AI Structured Summary
Not yet generated for this judgment
Judgment
N.S. Ramaswami, J.—This revision under Sections 435 and 439 of the Code of Criminal Procedure, 1898, (hereinafter referred to a the Code) has been filed by the State (represented by the Public Prosecutor) against the discharge of the accused in S.P.C.C. No. 49 of 1972 on the file of the Special Presidency Magistrate, Egmore, Madras. There were seven accused before the learned Magistrate, and the main charge against them was one of criminal conspiracy punishable u/s 120-B, I.P.C., read with Section 420, I.P.C., 132 of the Customs Act and Sections 23 and 4 of the Foreign Exchange Regulation Act (Act 7 of 1947). The substance of the allegation is that all the accused entered into a conspiracy to earn foreign exchange illegally by over-invoicing certain goods imported from Tehran. There were specific charges u/s 420 read with Section 34, I.P.C., against accused 1 and 7 on several counts and against accused 1 and 4 to 7 on one count. Further accused 1 and 7 stood charged for the specific offence (on several counts) punishable u/s 132of the Customs Act read with Section 34, I.P.C.
Though originally the charge sheet filed by the Deputy Superintendent of Police, Special Police Establishment (Economic Offences Wing) Madras was taken on file as a Calendar Case trial by a First Class Magistrate, the Chief Presidency Magistrate on whose file, the case was then pending has converted the case into a Preliminary Register Case. Ultimately the case was made over for committal enquiry to the Special Presidency Magistrate, Egmore, Madras and the case proceeded as a Preliminary Register case.
A large number of witnesses have been cited is the charge sheet and the prosecution relied upon innumerable documents in support of the charges. But as Section 207-A of the Code is applicable, only 10 witnesses were examined and 1122 Exhibits were marked.
During the enquiry, accused-7 died and so the charges against him abated.
The learned Magistrate has discharged all the other accused (accused 1 to 6) u/s 207-A (6) of the Code holding that there are no grounds to commit any of the accused for any of the charges. The correctness of the view of the Magistrate is questioned in this revision petition.
The reasons given for discharging al the accused may be stated broadly as. (1) On the materials available (from the evidence recorded as well as the statements of several other witnesses who are yet to be examined) no conspiracy amongst the accused can be spelt out; (2) The facts of the case disclose primarily and essentially an offence u/s 4(l) of the Foreign Exchange Regulation Act and not merely a conspiracy to commit the offence and hence the case is not cognizable by the Court without a complaint in writing by the Director of Enforcement; (3) The first accused having already been fined by the Director of Enforcement (for contravening the provisions of the Foreign Exchange Regulation Act) interests of justice do not require that the first accused should be prosecuted, and (4) The ingredients of the offence of cheating as well as that u/s 132 of the Customs Act are not established is respect of the Specific charges.
The contention of the learned Advocate General who appears for the State is that the learned Magistrate fell into a grave error in taking the view that there are no materials to establish a criminal conspiracy as charged and that the view that necessary ingredients for the specific offences u/s 420, I.P.C, and Section I32 of the Customs Act are absent is not correct. It is his contention that the Court has completely forgotten its limitation as a Committing Court u/s 207-A of the Code, and that the other reasons given in support of the order of discharge are also erroneous.
The fourth Accused has not appeared in this Court and he is not represented by any one. The others are represented. The contention on their behalf is that the view taken by the Court below is correct.
I will first take up the question whether there are materials in the prosecution case for an offence of conspiracy punishable u/s 120-B of the Indian Penal Code.
Sant Parkash Sahni, the first accused is a resident of Bombay and a partner of the firm called Bagawandas Sant Parkash. He is also a director of Surendra Cotton Wool Pressing Factory, New Delhi. Satish Kumar and Company is a proprietory concern of his wife Mani Devi. C. Jayaram (P) Ltd., is another sister concern of the first accused. Himself, his wife as well as the second accused and one Moolchand Dwarkadas are its directors. The second accused is also the power of attorney agent of the first accused''s wife. Vrajlal Hirji Bhansali, the third accused is an Official in the Bank of Tokyo at its Bombay Branch. (His designation in the Bank appears as clearing agents). Triloknath Gopichand Kapur, the seventh accused who died during the committal proceedings is said to be a close associate of the first accused and during the relevant period he was in Tehran. According to the prosecution, the seventh accused entered into a criminal conspiracy to purchase licences to import goat skins from various parties, establish letters of credit in the Bank of Tokyo in the names of the various licences, over-invoicing the same by over 2000 per cent and repatriate foreign exchange to a nominee at Tehran which would ultimately be paid to the first accused. Since no direct evidence can be expected to establish a charge of conspiracy of this nature, the prosecution relies only on circumstantial evidence.
I will set out the broad facts and circumstances relied on by it to establish this conspiracy. It may be noted that for the present purpose it is not contended on behalf of any of the accused that the facts and circumstances alleged by the prosecution should not be relied on. The parties proceeded on the footing that the prosecution would be in a position to establish those facts and-circumstances, in a trial.
