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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 ..... Directors as per the provisions of Section 68 of FERA. The respondents deliberately and willfully ignored the investigation conducted by CBI whereby, chargesheet at Para 2 confirmed that C.K. Ramakrishnan and D.S. Kanwar who were functioning as Managing Director and Executive Director respectively in the petitioners company were responsible having domain over the funds of the company during the year 1995-96 and they dishonestly in connivance with officials of M/s. Karsan Limited, a Turkish Company and other accused persons, directed the bank officers to remit US$ 38 million to the account of M/s. Karsan Limited. Moreover, the facts of the investigation have been concealed by the respondent before the Trial Court and since the sunset period was expired, therefore, hurriedly without going through the material on record, the Trial Court had issued the summons against the petitioners. Complains and Summons quashed - Decided in favor of petitioner. - CRL. M. C. 3003/2002, CRL.M.C. 5093/2003 - - - Dated:- 9-3-2016 - Suresh Kait, J. For the Petitioner : Mr. Dinesh Mathur, Senior Advocate with Mr. Ghanshyam Joshi and Mr. Chirag Joshi, Advocates For the Respondent : Mr. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he SBI. Accordingly, the petitioners company as well as SBI Officers allegedly were made liable under Section 56 of FERA and its employees become vicariously liable for the alleged acts of the said Company under Section 56 read with Section 68 of FERA. The petitioners were also sought to be made liable under Sections 6 (4) (5), 8 (1),(3) (4), 9(1)(f)(i) and (3), 49, 64(2) and 73 (3) read with Section 68 of FERA. 7. Ld. Sr. Counsel further submitted that the complaint is contrary to the investigation and chargesheet filed by the CBI in case bearing No.RC-3A/96-ACU-1. The CBI, in fact, found that the petitioners company was the victim of the conspiracy of the accused therein punishable under sections 120B/201/409 and 420 of IPC and Section 13 (2) read with Section 13 (1) (c) and (d) of Prevention of Corruption Act. Some of the petitioners employees therein were placed in column no. 2 of the chargesheet filed by CBI in above-mentioned FIR and have been cited as witnesses while remaining petitioners employees found no mention at all in the chargesheet. Thus, the present case is completely opposed to the findings reached by the CBI. It cannot, therefore, be comprehended, how when ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lleged out against the petitioners company. Perusal of aforesaid Section shows that it is the duty of authorized agent that before engaging/undertaking in any transaction involving in foreign exchange, it has to take care of the directions and instructions issued by the RBI from time to time and in necessary cases it has to obtain previous permission of the Reserve Bank of India. Thus, in all the cases, it is the liability, responsibility and duty of the authorized dealer that he should be satisfied as to the genuineness of the dealings in foreign exchange and if not so satisfied, report to the RBI for its necessary directions. The authorized dealer in the instant case was the SBI and the petitioners company and its employees had neither any role to play nor any duty to perform in the light of the provisions of the aforesaid Sections. Furthermore, there is no question of attaching vicarious liability on the petitioners for the actions of any entity of the Government including SBI. 12. Further there are no specific allegations in the complaint against the petitioners employees, except vague and general allegations that the petitioners were liable and responsible for the work of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the Court. A litigant who approaches the Court is bound to produce all documents which are relevant to the litigation. If he withholds a vital document in order to gain advantage on the other side then he would be guilty of playing fraud on the Court as well as on the opposite party. The second respondent, in our opinion, was not justified in suppressing the material fact that he was convicted by the Magistrate on an earlier occasion. Since the second respondent deliberately suppressed the crucial and important fact, we disapprove strongly and particularly, the conduct of the second respondent and by reason of such conduct, the second respondent disentitled himself from getting any relief or assistance from this Court. We, however, part with this case with a heavy heart expressing our strong disapproval of the conduct and behavior but direct that the second respondent to pay a sum of ₹ 10,000 by way of cost to the appellant herein. 15. Ld. Counsel further submitted that petitioner nos. 4 5 in Crl. M.C. 5093/2003 have died; and petitioner nos. 1, 3, 6 7 have retired in the year February, 2009, 2002, April, 2011 and March, 2010 respectively. However, their retirement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... zed dealer, i.e, SBI, who failed to comply with the conditions of RBI as prescribed in Paragraph 7A (1) (d) of the Exchange Control Manual, 1993. According to said provisions, if any amount of advance remittance exceeds US$ 5000, a guarantee from the International Bank of repute situated outside India should be obtained. Thus, the petitioners have violated the aforesaid provisions as the specific import to India should be made within 3 months from the date of remittance. Moreover, the importer ought to have given an undertaking to furnish documentary evidence of import within 15 days from the close of relevant period. The contract in question was signed in violation of the aforesaid provisions. In addition, special permission was also required