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2007 DIGILAW 244 (CAL)

Modern Malleables Limited v. B. R. Sinku

2007-03-30

S.P.TALUKDAR

body2007
Judgment :- (1) THE present petitioners are three of the accused persons being Nos. 1, 2 and 4 respectively in the case (No. C-3072 of 1998) filed by the opposite party as complainant. (2) LEARNED Chief Metropolitan Magistrate, Calcutta, on the basis of such complaint filed by the present opposite party took cognizance of the offences punishable under Section 56 read with Section 68 of the-Foreign exchange Regulation Act and thereafter, made over the case to the learned 8th Court of Metropolitan Magistrate, Calcutta, for trial. (3) IT was alleged in the said complaint that the accused company through its Director and Executive, being accused Nos. 2, 3 and 4, effected shipment of goods during the year 1991-92 valued at total U. S. dollar27,822. 40 declared under three separate GRI Forms, namely viz., AA-150868 dated 24. 2. 1992 export value of U. S. dollar 20,227. 30, AA-59892 dated 5. 3. 1992 export value of U. S. dollar 6,570. 00 and AA-659899 dated 12. 3. 1992 export value of U. S. dollar 1,025. 10. (4) THE amount declared in GRI Forms was repatriable in India within the stipulated period either within six months from the date of shipment or within the time as extended by the Reserve Bank of India through authorized bank, Calcutta. (5) IT was alleged that the accused persons failed to take any action or refrained from taking any action to secure the receipts of full export value of the goods within six months from the date of shipment, without the permission of the Reserve Bank of India. (6) SUCH failure was in contravention of Section 18 (2) of the Foreign exchange Regulation Act, 1973 as amended read with Central Government notification dated 1. 1. 1974 as also Section 18 (3) of the said Act. The accused persons thereby rendered themselves liable to be proceeded against under section 56 of the said Act read with Section 68 of the Act. (7) NOTICE under Section 61 of the Foreign Exchange Regulation Act was issued and the accused persons acknowledged the same. They did not furnish any permission/exemption or appropriate certificate from the R. B. I, or any appropriate authority and as such, committed violation of the F. E. R. A. (8) IT was thus alleged before the learned Trial Court that the accused person Nos. They did not furnish any permission/exemption or appropriate certificate from the R. B. I, or any appropriate authority and as such, committed violation of the F. E. R. A. (8) IT was thus alleged before the learned Trial Court that the accused person Nos. 2 and 3 being the Directors and Executives of the accused No. 1, the Company being in charge of and responsible to the Company at the relevant period are liable to be proceeded under Sections 56/68 of the said Act. (9) IN the present application praying for quashing of the proceeding, it was claimed that much prior to the institution of the aforesaid proceedings, adjudication proceedings under Section 50 of the said Act were initiated. By order dated 31st July, 2002, the adjudicating authority, namely, the Special directorate of Enforcement, Enforcement Directorate, Government of India, New Delhi exonerated the petitioners from the charge of contravention of the provisions of Section 18 (2) and Section 18 (3) read with the Central Government notification dated 1. 1. 1994. (10) AT the time of hearing of the application, learned Counsel, Mr. Debasish Roy, appearing for the petitioners invited attention of the Court to the observations made by the adjudicating authority. The said authority found that the company had discharged all its legal obligations and all the GRIs were duly regularized. The same was disposed of with the finding that the charge did not survive with strength. Such order of the adjudicating authority was never challenged by the complainant before any forum and as such, it reached its finality. (11) MR. Debasish Roy referring to the backdrop of the present case submitted that the petitioner No. 1 in spite of all bona fide efforts could not realize outstanding i. e. 10% of the export proceeds under the concerned GRI and the overseas buyer adjusted their claims on account of liquidated damage etc. against balance 10% payment. It was categorically mentioned by Mr. Roy that pursuant to the request of the petitioners company and being fully satisfied of its bona fide prayer and documents, the State Bank of Hyderabad, Burrabazar Branch, Kolkata, approached Reserve Bank of India seeking permission for writing off unrealized export proceed covered by the said GRIs and 43 other GRIs valued at 1,49,233. 10 US dollar on account of the petitioner no. 1 company. 10 US dollar on account of the petitioner no. 1 company. The Reserve Bank of India in response to the same granted its approval of writing off other outstanding export value covered under the concerned GRIs and 43 others. Mr. Roy referred to the relevant letter issued by the R. B. I, dated 17. 4. 1997 in this context. This was followed by the communication dated 23rd April, 1997 made by the State Bank of Hyderabad, Burrabazar Branch to the accused company. (12) THE petitioner thereafter informed the complainant about such writing off the outstanding unrealized export value by R. B. I. (13) AN application or discharge was filed before the learned Trial Court but the same was rejected by order dated 29. 4. 2006. (14) MR. Roy referred to a number of revisional applications which were also filed in connection with various other cases. (15) IT was the contention of Mr. Roy, as learned Counsel for the petitioners that the R. B. I, having permitted write off of the outstanding unrealized export value in respect of the GRIs involved in the complaint and the adjudicating authority having exonerated the petitioner from the self-same charge based on identical allegations as that of the criminal case, the charge in the criminal case cannot be sustained and is liable to be quashed. (16) IT was submitted on behalf of the petitioner that the foundation of the criminal case does not exist and as such, it will be an abuse of the process of Court to allow the said criminal proceeding to continue. Not merely the adjudication proceeding over the identical allegations had already been disposed of in favour of the petitioners but in view of writing off by the R. B. I, there virtually remains nothing against the accused persons. Attention of he court was invited to the copy of the correspondence dated 17. 4. 