Vijay Mallya vs.
Enforcement Directorate, Ministry of Finance
[Criminal Appeal No.1406
of 2009]
ADARSH KUMAR GOEL, J.
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1. This appeal has been
preferred against judgment and order dated 21st May, 2007 of the High Court of
Delhi at New Delhi in Criminal Revision Petition No.554 of 2001.
2. Brief facts necessary
for decision of this appeal are that the appellant was summoned by the Chief
Enforcement Officer, Enforcement Directorate, under Section 40 of the Foreign
Exchange Regulation Act, 1973 ("the Act") with his passport and
correspondence relating to a transaction with Flavio Briatore of M/s. Benetton
Formula Ltd., London, to which the appellant, as Chairman of United Breweries
Ltd., was a party. Allegation against the appellant was that he entered into an
agreement dated 1st December, 1995 with the earlier mentioned English Company
for advertisement of 'Kingfisher' brand name on racing cars during Formula-I
World Championships for the years 1996, 1997 and 1998 providing for fee
payable.
Requisite permission of
the Reserve Bank of India was not taken which was in violation of provisions of
Sections 47(1) & (2), 9(1)(c) and 8(1) of the Act. Approval was later
sought from Finance Ministry for payment on 19th June, 1996, which was rejected
on 4th February, 1999. Since the appellant failed to appear in response to
summons issued more than once, a complaint dated 8th March, 2000 under Section
56 of the Act was filed before the Additional Chief Metropolitan Magistrate,
New Delhi. The trial court after considering the material on record summoned
the appellant and framed charge against him under Section 56 of the Act.
3. The appellant
challenged the order of the Magistrate dated 9th August, 2001 in above Criminal
Complaint No.16/1 of 2000 and also sought quashing of proceedings in the said
complaint before the High Court by filing Criminal Revision Petition No.554 of
2001 on the ground that willful default of the appellant could not have been
inferred and that there was non-application of mind in the issuance of summons
as well as in framing the charge which was in violation of procedure laid down
under Section 219 of the Criminal Procedure Code.
The charge related to
failure of the appellant to appear on four occasions, i.e., 27th September,
1999, 8th November,1999, 26th November, 1999 and 3rd January, 2000. In respect
of first date, it was submitted that the trial court itself accepted that the
service of summons was after the time for appearance indicated in the summons.
In respect of second and third dates, the appellant had responded and informed
about his inability to appear and for the last date, summons was not as per
procedure, i.e., by registered post. It was submitted that composite charge was
against Section 219 of the Criminal Procedure Code.
4. The High Court
rejected the contentions by holding that framing of composite charge could not
be treated to have caused prejudice so as to vitiate the proceedings. It was
further observed that default of the appellant in relation to summons dated
15th September, 1999 for attendance on 27th September, 1999 could not be taken
into account and to that extent the charge was liable to be deleted but with
regard to the defaults in relation to summons dated 7th October, 1989, 8th
November, 2009 and 21st December, 1999, the proceedings were not liable to be
interfered with as the appellant could contest the matter before the trial
court itself in the first instance.
5. We have heard Shri
F.S. Nariman, learned senior counsel for the appellant and Shri K.
Radhakrishnan, learned senior counsel for the respondent.
6. When the matter came
up for hearing before this Court earlier, a statement was made on behalf of the
appellant that the appellant expressed regret for not responding to the summons
on which learned senior counsel for the respondent took time to ascertain
whether the complaint could be withdrawn. Thereafter, it was stated that
withdrawal of the complaint may have impact on other matters and for that
reason withdrawal was not possible. However, the question whether the non
compliance was deliberate was required to be examined. Learned senior counsel
for the appellant submitted that the default was not deliberate, intentional or
willful which may be punishable under Section 56 of the Act and the appellant
had sent reply and sought a fresh date on two occasions.
7. It was further
submitted that subsequent events which were not gone into by the High Court may
also be seen. The complaint was filed on 8th March, 2000. During pendency of
the complaint, the Act (FERA) was repealed on 1st June, 2000. Still, show cause
notice dated 13th March, 2001 was issued to which reply was given and the
adjudicating officer vide order dated 10th January, 2002 dropped the
proceedings on merits. The Appellate Board dismissed the Revision Petition
filed by the Department on 16th March, 2004. Against the said order, Criminal
Appeal No.515 of 2004 was pending in the High Court.
8. It was submitted that
having regard to repeal of the Act and exoneration of the appellant by the
departmental authorities (even though an appeal was pending in the High Court),
this Court in the circumstances of the case ought to quash proceedings,
following law laid down in Dy. Chief Controller of Import and Export vs. Roshan
Lal Agarwal[1] as follows :
"13. In view of the
findings recorded by us, the learned Magistrate has to proceed with the trial
of the accused-respondents. Shri Ashok Desai, learned Senior Counsel has,
however, submitted that the Imports and Exports (Control) Act, 1947 has since
been repealed and in the departmental proceedings taken under the aforesaid
Act, the Central Government has passed orders in favour of the respondents and,
therefore, their trial before the criminal court at this stage would be an
exercise in futility.