The first accused with the help of P.W.8 and others purchased from others, licences to import goat skins. The licensees are from Madras, two of whom have given evidence as P. Ws. 1 and 2. The first accused who is a constituent of the Bank of Tokyo at Bombay with the help of the third accused (The Financial Adviser of the Bank) caused opening of letters of credit on the basis of the import licences, not in his name but in the names of the respective licensees. The indents necessary for opening the various letters of credit are in the name of Satish Kumar and Company, the proprietary concern of the wife of the first accused. 23 letters of credit were so established in the Bank of Tokyo, Bombay. The said 23 letters of credit covered 33 consignments of goat skins consisting of 1087 bundles.
Originally all the 23 letters of credit were is favour of one Sardar Sahib Sardar Mehar Singh Chadash of Tehran. Chadash the beneficiary had no idea of the matter till he was informed about it by the first accused, who by then had gone to Tehran. The beneficiary expressed to the first accused, certain difficulty in the letters of credit being in his name. Thereafter the first accused as well as the seventh accused, the representative of the first accused, met Rahimi and arranged with him for he being the beneficiary. The understanding was that Rahimi who would be receiving monies by virtue of the letters of credit should pay the same to the 1st accused''s representative, Rahimi, himself was to get a commission of 3 per cent for allowing his name to be utilised.
The first accused who was in Teheran caused the procuring of goat skins. The entire goods (1087 bundles) were transported to Bundar Abbas wherefrom it was transshipped through the vessel ''M.V. Ahamdi''. The said vessel which touched Bhavanagar Port was not allowed to land the goods, because neither the importer nor the owner of the goods nor anyone else, with the shipping documents was there to clear the goods.
When the said vessel was in Bhavanagar Port, the Tindal of the vessel approached a local Muslim clearing agent for help in landing the goods. The goods were then unloaded and the ship was lying in the port for some time.
When the goods were so lying in Bhavanagar Port, the first accused (who had by then returned from Teheran) went to P.W.7, the then Inspector of Customs, Bhavanagar and presented the letter, Ex. P. 1030 dated 8th April 1975 claiming that he is P.C. Kapoor of M/s. Kapoor and Company, Delhi. In this letter the first accused stated that the entire consignment of 1087 bundles belonged to P.C. Kapoor and Company, that he (the first accused) had inspected the consignment, that the same has been landed in full to his satisfaction and that he had no objection for clearance being given to the vessel.
P.W.4 is a partner of Jawantrai and Company, a clearing agent at Bhavanagar. The first accused as well as the fourth accused were introduced to P.W.4 by the third accused at the office of the Bank, of Tokyo, Bombay. The first accused handed over to P.W.4, the shipping documents relating to a portion of the consignment, the same having been retired by them. The documents in respect of the balance of the goods were given to P.W. 4 later. Though in Ex. P-1030, the first accused has stated that M/s. J.M. Shah of Bhavanagar had been authorised to clear the consignment, the same was actually cleared by P.W. 4. He filed 33 bills of entry with the Customs Authorities (in respect of the 33 consignments) and cleared goods covered by 24 bills of entry. The goods covered by 21 consignments were despatched by Rail and those of 3 consignments by road to Surendra Cotton Wool Pressing Factory, New Delhi, of which the first accused is a Director. This was done as per the instructions of the first accused.
The first accused was instrumental in getting the necessary release orders in respect of goods so cleared and despatched by P.W.4. For two more consignments (out of the remaining 9 consignments )release orders had been received and P.W.4 paid the customs duty regarding the same.
It was by August 1965 the abovesaid 24 consignments had been cleared but before the remaining 9 consignments could be cleared, the Customs Authorities suspected foul-play and seized the goods.
As per the instructions of the first accused, P.W. 4 had been throughout contracting the third accused and through him getting funds for clearing the goods.
In pursuance of the agreement, Rahimi got payments on the letters of credit, through the Bank at Tehran and he in turn paid it (less the commission) to the Seventh accused, the representative of the first accused.
There is also material to show that the goods had been very highly over-invoiced, which fact however, was sought to be disputed on behalf of the accused. I was referred to the evidence already recorded in the case and I am satisfied that the prosecution case about the value of the goods has to be prima facie accepted, (In the course of the investigation, statements regarding the value of the goods have been recorded from several persons and those persons are yet to give evidence).
According to the prosecution the accused had entered into an agreement to commit the offence punishable u/s 4(l) of the Foreign Exchange Regulatioa Act, and other offences. It is this agreement, which is punishable u/s 120-B I.P.C, that is sought to be established from the facts and circumstances stated above. Therefore one has to see whether any such agreement amongst the accused can be inferred.
