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TMI Blog2016 (4) TMI 366X X X X Extracts X X X X X X X X Extracts X X X X ..... red by employees of above named Company. 4. It is important to note that vide orders dated 03.10.2002 and 16.12.2003 proceedings against the petitioners have been stayed by this Court. 5. The facts of the cases in brief are that petitioners company deals in fertilizers, heavy chemicals and their by-products including manufacturing and distribution and in case of necessity arises for the country, the Company was authorized to import such items from any country outside India. 6. Mr. Dinesh Mathur, ld. Sr. Counsel appearing on behalf of the petitioners company and Mr. Rajeev Khosla, ld. Counsel appearing for the petitioners employees submitted that the complaint in question was filed during the sunset period, i.e., in the year 2002 alleging therein that in the year 1995, the petitioners employees along with other co-accused persons while working in State Bank of India ('SBI') violated the provisions of Foreign Exchange Regulation Act, 1973 (hereinafter referred to as 'FERA') as the petitioners company while acting as a canalizing agency for import of fertilizers entered into a contract with one Turkish Company namely M/s. Karsan Ltd. for supply of 200000 Metric Tons of Urea and mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prosecution of the petitioners employees would not be in the interest of justice. 9. Ld. Sr. Counsel further submitted that the effect of instance of prosecution would also prejudicially exposed the petitioners employees to testimonial compulsions which is prohibited by virtue of Article 20 (3) of the Constitution of India, 1950, which gives protection against self-incrimination, as upheld by the Supreme Court in the case of M.P. Sharma Vs. Satish Chandra, [1954] 1 SCR 1077. 10. Further submitted that ld. Trial Court was mislead by the respondent as they suppressed the material fact that the petitioners company had initiated Arbitration proceedings for recovery of cheated/defrauded money from M/s. Karsan and its Banks. The petitioners company has kept the Reserve Bank apprised of its steps to recover its amount of money from the aforesaid Company and its Banks. The proceedings contemplated in the instant case would also possibly have adverse consequences on the execution proceedings initiated by the petitioners company in different countries for bringing back the amounts paid in respect to contracts for the import of urea, and in fact negates the efforts of the petitioners Compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of the investigation in the afore-noted matter. The said fact has been concealed by the respondent in the complaint in question. Moreover, in Snap Inspection Report of RBI annexed with the said affidavit it is mentioned that Assistant General Manager / In-charge of concerned Branch with Manager (IP) are squarely responsible for the remittance. Therefore, on concealment of facts itself, the complaint and impugned order deserve to be quashed. To strengthen his arguments ld. Counsel have relied upon a case of MCD Vs. State of Delhi and Anr. 2005 SCC (Cri.) 1322, wherein it is held as under: "21. This apart, the respondent did not also disclose the fact in the criminal revision filed before the High Court that he has also been convicted in another Criminal Case No. 202 of 1997 by the Court of Metropolitan Magistrate, Patiala House, New Delhi. Thus, the contesting respondent has come to the High Court with unclean hands and withholds a vital document in order to gain advantage on the other side. In our opinion, he would be guilty of playing fraud on the Court as well as on the opposite party. A person whose case is based on falsehood can be summarily thrown out at any stage of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d an application in the Court of Additional Judicial Magistrate for their discharge and that this Court should not interfere in the criminal proceedings which are at the threshold. We do not think that on filing of any application for discharge. High Court cannot exercise its jurisdiction under Section 482 of the Code. In this connection, reference may be made to two decisions of this Court in Pepsi Foods Ltd. v. Special Judicial Magistrate : 1998 Cri LJ 1 and Ashok Chaturvedi v. Shitul H. Chanchani: 1998 Cri LJ 4091 , wherein it has been specifically held that though the Magistrate trying a case has jurisdiction to discharge the accused at any stage of the trial if he considers the charge to be groundless but that does not mean that the accused cannot approach the High Court under Section 482 of the Code or Article 227 of the Constitution to have the proceeding quashed against them when no offence has been made out against them and still why must they undergo the agony of a criminal trial." 