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TMI Blog1969 (7) TMI 109X X X X Extracts X X X X X X X X Extracts X X X X ..... ap, Managing Director of .accused No. 1, appellant in Criminal Appeal No. 19/1969 was accused No. 2. The circumstances under which the complaint was filed may be briefly stated. The premises of accused No. 1 were raided by the Enforcement Directorate on the 20th and 21st December, 1966 and certain records were seized from the control of the Manager. Some enquiries were made subsequently and, thereafter, on the 25th August, 1967, a notice was issued by the respondent to the two accused to show cause why adjudication proceedings should not be instituted against them for violation of sections 4 and 9 of the Foreign Exchange Regulation Act VII of 1947 (hereinafter referred to as "the Act") on the allegation that a total sum of 2,44,713.70 Swedish Kronars had been deposited in a Bank account in Sweden in the name of accused No. 2 at the instance of accused No. 1 which had acquired the foreign exchange and had failed to surrender it to. an authorised dealer as required under the provisions of the Act. They were called upon to show cause in writing within 14 days of the receipt of the notice. Thereafter, some correspondence went on between the respondent and the two accused and, later, o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In addition, the complaint also charged both the accused with violation of Rule 132-A(2) of the Defence of India. Rules (hereinafter referred to as "the D.I. Rs.") Which was punishable under Rule 132-A(4) of the said Rules. Thereupon, both the accused moved the High Court for quashing the proceedings sought to be taken against them on the basis of this complaint. Those applications having been dismissed, the appellants have come up in these appeals challenging the order of the High Court dismissing their applications and praying for quashing of the proceedings being taken on the basis of that complaint. In these appeals. Mr. A.K. Sen, appearing on behalf of the appellants, has raised three points. In respect of the prosecution for violation of ss. 4(1), 5(1)(e) and 9. of the Act punishable under s. 23 (1 ) (b) of the Act, the principal ground raised is that s. 23(1)(b) of the Act is ultra rites Article 14 of the Constitution inasmuch as it provides for a punishment heavier and severer than the punishment or penalty provided for the same acts under s. 23(1)(a) of the Act. In the alternative, the second point taken is that, even if s. 23 ( 1 ) (b) is not void, the complaint in respe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nfiscated to the Central Government and further direct that the foreign exchange holdings, if any, of the person committing the contravention or any part thereof shall be brought back into India or shall be retained outside India in accordance with the directions made in this behalf. Explanation. For the purposes of this sub-section, property in respect of which contravention has taken place shall include deposits in a bank, where the said property is converted into such deposits. (2) Notwithstanding anything, contained in section 32 of the Code of Criminal Procedure, 1898 (Act 5 of 1898), it shall be lawful for any magistrate of the first class, specially empowered in this behalf by the State Government, and for. any presidency magistrate to pass a sentence of fine exceeding two thousand rupees on any person convicted of an offence punishable under this section. (3) No Court shall take cognizance- (a) of any offence punishable under subsection (1) except upon complaint in writing made by the Director of Enforcement, or (aa) of any offence punishable under subsection (2) of section 191,- (i) where the offence is alleged to have been committed by an officer of Enforcement not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gn exchange in respect of which the contravention has taken place, or Rs. 5,000/-, whichever is more.This penalty can be imposed by an adjudication made by the Director of Enforcement in the manner provided in s. 23D of the Act. The alternative punishment that is provided in cl. (b) is to be imposed upon conviction by a Court when the Court can sentence the person to imprisonment for a term which may extend to two years, or with fine, or with both. Clearly, the punishment provided under s.. 23 (1)(b) is severer and heavier than the penalty to which the person is made liable if proceedings are taken under s. 23(1)(a) instead of prosecuting him in a Court under s. 23 (1)(b). The argument of Mr. Sen is that this section lays down no principles at all, for determining when the per-son concerned should be proceeded 'against under s. 23(1)(a) and when under s. 23(1)(b), and it would appear that it is left to the arbitrary discretion of the Director of Enforcement to decide which proceedings should be taken. The liability of a person for more or less severe punishment for the same act at the sole discretion and arbitrary choice of the Director of Enforcement, it is