9911796707
TMI Blog2024 (7) TMI 191X X X X Extracts X X X X X X X X Extracts X X X X ..... the present case, rather the case of the petitioner falls within the ambit of paragraph 38(vii) of Radheshyam Kejriwal (supra) case which states as follows: 38. (vii) In case of exoneration, however, on merits where the allegation is found to be not sustainable at all and the person held innocent, criminal prosecution on the same set of facts and circumstances cannot be allowed to continue, the underlying principle being the higher standard of proof in criminal cases. It is of the opinion that further continuance of the complaint case being Case No. C-2482/2002 pending before the learned Metropolitan Magistrate, 9th Court, Calcutta would be an abuse of the process of the Court and as such the same is hereby quashed. - HON BLE JUSTICE TIRTHANKAR GHOSH For the Petitioner : Mr. Pradip Kumar Ghosh, Mr. Sandipan Ganguly, Mr. Kaushik Gupta, Mr. Sourav Bhagat, Mr. Jishnujit Roy. For the Opposite Party/ED.: Mr. Vipul Kundalia, Mr. Anurag Roy.. JUDGMENT TIRTHANKAR GHOSH, J:- 1. The present revisional application has been preferred challenging the proceedings being Case No. C-2482/2002 pending before the learned Metropolitan Magistrate, 9th Court, Calcutta under Sections 56 and 68 of the F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... instructions from Mr. K.L. Chugh, he authorised Dr. E. Rabindranath, Vice- president (operation) of Agro Business of M/s ITC Ltd.to remit/transfer funds generated through Counter Trade to various M/s ITC Ltd., companies in Singapore and EST Group of Chitalias in USA and total amount of US $ 2 Million generated out of said counter trade business was transferred directly by counter Trade Business overseas through Chitalia group of companies in USA. 8. It further transpired from the statement of Dr. E. Rabindranath, Vice-president (operation) of IBD, M/s ITC Ltd, that since 1990 they have been doing counter trade business and that he was instructed by Sri G.K.P. Reddy to remit the counter trade fund to M/s ITC Ltd Singapore and EST group of companies in USA and EST Rotterdam A/s and that he pleaded ignorance about the purpose for which those amounts were generated out of the counter trade premium and was used by the Chitalia company on behalf of M/s. ITC Ltd. and that he was told by the then M/s ITC Ltd., chairman Sri K.L. Chugh that M/s ITC Ltd. would get premium ranging from 3% to 3.5% plus interest for 120 days post shipment credit along with counter trade benefit and that benefits ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. did counter trade of US $ 14.4 Million in respect of sale of leaf tobacco on which no counter trade profit were realized by ILTD from IBD and ILTD have been informed of the profit generated through the counter trade done by IBD and that counter trade margin varied from time to time any where from 2% to 5% depending on through when counter trade was carried out and profit earned @4% should have been US $ 6,60,000 on a turn over of US $ 14.4 million and ILTD, M/s ITC Ltd did not receive the trade profit amounting to US $ 6,60,000. 13. It transpired from the statement dated 9.10.96 S/Shri Suresh Chitalia and Devang Chitalia of USA and also the subsequent documents sent by them with their letter dated 15.10.96 that Dr. E. Rabindranath arranged US $ 2,44,000 through EST, A/c of Chitalia for Bukhara settlement out of the counter trade benefit and that US $1.37 million used for Bukhara settlement by M/S ITC Ltd. appears to have been generated out of counter trade benefit as Sri G.K.P. Reddy viz statements dated 23.10.96 and 24.10.96 admitted to have transferred and utilized about US $ 2 million generated out of counter trade benefit towards Bukhara settlements in USA. It also transpi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Section 4 of Foreign Exchange Regulation Act, 1973. In order to emphasise on such issue the judgment of the Hon ble Supreme Court in The Assistant Commissioner, Assessment-II, Bangalore Ors. Vs. M/s. Velliappa Textiles Ltd Anr. reported in (2003) 11 SCC 405 was relied upon. The additional grounds which were canvassed in the revisional application relate to the authority of the complainant to file the complaint in terms of Section 61 (2) (ii) of the FERA, 1973, as under the Act a complaint could be presented only by the Director of Enforcement or an Officer specially authorised in writing by the Director of the Enforcement or the Central Government. According to the petitioner the complaint was filed without any specific permission as stipulated under Section 61 (2) (ii) of the FERA, 1973, as such the cognizance which was taken was barred under the