Arun Sood vs P.K. Roy
2012 Latest Caselaw 736 Del

*       IN THE HIGH COURT OF DELHI AT NEW DELHI

+                         CRL.M.C.No. 2155/2000

                                     Date of Decision : 03.02.2012


ARUN SOOD                                         ...... Appellants
                                   Through: Mr. Sanjeev Narula,
                                            Adv.

                                    Versus

P.K. ROY                                     ......      Respondent

Through: Mr. Sachin Datta, CGSC with Mr. A. Kumar, Advs.

CORAM :

HON'BLE MR. JUSTICE V.K. SHALI

V.K. SHALI, J. (oral)

1. This is a petition filed under Section 482 Cr.P.C. for

quashing of the proceedings against the petitioner in

respect of complaint bearing no. 357/93 under Section

57 of the Foreign Exchange Regulations Act, 1973

(hereinafter referred to as "the Act") and also for

quashing of the orders passed by the Learned ACMM,

dated 06.02.1997, by virtue of which the application of

the petitioner under Section 245 (2) of the Cr.P.C., was

dismissed. It has also been prayed that the order of the

learned Additional Sessions Judge, dated 05.10.1999,

Crl. M.C. No. 2155/2000 Page 1 | 15 upholding the said rejection order passed by the learned

ACMM be also set aside.

2. Briefly stated the facts of the case are that a complaint

under Section 57 of the Act was filed by Mr.P.K.Roy,

Assistant Director, Enforcement, against M/s Kay Films,

Chanakyapuri, New Delhi and its Managing Director,

Kuldeep Singh Sood and the present petitioner. It was

alleged that the adjudicating authority, vide order dated

20.02.1989, had imposed a penalty of Rs.45,00,000/- on

M/s Kay Films and Rs. 5,00,000/- on Kuldeep Singh

Sood, for violation of Section 18(2) of the Act. So far as

the present petitioner is concerned, no separate penalty

was imposed upon him. The complaint was filed by the

respondent no. 1/P.K. Roy, Assistant Enforcement

Director, in the capacity of a public servant. No pre

summoning evidence was recorded and notice was issued

to all the three accused persons. The petitioner, on

appearance, filed an application under Section 245 (2) of

Cr.P.C. seeking discharge on the ground that so far as

the petitioner is concerned, no penalty was imposed upon

him by the adjudicating authority vide order dated

Crl. M.C. No. 2155/2000 Page 2 | 15 20.02.1989. The operative portion of the order dated

20.02.1989 read as under:

"Sh.Kuldeep Sood is the Managing Director of M/s Kay Films and he was responsible and in-change of its activities as far as these exports are concerned. Transactions with the importer are made by him and he only has been dealing with Government authorities also. Sh. Arun Sood in his statement dated 06.04.1993 had also stated that his father Sh.

Kuldeep Sood was more conversant with the affairs of Kay Films. As such I hold Sh.Kuldeep Sood guilty of the contravention under Section 18(2) read with section 68 of Foreign Exchange Regulation Act, 1973 and impose on him a penalty of Rs.5,00,000/- (Rs.Five lakhs only) No separate penalty is imposed on Sh. Arun Sood."

3. It was contended by the petitioner before the Trial Court

that the proceedings against the present petitioner,

under Section 56 of the Act, which were initiated by the

respondent no.1 were also quashed by Hon'ble Mr.Justice

P.K.Bahri vide order dated 26.03.1990. It was contended

that since no penalty has been imposed upon him and he

has not been held as a Director of M/s. Kay Films, much

less in-charge and responsible for the conduct of the

business of the company, therefore, he could not be

proceeded against by the respondent no. 1 by filing a Crl. M.C. No. 2155/2000 Page 3 | 15 complaint under Section 57 of the Act. This application of

the petitioner was rejected by the learned ACMM vide

order dated 06.02.1997, by holding that the petitioner is

admittedly the Director of the company, M/s Kay Films

and the Section 68 (1) of the Act clearly lays down that

where a person committing a contravention of any of the

provisions of this Act or of any rule, direction or order

made thereunder is a company, every person who, at the

time of the contravention was committed, was in charge

of, and was responsible to, the company for the conduct

of business of the company as well as the company, shall

be deemed to be guilty of the contravention and shall be

liable to be proceeded against and punished accordingly:

provided that nothing contained in this sub-section

render any such person liable to punishment if he proves

that the contravention took place without his knowledge

or that he exercised due diligence to prevent such

contravention.

