M/S Rare Creations Limited vs Union Of India And Another
2009 Latest Caselaw 1413 Del

21
              IN THE HIGH COURT OF DELHI AT NEW DELHI

+                          WP(CRL.)No. 223-25/2006

#       M/s Rare Creations Limited           ....       Petitioner
        & Others

                      Through:         Mr.R.K. Handoo, Mr.Atul Sharma
                                       and Mr.Aditya Chaudhary, Advs.

                                 Versus

        Union of India and Another     .....          Respondents

                      Through:         Mr.K.Singhal for
                                       Mr.Vineet Malhotra, Adv.

                            ORDER

%                           16.04.2009
CORAM:
HON'BLE MR. JUSTICE G.S. SISTANI

    1. Whether reporters of local papers may be allowed to see the
       Judgment ?                                 Yes
    2. To be referred to the Reporter or not?     Yes

3. Whether the Judgment should be reported in the Digest? Yes

G.S. SISTANI, J. (ORAL):

1. The present petition filed under Article 226 and 227 of the

Constitution of India read with Section 482 of the Code of Criminal

Procedure has been filed by the petitioners seeking an appropriate

writ, order or direction in the nature of a writ of certiorari quashing

the complaint dated 2.5.2002 being 361/2002 pending in the court

of Additional Chief Metropolitan Magistrate, New Delhi instituted by

the respondents under Section 56 of the Foreign Exchange Act,

1973 read with Section 49 (3) and (4) of the Foreign Exchange

Management Act, 1999.

2. Brief facts which have led to filing of the present petition are as

under.

3. Petitioner No. 1 is a company incorporated under the Companies

Act, 1956 and carried on the business of manufacture and export

of leather garments from 1990 upto 1997. The petitioner Nos.2

and 3 are the Directors of the petitioner No. 1. The respondent No.

1 is Union of India. The respondent No.2 is the Chief Enforcement

Officer in the Enforcement Directorate in FEMA, 1999 and is

working under the direct control of respondent No. 1.

4. It is stated that the Foreign Exchange Regulation Act, 1973

(hereinafter referred to as FERA) was repealed and was substituted

by the Foreign Exchange Management Act, 1999 (hereinafter

referred to as FEMA). The FEMA came to into force on 1.6.1999.

The respondent No.2 had filed a complaint against the petitioners

under Section 56 of FERA, 1973 on the ground that the petitioners

have not put in reasonable efforts to receive or recover the export

outstanding amount to the tune of Rs. 2,00,15,984/- under the

exports made under various GR/RF forms for the alleged violations

of Section 18(2) and 18(3) of FERA, 1973.

5. Learned counsel for the petitioner submits that the present

complaint is a gross abuse of the process of law and the same has

been filed by suppressing and withholding material facts. He

submits that 31.05.2002 was the last date when the complaint

under Section 56 of FERA could be filed and taken cognizance of.

The respondent No.2 with a predetermined mind to prosecute the

petitioners and in a hurry to meet the deadline of 31.05.2002, filed

the complaint bearing No. 361/2002, before the learned Additional

Chief Metropolitan Magistrate, New Delhi.

6. Learned counsel for the petitioner submits that during the period

of 1990 upto 1997, when petitioner No.1 was carrying on the

business of manufacture and export of leather garments, the

cumulative exports of goods to its foreign buyers was for a total

sum of Rs. 11,63,14,306.50 and against which it had received

payment amounting to Rs.10,52,58,489.40. The outstanding value

for which the petitioner No.1 did not receive payment is

Rs.1,10,55,817.10.

7. Since the marginal part of the payment of the outstanding was not

realized by the petitioners, as a result whereof, the Reserve Bank

of India vide its letter dated 17.11.97 called upon the petitioners to

furnish details of shipment, proceeds of which were not accounted

by the petitioners although the stipulated period for realization had

elapsed. The petitioner No.1 vide its letter dated 18.12.1997

confirmed to the Reserve Bank of India that the petitioner No.1

had taken all possible steps to effect the recoveries. In the

meantime, petitioner No.1 submitted an application on 31.03.1999

with the Bank of Maharashtra seeking grant of extension from

Reserve Bank of India for realization of the export proceeds in

respect of the suit filed in this Court, by the petitioners against a

Foreign Buyer, being suit No. 2995/1995 entitled as "Rare

Creations Limited Vs. Amber International and Others".