1997 made by the R. B. I, which is addressed to the State Bank of Hyderabad. Such annexure-e to the present application goes a long way to substantiate the stand taken by the present petitioners. (17) REFERRING to the decision in the case of P. S. Rajya v. State of Bihar, reported in 1996 SCC (Cri) 897, it was submitted by Mr. Such annexure-e to the present application goes a long way to substantiate the stand taken by the present petitioners. (17) REFERRING to the decision in the case of P. S. Rajya v. State of Bihar, reported in 1996 SCC (Cri) 897, it was submitted by Mr. Roy that the writing off by the R. B. I, and exoneration by the adjudicating authority leave no rational justification for any further continuation of the criminal proceeding. In the said case of P. S. Rajya, it was observed by the Apex Court that "the standard of proof required to establish the guilt in a criminal case is far higher than the standard of proof required to establish the guilt in the departmental proceedings. In the instant case the charge in the departmental proceedings and in the criminal proceedings is one and the same. If the charge which is identical could not be established in a departmental proceedings and in view of the admitted discrepancies in the reports submitted by the valuers one wonders what is there further to proceed against the appellant in criminal proceedings. " (18) IN the case of G. L Didwania and anr. v. Income Tax Officer and anr, reported in 1995 Supp (2) SCC 724, the appellate Court while directing quashing of the criminal proceeding took into consideration the finding of the appellate Tribunal. Learned Division Bench of this Court in the case of Gopal das Mundar v. Assistant Collector of Customs and Anr., reported in 2002 (1) CHN 612 , observed that the departmental proceedings initiated by the authorities having been decided in favour of the petitioner holding that the disputed goods are not liable to be confiscated, further proceeding under Section 135 of the customs Act on the same set of facts would, perhaps, amount to misuse of the process of law. (19) MR. Roy derived further inspiration from the decision in the case of deputy Chief Controller of Imports and Exports v. Roshanlal Agarwal and Ors. , reported in 2003 SCC (Cri) 788 as also in the case of Jagmohan Jindal and. Anr. v. State of West Bengal and Anr. , reported in 2004 (2)CHN 106 . (20) IN the case of F. V. Arul and Ors. v. S. K. Mukherjee, reported in 2006 (3) CHN 638 practically an identical view was taken. , reported in 2003 SCC (Cri) 788 as also in the case of Jagmohan Jindal and. Anr. v. State of West Bengal and Anr. , reported in 2004 (2)CHN 106 . (20) IN the case of F. V. Arul and Ors. v. S. K. Mukherjee, reported in 2006 (3) CHN 638 practically an identical view was taken. It was held that when the adjudicatory authority found the petitioners not liable for contravention of any provision of the Act and exonerated them of all the charges, prosecuting them on the basis of same set of facts before a Criminal court is manifestly unjust and amounts to persecution and abuse of the process of the Court. (21) ON the other hand, Mr. Himangsu De, as learned Counsel for the opposite party, submitted that the mere fact that the adjudication proceeding had been disposed of in favour of the present petitioners does not by itself justify quashing of the criminal proceeding. In this context, Mr. De referred to the decision in the case of Radheshyam Kejriwal v. State of West Bengal and anr. , reported in 2001 (3) CHN page 617. (22) TRUE, in the case of Standard Chartered Bank and Ors. v. Directorate of Enforcement and Ors. , reported in 2006 (2) SCC (Cri) 221, the Apex Court held that adjudication and prosecution are independent of each other and each sub-serves a purpose. These proceedings can be launched and pursued simultaneously. The Apex Court held that it cannot be accepted that unless adjudication under Section 51 is completed, prosecution under Section 56 cannot be initiated. There is no indication in the Act that the prosecution depends upon the result of the adjudication. The Apex Court further held that finding in one is not conclusive in the other. (23) THE factual backdrop of the present case, however, stands on a different footing. The present application praying for quashing of the criminal proceeding is not solely on the ground that the adjudication proceeding had been disposed of in favour of the present petitioners but the stand taken by the R. B. I, and writing off by it have made the allegations in the complaint absolutely baseless. Mr. Roy chose to explain the situation by using the expression that the foundation of the criminal proceedings has gone. Mr. Roy chose to explain the situation by using the expression that the foundation of the criminal proceedings has gone. It cannot be denied that in such a situation where the allegation made in a petition of complaint lose its force, there remains no justification for continuation of such proceedings. (24) IN this context, Mr. Roy produced a chart indicating thereby that the R. B. I. /authorized dealer granted exemption prior to institution of the complaint before the learned Court of Magistrate except in a couple of cases where it was done soon thereafter. (25) IN the context of the present case being C. R. R. No. 2642 of 2006, it was submitted that the R. B. I, granted exemption on 23. 4. 1997 whereas the complaint was filed on 18. 9. 1998. It thus cannot be denied that there could be no basis for instituting such complaint and proceeding on the basis of such inherently hollow complaint will undoubtedly amount to abuse of the process of the Court. (26) MR. De, as learned Counsel for the opposite party/authority could not challenge such contention made by Mr. Roy. Accordingly, there is no rational justification for a wild goose chase on the basis of a complaint which suffers from latent wound. (27) THE case being C. R. R. No. 2642 of 2006 is accordingly allowed and further proceeding in the case being Case No. C-3072/98 is now pending before the learned 8th Court of Metropolitan Magistrate, Calcutta be quashed. (28) INTERIM order, if any, is thus made absolute. The accused persons in the said case stand released from their respective bonds. (29) THIS order also governs C. R. R. No. 2643 of 2006, C. R. R No. 2644 of 2006, C. R. R. No. 2645 of 2006, C. R. R. No. 2646 of 2006, C. R. R. No. 2647 of 2006 and C. R. R. No. 2648 of 2006. (30) THE accused persons in the said cases stand accordingly released from the bonds in connection with the respective criminal cases.