# LENNART SCHUSSLER AND ANR v. DIRECTOR OF ENFORCEMENT & ANR

- **Citation:** [1970] 2 S.C.R. 760
- **Court:** Supreme Court of India
- **Decided:** 1969-10-14
- **Case number:** Criminal Misc. Petitions Nos. 469 and 62I of 1969
- **Bench:** S. M. S!Kri, G. K. Mitter, K. S. Hegde, A. N. Ray, P. Jaganmohan Reddy
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/lennart-schussler-and-anr-v-director-of-enforcement-anr-4945
- **Pages:** 27

## Headnote

Foreign Exchange Regulation Act (7 of 1947), ss. 4 and 21(1)-
lndian Penal Code; s. 120-B-ll/egal acquisition of foreign exchanKe and
retention in foreign bank-Agreen1ent to do so whether an offence under
s. 21(1) of Act 7 of 1941-Whether applicability of s.
21(1) excludes
applicability of s.
120-B I.P.C.-Rete.•tion of foreign exchange not an
offence at the ti1ne when agreement entered int~Subsequently made an
offence-Acts in pursuance of agree1nent after creation of offence ·whether
to be treated as acts in pursuance of conspiracy.
The Rayala Corporation (P) Ltd. manufactured Halda typewriters in
India v.ith materials imported from Sweden.
Initially it made purchases
through a firm known as A.B. Atvidabergs (later known as Facit A.B.).
In 1963 the Rayala Corporation decided to import
certain materials
through another firm called the Associated Swedish Steels A.B., Sweden
(ASSAB). Appellant No. 1 a Swedish nati"nal, was at the relevant time
export manager of A.B. Atvidaberg:;; in 1966 he also became a director
of Rayala Corporation. In November 1968 appellant no. 1 waa travelling
by aircr~ft from Singapore to Karachi. The aircraft became grounded at
Delhi. The Director of Enforcement, New Delhi,
acting under the
Foreign Exchange Regulation Act, 1947 took appellant no. 1 into custody
and detained him.
He was served with a notice of adjudication under the
Act; the notice purported to be in continuation of one nlready given to
Rayala Corporation under s. 23C of the Act. Appellant No. I challenged
his detention by a petition under Art. 32 of the Constitution.
In this Court
a statement was made on behalf of the ·respondents that a complaint had
already been filed against the appellants under s. 120-B of the Indian
Penal Code read with certain sections elf the Foreign Exchange Regttlation
Act.
Jn the said complaint it was alleged that in 1963 when appellant
no. 2 had gone to Sweden he told AppeJant no. I of the decision taken
by the Rayala Corporation to buy certain materials from ASSAB. He further informed Appellant no. 1 that arrangements
had been made with
ASSAB to over invoice to the goods by 40%, and that the said ex.cess
over the true value would be kept in a bank in the personal account of
appellant no. 2. Appellant no. 1 agreed to help Appellant no. 2 in opening the said account and keeping it secret; he also agreed to keep a watch
over the account and to bring copies of it whenever he visited India. This
according to the complaint amounted to a conspiracy between Appellants
nos. 1 and 2 within the meaning of s. 120-B of the Indian Penal Code for
the purpose elf illegal acquisition of foreign e<change by appellant no. 2
and retaining the same abroad in contravention of ss. 4(3), 5(1)(el and
9 of the Foreign Exchange Regulation Act and
Rule
132-A of the
Defence of India (Amendment) Rules, 1964. It was alleged that appellant no. 1 actua11y sent to appellant no. 2 from time to time statements
of the illegal account ooened in Sweden in pursuance of the cons.Piracy.
It was further alleged that in November 1965 ~poellant no. 1 came to
India and again agreed to continue heloing appellant no. 2 in operating
the 'foreign account. The appellants filed petitions in the. Madras High
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SCH\;SSLER V. DIR. E1'FORCEME~T (Reddy, J.)
761
Court asking it to quash the '1iri complaint. These petitions having been
dismissed the appellants appealed to this Court. It was contended on be·
.half of the appellant• : (i) that s·. 120-B of the I.P.C. did not apply to
the caso because s. 21 (I) of the Foreign Exchange Regulation Act, cover·
ed tho >amc grounds; (ii) ihat when the alleged agreement was made in
1963 the objects of it were not illegal because they became so unly on the
enactment of r. 132A of the Defence of India Rules in 1964 and the
amendment of s. 4 of the Foreign Exchange Regulation Act in 1965. It
was urged that whatever appellant
no. 1. did or agreed to do after the
passing of these Jaw. did not constitute

## Text

_Characters 0–39,982 of 75,333. This is a partial read: ask again with offset=39982 for what follows._

LENNART SCHUSSLER AND ANR.
v.
DIRECTOR OF ENFORCEMENT & ANR.
October 14, 1969
[S. M. S!KRI, G. K. MITTER, K. S. HEGDE, A. N. RAY AND
P. JAGANMOHAN REDDY, JJ.]
Foreign Exchange Regulation Act (7 of 1947), ss. 4 and 21(1)-
lndian Penal Code; s. 120-B-ll/egal acquisition of foreign exchanKe and
retention in foreign bank-Agreen1ent to do so whether an offence under
s. 21(1) of Act 7 of 1941-Whether applicability of s.
21(1) excludes
applicability of s.
