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2016 (6) TMI 341 - SC - FEMAOffence punishable under Section 56(1)(i) of the Foreign Exchange Regulation Act, 1973 for the alleged contravention of the provisions of Sections 18(2) and 18(3) of the Act - Held that - The tribunal has arrived at a conclusion that the appellant cannot be held guilty for Section 18(2) read with Section 18(3) of FER Act, 1973 and the advise of the Reserve Bank of India given in its letters dated 21.1.1992 and 18.2.1994 deserve to be accepted as they are totally in consonance with legal provisions. The High Court, without an assail to the order passed by the tribunal, has adverted to the same and opined that it does not subscribe to the view expressed by the tribunal that Section 18(2) and 18(3) of the Act were not applicable to the transaction in question. The High Court could not have done that. We may note with profit that the High Court after stating that has reproduced paragraph 38 and (vi) and opined that the findings given by the tribunal are based on technical grounds and, therefore, the prosecution is liable to continue. As we perceive, the judgment of the tribunal is on merits, inasmuch as findings have been recorded after analysis of facts and the conclusion has been arrived at that the appellants have not violated the provisions of the Act. In such a situation, it cannot be said that it is a judgment rendered on technical grounds and, therefore, we are compelled to hold that the High Court has totally erred in law. Thus we allow the appeals, set aside the judgments and order passed by the High Court as well as by the learned Additional Sessions Judge and direct that the order passed by the learned Magistrate discharging the accused persons shall stand restored.
Issues Involved:
1. Legality of the order of discharge by the Chief Metropolitan Magistrate. 2. Applicability of Sections 18(2) and 18(3) of the Foreign Exchange Regulation Act, 1973. 3. Impact of the adjudication by the Appellate Tribunal for Foreign Exchange on criminal proceedings. 4. Interpretation of the legal principles from the Radheshyam Kejriwal case. Issue-wise Detailed Analysis: 1. Legality of the Order of Discharge by the Chief Metropolitan Magistrate: The Chief Metropolitan Magistrate discharged the accused based on the adjudication by the Appellate Tribunal for Foreign Exchange, which found no contravention of the Foreign Exchange Regulation Act, 1973 (FERA). The Additional Sessions Judge, however, overturned this discharge, leading to the appeal before the High Court. The High Court upheld the Additional Sessions Judge's decision, but the Supreme Court found that the High Court erred in its approach by not considering the binding nature of the tribunal's decision on merits. 2. Applicability of Sections 18(2) and 18(3) of the Foreign Exchange Regulation Act, 1973: The tribunal held that Sections 18(2) and 18(3) of FERA were not applicable to the transactions in question because the goods were not exported from India but were part of international trade transactions involving purchases from Korea and Japan. The High Court disagreed, stating that the transactions amounted to "deemed export" from India, thus falling within the scope of Sections 18(2) and 18(3). The Supreme Court, however, concluded that the High Court should not have revisited the tribunal's findings, which were based on a thorough analysis of the statutory provisions and the nature of the transactions. 3. Impact of the Adjudication by the Appellate Tribunal for Foreign Exchange on Criminal Proceedings: The tribunal's decision, which exonerated the appellants on merits, was not challenged by the Revenue, thus attaining finality. The Supreme Court emphasized that the tribunal's findings were on merits and not on technical grounds, meaning that the criminal proceedings should not continue. The High Court's decision to allow the prosecution to proceed was thus found to be erroneous. 4. Interpretation of the Legal Principles from the Radheshyam Kejriwal Case: The Supreme Court reiterated the principles from the Radheshyam Kejriwal case, particularly that if exoneration in adjudication proceedings is on merits, then criminal prosecution on the same facts should not continue. The High Court's reliance on the dissenting opinion in Radheshyam Kejriwal was incorrect, and it should have followed the majority view, which aligns with the tribunal's findings in this case. Conclusion: The Supreme Court allowed the appeals, set aside the judgments of the High Court and the Additional Sessions Judge, and restored the order of discharge by the Chief Metropolitan Magistrate. The tribunal's decision on merits was deemed binding, and the continuation of the criminal proceedings was considered an abuse of the process of the court.
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