from RBI before acquisition of payment of aforesaid foreign exchange of US$ 3.80 Lakh and US$ 37.62 million without the same being backed by the requisite International Bank of repute guarantee. The petitioners company did not obtain any permission from RBI and even the SBI did not obtain any permission. In this manner, the aforesaid remittance was issued in violation of relevant provisions of FERA. 18. Ld. Counsel further submitted that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iolated Sections 6 (4) (5), 8 (1)(3) (4), 9(1)(f)(i) (3), 49, 64 (2) (3) read with Section 68 of FERA punishable under Section 56 of FERA. 23. Ld. Counsel further submitted that only summons have been issued, charges are yet to be framed. Therefore, the petitioners have surpassed the procedure and the present petition is liable to be dismissed being premature. Moreover, the petitioners having violated the due procedure are liable for penal action under FERA. 24. To strengthen his arguments, ld. Counsel for the respondent has relied upon a case of Balasaheb @ Ramesh Laxman Deshmukh Vs. State of Maharasahtra and Anr. 2010 XII AD (S.C.) 372 wherein it is observed as under: 6. We are of the opinion that for invoking the constitutional right under Article 20(3) a formal accusation against the person claiming the protection must exist. Simply because the Appellant figures as the accused in the complaint case, a blanket protection as claimed by him cannot be granted. Reference in this connection can be made to a decision of this Court in the case of Raja Narayanlal Bansilal v. Maneck Phiroz Mistry and Anr. : AIR 1961 SC 29, wherein it has been held as follows: The ef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nds that the same were obtained by torture and harassment and are involuntary and, therefore, the conviction of the appellants cannot be sustained. The delay in recording of the statements of the appellants is put forth as one of the reasons to support the contention that the statements were involuntary. Learned counsel submits that after apprehending truck and the car on the road at about noon time on 15th May, 1993, the seizure of the narcotics had taken place between 6 to 9 p.m. at the Customs House and the statements of accused Nos.2, 3 and 6 were recorded on the next day i.e. on 16th May, 1993 and the statement of accused No. 1 was recorded on 17th May, 1993. It may be noted that accused Nos.2, 3 and 6 were apprehended on the spot on 15th May, 1993 whereas accused No. 1 was arrested on 16th May, 1993. The courts below on appreciation of evidence have neither doubted the recovery nor has found the statements to be involuntary. 26. Also relied upon case of Mohit @ Sonu and Anr. Vs. State of U.P. and Anr. AIR 2013 SC 2248, wherein it is observed as under: 23. So far as the inherent power of the High Court as contained in Section 482 of Code of Criminal Procedure is conc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und for proceeding against the accused. The High Court therefore is entitled to go into the reasons given by the Sessions Judge in support of his order and to determine for itself whether the order is justified by the facts and circumstances of the case. Section 482 of the new Code, which corresponds to Section 561-A of the Code of 1898, provides that: Nothing in this Code shall be deemed to limit, or affect the inherent powers of the High Court to make such orders as may be necessary to give effect to any order under this Code or to prevent abuse of the process of any Court or otherwise to secure the ends of justice. In the exercise of this wholesome power, the High Court is entitled to quash a proceeding if it comes to the conclusion that allowing the proceeding to continue would be an abuse of the process of the Court or that the ends of justice require that the proceeding ought to be quashed. The saving of the High Court's inherent powers, both in civil and criminal matters is designed to achieve a salutary public purpose which is that a court proceeding ought not to be permitted to degenerate into a weapon of harassment or persecution. In a criminal case, the vei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h NFL. All the aforesaid accused persons were liable and responsible for the work of M/s. NFL . The same Para further state that as these officers were working the Corporate office and Marketing Division looking after imports with the Company and all were liable and responsible for the work of the said Company and therefore were well conversant with the procedures and documentations for import and finance . 31. After going through the complaint, it is established that except the allegations noted above, no averment is made in whole of the complaint against the petitioners. The only allegation made against one of the petitioners, namely, P.K. Kataria is in respect of directions being given by D.S. Kanwar ED(M) of petitioners company regarding sending letter to SBI to remit advance of US$ 3.80 Lakh to M/s. Karsan Ltd. for obtaining Lloyds Insurance Cover, which was merely 1% of the contract value. However, the said amount has been returned back and could not be remitted and is lying with the SBI as Fixed Deposit. 