Non-compliance with FERA summons may attract penalty, but prosecution fails without prima facie proof of wilful disobedience.

Non-compliance with a summons issued under Section 40(3) of the Foreign Exchange Regulation Act, 1973 may attract penal liability under Section 56(1)(ii), because that provision is not confined to contraventions involving a monetary amount. However, criminal proceedings cannot continue unless the complaint and admitted materials disclose a prima facie case of refusal or wilful disobedience. Where the record shows repeated requests for time on health grounds, cooperation, and later appearance for interrogation, it does not establish deliberate non-compliance. In such circumstances, continuation of the prosecution amounts to abuse of process, and the proceedings are liable to be quashed under the inherent powers of the court.

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Issues: (i) whether non-compliance with summons issued under Section 40(3) of the Foreign Exchange Regulation Act, 1973 attracts penal liability under Section 56(1)(ii); (ii) whether the complaint disclosed a prima facie case of refusal or disobedience of summons so as to justify continuation of the criminal proceedings.

Issue (i): whether non-compliance with summons issued under Section 40(3) of the Foreign Exchange Regulation Act, 1973 attracts penal liability under Section 56(1)(ii).

Analysis: The legal position was governed by the Supreme Court interpretation of Sections 40 and 56 of the Act. A summons issued under Section 40, if not obeyed, constitutes contravention of the Act or of a direction issued thereunder. Section 56 is not confined to offences involving a money value or amount; the expression 'in any other case' in Section 56(1)(ii) has no restrictive meaning limiting its operation to value-based contraventions.

Conclusion: Non-compliance with Section 40(3) can fall within Section 56(1)(ii), and the contention that absence of monetary involvement excludes penal liability was rejected.

Issue (ii): whether the complaint disclosed a prima facie case of refusal or disobedience of summons so as to justify continuation of the criminal proceedings.

Analysis: The allegations and admitted materials showed repeated responses by the petitioner seeking time on health grounds, enclosing documents, and expressing willingness to appear. The record did not show refusal or deliberate disobedience; rather, it showed cooperation and requests for adjournment. The complaint therefore did not make out a prima facie offence. Continuation of the prosecution, especially after the petitioner had later appeared, been interrogated, arrested, and remanded, would amount to abuse of process of Court. The inherent power under Section 482 of the Code of Criminal Procedure, 1973 was held to be available to secure the ends of justice.

Conclusion: The proceedings were liable to be quashed because no prima facie contravention under Section 40(3) was established.

Final Conclusion: The criminal proceedings were set aside as the complaint did not disclose a sustainable offence and their continuation was held to be an abuse of process.

Ratio Decidendi: Failure to obey a summons under Section 40 of the Foreign Exchange Regulation Act, 1973 may fall within Section 56, but criminal proceedings can be quashed where the admitted materials do not show wilful disobedience or refusal and instead reveal cooperation and bona fide requests for time.

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