8. Learned counsel for the petitioner submits that prior to filing of the

complaint, the petitioner had received a communication/summons

dated 06.05.1999 from the Enforcement Directorate to appear

before the Enforcement Officer on 02.06.1999 alongwith the

documents as stated in the said notice. Learned counsel submits

that in response to the summons, the petitioner had issued

communications dated 01.06.1999 as well as 17.06.1999. In the

communication dated 17.06.1999, the petitioner gave detailed

information alongwith the action taken report and the steps taken

for realization of the amounts to the Enforcement Officer, Foreign

Exchange Regulation Act, Govt. of India, Lok Nayak Bhawan, 6th

Floor, Khan Market, New Delhi. In the said communication

petitioner also gave details of the outstanding bills and the bill

amounts with respect to consignments. The communication also

detailed that a suit for recovery was instituted against M/s.Amber

International for Rs.41,12,960/- and the suit was at the final stage

and petitioner was hoping for favourable results. With respect to

the shipment made to M/s.Kenwright Limited, a legal notice was

issued and the petitioner was contemplating filing a suit for

recovery, which during the course of hearing learned counsel for

the petitioner submits, was filed.

9. As for the shipment made to RLE INC it was brought to the notice

of the department that a theft had occurred in the godown of the

buyer and various dresses had been stolen and thus the complete

garments were not available, although an advance of 20,000 US$

was received at the first instance and thereafter further payment

of 19,497 US$ were received out of which one cheque of Rs.10,000

US$ got bounced due to insufficient funds and the buyer had

expressed his inability to pay the balance. With respect to

consignment sold to M/s.Om Imports a part payment stood

received and further payments were not received due to financial

problems being faced by the buyer and the petitioner apprised the

department that they had approached the RBI.

10. In reply to the petitioner's letter dated 17.6.1999, the

respondents vide letter dated 11/14.10.1999, requested the

petitioner to disclose the position of suit filed by the petitioners

against M/s Amber International, USA in the Delhi High Court and

also sought other information in terms of the said letter. Learned

counsel for the petitioner submits that although details had

already been supplied, still the petitioner replied vide its

communication dated 24.10.1999 and the present position was

informed to the department.

11. It is submitted that the respondents again vide their letter

dated 22.11.2000 sought further information from the petitioners,

who vide their letter dated 29.12.2000 filed a reply and also

requested the concerned officer of the respondents to refer to their

earlier letters/representation submitted.

12. Learned counsel for the petitioner submits that in spite of the

various communications as detailed hereinabove the petitioner

was issued a statutory opportunity notice dated 11.2.2002 under

Section 61 (2) of the Foreign Exchange Regulation Act. Bare

reading of this opportunity notice, copy of which has been placed

on record, would show that there is no mention of the several

correspondences exchanged between the petitioner and the

respondent. The contention of learned counsel is that the

opportunity notice is devoid of material particulars, suppresses

material facts and thus was issued as an empty formality and

cannot be said to be a notice in the eyes of law. He submits that

on this ground alone the complaint is liable to be quashed.

13. Learned counsel for the petitioner has also drawn the attention

of this court to the reply submitted by the petitioner to the

opportunity notice dated 11.2.2002. In this reply the respondents

were informed that the outstanding amount is approximately

Rs.1.40 crores and not Rs.2.0 crores as mentioned in the notice.

