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2010 DIGILAW 499 (CAL)

Modern Malleables Limited v. B. R. Sinku

2010-05-07

KALIDAS MUKHERJEE

body2010
JUDGMENT: KALIDAS MUKHERJEE, J: 1. These are the ten revisional applications, namely, CRR 1480 of 2005, CRR 1482 of 2005, CRR 296 of 2005, CRR 297 of 2005, CRR 298 of 2005, CRR 299 of 2005, CRR 300 of 2005, CRR 1253 of 2006, CRR 1254 of 2006, CRR 1256 of 2006 praying for quashing of the proceedings pending before the Court of learned Metropolitan Magistrate, Calcutta. As the parties are the same and identical questions of law are involved, all the aforesaid revisional applications are taken up together for disposal. The factual matrix of the case may be summarised as follows:- In CRR 1480 of 2005 the case No. C 2942 of 1998 has been registered on the basis of a complaint made by the O.P. before the learned Chief Metropolitan Magistrate, Calcutta. It has been alleged in the complaint that accused No. 1 Modern Malleables Limitted is a limited Company and the other accused persons are the Director and Executive of the said Company and they are responsible for the day to day affairs and the conduct of the business of the Company. The accused Company through the other accused persons during the year 1991-1992 effected shipment of goods valued at total US $ 1,60,809.63 declared under three separate GRI Forms, namely, GS-267808 dated September 5, 1991 export value of US $ 66,551.40, GS 267809 dated September 12, 1991 export value of US $ 64,598.75, GS 267813 dated September 12, 1991 export value of US $ 29,659.48. The amount declared in GRI Form was repatriable in India within the stipulated period either within six months from the date of shipment or within the time as extended by RBI through their authorised bank, Calcutta. The accused persons failed to take any action or reasonable steps and refrained from taking action to secure the receipts of full export value of goods from the country of final destination of the goods within the six months from the date of shipment without any general or special permission of the RBI which amounts to violation of Section 18(2) of the FERA 1973 as amended with Central Government Notification No. F-1/67/EC/73-1 and 3 both dated 1.1.1974. Section 18(3) of the said Act further provides that where in relation to any goods to which a notification under Clause (a) of sub-Section (1) applies, the prescribed period has expired and the payment therefor has not been made, it shall be presumed, unless the contrary is proved by the person, who has sold or is entitled to sell the goods or procure the sale thereof, then such person has not taken reasonable steps to receive or recover the payment for the goods be presumed to have contravened the provision of Section 18(2) of the Act. The accused persons having failed to take any action or refrained from taking any action which has the effect of securing the export proceed of US 16,080.96 have not so far been received in India, the accused persons being the Director and Managers of the said Company have contravened the provisions of Section 18(2) read with Section 18(3) of the said Act and liable to be prosecuted under Section 56 of the Act. 2. It has been contended in the revisional application that prior to the institution of the criminal proceeding under Section 56 read with Section 68 of the FERA, the adjudication proceeding under Section 50 of the Act was started against the accused persons as far back as in August, 1995 pursuant to the issuance of memo No. T-4/20-C-95 (SCN) dated 28.8.1995. By an order dated July 31, 2002 the adjudicating authority, namely, the Special Directorate of Enforcement, Government of India, New Delhi exonerated the petitioners of the charges of contravention of provisions of Sections 18(2) and 18(3) read with Central Government notification No. F-1/67/EC/73-1 and 3 both dated 1.1.1974. No appeal has been preferred against the order of the adjudicating authority. For the aforesaid reasons the petitioners have filed the revisional applications under Section 401 read with Section 482 of the Code of Criminal Procedure praying for quashing of the proceedings pending before the learned Metropolitan Magistrate, Calcutta. 