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TMI Blog2015 (8) TMI 1381X X X X Extracts X X X X X X X X Extracts X X X X ..... ds taken are identical, therefore, for the sake of convenience all the three appeals are being disposed of by a common order. 3. Brief facts which are relevant for disposal of the appeals are that appellant M/s. Rare Creations Ltd. was earlier functioning as a firm carrying on business of manufacture and export of leather garments and had made exports of goods to its foreign buyers and had received payments from time to time. The business of erstwhile firm amalgamated with the appellant company which was incorporated on 19-4-1995 as a limited company and took over all the assets and liabilities of the erstwhile firm. Appellants Ajay Soni and M.K. Mongha were its directors. The Enforcement Directorate received an information that M/s. Rare Creations Ltd. had failed to realize export proceeds of substantial amount. Therefore an investigation, was initiated against the company. During the course of investigation a directive was issued under Section 33(2) of Foreign Exchange Regulation Act, 1973 (hereinafter called FERA, 1973) to M/s. Rare Creations Ltd. on 18-12-1996 asking the company to furnish the details of pending export bills, the reasons for non-realization and details of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and US $ 13,400 respectively could be realized. It was further informed that the buyer could not be found at his given address or could be contacted at his numbers. 8. The appellant company also informed that the company had submitted applications to the RBI for extension of time. Copy of the suit for recovery against M/s. Amber International along with the letter dated 17-6-1999 and the letter dated 29-12-2000 were also enclosed as proof of legal action taken against M/s. Ken Wright, Russia. It was informed that the plaint has been admitted for hearing before the Hon'ble Delhi High Court. The company also informed that it has also closed down its business since 1997, but was pursuing the recovery proceedings. 9. The case of non-realization of export proceeds was referred to Bank of Maharashtra, Connaught Place, New Delhi, which informed that proceeds in respect of 32 GRs for a total invoice value of Rs. 2,00,15,984/- were pending realization and also forwarded copies of relevant GR forms. On the basis of the investigations it was found that appellant company had contravened provision of Section 18(2) read with Central Government Notification No. F-1/67/EC/73-1 & 3, da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers and the goods sent by appellant company kept in the warehouse had been stolen and since the buyers had suffered heavy losses they failed to send the remittances. It was also contended that recovery agents had been engaged in an effort to recover the proceeds. It was also informed that the company had received remittances totalling US $ 39,497 in respect of shipment of RLE Incorporation. However, a cheque for US $ 10,000 was dishonoured. 12. In respect of 5 GRs through which exports were made to M/s. Om International, USA part payment was received and the buyer was stated to be not traceable at his given address. It was also contended that the company had made total exports to the tune of Rs. 12 crores during the last five years out of which the unrealized amount was only around Rs. 1.5 crores. The applications for write off/waiver moved to the RBI were under active consideration. The Adjudicating Authority on consideration of the facts and evidence available before him finally held that the efforts made by the appellants for realization of the pending proceeds of Rs. 1,45,45,882/- in respect of 31 GRs were inadequate, to suffice the requirement of Section 18(2) and of FER ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll possible efforts by the appellants. Further submission is that under Section 18 of FERA, 1973 the requirements cast upon the exporter in respect of realization of sale proceeds is to take all reasonable steps to receive or recover the payment of goods for realization and repatriation of the export proceeds. Application for waiver and write off were duly moved to RBI through authorized dealer and at the time of disposal of the adjudication proceedings the request for waiver or write off had not been declined by the RBI. 14. Further submission is that a criminal complaint under Section 56 of FERA, 1973 read with Sections 49(3) and (4) of Foreign Exchange Management Act, 1999 was filed against the appellants based on the same allegations in the Court of Additional Chief Metropolitan Magistrate, New Delhi. The appellants filed Writ Petitions (Crl.) Nos. 223-225/2006 before Hon'ble Delhi High Court under Articles 226 and 227 of the Constitution of India and Section 482 CrPC. The Hon'ble Delhi High Court after due consideration of all the aspects involved in the matter, vide its judgment dated 16-4-2009 has allowed the Writ Petitions and quashed the criminal complaint under Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a half years the company has failed to take any steps in implementing the orders. Further submission is that at the time when the adjudication order was passed the order of the Hon'ble High Court had not been passed therefore the Adjudicating Authority could not have anticipated the result of criminal proceedings and therefore he rightly decided the adjudication proceedings independently. Both the proceedings are distinct. Lastly it has been submitted that the judgment of the Hon'ble High Court will not have any bearing and the alleged contraventions have been fully established under the adjudication proceedings. The standard of proof in the adjudication proceedings is not so stringent as compared to that of criminal proceedings therefore the impugned order which is a reasoned and detailed order cannot be set aside. The complaint under Section 56 of FERA, 1973 filed by the Enforcement Directorate has been quashed under Section 482 CrPC and the prosecution has not been set aside/quashed after holding a full trial therefore the instant appeals are liable to be dismissed. 