The department thereafter filed the complaint wherein the amount

was again shown as over Rs.2.0 crores. Learned counsel for the

petitioner submits that the figure in the complaint is relevant more

so in view of the circular dated 05.07.2001 issued by the

respondents. As per this circular, guidelines were issued with

regard to prosecution under section 56 of the Foreign Exchange

Regulation Act and as per Clause C- in Export cases, the

prosecution was to be launched in case of non-realization of export

proceeds worth Rs.2.0 crores or more and where non-realization

was willful and mala fide. Learned counsel submits that the

department has failed to follow the guidelines enshrined in the

circular dated 05.07.2001 in view of the fact that the outstanding

amount in the present case is Rs.1.40 crores. In support of his plea

with regard to the outstanding amount, learned counsel for the

petitioner has drawn the attention of the Court to the statement of

account, and certificate issued by the bank of Maharashtra dated

03.10.2002 according to which the outstanding amount for Export

Bills of the petitioner is Rs.1,40,45,882/-. Copy of this certificate

has also been placed on record as Annexure P-22.

14. Learned counsel for the petitioner further relies upon a

communication dated 14.5.2002 issued by the Reserve Bank of

India to the petitioner according to which, the Reserve Bank of

India upon considering the case of the petitioner had advised the

petitioner to apply for export/write off through the authorized

dealer. Relevant portion of the said communication is reproduced

below:

"Sub : Non-realisation of export proceeds

Reference to your letter No. Nil dated 30.4.2004

Please refer to your letter dated 30.4.2002 on the captioned subject. In this connection you are advised to submit the following documents/ information through you're A.D.

(1) Developments in the legal case for recovery against GR No.AB-963078, AD-769081, AD- 769158, AD-554987 and AD-554952 which was at a decree stage as per your letter dated 17.6.99 and approach the AD for release of GRS for which payment has been received.

(2) Apply for extn./write off through your AD alongwith relevant documents for GRS for which payment cannot be received."

15. It is submitted that the Reserve Bank of India vide their notice

dated 4.4.2002 issued under Regulation 17(1) of the Foreign

Exchange Management (Export of Goods and Services) Regulation,

2000 had called upon the petitioners to show cause within 21 days

from the date of notice as to why the Reserve Bank of India should

not issue directions to the petitioners under Sub Regulation (1) of

Regulation 17 of the Foreign Exchange Management (Export of

Goods and Services) Regulation, 2000. The petitioners vide their

letter dated 30.04.2002 submitted their detailed representation

with the Reserve Bank of India along with suit proceedings filed by

the petitioners in this Court. Thereafter, the reserve Bank of India

vide its letter dated 14.05.2002 after being satisfied with the

submissions and the documents filed by the petitioners, directed

the petitioners to apply for extension/write off through petitioners'

authorized dealer (Bank of Mahrashtra) alongwith relevant

documents for G.R.S., for which payment could not be received.

The petitioners vide their letter dated 03.09.2002 requested its

authorized dealer, Bank of Maharashtra for making corrections in

the statement of outstanding payments and also to make the

adjustment of the amounts received as part payment in respect of

various outstanding GRs. On 03.10.2002, Bank of Maharashtra

issued a certificate, certifying the outstanding position as on

19.2.1999 for the outstanding export bills of the petitioner No. 1.

16. The sum and substance of the argument of learned counsel for

the petitioner is that as per section 18(2) of the Foreign Exchange

Regulation Act, the petitioner has to show reasonable steps which

have been taken by it for the recovery of the export proceeds, and

which it is submitted were duly taken. It would be useful to

reproduce ground (E) of the petition, which reads as under:

"(E) Because the respondents have erred that the petitioners have not taken reasonable steps in as much as it is on record that the petitioners filed recovery suit in the Hon'ble High Court of Delhi and have also taken appropriate steps for recovery, it cannot be said that the petitioners have not taken reasonable steps to recover the amount. The petitioners submit that the combined reading of Section 18(2) and 18(3) of FERA, 1973 envisages inaction or a default on the part of the exporter by refraining from doing anything or refraining from taking any action as envisaged under Sub-Section 2 of Section 18 to take all reasonable steps to receive or