120-B I.P.C.-Rete.•tion of foreign exchange not an
offence at the ti1ne when agreement entered int~Subsequently made an
offence-Acts in pursuance of agree1nent after creation of offence ·whether
to be treated as acts in pursuance of conspiracy.
The Rayala Corporation (P) Ltd. manufactured Halda typewriters in
India v.ith materials imported from Sweden.
Initially it made purchases
through a firm known as A.B. Atvidabergs (later known as Facit A.B.).
In 1963 the Rayala Corporation decided to import
certain materials
through another firm called the Associated Swedish Steels A.B., Sweden
(ASSAB). Appellant No. 1 a Swedish nati"nal, was at the relevant time
export manager of A.B. Atvidaberg:;; in 1966 he also became a director
of Rayala Corporation. In November 1968 appellant no. 1 waa travelling
by aircr~ft from Singapore to Karachi. The aircraft became grounded at
Delhi. The Director of Enforcement, New Delhi,
acting under the
Foreign Exchange Regulation Act, 1947 took appellant no. 1 into custody
and detained him.
He was served with a notice of adjudication under the
Act; the notice purported to be in continuation of one nlready given to
Rayala Corporation under s. 23C of the Act. Appellant No. I challenged
his detention by a petition under Art. 32 of the Constitution.
In this Court
a statement was made on behalf of the ·respondents that a complaint had
already been filed against the appellants under s. 120-B of the Indian
Penal Code read with certain sections elf the Foreign Exchange Regttlation
Act.
Jn the said complaint it was alleged that in 1963 when appellant
no. 2 had gone to Sweden he told AppeJant no. I of the decision taken
by the Rayala Corporation to buy certain materials from ASSAB. He further informed Appellant no. 1 that arrangements
had been made with
ASSAB to over invoice to the goods by 40%, and that the said ex.cess
over the true value would be kept in a bank in the personal account of
appellant no. 2. Appellant no. 1 agreed to help Appellant no. 2 in opening the said account and keeping it secret; he also agreed to keep a watch
over the account and to bring copies of it whenever he visited India. This
according to the complaint amounted to a conspiracy between Appellants
nos. 1 and 2 within the meaning of s. 120-B of the Indian Penal Code for
the purpose elf illegal acquisition of foreign e<change by appellant no. 2
and retaining the same abroad in contravention of ss. 4(3), 5(1)(el and
9 of the Foreign Exchange Regulation Act and
Rule
132-A of the
Defence of India (Amendment) Rules, 1964. It was alleged that appellant no. 1 actua11y sent to appellant no. 2 from time to time statements
of the illegal account ooened in Sweden in pursuance of the cons.Piracy.
It was further alleged that in November 1965 ~poellant no. 1 came to
India and again agreed to continue heloing appellant no. 2 in operating
the 'foreign account. The appellants filed petitions in the. Madras High
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SCH\;SSLER V. DIR. E1'FORCEME~T (Reddy, J.)
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Court asking it to quash the '1iri complaint. These petitions having been
dismissed the appellants appealed to this Court. It was contended on be·
.half of the appellant• : (i) that s·. 120-B of the I.P.C. did not apply to
the caso because s. 21 (I) of the Foreign Exchange Regulation Act, cover·
ed tho >amc grounds; (ii) ihat when the alleged agreement was made in
1963 the objects of it were not illegal because they became so unly on the
enactment of r. 132A of the Defence of India Rules in 1964 and the
amendment of s. 4 of the Foreign Exchange Regulation Act in 1965. It
was urged that whatever appellant
no. 1. did or agreed to do after the
passing of these Jaw. did not constitute any offence and therefore he could
not be said to have taken part in a criminal conspiracy.
HELD:
Per Sikri. Ray and Reddy, JJ.-The appeals must be dismissed.
( i) The combined effect of the several provisions of s. 21 does not
sul'P."'t the view that sub-s. ( 1) covers a case of criminal conspiracy
simtlar to s. 120-B. Section 21 does not in terms deal with an agreement
to commit an offence or a legal act in an illegal way but merely provides
that an agreement or contract by itself ought not to evade or avoid the
provisions of the Ac:t. The agreement entered into between ASSAD and
appellant no. 2 would, if proved, come within the mischief of s. 21 (1)
but the agreement such ns the one alleged to have been entered into be·
tween appellant no. I and appellant no. 2 does not itself evade or avoid
any of the provisiont of the Act, rules, or directions. The words directly
or indirectly do not take in any agreement to be illegal acts .in future.
(769 H·770 BJ
(ii) For the oft'ence of COMpiracy as deftned in s. 120-A of the In·
dian Penal Code there muat be a meeting of minds in the doing of an
illegal act or the doing of a legal act by illegal means. If in the further·
ance of the conspiracy certain person& are induced to do an unlawful act
without the knowledge of the conspiracy or the plot they cannot be held
to be conspirators, though they may be guilty of an offence pertaining to
the specific unlawful act. The offence of conspiracy is complete when
two or more conspirators have agreed to do or cause to be done an act
which it itself an offence, in which ca'° no overt act need be established.
An agreement to do an illegal
act which amounts to a conspiracy will
continue as Ion~ as the members of the conspiracy remain in agreement
and as long as they are acting in accord and in furtherance df the object
for which they entered into the agreement.
