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TMI Blog2007 (4) TMI 693X X X X Extracts X X X X X X X X Extracts X X X X ..... y, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, Mumbai, search of office premises of Kirloskar Brothers Ltd. and its officers were undertaken and besides the other things, it was found that A.T.C. Pvt. Ltd. had paid amount of 30 Lacs to one Mr. M.M. Vaidya, Vice President of Kirloskar Brothers Ltd. and said M.M. Vaidya had made the payment of that amount to the present applicant, H.M. Kothari, in consideration of his making payment of 2 Lac Sterling Pound, to M/s PME Limited, London. In view of this, the complaint was filed against accused persons under Foreign Exchange Regulation Act, 1973, (FERA in brief). The present applicant moved an application before the Chief Judicial Magistrate to recall the process, but that application was rejected. Thereafter, he filed revision application dtd. 2/7/1996, which also came to be dismissed by the learned Additional Sessions Judge, Pune. Thereafter the applicant filed the present application under Section 482 of Cr.P.C. seeking to quash the order passed by the learned Judge. Petitioner contends that there is no material to establish that he had received amount of ₹ 30 Lacs for transferring amount of 2 Lac Pounds to P.M. Engines Ltd., London on behalf of M/s Kirloskar Brothers. Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpose certain penalty while before the Criminal Court, the accused is prosecuted for the criminal offence committed by him. 5. Before proceeding to discuss the different legal aspects raised by the learned Counsel for both the parties, it would be necessary to point out the findings of the adjudicating authority in its order dtd. 21st July 2004. The order passed by the adjudicating authority reveals that as a result of searches conducted on 9th December 1985 all over India against M/s Kirloskar Brothers Limited and various other sister concerns/subsidiaries as well as residence and office premises of their Directors and their employees, as many as 15 show cause notices were issued to M/s Kirloskar Brothers, its Directors and various Officers. Show cause Notice VIII was under Section 9(1)(f)(1) of the FERA on the allegation that the Company had made payment of ₹ 30 Lacs to H.M. Kothari of M/S DSP Financial Consultants Limited, Mumbai for transferring the amount of 2 Lac Pounds to M/s P.M. Engines, Ltd. London. During the search and other proceedings, the Officers of the Enforcement Directorate recorded statements of some persons. Relevant statements were of M.M. Vaidya, Bhadk ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statement was also not admissible. The Adjudicating authority found that the culpability of Kirloskar Brothers and its management was established and therefore the statement of Mr. Vaidya could not be merely ticked off as a dictation by the Officers of the Enforcement. However, to the extent of the allegations against the present applicant, the adjudicating authority came to the conclusion that as there was no documentary or other evidence to connect the present applicant with the receipt of ₹ 30 Lacs or the transfer of 2 Lac Pounds to P.M. Engines, London, merely the retracted statement of Mr. Vaidya was not sufficient to hold the applicant guilty. He held that the charge pertaining the transfer of 2 Lacs Pounds to P.M. Engines Limited by Kirloskar Brothers was established, but there was nothing on the basis of which the responsibility could be fastened against Mr. H.M. Kothari. In view of these circumstances, the adjudicating authority held that the charges against Mr. H.M. Kothari were not proved. 6. It is true that when the Additional Sessions Judge heard and disposed of the revision application filed by the applicant, the findings of adjudicating authority were not on r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... read with 277 and 277 I-T Act are liable to be set aside in the teeth of the judgment of the Tribunal completely exonerating the appellants from the liability of the income tax. We shall examine this contention and dispose of the same in the ratio of the decisions of this Court in P. Jayappan v. S.K. Perumal ). In that case, the following dictum has been laid down (para 5 of AIR). The criminal court no doubt has to give due regard to the result of any proceeding under the Act having a bearing on the question in issue and in a appropriate case it may drop the proceedings in the light of an order passed under the Act. It does not, however, mean that the result of a proceeding under the Act would be binding on the criminal court. The criminal court has to judge the case independently on the evidence placed before it. 48. The above principle of law laid down by this court gives an indication that the result of the proceedings under the IT Act is one of the major factors to be considered and the resultant finding in the said proceeding will have some bearing in deciding the Criminal Prosecution in appropriate cases. 