He has placed before us
copies of the orders passed by the Additional Director General of [pic]Foreign
Trade on 16-8-1993 and also by the Appellate Committee Cell, Ministry of
Commerce, Government of India on 13-3- 1997 by which the appeals preferred by
the respondents were allowed by the Appellate Committee and the
accused-respondents were exonerated. Having regard to the material existing
against the respondents 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 the Deputy Chief Controller of Imports and Exports are,
therefore, quashed". Alternatively, explanation of the appellant for non
appearance may be looked into on merits instead of the same being left to the
trial court.
9. Before we consider
the submissions made, the provisions of Section 40 and 56 of the Act may be
noticed which are as follows:
"Section 40 - Power
to summon persons to give evidence and produce documents
(1) Any Gazetted Officer
of Enforcement shall have power to summon any person whose attendance he
considers necessary either to give evidence or to produce a document during the
course of any investigation or proceeding under this Act.
(2) A summon to produce
documents may be for the production of certain specified documents or for the
production of all documents of a certain description in the possession or under
the control of the person summoned.
(3) All persons so
summoned shall be bound to attend either in person or by authorised agents, as
such officer may direct; and all persons so summoned shall be bound to state
the truth upon any subject respecting which they are examined or make
statements and produce such documents as may be required: Provided that the
exemption under section 132 of the Code of Civil Procedure, 1908 (5 of 1908)
shall be applicable to any requisition for attendance under this section.
(4) Every such
investigation or proceeding as aforesaid shall be deemed to be a judicial
proceeding within the meaning of sections 193 and 228 of the Indian Penal Code,
1860 (45of 1860). Section 56 - Offences and prosecutions (1)Without prejudice
to any award of penalty by the adjudicating officer under this Act, if any
person contravenes any of the provisions of this Act [other than Section 13,
Clause (a) of sub-section(1) of (Section 18, Section 18A), clause (a) of
sub-section (1) of Section 19, sub-section(2) of Section 44 and Section 57 and
58] or of any rule, direction or order made there under, he shall, upon conviction
by a court, be punishable (i) in the case of an offence the amount or value
involved in which exceeds one lakh of rupees with imprisonment for a term which
shall not be less than six months, but which may extend to seven years and with
fine; Provided that the Court may, for any adequate and special reasons to be
mentioned in the judgment, impose a sentence of imprisonment for a term of less
than six months; (ii)in any other case, with imprisonment for a term which may
extend to three years or with fine or with both."
10. In Enforcement
Directorate vs. M. Samba Siva Rao[2], it was observed : "3. xxxxxxxx The
Foreign Exchange Regulation Act, 1973 was enacted by Parliament, basically for
the conservation of the foreign exchange resources of the country and the
proper utilisation thereof in the interest of economic development of the
country.
The Act having been
enacted in the interest of national economy, the provisions thereof should be
construed so as to make it workable and the interpretation given should be
purposive and the provisions should receive a fair construction without doing
any violence to the language employed by the legislature.
The provisions of
Section 40 itself, which confers power on the officer of the Enforcement
Directorate, to summon any person whose attendance he considers necessary
during the course of any investigation, makes it binding as provided under
sub-section (3) of Section 40, and the investigation or the proceeding in the
course of which such summons are issued have been deemed to be a judicial
proceeding by virtue of sub-section (4) of Section 40. These principles should
be borne in mind, while interpreting the provisions of Section 40 and its
effect, if a person violates or disobeys the directions issued under Section 40."
11. The above
observations clearly show that a complaint is maintainable if there is default
in not carrying out summons lawfully issued. The averments in the complaint
show that the summons dated 21st December, 1999 were refused by the appellant
and earlier summons were not carried out deliberately. The averments in paras 3
and 4 of the complaint are as follows :
"3. That the
complainant issued a summons dated 21.12.1999 under Section 40 of FERA, 1973 in
connection with the impending investigations for the appearance of the accused
on 3.1.2000 but the same have been returned back by the postal authorities with
the remarks "refused".
It is submitted that the
accused has deliberately avoided his appearance before the Investigating
Officer and on account of his non co- operative attitude the investigation has
come to a standstill.
4. It is respectfully
submitted that the accused has been intentionally avoiding his appearance
before the Enforcement Directorate knowing fully well that non compliance of
the directions made under Section 40 of the Act renders the person liable for
prosecution in a Court of law under Section 56 of the Act which is a
non-bailable offence. It is further submitted that by virtue of Section 40(3)
of the Act, the accused was bound to appear before the Officers of the
Enforcement Directorate in the best interest of investigation. Section 40(3) is
reproduced below for kind perusal and ready reference to this Hon'ble Court :
"Section 40(3): (3)
All persons so summoned shall be bound to attend either in person or by
authorised agents, as such officer may direct; and all persons so summoned
shall be bound to state the truth upon any subject respecting which they are
examined or make statements and produce such documents as may be required."
It is respectfully submitted that non compliance of any rule, directions or law
is punishable under Section 56 of the Act. The accused willfully failed to
appear before the Enforcement Directorate at the given venue, time and dates
mentioned in the respective summons and has thus, contravened the provisions of
Section 56 of the Act."