[770 D·FJ
The contenti0n that the acts of appellant no. l in watching the bank
account in Sweden on behalf of apoellant no: 2 and keening him informed about it did not cQnstitute any offence and therefore he was not guilty
of the offence of conspiracy, could not be accepted. The several acts which
constiture a conspiracy cannot be split up into parts and the liability of
apnellant no. l could not be jud!!ed by the part that he played. The
entire aveement mu<t be viewed as a whole and it had to be ascertained
as to what in fact the con<pirators intended to do nr the object they want·
ed to achieve.
[771 D·E]
In this case on the allegations appellant no. 2 asked appellant no. I to
helt> him in acquiring foreign excban~e illegally and appellant no. J agreed
to help him. Thk agreement though initially may not have
bee~ an
offence was none the Jess an offence subsequently, but appellant no. l did
not withdraw from it and was said to have continued to carry out the
agreement. The help of appellant no. l was necessary to the desil:ll of
appollant no. 2 bec8me ot~se be would not know whether ASSAB
was In fact crediting bis '*aunt in the bank with the · amount ,of over
7c2
SUPREMJ:t° COURT REPORTS
( 1970] 2 S.C.R.
in\oice. Appdlani no. 1 kept appellant no. 2 supplied with necessary in·
A
f1:il·n1ation "from time to time and agreed while in Madra6 in 1965 to con•
tlnue, to help appellant Ol). 2 The several acts of appe!Jant no. 1 were
rill acts Jn. ~onsequence of the agreement which had its origin in Sweden.
Appe_~lant no. 2 also in pursuance of the conspiracy acquired foreign ex·
change in· Sweden.
Therefore on the aJ'~gations contained in the
com ..
plaint appellant no. I an<l appellant no.
2 could
be charged with an
offence under s. 120-B.
[771 H-772 E]
B
M/s. Raya/a Corporation (P) Ltd. & Anr- v.
Director of En/~
ment, New Delhi. [1970] 1 S.C.R. 639 and Denis Doll'/ing Mule/iv v.
Queen LR. 3 H.L. 305. 317. referred to.
Per Mitter and Hedge. JJ. (dissenting).-The appeals must be allowed.
Per Mitter, J.-(i) An agreement by two persons whereby one agrees
ro ·help the other by 'facilitating transfer of foreign
exchange from a
fol'ei311 exporter into the h;inking account of that other i~ an agreement
tne:·· object \Vhereof is not only the acquisition of ·foreign exchange but the
retention of 'it .abro:-id.
This· is clearly an agreement to evade lhe operation of tho· provision< of the Foreign Exchange Regulation Act relating to
the illegal ""·acquisition and retention· of 'foreign exchange within the meaning of s. 21 ( 1) of the Act.
So far as the violation of the different provisionS" of the Act or rule or direction or order made thereunder are concerned the Act is a complete code including within its ambit by reason of
•· 21(1) a criminal conspiracy to acquire foreign exchange abroad illicitly
and retaining l)ie same abroad. The offence alleged against the appellant<
in the:· esent case therefore •fell under s. 23(1A) read withs. 21(1) of
the Act and no ·complaint lay under s. 120-B of the Indian Penal Code.
[7,81 E-F, 782 B. 783 HJ
. (ii) Jn the Raya/a Corporation's case this Court laid down that complaint under s. 23(1) (I>) cannot be launched before the Director of Enforcement has taken up the adjudication
proceedings
and made some
inquiry in these proceedings and formed the opinion that it was necessary
to have resort to the more drastic provisions of conviction hy a court n:t.
envisaged by s. 23 ( 1 ){b). fn the present case no proceedings had heen
started either agairu;t appellant no. 1 or appellant no. 2 in pursuance of
the notices o'f adjudication issued against them.
Therefore in respect of
the substantive offences for contravention of the different sections of the
Act the Director of Enforcement could not make a complaint before first
having followed the procedure laid down in s. 23D of the Act. It would
be absurd to allow him to file a complaint for violation of s. 21 ( 1) bv
making a charge under s. 1;10-B 1.P.C. when the overt acts alle~ed were
contraventions of different provisions of the Act punishable only under
s. 23 (1 )(b) by following the procedure indicated in s. 23D. To allow
the pro<eculion to he proceeded "ith .at this sta~e would in effect be stultifyin~ in s. 23 ( 1) (b). Accordingly the complaint filed under s. l 20P of
the J.P.C. agninst the appellants must be quoshed.
[7R2 C-F)
Per Hegde. J.-(i) Th(' arpcals must be allo\11ed follo\vine the rule
laid. <lcnvn bv this Court in lhe Raya/a Corporation'.v ca"r.
Jt-i., a funda·
mental princiri1e of 1:nl· that \\'h:tt cannot be done · directlv ~hould not he
pcrnlittcd to he done indirectly.
[784 A-B}
·
(ii) From the .'fncts and circumstances of the ca~e it -was clear that
the compbint wai pot a hom fid•.one •. It ·had been .filed with a collateral
purpose ric .. to iustify the unlawful .detention of appellant no. l in
this
country.
[784 B-C]
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(iii) Even if all the facts stated in the complaint were accepted as
correct the same did not amount to an offence under s. 120B of the Indian Penal Code. These allegatioos merely made out that appellant no. I
was an accessory after the fact and not that he was a conspirator. If a
person agreed with a robher to rece-ivc the stolen property to arrange !for
its safe keeping he does not become a co-conspirator with the robber in
the commission of the offence of robbery.