49. It may not be out of place to refer to an observation of this Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uestion of penalty. Taking into consideration this fact also, the Supreme Court held that no prosecution could be launched against the assessee. 12. In Deputy Chief Controller of Imports and Exports v. Roshanlal Agarwal 2003 Cr. L.J. 1698, under Imports and Exports Control Act, it was pointed out that Appellate Committee had allowed the appeals and the accused were exonerated. The Supreme Court observed: 13. Having regard to the materials existing against the respondent and the reasons and findings given in the aforesaid orders, we are of the opinion that no useful purpose would be served by the trial of the accused-respondents in the criminal court at this stage. The proceedings of the criminal cases instituted against the accused-respondents on the basis of the complaints filed by Deputy Chief Controller of Imports and exports are, therefore, quashed. 13. In K.C. Builders and Anr. v. The Assistant Commissioner of Income Tax , the Supreme Court quashed the criminal proceedings on the ground that the Income Tax Tribunal had given conclusive findings that there was no concealment of income. Their Lordship observed in para 25, as follows: 25. In our opinion, the appellants cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the submission of the learned Additional Solicitor General that the correctness of the view taken in K.C.Builders (supra) may require reconsideration as the reasoning appears to run counter to the one adopted by the Constitution Bench in Assistant Collector of Customs, Bombay v. L.R. Melwani and Anr. (supra) and in other decisions not referred to therein. For the purpose of these cases, we do not think it necessary to pursue this aspect further. Suffice it to say, that the ratio of that decision has no application here. 15. Mr. Desai, however, vehemently contended that in the above passage from the Standard Chartered Bank, the Supreme Court had only expressed that the view taken in K.C. Builders may require the reconsideration as the reasoning appears to run counter to the one adopted by the Constitution Bench in Assistant Collector of Customs Bombay v. L.R. Melwani and Anr. However, their Lordship did not pursue the matter further and held that the said ratio in K.C. Builders had no application to the Standard Chartered Bank. 16. According to Mr. Desai merely because the Supreme Court had expressed that K.C. Builders needs to be reconsidered, it cannot be said that the view take ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igh 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 ALL MR (Cri) 1085, in a proceeding under Section 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 under Section 482 Cr.P.C., the criminal proceeding should be quashed. 20. In Ushanes Nrupendra Mehta v. State of Maharashtra and Anr. 2004 ALL MR (Cri) 2129 which was also a case under FERA, in the appeal before Customs, Excise & Gold (Control) (Appellate Tribunal), Constituted under the Customs Act, was allowed and the petitioner was fully exonerated in adjudication proceeding and the order exonerating petitioner was not challenged by the revenue. It was held that in such circumstances, prosecution based on the same evidence and charges was liable to be quashed. 21. It may be noted that in the present case the applicant was exonerated b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n if the statement of witness recorded under Section 40, FERA is admissible in evidence, the question is whether a retracted statement of a witness before the Officer of the Enforcement is sufficient to prove the criminal charges against the accused. Mr. Desai vehemently contended that the Apex Court and several High Courts have from time to time held that confession of co-accused cannot be treated as substantive evidence against the other co-accused and cannot be made basis for conviction without any corroboration. 25. In Haricharan Kurmi and Anr. v. State of Bihar , Supreme Court in para 16, observed as follows: 16. ...As we have already indicated, it has been a recognised principle of the administration of criminal law in this country for over half a century that the confession of a co-accused person cannot be treated as substantive evidence and can be pressed into service only when the court is inclined to accept other evidence and feels the necessity of seeking for an assurance in support of its conclusions deducible from the said evidence. In criminal trials, there is no scope for applying the principle of moral conviction or grave suspicion. In criminal cases where the oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Anr. 1985 Cr.L.R. (Mah) 495 and several other cases has taken a view that the statement of an accomplice is not sufficient to base a conviction unless there is corroboration to the same. 29. In the present case, 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 above, 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 ou ..... 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