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2000 (5) TMI 586 - SC - FEMAWhether refusal on the part of a person, who is summoned under Section 40 of the Foreign Exchange Regulation Act, 1973 to comply with the directions under the summons, would attract the provisions of Section 56 of the Act? Held that - The ultimate conclusion of the learned Single Judge of the Delhi High Court in the impugned Judgment that the Union of India can prosecute the accused for offences under the provisions of Section 174 or any other relevant provision under Chapter 10 of the IPC relating to contempts of the lawful authority of public servants, is not sustainable in law. As has been stated earlier, bearing in mind the purpose for which an officer of Enforcement Directorate have been empowered to summon persons, either to give evidence or to produce a document and the provisions of the Act, making the persons summoned, bound to state the truth and further the investigation in question having been made to be a judicial proceeding within the meaning of Sections 193 and 228 of the Indian Penal Code, on a plain literal meaning being given to the language used in Section 56 of the Act, we are of the considered opinion that violation or contravention of the directions given under the summons under Section 40 would come within the purview of Section 56 and, therefore would be punishable thereunder, and the impugned judgment of the Delhi High Court as well the judgment of Kerala High Court must be held to have been wrongly decided. We, therefore, set aside the impugned judgments of the learned Single Judge of Delhi High Court and allow these appeals and direct that the complaint proceedings may be proceeded with, in accordance with law.
Issues Involved:
1. Whether refusal to comply with summons under Section 40 of the Foreign Exchange Regulation Act, 1973 attracts the provisions of Section 56 of the Act. Issue-wise Detailed Analysis: 1. Refusal to Comply with Summons under Section 40 and Applicability of Section 56: The primary question in these appeals is whether the refusal to comply with summons issued under Section 40 of the Foreign Exchange Regulation Act, 1973 (FERA) attracts the penal provisions of Section 56 of the Act. The High Court had previously ruled that such refusal does not attract Section 56, leading to quashing of complaints filed for such violations. Arguments by the Additional Solicitor General: The Additional Solicitor General argued that since the Act confers power on Enforcement Directorate officers to summon any person necessary for an investigation, refusal to comply should be viewed as a serious contravention. He contended that such refusal should be punishable under Section 56 of the Act, and the High Court erred in quashing the complaints. Arguments by Counsel for the Respondents: Counsel for the respondents argued that only statutory orders or directions are punishable under Section 56, and summons under Section 40 lack statutory character. They also contended that since 'offence' is not defined under the Act, the definition from the General Clauses Act should be applied, which would not classify the violation of a Section 40 summons as an 'offence' under Section 56. Analysis of Sections 40 and 56: Section 40 grants Enforcement officers the power to summon individuals for evidence or document production during investigations, making compliance mandatory. Section 56 outlines punishments for contraventions of the Act, specifying imprisonment and fines based on the value involved in the offence. Judicial Precedents: - Kerala High Court: Held that failure to obey summons under Section 40 is not a contravention punishable under Section 56, applying strict construction of penal statutes. - Madras High Court: Concluded that Section 56 applies only to violations involving monetary value. - Andhra Pradesh High Court: Held that failure to comply with Section 40 summons is a contravention under Section 56, interpreting "in any other case" in Section 56(1)(ii) to include non-monetary violations. Supreme Court's Interpretation: The Supreme Court disagreed with the Kerala and Madras High Courts' restrictive interpretations. It emphasized that the Act aims to conserve foreign exchange and should be interpreted to make its provisions effective. The Court held that refusal to comply with Section 40 summons constitutes a contravention of the Act, punishable under Section 56. This interpretation ensures the enforceability of the Act's provisions and the effectiveness of the Enforcement Directorate's powers. Conclusion: The Supreme Court set aside the impugned judgments of the Delhi High Court and Kerala High Court, holding that refusal to comply with summons under Section 40 is punishable under Section 56. The Court directed that the complaint proceedings should proceed in accordance with the law.
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