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Issues: Whether non-compliance with summons issued under Section 40(3) of the Foreign Exchange Regulation Act, 1973 is punishable under Section 56(1)(ii) of that Act and whether the criminal proceedings based on such non-compliance were liable to be quashed.
Analysis: Section 40(3) required a summoned person to attend, state the truth and produce documents, but it did not itself prescribe any consequence for non-appearance or non-compliance. Section 56 was held to be the penal provision, but its scheme was read as dealing with offences having reference to the amount or value involved. On that construction, non-compliance with a summons under Section 40(3) could not be treated as an offence falling within Section 56(1)(ii). The Court preferred the view that penal provisions must be construed strictly and, on that basis, accepted the view that the statutory scheme did not cover the alleged default. The contrary decision relied upon by the respondent, rendered at the admission stage without notice to the other side, was treated as lacking binding force.
Conclusion: The complaint alleging contravention of Section 40(3) was not maintainable under Section 56(1)(ii), and the prosecution was quashed.
Final Conclusion: The proceedings based on alleged non-compliance with summons under the Act were held unsustainable and terminated in favour of the petitioners.
Ratio Decidendi: A penal provision cannot be applied to non-compliance with a statutory summons unless the statute, on a strict construction, clearly brings that default within the scope of the offence created by the penal section.
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