3. Mr. Debasish Roy, learned Counsel appearing for the petitioners submits that in the departmental proceedings it was held that the charges against the noticees do not survive with strength and the proceedings deserved to be dropped. It is contended that in view of such finding made by the adjudicating authority, there is no basis for the criminal proceeding. Mr. 3. Mr. Debasish Roy, learned Counsel appearing for the petitioners submits that in the departmental proceedings it was held that the charges against the noticees do not survive with strength and the proceedings deserved to be dropped. It is contended that in view of such finding made by the adjudicating authority, there is no basis for the criminal proceeding. Mr. Roy contends that no appeal was preferred against the order of the adjudicating authority. Mr. Roy has submitted the Xerox copies of the judgments passed by this Hon’ble Court in CRR 1273 of 2005 and CRR 2642 of 2006. Mr. Roy submits that the factual scenario in all these cases is the same and that the transaction was the same and in all 25 complaints were filed before the Court of learned Chief Metropolitan Magistrate out of which seven revisional applications have been disposed of by Hon’ble Justice S. P. Talukdar quashing the proceedings and eight other revisional applications were disposed of by Hon’ble Justice Partha Sakha Dutta quashing the criminal proceedings. Mr. Roy submits that these are the ten revisional applications which arose out of the same transactions and as the transaction is the same the decisions in those two cases are squarely applicable in these revisional applications. 4. Mr. Himangshu Dey, learned Counsel appearing on behalf of the O.P. opposed the revisional applications, contending, that inspite of decision of the adjudicating authority in favour of the accused persons, the criminal proceedings are maintainable and the findings of the adjudicating authority have no bearing in the instant criminal proceedings. Learned Counsel has referred to the decision reported in 2001(3) CHN page 617 [Radheshyam Kejriwal Vs. State of West Bengal & Anr.] 5. The adjudicating authority while disposing of the proceedings observed at para 36 & 37 as follows:- “36. Based upon the facts as discussed hereinbefore, I find that the noticees had regularised all the GRIs (subject matter of the present proceedings) by either realising proceeds, or through write off duly approved by the RBI. As such, I am inclined to feel that the company has discharged all its legal obligations. Based upon the facts as discussed hereinbefore, I find that the noticees had regularised all the GRIs (subject matter of the present proceedings) by either realising proceeds, or through write off duly approved by the RBI. As such, I am inclined to feel that the company has discharged all its legal obligations. At this juncture, it is pertinent to keep in mind that the company’s out standings spread over a span of a number of years related to exports made to different Public Sector Undertakings and Government organisations abroad and, in fact, represented retention money kept by the said undertakings for disbursement after certification by the authorities concerned in regard to the satisfactory execution of the projects. Considering the facts on record, I find that the notinees undertook earnest efforts for realising the pending proceeds as a result of which all the GRIs were regularised, even though after consuming a considerable period of time. 37. Having heard to the elaborate discussion in the preceding paras and viewed in the perspective that the GRIs (in respect of which the SCN was issued) stand regularised, I am of the opinion that the charges against the noticees now do not survive with strength. Hence, these would deserve to be dropped.” 6. The adjudicating authority has observed that the noticees undertook earnest efforts for realising the pending proceeds as a result of which all the GRIs were regularised, even though after consuming a considerable period of time. It has also been observed that the Company has discharged all its legal obligations. The learned Counsel for the petitioner has also submitted that the RBI approved ‘write off’ in respect of the outstanding unrealised export value in respect of the GRIs involved in the complaint. It is contended that the adjudicating authority exonerated the petitioners of self-same charges placed on identical allegations because of the approval of the ‘write off’ by the RBI. It is submitted that in view of the grant of post facto approval for extension of time in respect of the GRIs involved in the impugned criminal proceedings by the RBI and the release all those GRIs by the State Bank of Hyderabad through which the export was negotiated, no violation of the Act can be said to have been committed by the petitioners relating to the GRIs in question and, as such, the impugned proceedings are liable to be quashed. 7. Mr. 7. Mr. Dey has cited the decision reported in 2001(3) CHN 617 (supra) in support of this contention that the criminal proceedings are maintainable in spite of the decision of the adjudicating authority in favour of the petitioners. Mr. Roy does not dispute this proposition of law, but, submits that in view of the decision in respect of the other cases, these proceedings should also be quashed, inasmuch as, the transaction is the same. It is also submitted by Mr. Roy that in another proceeding bearing CRR No. 1273 of 2005 it was observed by the Hon’ble Judge that no fruitful purpose will be served if the criminal proceedings are allowed to continue. 