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TMI Blog1986 (11) TMI 347X X X X Extracts X X X X X X X X Extracts X X X X ..... e necessity of exercise of extreme circumspection in prosecuting persons under regulatory offences. Parle (Exports) Pvt. Ltd. ("Parle") of Andheri, (West), Bombay, were negotiating with Union Beverages at Sharjah, and Muhd. Nazer Al-Sayer and Sons, Kuwait, and Dhofar Beverages Co., Salalah, for export of their concentrates with a view to enabling the foreign collaborators to bottle and sell their products in Kuwait and Sharjah. As Parle had to face razor-sharp competition from other entrenched international giants like Pepsi Cola, 7-Up, Canada Dry, Etc., the Collaborators advised Parle to follow the practice of the international companies in honing a blitz advertising compaign as a sale promotion strategy. Earlier, the Reserve Bank of India had permitted Parle to send publicity material free of cost to the tune of Rs. 3.33 lakhs, but Parle discovered to their dismay that a product cannot capture the market unless it is backed by a high profile and expensive publicity drive. The publicity material sent earlier proved to be extremely inadequate and Parle on February 1, 1977, wrote to the Reserve Bank of India requesting them to release foreign exchange of 25% of the f.o.b. value of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Caravan" dated March 2, 1979, speaks of setting up plants by the company in Mauritius, Dubai, Kuwait and Bangladesh. The Joint Controller, upon enquiries from Parle, learnt that Parle have no financial investments in these plants and enclosed, a copy of the agreement received from the company for verification. The Joint Controller was also asked by the Controller whether the arrangement in the said agreement would not require the approval of the Government or the Reserve Bank of India. The Joint Controller was asked to advise the company to apply for the approval of the Government under section 27 of the Art, which was accordingly done by the company. The matter stood there. Parle (Exports) Pvt. Ltd., Mr. Ramesh J. Chauhan and Mr. H. M. Golwala, two directors of Parle, are being prosecuted before the Additional Chief Metropolitan Magistrate, 8th Court, Esplanade, Bombay, for having committed an offence under section 27(1) read with section 56 of the Act. An application was made by the accused persons under section 245(2) of the Criminal Procedure Code for their discharge which application having been dismissed by the Additional Chief Metropolitan Magistrate, 3th Court, Esplanad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e that permitted by the Reserve Bank) in launching a massive advertising campaign in foreign countries. It is urged by the prosecution, which argument found favour with the court below, that the expression "associate with or participate in" should be given a wide and broad meaning ; while counsel for the petitioners submits that the phrase "whether as promoter or otherwise" occurring in the sub-section is indicative of the fact that the interpretation should follow the principle of ejusdem generis and draw inspiration from the word "promoter" while scrutinising the conduct of the accused. If the expression "associate with or participate in" is to be given a broad and wide meaning as canvassed by the State, the various steps taken by Parle, such as allowing the bottlers to use the trade mark, actively propagating the sales and offering technical know-how would surely fall within the ambit of the two expressions. However, reading the preamble and examining the scheme of the Act, more particularly section 76 thereof, which contains the guidelines as to when permission or licence under the Act should be given, it is clear to me that a narrow interpretation following the ejusdem ge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the use of the word "contract" in George s case [1967] 63 ITR 497 (SC), here we have the word "promoter" in the Foreign Exchange Regulation Act from which we can obtain light regarding the type of conduct which was sought to be proscribed by Parliament. The impugned conduct should partake of some of the attributes of the conduct of a promoter even though the person may not have an inadequate interest in the company. The exchange of correspondence between Parle and the Reserve Bank of India, the queries put by the Reserve Bank of India, make it clear beyond doubt that Parle not have a financial stake in the actual running of the concerns in Sharjah or Kuwait but were interested only in earning more foreign exchange for the country in the shape of more sales of concentrates to the bottling plants. It was a tactical business like move on the part of Parle finance a whirlwind sales promotion campaign to ensure that the sales of their product do not plummet in competition with the products of well-known international giants like Papsi. Cola, 7-Up, Canada Dry, etc. Parle were not to get any cut from the profits made by foreign bottlers and hence their conduct can never come anywhere ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugh Parle waiteb for 20 months. The generally considered purposes of criminal law include : "(1)the prescription of conduct which unjustifiably and inexcusably causes or threatens substantial harm to individual or public interest; (2)The giving of clear warning of the nature of the conduct so prescribed; (3)the safeguarding of conduct which is without blame from condemnation as a criminal; (4)the differentiation on reasonable grounds between serious and minor offences." In the pre-war era, for political reasons which by now are matters of common knowledge any resident of India could freely obtain pound sterling but the impact of the drain of foreign exchange on the Indian economy was so crippling that the Legislature had to proscribe unauthorised dealings in foreign exchange as they threatened to cause substantial harm to public interest. This prohibition would fall within the first purpose of criminal law indicated above, this abrupt change of philosophy making certain conduct illegal which here to before was not only perfectly legal but encouraged by the colonial rulers has to be brought home to the prospective users of the facility of obtaining foreign exchange for t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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