Amrik Singh Saluja vs Union Of India & Others
2009 Latest Caselaw 1877 Del

                                          REPORTED
*      IN THE HIGH COURT OF DELHI AT NEW DELHI

%                              DATE OF RESERVE: April 23, 2009

                               DATE OF DECISION: May 05, 2009



+        CRL.M.C. 3724/2008 and CRL. M.A. 13899/2008

       AMRIK SINGH SALUJA                      ..... Petitioner
                     Through: Mr. Pawan Narang, Mr. Anish Dhingra
                             and Mr. Puskal Gogoi, Advocates.

                      versus

       UNION OF INDIA & ORS.                     ..... Respondents
                      Through: Mr. Vineet Malhotra and Mr. K. Singhal,
                              Advocates



CORAM:
HON'BLE MS. JUSTICE REVA KHETRAPAL
1.     Whether reporters of local papers may be allowed
       to see the judgment?
2.     To be referred to the Reporter or not?
3.     Whether judgment should be reported in Digest?


:      REVA KHETRAPAL, J.

1. Admit.

2. With the consent of the parties, the matter was taken up for final hearing

and after hearing the parties, the orders had been reserved.

3. By this petition under Section 482 of the Code of Criminal Procedure,

1973, the petitioner prays for quashing of the complaint pending before the

learned trial court titled as "Niranjan Subudhi vs. Amrik Singh Saluja" for

the violation of the provisions of Section 57 of the Foreign Exchange

Regulation Act, 1973 (hereinafter referred to as FERA).

4. The brief facts leading to the filing of the present petition are that on

15.08.1997, the residential premises of the petitioner were searched under

Section 37 of FERA, which allegedly resulted in the recovery and seizure of

Indian currency to the tune of Rs.1,18,00,000/- (Rupees One Crore Eighteen

Lakhs only), one bunch of loose sheets (29 in number) and one currency note

of Rs.50/- bearing No.5AA 69JJ95, as per the details given in the panchnama.

Follow-up searches were conducted at various places, including the premises

of one Raj Kumar Kedia at Calcutta, one J.P. Soni at Delhi and Rajiv Gopalani

at New Delhi. The documents and other investigations revealed that the

appellant was indulging in the acquisition and transfer of foreign exchange as

well as receiving and making payments in India in accordance with

instructions received from abroad. Resultantly, four Show Cause Notices were

issued to the appellant and other co-noticees for alleged violation of Sections

9(1)(b), 9(1)(d), 9(1)(f) (i) and 8(1) FERA, 1973, all dated 14.08.1998, and

subsequently when the proceedings were almost complete in the said four

Show Cause Notices, the Enforcement Directorate three years thereafter issued

a fifth Show Cause Notice dated 08.05.2001 to the appellant alone.

5. By an order dated 09.10.2001, the learned Adjudicating Authority, i.e.,

the Special Director, FERA, held the appellant guilty for violation of the

provisions of the aforesaid Sections of the FERA in all the five Show Cause

Notices and imposed a total penalty of Rs.20,75,000/- (Rupees Twenty Lakhs

and Seventy Five Thousand only) and further ordered the confiscation of

Rs.1,15,90,000/- (Rupees One Crore Fifteen Lakhs Ninety Thousand only).

The Adjudicating Authority also ordered that the amount of Rs.2,10,000/-

(Rupees Two Lakhs Ten Thousand only) lying deposited with the Department

along with interest accrued on the seized currency which was converted into

fixed deposits to the tune of Rs.12,41,360/- (Rupees Twelve Lakhs Forty One

Thousand Three Hundred Sixty only) be adjusted towards penalty levied on the

appellant. In this manner, a total of Rs.14,51,360/- (Rupees Fourteen Lakhs

Fifty One Thousand Three Hundred Sixty only) was appropriated as penalty

amount against the total penalty of Rs.20,75,000/- (Rupees Twently Lakhs

Seventy Five Thousand only), leaving a balance of Rs.6,23,240/- (Rupees Six

Lakhs Twenty Three Thousand Two Hundred Forty only).

6. Aggrieved by the findings of the learned Adjudicating Authority, the

appellant preferred an appeal before the Appellate Tribunal for Foreign

Exchange, registered as Appeal No.478/2001, along with an application

seeking waiver of pre-deposit of the balance penalty amount on the ground that

the appellant had a prima facie case. The appellant having deposited another

Rs.2,00,000/- (Rupees Two Lakhs only) out of the balance penalty amount, the

learned Appellate Tribunal vide order dated 27.05.2002 was pleased to

dispense with the pre-deposit of the remaining amount of penalty of

Rs.4,40,000/- (Rupees Four Lakhs Forty Thousand only) on the ground that the

deposit thereof would cause undue hardship to the appellant.

