1984 (2) TMI 353 - HC - FEMA

Criminal Prosecution Can Proceed Independently of Adjudication Proceedings

The court held that criminal prosecution can proceed independently of adjudication proceedings, even during the pendency of an appeal. Contravention of ... - Issues Involved:1. Validity of prosecution during the pendency of appeal.2. Whether contravention of Section 9(1)(b) constitutes an offence.3. Basis of prosecution on incorrect and irrelevant particulars.4. Consideration of government policy on repatriation.5. Adequacy of adjudication proceedings versus criminal prosecution.6. Alleged arbitrary action and violation of Article 14.7. Requirement of a show cause notice before filing a complaint.Detailed Analysis:1. Validity of prosecution during the pendency of appeal:The petitioner argued that the criminal prosecution should not proceed while his appeal against the adjudication order was pending. The court clarified that the power to adjudicate under Section 51 and the right to prosecute under Section 56 of the Foreign Exchange Regulation Act, 1973, are independent. Section 56 explicitly states that criminal prosecution can proceed 'without prejudice to any award of penalty by the adjudicating officer.' Thus, the criminal prosecution is independent of the adjudication proceedings, and the pendency of the appeal does not bar the prosecution.2. Whether contravention of Section 9(1)(b) constitutes an offence:The petitioner contended that only contraventions of Sections 44 and 58 constitute criminal offences under the Act. The court refuted this, stating that Section 56 penalizes contraventions of various sections of the Act, including Section 9(1)(b). Sections 44 and 58 deal with specific offences by Enforcement Directorate officers, while Section 56 covers broader contraventions, making the petitioner's argument untenable.3. Basis of prosecution on incorrect and irrelevant particulars:The petitioner claimed that the prosecution was based on incorrect facts, specifically regarding alleged contraventions in 1966 when he was not a repatriate. The court dismissed this argument, emphasizing that the petitioner's past conduct, regardless of his status at the time, was relevant. The court noted that the petitioner had a history of illicit monetary transactions, which justified the prosecution.4. Consideration of government policy on repatriation:The petitioner argued that the Deputy Director failed to consider the Government of India's policy granting exemptions and relaxing rules for repatriates from Sri Lanka. The court found that the exemptions were related to income-tax assessments and did not waive the restrictions under the Foreign Exchange Regulation Act. Therefore, the prosecution was justified despite the government policy.5. Adequacy of adjudication proceedings versus criminal prosecution:The petitioner argued that the Deputy Director should have chosen either adjudication or prosecution, not both. The court dismissed this argument, noting that the current Act does not require stopping adjudication proceedings if prosecution is warranted. Sections 51 and 56 operate independently, allowing for both adjudication and prosecution based on the severity of the contravention.6. Alleged arbitrary action and violation of Article 14:The petitioner claimed that the Deputy Director acted arbitrarily by prosecuting him while showing leniency to another individual, Amirdham. The court found that the facts of Amirdham's case were different, and he was not a repeat offender like the petitioner. The decision to prosecute depends on the specific facts of each case, and there was no violation of Article 14.7. Requirement of a show cause notice before filing a complaint:The petitioner argued that the Deputy Director should have issued a show cause notice before filing the criminal complaint, as mandated by the proviso to Section 61(2). The court held that the proviso requires an opportunity to show cause at some point before the complaint, not necessarily immediately before filing. Since a show cause notice was issued during the adjudication proceedings, it satisfied the requirement, making a second notice unnecessary.Conclusion:The petition to quash the proceedings was dismissed. The court instructed the trial court to dispose of the case on its merits, uninfluenced by the dismissal of the petition or the observations made in the judgment.