law. Several other issues were also canvassed in the revisional application however at the time of final hearing petitioner filed a supplementary affidavit which included a fresh question of law, as during the pendency of the present revisional application a show cause memorandum being no. T-4/18-C/97 (SCN XV) dated 2nd January, 1998 w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.96 at the office premises of various divisions of M/s. ITC Ltd/ ITC Bhadrachalam Paper Board Ltd., and their associate companies and at the residential premises of the Chairman/Ex-Chairman, Directors, Executives at Calcutta, Delhi, Bombay, Madras, Guntur, Hyderabad and Secunderabad covering 36 premises in execution of the search warrants issued under Section 37 of the Foreign Exchange Regulation Act, 1973, a large number of documents were seized as per Panchanamas/ search lists/ Mahazars on the respective dates details of which are separately annexed marked as 'A' ; Para 1 of SCM XV Para 4 That during the course of investigation of documents/ information were called for and/ or collected from accused No. 1 and other sources from time to time under Section 33 (2) of the Foreign Exchange Regulation Act, 1973 and during the course of recording of statements of Directors and Executives of accused No. 1 and/ or other persons under Section 40 of the Foreign Exchange Regulation Act, 1973 on the various dates were recorded; AND WHEREAS, during the course of investigation documents/ information were called for and/ or collected from ITC Ltd., and other sources from time to time un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oducts commodities viz. cashew and coffee to the extent of Rs 130 crores during the period 1991-93 against Counter Trade arrangements with an understanding between M/s ITC Ltd. EST Group of Chitalia of USA and various other ultimate overseas buyers, that M/s ITC Ltd would receive 3 to 4% Counter Trade Premium on the total volume of business; Para 4 of SCM XV Para 7 That it transpired from the statements dated 26.10.96 of Sri GKP Reddy, Chairman of IBD, M/s ITC Ltd in which he admitted that during the period 1991-93 in respect of export of the said commodities to the tune of Rs 130 crores, M/s ITC Ltd was to receive 3 to 4% premium on the Counter Trade Businesses and as per instructions from M/s K L Chugh, he authorised Dr. E Ravindranath, Vice President (Operations) of Agro Business of M/s ITC Ltd to remit/transfer funds generated through Counter Trade to various ITC Ltd companies in Singapore and EST Group of Chitalias in USA and total amount of US$ 2 Million generated out of said counter trade business was transferred directly by counter trade business overseas through Chitalia group of companies in USA; And whereas it appears from the statement dated 26.10.96 of Sri GKP Reddy, C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... then M/s ITC Ltd chairman Sri K L Chugh that M/s ITC Ltd would get premium ranging from 3% to 3.5% plus interest for 120 days post shipment credit along with counter trade benefit and that benefits would be remitted through overseas offices by adjusting the price and that with the knowledge of Line Directors, the Financial Controller used to communicate the product Manager how much premium to be added to each contract and that Mr M B Rao Export Executive of IBD, M/s ITC Ltd used to maintain the counter trade benefit A/c and submitted consolidated report to Sri N Lakshminarayan, Financial Controller of IBD, M/s ITC Ltd; Para 6 of SCM XV Para 9 That from the statement dated 25.10.96 of Mr M B Rao, Export Manager of IBD M/s ITC Ltd it further transpired that through fullfilling of counter trade obligation of various companies, M/s ITC Ltd was able to get service charge ranging from 5% to 11% from time to time and that counter trade business and the profits thereof was periodically reported to Dr E Ravindranath, Vice President (Operations) of IBD, M/s ITC Ltd and that he was told that these information were shared by him with Sri GKP Reddy, the Line Director of IBD, M/s ITC Ltd and eve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... volving in the transactions and also in view of the documents seized and collected by the Directorate; And whereas it appears that though in their statements Sri J N Sapru, Ex chairman of M/s ITC Ltd, Sri B Mitter Ex-director of M/s ITC Ltd, pleaded ignorance of the transactions and also utilization of certain funds to the NRIs and others for settlement of Bukhara pay of matter but the said contention cannot be accepted in the light of admission made by Line Director Sri GKP Reddy and also Sr Executives involving in the transactions and also in view of the documents