urged, denies equality ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken under s. 23 (1). The effect of this interpretation is that, whenever there is any contravention of any section or rule mentioned in s. 23( 1 ), the Director of Enforcement must first proceed trader the principal clause of s. 23D(1) and initiate proceedings for adjudication of penalty. He cannot, at that stage, at his discretion, choose to file a complaint in a Court for prosecution of the person concerned for the offence under s. 23( 1 )(b). The Director of Enforcement can only file a complaint by acting in accordance with the proviso to S. 23D(1), which clearly lays down that the complaint is only to be filed in those cases where, at any stage of the inquiry, the Director of Enforcement comes to the opinion that, having regard to the circumstances of the case, the penalty which he is empowered to impose would not be adequate. Until this requirement is satisfied, he cannot make a complaint to the Court for prosecution of the person concerned under s. 23 (1) (b). The choice of the proceeding to be taken against the person, who is liable for action for contravention under S. 23 (1), is, thus, not left entirely to the discretion of the Director of Enforcement, but the criterion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat is the reason why Parliament simultaneously introduced the procedure to be adopted under s. 23D(1) in the course of which the Director of Enforcement is' to decide whether a complaint is to be made in Court and under what circumstances he can do so. We have also to keep in view the general principle of interpretation that, if a particular interpretation will enure to the validity of a law, that interpretation must be preferred. In these circumstances, we have no hesitation in holding that, whenever there is a contravention by .any person which is made punishable under either cl. (a)or cl. (b) of s. 23(1), the Director of Enforcement must first initiate proceedings under the principal clause of s..23D( 1 ) and he is empowered to file a complaint in Court only when he finds that he is required to do so in accordance with the proviso. It is by resorting to the proviso only that he can place that person in greater jeopardy of being liable to a more severe punishment under s. 23(1)(b) of the Act. The view we have taken is in line with the decision of this Court in Shanti Prasad Jain v. The Director of Enforcement [1963] 2 S.C.R. 297., where this Court considered the validity of s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under s. 23 (1) (b). In the case before us, it is s. 23(1)(b) which is challenged and on a slightly different ground that it provides for a higher punishment than that provided by S. 23 (1) (a). The answer to both the questions is found in the view taken by us in the present case as well as by this Court in the case of Shanti Prasad Jain([19631 2 S.C.R. 297) that the Director of Enforcement, though he has power to try the case under S. 23 (1) (a), can only send the case to the Court if he considers that a severer punishment than what he is authorised to impose should be awarded. The Court in that case also thus accepted the principle that S. 23D limits entirely the procedure the Director of Enforcement has to observe when deciding whether the punishment should be under s. 23 (1) (a) or under S. 23 (1) (b). However, we consider that, in this case, there is considerable force in the second point urged by Mr. Sen on behalf of the appellants that the respondent, in filing the complaint on 17th March, 1968, did not act in accordance with the requirements of the proviso to s. 23D(1). We have held above that the proviso to S. 23D(1) lays down the only manner in which the Director of Enf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .09 would not be adequate. The respondent, in the case of accused No. 2, appears to have formed 'a prima. facie opinion that a complaint should be made against him in Court when he issued the notice on 4th November, 1967 under the proviso to s. 23(3) of the Act, and a similar opinion in respect of accused No. 1 when he issued the notice on 20th January, 1968 under the same proviso. There is, however, no information on the record to indicate that, by the time these notices were issued, any material had appeared before the respondent in the course of the enquiry initiated by him through the notice dated 25th August, 1967 which could lead to the opinion being formed by the respondent that he will not be in a position to impose adequate penalty by continuing the ,adjudication proceedings. Even subsequently, when one of the accused replied to the notice, there does not appear to have been brought before the respondent any such relevant material. Mr. S.T. Desai on behalf of the respondent drew our attention to para. 3(E) of the petition presented by accused No. 1 for certificate under Art. 132(1) and Art. 134(1)(c) of the Constitution in this case which contains the following pleading : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions were carried on by the respondent; but these investigations would not be part of the inquiry which had to be held in accordance with Adjudication Proceedings and Appeal Rules, 1957. It appears that, at one stage, before the complaint was filed, a writ petition was moved under Art. 226 of the Constitution in the High Court of Madras praying for the quashing of the notice dated 25th August, 1967. The order made' by the High Court on one of the interim applications in connection with that notice shows that, while that writ petition was pending, some investigations were permitted by the Court, but further penal proceedings in pursuance of that notice were restrained. This clearly indicates that whatever statements were recorded by the respondent as mentioned in the petition of accused No. 1 referred to above must have been in the course of investigation and not in the course of the inquiry under s. 23D ( 1 ) of the Act. The record before us, therefore, does not show that any material at all was available to the respondent in the course of the enquiry under s. 23D( 1 ) on the basis of which he could have formed an opinion that it was a fit case for making a complaint on the ground ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ule has been omitted, no prosecution in respect of that contravention can be instituted. He conceded the .possibility that, if a prosecution had ,already been started while R. 132A was in force, that prosecution might have been competently continued. Once the Rule was omitted altogether, no new proceeding by way of prosecution could be initiated even though it might be in respect of an offence committed earlier during the period that the rule was in force. We are inclined to agree with the submission of Mr. Sen that the language contained in' el. 2 of the Defence of India (Amendment) Rules, 1965 can only afford protection to action already taken while the rule was in force, but cannot justify initiation of a new proceeding which will not be a thing done or omitted to be done under the rule but a new act of initiating a proceeding after the rule had ceased to exist. On this interpretation, the complaint made for the offence under R. 132A(4) of the D.I. Rs., after 1st April, 1965 when the rule was omitted, has to be held invalid. This view of ours is in line with the general principle enunciated by. this Court in the case of S. Krishnan and Others' v. The State of Madras([1951] S.C. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icted in respect of the offence which he had committed when the regulation was in force. That case, however,is distinguishable from the case before us inasmuch as, in that case, the saving provision laid down that the operation of that Act itself was not to be affected by the expiry as respects things previously done or omitted to be done. The Act could, therefore, be held to be in operation in respect of acts already committed, so that the conviction could be validly made even after the expiry of the Act in respect of an offence committed before the expiry. In the case before us, the operation of R. 132A of the D.I. Rs. has not been continued after its omission. The language used in the notification only affords protection to things already done under the rule, so that it cannot permit further application of that rule by instituting a new prosecution in respect of something already done. The offence alleged against the accused in the present case is in respect of acts done by them which cannot be held to be acts under that rule. The difference in the language thus makes it clear that the principle enunciated by the Privy Council in the case cited above cannot apply to the notifica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n after the Defence of India Act had ceased to be in force. That case is, however, distinguishable from the case before us in two respects. In that case, the prosecution had been started before the Defence of India Act ceased to be in force and, secondly, the language introduced in the amended sub-s. (4) of s. 1 of the Act had the effect of making applicable the principles laid down in s. 6 of the General Clauses Act, so that a legal proceeding could be instituted even after the repeal of the Act in respect of an offence committed during the time when the Act was in force. As we have indicated earlier, the notification of the Ministry of Home Affairs omitting R. 132A of the D.I.Rs. did not make any such provision similar to, that contained ms. 6 of the General Clauses Act. Consequently, it is clear that, after the omission of R. 132A of the D.I.Rs., no prosecution could be instituted even in respect of an act which was an offence when that Rule was in force. ' In this connection, Mr. Desai pointed out to us that, simultaneously with the omission of R. 132A of the D.I.Rs., s. 4(2) of the Act was amended so as to bring the prohibition contained in R. 132A(2) under s. 4(1) of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X
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