7. Notwithstanding the aforesaid, the respondent on 31.05.2002 filed a

complaint under Section 57 of the FERA, 1973 before the learned ACMM,

Patiala House Courts for the non-deposit of the penalty amount of

Rs.6,23,240/- (Rupees Six Lakhs Twenty Three Thousand Two Hundred Forty

only) in terms of the orders and directions issued by the Adjudicating

Authority, whereas, admittedly on the said date the balance penalty amount

was only Rs.4,40,000/- (Rupees Four Lakhs Forty Thousand only) and the

deposit of the same too had been dispensed with by the Appellate Tribunal.

8. Subsequently, however, the Appellate Tribunal, New Delhi by its order

dated 04.01.2008 dismissed the appeal of the appellant and sustained the order

of the Adjudicating Authority, FERA. Aggrieved with the aforesaid order of

the Appellate Tribunal, the petitioner filed an appeal before this Court bearing

Crl. A. No.120/2008. In the said appeal, this Court by an order dated

29.07.2008, after hearing both the parties, stayed the recovery of the balance

amount of Rs.4,40,000/- (Rupees Four Lakhs Forty Thousand only), during the

pendency of the appeal, by passing the following order:-

"Crl. M.A. No.1777/2008 Reply to the stay application has not been filed despite time sought by the respondent. Mr. Vineet Malhotra, counsel appearing for the respondent states that he does not wish to file any reply to the stay application. Mr. Pawan Narang, counsel appearing for the appellant states that penalty of Rs.20,75,000/- was imposed upon the appellant. Counsel further submits that an amount of Rs.12,41,360/-, which accrued as interest on the seized amount of Rs.1,18,00,000/- has already been adjusted by the respondent towards the said penalty. Counsel further submits that an amount of Rs.2,10,000/- was lying with the Department as total amount of Rs.1,15,90,000/- was confiscated by the Department under Section 63 of FERA. Counsel further submits that even an amount of Rs.2 lakhs was further paid by the appellant at the time of filing of the appeal before the Appellate Tribunal. Counsel thus states that in all the appellant has already paid a sum of Rs.16,51,360/- and only Rs.4,40,000/- is left to be payable towards the remaining penalty amount. Since an amount of Rs.16,51,360/- is already lying with the respondent Department, therefore, recovery of the balance amount shall stand stayed till the final disposal of the appeal.

The application stands disposed of.

Crl. A. No.120/2008 Let the reply be filed by the respondent to the present appeal within a period of four weeks. Rejoinder, if any, be filed within two weeks thereafter.

List this matter on 22nd September, 2008."

9. As already stated hereinabove, the petitioner has filed the present

petition challenging the filing and continuance of proceedings in the complaint

filed by the respondent in the meanwhile under Section 57 of the FERA, 1973,

on which I have heard Mr. Pawan Narang, the learned counsel for the

petitioner and Mr. Vineet Malhotra, the learned counsel for the respondent.

10. The principal contention of the learned counsel for the petitioner Mr.

Narang is that as on the date of the filing of the complaint under Section 57 of

the FERA, 1973, i.e. on 31.05.2002, there was no willful default on the part of

the petitioner in not complying with the orders of the Adjudicating Authority,

FERA or any other authority, which could have made the petitioner liable to

be prosecuted under Section 57 of the said Act. By its order dated 27.05.2002,

the Foreign Exchange Tribunal had already dispensed with the deposit of the

amount of Rs.4,40,000/-, which was the balance penalty amount due from the

petitioner, and, therefore, there was no occasion for the respondents to allege

that the petitioner had not deposited the balance penalty amount, and that too

amounting to Rs.6,23,240/- (Rupees Six Lakhs Twenty Three Thousand Two

Hundred Forty only), and to file a complaint on the basis thereof, whereas the

balance penalty amount due on 31.05.2002 (i.e. on the date of filing of the

complaint) was even otherwise Rs.4,40,000/- (Rupees Four Lakhs Forty

Thousand only).

11. The learned counsel also contends that the malafides of the respondents

are crystal clear from the fact that despite the orders dated 27.05.2002 of the

Tribunal staying the deposit of the balance penalty amount, the respondents

filed the complaint exactly four days after the said order, i.e. on 31.05.2002.

The Department at that point of time had full knowledge of the fact that the

deposit of the penalty amount had been dispensed with by the Tribunal, that

there was no willful default on the part of the petitioner in not complying with

the orders of the Adjudicating Authority under FERA, that the petitioner had

filed an appeal against the orders of the Adjudicating Authority immediately

after the passing of the orders of the Adjudicating Authority dated 9 th October,

2001 (being Appeal No.478/01) and that in the said appeal the Appellate

Tribunal had waived the pre-deposit of the balance amount of penalty. The

learned counsel urges that the haste shown by the appellant in filing the

complaint during the existence of a judicial order passed by the Appellate

Authority was in view of the fact that the respondents were in a hurry to file all

the complaints before the sunset clause came into operation, for which the last

day was 31.05.2002. Thus, even though there was no valid demand pending in

favour of the Enforcement Department vesting in them the right to file the

complaint under Section 57 of the FERA as on 31.05.2002, the Department

without looking into the validity of its actions did not hesitate to file the

complaint, for which it is liable to appropriately compensate the petitioner.