On the facts alleged it was
clear that appellant no. I had nothing to do either with the acquisition of
foreign exchange by appellant no. 2 or in the matter of the latter"s failure
to repatriate the same to this country. The allegation against him \Vas
that he provided facility for its retention in Sweden.
[786 A-ll]
CRIMINAL APPELLATE JURISDICTION : Criminal App~als Nos.
113 and I63 of I969.
Appeals from the judgment and order dated April 16, 1969 of
Madras High Court in Criminal Misc. Petitions Nos. 469 and 62I
of 1969.
A. K. Sen, N. C. Raghavachm·i, W.
S.
Setharaman
and
R. Gopalakrish.ian, for the appellant (in Cr.A. No. 113 of I969).
D
M. C. Setalvad, N. C. Raghavachari, W. S. Setharaman and
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R. Gopa/akrishnan, for the appellant (in Cr. A. No. I63 of I969).
Jagadish Swarup, Solicitor-General, R. H. Dhebar, B. D.
Sharma and S. P. Nayar, for the resJX>ndents (in both the appeals).
The Judgment of S!KRI, RAY and ]AGAN MOHAN REDDY, JJ.
was delivered by REDDY J. MITTER and HEGDE, JJ.
delivered
dissenting Opinions.
Jaganmohan Reddy, J. The Director of Enforcement, New
Delhi, filed a complaint on February 16, 1969 before the Chief
Presidency Magistrate, Madras against Lennart Schussler, accused
I, and M. R. Pratap, accused 2, Managing Director, The Rayala
Corporation Ltd, hereinafter referred to as
A. I and A.2 respectively, under section 120-B I.P.C. and ss. 4(3), 5(1) (e) and
9 of the Foreign Exchange Regulation Act (VII) of 1947 (hereinafter called the Act).
Two Crin1ina! Miscellaneous Petitions,
one filed by A. I being No 469 of I 969 and the other filed by A.2
being No. 62I of 1969 for quas!Jng the complaint were dismissed
by the Madras High Court by a common judgment against which
these iwo appeals by certificate have been filed.
The ·complaint which is in
respect of
the
acquisition
of
88913.09 Swiss Kronars in contravention of the Act states that
on reliable information received by the Assistant Director of Enforcement, Madras that A 2 was utilising his position as Managing Director of' the Rayala Corporation Ltd. in acquiring foreign
exchange illicitly; on December 20, 1966; a ~~arch was ·conducted of the premises of the ssid company in the presenoe of A-2,
76.4
SUPREME COURT REPORTS
(1970] 2 S.C.R
Jag~ Rao and the legal adviso~ of the company one Sita Ram.
Durmg the search certain documenls were recovered and seized,
one of which was a Jetter dated the 25th March· 1965 in Swedish
language from the Associated Swedish Steels A.B. Sweden, known
as ASSAB to A 1 with the enclosures. The Rayala Corporation
Private Ltd. was a concern manufacturing Halda· typewriters for
which purpose certain materials
were
being imported from
Sweden. The firm with which initia!ly t11e transactions were being entered into was known as A.B. Atvidabergs, later known as
Facit AB, of which A l, a Swedish national, has been the export
manager. It is alleged that in August 1963, A 2 Jaga Rao and
A 1 met together at Stockholm and ag,eed to a plan regarding
purchase of certain raw materials, namely,
steel
alloy
sheets
directly from ASSAB instead of purchasing them from Atvidabergs.
At that meeting A 2 informed A 1 that henceforth he
would buy material on behalf of his company from ASSAB instead of M/s Atvidabergs.
A 2 further infonned A 1 that the
arrangP.ment made between him and the ASSAB was to overinvoice the value of goods by 40 per cent of the true value and
that he should be paid the difference of 40 per cent on account of
the aforesaid over-invoicing by crediting it to his
personal
account and that since under the laws of India this acquisition by
him was unlawful and had to be kept secret, it should not be
mentioned in the official correspondence of Messrs Rayala Corporation with the Swedish firm.
He requested the first accused
to help him in opening the account in ~wenska Handles Banken,
Sweden, in order not only to transfer the money lying to his credit
in Atvidabergs but also to have further deposiis to his personal
account from ASSAB on account of the difference between the
actual value and the over-invoiced value.
A 1 agreed to act as
requested by A 2. A 2 made arrangement wiih ASSAB to intimate to A 1 the various amounts credited to A 2's account and
asked A 1 to keep a watch over the correctness of the account
and io further intimate to him the account position from time to
time throu11h unofficial channels and whenever A 1 came to
India. A 1 is said to have agreed to comply with this request.
Subsequently in November 1965 A 1 came to frlia when he is
said to have brought the incriminating letier dated the 25th March
1965 which was seized.
