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AJAY BAGARIA Versus UNION OF INDIA & ANR.

CRIMINAL M C No 5095 of 2006 & Crl M A 883/2002 - Dated:- 29-4-2008 - DR. JUSTICE S. MURALIDHAR For the Petitioner : S/Shri S.B.Upadhyay, Senior Advocate with Santosh Kumar & Saurabh Singh, Advocates For the Respondent : Mr. P.P. Malhotra, Addl. Solicitor General of India with Mr. Navin Matta, Advocate JUDGMENT S. Muralidhar, J. 1. This petition under Section 482 of the Code of Criminal Procedure, 1973 (CrPC) seeks the quashing of Criminal Complaint titled Chief Enforcement Officer v. Ratan .....

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mpany M/s. Ratan Exports and Industries Limited (REIL) and six others. The Petitioner here was arrayed as Accused No. 4 in the complaint. 3. The complaint stated that by a letter dated 26th May, 1997 Reserve Bank of India (RBI) had informed the Enforcement Directorate that export proceeds to the tune of ₹ 22.95 crores were pending realization in the account of REIL. Earlier, for the purpose of investigation, a directive had been issued by the RBI to REIL on 19th September 1996 under Sectio .....

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te. Shri Palash Ganguly informed that: Shri Ratan Bagaria is controlling all the operations and the day-to-day affairs of the company, the presently S/Shri Ratan Bagaria, Managing Director and S/Shri Bijoy Bagaria, N.K. Hara, S.N. Garg and Palash Ganguly (himself) are the Directors and are working on the instructions of Shri Ratan Bagaria that Shri Ratan Bagaria is out of country to Russin since January 1997; that REIL has an office in Moscow, Russia at 19, Begovarya Street and the phone No. is .....

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ate a directive was sent on 24th October, 1997 to the United Bank of India, 16, K.G. Marg, New Delhi to furnish the details of outstanding export proceeds and the details of proprietor/partners/Directors of REIL. By their letter dated 12th April 2001 United Bank of India wrote to the Enforcement Directorate informing inter alia that Directors/Guarantors of the company were the following: 1. Shri Rattan Bagaria 2. Shri Bijoy Bagaria 3. Smt. Vidya Bagaria 4. Shri Ajay Bagaria 5. Shri Rajan Bagaria .....

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I had acted as a Director of Rattan Exports and Industries Ltd. d) I was not aware of the day to day business of the said Company, was not aware of outstanding export realization, and was not in charge and responsible to the affairs of the said Company in any manner. e) No statement of any of the persons relied upon in the show cause notice connects me with the company. f) No summons had also at any time been served upon me. g) Simply because I was the Director of the said Company at the releva .....

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to a show cause notice issued on 9th May, 2002 containing the very same allegations, a reply was sent by the petitioner on 3rd June, 2002 stating that he was one of the brothers of the Ratan Lal Bagaria who had floated REIL and at his request the Petitioner had lent his name for the Board of Directors. He stated that as far as I can remember I have never attended any Board Meeting of the said Company. I was never in charge nor responsible for the affairs of the said Company. It was further asse .....

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the show cause notice connects me with the company. f) No summons had also at any time been served upon me. g) Simply because I was the Director of the Company at the relevant time I cannot be fastened with any liability for violation of Sections 18(2) and 18(3) of the Foreign Exchange Regulation act, 1973 by the said Company. 7. The Petitioner has placed on record postal receipts to show that the reply dated 20th May 2002 was dispatched to the Respondent by speed post on 24th May 2002. 8. On 3 .....

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s day-to-day business. 9. On 30th May 2002 the following order was passed by the learned ACMM: 30.5.2002 Present: SPP along with complainant. New complaint presented. It be checked and registered. Photocopy of documents have also been filed along with complaint. Ahlmad is directed to check the documents as per index attached with these documents. An application for exemption of personal attendance of complainant and for dispensing of recording of preliminary evidence has also been moved along wi .....