Finally, the learned counsel for the petitioner contended that though the appeal

itself was dismissed by the Appellate Tribunal, the operation of the waiver

order in respect of the pre-deposit is still in abeyance by virtue of the orders of

this Court dated July 29, 2008 passed in Crl. A. No.120/08, reproduced

hereinabove, and even as on date, the respondents have no right to file a

complaint under Section 57 of the FERA.

12. Mr. Vineet Malhotra, the learned counsel for the respondents, on the

other hand, contended that the petitioner having failed to make the deposit of

the balance penalty amount within 45 days of the order of the Adjudicating

Authority, the Enforcement Directorate was fully within its right to file the

complaint under Section 57 of the Act.

13. The provisions of Section 57 of the FERA, which are the subject matter

of the present petition, are apposite and are reproduced hereunder:-

"If any person fails to pay the penalty imposed by the Adjudicating Officer or the Appellate Board or the High Court or fails to comply with any of his or its directions or orders, he shall, upon conviction by a Court, be punishable with imprisonment for a term which may extend to two years or with fine or with both."

14. A bare perusal of the provisions of the aforesaid Section make it

abundantly clear that failure on the part of the person concerned to pay the

penalty imposed is the sine qua non for conviction under the said Section.

Such failure, needless to say, must exist on the date of the filing of the

complaint. In the present case, in my considered opinion, there was no failure

on the part of the petitioner to pay the penalty imposed, for the reason that the

Appellate Tribunal itself had waived the deposit of the balance penalty

amount, i.e., the sum of Rs.4,40,000/- (Rupees Four Lakhs Forty Thousand

only), after taking note of the fact that out of the balance penalty amount of

Rs.6,23,240/- (Rupees Six Lakhs Twenty Three Thousand Two Hundred Forty

only), the petitioner had paid a sum of Rs.2,00,000/- (Rupees Two Lakhs only)

after the passing of the order of the Adjudicating Authority.

15. The contention of the learned counsel for the petitioner that the failure

to pay the penalty amount by the petitioner within the time prescribed was

neither deliberate nor willful is, therefore, not sans merit, the petitioner having

already filed an appeal in the Tribunal with an application for stay seeking

waiver of the pre-deposit amount under the proviso to Section 52(2) of the

FERA and the Appellate Tribunal in exercise of its powers under Section 52(2)

having waived the pre-deposit amount. In the circumstances, in my view, it

cannot be said that an offence under Section 57 of the FERA had been

committed by the petitioner, so as to make the petitioner liable to the penalty

imposed by the said Section. The adjudication order was the subject matter of

an appeal and during the pendency of the appeal, the Appellate Tribunal had

waived the condition with regard to pre-deposit of the balance penalty amount.

After the dismissal of the appeal by the Appellate Tribunal also, the High

Court in Crl. A. No.201/08 had stayed the recovery of the balance penalty

amount. Had the adjudication order attained finality, which it had not in view

of the appeal pending before the Tribunal, or had the stay granted by the

Appellate Tribunal been vacated by a superior Court/Tribunal, the respondents

may have been justified in launching proceedings against the petitioner under

Section 57 of the FERA. It is not, however, comprehensible how the petitioner

became liable under the provisions of the said Section despite having obtained

a judicial order in his favour from the Appellate Tribunal and despite his

appeal being pending before the said Tribunal. Failure to pay, as set out above,

implies a deliberate and willful act. How the act of the petitioner can be said to

be either deliberate or willful when the Appellate Tribunal itself had waived

the penalty amount, has not been explained by the respondents. The haste

shown by the respondents in initiating the complaint proceedings by itself, in

my opinion, speaks eloquently of the malafides of the Department.

16. In the facts and circumstances aforesaid, I have no hesitation in holding

that the offence under Section 57 of the FERA has not been committed by the

petitioner and in fact the basic ingredients of the same are missing in the

instant case. The petitioner cannot, therefore, be visited with the penal

consequences envisaged by the said Section. Resultantly, the complaint filed

by the respondent No.2 titled "Niranjan Subudhi vs. Amrik Singh Saluja"

under Section 57 of the FERA is quashed albeit with the clarification that in

the event the appeal is decided in favour of the respondents and against the

petitioner or in the event the aforesaid stay for any reason is vacated by this

Court and the petitioner fails to pay the penalty amount, the respondent No.2

will be at liberty to take action in accordance with law.

CRL.M.C. 3724/2008 and CRL. M.A. 13899/2008 stand disposed of in

the above terms.

REVA KHETRAPAL, J.

MAY 05, 2009 km