AI Structured Summary
Not yet generated for this judgment
Judgment
G.M. Akbar Ali, J.—By consent, the matter is taken up for final hearing. The Petitioner herein seeks a direction to call for the records in
C.C. No. 6 of 2008 on the file of the learned II Additional and Sessions and Special Judge for CBI Cases, Coimbatore, and to recall the order
made in M.P No. 629 of 2009 dated 1.10.2010 in C.C. No. 6 of 2008, in which, the trial court proceeded to take cognizance against him by
arraying as A.3 based on the charge sheet filed by the Respondent for the offence under Sections 120B, 420, 468, 471 PC r/w 13(2) r/w 13(1) of
Prevention of Corruption Act 1988 and to quash the entire proceedings.
The facts of the case which led to filing of the charge sheet against the Petitioner and others are as follows:
One Gunasekar (A.2), is the proprietor of Appu Apparels Exports, dealing with export of readymade garments. One Muthukumarasamy (A.1),
the Petitioner herein (A.3) and one Selvaraj (A.4) were working as Superintendents of Customs and Central Excise ICD Coimbatore from 2001
to 2003.
According to the prosecution, they entered into a criminal conspiracy with A.2 and cheated the Customs Department by way of preparing false
shipping bills, falsely declaring the Port of destination as European Countries and also mis-declaring the FOB values on the Shipping bills by ''over
invoicing'' with the dishonest intention to draw more duty drawback amount, and thereby caused wrongful loss to the Customs
Department/Government of India to the tune of Rs. 1,36,01,773/- with the corresponding wrongful gain accruing to the accused persons.
On investigation, it was found that A.2 submitted 72 fabricated shipping bills by falsely declaring that the consignments contained Cotton Mill
made Men''s Tailored Collar Shirts, which are eligible for duty drawback, when actually the consignments for export contained worthless materials.
It was also found that A.2 submitted invoices and other documents along with Shipping Bills and after the export, had claimed duty drawback
through Customs Handling Agent, which were processed by the Examiner/Inspectors of Central Excise, recommended and forwarded by the
accused A.1, A.3 and A.4. And at the relevant times, he obtained sanction from the concerned Deputy Commissioner of Customs and Central
Excise.
By virtue of the sanction granted by A.1, A.3 and A.4, A2 obtained a total duty drawback amount to the tune of 1,36,01,773/-as against the
total FOB value declared as per the shipping bills for Rs. 10,30,04,507/-. However, the goods did not reach the destination and were taken
delivery by one M/s Field Line Trading Company, in which, A.1 is having 49% of share. The value of the goods bill of entry was also found to be
lesser than what was the initial value shown while exporting from Coimbatore. Out of the FOB value of 10,30,04,507/ not even a single rupee has
been received from the importer by the exporter as repatriation of the sale proceeds., thereby the Government of India had lost valuable foreign
exchange. Since the acts of A.1 to A.4 constituted offences for conspiracy, cheating, forgery and using fraudulent documents as genuine and also
for the offence under the provisions of Prevention of Corruption Act, after full-fledged investigation, charge sheet came to be filed.
The Petitioner seemed to have filed an application to discharge him from the proceedings before the Special Court for CBI which was
dismissed. However, the Petitioner has also filed another application u/s 190 Cr.P.C to recall the cognizance taken in C.C. No. 6 of 2008 on
various grounds.
Two main grounds raised by the Petitioner are that the exporter has failed to collect the total FOB Value of Rs. 10,30,04,507/-as repatriation of
the sale proceeds, thereby caused loss by way of foreign exchange, which is in contravention of FEMA (Foreign Exchange Management Act
1999), where by departmental proceedings are envisaged and not criminal proceedings.
The another ground raised by the Petitioner is that the Central Bureau of Investigation has not obtained the necessary sanction before
proceeding against the Government Servant. While elaborating the arguments on this point, it is submitted that pertaining to the subject matter of
non-repatriation of foreign exchange if any occurred with respect to the export made by A.2 neither the Respondent herein nor the provisions of
Delhi Special Police Establishment Act, 1946 shall have any say or application on the issue in as much as the whole matter falls under the purview
of FEMA. It is not as if the said Delhi Special Police Establishment Act 1946 or the Officers functioning under the said Act have got jurisdiction to
straight away investigate into all matters irrespective of the statutory demarcation of jurisdiction nor they have got any such wholesome powers in
the matter of investigation in all matters. The said Delhi Special Police Establishment Act 1946 hereinafter shortly called as Act of 1946 constitutes
an organisation called Central Bureau of Investigation or in short as CBI in order to investigate into offences to which they are empowered under
the Act to register, investigate and proceed further like filing charge sheet, etc., By virtue of Section -2 of the said Act a special police force is
constituted for investigation with respect to offences Notified u/s 3 of Act of 1946.
