# RADHEYSHYAM KEJRIWAL v. STATE OF WEST BENGAL AND ANR

- **Citation:** [2011] 4 S.C.R. 889
- **Court:** Supreme Court of India
- **Decided:** 2011-02-18
- **Case number:** Criminal Appeal No. 1097 of 2003
- **Bench:** Harjit Singh Bedi, P. Sathasivam, Chandramauli Kr. Prasad
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/radheyshyam-kejriwal-v-state-of-west-bengal-and-anr-27667
- **Pages:** 55

## Headnote

Foreign Exchange Regulation Act, 1973- ss. 50, 51 and
A
B
56 -
Scope and applicability of -
Charges against the C
appellant for contravening the provisions of s.9(1)(f)(i) and
s.8(2) rlw s.64(2) - Enforcement Directorate (ED) sought to
prosecute appellant in a proceeding uls. 56 though on the
self-same facts and cause of action, respondent-adjudicating
authority had dropped charges framed against the appellant D
u/s.50 - Plea of appellant that standard of proof required to
bring home the charge in a criminal case is much higher than
the adjudication proceeding and once the appellant was
exonerated in the adjudication proceeding, his prosecution
was an abuse of the process of Court - Held (per majority):
E
The yardstick would be to judge as to whether allegation in
the adjudication proceedings and the proceedings for
prosecution was identical and exoneration of the person
concerned in the adjudication proceeding was on merits - In
case it is found on merit that there was no contravention of F
the provisions of the Act in the adjudication proceedings, the
trial of the person concerned shall be an abuse of the process
of the court -
In the instant case, in the adjudication
proceeding on merit the adjudicating authority had
categorically held that the charges against the appellant for
contravening the provisions of s. 9(1 )(f)(i) ands. 8(2) r/w s. 64(2)
G
were not sustainable - In the face of the finding by the
Enforcement Directorate in adjudication proceeding that there
was no contravention of any of the provisions of the Act, it
889
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890
SUPREME COURT REPORTS
[2011) 4 S.C.R.
A would be unjust and an abuse of the process of the court to
permit the Enforcement Directorate to continue with the
criminal prosecution - Resultantly the appellant's prosecution
is quashed - Held (per minority): The scheme of the Act
makes it clear that adjudication by the concerned authorities
B and prosecution are distinct and separate - The two
proceedings are independent and irrespective of the outcome
of the decision u/s.50, there cannot be any bar in initiating
prosecution uls.56 - In the fight of the mandate of s.56, it is
the duty of the Criminal Court to discharge the functions
c vested with it and give effect to the legislative intention,
particularly, in the context of the scope and object of FERA
which was enacted for economic development of the country
and augmentation of revenue.
The Enforcement Directorate alleged that the
D appellant had contravened the provisions of Section 8(2)
and 9(1 )(f)(i) of the Foreign Exchange Regulation Act,
1973 and accordingly rendered himself liable to
imposition of penalty under Section 50 of the Act.
Accordingly, adjudication proceeding as contemplated
E under Section 51 of the Act were instituted against him
for the aforesaid contraventions. The adjudication officer
(the Special Director) came to the conclusion that the
allegation made against the appellant of contravention of
the provisions of Section 8, 9(1 )(f)(i) and Section 8(2) read
F with Section 64(2) of the Act were not sustainable. The
Enforcement Directorate did not challenge this order and
it attained finality.
The Enforcement Directorate on the same allegation
G which was the subject matter of adjudication proceeding
laid complaint against the appellant for prosecution
under Section 56 of the Act before the Metropolitan
Magistrate. After the issuance of process and exoneration
in the adjudication proceeding, the appellant filed
H
RADHEYSHYAM KEJRIWAL v. STATE OF WEST
891
BENGAL
application for dropping the proceedings, inter alia, A
contending that on the same allegation the adjudication
proceedings having been dropped and the appellant
exonerated, his continued prosecution is an abuse of the
process of the Court. The Metropolitan Magistrate rejected
his prayer. Aggrieved, the appellant preferred criminal B
revision application which was dismissed by the High
Court by the impugned order.
In the instant appeal, dispute arose as to whether the

## Text

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•
[2011] 4 S.C.R. 889
RADHEYSHYAM KEJRIWAL
v.
STATE OF WEST BENGAL AND ANR.
(Criminal Appeal No. 1097 of 2003)
FEBRUARY 18, 2011
[HARJIT SINGH BEDI, P. SATHASIVAM AND
CHANDRAMAULI KR. PRASAD,. JJ.]