recover the payment for the goods. Thus, it is only failure to take reasonable steps which would render the exporter liable for contravention of Section 18(2) and 18(3) of FERA, 1973, and not the fact that the amount has not been realized. In other words, Section 18(2) and 18(3) envisages that if an exporter has taken all reasonable steps to recover the value of the exported goods, he would not be said to have contravene the provisions of section 18(2) and 18(3) of FERA, 1973 even if the export proceeds or any part thereof remained unrealized. The petitioners submit that the determining factor is reasonable steps towards realization of outstanding payments. The petitioners submit that Sub-Section 3 of Section 18 does not specify as to what shall constitute reasonable steps. The petitioners submit that the reasonable steps have to be determined in the facts and circumstances of each case and the test would be "what a prudent businessmen would do in a particular situation of a case". Needless to say that business decision is always based on the conditions such as relationship with the buyers, in the sense of past business, product of future business and quantum of outstanding amount in relations to the total turn over, the likely effect on the buyers, if the complaint is made to the Government agency for action, etc.

Thus as per law there cannot be any specific step or set of step that an exporter has to take as an uniformed standard for judging the reasonable steps taken by exporter for realization of export proceeds. The petitioners submit that even one step may suffice in any particular situation to recover the amount and would come within the purview of "all reasonable efforts while as number of steps may not qualify, and/or to be termed as all reasonable steps". The test being the adequacy of step and not the number of steps. Even if one step is adequate, it would be construed that the exporter has taken all reasonable steps to realize the proceeds and in such case, it cannot be alleged that the exporter has derelict and/or contravened Section 18(2) and 18(3) of FERA, 1973.

The material on record is replete to conclude that the petitioners have taken all reasonable proceeds and resultantly, the petitioners cannot be alleged to have contravened Section 18(2) and 18(3) of FERA, 1973, and the complaint is liable to be quashed."

17. Learned counsel for the petitioner also submits that in para 6 of

the complaint it has been stated that Mr.Ajay Soni and Mr.M.K.

Monga, Directors of M/s.Rare Creations Limited, during the

relevant period were incharge and responsible to the said firm for

the conduct of the day-to-day business of the company. However,

it is contended that a bare reading of the complaint would show

that the complaint lacks material particulars with respect to the

role ascribed to the directors, who have already been made as

parties to the complaint. Learned counsel submits that his case

would be squarely covered by the decision of the Apex Court in the

case of S.M.S. Pharmaceuticals Ltd. Vs. Neeta Bhalla & Anr.

reported at JT 2005 (8) SCC 89, and the decision of a single

judge of this Court in the case of Anil Kumar Vs. State and Anr.

reported at (137) 2007 DLT 10. Learned counsel further submits

that taking into consideration that neither the opportunity notice

nor the complaint has considered the relevant facts on record and

there has been a deliberate attempt on the part of the department

to suppress material particulars, the complaint is a gross abuse of

the process of the Court and thus is liable to be quashed. While

relying upon Rukmini Narvekar Vs. Vijaya Satardekar & Ors.

reported at JT 2000 (8) 11 SC 32 to buttress his argument,

learned counsel submits that in exceptional cases, as the case in

hand, in view of the wide powers conferred upon it under section

482 Cr.P.C. and Article 226 of the Constitution of India, in order to

meet the ends of justice, the Court may look into the admitted

documents between the parties and where continuance of

prosecution would amount to an absurdity, it is open to the Court

to quash the proceedings.

18. Learned counsel further submits that petitioners have obtained

a decree against M/s.Amber International, to the tune of US $

75,000; Rs.85.0 lacs in the case of M/s.Kenwrite; and US $ 30,000

in the case of M/s.RLE, NY. The details of which are given herein

below:

"(i) In regard to M/s.Amber International, petitioners filed civil suit before this Hon'ble Court which was decreed by this Hon'ble Court and the decree was sent for execution in pursuance of which US $ 75,000 are realized and the bankers have released the GRs in respect of the outstanding export for M/s.Amber International.

(ii) In respect of M/s.Kenwrite, again Civil Suit was filed and a decree has been passed by this Hon'lbe Court and in pursuance of the decree, respondent was directed by this Hon'ble Court to deposit Rs.85 lacs before the Hon'ble COurt which has been deposited with the Ld. Registrar of this Hon'ble Court.

