Elite Optical Industries vs Assistant Director of Enforcement

The petitioners are accused 1 and 2 in E.O.C.O. No. 650 of 1986 on the file of the Additional Chief Metropolitan Magistrate (Economic

Offences) No. 1 Madras.

Accused 1 is a partnership firm engaged in the manufacture of spectacle frames which are sold locally as well as exported. Accused 2 is one of

the partners of accused 1 firm and he is looking after the affairs connected with the import and export in the firm.

The Intelligence Wing of the Income Tax Department, Madras searched the office premises of accused 1 firm on 6-7-1982 as well as the

residential premises of accused 2, Certain incriminating documents were seized during the course of search. The Deputy Director of Inspection,

[Intelligence], Income Tax, Madras-34 given information to the office of the Assistant Collector, Enforcement Directorate, Government of India,

26, Haddows Road, Madras-6 the respondent herein about the seizure of the documents, of the Foreign Exchange Regulation Act, 1973

(''FERA'' for short.)

On 18-8-1982, the Enforcement Directorate, madras took over the documents seized by the Income Tax authorities u/s 33(2) of FERA. After

examining those documents, the then Deputy Director, Enforcement Directorate decided to search the premises of accused 1 under the relevant

provisions of FERA and further in - criminating documents were also seized during the course of such search.

On 19-8-1982, accused 2 was questioned with reference to the documents seized. He explained that the firm was engaged in the import of

semi-finished frames from M/s. Menrad, West Germany against import licence under customs bond for the purpose of export to made import

USSR. A statement was also recorded from him on 17-2-1983 by the Enforcement Officer in response to the summons issued u/s 40 of FERA.

Accused 1 - firm by an order u/s 33(2) dated 19-5-1983 was required to furnish copies of import invoices. The firm, by their letters dated 20-6-

1983 and 25-6-1983 furnished copies of their invoices. From all those materials, the Enforcement Directorate came to the conclusion that accused

1 and 2 violated the provisions of Sections 8(1), 8(3) and 8(4) of FERA and initiated adjudication proceedings after complying with the

requirements of law.

The Special Director, Enforcement Directorate, FERA, New Delhi by his order dated 8-11-1983, gave a finding that the materials available on

record were not adequate to hold that there had been over - invoicing or that any money had been retained by M/s. Menrad to the credit of

accused 1-firm and therefore, the charges of contravention of Sections 8(1) and 8(3) of FERA failed.

Three years thereafter, the respondent chose to initiate criminal proceedings on the very same set of facts for violation of the provisions of

Section 14 of FERA read with Notification No. E1/3/EC/73 dated 15-6-1977 as amended by Notification No. 1/42/EC/78 (GSR 996) dated 6-

7-1978 read with Section 68 punishable u/s 56(1)(i) of FERA.

On receipt of the process, the petitioners came forward with the present action invoking the inherent jurisdiction of this court to quash the

criminal proceedings initiated against them.

The primary contention of Mr. Habibullah Badsha, learned Senior Counsel appearing for the petitioners is that the Customs Department had no

case against the petitioners for the purpose of adjudication proceedings, as had been held by the Special Director, Enforcement Directorate,

FERA, New Delhi the petitioners cannot be prosecuted on the same set of facts, inasmuch as the same is sheer harassment, amounting to

persecution by misuse of power. In amplification of this submission, he would state further that in the absence of a firm finding in favour of the

Department by the Adjudicating Authority, to launch a prosecution even after giving a clean chit to the petitioners by the Adjudicating Authority

leads to an illogical situation tending to absurdities.

Learned Special Public Prosecutor appearing for the respondent - Customs Department, would however repel such submission and state that

there is no legal bar at all for prosecution to be launched against the petitioners on the same set of facts for violation or refraction of the provisions

of FERA, different from the one in respect of which the petitioners were called upon to answer in the Adjudicatory Proceedings, as had been done

in this case, inasmuch as the findings given by the Adjudicating Authority are not at all binding on the Criminal Court trying the offence.

Anxious consideration may now be given to the points raised by either Counsel.

In support of his submission learned Counsel for the petitioners would seek to place implicit reliance on the decision in Jewels of India and

Others Vs. The State and Another, . In that case, the admitted case of the parties is that the order of the Collector of Customs imposing penalty

upon the petitioners for gross under-valuation of the exported consignment has been set aside by the Central Board of Excise and Customs, which

has practically found that there was no under-valuation. This was done on 23rd May, 1980, while the prosecution on the same set of facts was

initiated in February, 1977 and the charges were framed on the 27th June, 1983. Learned Counsel appearing for the petitioners relying upon the

decision in Uttam Chand and Others v. Income Tax Officer, Central Circle, Amritsar (1982) 132 ITR 909 contended that if the departmental

Adjudicating Authority has found no contravention of the provisions of the Customs Act, the petitioners cannot be prosecuted for the same.

Learned Judge upholding the contention raised by learned Counsel, quashed the proceedings initiated against them observing as follows :-

The view therefore expressed is that there is no rationable in the department prosecuting a person on a set of facts and evidence which according

to its own adjudication does not exist. In criminal matters the degree of proof required is far more strict and if the departmental authorities have no

good case for the purpose of adjudication, it cannot claim to have a good case for the purpose of criminal prosecution particularly when the

prosecution is based on the same set of facts and evidence. In a situation such as this a criminal prosecution would in effect amount to

prosecution.

To this view of learned Judge, I respectfully agree to disagree.

It is rather very well-settled proposition by the apex of the judicial administration of this county that the adjudicatory proceedings and further

prosecution in Criminal Court in respect of the same matter is legally permissible as the same is not amounting to double jeopardy falling within the

tentacles of Articles 20(3) of the Constitution of India. Further, the Adjudicating Authority cannot at all be construed as a ''Court'' trying an offence

and giving a finding therefore in the said proceedings so that such a finding may be construed as one falling within the ambit of Section 300 of the

Crl.P.C. In this view of the matter, notwithstanding a finding had been recorded by the Adjudicating Authority giving a clean chit that the petitioners

had not retained any foreign exchange to their credit with M/s. Menrad, West Germany, the petitioners cannot be stated to be immune from

criminal prosecution and further it is open to the Criminal Court to arrive at a finding different from the one given by the Adjudicating Authority, on

consideration of the materials and evidence placed before it.

Of course, resorting to prosecution in such a situation appears to be highly illogical and paradoxical tending to absurdity as rightly contended

by learned Counsel for the petitioners. But notwithstanding such a situation having been created, there is no other go except to obey the command

or dictates of law, in spite of the fact that the application of the law in this regard did create illogical situation, could very well have been in

contemplation of the Legislators.

In this view of the matter, the petition deserves to be dismissed and is hereby dismissed.