He is said to have also agreed at that
time with A 2 to continue to help him to accumulate foreign exchan.Qe illegally in the same mannbr. In September 1966 also A
1 arrived at Madras where he stayed for a month and at that time
also he brou$i further details of the account. Tue gravamen of
the charge is set out in paragraph 9 of the complaint as follows :-
"Thus it is clear that A 1 and A 2 agreed to commit illegal acts,
namely, acquisition by A 2 of foreign exchange illicitly and retaining the same abroad without surrendering the same to the
Government of India and also to defraud_ the Government of
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SCHUSSLER v. DIR. ENFORCEMENT (Reddy, ] . )
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India of foreign exchange thereby contravening Sections 4(3),
5 ( 1) ( e) and 9 of the Foreign Exchange Regulation Act and Rule
13,2A of the Defence of India (Amendment) Rules, 1964 anct
further that between August 1963 and 1966 A l
and A 2 in
pursuance of the said agreement did commit acts in contraventfon
of sections 4 ( 3), 5 (I) ( e) and 9 of the Foreign Exchange Regulaticm Act and Rule 132 A of the Defence of India (Amendment)
Rules, 1964 and thereby commitied offence punishable under
sec. 120 B of the Indian Penal Code, read with St)Ctions 4(3),
5(1) (e) and 9 of the F.E.R. Act and Rule 132 A of the Defence
of India (Amendment) Rules. 1964".
The complaint also refers to the fact that C.C. No. 8736 of
1968 had already been filed against the Rayala Corporation frivate Ltd. In view of this reference it is necessary, for a ~tter
appreciation of the issues involved in this petition, to give a brief
account of the earlier proceedings taken by ihe Directorate of
Enforcement in this regard. It appears that the earlier notice sent
by the Enforcement fiirectorate daied the 25th August 1967 was
for the contravention of the Act in respect of 244,713.70 Swiss
Kronars alleged to have been deposited in A 2's bank account,
which amount included 88,913.09 Swiss Kronm. This notice
was followed by a further show cause,notice under ~. 23(3) of
the Act dated the 4th Novemb.~r 1967 to A 2 as to why he should
not be prosecuted in respect of 88,913.09 Swiss Kronars. A 2
in his reply of November 13, 1967 to the show cause notice of
the 25th August 1967 denied the allegations. The Enforecment
Director further issued another show cause notice dated the 15th 1
November 1967 to the other directors of the Corporation and its
General Manager, Jaga Rao in coniinuation of the notice date.cl
the 25th AUl!USt asking them to show cause why adjudication
proceedings should not be instituted. On November 29, 1967,
A 2 replied to the notice of the 4th November 1967 denying the
allegations.
Thereafter on January 20, 1968 the Director of
Enforcement issued a notice to the Rayala Corporation to show
cause whv it should not be orosecuted for violation in respect of
88,913.09 Swiss Kronars. Two months later, namely, on March
16, 1968, a revised show cause notice was issued to the Corpora·
tion and A 2 supersedimr the notice of 25th Auj!Ust 1967 and
intimatine: to them tha• thev were prosecuting the Corporation
and A 2 for the contravention of the Foreign Exchange Ree:ulation Act in respect of ~8.913.09 Swiss Kronars. Four davs there·
after the Direcior of Enforcement filed a comolaint aj!ainst the
Cornoration ·and A 2 under r. 132-A of the Defence of India
Rules and ss. 4(1), 4(3). and 5(1 )(e) of the)\ct. Both the
Corooration and A 2 .filed Criminal Misc. P~titions, beinl! respectivelv Nos. 978 and 980 of 1968. for quashing the complaint but
the· Hfah Court of Madras dismissed these petitions in October
766
SUPREME COURT REPORTS
(1970] 2 S.C..11..
1968.
Two appeals by certificate preferred against that order,
being Criminal Apneals Nos. 18 and 19 of 1969, were allowed
by this Court on July 23. 1969, setting aside the order of
the
High Coun rejecting the applications under s. 56 l A of the Cude
of Criminal PrnccJure for quashing the proceedings against the
appcJlants therein.
While the above proceedings were pending,
A 1 who happened to be a passenger travelling by an aircraft
from Singapore to Karachi via Palam was detained on November
2 7. 1968 bv the officers of the Office of the Enforcement Directorate when ihe aircraft' which had landed at Palam on November
26, 1968 for refuelling had to be temporarily grounded due to
engine trouble. On November 30, 1968, the Enforcement Directorate served a notice for adjudication on A 1 in his capacity as a
director of the Rayala Corporation which was purported to be in
continuation of the previous adjudication notice dated August
25, I 967 issued to the company under s. 23 C of the Act. These
allegations were also denied by A I on the 30th January I 969
and on 5th February 1969 A 1 filed a writ petition in this Court
for the issue of a writ of habeas corpus. It is however unnecessary to mrrate the various stages of this and the subsequent petitions for directing A 1 's release and for according him permission
to leave this country for Sweden. The subsequent writ petition
filed by him after the withdrawal of the first one fifed on 5th February 1969, came up for hearing along with these criminal appeals
and this Court on the I 0th September 1969 while allowing the
writ petition to be withdrawn pas~ed a consent order permitting
A 1 to depart from India provided he furnishes ban guarantee in
the foreign exchange equivalent of Rs. 1,50,000/-
in Swedish
Kronars and on his undertaking to appear before the Chief Presidency Magistrate, Madras or any other Magistrate to ·.•nom the
complaini case might be transferred at the time of the disposal
thereof.
The main question in these appeals is whether A 1 can be
charged in respect of acts alleged against him in the complaint
with an offence under s. 120B I.P.C. or with offences under the
several provisions of the Act and r. 132 A of the Defence of
India Rules, read with s. 120B I.P.C.