Foreign Exchange Regulation Act, 1973- ss. 50, 51 and
A
B
56 -
Scope and applicability of -
Charges against the C
appellant for contravening the provisions of s.9(1)(f)(i) and
s.8(2) rlw s.64(2) - Enforcement Directorate (ED) sought to
prosecute appellant in a proceeding uls. 56 though on the
self-same facts and cause of action, respondent-adjudicating
authority had dropped charges framed against the appellant D
u/s.50 - Plea of appellant that standard of proof required to
bring home the charge in a criminal case is much higher than
the adjudication proceeding and once the appellant was
exonerated in the adjudication proceeding, his prosecution
was an abuse of the process of Court - Held (per majority):
E
The yardstick would be to judge as to whether allegation in
the adjudication proceedings and the proceedings for
prosecution was identical and exoneration of the person
concerned in the adjudication proceeding was on merits - In
case it is found on merit that there was no contravention of F
the provisions of the Act in the adjudication proceedings, the
trial of the person concerned shall be an abuse of the process
of the court -
In the instant case, in the adjudication
proceeding on merit the adjudicating authority had
categorically held that the charges against the appellant for
contravening the provisions of s. 9(1 )(f)(i) ands. 8(2) r/w s. 64(2)
G
were not sustainable - In the face of the finding by the
Enforcement Directorate in adjudication proceeding that there
was no contravention of any of the provisions of the Act, it
889
H
890
SUPREME COURT REPORTS
[2011) 4 S.C.R.
A would be unjust and an abuse of the process of the court to
permit the Enforcement Directorate to continue with the
criminal prosecution - Resultantly the appellant's prosecution
is quashed - Held (per minority): The scheme of the Act
makes it clear that adjudication by the concerned authorities
B and prosecution are distinct and separate - The two
proceedings are independent and irrespective of the outcome
of the decision u/s.50, there cannot be any bar in initiating
prosecution uls.56 - In the fight of the mandate of s.56, it is
the duty of the Criminal Court to discharge the functions
c vested with it and give effect to the legislative intention,
particularly, in the context of the scope and object of FERA
which was enacted for economic development of the country
and augmentation of revenue.
The Enforcement Directorate alleged that the
D appellant had contravened the provisions of Section 8(2)
and 9(1 )(f)(i) of the Foreign Exchange Regulation Act,
1973 and accordingly rendered himself liable to
imposition of penalty under Section 50 of the Act.
Accordingly, adjudication proceeding as contemplated
E under Section 51 of the Act were instituted against him
for the aforesaid contraventions. The adjudication officer
(the Special Director) came to the conclusion that the
allegation made against the appellant of contravention of
the provisions of Section 8, 9(1 )(f)(i) and Section 8(2) read
F with Section 64(2) of the Act were not sustainable. The
Enforcement Directorate did not challenge this order and
it attained finality.
The Enforcement Directorate on the same allegation
G which was the subject matter of adjudication proceeding
laid complaint against the appellant for prosecution
under Section 56 of the Act before the Metropolitan
Magistrate. After the issuance of process and exoneration
in the adjudication proceeding, the appellant filed
H
RADHEYSHYAM KEJRIWAL v. STATE OF WEST
891
BENGAL
application for dropping the proceedings, inter alia, A
contending that on the same allegation the adjudication
proceedings having been dropped and the appellant
exonerated, his continued prosecution is an abuse of the
process of the Court. The Metropolitan Magistrate rejected
his prayer. Aggrieved, the appellant preferred criminal B
revision application which was dismissed by the High
Court by the impugned order.
In the instant appeal, dispute arose as to whether the
Enforcement Directorate (ED) could prosecute the
appellant in a proceeding under Section 56 of the FERA C
when on the self-same facts and cause of action, the
respondent-adjudicating authority· had dropped the
charges framed against the appellant under Section 50
of the FERA.
D
It was contended on behalf of the appellant that
standard of proof required to bring home the charge in a
criminal case is much higher than the adjudication
proceeding and once the appellant was exonerated in the
adjudication proceeding, his prosecution was an abuse E
of the process of Court.
Allowing the appeal (per majority),
Per Chandramauli Kr. Prasad, J. (for Harjit Singh Bedi, J.
and himself):
F
HELD: 1. Section 50 of the Foreign Exchange
Regulation Act, 1973 (FERA) provides for mandatory
penalty and fixes the outer limit of such penalty on any
person contravening the provisions of the Act which is G
to be adjudged by the Director of Enforcement or any
other officer of the Enforcement not below the rank of an
Assistant Director empowered by the Central Government.
The procedure and the power to adjudicate penalty has
-:~~
.
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SUPREME COURT REPORTS
[2011] 4 S.C.R.
A been provided under Section 51 of the Act. From a plain
reading of Section 51 of the Act it is evident that for
adjudging the penalty under Section 51 of the Act for
contravention of the provisions of the Act or any rule,
direction or order made thereunder the adjudicating
B officer is to be satisfied that the person has committed
the contravention after holding an inquiry in the
prescribed manner and after giving the person
concerned a reasonable opportunity of making
representation. Thus besides the procedural requirement
c the sine qua non for imposition of penalty under Section
51 of the Act is that the adjudicating officer has to record
its satisfaction that the person concerned has committed
the contravention of any of the provisions of the Act or
of any rule, direction or order made thereunder. [Paras
D 8, 9) [903-E-H; 904-A-G]
2. As would be evident from the preamble of the
FERA, it was enacted for the conservation of foreign
exchange resources of the Country and the proper
utilization thereof in the economic development of the
E Country. The proceedings under Section 51 and 56 of the
Act are independent of each other and the finding in an
adjudication proceeding under Section 51 of the Act is
not binding in the proceeding for prosecution under
Section 56 of the Act and both can go hand in hand.
