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2016 (6) TMI 341 - SUPREME COURT

2016 (6) TMI 341 - SUPREME COURT - 2016 (337) E.L.T. 3 (SC) - Offence punishable under Section 56(1)(i) of the Foreign Exchange Regulation Act, 1973 for the alleged contravention of the provisions of Sections 18(2) and 18(3) of the Act - Held that:- The tribunal has arrived at a conclusion that the appellant cannot be held guilty for Section 18(2) read with Section 18(3) of FER Act, 1973 and the advise of the Reserve Bank of India given in its letters dated 21.1.1992 and 18.2.1994 deserve to be .....

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given by the tribunal are based on technical grounds and, therefore, the prosecution is liable to continue. As we perceive, the judgment of the tribunal is on merits, inasmuch as findings have been recorded after analysis of facts and the conclusion has been arrived at that the appellants have not violated the provisions of the Act. In such a situation, it cannot be said that it is a judgment rendered on technical grounds and, therefore, we are compelled to hold that the High Court has totally e .....

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hiva Kirti Singh, JJ. For the Petitioner : Mr. C.U. Singh, Sr. Adv. Mr. Siddharth Bhatnagar, Adv. Mr. S. Mishra, Adv. Mr. Sidharth Mohan, Adv. Ms. Garima Tiwari, Adv. Mr. Nirnimesh Dube,Adv. SLP(Crl.) 40/14 Mr. Siddharth Bhatnagar, Adv. Mr. Sidharth Mohan, Adv. Ms. Garima Tiwari, Adv. Mr. T. Mahipal, AOR For the Respondent : Mr. A.K. Panda, Sr. Adv. Mr. Amarjeet Singh, Adv. Mr. S.A. Haseeb, Adv. Mr. Rajat Mathuria, Adv. Ms. Sonali Singh, Adv. Mr. B. Krishna Prasad, AOR Mr. T. Mahipal, AOR JUDGME .....

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the company as well as its officer were facing trial for the offence punishable under Section 56(1)(i) of the Foreign Exchange Regulation Act, 1973 (for short, 'the Act') for the alleged contravention of the provisions of Sections 18(2) and 18(3) of the Act. 3. As the factual matrix would depict, when the matter was pending for trial before the learned Chief Metropolitan Magistrate, the adjudicating authority vide order dated 30.03.2005 imposed penalty of ₹ 2,00,00,000/- (Rupees tw .....

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of the provisions, scrutinized the allegations made by the Department, discussed the stand put forth by the assessees and came to hold that:- Thus, it is simple and clear from the language that goods which were purchased from Korea and Japan are not covered under Section 18(1)(a). From this sequence, it further flows that Section 18(2) is not applicable to the goods which were sold in international market by way of international transactions because these provisions are made applicable to the g .....

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by an Indian person is not forbidden by Section 19 of FER Act. Shri A.C. Singh, ALA could not point out any other provision in FER Act where spending of foreign exchange is prohibited in international trade by a person resident in India. It is well known fact that international trade is transacted by spending foreign exchange but the earning of foreign exchange is also made by person resident in India. There is no law whereby Indian resident is regulated from entering into international trade. I .....

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t how individual Directors of M/s. Videocon Appliances Ltd. Can be held guilty by the impugned order. It is apparent from the impugned order that partner appellants as well as Director appellants are held guilty doubly and separately even when these names are over-lapping and all of them are also shown as directors of M/s. Videocon Appliances Ltd. 12. The Reverse Bank of India by two letters of dated 21.1.1992 and dated 18.2.1994 as at page 46 and 52 of the records has also stated that internati .....

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foreign exchange, hence, the advice of RBI given by aforesaid two letters is required to be accepted when it is totally in consonance with the legal provisions. [Underlining is ours] 5. Being of this view, the tribunal dislodged the finding of the adjudicating authority. 6. Be it noted here, the order passed by the tribunal was not assailed by the Revenue and, therefore, it has attained finality. 7. Presently, we shall advert to the scenario in the court of the learned Magistrate. During the pro .....

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d Chief Metropolitan Magistrate was challenged in Criminal Revision Application No. 716 of 2008 and the learned Additional Sessions Judge dislodged the view expressed by the learned Magistrate and allowed the revision. Being dissatisfied, the appellant preferred Criminal Application No. 497 of 2011 before the High Court. The learned single Judge referred to the decision Radheshyam Kejriwal v. State of West Bengal & Anr. (2011) 3 SCC 581, noted that the revisional court had relied on the mino .....

