1994 (3) TMI 332 - HC - Companies Law

Summary

Issues Involved:
1. Premature filing of complaints under Section 57 of the Foreign Exchange Regulation Act (FERA) while appeals are pending.
2. Jurisdiction of the Additional Chief Metropolitan Magistrate, Madras, to try the cases.

Issue-wise Detailed Analysis:

1. Premature Filing of Complaints:
The primary contention by the petitioners was that the complaints under Section 57 of the FERA were filed prematurely, as the penalties imposed by the Special Director of Enforcement were under appeal before the Appellate Board. The petitioners argued that if the appeals were allowed and the penalties set aside, the basis for the complaints would no longer exist. Therefore, they asserted that the complaints should be quashed as premature.

The court, however, rejected this argument. It referenced previous judgments, including one by Justice Arunachalam in Crl. O. P. No. 8836 of 1991, which held that the mere filing of an appeal does not stay the operation of the adjudication order. The court emphasized that Section 57 of the FERA penalizes the failure to pay the penalty within 45 days, and the offense is complete upon non-payment within that period. The court cited the Supreme Court's decision in P. Jayappan v. S. K. Perumal, which stated that the expectation of success in an appeal cannot bar the initiation of criminal proceedings.

Further, the court noted that criminal prosecution under the FERA is independent of the adjudication process and is not contingent upon the outcome of the appeal. This view was supported by earlier judgments, including R. K. Swamy v. Assistant Director, Enforcement Directorate, and T. R. Balasubramaniam v. Assistant Director, Enforcement Directorate. The court concluded that the complaints were not premature and could proceed irrespective of the pending appeals.

2. Jurisdiction of the Additional Chief Metropolitan Magistrate, Madras:
The petitioners also challenged the jurisdiction of the Additional Chief Metropolitan Magistrate, Madras, arguing that the accused were located in Kerala and the adjudication orders were not passed in Madras.

The court dismissed this contention, pointing out that the adjudication orders directed the payment of penalties at the office of the Enforcement Directorate in Madras. The failure to pay the penalties at Madras constituted the cause of action for the complaints. Therefore, the court at Madras had jurisdiction to try the cases, as the non-payment of the penalty amount was the sine qua non for the offense, and the payment was to be made in Madras.

Conclusion:
The court, after considering all submissions, found no merit in the arguments presented by the petitioners. It upheld the validity of the complaints filed under Section 57 of the FERA despite the pending appeals and confirmed the jurisdiction of the Additional Chief Metropolitan Magistrate, Madras. Consequently, the petitions were dismissed.