(iii) In respect of M/s. RLE, NY few GRs and the goods had been stolen and police report has been lodged in New York and culprits were apprehended and due to the persistent efforts of the petitioners US $ 30000 have been recovered after herculean."

19. In view of the above averments, learned counsel for the

petitioner submits that the complaint instituted against the

petitioner be quashed in the interest of justice.

20. The present petition is opposed by learned counsel for

respondent primarily on the ground that petitioner has failed to

take reasonable steps to recover the amount. It is contended

that the steps taken by the petitioner are a mere eye wash as

also the steps are neither reasonable nor adequate to satisfy

the requirements of the provisions of Section 18 of the Foreign

Exchange Regulation Act, 1973. It is contended that the suits

were filed only with the intention of satisfying the legal

requirements and not with the earnest desire to realize the

proceeds. It is also contended that the fact of suits having been

filed were duly intimated to the Reserve Bank of India and

despite that, Reserve Bank of India did not grant any write off

or extension of time as sought by the petitioners. On the

contrary, as seen from Reserve Bank of India letter

no.EX.DEL.NEPZ/417/16.18/0512/2001-02 dated 04.04.02, the

petitioner's name was proposed for placing under caution list.

Reserve Bank of India did not write off the amount as also

nothing had been placed on record to show as to what was the

result of the application made by the petitioner. It is contended

that the figure of Rs.2.0 crores has been taken by the

department based on a certificate of the bank dated 21.10.1999

and it is on the basis of this statement of account that the

respondents had filed the complaint

21. I have heard learned counsel for the parties and given my

thoughtful consideration to the matter. The attention of this

court was drawn to paras 2, 3 and 4 of the complaint wherein

the complainant has stated that during the years 1993-96

M/s.Rare Creations Limited had effected shipments of goods

valued at Rs.2,00,15,984/-. It has further been stated in the

complaint that the said M/s.Rare Creations Limited without any

permission from Reserve Bank of India took or refrained from

taking action which had the effect of securing that the export

value of Rs.2,00,15,984/-.

22. In this case admittedly summons dated 06.05.1999 were issued

by the respondents to the petitioners, and to which the

petitioners replied vide letter dated 17.06.1999. Further in the

communication of the department dated 11/14th October, 1999

while asking for further information, the Enforcement

Directorate has acknowledged the letter dated 17.06.1999,

which would show that the department had received the reply

sent by the petitioner dated 17.06.1999. To the communication

dated 11/14th October, 1999, the petitioner had issued a reply

dated 24.10.1999 which also finds mention in a further

communication issued by the Enforcement Directorate dated

22.11.2000. There is no quarrel to the propositions that

ordinarily, while deciding a matter pertaining to quashing of the

FIR or the complaint, the court has to read the complaint and

not take into consideration the defence of the accused.

However, the same is not an absolute proposition of law. I am

fortified in my view by the decision referred to by learned

counsel for the petitioner reported in Rukmini Narvekar

(supra) wherein it was observed by the Apex Court that it

cannot be said as an absolute proposition that under no

circumstances can the Court look into the material produced by

the defence at the time of framing of the charges. It was

observed that, "We should also keep in mind that it is well

settled that a judgment of the Court has not to be treated as a

Euclid formula vide Dr. Rajbir Singh Dalal v. Chaudhari Devi Lal

University, Sirsa & Anr. JT 2008 (8) SC 621. As observed by this

Court in Bharat Petroleum Corporation Ltd. & Anr. v. N. R.

