Final exoneration in adjudication can bar criminal prosecution on identical FERA allegations as abuse of process.

Adjudication and prosecution under the Foreign Exchange Regulation Act, 1973 are generally separate, so criminal proceedings may ordinarily proceed independently of adjudication. However, where the competent adjudicating authority has finally exonerated the person on merits on the same allegations and identical facts, continuation of the criminal prosecution rests on a rejected factual foundation. In that situation, the higher criminal standard of proof does not save the prosecution, and proceeding further amounts to abuse of process. The text states that such a prosecution cannot be continued after final exoneration on merits.

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Issues: Whether a criminal prosecution under section 56 of the Foreign Exchange Regulation Act, 1973 could continue when the accused had already been exonerated on merits in adjudication proceedings under sections 50 and 51 of that Act on the same facts.

Analysis: The adjudication mechanism under sections 50 and 51 and the prosecution mechanism under section 56 are generally independent, and prosecution may be launched without awaiting completion of adjudication. The finding in adjudication is not, as a matter of law, binding in the criminal case in every situation. However, where the adjudicating authority has, on the same allegations and on merits, recorded a categorical finding that the contravention is not established and has exonerated the person concerned, the criminal court is faced with a prosecution resting on a foundation already rejected by the competent authority. In such a situation, the stronger criminal standard of proof becomes material, and continuation of the prosecution would amount to abuse of process.

Conclusion: The prosecution could not be continued after a final exoneration on merits in adjudication proceedings on identical allegations. The appeal was allowed and the prosecution was quashed in favour of the assessee.

Concurring Opinion: No separate concurring opinion is recorded.

Dissenting Opinion: P. Sathasivam J. held that the statutory scheme of the Foreign Exchange Regulation Act, 1973 treated adjudication and prosecution as separate and distinct proceedings, that an adjudication finding did not bar prosecution under section 56, and that the appeal should therefore be dismissed.

Ratio Decidendi: Where a competent adjudicating authority has finally exonerated a person on merits on the same facts and identical allegations, continuation of a criminal prosecution for the same contravention is an abuse of process and cannot be permitted.

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