F Further, the prosecution can be launched even before
conclusion of adjudication proceeding under Section 51
of the Act. [Paras 10, 11] [904-H; 905-H; 906-A-C]
3, The standard of proof in a criminal case is much
G higher than that of the adjudication proceeding. The
Enforcement Directorate has not been able to prove its
case in the adjudication proceeding and the appellant has
been exonerated on the same allegation. The appellant
is facing trial in the criminal case. Therefore, the
H determination of facts in the adjudication proceeding
•
RADHEYSHYAM KEJRIWAL v. STATE OF WEST
893
BENGAL
cannot be said to be irrelevant in the criminal case.
A
However, the finding in an adjudication proceeding is not
binding in the proceeding for criminal prosecution. A
person held liable to pay penalty in adjudication
proceeding cannot necessarily be held guilty in criminal
trial. Adjudication proceedings are decided on the basis
B
of preponderance of evidence of a little higher degree
whereas in a criminal case entire burden to prove beyond
all reasonable doubt lies on the prosecution. [Paras 15,
16] [909-H; 910-A-B; 911-F-G]
4. The yardstick would be to judge as to whether c
allegation in the adjudication proceeding as well as
proceeding for prosecution is identical and the
exoneration of the person concerned in the adjudication
proceeding is on merits. In case it is found on merit that 0
there is no contravention of the provisions of the Act in
the adjudication proceeding, the trial of the person
concerned shall be in abuse of the process of the court.
[Para 19) [916-A-B]
5. In the instant case, in the adjudication proceeding
E
on merit the adjudicating authority has categorically held
that "the charges against Shri Radheshyam Kejriwal for
contravening the provisions of Section 9(1 )(f)(i) and
Section 8(2) read with Section 64(2) of the Foreign
Exchange Regulation Act, 1973 cannot be sustained". In
F
the face of the aforesaid finding by the Enforcement
Directorate in adjudication proceeding that there is no
contravention of any of the provisions of the Act, it would
be unjust and an abuse of the process of the court to
permit the Enforcement Directorate to continue with the G
criminal prosecution. [Para 23] [919-F-!'i; 910-A]
·~
6. In the result the impugned judgment of the
Metropolitan Magistrate and the order affirming the same
H
894
SUPREME COURT REPORTS
[2011) 4 S.C.R.
A by the High Court are set aside and appellant's
prosecution is quashed. [Para 24] [920-B]
Standard Chartered Bank and others vs. Directorate of
Enforcement and others (2006) 4 SCC 278; Assistant
8
Collector of Customs, Bombay and another vs. L.R. Melwani
and another AIR 1970 SC 962 and Iqbal Singh Marwah v.
Meenakshi Marwah (2005) 4 SCC 370 - distinguished.
Uttam Chand and others vs. Income Tax Officer, Central
Circle, Amritsar (1982) 2 SCC 543; G.L. Didwania and
C Another vs. Income Tax Officer and Another 1995 Supp (2)
SCC 724 and K. C. Builders and Another vs. Assistant
Commissioner of Income Tax (2004) 2 SCC 731 - relied on.
Hemendra M. Kothari v. Shri W. S. Vaigankar, Asstt.
0 Director, Enforcement Directorate (FERA), Govt. of India and
State of Maharashtra (decided by Bombay High Court on 2504-2007) and Sunil Gulati & Anr. V. R.K. Vohra 145 (2007)
DLT 612 - approved.
B.N. Kashyap vs. Emperor AIR (32) 1945 Lahore 23 Full
E Bench; K.G. Premshanker v. Inspector of Police (2002) 8
sec 87 - referred to.
Case Law Reference:
F
(2006) 4 sec 278
distinguished Para 11, 20
AIR 1970 SC 962
distinguished Para 12, 13
AIR (32) 1945 Lahore 23 referred to
Para 15
(2002) 8 sec 87
referred to
Para 15
G
(2005) 4 sec 370
distinguished Para 16
(1982) 2 sec 543
relied on
Para 17
H
RADHEYSHYAM KEJRIWAL v. STATE OF WEST
895
BENGAL
1995 Supp (2) SCC 724 relied on
Para 17
A
(2004) 2 sec 731
relied on
Para 17
145 (2007) DLT 612
approved
Para 22
PER SATHASIVAM, J. (dissenting):
B
HELD: 1. The Foreign Exchange Regulation Act,
1973 (FERA) being a statute relating to economic
offences, there is no reason to restrict the scope of any
provisions of the Act. These provisions ensure that no
economic loss is caused by the alleged contravention by C
the imposition of an appropriate penalty after
adjudication under Section 51 of the Act and to ensure
that the tendency to violate is guarded by imposing
appropriate punishment after due transaction in terms of
Section 56 of the Act. In fact, Section 230 of the Foreign D
Exchange Regulation Act, 1947 had a proviso, which
indicates that the adjudication for the imposition of
penalty should precede making of complaint in writing to
the court concerned for prosecuting the offender. The
absence of a similar proviso to Section 51 or to Section E
56 of the 1973 Act is a clear indication that the Legislature
intended to treat the two proceedings as independent of
each other. There is nothing in the present Act to indicate
that a finding in adjudication is binding on the Court in a
prosecution under Section 56 of the Act or that the F
prosecution under Section 56 depends upon the result
of adjudication under Section 51 of the Act. The two
proceedings are independent and irrespective of the
outcome of the decision under Section 50, there cannot
be any bar in initiating prosecution under Section 56. The G
scheme of the Act makes it clear that the adjudication by
the concerned authorities and the prosecution are distinct
and separate. No doubt, the ·conclusion of the
adjudication, in the case on hand, the decision of the
H
896
SUPREME COURT REPORTS
[2011] 4 S.C.R.