Vairamani & Anr. AIR 2004 SC 4778, observations of Courts are

neither to be read as Euclid's formula nor as provisions of the

statute. Thus in our opinion while it is true that ordinarily

defence material cannot be looked into by the Court while

framing of the charge in view of D. N. Padhi's case (supra),

there may be some very rare and exceptional cases where

some defence material when shown to the trial court would

convincingly demonstrate that the prosecution version is totally

absurd or preposterous, and in such very rare cases the

defence material can be looked into by the Court at the time of

framing of the charges or taking cognizance. In our opinion,

therefore, it cannot be said as an absolute proposition that

under no circumstances can the Court look into the material

produced by the defence at the time of framing of the charges,

though this should be done in very rare cases, i.e. where the

defence produces some material which convincingly

demonstrates that the whole prosecution case is totally absurd

or totally concocted. We agree with Shri Lalit that in some very

rare cases the Court is justified in looking into the material

produced by the defence at the time of framing of the charges,

if such material convincingly establishes that the whole

prosecution version is totally absurd, preposterous or

concocted."

23. In the counter affidavit as well as during the course of hearing,

learned counsel for the respondent has not disputed that the

letters referred to hereinabove were issued by the petitioner

herein. These communications are material information which

was sent to the respondent and the respondent was duty bound

to consider the contents of these communications and should

have dealt with these letters in the opportunity notice dated

11.02.2002 and further the respondent was bound to consider

these communications in the complaint. The opportunity notice

is a statutory requirement and not an empty formality. The

respondent could not have thus ignored the contents of these

communications, which are material and integral to the dispute,

subject matter of controversy.

24. The petitioner has also placed reliance on the order dated

29.10.2002 passed by the respondents with respect to the

persons similarly situated, wherein the noticee company had

taken effective steps to realize their outstanding export bills

and thus it was held to be pre-mature to initiate adjudication

proceedings and also held that the notice is not liable for

contravention as alleged in the show cause.

25. The respondent has failed to point out or show how the case in

hand is different in any way from the proceedings, subject

matter of the order passed by the department, copy of which

has been filed on record. Sub-section (2) and (3) of Section 18

of the Foreign Exchange Regulation Act, read as under:

"(2) Where any export of goods, to which a notification under clause (a) of sub-section (1) applies, has been made, no person shall except with the permission of the Reserve Bank, do or refrain from doing anything, or take or refrain from taking any action, which has the effect of securing-

(A) in a case falling under sub-clause (i) or sub-clause

(ii) of clause (a) of sub-section (1),- (a) that payment for the goods- (i) is made otherwise than in the prescribed manner, or (ii) is delayed beyond the period prescribed under clause (a) of sub- section (1), or (b) that the proceeds of sale of the goods exported do not represent the full export value of the goods subject to such deductions, if any, as may be allowed by the Reserve Bank; and

(B) in a case failing under sub-clause (ii) of clause (a) of sub-section (1), also that the sale of the goods is

delayed to an extent which is unreasonable having regard to the ordinary course of trade:

Provided that no proceedings in respect of any contravention of the provisions of this sub-section shall be instituted unless the prescribed period has expired and payment for the goods representing the full export value has not been made in the prescribed manner within the prescribed period.

(3) Where in relation to any goods to which a notification under clause (a) of sub-section (1) applies the prescribed period has expired and payment therefor has not been made as aforesaid, it shall be presumed, unless the contrary is proved by the person who has sold or is entitled to sell the goods or to procure the sale thereof, that such person has not taken all reasonable steps to receive or recover the payment for the goods as aforesaid and he shall accordingly be presumed to have contravened the provisions of sub-section (2).

26. A bare reading of this section would show that there are two

basic requirements which are to be fulfilled. As per the said

sections, the petitioner should have taken reasonable steps to

receive or recover the payment of goods and it is only upon

failure to take reasonable steps, the exporter would be liable for

contravention of section 18 (2) read with sub-section (3) of the

Foreign Exchange Regulation Act. It may be noticed that these

sections do not provide a mandatory requirement of recovery of

the amount due.

27. In the light of the said provisions, in the case in hand, it was for

the petitioner to satisfy the department as to the steps taken by

the petitioner for recoveries. In the communication dated

17.06.1999, the petitioner had given full detail of the steps

which had been taken by them for recoveries. Relevant portion

of this communication reads as under:

"ACTION TAKEN: A suit of recovery amounting to Rs.41,12,960/- (Rupees Forty One Lac twelve thousand Nine Hundred and sixty) has been filed against the buyer in Delhi High Court vide suit No.2995 of 1995. The case is at the decree stage and we are hopeful of getting a favourable award. Complete details in respect of these consignments and the copy of referred suit is enclosed herewith from page Nos.001 to 045.