8. Since, the RBI has approved the ‘write off’ and granted ex-post facto approval in respect of extension of time I find that the basis of allegation has lost its force. In this connection it is necessary to mention the provisions contained in Section 18(2) and 18 (3) of the FERA, 1973 which are set out as hereunder:- “Section 18(2) – Where any export of goods, to which a notification under clause (a) of sub-section (1) applies, has been made, no person shall, except with the permission of the Reserve Bank, do or refrain from doing anything, or take or refrain from taking any action, which has the effect of securing- (A) in a case falling under sub-clause (i) or sub-clause (ii) of clause (a) of sub-section (1),- (a) that payment for the goods- (i) is made otherwise than in the prescribed manner, or (ii) is delayed beyond the period prescribed under clause (a) of sub-section (1), or (b) that the proceeds of sale of the goods exported do not represent the full export value of the goods subject to such deduction, if any, as may be allowed by the Reserve Bank; and (B) in case falling under sub-clause (ii) of clause (a) of subsection (1), also that the sale of the goods is delayed to an extent which is unreasonable having regard to the ordinary course of trade: Provided that no proceedings in respect of any contravention of the provisions of this sub-section shall be instituted unless the prescribed period has expired and payment for the goods representing the full export value has not been made in the prescribed manner within the prescribed period. (3) Where in relation to any goods to which a notification under clause (a) of sub-section (1) applies the prescribed period has expired and payment therefor has not been made as aforesaid, it shall be presumed, unless the contrary is proved by the person who has sold or is entitled to sell the goods or to procure the sale thereof, then such person has not taken all reasonable steps to receive or recover the payment for the goods as aforesaid and he shall accordingly be presumed to have contravened the provisions of sub-section (2)." 9. Under sub-Section 3 of Section 18 the accused persons are to show that they have taken all reasonable steps to receive or recover the payment for the goods. It is evident from the order passed by the adjudicating authority that the Company has discharged all its legal obligations. So in view of the fact that the accused persons have taken all reasonable steps for the realisation of the amount and the RBI having granted ‘write off’ and also granting approval in respect of extension of time, it has become clear that the basis of the complaint under Section 56 read with Section 68 of the FRA, 1973 does not exist. In such view of the matter, I find that it will be abuse of the process of the Court if the criminal proceedings are allowed to continue. Under such circumstances, the decision referred to by Mr. Dey is not applicable. The revisional applications, therefore, succeed. In such view of the matter, I find that it will be abuse of the process of the Court if the criminal proceedings are allowed to continue. Under such circumstances, the decision referred to by Mr. Dey is not applicable. The revisional applications, therefore, succeed. Accordingly, proceedings in Case No. C 2942 of 1998 pending before the learned 10th Metropolitan Magistrate, Calcutta relating to CRR 1480 of 2005; Case No. C 2944 of 1998 pending before the learned 10th Metropolitan Magistrate, Calcutta relating to CRR 1482 of 2005; Case No. C 3007 of 1998 pending before the learned 13th Metropolitan Magistrate, Calcutta relating to CRR 296 of 2005; Case No. C 3006 of 1998 pending before the learned 13th Metropolitan Magistrate, Calcutta relating to CRR 297 of 2005; Case No. C 3008 of 1998 pending before the learned 13th Metropolitan Magistrate, Calcutta relating to CRR 298 of 2005; Case No. C 3005 of 1998 pending before the 13th Metropolitan Magistrate, Calcutta relating to CRR 299 of 2005; Case No. C 3004 of 1998 pending before the learned 13th Metropolitan Magistrate, Calcutta relating to CRR 300 of 2005; Case No. C 2854 of 1998 pending before the learned 16th Metropolitan Magistrate, Calcutta relating to CRR 1253 of 2006; Case No. C 2853 of 1998 pending before the learned Metropolitan Magistrate, 16th Court, Calcutta relating to CRR 1254 of 2006; Case No. C 2856 of 1998 pending before the learned Metropolitan Magistrate, 16th Court, Calcutta relating to CRR 1256 of 2006 stand quashed. Accused persons are discharged. The aforesaid revisional applications are allowed being governed by this judgment. 10. The Criminal Section is directed to send the copy of this judgment to the learned Court below immediately. 11. Urgent Photostat certified copy, if applied for, be handed over to the parties as early as possible.