Section 3 empowers the Central Government to notify the offences which may be investigated by CBI. For easy reference that section is
extracted here-under:
Offences to be investigated by special police establishment
The Central Government may, by notification in the official gazette, specify the offence or classes of offences which are to be investigated by the
Delhi Special Police Establishment.
According to the Petitioner, when the scheme of the Act is very clear that the Agency (CBI) has its operation of orbit only embracing those
cases covered by Section 3, the present proceedings under the provisions of FEMA, that too against a Government Servant, without proper
sanction of the Government should be rendered illegal and invalid in the eye of law.
The Respondent filed detailed counter and on enquiry, the learned Special Court dismissed the application. The Petitioner is before this Court
invoking the jurisdiction u/s 482 Cr.P.C with a prayer to recall the cognizance taken in CC No. 6 of 2008 reversing the order passed in the
application filed by the Petitioner.
The ground urged before this Court is also that the sale prices of the exported goods were not remitted by the foreign buyers whereas the
incentive was obtained by the exporter which the Petitioner and two other Officers of the Customs Department have facilitated and therefore, the
violation will attract only the provisions of FEMA and the court ought not to have taken cognizance of the offences under IPC. The other ground
taken is also that the CBI is not empowered to investigate as the necessary Notification under the Special Police Act was not issued.
Mr.M.C. Govindan, learned Counsel for the Petitioner elaborated the entire dates and events and pointed out that even according to the
charge sheet, the total exported value of Rs. 10,30,04,507/-was not received by the exporter by way of foreign exchange and the Petitioner is
accused of causing financial loss to the Government. The learned Counsel pointed out that the failure of recovery of sale proceeds by the exporter
will attract only the provisions of FEMA where adjudication has to be done and fine may be imposed on the exporter. The learned Counsel
pointed out that taking cognizance of offence itself is wrong and the same has to be recalled.
The learned Counsel for the Petitioner relied on the following decisions:
Mithilesh Kumar Singh and Others Vs. State of Jharkhand and Another,
Adalat Prasad Vs. Rooplal Jindal and Others,
Surya Bhan Vs. State of U.P. and Deepak Kumar Singh,
M. Balakrishna Reddy Vs. Director, CBI, New Delhi,
Central Bureau of Investigation Vs. State of Rajasthan and others,
2009 (2) SCC 370 (Dhariwal Tobacco Products Limited and Ors. v. State of Maharashtra and Anr. 2009 (2) SCC 370)
Mr. N. Chandrasekaran, the learned Special Public Prosecutor for CBI Cases would submit that filing of an application to recall the
cognizance itself is mis-conceived and the petition is liable to be dismissed at limine. He also pointed out that the Petitioner, having failed in his
attempt to get him discharged from the offences, has chosen to invoke the jurisdiction u/s 482 CR.P.C which is not available to him.
He relied on the following decisions:
Madhu Limaye Vs. The State of Maharashtra,
AIR 1995 785 ( State of West Bengal and Anr. v. Mohammed Khalid and Ors. AIR 1995 785)
Gangadhar Janardan Mhatre Vs. State of Maharashtra and Others,
I have given my thoughtful consideration to the rival submissions advanced on either side and meticulously perused the materials available on
record.
The fact that A.2 was the proprietor of Appu Apparels Exports Company and A.1, A.3 and A.4 were the Superintendents of Customs and
Excise at Coimbatore during 2001 to 2003 are not denied. Indisputably, A.2 had raised several shipping bills showing export of cotton mill made
Men''s Tailored Collar Shirts to various European Countries and Middle East. In the capacity of Superintendents of Customs and Central Excise
the Petitioner, A.1 and A.4 have assessed the goods, passed, let export order, examined the goods, stuffed the containers and sealed one time
locker. Admittedly, a total FOB value declared as per the Shipping Bills was Rs. 10,30,04,507/-. In order to encourage foreign trade, incentives
were given to the exporters. For a total exported value, the exporter is entitled for a duty draw back at certain percentage. When the exporter
receives the value of the goods in foreign exchange which could be routed through Reserve Bank of India, the Indian Government gets foreign
exchange for their benefit. Since the exporter is the cause for foreign exchange thus earned, the incentive is offered by the Government. In the
present case A.1 had exported to the value of Rs. 10,30,04,507/-and has earned duty draw back to a sum of Rs. 1,36,01,773/-.