4. Reliance was also placed on Section 68(2) of the Act by

the learned ACMM which states that notwithstanding

what is contained in Section 68(1) if it is shown that the

offence is committed with the consent or the connivance Crl. M.C. No. 2155/2000 Page 4 | 15 or is attributable to the neglect on the part of the

Directors, Managers or Secretary or any other officer of

the company then such a person shall also be deemed to

be guilty of the contravention and can be proceeded

against and punished. On the basis of reliance on

Section 68 of the Act and by observing that admittedly

the present petitioner being the Director of the company

in question, he could not be discharged under Section

245 (2) of Cr.P.C.

5. The petitioner feeling aggrieved by the said order

preferred a revision petition which came to be decided on

05.10.1999, by the learned Additional Sessions Judge,

New Delhi, who upheld the order passed by the learned

ACMM, on the basis of the same reasoning which had

been given by the learned ACMM. The petitioner, feeling

aggrieved by the aforesaid two orders as well as the

complaint having been initiated against him, preferred

the present petition under Section 482 Cr.PC. way back

in the year 2000 which has been pending in this Court for

almost 12 years.

6. I have heard the learned counsel for the petitioner as

well as the learned counsel for the respondent.

Crl. M.C. No. 2155/2000 Page 5 | 15

7. The learned counsel for the respondent had taken time

on previous occasions, to seek instructions against the

present petitioner, on the ground that no penalty was

imposed upon him by the adjudicating order dated

20.02.1989 and that there was no averment made in the

complaint in question filed under Section 57 of the Act

alleging that the present petitioner was a Director, but

today when the matter was listed, the learned counsel

for the respondent, Mr. Dutta did not concede and

submits that the petitioner was also a Director of the

company and therefore he was responsible for the

offence and complaint against him is maintainable.

8. The contention of Mr. Dutta has been two fold. The first

contention of the learned counsel for the respondent was

that the present petition is not maintainable in as much

as the petitioner's prayer for discharge has not only been

rejected by the learned ACMM vide order dated

06.02.1997 but it has also been rejected by the learned

Additional Sessions Judge, New Delhi on 05.10.1999. It

was contended that now it was not open to the petitioner

to rake up the said issue afresh by filing the present

petition under Section 482 Cr.P.C. as it would Crl. M.C. No. 2155/2000 Page 6 | 15 tantamount to filing of a second revision which is not

permissible.

9. I do not agree with this contention of the learned counsel

for the respondent. The language of Section 482 Cr.P.C.

starts with a non-obstante clause which lays down that

notwithstanding anything to the contrary in any provision

of Cr.P.C., the High Court may pass any order to prevent

the abuse of processes of law or secure the ends of

justice. Therefore, the plain reading of Section 482

Cr.P.C. would make it clear that exercise of a power

under Section 245(2) Cr.P.C. is not restricted by any

sellers, if it is satisfied that the proceedings in the Trial

Court or the initiation of the complaint is resulting in the

abuse of processes of law and/or an order is warranted

to secure the ends of justice.

10. In the instant case also I feel that initiation of a

complaint under Section 57 of the Act and the issuance

of summons thereafter is resulting in gross abuse of

processes of law, and therefore, the order is required to

be passed by this Court to secure the ends of justice. I

am holding this view on account of the fact that there are

certain admitted facts which are not in dispute between Crl. M.C. No. 2155/2000 Page 7 | 15 the parties. It is not in dispute that the adjudication

order dated 20.02.1989, passed by the respondent no.1,

imposed a plenty of Rs.45,00,000/- on M/s Kay Films and

a sum of Rs.5,00,000/- as penalty on Kuldeep Sood,

Managing Director of the said company. No separate

penalty was imposed on the present petitioner. It is not

in dispute that the complaint which was filed by the

respondent no. 1, under Section 56 of the Act, against

the present petitioner, was quashed by Hon'ble

Mr.Justice P.K.Bahri vide order dated 26.03.1990 holding

that at the relevant time when the offence under Section

18(2) of the Act is alleged to have been committed, the

present petitioner was not in-charge and responsible for

the conduct of the business of the company as there was

no averment in this regard made in the complaint, much

less the evidence. Therefore, now the question which

arises for consideration is as to whether the complaint

under Section 57 of the Act which has now been filed

against the company, its Managing Director Kuldeep

Sood, against whom penalty had been imposed, as well

as the present petitioner against whom no penalty had

been imposed is sustainable in the eyes of law or not.

Crl. M.C. No. 2155/2000 Page 8 | 15

11. It was contended by Mr. Sharma, the learned counsel for

the petitioner that the present complaint could not have

been filed against the present petitioner on account of

the two reasons, firstly, neither he was visited with the

penalty nor there was any occasion for him to pay the

same, on behalf of the company as he was neither in-

charge nor responsible for the conduct of the business of

the company either at the time of commission of the

contravention or even now. It is further pointed out by

him that there is no averment in the complaint filed

under Section 57 of the Act by the respondent no. 1 that

the petitioner is in-charge and responsible for the

conduct of the business of the company which is an

essential requirement before summons could have been

issued against him. For this reason, Mr. Sharma has

relied upon the case titled SMS Pharmaceuticals Vs.

