2009 (3) TMI 571 - HC - Companies Law

Violation of provisions of sections 8(1), 8(2), 8(3), 8(4), 9(1)(a), 9(1)(l)(i ), 18(2), 18(3), read with sub-section (3) of section 49 of Foreign Exchange Regulation Act, 1973 Held that - This Court is convinced that no purpose will be served to permit prosecution of the petitioner as the entire process will be an abuse of the process of the Court. More so when there would be no occasion to hold him guilty in the facts of this case. Thus, the petition is allowed and the order dated 5-3-2007 passed against the petitioner under section 319 Cr. P.C. is set aside. His bail bond, if any, are discharged.

Summary

Issues Involved:
1. Whether the petitioner could be prosecuted under Section 319 Cr. P.C. despite exoneration in departmental adjudication proceedings.
2. The impact of adjudication proceedings on criminal prosecution.
3. The validity of criminal prosecution after departmental exoneration on merits.

Issue-wise Detailed Analysis:

1. Prosecution under Section 319 Cr. P.C. Despite Exoneration:
The petitioner was aggrieved by an order of the ACMM summoning him under Section 319 Cr. P.C. despite the Enforcement Directorate deciding not to prosecute him. The petitioner's name was not initially included as an accused in the complaint, and he was exonerated in the adjudicatory proceedings. The Enforcement Directorate had issued a show-cause notice to the petitioner, and after considering his reply, decided not to prosecute him. This decision was inadvertently not reflected in the complaint, which still contained references to the petitioner. The ACMM's order summoning the petitioner was challenged on the grounds that the departmental decision not to prosecute him should preclude any criminal proceedings.

2. Impact of Adjudication Proceedings on Criminal Prosecution:
The court referred to previous judgments, notably in the cases of Sandeep Puri, Anil Mahajan, and Sunil Gulati. It was established that if exoneration in departmental adjudication is on merits, criminal prosecution cannot continue. The reasoning is that if the departmental authorities find no contravention of the Act in adjudication proceedings, it would be unjust to pursue criminal charges based on the same facts. The court emphasized that the charges in both proceedings must be identical, and exoneration should be on merits for this principle to apply.

3. Validity of Criminal Prosecution after Departmental Exoneration on Merits:
The court noted that the adjudication proceedings against the petitioner had concluded with a decision that no penalty should be imposed, effectively exonerating him. This exoneration was on merits, as the charges were found unsubstantiated. Consequently, the court held that continuing criminal prosecution in such circumstances would be unjust. The court cited the judgment in Sandeep Puri's case, where it was held that criminal prosecution should not proceed if the accused is exonerated on merits in adjudication proceedings.

Conclusion:
The court concluded that the order summoning the petitioner under Section 319 Cr. P.C. could not be sustained. It was determined that no purpose would be served by permitting the prosecution to continue, as it would constitute an abuse of the process of the court. The petition was allowed, and the order dated 5-3-2007 summoning the petitioner was set aside. The petitioner's bail bond, if any, was discharged.