Before considerinJ! this question it is necessary to mention
that at the time of the alleged agreement between A I and A 2
at Stockholm neither the Defence of India Rules nor the Foreign
Exchange Regulation Act contained any
provision specifically
m:iking it an offence for a person resident in India to acquire
foreign exchange abroad. Rule 132 A of the Defence of India
Rules was added on 21st January 1964 by Defence of India
(Amendment) Rules 1964 by which dealings in foreign exchange
by persons other than an authorised person were prohibited. The
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SCHUSSLER V. DIK. ENFORCEMENT (Reddy, l.)
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provision remained in force till 3 l st March 1965 when it was
repeaJcc!.
:section 4 of the Foreign Exchange Regulauon Act
was also amendec! as from !st April 1965 so as to prohibit the
buying or otherwise acquiring or borrowing or selling or otherwise transferring or lenc!inv, to any person other than an authonsed c!ealer any foreign excllange without the previous general or
'pcc1al permission of the Reserve Bank.
It is therefore apparent
that at the time when the alleged agreement between A I, A 2
and Jaga Rao is said to have taken place in Stockholm in August
1963 it was neither an otfence under the Defence of India Rules
nor under the Act to acquire foreign
exchange in
a forei5.1
country. But it is contended by the learned Solicitor General
that pursuant to that agreement A 1 continued to heir and agreed
to help even after it became an offence unc!er the Defence of !ndia
Rules or under the Act and consequently no exception can be
taken to the complaint against A 1.
At any rate, s. 21 ( 1) of
the Act would cover such agreements which are offences
and consequently the accused can be charged with s. 120B
I.P.C.
On
the other hand,
learned
counsel for
the
appellants Shri
Asoke Sen submits that firstly,
there was
no mention of any allegation against A
1 in the several
show cause notices issued either to the Rayala Corporation or to
the director•; of that Corporation or to A 2 but it is an after
thought brought about by the mechanisation of Jagga Rao who
was hostile and inimical to A 2; secondly, as it appears 011 the
enquiry made by A 2 at the instance of the Enforcement Directorate from Swenska Handel~: Banken,
Stockholm,
that in fact
there is no account as alleged either in the name of the Rayala
Corporation or in the name of the Managing . Director of the
Rayala Corporation, that is, A 2. there would be no basis for th<'
complaint; and thirdly, the agreement alleged does
not either
come under s. l 20B l.P.C. or would amount to a contravention
of any of the provisions of the Act including s. 21 (1) thereof. It
would not be necessary at this stage to go into these questions
because what has to be seen is whether, assuming the facts as stated
in the complaint to be true, '\ l and A 2 could be charged with
the offences specified therein.
The answer to this question must
depend upon the nature of the pan which A l agreed to play in
the acquisition· of· the foreign exchange under which agreement
he is said to have continued to participate in the conspiracy by
rendering help to. A 2 in acquiring foreign exchange even after
21st 0f January 1964 and also till after the am,~ndmcnt of s. 4(1)
o[ the Act.
Under .s. 120B tl1ere must be an agreement between two or
more persons to commit an offence or where the· agreement does
not amount to an offence in the doing of an act which is legal, in
an illegal. way there should a:so he established an overt act. Tn
768
SUPREME COURT REPORTS
[!970] 2 S.C.R.
so far as the offence under r. 132A of the Defence of India
Rules is concerned, in 1963 what Pratap did was not an offence,
nor was it an offence under the Act as s. 4 was amended with
effect from !st April 1965. In so far as any acts which may be
considered to constitute an offence under r.
! 32A of the
Defence of India Rules, it has been held by this Court in Criminal Appeals Nos. 18 and 19 of 1969, decided on 23rd July 1969
(Raya/a Corporation etc. v. Director of Enforcement) that no
prosecution can be launched for an offence under that provision
subsequent to the repeal as there i,; 110 saving provision thereunder.
It is then contended that the agreement entered into in 1963
continued to be effective even after the acquisition of foreign exchange became an offence after the amendment of the Act on
!st April 1965, and at any raie after this amendment an agreement by A 1 to assist A 2 was again said to have been arrived at
in Madras in 1965. It is,
therefore,
necessary to
examine
whether such an agreement would constitute an offence and if
so under what provision of law.
The agreement in Madras has
a reference to the initial agreement in Sweden.
This alleged
agreement between A. 1 and A. 2, as set out in the complaint,
can be briefly stated· to consist of tl)e following,
namely, in
August 1963 A 2 asked A 1 to help him (a) to open an account
in Swenska Handels Banken, Stockholm, (b) to get the money
lying to A 2's credit with Atvidaberge accumulated by him· as a
result of over-invoicing transferred to Pratap's account with the
bank and ( c) to keep a watch on and check the correctness of
the account of the acquisitions from time to time and not to mention anything in the official correspondence but to give information otherwise. Evea in Madras in 1965, A 1 is alleged fo have
agreerl to keep a watch on the account and bring him statements
of the account. The offence by A 2 under the Act would consist of getting the goods which the Rayala Corporation was purchasing over-invoiced by 40 per cent so that permission to remit
foreign exchange from India to the extent of the amount of the
over-invoice could be obtained from the Reserve Bank and after
money is received in Sweden by the Swedish company that company was to credit Pratap's (A 2) account with 40 per cent of
the over-invoice price. If these facts are established, they certainly amount to a contravention of cl. (1) and cl. ( 3) of s. 4
which provide that where any foreign exchange is acquired by
any person other than by any authorised dealer for any particular
purpose or where any person has been permitted conditionally to
acquire foreign exchange the said person shall not use the foreign
exchange so acquired otherwise than for that ·purpose or as the
case may be, fail to comply with any condition to which the permission granted to him is subject, and where any foreign exchange so acquired cannot be so used or. as the case may be. the
A
8
c
D
E
F
G
II
SCHUSSLER v. DIR. ENFORCEMENT (Reddy, /.)
