TMI Blog2006 (2) TMI 668X X X X Extracts X X X X X X X X Extracts X X X X ..... d penalties purported to be imposed. Are these proceedings identical in nature or one is independent of the other, is therefore, the core issue. If they are not, still, exoneration in one would mean continuation of the latter an abuse of the process of the Court, in the facts and circumstances of this case. 4. The factual background is as under. Sometime in June 1993 information came to be received by the Department of Enforcement that applicant in Criminal Application No. 1793 of 2003 was engaged, on large scale, in the making of compensatory payments. Pursuant thereto on 25th June 1993 his residential premises and office premises were searched and certain documents were seized from both premises. On 25th June 1993 and 26th June 1993 his statement came to be recorded by the Officer at their office, in which Shri Jain made certain admissions that he was importing pharmaceutical drugs from one Anand of Singapore, whom he has met at Lugano through Preetam Khurana. In the statement it was further stated that he was giving foreign exchange to the said Anand or his men for the purchase of the imported pharmaceutical drugs and the said foreign exchange was purchased from Page 727 Raic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplicants are exonerated by the adjudicating authority, then on same set of allegations, parallel criminal proceedings cannot be continued. Such criminal proceedings and/or continuation thereof is an abuse of process of law and, therefore, he submits that this is a fit case where this Court should exercise it's inherent powers and quash the criminal proceedings. Shri Desai relies upon the following decisions: 1) Uttam Chand and Ors. v. Income Tax Officer, Central Circle, Amritsar; 2) (1984) Supp SCC-437 P.Jayappan v. S.K.Perumal, First Income Tax Officer, Tuticorin; 3) K.T.M.S. Mohd. and Anr. v. Union of India; 4) 1995 Supp.(2)-scc-724 G.L. Didwania and Anr. v. Income Tax Officer and Anr. 5) P.S. Rajya v. State of Bihar. 6) 1996(84)ELT-404 ITC Ltd. v. Collector of Central Excise. 7) 2003-Cr.L.J.-1698 Dy. Chief Controller of Imports and Exports v. Roshanlal Agarwal; 8) K.C. Builders and Anr. v. The Assistant Commissioner of Income Tax. 9) 1993-Cr.L.J. (Mah)-88 Mohan Rewachand Mankaal v. L.D. Arora. 10) 1996-Cr.L.J.449 Shastri Sales Corporation v. ITO. 11. 1996(1)-All.M.R.-444 Jamnadas Madhavji v. D.C. Shreedhar. 12. 1998(6)-LJ-394 Ramniklal Pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that it is for the purposes of adjudging penalty. He submits that under section 18 of the Act, a provision is made for payment of exported goods. He invites my attention to the provisions of sub section 3 of Section 18 and submits that under section 50 penalty is leviable for contravention of the provisions of the Act other than Sections 13, 18(1)(a), 18-A and 19(1)(a) of the same. He submits that as far as these provisions are concerned, no penalty can be levied. However, such contravention is punishable as an offence under Section 56 of the Act, and therefore, the submissions of applicants should not be accepted. 11. Shri Salvi places reliance upon a decision of Supreme Court Maqbool Hussain v. State of Bombay. He also relies upon the decisions Thomas Dana v. State of Punjab Asst. Collector of Customs Bombay v. L.R. Melwani, 1999-Cr.L.J. 2970 Anz Grindlays Bank Bombay v. Directorate of Enforcement, Bombay. For all these reasons, he submits that the applications be dismissed. 12. With the assistance of Shri Desai and Shri Salvi I have perused the orders passed by the Special Director of Enforcement, Ministry of Finance, Government of India as also orders of the learned Chie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the learned Sessions Judge and the learned Sessions Judge concluded that a decision of the Supreme Court and the Division Bench decision of this Court referred to above lay down the principle that adjudication proceedings do not amount to prosecution and order passed therein does not amount to punishment. 16. In the opinion of learned Sessions Judge, judgements laying down the above principle, are under Customs Act or FERA. The under lying principle that two proceedings are not identical, cannot be brushed aside. Holding so, he dismissed the revision applications. 17. In 2004-All.M.R.(Cri.)-2129 Ushanes Nrupendra Mehta v. State of Maharashtra and Anr. a learned Single Judge of this Court had an occasion to consider some what similar controversy. The learned Judge after noticing Supreme Court decisions in the field, some of which have been relied upon by Shri Desai before me, observed thus: 18. It appears from the above judgements that though it is true that generally, if a person is fully exonerated in the adjudication proceedings, Page 731 a prosecution based on the same evidence and on the same charges is liable to be quashed, no hard and fast rules can be laid down in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exonerated in adjudication proceedings, the prosecution may still have to go on. 18. In the present case the applicants were served with five show cause notices. The five show cause notices were served after their premises searched, documents seized and statements recorded. The charge is that they violated Page 732 the abovementioned provisions of FERA.. Certain payments were made/foreign exchange sold without complying with the provisions of FERA as also without permission from the Reserve Bank of India. The adjudicating authority has, upon consideration of the entire materials including replies of the applicants, held thus: 27. Now coming to the charge under Section 9(1)(c) of FERA, 1973 in the SCN-I, wherein it is alleged that Shri Parasmal Jain had acknowledged a debt of US$ 320822 in favour of Shri Anand of Singapore, a person resident outside India, against pharmaceutical drugs/ raw materials purchased from Shri Anand, which were smuggled to India, the said charge is primarily based on the entries appearing in page 5 of bunch 'D' of the documents seized from Shri Parasmal Jain and his statement. As already discussed earlier, the entries appearing in the said doc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent seized from Shri Parasmal and his statement are not corroborated by the statement of shri Randhir Jain. Further, there is Page 733 nothing on record to indicate these persons being non resident except the retracted statement of Shri Parasmal Jain voluntariness of which has been found to be doubtful. Therefore the charges under Section 9(1)(d) and 9(1)(b) ibid. alleged in this SCN-III against Shri Parasmal and Randhir Jain respectively would also fail. 30. Now coming to SCN-IV, it is alleged that Shri Parasmal purchased pharmaceutical goods valued at ₹ 43,19,93,230 from Shri Anand of Singapore, purchased US$ equivalent to the said amount at rates ranging from ₹ 33.80 to ₹ 35 from Shri Babulal @ Raichand Jain in contravention of under Section 8(1) and 8(2) ibid. for selling the said amount of foreign exchange to Shri Parasmal. The amount of ₹ 43,19,93,230 is arrived at on the basis of the statement of Shri Parasmal saying that the total transactions between him and Shri Anand would amount to ₹ 45 crores. From this amount, an amount of ₹ 1,12,28,770 (being equivalent to US$ 3,20,822 @ 35 per dollar, which is subject matter of SCN-I) has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the charges is the same and when the order of exoneration in adjudication proceedings is conclusive, then whether any useful purpose will be served by allowing continuation of the criminal proceedings. The Supreme Court in P. Jayappan v. S.K. Perumal First Income Tax Officer, Tuticorin reported in 149 I.T.R. 696 has observed thus: At the outset it has to be stated that there is no provision in law which provide that a prosecution for the offences in question cannot be launched until reassessment proceedings initiated against the assessee are completed. Section 279 of the Act provides that a person shall not be proceeded against for an offence punishable under Section 276C or Section 277 of the Act except at the instance of the Commissioner. It further provides that a person shall not be proceeded against for an offence punishable under those provisions in relation to the assessment for an assessment year in respect of which the penalty imposed or imposable on him under clause (iii) of sub section (1) of section 271 has been reduced or waived by an order under Section 273A. The Commissioner has the power either before or after the institution of proceedings to compound any such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 1973. Section 68 as caption indicates, deals with the offences by a Company. As such, Section 68 cannot be invoked for the levy of penalty on the persons indicated by therein. We find considerable force in this submission. 20. However, as has been stated above, it is not as if both proceedings cannot go on. The nature of the proceedings has also been noted and the difference spelt out in the Supreme Court decision referred to above. It is equally true that at the stage where the criminal proceedings are today, namely, framing of charge, it cannot be said that their continuance further is impermissible in law. However, it is also well settled that if the continuation of the criminal proceedings after final conclusion of adjudication proceedings is an abuse of process of the Court, then certainly powers under Section 482 of Cr.P.C. can be exercised. Precisely this has been done in the case of U.N.Mehta by a learned Single Judge of this Court. There the charges were under the FERA.. In that case, adjudication proceedings were in favour of the applicant before this Court. The Department did not carry the matter further and allowed the order of the Special Director to gain fina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udicate. In his submission, if there is a contravention of any provisions of this Act, then penalties can be imposed under Section 50 and that power is expressly kept out of purview of Section 56 which deals with offence and prosecutions. He submits that words without prejudice to any award of penalty by the adjudicating officer under this Act appearing in Section 56(1) make the intention of the Legislature absolutely clear. He submits that these provisions have not been noticed by the learned Single Judge so also she has failed to notice Rule 2(2) of the FERA Appellate Tribunal Rules. The said judgement, therefore, is not laying down the correct law, according to Shri Salvi. It is per incuriam because the above mentioned statutory provisions have not been noticed, rather they have been ignored. 23. In my view, this larger controversy posed before me need not be considered in the facts and circumstances of this case. Independently of this judgement I have reproduced the factual material in this case. I have reproduced the observations and findings of the Special Director. Further, my attention is also invited to another judgement of Supreme Court K.C. Builders and Anr. v. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lative enactment dealing with procedure can provide for all cases that may possibly arise. Courts, therefore, have inherent powers apart from express provisions of law which are necessary for proper discharge of functions and duties imposed upon them by law. That is the doctrine which finds expression in the section which merely recognizes and preserves inherent powers of the High Courts. All Courts, whether civil or criminal possess, in the absence of any express provision, as inherent in their constitution, all such powers as are necessary to do the right and to undo a wrong in course of administration of justice on the principle quando lex aliquid alicui concedit, concedere videtur et id sine quo res ipsae esse non potest when the law gives a person anything it gives him that without which it cannot exist). While exercising powers under the section, the Court does not function as a court of appeal or revision. Inherent jurisdiction under the section though wide has to be exercised sparingly, carefully and with caution and only when such exercise is justified by the tests specifically laid down in the section itself. It is to be exercised ex debito justitiae to do real and subs ..... X X X X Extracts X X X X X X X X Extracts X X X X
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