A Special Director, may be a point for the appellant and it
is for him to put forth the same before the Magistrate.
Inasmuch as FERA contains certain provisions and
features which cannot be equated with the provisions of
Income Tax Act or the Customs Act and in the light of the
B mandate of Section 56 of the FERA, it is the duty of the
Criminal Court to discharge its functions vest with it and
give effect to the legislative intention, particularly, in the
context of the scope and object of FERA which was
enacted for the economic development of the country
c and augmentation of revenue. Though the Act has since
been repealed and not available at present, those
provisions cannot be lightly interpreted taking note of the
object of the Act. [Para 23] [942-D-H; 943-A·D]
2. In view of the above, the conclusion arrived at by
D the Metropolitan Magistrate, Calcutta as well as the
decision of the High Court are upheld. [Para 24] [943-E]
G.L. Didwania and Another v. Income Tax officer and
Another 1995 Supp (2) SCC 724; K. C. Builders and Another
E
v. Assistant Commissioner of Income-Tax (2004) 2 SCC 731;
P. S. Rajya vs. State of Bihar (1996) 9 SCC 1; Uttam Chand
and Others v. Income Tax Officer, Central Circle, Amritsar
(1982) 2 sec 543 - distinguished.
Standard Chartered Bank and Others vs. Directorate of
F Enforcement and Others (2006) 4 SCC 278; K. G.
G
H
Premshanker vs. Inspector of Police and Another (2002) 8
SCC 87; Assistant Collector of Customs vs. LR. Malwani,
1969 (2) SCR 438; Iqbal Singh Marwah and Another vs.
Meenakshi Marwah and Another (2005) 4 SCC 370 - relied
on.
Asstt. Commr. vs. Ve/liappa Textiles Ltd. (2003) 11 SCC
405; ANZ Grindlays Bank Ltd. vs. Directorate of Enforcement
(2004) 6 SCC 531; Standard Chartered Bank vs. Directorate
•
RADHEYSHYAM KEJRIWAL v. STATE OF WEST
897
BENGAL
of Enforcement (2005) 4 SCC 530 - referred to.
A
B.N. Kashyap vs. Emperor AIR (32) 1945 Lahore 23 Full
Bench - referred to.
Case Law Reference:
B
1995 Supp (2) sec 724 distinguished
Para 9, 10,
11,16,19,22
(2004) 2 sec 731
distinguished
Para 9, 11
(1996) 9 sec 1
distinguished
Para 9, 12
c
(1982) 2 sec 543
distinguished
Para 9 , 13
(2006) 4 sec 278
relied on
Para 15, 22
(2002) 8 sec 87
·relied on
Para 15, 17
D
1969 (2) SCR 438
relied on
Para 15, 18,
19, 22
. (2005) 4 sec 370
relied on
Para 15, 20
AIR (32) 1945 Lahore 23
E
Full Bench
referred to
Para 15, 21
(2003) 11 sec 405
referred to
Para 16
(2004) 6 sec 531
referred to
Para 16
F
(2005) 4 sec 530
referred to
Para 16
CRIMINAL APPELLATE JURISDICTION: Criminal Appeal
No. 1097 of 2003.
From the Judgment & Order dated 10.08.2001 of the High
G
Court of Calcutta in C.R.R. No. 3593 of 1997.
A. Sharan, Punet Jain, Sushil Kr. Jain, Pramod Sharma,
Anil K. Verma, Pratibha Jain for the Appellant.
H
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[2011] 4 S.C.R.
A
P.P. Malhotra. ASG, P.K. Dey, Ranjana Narayan, B.
B
Krishna Prasad. Tara Chandra Sharma, Neelam Sharma for the
Respondents.
The Judgement of the Court was delivered by
CHANDRAMAULI KR. PRASAD, J. 1. We have gone
through the draft judgment prepared by our noble and learned
Brother Sathasivam, J. and we find ourselves unable to
subscribe to the view taken by him.
c
2. Shorn of unnecessary details facts giving rise to the
present appeal are that on 22nd May, 1992 various premises
in occupation of the appellant Radheshyam Kejriwal besides
other persons were searched by the officers of the Enforcement
Directorate. The appellant was arrested on 3rd May, 1992 by
D the officers of the Enforcement Directorate in exercise of the
power under Section 35 of the Foreign Exchange Regulation
Act, 1973 (hereinafter referred to as the 'Act') and enlarged on
bail on the same day. Further the appellant was summoned by
the officers of the Enforcement Directorate to give evidence in
E exercise of the power under Section 40 of the Act and in the
light thereof his statement was recorded on various dates, viz.
