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2007 (4) TMI 693 - HC - FEMAForeign exchange - Search and seizure - Prosecution and penalty - seeking to quash the order passed by the learned Judge - Violation of Section 9 of the Foreign Exchange Regulation Act, 1973, (FERA) - appellant submits that the standard of proof required to bring home the charge in a criminal case is much higher than in the adjudication proceedings and once the appellant has been exonerated in the adjudication proceedings, his prosecution is an abuse of the process of court - HELD THAT - It may be noted that relying on different authorities by the Supreme Court and other High Courts, in several cases, this High Court has also taken a view that when in the departmental proceedings the accused was exonerated by the adjudicating authority, the criminal proceedings should not be continued. In Raichand C. Jain v. Surendra Prasad 2006 (2) TMI 668 - BOMBAY HIGH COURT , in a proceeding u/s 56(1)(I) read with 9(1)(d) etc., FERA, this Court had held that when the applicant-accused was exonerated by the adjudicating authority, on the same set of facts, criminal proceeding could not be continued and therefore in the inherent power u/s 482 Cr.P.C., the criminal proceeding should be quashed. It may be noted that in the present case the applicant was exonerated by the Dy. Director of Enforcement, who was adjudicating authority, in the adjudication proceedings. Admittedly that order was not challenged in appeal by the respondent and thus that order has become final. I have already noted the facts and findings of the adjudicating authority in detail. The adjudicating authority had clearly come to the conclusion that there was no material to hold the present applicant guilty for contravention of the provisions of FERA and he was completely exonerated. When in the departmental proceedings before the adjudicating authority, the department could not establish the charges, it is difficult to imagine how the department could prove the same charges before the criminal Court when the standard of proof may be much higher and stringent than the standard of proof required in departmental proceedings. Before concluding, it would be necessary to find out whether the retracted statement of M.M. Vaidya could be sufficient to proceed with the criminal proceeding against the present applicant. The statement of M.M. Vaidya, Bhadkamkar and Harshe were recorded by the Officers of Enforcement Directorate u/s 39 or 40 of Foreign Exchange Regulation Act and not Section 108 of the Customs Act. In view of the provisions of Section 138(b) Customs Act, it is settled that the Officers of the Customs Department are not the Police Officers and the statement recorded by the Customs Officers under Section 108 are admissible in evidence. Statements of Mr. Bhadkamkar and Mr. Haresh, the two Officers from A.T.C., is only hearsay evidence and Mr. Bhadkamkar is no more alive. According to them, Mr. Vaidya had received ₹ 30 Lacs or ₹ 27 Lacs from A.T.C. and from Mr. Vaidya they had come to know that the amount was paid to the present applicant. Therefore, no importance could be given to the statements of those two persons. Mr. Vaidya made a statement implicating himself as well as the present applicant, but later on he retracted from that statement and admittedly there is no documentary or other evidence to provide any corroboration to the said statement of Mr. Vaidya. As such there is no material on the basis of which the prosecution would have any chance of success in criminal case. As pointed out, in view of the same circumstances, the adjudicating authority under FERA has completely exonerated the present applicant and it is impossible that with the same set of evidence, as pointed out above, the applicant can be convicted in the criminal proceedings. Therefore, in my opinion, it is a fit case to invoke inherent restrictions to avoid abuse of process under Section 482 of Cr.P.C. In the result, the application is allowed. The criminal proceedings in case No. 3 of 1986 before learned Chief Judicial Magistrate, Pune are hereby quashed.
Issues Involved:
1. Quashing of the order passed by the Sessions Judge in Criminal Revision Application. 2. Alleged violation of the Foreign Exchange Regulation Act, 1973 (FERA). 3. Admissibility and reliability of evidence, including retracted statements. 4. Impact of departmental adjudication on criminal proceedings. Detailed Analysis: 1. Quashing of the Order Passed by the Sessions Judge: The applicant sought to quash the order passed by the learned Sessions Judge, Pune, in Criminal Revision Application No. 217 of 1996. The Sessions Judge had dismissed the applicant's revision application, which was filed to recall the process initiated by the Chief Judicial Magistrate. The applicant contended that there was no material to establish that he had received Rs. 30 Lacs for transferring 2 Lac Pounds to P.M. Engines Ltd., London, and thus had not violated any provisions of the Foreign Exchange Regulation Act, 1973. 2. Alleged Violation of the Foreign Exchange Regulation Act, 1973 (FERA): The prosecution alleged that the applicant, a non-Executive Director of Kirloskar Brothers Ltd., Pune, had received Rs. 30 Lacs from A.T.C. Pvt. Ltd. through Mr. M.M. Vaidya, Vice President of Kirloskar Brothers Ltd., for transferring 2 Lac Pounds to P.M. Engines Ltd., London. The applicant denied these allegations, arguing that there was no evidence to show he had violated Section 9(a) read with Section 56 of FERA. 3. Admissibility and Reliability of Evidence: The primary evidence against the applicant was the statement of Mr. M.M. Vaidya, who later retracted his statement. The adjudicating authority noted that Mr. Vaidya's statement lacked credibility due to inconsistencies and the absence of corroborative evidence. The statements of other witnesses, Mr. Bhadkamkar and Mr. Harshe, were deemed hearsay and insufficient to establish the applicant's guilt. The adjudicating authority concluded that there was no documentary or other evidence to connect the applicant with the alleged transactions. 4. Impact of Departmental Adjudication on Criminal Proceedings: The adjudicating authority under FERA had exonerated the applicant, finding no material to hold him guilty of contraventions. The court considered the findings of the adjudicating authority, which had become final as they were not challenged in appeal. The court noted that the standard of proof in departmental proceedings is lower than in criminal proceedings. If the department could not establish the charges in the adjudication proceedings, it would be difficult to prove the same charges in a criminal court. The court referred to several Supreme Court judgments, including Uttam Chand v. Income Tax Officer, K.T.M.S. Mohd. v. Union of India, and K.C. Builders v. Assistant Commissioner of Income Tax, which held that exoneration in departmental proceedings could impact the continuation of criminal proceedings. The court emphasized that while adjudication and prosecution are independent, the findings in departmental proceedings should be considered by the criminal court. Conclusion: The court concluded that the retracted statement of Mr. Vaidya, without corroboration, was insufficient to proceed with the criminal case. Given the exoneration by the adjudicating authority and the lack of credible evidence, the court found it appropriate to quash the criminal proceedings to prevent abuse of the judicial process. The application was allowed, and the criminal proceedings in Case No. 3 of 1986 before the Chief Judicial Magistrate, Pune, were quashed.
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