17. We have considered the submissions of ld. Counsel for the appellants and ld. Legal Consultant. In Gopald ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esult in setting aside ipso facto of the orders of confiscation passed by the competent authority under the Act. 18. In Radhey Shyam Kejriwal v. State of West Bengal and Anr. - 2011 (1) JCC 943 the Hon'ble Supreme Court has held that proceedings under Section 51 and 56 of FERA, 1973 are independent of each other and finding in an adjudication proceedings under Section 51 is not binding in the proceedings for prosecution under Section 56 of the Act. The Hon'ble Court further held that adjudicating proceedings and criminal proceedings can be launched simultaneously decision in adjudication proceedings is not necessary before initiating criminal prosecution, adjudicating proceedings and criminal proceedings are independent in nature to each other. Adjudication proceedings by the Enforcement Directorate is not prosecution by a competent Court of law to attract the provisions of Article 20(2) of the Constitution of India or Section 300 of the Code of Criminal Procedure. The finding in adjudication proceeding in favour of person facing trial for identical violation will depend upon the nature of findings recorded. If the exoneration in adjudication proceedings is on technical groun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sidering the disputed facts regarding Hon'ble acquittal of the appellant on the charges in the criminal case which are similar in the disciplinary proceedings. The Hon'ble Supreme Court in Paragraph 26 of the judgment has further observed as follows : "26. We have answered the alternative legal contention urged on behalf of the appellants by accepting the judgment and order of the Sessions Judge in which case they have been acquitted hon'bly from the charges which are more or less similar to the charges levelled against the appellants in the disciplinary proceedings by applying the decisions of this Court referred to supra. Therefore we have to set aside the orders of dismissal passed against the appellants by accepting the alternative legal plea as urged above having regard to the facts and circumstances of the case." The Hon'ble Supreme Court accepted the appeal and set aside the orders of dismissal against the appellants. 21. In G.M. Tank v. State of Gujarat and Anr. relied upon by ld. Counsel for the appellants also the controversy related to examination of the effect of Hon'ble acquittal in criminal case over the disciplinary proceedings and the Hon'ble Supreme Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of FERA r/w Central Government Notification and criminal prosecution under Section 56 of FERA, 1973 before the Court of Magistrate appear to be exactly identical facts. 24. In the criminal matter as we have observed earlier the facts are exactly identical. In Paragraph 7 of the judgment of Hon'ble High Court in M/s. Rare Creations v. Union of India the Hon'ble High Court has observed that the company vide its order dated 18-12-1997 confirmed to the RBI that it had taken all possible steps to effect the recoveries and had also moved an application on 31-3-1999 with the Bank of Maharashtra seeking grant of extension from RBI for realization of export proceeds in respect of suit filed before the Hon'ble High Court against foreign buyer being suit No. 2995/1995. In Paragraph 8 of the judgment, the Hon'ble High Court has observed that in the communication dated 17-6-1999 the petitioner therein (company) gave detailed information in view of the action taken report and the steps taken for realization of the amounts to enforcement officer and also gave details of the outstanding bills and the bill amounts with respect to consignments and also the details of the suit against Amber Int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h 29 of the judgment of the Hon'ble High Court in Rare Creations matter, it has been observed that respondents could not explain as to why filing of a civil suit cannot be termed as reasonable steps taken and on what basis it cannot be said that these steps taken are a mere eyewash. The Hon'ble Court has further observed that the recoveries made and the decree was passed by this Court clearly show that the petitioner had taken not only reasonable steps but all possible steps to institute proceedings and thereafter to take recoveries and gain the fruits of the decree. In Paragraph 30 of the Hon'ble High Court's judgment the Hon'ble High Court has dealt with the aspect of recoveries and non-application of mind by the Adjudicating Authority and also not taking into account the steps taken by the appellant herein for the recovery of the outstanding export proceeds. In view of this, the criminal proceedings by the Hon'ble High Court were considered to be futile exercise and to prevent the abuse of process and to meet the ends of justice the petition was allowed and the complaint was quashed. 26. In Paragraph 32 of the order of the Adjudicating Authority, it has been held that in v ..... X X X X Extracts X X X X X X X X Extracts X X X X
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