769
A condition cannot be complied with, the said person shall without
delay sell the foreign exchange to an authorised dealer. Now it
is alleged· that A 2 Pratap has in breach of this condition .on
which foreign exchange was released to the Rayala Corporauon
to pay the actual cost of the goods has not only not complied with
the conditions on which the permission was granted but has also
e
committed default in not selling the foreign exchange so acquired
by him without delay to an authorised dealer.
Before dealing with Ow question whether the agreement of
A 1 to help A 2 amounts to criminal conspiracy punishable
under s. 120B I.P.C., it will be convenient first to dispose of the
c
submission thats. 120B LP.C. does not apply because s. 21(1)
covers the same ground. It would appear that the alleged agiee·
ment between A 1 anJ A 2 is not one which transgresses s. 21
(I ) of the Act. What s. 21 ( 1) provides is that the provisions of
the Act must be avoided or evaded by the agreement or contract
itself. The contracts or agreements are those which are entered
D
into during the course of commer,cial transactions and it is the
intention of the legislature to prohibit that such contracts or
agreements ought not to provide for the evasion or avoidance of
any of the provisions of the Act either directly or indirectly. This
assumption is made clear by the subsequent sub-section in which
the legislature i.~ anxious to preserve the integrity of these transactions by providing that any reference to any act being done
E without the permission of the Central Government or Reserve
Bank shall not render the agreement invalid and 1t shall be an
implied term of every contract governed by the law of any part
of India that anything agreed to be done by any term of that contract which is prohibit.eel to be done by or under any of the provisions of this Act eXcept with the. permission of the Central GovF
ernm~nt\ir Reserve Bank shall not be done unless such permission is granted.
Sub-sec. ( 3)
provides
that notwithstanding
anything in the Act or any provision in the contract that anything
for which permission has to be obtained from the Central Government or Reserve Bank shall not be done without that permission,
no .lel!;al proceedings shall be prevented from bein,~ brought in
I~d1a to recover any sum which apart from any of the said proviG stons and any such term would he due whether as a debt damages
or otherwise but subject to the certain conditions p;ovided in
els. (a) to ( c) therein. Similarly, sub-s. ( 4) states that nothing
shall be deemed to prevent any instrument being a bill of exchanj!e or promissory note in spite of any inhibitions in the Act
and notwithstanding anythi.ng contained in the Negotiable Instruments Act. The combined effect of the several :irovisions of s. 21
does not incline us to the view that sub-s. (I) covers a case of
H
criminal conspiracy similar to s. l 20B. Section 21 does not in
terms deal with an aj!reement to commit an offence or a legal act
7 70
SUPREME a>URT REPORTS
[1970) 2 S.C.R.
in an illegal way but merely provides that an,..agreement or con·
A
tract by 1tselt ought not to evade or avoid the prov1S1ons o! the
Act.
fhe agreement entered into between ASSAB and A 2
!'ratap would, ii proved, come within the mischief of s. 21 (1)
but thi;. agreement such as the one alleged to have been entered
into between A 1 and A 2 does not itself evade or avoid any of
the provis10ns of the Act, rules or directions.
The words directly
B
or indirectly do not take in any agreement to do illegal acts in
future.
It now remains to be seen whether the alleged agreement
which A 1 and A 2 arrived at in Stockholm in 1963 and again
in Madras in 1~65, would, if established, amount to a criminal
conspiracy. The first of the offences defined in s. 120A Penal
Code which is itself punishable as a substantive offence is the very
agreement between two or more persons to do or cause to be done
an illegal act or a legal act by illegal means subject however to
c
the proviso that where the agreement is i:.:it an agreement to
commit an offence the agreement does not amount to a conspiracy unless it is followed up by an overt act done by one or more
D
persons in pursuance of such au
agreement. There must be a
meeting of minds in the doing of the illegal act or the doing of a
legal act by illegal means. If in the furtherance of the conspiracy certain persons are induced to do an unlawful act without
the knowledge of the conspiracy or the plot they cannot be held
to be conspirators. though they may be guilty of an offence per-
&
taining to the specific unlav.ful act.
The offence of conspiracy
is complete when two or more conspirators have agreed to do or
cause to be done an act which is itself an o!'euce, in which ca&e
no overt act need be established. It is also clear that an agree·
ment to do an illegal act which amounts to a conspiracy will con·
tinue as Jon/;! as the members of the conspiracy remain in agreement and as long as they are acting in accord and in furtherance
F
of the object for which they entered into the agreement.
As has been noticed earlier at tire time A I and A 2 entered
into an agreement though A 2 thought it was an offence to acquirl:'
foreign exchange by the method he was employing it was
nor
in fact an offence.