32. The aforesaid allegations are general in nature and under no circumstances can bring the petitioners under the ambit of Section 68 of FERA, which prescribed that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r association of individuals; and (ii) director , in relation to a firm, means a partner in the firm. 34. On perusal of the aforesaid provisions, it is established that respondent failed to consider the important aspects of Section 68 of FERA while naming the petitioners as accused without considering three important ingredients as prescribed under Section 68 of FERA. Further failed to bring or produce any document on record to show that all the petitioners were in-charge and responsible for day-to-day affairs of the Company at the time when offence was committed. Also failed to consider the fact that the petitioners company who was made accused no. 1 in the complaint is a Company registered under the Companies Act, 1956, and is governed by Memorandum and Articles of Association of the Company, which are statutory and public documents and the powers and duties of officials flow from the Articles of Association. The respondent deliberately did not file the said documents as the same would have absolved all the petitioners from the offences covered under Section 68 of FERA. The respondent also failed to produce any document on record showing delegated powers to any of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Managing Director or an Executive Director / Functional Director or Executive Directors / Functional Directors so appointed shall be whole time employees of the Company and shall be whole time employees of the Company and shall be paid such salary and Allowances as may be fixed by the President. Article: 82 which deals with Delegation of Powers. The Board may, from time to time, delegate such of its powers as it may think fit and as are not required to be exercised by the Board at a meeting to the Standing / Executive Committee of Directors, Chairman, the Managing Director, an executive Director, a Functional Director, subject to such terms, conditions and restrictions as the Board may think fit to impose and the Board may, from time to time, revoke, amend or vary all or any of the powers as delegated. To Managing Director as Chief Executive of the Company may from time to time sub-delegate his powers to the Functional Directors and /or General Managers and / or to any other officers of the Company as he may deem it fit . 36. It is evident from the above that the said powers under Article 79 were vested only with above two persons and were not delegated to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is pertinent to mention here that as per the CBI, no role has been assigned to any of the petitioners. However, by the depth investigation it is established that the offence was committed by aforesaid two officers of the petitioners company in connivance with other co-accused. Even otherwise, the petitioners could not play any role in remittance and functioning of approval of foreign exchange which was done by authorized agent, i.e., SBI, as appointed by the RBI. However, in case of any conspiracy in remittance of amount, the offence may be looked into under the provisions of Section 68 of FERA only in respect of those persons who were in-charge and running the affairs of the Company at that time and had colluded with certain officials of the authorized banks which were responsible for remittance of the foreign exchange. 41. As per the complaint, the respondent had failed to show any abetment on the part of the petitioners who were neither Managing Directors, Directors, Executive Directors nor having any power or domain over the funds nor instructed the SBI to remit the foreign exchange. 42. On the other hand, one of the subordinate officers, namely, Deepak Lal (since die ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt observed as under: 17 the averment in a complaint that an accused is a director and that he is in charge of and is responsible to the company for the conduct of the business of the company, duly affirmed in the sworn statement, may be sufficient for the purpose of issuing summons to him. But if the accused is not one of the persons who falls under the category of 'persons who are responsible to the company for the conduct of the business of the company' (listed in para 14 above), then merely by stating that 'he was in charge of the business of the company' or by stating that 'he was in-charge of the day to day management of the company' or by stating that he was in charge of, and was responsible to the company for the conduct of the business of the company', he cannot be made vicariously liable under Section 141(1) of the Act. xxxx xxxx xxxx 20 (iv) Other officers of a company cannot be made liable under sub-section (1) of Section 141. Other officers of a company can be made liable only under sub-section (2) of Section 141, be averring in the complaint their position and duties in the company and their role in regard to the issue and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Reserve Bank, an authorized dealer shall not engage in any transaction involving any foreign exchange which is not in conformity with the terms of the authorization under this Section. 51. It is important to note that the respondent had admitted in Para 4 of the complaint that instructions were given by PMO to accused C.K. Ramakrishnan, Managing Director of the petitioners company by calling him in the PMO to help accused Sanjeeva Rao, the relative of the then Prime Minister. The said averments of the complaint shows that the said contract was being dealt with at the highest level, i.e., at the level of the then Prime Minister as his relative Sanjeeva Rao kept on meeting accused C.K. Ramakrishnan between April to October, 1995 due to same, a contract was signed in July, 1995, which was not acted upon in its place. Therefore, another contract was signed on 09.11.1995. This fact has been corroborated with the statements of C.K. Ramakrishnan and D.S. Kanwar recorded under Section 40 of FERA. 52. In view of the facts recorded above, it is apparently clear that the respondents deliberately and willfully ignored the investigation conducted by CBI whereby, chargesheet at Par ..... X X X X Extracts X X X X X X X X Extracts X X X X
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