22nd May, 1992, 10th March, 1993, 16th March, 1993, 17th
March, 1993 and 22nd March, 1993. On the basis of materials
collected during search and from the statement of the appellant
F it appeared to the Enforcement Directorate that the appellant,
a person resident in India, without any general or specific
exemption from Reserve Bank of India made payments
amounting to Rs.24,75,000/- to one Piyush Kumar Barodia in
March/April, 1992 as consideration for or in association with
the receipt of payment of U.S. $ 75,000 at the rate of Rs.33/-
G per U.S. Dollar by the appellant's nominee abroad in
Yugoslavia. It further appeared to the Enforcement Directorate
that transaction involved conversion of Indian currency into
foreign currency at rates of exchange other than the rates for
the time being authorised by the Reserve Bank of India. In the
H
• RADHEYSHYAM KEJRIWAL v. STATE OF WEST
899
BENGAL [CHANDRAMAULI KR. PRASAD, J.]
opinion of the Enforcement Directorate the act of the appellant A
in making the aforesaid payment of Rs.24,75,000/- in Indian
currency for foreign currency at the rate of Rs.33/- per US Dollar
against the official rate of Dollar i.e. Rs.30/- per Dollar
(approximately), contravened the provision of Section 8(2) of
the Act. Further the Said payment having been made without B
any general or special exemption from Reserve Bank of India,
the appellant had contravened the provisions of Section 9(1)(f)(i)
of the Act and accordingly rendered himself liable to imposition
of penalty under Section 50 of the Act. Enforcement Directorate
was further of the opinion that by abetting in contravening the C
provisions of Sections 9(1)(f)(i) and 8(2) of the Act read with
the provisions of the Section 64(2) of the Act the appellant has
rendered himself liable for penalty under Section 50 of the Act.
3. Accordingly, a show cause notice dated 7th May, 1993
was issued by the Special Director of the Directorate of D
Enforcement calling upon the appellant to show cause as to why
adjudication proceeding as contemplated under Section 51 of
the Act be not held against him for the contraventions pointed
above. Show cause notice dated 7th May, 1993 referred to
above led to institution of proceeding under Section 51 of the
E
Act (hereinafter referred to as the 'adjudication proceedings').
The adjudication officer came to the conclusion that the
allegation made against the appellant of contravention of the
provisions of Section 8, 9(1 )(f)(i) and Section 8(2) read with
Section 64(2) of the Act cannot be sustained. While doing so
F
the Special Director observed as follows:
The payment alleged to have been made by Shri
Radheshyam Kejriwal amounting to Rs.24,75,000/- has to
be examined in the context of Section 9(1)(f)(i) and Section G
8(2) r/w Section 64(2) of Foreign Exchange Regulation Act,
1973. The important ingredients for sustaining the
conviction under the above provisions would require the
proof of payment having been made to the credit of any
person @ exchange other than the rate which has been
H
900
A
B
c
D
E
F
G
H
SUPREME COURT REPORTS
[2011] 4 S.C.R.
authorized by the Reserve Bank of India. In the case before
me, it has not been proved beyond reasonable doubt
whether a sum of Rs.24,75,000/- has actually been paid
or not. There is no documentary evidence except the
statement of Shri Piyush Kumar Barodia and the retracted
statement of Shri Radheshyam confirming the fact that
Rs.24,75,000/- was exchanged @ of Rs.33/- per dollar.
Therefore, it is very relevant to take the above facts and
circumstances into consideration before coming to a
conclusion as to the correctness of the statements given
by S/Shri Radheshyam Kejriwal and Piyush Kumar
Barodia. The documentary evidence available and the
statements of the other co-accused will definitely throw
further light in the matter.
After considering all the above facts, I find that the
only evidence available against Shri Radheshyam Kejriwal
is the fact that his telephone number and name are
mentioned in the documents seized from Shri Piyush
Kumar Barodia and the fact that some transactions have
been noted against his name which do not match the sum
of Rs.24, 75,000/- which was alleged to have been
transferred. Secondly, there is no evidence to show that
he was indulging in any foreign exchange transaction to
transfer money abroad. In conclusion, the benefit of doubt
will have to be given to Shri Radheshyam Kejriwal in the
absence of any further evidence and also the fact that both
Raju Poddar and Babubhai Umaidmal have denied having
taken part in any such transaction. Significantly, on enquiry,
it was found that Shri Sirish Kumar Barodia, brother of
Shri Piyush Kumar Barodia staying at Bombay, was not
available for the past year during which these transactions
took place. Shri Piyush Kumar Barodia is absconding,
therefore, his case is being decided on merits. However,
since the charges against Shri Radheshyam Kejriwal for
contravening the provisions of Section 9(1 )(f)(i) and
Section 8(2) read with Section 64(2) of the Foreign
•
RADHEYSHYAM KEJRIWAL v. STATE OF WEST
901
BENGAL [CHANDRAMAULI KR. PRASAD, J.]
Exchange Regulation Act, 1973 cannot sustained, the A
charges against Shri Piyush Kumar Barodia can also not
be sustained. Therefore, the charges against S/Shri Raju
Poddar, Sirish Kumar Barodia and Babubhai Umaidmal
Jain @ Babubhai Bhansali, are not sustainable for
contravening the provisions of Section 9(1 )(f)(i) and 8(2)
B
read with Section 64(2) of the Foreign Exchange
Regulation Act, 1973.