12. As regards summons
dated 8th November, 1999, learned senior counsel for the appellant has referred
to the explanation offered by the appellant. Letter dated 22nd November, 1999
is as follows : "As you will appreciate, I am the Chairman of several
public Companies both in India as well as in the USA and, therefore, my
schedule is finalized several months in advance. During the fiscal year end
period, the problem only gets compounded. I would, therefore, request you to
excuse me from the personal appearance on November 26, 1999 as I will be out of
India. I am willing to fix a mutually convenient date to appear before
you."
13. From the tenor of
the letter, it appears that it was not a case of mere seeking accommodation by
the appellant but requiring date to be fixed by his convenience. Such stand by
a person facing allegation of serious nature could hardly be appreciated.
Obviously, the enormous money power makes him believe that the State should
adjust its affairs to suit his commercial convenience.
14. In our opinion, the
appeal is required to be dismissed for more than one reason. The fact that the
adjudicating officer chose to drop the proceedings against the appellant herein
does not absolve the appellant of the criminal liability incurred by him by virtue
of the operation of Section 40 read with Section 56 of the Act. The offence
under Section 56 read with Section 40 of the Act is an independent offence.
If the factual
allegations contained in the charge are to be proved eventually at the trial of
the criminal case, the appellant is still liable for the punishment
notwithstanding the fact that the presence of the appellant was required by the
adjudicating officer in connection with an enquiry into certain alleged
violations of the various provisions of the Act, but at a subsequent stage the
adjudicating officer opined that there was either insufficient or no material
to proceed against the appellant for the alleged violations of the Act, is
immaterial. The observations made by this Court in Roshanlal Agarwal (supra),
in our opinion, must be confined to the facts of that case because this Court
recorded such a conclusion "having regard to the material existing against
the respondent and the reasons and findings given in the aforesaid orders.....".
The said case cannot be
read as laying down a general statement of law that the prosecution of the
accused, who is alleged to be guilty of an offence of not responding to the
summons issued by a lawful authority for the purpose of either an inquiry or
investigation into another substantive offence, would not be justified.
Exonerating such an accused, who successfully evades the process of law and
thereby commits an independent offence on the ground that he is found to be not
guilty of the substantive offence would be destructive of law and order, apart
from being against public interest. Such an exposition of law would only
encourage unscrupulous elements in the society to defy the authority conferred
upon the public servants to enforce the law with impunity. It is also possible,
in certain cases that the time gained by such evasive tactics adopted by a
person summoned itself would result in the destruction of the material which
might otherwise constitute valuable evidence for establishing the commission of
a substantive offence by such a recalcitrant accused.
15. Secondly, an appeal
against the conclusion of the adjudicating officer that the proceedings against
the appellant herein for the alleged violation of the various provisions of the
FERA Act are required to be dropped has not even attained finality. Admittedly,
such an order of the adjudicating officer confirmed by the statutory appellate
authority is pending consideration in an appeal before the High Court. Though,
in our opinion, the result of such an appeal is immaterial for determining the
culpability of the appellant for the alleged violation of Section 40 read with
Section 56, we must record that the submission made on behalf of the appellant
in this regard itself is inherently untenable.
16. For all the abovementioned
reasons, we do not see any merit in the appeal. We are also of the opinion that
the entire approach adopted by the appellant is a sheer abuse of the process of
law. Any other view of the matter would only go to once again establishing the
notorious truth stated by Anatole France that - "the law in its majestic
equality, forbids the rich as well as the poor to sleep under bridges, to beg
in the streets and to steal bread".
17. The appeal is
dismissed with exemplary costs quantified at rupees ten lakhs to be paid to the
Supreme Court Legal Service Authority.
...................J.
[J. CHELAMESWAR]
...................J.
[ADARSH KUMAR GOEL]
NEW DELHI
JULY 13, 2015
Item No.1A-For Judgment
Court No.4 Section II
Supreme Court of India
Record of Proceedings
Vijay Mallya Vs.
Enforcement Directorate, Min. of Finance.
[Criminal Appeal No(s).
1406/2009]
Date: 13/07/2015
This appeal was called on for pronouncement of
JUDGMENT today.
For Appellant(s)
M/s. Khaitan & Co.
For Respondent(s)
Mr. Surender Kumar Gupta, Adv.
Mr. B.K. Prasad, Adv.
Mr. B. V. Balaram Das,Adv.
Hon'ble Mr. Justice Adarsh Kumar Goel pronounced
the judgment of the Bench comprising Hon'ble Mr. Justice J. Chelameswar and His
Lordship.
The appeal is dismissed in terms of the signed
Reportable judgment with exemplary costs quantified at rupees ten lakhs to be
paid to the Supreme Court Legal Service Authority.
Vinod Kr.Jha
|
Renuka Sadana
|
Court Master
|
Court Master
|
Signed Reportable judgment is
placed on the file
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[1] (2003) 4 SCC 139
[2] (2000) 5 SCC 431
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