M.L Tahaliyani, J.:— The petitioners are original accused nos. 1 and 5 in Criminal Complaint case no. 1149.S/2002 pending in the Court of Chief Metropolitan Magistrate, Mumbai. They are facing trial for the offence punishable under Section 56(1)(i) of Foreign Exchange Regulation Act, 1973 for the alleged contravention of the provisions of Section 18(2) and 18(3) of Foreign Exchange Regulation Act, 1973. In all there are 19 accused in the said case. Respondent nos. 3, 4, 5 and 6 are also accused in the said criminal case. Respondent no. 1 is State of Maharashtra and Respondent no. 2 is Assistant Director of Enforcement Directorate having his office at Janmabhoomi Chambers, Mumbai-400001.
2. The petitioners feel aggrieved by the order passed by the learned Additional Sessions Judge on 7.4.2011 in Criminal Revision Application no. 716 of 2008 whereby the learned Additional Sessions Judge has set aside the order passed by the learned Chief Metropolitan Magistrate ON 29.5.2008 The learned Chief M.M by his order 29.5.2008 had discharged all the accused under Section 245(2) of Cr.P.C holding interalia that there existed no ground to proceed against the accused. The crux of the order of learned Chief Metropolitan Magistrate can be found in paragraph 39 of the order which runs as under:-
“Thus after considering the submissions of both the sides, the accused have made out a case u/s.245(2) of Cr.P.C, and as the Department has not succeeded in the departmental proceedings, where a lesser degree of proof is required, then allow to proceed with the criminal prosecution will be an abuse of the process of law. In view of the aforesaid observations, I proceed to pass the following order:-
All the accused are discharged u/s.245(2) of Cr.P.C of the offences u/s.18(2) and 18(3) r/w.Sec.68(1), punishable u/s.56(1)(i) of the Foreign Exchange Regulation Act, 1973, and r/w. Section 49(3) and (4) of the Foreign Exchange Management Act, 1999.
Their bail bonds stand cancelled.”
3. As such the order of the learned Chief M.M was outcome of the decision delivered by the Appellate Tribunal for Foreign Exchange, New Delhi in various appeals filed by the accused against the order of Special Director of Enforcement Directorate, Mumbai. The Special Director of Enforcement Directorate in the departmental proceedings had found the accused including the applicants guilty of contravention of provisions of Sections 18(2) and 18(3) of Foreign Exchange Regulation Act, 1973 and had imposed various sums of penalties on the accused. This order of Special Director was challenged before the Tribunal. The Tribunal quashed the order passed by the Director and allowed the appeals. The review petitions filed before the Tribunal by the department were also dismissed. As such, as already stated, the order of learned Chief M.M is based on the findings given by the Tribunal.
4. The Enforcement Directorate, not satisfied with the order of Chief M.M, moved the Sessions Court in Criminal Revision application no. 716 of 2008. The learned Additional Sessions Judge by the impugned order has set aside the order passed by the learned Chief M.M and has directed that the trial to conclude in accordance with law. The applicants/petitioners feel aggrieved by the said order.
5. The learned Counsel Mr. Bulchandani appearing on behalf of the petitioners/applicants has submitted that the order passed by learned Chief M.M was a reasoned order and does not call for any interference by the learned Sessions Court. Reliance was placed on the judgment of Hon'ble Supreme Court in the matter of “Radheshyam Kejriwal v. State of West Bengal, (2011) 3 SCC 581.” It was brought to my notice that the learned Additional Sessions Judge has relied upon minority view of Hon'ble Supreme Court in the said judgment. It was, thus, submitted that the order of learned Additional Sessions Judge suffers from serious infirmity.
6. During the course of arguments, it was submitted by learned Counsel Mr. Bulchandani that in view of the judgment of Hon'ble Supreme Court in the matter of “Radheshyam Kejriwal v. State of West Bengal” (supra) and similar other judgments of Hon'ble Supreme Court, the learned Chief M.M has no option except to discharge all the accused. Mr. Bulchandani has submitted that the learned Additional Sessions Judge had, by mistake, placed reliance on minority judgment.
7. In have gone through the judgment and order passed by the learned Additional Sessions Judge. However, without going to the details of the said order, it can be said that the learned Addl. Sessions Judge has relied on minority view of the Hon'ble Supreme Court in the matter of ‘Radheshyam Kejriwal’. One can take note of paragraph 38 of the judgment in the case “Radheshyam Kejriwal v. State of West Bengal” as a guiding factor. Paragraph 38 of the said judgment runs as under:-
“38. The ratio which can be culled out from these decisions can broadly be stated as follows:-
(i) Adjudication proceeding and criminal prosecution can be launched simultaneously;
(ii) Decision in adjudication proceeding is not necessary before initiating criminal prosecution;
(iii) Adjudication proceeding and criminal proceeding are independent in nature to each other;
(iv) The finding against the person facing prosecution in the adjudication proceeding is not binding on the proceeding for criminal prosecution;
(v) Adjudication proceeding by the Enforcement Directorate is not prosecution by a competent court of law to attract the provisions of Article 20(2) of the Constitution or Section 300 of the Code of Criminal Procedure;
(vi) The finding in the adjudication proceeding in favour of the person facing trial for identical violation will depend upon the nature of finding. If the exoneration in adjudication proceeding is on technical ground and not on merit, prosecution may continue; and
(vii) In case of exoneration, however, on merits where allegation is found to be not sustainable at all and person held innocent, criminal prosecution on the same set of facts and circumstances can not be allowed to continue underlying principle being the higher standard of proof in criminal cases.”
