Merit-based exoneration in adjudication bars identical criminal prosecution under foreign exchange law when allegations are not proved.

Where adjudication under the Foreign Exchange Regulation Act, 1973 ends in exoneration on merits after consideration of the relied-upon documents, official statements and the defence materials, criminal prosecution on the same allegations cannot continue. The court applied the principle that a finding that the contravention is not proved in parallel adjudication makes identical criminal proceedings an abuse of process, and the exception for incomplete consideration of material did not apply on the facts. The criminal complaint was therefore held liable to be quashed.

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Issues: Whether the criminal complaint under the Foreign Exchange Regulation Act, 1973 could be permitted to continue after the petitioner had been exonerated on merits in the parallel adjudication proceedings on the same set of allegations.

Analysis: The adjudication order was examined to see whether the exoneration was merely technical or whether it was a finding on merits after consideration of the relevant materials. The adjudicating authority had considered the relied upon documents, the statements of the concerned officials, and the RBI-related defence, and concluded that the allegations were not proved. On that basis, the case was held to fall within the rule that where exoneration in adjudication is on merits and the allegations are found not sustainable, continuation of criminal prosecution on identical facts is impermissible. The exception relating to incomplete consideration of material was found inapplicable on the facts.

Conclusion: The criminal complaint could not be continued and was liable to be quashed in favour of the petitioner.

Ratio Decidendi: Where a person is exonerated on merits in adjudication proceedings on the same allegations, and the finding is that the contravention is not proved, criminal prosecution on identical facts amounts to an abuse of the process of court.

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