In view of the foregoing, the proceedings initiated against
S/Shri Piyush Kumar Barodia, Radheshyam Kejriwal, Raju
C
Poddar, Sirish Kumar Barodia and Babubhai Umaidmal
Jain and Babubhai Bhansali, vide the impugned
Memorandum, are hereby dropped."
It is common ground that the Enforcement Directorate has
not challenged this order and it has attained finality.
D
4. It is relevant to state that any person contravening the
provisions of Sections 8 and 9 of the Act besides other
provisions is also liable to be prosecuted under Section 56 of
the Act without prejudice to any award of penalty by the E
adjudicating officer under Section 51 of the Act. However,
before launching such prosecution for contravening such
provisions of the Act which prohibits the doing of an act without
permission, the proviso to Section 61(2) of the Act mandates
giving an opportunity to the person concerned to show that he
F
had such permission. Accordingly, by notice dated 29th
December, 1994 the appellant was given an opportunity to show
permission granted by the Reserve Bank of India. Appellant
replied to that but did not produce any permission.
5. The Enforcement Directorate on the same allegation G
which was the subject matter of adjudication proceeding laid
complaint against the appellant for prosecution under Section
56 of the Act before the Metropolitan Magistrate. After the
issuance of process and exoneration in the adjudication
proceeding appellant filed application for dropping the H
902
SUPREME COURT REPORTS
[2011) 4 S.C.R.
A
proceedings, inter alia, contending that on the same allegation
the adjudication proceedings having been dropped and the
appellant exonerated, his continued prosecution is an abuse
of the process of the Court. The Metropolitan Magistrate by
order dated 2nd September, 1997 rejected his prayer.
B
Aggrieved by the same appellant preferred criminal revision
application and reiterated the same submission but it did not
find favour with the Calcutta High Court and by the impugned
order dated 10th August, 2001, it rejected the revision
application. While doing so it observed as follows:
c
D
E
F
G
H
"Therefore, the contention of Mr. Ghosh is unacceptable
that in the adjudication proceedings being held by the
department concerned the allegations against the
petitioner having not been found established the
prosecution against him before a Court of law cannot have
any legs to stand upon, since the same departmental
authority which held the enquiry against him and found no
materials for establishing his guilt cannot be expected to
lodge the prosecution on the self-same allegations against
that person before a Court and cannot be expected to take
a different stand on the self-same materials as available
against him on the record. As we have noted above, the
Enforcement Officer who has investigated into the case is
a different agency from that of the adjudicating officer and,
what is more important, it cannot be taken for granted that
the Court will take the same view on the materials on record
which have prompted the departmental authority to find the
allegations not substantiated. As it has been already
pointed out, the procedure according to which the trial of
such an accused by the Court it held has some special
features and the two testing processes are so divergent
that there is ample scope for the two parallel authorities
to hold even diametrically opposite views so far as the
question of proof of the charge against the accused is
concerned. The most of decisions relied upon by Mr.
Ghosh and discussed above in respect of his above
•
RADHEYSHYAM KEJRIWAL v. STATE OF WEST
903
BENGAL [CHANDRAMAULI KR. PRASAD, J.]
contention cannot be attracted to our present case for the
A
simple reason that none of those judicial pronouncements
are relating to a case under the Foreign Exchange
Regulation Act the provisions of which cannot be equated
with those of the Income Tax Act or Customs Act."
B
6. Being aggrieved, the appellant is before us with the
leave of the Court.
7. Mr. Amarendra Sharan, Senior Counsel appearing on
behalf of the appellant submits that standard of proof required
to bring home the charge in a criminal case is much higher than
C
the adjudication proceeding and once the appellant has been
exonerated in the adjudication proceeding, his prosecution is
an abuse of the process of Court. Mr. P.P. Malhotra, Additional
Solicitor General, however, contends that from the scheme of
the Act as reflected from Sections 50, 51, 56 of the Act, the
D
plea put forth by the appellant is unsustainable.
8. The submissions made necessitate examination of the
scheme of the Act. Section 50 of the Act which is relevant for
the purpose reads as follows:
50. Penalty.- If any person contravenes any of the
provisions of this Act other than section 13, clause (a) of
sub-section (1) of section 18, section 18A and clause (a)
E
of sub-section (1) of Section 19 or of any rule, direction or
order made thereunder, he shall be liable to such penalty
F
not exceeding five times the amount or value involved in
any such contravention or five thousand rupees, whichever
is more, as may be adjudged by the Director of
Enforcement or any other officer of Enforcement not below
the rank of an Assistant Director of Enforcement specially
G
empowered in this behalf by order of the Central
Government in either case hereinafter referred to as the
adjudicating officer.
The aforesaid provision provides for mandatory penalty
H
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904
SUPREME COURT REPORTS
[2011] 4 S.C.R.
A and fixes the outer limit of such penalty on any person
contravening the provisions of the Act which is to be adjudged
by the Director of Enforcement or any other officer of the
Enforcement not below the rank of an Assistant Director
empowered by the Central Government. The procedure and the
B power to adjudicate penalty have been provided under Section
c
D
51 of the Act, which reads as follows:
51. Power to adjudicate.- For the purpose of adjudicating
under section 50 whether any person has committed a
contravention of any of the provisions of this Act other than
those referred to in that section or of any rule, direction or
order made thereunder, the adjudicating officer shall hold
an inquiry in the prescribed manner after giving that person
a reasonable opportunity for making a representation in
the matter and if, on such inquiry, he is satisfied that the
person has committed the contravention, he may impose
such penalty as he thinks fit in accordance with the
provisions of that section.