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gainst accused under Section 56 of FERA 1973. I take cognizance of offence under Section 56 FERA 1973. Issue summons to accused for 3.9.2002. Sd/- ACMM 10. In the present petition filed by the Petitioner and on 9th October 2002 it was directed by this Court that the Petitioner could appear before the learned ACMM on date fixed and thereafter he would be admitted to bail. By order dated 22nd May 2003 the proceedings before the learned ACMM were stayed. That interim order has continued till date. .....

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that date was drawn up mechanically and in haste to meet the deadline of 30th May, 2002 for filing a complaint under the erstwhile FERA. The complaint itself indicates that the Respondent No. 2 was aware that while Ratan Bagaria and Bijoy Bagaria were handling the business of the Company directly, the petitioner was only stated to be well conversant with its business and that this did not satisfy the requirement of Section 68(1) FERA. Relying on the judgment in Girdhari Lal Gupta v. D.H. Mehta w .....

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wing the said decision, this Court had in Rajan Bagaria v. Union of India 2008 (1) JCC 679, concerning the very same complaint case, discharged one other accused. He submits that the position as regards the present Petitioner is no different and therefore the Petitioner must also be discharged. 12. Mr. P.P. Malhotra, the learned Additional Solicitor General appearing for the Respondent No. 2 Enforcement Directorate, relies on the specific averments in the complaint where it is stated that along .....

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eshold particularly when these were serious violations resulting in economic offences for which legislatively a presumption could be drawn in terms of Section 18(3) and 59 FERA. He relies on the judgment in State of Haryana v. Bhajan Lal (1992) Supp 1 SCC 335 to contend that the power under Section 482 CrPC should be sparingly used. 13. Section 68 FERA reads as under: 68. Offences by companies: (1) Where a person committing a contravention of any of the provisions of this Act or of any rule, dir .....

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out his knowledge or that he exercised all due diligence to prevent such contravention. (2) Notwithstanding anything contained in Sub-section (1), where a contravention of any of the provisions of this Act or of any rule, direction or order made thereunder has been committed by a company and it is proved that the contravention has taken place with the consent or connivance of, or is attributable to any neglect on the part of, any director, manager, secretary or other officer of the company, such .....

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inimum averment that is required to be made in a complaint for an offence under Section 138 NI Act has been fairly well settled in the judgment of the three Judge Bench of the Supreme Court in Neeta Bhalla I. It was held that the averment must contain the two mandatory elements, i.e., it should state the person sought to be arraigned as an accused, apart from the Company, was a person in charge of the affairs of the Company and responsible to it for the conduct of its business and further that s .....

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as regards a complaint against a company under FERA where liability is sought to be fastened on to a Director using Section 68 thereof. 15. The question that arises in the present case is whether in fact the Enforcement Directorate had material before it even at the time of filing a complaint, to reasonably conclude that the Petitioner here was, at the time of the commission of the offence, a person who was in charge of the affairs of the company and responsible to it for the conduct of its busi .....

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e director, manager, secretary and any other officer. There is no other category of persons like for e.g., the guarantors, who can be made liable for the offences committed by a company under Section 68 FERA. 17. As far as the petitioner is concerned, the complaint itself states that of the three persons, i.e., Shri Ratan Lal Bagaria, Shri Bijoy Bagaria and Shri Ajay Bagaria the first two were handling the business directly. Therefore, the case of Ajay Bagaria, even according to Respondent No. 2 .....

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at the time of the commission of the offence does not satisfy the requirement of the law as explained by the Supreme Court in Neeta Bhalla I. Having embarked upon an enquiry, by sending an opportunity notice to which a reply was sent by the petitioner, the Respondent No. 2 was expected to ascertain some material which would satisfy the minimum requirement of the law vis-a-vis the petitioner for making out a prima facie case. 18. The decision in Girdhari Lal Gupta in relation to Section 23-C of .....

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ted by the company. Therefore, in accordance with well-settled principles this section should be construed strictly. 6. What then does the expression a person in-charge and responsible for the conduct of the affairs of a company mean' It will be noticed that the word 'company' includes a firm or other association and the same test must apply to a director in-charge and a partner of a firm in-charge of a business. It seems to us that in the context a person 'in-charge' must me .....

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