2012 (5) TMI 251 - HC - FEMA

FEMA - complaint filed by respondent No. 2/Enforcement Directorate under section 56 of the Foreign Exchange Regulation Act, 1973 ( the FERA ) and sub-sections (3) and (4) of section 49 of the Foreign Exchange Management Act 1999 ( the FEMA ), a disclosure was made by the then captain of South African Cricket Team, Mr. Hansie Cronje, to the effect that the one day international cricket matches played in India during the Seasons (1996-1997) between South Africa and India were heavily influenced through illegal betting, etc Simultaneously, adjudication proceedings before the Enforcement Directorate were initiated against the petitioner under the said Acts. In the adjudication proceedings, an order dated 11-12-2003 was passed by the Special Director, Enforcement Directorate, imposing a penalty of Rs. 2 crores on the petitioner for acquisition of foreign exchange from the persons other than the authorized dealer and for making payment to persons residing outside India, without any previous general or special permission of the Reserve Bank of India, in contravention of sections 8(1) and (9)(1)(a) of the FERA Held that - it would be unjust for the departmental authority to continue with the criminal complaint, when in the course of adjudication, categorical and unambiguous findings have been returned that there is no contravention of the provisions of the Act, and when the concerned person has been exonerated, no useful purpose shall be served by proceeding further with the criminal complaint in the instant case and the respondent agency cannot be permitted to prosecute the petitioner, having failed to establish the foundational facts to justify his prosecution.

Issues Involved:
1. Recall of process issued against the petitioner.
2. Adjudication proceedings and criminal proceedings under FERA and FEMA.
3. Exoneration of the petitioner by the Appellate Tribunal.
4. Continuation of criminal proceedings post-exoneration.

Issue-wise Detailed Analysis:

1. Recall of Process Issued Against the Petitioner:
The petitioner filed a petition under Article 226 of the Constitution of India read with section 482 of the Cr. P.C. to set aside the order dated 18-3-2003 by the learned ACMM, which dismissed the petitioner's application for recalling the process issued against him in Complaint Case No. 860/1/2002.

2. Adjudication Proceedings and Criminal Proceedings under FERA and FEMA:
The complaint by respondent No. 2/Enforcement Directorate alleged violations under sections 8(1) and 9(1)(a) of the Foreign Exchange Regulation Act, 1973 (FERA) and section 49(4) of the Foreign Exchange Management Act, 1999 (FEMA). The allegations were based on disclosures by Mr. Hansie Cronje about illegal betting during cricket matches. The Special Director, Enforcement Directorate, imposed a penalty of Rs. 2 crores on the petitioner for acquiring foreign exchange from unauthorized dealers and making payments to persons outside India without RBI permission.

3. Exoneration of the Petitioner by the Appellate Tribunal:
The petitioner appealed against the adjudication order, and the Appellate Tribunal for Foreign Exchange allowed the appeal on 21-4-2008, directing the refund of the pre-deposited amount and setting aside the impugned order. The Enforcement Directorate's appeal against this order was dismissed due to a delay, and the order attained finality as no SLP was preferred.

4. Continuation of Criminal Proceedings Post-Exoneration:
The petitioner argued that the criminal complaint should be quashed in light of the Appellate Tribunal's order, which had attained finality. The respondent, however, contended that the criminal proceedings should continue despite the Tribunal's order. The court examined the judgments cited by both parties and concluded that if the exoneration in adjudication proceedings is on merits, the criminal prosecution cannot continue.

The court noted that the Appellate Tribunal's order was based on merits, considering the evidence and submissions, and found that the petitioner's confessions during the investigation were unreliable. The Tribunal observed that the adjudicating authority relied on hearsay evidence and failed to establish the petitioner's identity as the person named in the King Commission's report.

The court held that the foundational facts in the adjudication proceedings and the criminal complaint were identical. Since the Tribunal's order exonerating the petitioner was on merits, the continuation of the criminal complaint would be unjust. Therefore, the criminal complaint No. 860/1/2002 and the proceedings arising therefrom were quashed.

Conclusion:
The petition was allowed, and the criminal complaint pending before the learned ACMM was quashed, along with the proceedings arising therefrom. The court emphasized that it would be unjust to continue with the criminal complaint when the petitioner had been exonerated on merits in the adjudication proceedings.

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