Continuing agreement in foreign exchange matters can constitute conspiracy, and statutory adjudication does not automatically bar prosecution.

A continuing agreement to facilitate illicit acquisition and retention of foreign exchange abroad may amount to criminal conspiracy under Section 120B IPC when the arrangement persists after foreign exchange restrictions come into force and is furthered by acts in execution of the common design. The Court also held that the Foreign Exchange Regulation Act, 1947 contains a self-contained adjudication-and-complaint scheme, but that scheme does not exclude prosecution where the statutory procedure is followed; the complaint was therefore not liable to be quashed on the ground that it was premature or barred by the Act. The majority sustained the prosecution, while the dissent would have treated the allegations as insufficient and premature.

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Issues: (i) Whether, on the allegations in the complaint, the appellants could be charged with criminal conspiracy under Section 120B of the Indian Penal Code, 1860 read with the foreign exchange provisions; (ii) whether the complaint was maintainable at that stage in view of the adjudication and complaint procedure under the Foreign Exchange Regulation Act, 1947.

Issue (i): Whether, on the allegations in the complaint, the appellants could be charged with criminal conspiracy under Section 120B of the Indian Penal Code, 1860 read with the foreign exchange law provisions.

Analysis: The alleged arrangement was treated as a continuing agreement to facilitate illicit acquisition and retention of foreign exchange abroad. The Court held that the agreement, though initially relating to conduct not then expressly penalised, continued after the relevant foreign exchange restrictions came into force and was then directed to an unlawful object. The alleged acts of assistance, including keeping watch on the foreign account, bringing account statements, and continuing the arrangement after the amendments, were viewed as acts in furtherance of a common design. On that footing, the complaint was held to disclose an of conspiracy.

Conclusion: The appellants could be charged under Section 120B of the Indian Penal Code, 1860 on the allegations made.

Issue (ii): Whether the complaint was maintainable at that stage in view of the adjudication and complaint procedure under the Foreign Exchange Regulation Act, 1947.

Analysis: The Court held that the Act furnished a self-contained scheme for dealing with contraventions of the foreign exchange restrictions, including adjudication and, where warranted, complaint to court after the prescribed inquiry. The Court rejected the contention that Section 21(1) displaced conspiracy law, but held that where the acts alleged were in substance contraventions of the Act, the statutory procedure under Sections 23(1)(a) and 23D had to be followed before resort to prosecution. The complaint was therefore held not to be barred as such by the Act, and the prosecution could proceed on the facts alleged.

Conclusion: The complaint was maintainable and was not liable to be quashed on the ground urged.

Final Conclusion: The majority sustained the prosecution and refused to quash the complaint; the contrary view in dissent would have treated the allegations as insufficient and would have quashed the proceedings.

Ratio Decidendi: A continuing agreement to facilitate the illicit acquisition and retention of foreign exchange abroad may constitute criminal conspiracy, and the special statutory machinery for adjudication under the Foreign Exchange Regulation Act, 1947 does not by itself exclude prosecution where the statute is applied in accordance with its prescribed procedure.

Dissenting Opinion

The dissent held that the allegations showed, at most, post-offence assistance or facility for retention of foreign exchange and did not establish conspiracy; it further considered the complaint premature because the statutory adjudication route had not been properly pursued.

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