8. Learned Counsel Mr. Bulchandani had invited my attention to clause (6) and (7) of the ratio of decision of Hon'ble Supreme Court and has submitted that all the accused including the applicants were found not guilty by the Tribunal not on technical ground but on merits. It was further submitted that since the allegations on merits are not sustainable and since all the accused were found innocent by the Tribunal, the criminal prosecution on the same set of facts cannot be allowed to be continued.
9. In the first place, there is no dispute that the adjudication proceedings and the criminal prosecution against the accused were based on same set of facts and on same allegations. What is important to be examined is ‘whether the exoneration by the Tribunal was on technical ground or on merit. If the exoneration by the tribunal is on technical ground then there is bar in continuation of the prosecution. To determine ‘whether exoneration is on technical ground or on merit’, one may have to refer the judgment of the Tribunal. The Tribunal has given its findings in paragraph 10 of its judgment which runs as under:-
“10. Secondly, it is an admitted fact that CPT colour tubes were purchased by appellants from Korea and Japan whereafter the same were sent and sold in Russia. The question squarely lies whether Section 18(1)(a) and 18(2) read with 18(3) applies to this fact situation. According to Section 18(1)(a), the prohibition or regulation by Notification can be made against taking or sending out of the goods from India directly or indirectly. 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 provision are made applicable to the goods which are otherwise covered under Section 18(1)(a) and not otherwise. As the goods in question were never exported outside India so Section 18(2) is in no way can be applied to these transactions because such international selling is not governed by Section 18(1)(a) of FER Act. The impugned order has repeatedly said that for purchase of CPT colour tubes from Japan and Korea the appellant spent the foreign exchange. May it be so. But such spending of foreign exchange in international trade by an Indian person is not forbidden by section 18 of fer act. Shri. A.C Singh, ALA could not point out any other provision in FER Act whereby 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. If that is so, the appellant cannot be held guilty for Section 18(2) read with Section 18(3) and 63 of FER Act, 1973.”
10. The allegations against the accused including the applicants/petitioners could be found in paragraph 5 of the complaint which runs as under:-
“5. As per information in the said letter, it was found that their another Partnership firm, namely M/s. Videocon Appliances Ltd., Bombay, had exported only Aluminium Electrolytic Capacitors. The said letter further provided information that Reserve Bank of India had permitted said M/s. Videocon International Ltd., for colour pictures tubes for making direct shipment of 2 lacs colour sets from Japan and South Korea to USSR. But the investigation relating thereto by the Directorate of Revenue Intelligence, Bombay, revealed that 82713 C.P.T were directly supplied by the party from Japan and South Korea to USSR importer and for that purpose the party remitted US $ equivalent to Rs. 18,66,33,678/- against L/C to Japan and South Korea who sent picture tubes to USSR directly. The investigation by the Directorate of Revenue Intelligence further revealed, according to the contents of their said letter, that the sale proceeds for those colour picture tubes were not received in India from the Russian buyers, though the payments to Japan and South Korea were already remitted in hard currency and furthermore, the party had not obtained any extension of time limit from the Reserve Bank of India for their failure to realise the export proceeds.”
11. As such in brief what is alleged is that the accused including the applicants have violated the provisions of Section 18(2) and 18(3) of FER Act which is punishable under section 56 of that act. Learned Counsel Mr. Bulchandani has submitted that the Tribunal has given a clearcut finding that the provisions of 18(2) and 18(3) of the Act were not applicable to the transaction in question inasmuch as there was no export directly or indirectly from India. The Tribunal in its judgment has stated that spending of foreign exchange by itself will not be the criteria to determine as to whether the transaction amounted to export. It was stated by the Tribunal that spending of foreign exchange in international trade by any Indian person is not forbidden by section 18 of fer act. In the present case, however, what is noted is that though the goods were physically shipped from Korea and Japan, the same were shipped on behalf of the accused and in my considered opinion it amounted to export. It is stated to be third country export. In such a case of export, in my view, it is not necessary that the goods shall necessarily 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 goods from South Korea and Japan. The payment was to be received in Indian Bank, Nariman Point Branch, Mumbai. No steps were taken by the accused to see that the payments are received within a stipulated time. I do not subscribe the view expressed by the Tribunal that Sections 18(2) and 18(3) of the Act were not applicable to the transaction in question.
12. As such it is clear that the Tribunal has not given any findings on merits of the case that no violation at all had taken place. The Tribunal has given findings that the goods were shipped from South Korea and Japan and therefore, it did not amount to export. It is, thus, obvious that the findings of the Tribunal is based on technical ground and therefore, the case of the applicants-petitioners will be covered by clause (vi) of the ratio laid down by Hon'ble Supreme Court in paragraph 38 of the judgment in the case “Radheshyam Kejriwal v. State of West Bengal” which runs as under:-
“38. (vi) The finding in the adjudication proceedings in favour of the person facing trial for identical violation will depend upon the nature of finding. If the exoneration in adjudication proceedings is on technical ground and not on merit, prosecution may continue.”
13. Since the exoneration of the applicants-petitioners and other accused in the present case is based on technical ground, the prosecution will have to continue.
14. As such though this Court do not agree with the reasons given by learned Additional Sessions Judge, it is abundantly clear that the order of the learned Chief Metropolitan Magistrate cannot be sustained. Hence, I pass the following order:-
The Criminal Application stands dismissed.
Interim order, if any, stands vacated.