17. On the other hand, Mr. Rajesh Manchanda, ld. Counsel appearing on behalf of the respondent submitted that the petitioners have violated the Procedures and Rules while signing the contract ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Trial Court has legally and justifiably passed the order dated 30.05.2002 and summoned the accused persons on the basis of violations made by them. The investigation conducted by CBI is independent for the offences other than the offences committed by the accused persons in the present complaint and as such there is no binding effect in the conclusion of investigation conducted by CBI and respondent. The Foreign Exchange Regulation Act, 1973, being a special Act containing comprehensive provisions of investigation, enquiry and trial for offences under the Act and the provisions of Cr.P.C. will not be applicable to the extent of provisions of FERA. The officers of the respondent are empowered to conduct the investigation pertaining to offence under FERA. 21. Ld. Counsel further submitted that alleged Arbitration proceedings and trial of CBI, case wherein the petitioners are stated to be the witnesses, creates no bar to prosecute them by filing complaint under Section 56 of FERA. No adverse inference can be drawn against the respondent for prosecuting the petitioners and other co-accused persons, who have committed offence in the present case. As per law, the Company is a juris ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in case it is done the protection under Article 20(3) of the Constitution shall spring into action. What question shall be put to this Appellant when he appears as a witness is a matter of guess and on that basis he does not deserve the blanket protection under Article 20(3) of the Constitution. Even at the cost of the repetition we may observe that in the Police case when he appears and asked to answer question, the answer whereof tends to incriminate him, he can refuse to answer the same pleading protection under Article 20(3) of the Constitution. In such eventuality the Court would decide the same. Therefore, at this stage the blanket protection sought by the Appellant is not fit to be granted." 25. Further relied upon case of M. Prabhulal Vs. Assistant. Director, Directorate of Revenue Intelligence, AIR 2003, SC 4311, wherein it is observed as under: "4. Assailing, therefore, the statements made by each of the appellant under Section 67, it was vehemently contended by Mr. R.K.Jain, Senior Advocate that the statements on basis whereof the appellants have been found guilty are not voluntary and thus their conviction cannot be sustained. The statements of the appellants have b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itself the task of assessing or appreciating the weight of material on the record in order to find whether any charges could be legitimately framed against the respondents. So long as there is some material on the record to connect the accused with the crime, says the learned Counsel, the case must go on and the High Court has no jurisdiction to put a precipitate or premature end to the proceedings on the belief that the prosecution is not likely to succeed. This, in our opinion, is too broad a proposition to accept. Section 227of the CrPC, 2 of 1974, provides that: If, upon consideration of the record of the case and the documents submitted therewith, and after hearing the submissions of the accused and the prosecution in this behalf, the Judge considers that there is not sufficient ground for proceeding against the accused, he shall discharge the accused and record his reasons for so doing. This section is contained in Chap. XVIII called "Trial before a Court of Sessions." It is clear from the provision that the Sessions Court has the power to discharge an accused if after perusing the record and hearing the parties he comes to the conclusion, for reasons to be recorded, tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he documents annexed thereto the petitioners can be held responsible for the contravention of the provisions of FERA alleged to have been committed by the Company and the accused persons merely being officers of the Company can be said to be in-charge and responsible for the conduct of the business of the Company as provided under Section 68 of FERA? II. Whether petitioners can be held liable for the act of remittance of Foreign Exchange which has been made by the State Bank of India in the capacity of the Authorized dealer appointed by the Reserve Bank of India under Section 6 of FERA, 1973? III. Whether there is any material on record suggesting that the petitioners connived with and abated the officials of State Bank of India in the said transaction and took / or obtained any monetary or other benefits? 30. There is no material on record or any specific allegation made against any of the petitioners in the complaint to suggest that even any of these petitioners were involved remotely in the said offence being in-charge or responsible for the affairs of the Company and in that capacity conspired or abetted the offence. The allegations made by the respondent are vague and gen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f FERA is reproduced as under: "68. Offences by companies.- (1) Where a person committing a contravention of any of the provisions of this Act or of any rule, direction or order made thereunder is a company, every person who, at the time of the contravention was committed, was in charge of, and was responsible to, the company for the conduct of business of the company as well as the company, shall be deemed to be guilty of the contravention and shall be liable to be proceeded against and punished accordingly: Provided that nothing contained in this sub-section shall render any such person liable to punishment if he proves that the contravention took place without his knowledge or that he exercised all due diligence to prevent such contravention. (2) Notwithstanding anything contained in sub-section (1), where a contravention of any of the provisions of this Act or of any rule, direction or order made thereunder has been committed by a company and it is proved that the contravention has taken place with the consent or connivance of, or is attributable to any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l as from the investigation conducted by CBI in case No. RC-3A/96-ACU-1, which after thorough investigation made said C.K. Ramakrishnan and D.S. Kanwar as the accused and absolved the petitioners from any connivance/conspiracy or abetment, however, made them as State witnesses. 