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y be shipped from the shores of India. It is noted that permission was obtained by the accused to ship the goods from South Korea and Japan directly. Foreign exchange was paid to the Japanese and Korean companies. The payment was to be received in Indian rupees and same was supposed to be received in India at Indian Bank, Nariman Point Branch, Mumbai. This being nature of transaction, it follows that the export of goods was deemed export from India and foreign exchange was spent for buying the g .....

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the case and its findings are based on technical grounds. The said appreciation has led to the dismissal of the criminal application preferred by the assessee. 10. We have heard Mr. C.U. Singh, learned senior counsel for the appellant and Mr. A.K. Panda, learned senior counsel for the respondents. 11. It is submitted by Mr. Singh that the High Court has not appropriately decided the petition regard being had to the jurisdiction under the Code of Criminal Procedure and keeping in view the princi .....

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the learned Magistrate is absolutely defensible and should not have been interfered with by the revisional court and the High Court should not have given the stamp of affirmance to the order passed in revision. 12. Mr. Panda, learned senior counsel, per contra, would go to the extent of submitting that the decision in Radheshyam Kejriwal (supra) is not in accordance with the principles stated in Standard Chartered Bank and others v. Directorate of Enforcement and Others (2006) 4 SCC 278 and ther .....

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f discharge in the present case and, therefore, this Court should exercise its jurisdiction under Article 136 of the Constitution and set aside the order of the High Court. That apart, it is urged that there is no necessity for reconsideration of the decision in Radheshyam Kejriwal (supra) by a larger Bench. 14. It is obligatory to note at the outset that the findings recorded and the conclusions arrived at by the tribunal are founded on analysis of statutory provisions, the applicability of the .....

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ident, followed the view expressed in the dissenting opinion. The High Court has noted the same and has not really adverted to the said facet. At this juncture it is necessary to state that the revisional court should have followed the view expressed by the majority and not the minority. The approach is absolutely erroneous. Be that as it may, as the order passed by the High Court would show, it has referred to the principles culled out in Radheshyam Kejriwal (supra) and thereafter had proceeded .....

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berated on the justification of the view expressed by the tribunal. It is interesting to note that the High Court has relied on the principles of the majority in Radheshyam Kejriwal (supra) and declined to quash the proceedings. Mr. Panda, learned senior counsel appearing for the revenue would strenuously argue that the Radheshyam Kejriwal (supra) is contrary to the view expressed in the Standard Chartered Bank (supra) and, therefore, the matter requires to be reconsidered by the larger Bench. A .....

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as follows:- … There is nothing in the Act to indicate that a finding in an adjudication is binding on the court in a prosecution under Section 56 of the Act. There is no indication that the prosecution depends upon the result of the adjudication. We have already held that on the scheme of the Act, the two proceedings are independent. The finding in one is not conclusive in the other. In the context of the objects sought to be achieved by the Act, the elements relied on by the learned Sen .....

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proceeding culminated earlier exonerating the person, the question would arise as to whether continuance of the prosecution would be permissible or not. In other words, the question with which we are concerned is the impact of the findings which are recorded on the culmination of adjudication proceedings on criminal proceeding and in case in the adjudication proceedings the person concerned is exonerated can he ask for dropping of the criminal proceeding on that ground alone . 17. Thereafter, it .....

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n the views in Standard Chartered Bank (1) and L.R. Melwani holding that adjudication proceedings and criminal proceeding are two in- dependent proceedings and both can go on simultaneously and finding in the adjudication proceedings is not binding on the criminal proceeding and the judgments of this Court in Uttam Chand, G.L. Didwania and K.C. Builders wherein this Court had taken a view that when there is categorical finding in the adjudication proceedings exonerating the person which is bindi .....

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can be culled out from these decisions can broadly be stated as follows: (i) Adjudication proceedings and criminal prosecution can be launched simultaneously; (ii) Decision in adjudication proceedings is not necessary before initiating criminal prosecution; (iii) Adjudication proceedings and criminal proceedings are independent in nature to each other; (iv) The finding against the person facing prosecution in the adjudication proceedings is not binding on the proceeding for criminal prosecution .....

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ase of exoneration, however, on merits where the allegation is found to be not sustainable at all and the person held innocent, criminal prosecution on the same set of facts and circumstances cannot be allowed to continue, the underlying principle being the higher standard of proof in criminal cases . 19. Clarifying the position, the majority observed that the yardstick would be to judge as to whether the allegation in the adjudication proceedings as well as the proceeding for prosecution is ide .....

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Enforcement Directorate in the 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. 20. We respectfully concur with the said view and do not perceive any reason to disagree with the same and refer the pronouncement in Radheshyam Kejriwal (supra) for reconsideration by the larger Bench. 21. Coming to the facts of the c .....

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