Admittedly, the above exported value was not received as foreign exchange routed through Reserve Bank of India. However, in an enquiry
conducted, it was revealed that shipping bills were fabricated, invoices were inflated, actual consignment, as declared, was not exported and in
many of the cases, the consignment has not reached the destination. Therefore, the Respondent has conducted an investigation and found that the
Superintendents of Central Excise and Customs Department conspired with A.2 in order to cheat the Government, created forged and fraudulent
documents and used them as genuine and thereby committed various offences. On filing of the charge Sheet, the Special Court CBI has taken
cognizance and the criminal proceeding is pending.
The contention of the Petitioner, who is one of the Superintendents of Customs and Central Excise during the relevant time at Coimbatore, is
that the non-recovery of the export value is a contravention under the provisions of FEMA 1999 and do not attract the penal provisions of IPC. It
is further contended that there is no availability of ingredients required for the alleged offence u/s 120B, 420, 468 and 471 IPC r/w 13(1)(d) and
13(2) of P.C Act.
According to the charge sheet, A.2 had produced various shipping bills, made mis-declaration of the consignment and also the consignees,
inflated the value of the exported goods by over invoicing with an intention to draw more duty drawbacks for which the Petitioner and other two
officers conspired, have assessed the goods, passed export order and stuffed the containers.
According to the prosecution, the Petitioner and two others are the conspirators for A.2 who had cheated by forging the document and
producing fraudulent documents as genuine and thereby wrongfully gained Rs. 1,36,01,723/-. Since the Petitioner and two others are Central
Government Officers, the provision of 13(1)(d) and 13(2) of P.C Act are pressed into service.
In paragraph-14 of the charge sheet it is stated that the entire export between 2001 and 2003 under 21 consignments and 72 shipping bills for
a total value of Rs. 10,30,04,507/-and the export value was not realised by the exporter. It is further submitted that for non-submission of bank
realisation certificate, the officers did not take any action by issuing show cause notice and for recovery of the drawback from A.2 as per Rules.
These are the specific allegations against the Petitioner and two other officers in the charge sheet.
The contention of the Petitioner is that non realisation of the sale proceeds attracts the provision of FEMA and not the penal offences.
At the out set, this Court is not agreeing with the contention of the Petitioner. As stated earlier, A.2 had produced over-invoiced shipping bills,
given false declaration regarding the consignment and also the consignees and has drawn the duty drawback to the tune of Rs. 10,30,04,507/-.
According to the charge sheet, the Petitioner and two others are the officers who examined, assessed the goods and passed the export orders.
Of course, there is contravention of the provisions of FEMA for non-recovery of foreign exchange by the exporter. That alone is not a
violation. The prosecution has come with a conspiracy theory for an offence u/s 420, 468 and 471 IPC. Since the Petitioner and two other officers
are central government employees, the provision of PC Act also are pressed into service. Therefore, the learned Judge was right in taking
cognizance u/s 190 of Code of Criminal Procedure
The present application is filed u/s 190 Cr.P.C which reads as follows:
Cognizance of offences by Magistrates.
(1) Subject to the provisions of this Chapter, any Magistrate of the first class, specially empowered in this behalf under Sub-section (2), may take
cognizance of any offence
(a) Upon receiving a complaint of facts which constitute such offence
(b) Upon it police report of such facts
(c) Upon information received from any person other than a police officer, or upon his own knowledge, that such offence has been committed.
(2) The Chief Judicial Magistrate may empower any Magistrate of the second class to take cognizance under Sub-section (1) of such offences as
are within his competence to inquire into or try.
The learned Counsel for the Petitioner relied on a decision reported in It is a case where apparently final report has been filed against certain
persons for whom nothing could have been deducted and they were not sent up for trial. The learned Magistrate had taken cognizance against
those persons also. The High Court of Jharkhand has held that the court below has committed an error in taking cognizance against those persons
without any material. The above case is not relevant to the facts of the present case.
The learned Counsel also relied on a decision reported in in which, the Allahabad High Court has held as follows:
15... The cognizance is taken of the offence and, therefore, the Court on perusal of the complaint or report has to satisfy itself on the basis of the
facts which constitute the offence. There may be instances where the Magistrate finds that the complaint is not made by the person who can lodge
the complaint or the complaint is not entertainable by that Court or cognizance of the offence alleged to have been committed cannot be taken
without the sanction of the competent authority etc. In such matters Magistrate should refuse to take cognizance but if the Magistrate takes
cognizance in such matters, and proceeds, the same may be curable u/s 460 Code of Criminal Procedure But in the case where statute directs as
to how and on what material the cognizance is to be taken, any violation thereof will be illegality and not irregularity. As for instance if the
Magistrate takes cognizance on a complaint and directs to proceed as a police case or conversely takes cognizance on a police report and directs
to proceed as a complaint case, this defect in cognizance would not be irregularity and would not be curable as it would vitiate the procedure....