9. From a plain reading of Section 51 of the Act it is
E evident that for adjudging the penalty under Section 51 of the
Act for contravention of the provisions of the Act or any rule,
1<'
direction or order made thereunder the adjudicating officer is
to be satisfied that the person has committed the contravention
after holding an inquiry in the prescribed manner and after
F giving the person concerned a reasonable opportunity of
making representation. Thus besides the procedural
requirement the sine qua non for imposition of penalty under
Section 51 of the Act is that the adjudicating officer has to
record its satisfaction that the person concerned has committed
G the contravention of any of the provisions of the Act or of any
rule, direction or order made thereunder.
10. As would be evident from the preamble of the Act, it
was enacted for the conservation of foreign exchange
resources of the Country and the proper utilization thereof in
H the economic development of the Country. It is relevant here to
•
RADHEYSHYAM KEJRIWAL v. STATE OF WEST
905
BENGAL [CHANDRAMAULI KR. PRASAD, J.]
mention that the Forty Seventh Report of the Law Commission A
of India on the Trial and Punishment of Social and Economic
Offences quoted the following portion from the Report of the
Study Team on Leakage of Foreign Exchange through Invoice
Manipulation:
B
" ... like the Customs Act, there should be a provision that
for an offence in the Foreign Exchange Regulation Act,
both adjudication by the Director of Enforcement and
conviction by a Court of law are possible. The two should
not be alternatives as at present. We would also suggest C
that in more and more cases, prosecution should also be
launched apart from adjudication so as to have a deterrent
effect."
Bearing in mind aforesaid the Legislature in order to
ensure that no economic loss is caused by the contravention D
provided for an appropriate penalty under Section 51 of the Act
and to prevent the tendency to violate is curbed by inserting
Section 56 of the Act providing for imposing appropriate
punishment after due prosecution, relevant portion whereof
reads as follows:
E
"56. Offences and prosecutions.- (1) Without
prejudice to any award of penalty by the adjudicating officer
under this Act, if any person contravenes any of the
provisions of this Act other than section 13, clause (a) of
sub- section (1) of section 18, section 18 A, clause (a) of F
sub- section (1) of section 19, sub- section (2) of section
44 and sections 57 and 58, or of any rule, direction or
order made thereunder, he shall, upon conviction by a
court, be punishable,-
xxx
xxx
)()()(
)()()(
11. With deepest respect we are entirely in agreement
with the conclusion of our learned Brother Sathasivam, J. that
G
the proceedings under Section 51 and 56 of the Act are H
•
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SUPREME COURT REPORTS
[2011] 4 S.C.R.
A independent of each other and the finding in an adjudication
proceeding under Section 51 of the Act is not binding in the
proceeding for prosecution under Section 56 of the Act and
both can go hand in hand. Further, the prosecution can be
launched even before conclusion of adjudication proceeding
B under Section 51 of the Act. In fact, it has explicitly been said
by this Court in the case of Standard Chartered Bank and
others vs. Directorate of Enforcement and others (2006) 4
sec 278 which is as follows :
c
D
E
"24.There is nothing in the Act to indicate that a finding in
an adjudication is binding on the court in a prosecution
under Section 56 of the Act. There is no indication that the
prosecution depends upon the result of the adjudication.
We have already held that on the scheme of the Act, the
two proceedings are independent. The finding in one is not
conclusive in the other. In the context of the objects sought
to be achieved by the Act, the elements relied on by the
learned Senior Counsel, would not justify a finding that a
prosecution can be launched only after the completion of
an adjudication under Section 51 of the Act."
12. However, in a case like the present one in which the
penalty proceeding under Section 51 of the Act and the
prosecution under Section 56 of the Act though launched
together but the penalty proceeding culminated earlier
F exonerating the person, the question would arise as to whether
continuance of the prosecution would be permissible or not. In
other words, the question with which we are concerned is the
impact of the findings which are recorded on the culmination
of adjudication proceeding on criminal proceeding and in case
G in the adjudication proceeding person concerned is exonerated
can he ask for dropping of the criminal proceeding on that
ground alone. Mr. Malhotra submits that finding in the
adjudication proceeding cannot either operate as estoppel or
res judicata in case of prosecution under Section 56 of the Act
H and in this connection, he has drawn our attention to a
•
RADHEYSHYAM KEJRIWAL v. STATE OF WEST
907
BENGAL [CHANDRAMAULI KR. PRASAD, J.]
Constitution Bench judgment of this Court in the case of the A
Assistant Collector of Customs, Bombay and another vs. L.R.
Me/wani and another AIR 1970 SC 962, wherein in paragraph
8, it has been held as follows :
"8. We shall now take up the contention that the finding of B
the Collector of Customs referred to earlier operated as
an issue estoppel in the present prosecution. The issue
estoppel rule is but a facet of the doctrine of autre fois
acquit."