It is none the Jess alleged that A 1 agreed
G
to help in t11e belief that what he is doing would be to assist A 2
to acquire foreign exchange illegally. This agreenmt continued
and A I was assisting A 2 even after the acquisition of foreign
exchange became illegal and is said to have agreed even after
ne came to Madras in 1965 to continue to help in acquiring the
foreign exchange. It is however contended that the agreement of
H
A I with A 2 docs not am&unt to a criminal conspiracy because
all that A 1 has agreed to do was to help A 2 to open an account
in the Swedish Bank. haYe the amounts !yin~ t'o the credit of A "
'
A
SCHUSSLER V, DIR. ENFORCEMENT (Reddy, J,)
771
with. Atvidabergs to that account and to help A 2 by keeping a
watch over the account. It is true that none of
these acts
.amounts to an offence, because the opening of the account in the
Bank and having the amounts transferred from Atvidabergs was
not an offence in August 1963, and there is nothing to show that
A 1 had not completed that part of the agreement reiating to
B Atvidabergs and the opening of the account with the bank before
January 1%4 or that he had rendered the assistance after that
date. if this part of the agreement does not amount to a conspiracy to do an unlawful act, then it is submitted that the subsequent watching over the account and sending pr bringing a statement of the account of A 2 relating to the acquisition of the
C foreign exchange does not amount to an offence.
The agreement
which constitutes an offence, it is said is the one between A 2 and
ASSAB. The subsequent act of A 1 was neither necessary to
acquire nor does it further the acquisition of th.~ foreign exchange
in contravention of the provisions of the Act and is therefore not
an offence under s. 120B of the Penal Code. This argument
would postulate that the several acts which constitute it can be
D split up in parts and the criminal liability of A 1 must only be
judged by the part he has played. It appears to us that this is
not a justifiable contention, because what has to be seen is
whether the agreement between A 1 and A 2 is a conspiracy to
do or continue to do something which is iilegal and if it is, it is
immaterial whether the agreement to do any of the acts in furtherE
ance of the C()lfllllission of the offence do not strictly amount to
an offence. The entire agreement must be viewed as a whole and
it has to be ascer<ained as to what in fact ihe conspirators intended to do or the object they wanted to achieve. As .observed
by Willis, J. in his 11th answer given on behalf of the Judges when
consulted by the Lord Chancellor i& Denis Dowling Mulcahy v.
Queen(')
G
"A conspiracy consists not merely in the intention
of two or more, but in the agreement of two or more
to do an unlawful act or to do a lawful act by unlawful
means. So long as such a design rests in intention only,
it is not indictable.
When two agree to carry it into
effect, the very plot is an act in itself, and the act of
each of the parties promise against
promise,
actus
contra actum, capable of being enforced, if lawful,
punishable if for a criminal object or for the use of criminals means."
In this case on the allegations A 2 asked A 1 to help him in
H
acquiring foreign P-Xchange illegally and A 1 agreed to help him.
This agreement though initially may not have been an offence
---
(!) L.ll3H.L. 305,317
LS Sup. Cl/70-4
772
SUl'REMB COURT ltEPORJ'S
[1970] 2 s.C.it
was none the less an offence subsequently but A 1 did not withdraw from 1t and was said to have conunued to carry out that
ag,eement. A 1 's help was necessary tor A Z's des1gn
because
otherwise he would not know whether ASSAB was in tact crediting his account in the bank with t11e
amount of over-invoice.
Only when ASSAB credited A .l's account could he be said to
have acquired the foreign exchange till then it was only an understanding or agreement under which if it 1s enforceable a
debt
would be created in favour of A 2.
The knowledge that the
ammmt was being credited from time to time was an . essential
part of the agreement between A l
and A 2 and would be in
furtherance of illegal and unlawful design to acquire foreign exchange contrary to the provisions of the Act. It consisted m, as
has alre~dy been stated in A 1 keeping a watch over the accounts,
his coming over to India on several occasions, his bringing a Jetter
in reply to his Jetter, with a statement of account annexed in
November 1965 from ASSAB to himself, in which the amouni of
foreign exchange credited by ASSAB to A z··s
account with
Swenska. Handels Banken was mentioned, his statement at the
\ime of handing it over that he brought the letter in person as he
did not want to send it by post in view of the nature of the transactions and his further agreeing in Madras with A 2 that he will
continue to help him. The several acts of A 1 are all acts in
consequence of the agreement which had its· origin in Sweden.
A 2 Pratap one of the conspirators also in furtherance of that
conspiracy obtained foreign exchange invoices which were over
priced with a view to acquire the same in Sweden. It would,
therefore, appear that on the allegations contained in the complaint A 1 and A 2 could be charged with an · offence under
s. 120B.
.
.
These appeals are accordingly dismissed
with a word of
caution that nothing that has been stated here should be taken as
establishing any of the facts required to constitute the offence
which if the prosecution case has to be sustained must be proved
at ihe trial in accordance with law.
Mitter, J,
These two appeals by certificate arise out of a
common judgment of the Madras High Court in Crl. M.P. 469/
1969 and Cr!. M.P. No. 621/1969, the object of both being to
quash the complaint in C.C. No. 5438 of 1969 on the file of the
Court of the Chief Presidency Magistrate, Egmore, Madras. Cr.
M.P. 469 of 1969 was by Lennart Schussler while Cr. M.P. 621/
1969 was by M. R. Pratap. The complaiIJt before the Chief
Presidency Magistrate was .filed on February 16, 1969 by the
Oireclor of Enforceinent against· Schussler
~nd Pratap under
s.