On the contrary, the learned Special Public Prosecutor for CBI Cases relied on a decision reported in wherein the Hon''ble Supreme Court
has held as follows:
We are of the view that the approach of the High Court in this regard is clearly against the decision of this Court in Shree Atyachar Virodhi
Parishad''s case (supra) in paragraph 14 as under:
It is in the trial, the guilt or the innocence of the accused will be determined and not at the time of framing of charge. The Court, therefore, need not
undertake an elaborate enquiry in sifting and weighing the material. Now it is necessary to devolve deep into various aspects. All that the Court has
to consider is whether the evidentiary material on record of generally accepted would reasonable connect the accused with the crime. No more
need be enquired into.
The learned Special Public Prosecutor also relied on a decision reported in wherein the Apex Court has held as follows:
When a report forwarded by the police to the Magistrate u/s 173(2)(i) is placed before him several situations arise. The report may conclude
that an offence appears to have been committed by a particular person or persons and in such a case, the Magistrate may either (1) accept the
report and take cognizance of the offence and issue process, or (2) may disagree with the report and drop the proceeding, or (3) may direct
further investigation u/s 156(3) and require the police to make a further report. The report may on the other hand state that according to the police,
no offence appears to have been committed. When such a report is placed before the Magistrate he has again option of adopting one of the three
courses open i.e.,(1) he may accept the report and drop the proceeding, or(2) he may disagree with the report and take the view that there is
sufficient ground for further proceeding, take cognizance of the offence and issue process or (3) he may direct further investigation to be made by
the police u/s 156(3). The position is, therefore, now well settled that upon receipt of a police report u/s 173(2) a Magistrate is entitled to take
cognizance of an offence u/s 190(1)(b) of the Code even if the police report is to the effect that no case is made out against the accused.
Therefore, following the judgment in the case of cited supra), when a police report is filed u/s 173(2) of the Code, the Magistrate is to take
cognizance of the offence u/s 191(b) of the Code. Once the report is accepted and the Magistrate has taken cognizance of the offence and issued
process, there is no provision to recall such taking cognziance except to challenge the charges .
Therefore, the present application with a prayer to recall taking cognizance is misconceived.
The learned Counsel for the Petitioner submitted u/s 3 of the Delhi Special Police Establishment Act, the Respondent is not notified to
investigate. The learned Counsel relied on a decision reported in The facts therein is that the Dy. Superintendent of Police, CBI made an
application u/s 155(2) CR.P.C before the Chief Judicial Magistrate, Economic Offences, Jaipur for grant of permission to investigate the case u/s
25 r/w 56 of FERA . The learned Chief Judicial Magistrate dismissed the application. In that case, the Apex Court has held as follows
In our view, a combined reading of Sections 3, 4 and 5 of FERA makes it quite evident that primarily the officer of Enforcement Directorate as
mentioned in Sections 3 and 4 have been empowered to exercise the powers and discharge the duties conferred or imposed on such officers of the
Enforcement Directorate under FERA. As it may be expedient in some cases to confer powers and duties under FERA to persons outside the
Enforcement Directorate, the Legislature in its wisdom has given authority to the Central Government u/s 5 of FERA to authorise any officer of
Customs or Central Excise Officer or a police officer or any officer of Central Government or State Government to exercise such of the powers
and discharge such of the duties of the Director of Enforcement or any other officer of Enforcement under FERA as may be specified subject to
such conditions and limitations as deemed fit by the Central Government.
The Respondent has not investigated any violation regarding FEMA. Moreover, the Respondent, in paragraph 12 of his Memo has stated as
follows:
12...I is drawing its power of investigation from the provisions of Delhi Special Police Establishment Act 1946 and the Government of India had
issued its first Notification vide No. 7/5/55-AVD dated 6.12.1956, No. 7//5/57 dated 23.03.1957, No. 25/7/6-AVD dated 21.01.1961 etc., of
the Government of India, Ministry of Home Affairs, and periodically the same is pending updated for the inclusion of every Section and every local
or special laws. Therefore, the CBI is drawing power on the strength of Sections 3 and 5 of the DSPE Act and the Notifications of the Central
Government and State Governments.
Therefore, in my considered view, the contention of the Petitioner is unacceptable and I have no reason to interfere with the order of the
learned II Additional and Sessions and Special Judge for CBI Cases, Coimbatore in M.P. No. 629 of 2009 in C.C. No. 6 of 2008.
In the result, the criminal original petition is dismissed. Consequently, connected Mps are closed.