)()()()(
)()()()(
)()()()(
)()()()(
c
But before an accused can call into aid the above rule, he
must establish that in a previous lawful trial before a
competent court, he has secured a verdict of acquittal
which verdict is binding on his prosecutor. In the instant 0
case for the reasons already mentioned, we are unable to
hold that the proceeding -before the Collector of Customs
is a criminal trial. From this it follows that the decision of
the Collector does not amount to a verdict of acquittal in
favour of accused Nos. 1 and 2."
We do not find any substance in the submission of Mr.
Malhotra and the decision relied on has no bearing in the facts
and circumstances of the case.
E
13. In L.R. Melwani's case (supra), the accused persons
F
resisted their prosecution on the ground that the Collector of
Customs having given the benefit of doubt, in view of the
guarantee granted under Article 20 (2) of the Constitution for
the same offence they can not be tried more than once. It was
also contended that that person once convicted or acquitted can G
not be tried for same offence again in view of the safeguard
provided under Section 403 of Code of Criminal Procedure,
1898, which corresponds to Section 300 of the Code of·
Criminal Procedure, 1973. In order to get benefit of Section 300
H
•
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SUPREME COURT REPORTS
[2011] 4 S.C.R.
A
of the Code of Criminal Procedure, 1973, it is necessary for
an accused person to establish that not only he had been tried
by a Court of competent jurisdiction for an offence but convicted
or acquitted of that offence and the said conviction or acquittal
is in force. In the aforesaid background the question which fell
B
for consideration before this Court was as to whether the
proceeding before the Collector of Customs is a criminal trial
by a court of competent jurisdiction for trial of offence. On
analysis of the various authorities of this Court, the Constitution
Bench came to the conclusion that the Collector of Customs
c was not a Court of competent jurisdiction for criminal trial. This
would be evident from the following passage from the said
judgment:-
D
E
F
" ....... Hence the question is whether that
prosecution is barred under Article 20 (2) of the
Constitution which says that no person shall be prosecuted
and punished for the same offence more than once. This
Article has no direct bearing on the question at issue.
Evidently those accused persons want to spell out from this
Article the rule of autre fois acquit embodied in S.403,
Criminal Procedure Code. Assuming we can do that, still
it is not possible to hold that a proceeding· before the
Collector of Customs is a prosecution for an offence. In
order to get the benefit of Section 403, Criminal Procedure
Code or Article 20 (2), it is necessary for an accused
person to establish that he had been tried by a "Court of
competent jurisdiction" for an offence and he is convicted
or acquitted of that offence and the said conviction or
acquittal is in force .... ."
G
14. In the present case, it is not the case of the appellant
that they were tried by the Enforcement Directorate and
therefore further trial by the criminal court is not permissible but
their contention is that in the face of the finding in the
adjudication proceeding, their continued prosecution is an
H abuse of the process of the court. In view of what we have
•
RADHEYSHYAM KEJRIWAL v. STATE OF WEST
909
BENGAL [CHANDRAMAULI KR. PRASAD, J.]
observed above, the contention of Mr. Malhotra is without merit
A
and the decision relied on in no way supports his contention.
15. Mr. Malhotra, then contends that finding of the
Enforcement Directorate in the adjudication proceedings is not
binding or relevant in the criminal court where the appellant is
B
facing the trial. In support of the contention, reliance has been
placed on a full Bench decision of the Lahore High Court in the
case of B.N. Kashyap vs. Emperor AIR (32) 1945 Lahore 23
and our attention has been drawn to the following passage:
"There is no reason in my judgment as to why the
C
decision of the civil Court particularly in an action in
personam should be allowed to have that sanctity. There
appears to be no sound reason for that view. To hold that
when a party has been able to satisfy a civil court as to
the justice of his claim and has in the result succeeded in
D
obtaining a decree which is final and binding upon the
parties, it would not be open to criminal Courts to go
behind the findings of the civil Court is to place the latter
without any valid reason in a much higher position than
what it actually occupies in the system of administration
E
in this country and to make it master not only of cases
which it is called upon to adjudicate but also of cases which
it is not called upon to determine and over which it has
really no control. The fact is that the issues in the two cases
although based on the same facts (and strictly speaking
F
even parties in the two proceedings) are not identical and
there appears to be no sufficient reason for delaying the
proceedings in the criminal Court, which unhampered by
the civil Court, is fully competent to decide the questions
that arise before it for its decision and where in the nature
G
of things there must be a speedy disposal."
We do not find any substance in this submission of Mr.
Malhotra also. We may observe that standard of proof in a
criminal case is much higher than that ofthe adjudication
proceeding. The Enforcement Directorate has not been able
H
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[2011) 4 S.C.R.
A to prove its case in the adjudication proceeding and the
appellant has been exonerated on the same allegation. The
appellant is facing trial in the criminal case. Therefore, in our
opinion, the determination of facts in the adjudication
proceeding cannot be said to be irrelevant in the criminal case.
B In the case of B.N. Kashyap (Supra), the full Bench had not
considered as to the effect of a finding of fact in a civil case
over the criminal cases and that will be evident from the
following passage from the said judgment :
c
D
"I must, however, say that in answering the question,
I have only referred to civil cases where the actions are in
personam and not those where the proceedings or actions
are in rem.