1995 (9) TMI 247 - HC - Companies Law

Court clarifies appeal pendency doesn't block prosecutions under Foreign Exchange Act, stresses harmonious interpretation. Discretionary adjournment upheld, speedy appeal disposal urged.

Assistant Director, Enforcement Directorate Versus Hameed Jahuffer

The court clarified that the pendency of appeals under Section 52 does not bar prosecutions under Section 57 of the Foreign Exchange Regulation Act, 1973. ... Appeals to Appellate Board, Penalty for contravention of order made by adjudicating officer, etc. Issues Involved:1. Interaction between proceedings under Section 52 and Section 57 of the Foreign Exchange Regulation Act, 1973.2. The impact of pending appeals on the prosecution under Section 57.3. The obligations of the Appellate Board regarding the disposal of appeals and applications for dispensing with the pre-deposit of penalties.4. The discretionary powers of the criminal court in handling prosecutions under Section 57.Issue-wise Detailed Analysis:1. Interaction between Proceedings under Section 52 and Section 57 of the Foreign Exchange Regulation Act, 1973:The court discussed the relationship between Section 52, which deals with appeals against adjudication orders and the dispensation of penalty deposits, and Section 57, which pertains to prosecution for failure to pay penalties. It was argued that there is no direct interaction between these sections, and the pendency of an appeal under Section 52 does not bar prosecution under Section 57. The court held that the right of appeal and the right to prosecute must be harmoniously construed to ensure neither is rendered ineffective.2. The Impact of Pending Appeals on the Prosecution under Section 57:The court reviewed various precedents and concluded that the pendency of an appeal does not automatically bar prosecution. It cited the Supreme Court's decision in P. Jayappan v. S.K. Perumal, ITO, which established that criminal prosecution can proceed independently of reassessment or appeal proceedings. The court emphasized that the prosecution launched under Section 57 cannot be deemed premature solely because an appeal or application for dispensing with the pre-deposit of the penalty is pending.3. The Obligations of the Appellate Board Regarding the Disposal of Appeals and Applications for Dispensing with the Pre-deposit of Penalties:The court highlighted the statutory obligation of the Appellate Board to expeditiously dispose of appeals and applications for dispensing with the pre-deposit of penalties. It stressed that the Board must act without undue delay to ensure the rights of appellants are not prejudiced. The court noted that the Appellate Board should devise procedures to handle these applications within a reasonable time frame to prevent arbitrary enforcement of Section 57.4. The Discretionary Powers of the Criminal Court in Handling Prosecutions under Section 57:The court affirmed that the criminal court has discretionary power to adjourn or postpone proceedings if the outcome of an appeal under Section 52 could impact the prosecution. However, this discretion must be exercised judicially to avoid frustrating the objectives of the criminal proceedings. The court also acknowledged that if an appeal results in the setting aside of the adjudication order, it would significantly influence the prosecution, potentially leading to the dropping of charges.Conclusion:The court set aside the order of the learned single judge, dismissed the writ petition, and clarified that the criminal court retains the discretion to handle prosecutions under Section 57 in light of pending appeals. The Appellate Board must act promptly on appeals and applications for dispensing with pre-deposits to ensure justice and effective operation of the law.