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Issues:
Quashing of order taking cognizance of offences under FERA and FEMA. Analysis: The petitioners sought to quash the order dated 31.5.2002 taking cognizance of offences under Section 56 of the Foreign Exchange Regulation Act, 1973, and Section 49 (3) & (4) of the Foreign Exchange Management Act, 1999, along with the entire criminal proceeding in Complaint Case No. FEMA 2/2002. The complaint alleged a conspiracy to defraud the government by issuing fake allotment letters for the purchase of medicines, leading to misappropriation of funds. The petitioners, including Dr. K.M. Prasad and his children, were accused of receiving foreign exchange remittances without proper authorization, violating FERA provisions. The Enforcement Directorate's investigation revealed discrepancies in the foreign exchange transactions, leading to the charges. The petitioners contended that the Income Tax Authorities had accepted the foreign exchange receipts, granting immunities, and argued against the applicability of FERA provisions for prosecution under Section 56 of the Act. The learned Special Judge, in the impugned order, found a prima facie case against all petitioners and took cognizance of the offences, summoning them for trial. The petitioners challenged this order, arguing that no enquiry or adjudication was conducted before filing the complaint, citing legal precedents supporting their position. On the other hand, the opposite party defended the order, stating that the court cannot meticulously examine the complaint's allegations at the stage of taking cognizance. Referring to a previous case involving a co-accused, it was argued that a similar challenge had been dismissed by the court previously, indicating the validity of the impugned order. The court differentiated the facts of the present case from the legal precedents cited by the petitioners, emphasizing the separate nature of adjudication proceedings and criminal prosecution under FERA. The court rejected the petitioners' arguments, citing precedents that courts cannot delve deeply into allegations at the cognizance stage and cannot substitute their findings for the Special Judge's prima facie determination. It was emphasized that the prosecution under Section 56 of FERA can proceed independently of adjudication proceedings. The court highlighted the principle that the truthfulness of the prosecution cannot be assessed at this stage. Ultimately, the court found no irregularity in the Special Judge's order taking cognizance of the offences, leading to the dismissal of the petitioners' application to quash the order and the criminal proceedings against them.
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