2009 (4) TMI 966 - HC - FEMA

Court quashes proceedings citing incorrect application of laws post-repeal, complaint's flaw, and conversion error.

BACHRAJ BENGANI Versus A.K. ROY

The High Court held that the ACMM's decision to take cognizance of the offence under Section 174 IPC was erroneous post-repeal of FERA by FEMA. The ... - ISSUES PRESENTED AND CONSIDERED 1. Whether non-compliance with a summons issued under Section 40 of the repealed Foreign Exchange Regulation Act (FERA) can be prosecuted under Section 174 IPC when the Supreme Court has held such conduct is punishable only under Section 56 FERA. 2. Whether a complaint that alleges an offence under Section 174 IPC but omits reference to Section 56 FERA supports cognizance and subsequent conversion of a summons case into a warrant case under Section 259 CrPC. 3. Whether, after repeal of FERA and the commencement of the Foreign Exchange Management Act (FEMA) with its Section 49(3) sunset provision, a court may take cognizance after the sunset period of an offence punishable under Section 56 FERA that was allegedly committed prior to repeal. 4. Whether an irregularity in the original cognizance entry (mentioning Section 174 IPC instead of Section 56 FERA) is curable under Section 465 CrPC or is an incurable defect affecting maintainability. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Legal framework: The statutory scheme distinguishes offences under IPC from specific penal provisions in FERA. Section 56 FERA made refusal to comply with summons under Section 40 FERA punishable under the FERA regime; Section 174 IPC is a general provision penalizing non-attendance of public servants' summons. Precedent Treatment: The Supreme Court in the authoritative decision held that refusal to comply with a summons under Section 40 FERA falls within Section 56 FERA and not under Section 174 IPC, expressly overruling contrary High Court decisions. Interpretation and reasoning: Given the statutory purpose of FERA summonses (compulsory production/statement, judicial-proceeding character) and the specific penal scheme, the plain meaning of Section 56 attracts punishment for non-compliance; allowing prosecution under Section 174 IPC would circumvent the special statutory regime. Ratio vs. Obiter: The Supreme Court ruling is treated as ratio and binding on the question whether FERA non-compliance can be tried under Section 174 IPC. Conclusion: The Court holds that non-compliance with a Section 40 FERA summons cannot be tried under Section 174 IPC; attempts to proceed on that basis render the complaint unsustainable. Issue 2 - Legal framework: Criminal procedure requires that the offence in the complaint must reflect the true statutory provision; classification affects mode of trial (summary vs. warrant) and available punishment. Precedent Treatment: General principles permit amendment of complaints in certain circumstances, but amendments cannot be used to revive time-barred or jurisdictionally barred claims. Interpretation and reasoning: Where the original complaint and the cognizance order expressly record only Section 174 IPC, the record demonstrates that the court treated the matter as a summary trial offence. Conversion to a warrant case under Section 259 CrPC depends on a valid cognizance of a non-summary (warrant) offence; absent any application or cognizance expressly under Section 56 FERA, conversion is improper. Ratio vs. Obiter: This conclusion operates as a ratio on maintainability and mode of trial in the specific factual posture where the complaint omitted the correct statutory provision. Conclusion: The court erred in converting the summons case to a warrant trial when the complaint and early cognizance recorded only Section 174 IPC; no valid foundation existed to proceed under Section 56 FERA. Issue 3 - Legal framework: Section 49(3) of FEMA (the saving/sunset provision) bars any court from taking cognizance of an offence under the repealed FERA after two years from FEMA's commencement; thus there was a discrete window during which FERA offences could be cognized. Precedent Treatment: Statutory sunset provisions are construed strictly; penal statutes and jurisdictional bars cannot be waived by prejudice or pragmatic considerations. Interpretation and reasoning: Even if the conduct pre-dated repeal, the power to take cognizance of a FERA offence had to be exercised within the statutory window. The learned magistrate's retrospective invocation of Section 56 FERA as of the original cognizance date effectively attempted to bypass the statutory bar, which the record does not support because the original cognizance was limited to Section 174 IPC and there was no prior application to amend within the sunset period. Ratio vs. Obiter: The strict interpretation of Section 49(3) as jurisdictional and time-baring is applied as ratio in invalidating post-sunset cognizance attempts. Conclusion: No cognizance of a Section 56 FERA offence could lawfully be taken after the expiry of the Section 49(3) period; attempting to treat the 1991 cognizance as encompassing Section 56 FERA is unsupported by the record and legally impermissible. Issue 4 - Legal framework: Section 465 CrPC and allied principles allow curative amendments for irregularities, but distinctions exist between curable irregularities and incurable jurisdictional defects that affect maintainability. Precedent Treatment: Courts have allowed amendments where the fundamental character of the offence and trial mode remain unaffected; however, amendments cannot be used to change the very nature of the offence so as to negate statutory bars or alter trial procedure improperly. Interpretation and reasoning: The omission of Section 56 FERA changed the complaint's legal complexion (summary vs. warrant, punishment quantum). That is not a mere procedural irregularity susceptible to being cured retrospectively. Treating the omission as curable would permit circumvention of the FEMA sunset and improperly expand magistrate jurisdiction under Section 259 CrPC. Ratio vs. Obiter: This determination - that the omission was an incurable defect in the circumstances - forms a ratio applicable where amendment would contravene a statutory time bar or alter trial character. Conclusion: The defect was not a mere irregularity curable under Section 465 CrPC; it vitiated maintainability and precluded conversion or post-sunset cognizance. Overall Conclusion: The Complaint Case founded and proceeded upon as one under Section 174 IPC is unsustainable given binding precedent that FERA summons non-compliance is triable only under Section 56 FERA; because the complaint never invoked Section 56 FERA and no cognizance or application to substitute/amend was made within the FEMA Section 49(3) window, subsequent attempts to treat the matter as a Section 56 FERA offence or to convert the proceeding into a warrant trial are legally impermissible. The proceedings based on the impugned orders are accordingly quashed.