Neeta Bhalla, AIR 2005 SC 3512 wherein it was

observed that in order to make a Director vicariously

liable, there must be an averment in the complaint that

he is responsible for the conduct of the day to day

business of the company.

Crl. M.C. No. 2155/2000                                   Page 9 | 15
 12.     I have gone through the said judgment.                   There is no

dispute about the proposition of law laid down by the

said judgment though it has been given in the context of

Section 138 read with section 141 of the Negotiable

Instruments Act, but the language of Section 141 is at

pari materia with Section 68(2) of the Act, therefore, the

said judgment squarely apply to the facts of the present

case as well. As against this, it has been contended by

the learned counsel for the respondent that de horse the

quashing of the proceedings against the present

petitioner, by the High Court, vide order dated

26.03.1990. The principle complaint under Section 57 of

the Act is maintainable against the present petitioner

would be maintainable only when the fine is sought to be

realized or against the petitioner on the allegation that

he is in-charge and responsible for the affairs of the

company.

13. I feel that the submissions made by the learned counsel

for the respondent are untenable in law. The complaint

admittedly has been filed by the respondent no. 1 under

Section 57 of the Act. The said Section reads as under:

Crl. M.C. No. 2155/2000 Page 10 | 15 "Penalty for contravention of order made by adjudicating officer, appellate Board and High Court.- 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 perusal of the aforesaid Section would show that in

case the amount of penalty remains unrealized then all

the persons who are in-charge or responsible for the

conduct of the business are liable to be proceeded

against under the Section 68(2) of the Act. The said

provision is at pari materia with Section 141 of the

Negotiable Instruments Act. This necessarily takes the

Court back to the complaint which has been filed by the

respondent no.1 against the present petitioner. In case

one sees the complaint filed by the respondent no.1, the

name of the present petitioner has been mentioned in

the title which has been shown as a Director then his

note is to be mentioned in the complaint. There is not

even an iota of averment that the present petitioner was

in-charge and responsible for the conduct of the business

of the company at the time when the contravention, in

Crl. M.C. No. 2155/2000 Page 11 | 15 respect of which the penalty was imposed, took place. In

SMS Pharmaceuticals Vs. Neeta Bhalla, AIR 2005 SC

3512 it has been categorically laid down by the Supreme

Court that in order to make a Director vicariously liable

there has to be necessarily an averment. There is no

question of presuming such a vicarious liability in the

absence of the averments. This is a complaint filed by

the public servant/respondent no.1, in the discharge of

his official duties, and therefore, by virtue of proviso (a)

to Section 200 Cr.P.C., the pre summoning evidence was

dispensed with. In law, such cases where pre-summoning

evidence is dispensed with, on account of the complaint

having been filed by the public servant, a greater onus is

caused on the public servant to show by way of

averments made in the complaint and the documents

relied upon in the complaint as to how the accused is

sought to be proceeded against for any offence. In the

instant case, neither there are averments in the

complaint under Section 57 of the Act which has been

filed against the petitioner, as to show how the petitioner

was in-charge and responsible for the affairs of the

company much less is there any proof of the same. The Crl. M.C. No. 2155/2000 Page 12 | 15 contention of the learned counsel for the respondent that

the onus is on the petitioner to show that the offence has

not been committed with his knowledge or connivance

and with his consent, as envisaged under Section 68 (2)

of the Act, is again without any merit. The Section 68

(2) of the Act would come into operation only when the

petitioner deserves to be summoned. Where the

respondent himself does not have a case for summoning

against the petitioner the question of the petitioner

showing that the offence was not committed with his

connivance or without his knowledge or the onus getting

shifted to him, does not arise.

15. I, accordingly, feel that the present complaint which has

been filed by the respondent no.1 is totally in gross

abuse of processes of law and consequently the orders

dated 06.02.197 passed by the learned ACMM and

upheld by the learned ASJ vide order dated 05.10.1999,

rejecting the application of the petitioner for being

discharged are untenable in law, and accordingly, the

said orders also deserve to be set aside.

16. For the reasons mentioned above, I set aside the

complaint which had been filed by the respondent no. 1, Crl. M.C. No. 2155/2000 Page 13 | 15 qua the present petitioner, as well as the two orders

dated 06.02.1997 and 05.10.1999 which have been

passed by the Courts below. No order as to costs.

                                                  V.K. SHALI,J
FEBRUARY 03, 2012
KP




Crl. M.C. No. 2155/2000                                 Page 14 | 15