seized and collected by the Directorate; Para 9 of SCM XV Para 12 It further transpired from the statement dated 7.11.96 of Sri R Ranganathan chief Executive of ILTD, M/s ITC Ltd before the officers of Enforcement Directorate that IBD, M/s ITC Ltd did counter trade of US$ 14.4 million in respect of sale of leaf tobacco on which no counter trade profit were realized by ILTD from IBD and ILTD have been informed of the profit generated through the counter trade done by IBD and that counter trade margin varied from time to time any where from 2% to 5% depending on through when counter trade was carried out and profit earned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd also the subsequent documents sent by them with their letter dated 15.10.96 and Dr E Ravindranath arranged US$ 244,000 through EST A/c of Chitalia for Bukhara settlement out of the counter trade benefit and that US$ 1.37 million used for Bukhara settlement by M/s ITC Ltd appears to have been generated out of counter trade benefit as Sri GKP Reddy viz. statements dated 23.10.96 and 24.10.96 admitted to have transferred and utilized about US$ 2 million generated out of counter trade benefit towards Bukhara settlements in USA; And whereas it appears that M/s ITC Ltd (IBD) otherwise accounted US$ 2.66 million by way of counter trade business in respect of export of Agro-product commodities and sale of leaf tobacco by way of counter trade business through Chitalias and others and transferred funds generated by way of a counter trade benefit to Chitalia companies in USA and ITC's subsidiaries in Singapore, a portion of which used i.e US$ 1.614 million was by them for making payment towards Bukhara settlement to the NRIs in USA and the balance amount of US$ 1 million approx. was retained with M/s ITC Ltd subsidiaries in Singapore and or with Chitalias instead of bring back into Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ger (Exports), M B Rao (Export Executive), K Vaidyanath Vice President (Finance), N Lakshminarayan Financial Controller, IBD of ITC Ltd were either directly involved in the aforesaid transactions or the same were in their knowledge and were/are responsible for control or conduct of the business of the said company during the relevant time when this transaction had taken place and therefore, appears to have contravened the provisions of Section 8(1), 9(1) (a) and 16 (1) (b) of the FERA 1973, and in terms of Section 68(1) and 68 (2) ibid and thereby rendered themselves liable to be proceeded under Section 50 of the FERA, 1973. Para 17 of SCM XV 4. Learned senior advocate in order to substantiate his argument relied upon Radheshyam Kejriwal -Vs. - State of West Bengal Anr. reported in (2011) 3 SCC 581. Emphasis was laid on paragraphs 19, 32, 33, 38 and 47 which are as follows: 19. However, in a case like the present one in which the penalty proceeding under Section 51 of the Act and the prosecution under Section 56 of the Act though launched together but the penalty proceeding culminated earlier exonerating the person, the question would arise as to whether continuance of the prosecut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i) Decision in adjudication proceedings is not necessary before initiating criminal prosecution; (iii) Adjudication proceedings and criminal proceedings are independent in nature to each other; (iv) The finding against the person facing prosecution in the adjudication proceedings is not binding on the proceeding for criminal prosecution; (v) Adjudication proceedings by the Enforcement Directorate is not prosecution by a competent court of law to attract the provisions of Article 20 (2) of the Constitution or Section 300 of the Code of Criminal Procedure; (vi) The finding in the adjudication proceedings in favour of the person facing trial for identical violation will depend upon the nature of finding. If the exoneration in adjudication proceedings is on technical ground and not on merit, prosecution may continue; and (vii) In case of exoneration, however, on merits where the allegation is found to be not sustainable at all and the person held innocent, criminal prosecution on the same set of facts and circumstances cannot be allowed to continue, the underlying principle being the higher standard of proof in criminal cases. 