2015 (3) TMI 687 - HC - FEMA

Court quashes summoning order for non-compliance in FERA/FEMA case

The court quashed the summoning order dated 27th May 2002 in a case involving the quashing of a criminal complaint under FERA and FEMA provisions. It ... Misuse of telephone line - one ISDN line was made a permanent channel at each of the above premises and thereafter by using sophisticated equipment international calls were being distributed to Delhi & nearby areas illegally through PSTN (Public Switch Telephone Network) - One ISDN line has a bandwidth of 144 Kbps and this bandwidth was misused to make about 24 voice calls in one single ISDN call, which caused loss equivalent to the charges for 22 lSD calls to the Govt. of India in terms of foreign exchange - Held that:- statutory requirement of issuance of notice under proviso of Section 61(2)(ii) of the FERA, its date and manner as well as the failure to consider the petitioner's reply has resulted in manifest error in the exercise of jurisdiction by ACMM . The order taking cognizance in the instant case and issuance of summons is contrary to law. Thus impugned order of cognizance and summoning of petitioner by ACMM vide order-dated 27th May, 2002, is illegal and is against the settled law and is liable to be quashed as the petitioner was not given opportunity as envisaged in law under Section 61 of the FERA which is apparent from the fact that complaint was filed and initiated in a haste manner before the ACMM even before the expiry of the period of opportunity granted to petitioner and the Trial Court in utter ignorance of the right given to the petitioner under Section 61 (2) and the bar imposed upon. The Trial Court thereby upon taking cognizance, issued process against the petitioner, which is apparent from the fact that the trial court did not even record in the impugned order about the fulfillment of statutory and mandatory requirement of Section 61 (2) of the FERA. With regard to Show Cause Notice for adjudication proceedings dated 4th April, 2002, which was served upon the petitioner on 22nd August 2002 i.e. after filing of the complaint, which was replied by petitioner vide reply dated in 19th September, 2002. - It is admitted fact that no proof of service of notice was filed by the respondent at the time of filing the complaint on 27th May, 2002 to establish that an opportunity in terms with Section 61 (2) was given to the petitioner and the petitioner failed to respond the same by showing that it has permission from the RBI or not making him liable for prosecution under Section 56 of the FERA. Legal bar imposed in proviso to Section 61 of the FERA, is ought to have satisfied himself at the first instance before issuance of the process about compliance of proviso to Section 61 (2) about the factum of opportunity given to the accused and his satisfaction to this effect must be there before taking cognizance against the petitioner in exercise of his legal duty, as there is a statutory bar imposed upon the ACMM from taking cognizance. If the trial court would have exercised his legal duty diligently in terms of Section 61 (2) of the FERA the cognizance could not have been taken for want of granting an opportunity to the petitioner, as done by the trial court in a mechanical manner. - Impugned order is liable to be set aside - Decided in favour of appellant. Issues Involved:1. Quashing of the criminal complaint under Section 56 of FERA read with Section 49 (3) & (4) of FEMA.2. Validity of the summoning order dated 27th May 2002.3. Compliance with statutory and mandatory provisions of FERA, specifically Section 61(2)(ii).4. Alleged procedural lapses and denial of natural justice.5. Relevance and application of previous judgments, particularly Devashis Bhattacharya vs. Union of India.Detailed Analysis:1. Quashing of the Criminal Complaint:The petitioner sought the quashing of Complaint No. 880/1 titled 'Enforcement Directorate vs. Sanjay Malviya & Ors.' and the summoning order dated 27th May 2002. The complaint was filed under Section 56 of FERA read with Section 49 (3) & (4) of FEMA. The petitioner argued that the complaint was filed hastily and without observing the statutory provisions of FERA, particularly Section 61(2)(ii).2. Validity of the Summoning Order:The ACMM took cognizance of the offence and summoned the accused on 27th May 2002. The petitioner challenged this order, arguing that it was issued without proper application of judicial mind and without compliance with the mandatory provisions of FERA. The court found that the summoning order was issued in a mechanical manner and without satisfying the statutory requirements, thus making it illegal.3. Compliance with Statutory and Mandatory Provisions of FERA:The petitioner contended that the respondent did not observe the statutory and mandatory provisions of FERA before initiating the proceedings. Section 61(2)(ii) of FERA requires that no magistrate shall take cognizance of the complaint unless the accused is given an opportunity to show that they had the necessary permission. The court agreed that the statutory requirement of issuance of notice and its proper service was not fulfilled, leading to a manifest error in the exercise of jurisdiction by the ACMM.4. Alleged Procedural Lapses and Denial of Natural Justice:The petitioner argued that the opportunity notice dated 17th May 2002 was served on 23rd May 2002, giving only three days to respond, which included public holidays. The complaint was filed on 27th May 2002, before the expiry of the notice period, denying the petitioner an opportunity to respond adequately. The court found that this amounted to a denial of natural justice as envisaged in Section 61(2) of FERA.5. Relevance and Application of Previous Judgments:The petitioner relied on the judgment in Devashis Bhattacharya vs. Union of India, where similar issues were discussed, and the proceedings were quashed. The court noted that the present case was covered by the principles laid down in the Devashis Bhattacharya case. The respondent's reliance on the case of 'Ranjit Raj & Ors. Vs. Sanjay Mishra & Anr.' was found to be inapplicable to the present facts.Conclusion:The court concluded that the summoning order dated 27th May 2002 was issued without proper compliance with the statutory requirements of FERA and in a mechanical manner. The order was quashed, and the petition was allowed. The court emphasized the importance of following the statutory provisions and principles of natural justice in such proceedings.No Costs:The court did not award any costs.