35. The provisions of Articles 79 and 82 of the Memorandum and Article of Association of Petitioners Company will make it explicitly clear that only the Managing Director or the Executive Director/Functional Directors are responsible for the conduct and management of business of the Company. The said Articles are being reproduced as under: Article 79: Appointment of Managing Director. "For the conduct and Management of the business of the Company in general and subject to the control and supervision of the Board of Directors, the President may empower the Chairman nominated under Article 92 to exercise the functions of the Managing Director or appoint one of the Directors to be the Managing Director who will be the Chief Executive Officer of the Company. The President may also appoint one or more of the Directors to be the Executive Director / Functional Director or Executive Directors / Functional Dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds of the petitioners company. Therefore, by no stretch of imagination, it can be construed that the petitioners committed any act making them liable under Section 68 of FERA. 39. As per the investigation of CBI, the contract was recommended by D.S. Kanwar on 31.10.1995 and approved by C.K. Ramakrishnan on 01.11.1995 and in terms of approved proposed contract, D.S. Kanwar gave instructions to remit 1% of the contract value in 'Insurance Cover' which would show that it was only these persons who were at the helm of affairs of the petitioners company. This fact is further proved from the contents of Para X of the complaint that D.S. Kanwar sent a letter in the shape of directions on 13.11.1995 to SBI for releasing 99% of the contract value to M/s. Karsan by 14.11.1995 "positively" while the letter of petitioners company dated 10.11.1995 signed by Deepak Lal, accused no.4 in the complaint (since died) seeking the permission of RBI as required under the law, to remit the contract value was still under consideration. The said fact establishes that D.S. Kanwar, who had domain over the fund of the company, was interested to get the remittance made under all circumstances even without fol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to come into force in place of FERA, 1973. The said summoning order itself shows that the Trial Court has not considered the aspect of criminal liability of the petitioners under Section 68 of FERA having position of subordinate officers other than Managing Directors, Directors and Executive Directors as per the provisions of Section 68 of FERA. 45. Ld. ACMM failed to consider that vicarious liability is an exception to the normal rule of criminal jurisprudence and no person can be held criminally liable for the actions of another. 46. The Supreme Court in the case of Monaben Ketanbhai Shah & Anr. Vs. State of Gujarat and Ors. (2004) 7 SCC 15 observed as under: "7............The primary responsibility is on the complainant to make necessary averments in the complaint so as to make the accused vicariously liable. For fastening the criminal liability, there is no presumption that every partner knows about the transaction. The obligation of the appellants to prove that at the time the offence was committed they were not in charge of and were not responsible to the firm for the conduct of the business of the firm, would arise only when first the complainant makes necessary averment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re, major role has been attributed to SBI and the only role attributed to the petitioners employees is under the provisions of FERA for which all the documents and investigations lead to the conclusion pointing out the role of C.K. Ramakrishnan and D.S. Kanwar who acted upon without having any resolution, passed by the Board of Directors of petitioner company, in their favour. 49. It is not out of place to mention here that RBI in its letter dated 12.06.1996 requested the respondent on the lines that "since the matter is already under investigation of CBI, we request you to kindly coordinate with them." Further, vide its letter dated 13.06.1996, RBI handed over the Snap Inspection Report dated 27.05.1996 and also other relevant papers to CBI in this regard. The Snap Inspection Report held the SBI responsible for remittance. However, it is nowhere mentioned therein that any of the petitioners had played any role in the remittance. 50. As per Section 2(b) of FERA, SBI is the 'authorized' dealer to deal in all foreign currencies as provided under Section 6 (2) (ii) of FERA. As provided under Section 6 (4) of FERA, the SBI in all its dealings in foreign exchange and in the exercise a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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