47. Bearing in mind the principles aforesaid we proceed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the relevant materials before arriving at its final decision with regard to the memorandum of charges dated 2nd January, 1998. To that effect learned advocate has referred to the relevant part of the adjudicating order as follows: (a) The adjudication order states that The statement of Shri N. Lakshminarayan mentioned at sl. No. 16 of relied upon documents in no way shows any link of the above letters with the charges made against ITC Ltd. in fact, Shri Lakshminarayan says that in the books of accounts, there is no provision on account of any counter trade premium receivable. This relied upon document would in no way substantiate the charges in the Memorandum. (b) The adjudication order states that the statements of Shri N. Lakshminarayan do not show any relation to the allegations in the Memorandum in any manner. 9. Learned advocate then pointed out that there were contradictions in respect of the earlier observations of the same order in the subsequent part and to that effect drew the attention of the Court to the following paragraphs of the order of the adjudicating authority: (i) In the 3rd paragraph of page 14 of the adjudication order it is stated that In his statement, Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s pointed out that in Pramod Kumar Dhamija (supra) though the adjudicating authority exonerated the accused on merits the Hon ble Supreme Court held that the entire relevant materials were not considered by the adjudicating authority and thus there was no bar in continuance of the criminal proceedings. 12. It was emphasised that the principles in Pramod Kumar Dhamija (supra) in splitting the nature of merits, apply squarely to the facts and circumstances of the instant case as the adjudicating authority erred in not considering the statement of Shri N. Lakshminarayan which is relevant in respect of the allegations against the petitioner and therefore there is no bar to proceed with the complaint based on the judgment of Radheshyam Kejriwal (supra). The learned advocate for the Enforcement Directorate as such, prayed for dismissing the revisional application. 13. In reply to the arguments advanced on behalf of the Enforcement Directorate petitioner reiterated its submission and further added that the plea of the complainant that certain statement which is relevant was not considered by the adjudicating authority in its order dated 20th August, 2015, should be accepted and considered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssing the adjudicating order. According to the adjudicating authority RUD 16 was hearsay in nature and the statement of Dr. E. Ravindranath which was the very foundation of the case, was held general and vague and could not be relied upon was a specific finding of the adjudicating authority, thus there were cogent reasons which were recorded for arriving at its conclusion. Accordingly the ratio laid down in Pramod Kumar Dhamija (supra), has no manner of application so far as the present case and the petitioner is concerned. 14. I have taken into account the order of the adjudicating authority dated 20th August, 2015 passed by the Special Director (ER) wherein he has taken into account the gist of the complaint, the issues relating to the Show Cause Memorandum along with its reply and has based his finding on 24 Relied Upon Documents (RUDs). So far as the RUD 16 is concerned it has been categorically recorded as follows: In his statement, Shri Lakshminarayan stated that he was told by Dr. E. Ravindranath, Vice-President(Operation) that IBD Agro was getting certain percentage of counter trade benefit of export deals but the same was not accounted for in the books of accounts. 15. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid judgment that : 6. .. vide his order dated 25-1-2008 set aside the penalty imposed on the respondent. The appellate authority was of the view that there were two persons having the same name i.e. Pramod Kumar, one in Dubai and the second being the respondent and 18. It was further held by the appellate authority in the aforesaid judgment that: If the investment was made by Shri Pramod Kumar of Dubai, then it cannot be linked to the appellant. The Department has not made Shri Pramod Kumar of Dubai a party in the case and nothing is on record to suggest that efforts were made to trace and identify Shri Pramod Kumar of Dubai and how the telephone number in Dubai i.e. 531228 is linked to the appellant. 19. The exoneration of Pramod Kumar in the judgment relied upon by the complainant/opposite party by the Commissioner of Customs (Appeal) was on a different set of parameters wherein the main issue relating to evasion of revenue was never considered. In the present case adjudicating authority decided the issue relating to the Show Cause on merits, including the statement and the materials placed before the adjudicating authority. 20. Having considered the same, I am of the view that ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
