs. Directorate of Enforcement and others (2006) 4 SCC 278; Assistant Collector of Customs, Bombay and another vs. L.R. Melwani and another AIR 1970 SC 962 and Iqbal Singh Marwah v. Meenakshi Marwah (2005) 4 SCC 370 – distinguished. Uttam Chand and others vs. Income Tax Officer, Central Circle, Amritsar (1982) 2 SCC 543; G.L. Didwania and Another vs. Income Tax Officer and Another 1995 Supp (2) SCC 724 and K.C. Builders and Another vs. Assistant Commissioner of Income Tax (2004) 2 SCC 731 – relied on. Hemendra M. Kothari v. Shri W.S. Vaigankar, Asstt. Director, Enforcement Directorate (FERA), Govt. of India and State of Maharashtra [decided by Bombay High Court on 25-04-2007] and Sunil Gulati & Anr. V. R.K. Vohra 145 (2007) DLT 612 – approved. B.N. Kashyap vs. Emperor AIR (32) 1945 Lahore 23 Full Bench; K.G. Premshanker v. Inspector of Police (2002) 8 SCC 87 – referred to. Case Law Reference: (2006) 4 SCC 278 distinguished Para 11, 20 AIR 1970 SC 962 distinguished Para 12, 13 AIR (32) 1945 Lahore 23 referred to Para 15 (2002) 8 SCC 87 referred to Para 15 (2005) 4 SCC 370 distinguished Para 16 (1982) 2 SCC 543 relied on Para 17 1995 Supp (2) SCC 724 relied on Para 17 (2004) 2 SCC 731 relied on Para 17 145 (2007) DLT 612 approved Para 22 Per Sathasivam, J. (dissenting): HELD: 1. The Foreign Exchange Regulation Act, 1973 (FERA) being a statute relating to economic offences, there is no reason to restrict the scope of any provisions of the Act. These provisions ensure that no economic loss is caused by the alleged contravention by the imposition of an appropriate penalty after adjudication under Section 51 of the Act and to ensure that the tendency to violate is guarded by imposing appropriate punishment after due transaction in terms of Section 56 of the Act. In fact, Section 23D of the Foreign Exchange Regulation Act, 1947 had a proviso, which indicates that the adjudication for the imposition of penalty should precede making of complaint in writing to the court concerned for prosecuting the offender. The absence of a similar proviso to Section 51 or to Section 56 of the 1973 Act is a clear indication that the Legislature intended to treat the two proceedings as independent of each other. There is nothing in the present Act to indicate that a finding in adjudication is binding on the Court in a prosecution under Section 56 of the Act or that the prosecution under Section 56 depends upon the result of adjudication under Section 51 of the Act. The two proceedings are independent and irrespective of the outcome of the decision under Section 50, there cannot be any bar in initiating prosecution under Section 56. The scheme of the Act makes it clear that the adjudication by the concerned authorities and the prosecution are distinct and separate. No doubt, the conclusion of the adjudication, in the case on hand, the decision of the Special Director, may be a point for the appellant and it is for him to put forth the same before the Magistrate. Inasmuch as FERA contains certain provisions and features which cannot be equated with the provisions of Income Tax Act or the Customs Act and in the light of the mandate of Section 56 of the FERA, it is the duty of the Criminal Court to discharge its functions vest with it and give effect to the legislative intention, particularly, in the context of the scope and object of FERA which was enacted for the economic development of the country and augmentation of revenue. Though the Act has since been repealed and not available at present, those provisions cannot be lightly interpreted taking note of the object of the Act. [Para 23] [942-D-H; 943-A-D] 2. In view of the above, the conclusion arrived at by the Metropolitan Magistrate, Calcutta as well as the decision of the High Court are upheld. [Para 24] [943-E] G.L. Didwania and Another v. Income Tax officer and Another 1995 Supp (2) SCC 724; K.C. Builders and Another v. Assistant Commissioner of Income-Tax (2004) 2 SCC 731; P.S. Rajya vs. State of Bihar (1996) 9 SCC 1; Uttam Chand and Others v. Income Tax Officer, Central Circle, Amritsar (1982) 2 SCC 543 – distinguished. Standard Chartered Bank and Others vs. Directorate of Enforcement and Others (2006) 4 SCC 278; K.G. Premshanker vs. Inspector of Police and Another (2002) 8 SCC 87; Assistant Collector of Customs vs. L.R. Malwani, 1969 (2) SCR 438; Iqbal Singh Marwah and Another vs. Meenakshi Marwah and Another (2005) 4 SCC 370 – relied on. Asstt. Commr. vs. Velliappa Textiles Ltd. (2003) 11 SCC 405; ANZ Grindlays Bank Ltd. vs. Directorate of Enforcement (2004) 6 SCC 531; Standard Chartered Bank vs. Directorate of Enforcement (2005) 4 SCC 530 – referred to. B.N. Kashyap vs. Emperor AIR (32) 1945 Lahore 23 Full Bench – referred to. Case Law Reference: 1995 Supp (2) SCC 724 distinguished Para 9, 10, 11, 16, 19, 22 (2004) 2 SCC 731 distinguished Para 9 , 11 (1996) 9 SCC 1 distinguished Para 9 , 12 (1982) 2 SCC 543 distinguished Para 9 , 13 (2006) 4 SCC 278 relied on Para 15, 22 (2002) 8 SCC 87 relied on Para 15, 17 1969 (2) SCR 438 relied on Para 15, 18, 19, 22 (2005) 4 SCC 370 relied on Para 15, 20 AIR (32) 1945 Lahore 23 Full Bench referred to Para 15, 21 (2003) 11 SCC 405 referred to Para 16 (2004) 6 SCC 531 referred to Para 16 (2005) 4 SCC 530 referred to Para 16 CRIMINAL APPELLATE JURISDICTION : Criminal Appeal No. 1097 of 2003. From the Judgment & Order dated 10.08.2001 of the High Court of Calcutta in C.R.R. No. 3593 of 1997. A. Sharan, Punet Jain, Sushil Kr. Jain, Pramod Sharma, Anil K. Verma, Pratibha Jain for the Appellant. P.P. Malhotra, ASG, P.K. Dey, Ranjana Narayan, B. Krishna Prasad. Tara Chandra Sharma, Neelam Sharma for the Respondents.

REPORTABLE IN THE SUPREME COURT OF INDIA CRIMINAL APPELLATE JURISDICTION CRIMINAL APPEAL NO.1097 OF 2003 RADHESHYAM KEJRIWAL ….. APPELLANT VERSUS STATE OF WEST BENGAL & ANR. ….. RESPONDENTS J U D G M E N T CHANDRAMAULI KR. PRASAD, J. 1. We have gone through the draft judgment prepared by our noble and learned Brother … Continue reading

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