ACTION TAKEN: Since persistent requests, reminders and visits to Russia have not yielded any results, we have resolved to institute legal proceedings against the buyer. A legal notice for recovery of Rs.61,62,000/- has been served upon the buyer and its agents. We shall soon file a proper suit for recovery. Complete information and relevant documents of above outsanding bills along with copy of Legal Notice and proof of service of notice is enclosed herewith from page Nos.046 to 063.

.... Against these shipments the buyer had sent an advance payment of Rs.20,000 and a further payment of 19,497 US Dollars, out of which one cheque of 10,000 U.S. Dollars got bounced due to insufficient funds and for remaining payment, on account of theft and on account of his inability to sell a partial garment, he expressed his inability to send any further payment. Complete documentation along with extensions filed with RBI, are enclosed at page Nos.064 to 109.

...... The buyer due to reported financial problems has not made any further payment and also is not available at earlier known address and contact number.

ACTION TAKEN: We have filed with RBI the required applications for extensions and followed up quite vigorously with the buyer. Complete information along with copies of ETX applications is enclosed herewith at page Nos.110 to 132."

28. During the pendency of this matter, it is not disputed that

petitioner has realized US$ 75,000 pursuant to a decree passed

by Delhi High Court arising out of a Civil Suit No.2995/1995, and

another sum of Rs.85.0 lacs stands deposited with the Registrar

of this court pursuant to the petitioner having filed a suit (Suit

No.1830/1999) against M/s.Kenwrite. Further US$ 30,000 stands

recovered from M/s.RLE as well as details have been given with

respect to the steps taken against Century Export Bankers',

who have accounted for part payment which would receive, but

have now been accounted for by the bankers as well as RBI.

29. It has not been explained by the respondents as to why filing of

a civil suit cannot be termed as reasonable steps taken and on

what basis it cannot be said that these steps taken are a mere

eye wash. In fact, the recoveries made and the decree so

passed by this Court clearly show that the petitioner had taken

not only reasonable steps taken but all possible steps to

institute proceedings and thereafter steps to take recoveries

and to gain the fruits of the decree.

30. Taking into consideration the certificate dated 3.10.2002 issued

by a nationalized bank (Bank of Maharashtra), the genuineness

of which has not been disputed by the department would show

that the amounts outstanding were Rs.1,45,00,882/-.

Furthermore, taking into consideration the circular dated

05.07.2001 (copy of which has been placed on record) as per

clause 1 (C) of the guidelines, prosecution is to be filed where

non-realization of export proceeds is Rs.2.0 crores or above and

where non-realization is willful and mala fide. The sequence of

events and undisputed documents placed on record show that

the petitioner herein had taken all suitable and reasonable

steps which a prudent person would take for recovery and

recoveries were actually made, as well as taking into

consideration that the basic requirement of a statutory notice

has not been complied with. The respondents have in fact made

an empty formality by issuing an opportunity notice without any

application of mind, without considering the relevant events or

the several replies given by the petitioner herein and thereafter

went on file a complaint, in which for reasons best known to

them, the respondents have failed to disclose the stand taken

by the petitioner and the reasonable steps taken by the

petitioner for the recovery of the outstanding export proceeds.

In light of the above discussion and having regard to the settled

position of law, proceeding with the present complaint would be

a futile exercise and thus to prevent the abuse of the process

and to meet the ends of justice, the present petition is allowed.

31. Consequently, complaint bearing No.361/2002 pending in the

court of Additional Chief Metropolitan Magistrate, New Delhi

instituted by the respondents under Section 56 of the Foreign

Exchange Act, 1973 read with Section 49 (3) and (4) of the

Foreign Exchange Management Act, 1999, stands quashed. No

order as to costs.

G.S. SISTANI, J.

April 16, 2009 'msr'////