Subject to the question who were all the conspirators, there can be no serious dispute that there ought to have been conspiracy to commit; an offence u/s 4(l) of the Foreign Exchange Regulation Act and other offences. On the facts stated earlier it cannot be contended that there is no material indicating conspiracy between accused 1 and certain others to commit the offence. For the present purpose one is not concerned as to whether the said offences had been committed. The facts and circumstances do prima facie disclose that there was a criminal conspiracy to commit those offences, and that accused 1 was in it. It is not possible to hold that the first accused without an agreement with others had indulged in the illegal activities. The seventh accused, the representative of the first accused, was thick in the game and from the circumstances stated earlier, it cannot be said that there had been no conspiracy between the first accused and the seventh accused. It is true that the seventh accused is now dead and the charges against him have abated. Even so, the first accused can be charged for the offence punishable u/s 120-B, I.P.C, (even if the other accused are not co-conspirators) for having conspired with the seventh accused to commit the offence,
The Court below seems to think that there are no materials to implicate even the first accused in any charge of criminal conspiracy. That is patently wrong. Purchase of import licences may not be uncommon (though illegal). But such purchase in this case is not innocuous. One has to see whether the first accused purchased the licences for importing goods for the full value of the invoices. It is not his case that he so imported. He denies knowledge about the entire transaction. The very fact that the beneficiary under the letters of credit was a dummy getting only a commission for lending his name and that the foreign exchange received by the dummy (on the shipping documents being retired) ultimately came to the first accused who had been instrumental in opening the letters of credit would indicate the bogus nature of the transaction and that there should have been a conspiracy to earn foreign exchange illegally. Though the licensees had misused the licences, by selling the same, they had nothing to do with the conspiracy. Some other witnesses might have also transgressed the law, but unless it is shown that they were parties to the conspiracy to earn foreign exchange illegally, they are not accomplices regarding the crime in question. All the acts connected with the illegal earning of foreign exchange-purchasing the import licences, opening of letters of credit in favour of a dummy, purchase of cheap materials in the foreign country and shipping the same in the name of another dummny, retiring the shipping documents, claiming the landed goods in an accused name, arranging to have the goods cleared and transporting the same to Delhi and getting payment of the foreign exchange from the dummy at Tehran less his commission are said to have been committed either by the first accused or at his instance. Such being the case, to say that there is no adverse circumstance against the first accused is meaningless.
If the Court thinks that all these circumstances are innocuous, it is clear, that it has wholly misguided itself.
The Court below refers to the denial by the first accused of his claiming the goods under an assumed name (P.C. Kapoor). I wonder whether the said statement is accepted in preference to the evidence of P.W. 7, the Customs Inspector at Bhavanagar. There is also independent evidence that the first accused was staying at Bhavanagar at the relevant time.
The Court says that the statement of Rahimi recorded at Tehran cannot be equated with a statement u/s 161 of the Code.
Assuming it to be so, I am unable to understand what follows from it. It ought to have been realised that Rahimi would be examined as a witness if the accused are committed to take their trial.
Therefore the question to be considered is whether the accused 2 to 6 or any of them were also co-conspirators liable to be committed to take trial with the first accused.
The second accused is a close associate of the first accused. He is one of the Directors of C. Jayaram (Private) Limited along with the first accused apart from the fact that he is the power of attorney agent of the first accused''s wife, who is the proprietnx of Satish Kumar and Company.
The indents for all the letters of credit were by the said Satish Kumar and Company which was run by accused 2 as the power of attorney agent. There is material to show that he was quite active in presenting the applications for opening letters of credit and had also been receiving intimations regarding the retiring of the shipping documents. These circumstances are sufficient to commit him to take trial for the charge of criminal conspiracy. In fact u/s 207-A of the Code, the Court is to send the accused for trial unless it finds there are no grounds for committal. It has not even the jurisdiction to consider whether there are sufficient grounds for committal.
On behalf of the third accused who is the financial adviser in the Bank of Tokyo at Bombay, the contention is that he had done nothing except what is expected of him as a bank official and therefore there is no material to commit him to take trial for conspiracy. In order to see whether a charge of conspiracy can be sustained, it is not right to take each circumstance separately and explain it away. The fact that the third accused was active in establishing letters of credit at the instance of the first accused (though the persons in whose names the import licences stood) were nowhere in the picture is no doubt capable of explanation. The first accused is a constituent of the Bank for a long number of years and therefore if the third accused helped the first accused in establishing letters of credit, that by itself would not show that the third accused had any knowledge of the illegality in the transaction. But there are various other circumstances in the case and the fact that the third accused was active in establishing the letters of credit must be taken in the light of those circumstances.
For all the letters of credit, no margin had been collected. It is true the first accused is a long standing constituent of the bank but the letters of credit were not opened in his name nor has he guaranteed payment.
It was at the instance of the thud accused who made the notings in Ex.P. 100, the name of the beneficiary in respect of the letters of credit came to be changed. It appears that this change had been made while the first accused himself was in Tehran. After the change by which Rahimi was made the beneficiary, the first accused had confirmed the same. The beneficiary under a letter of credit can be changed only on application made by the importer. That is what the first accused himself says when he was questioned u/s 342 of the Code (of course his case is that he had nothing to do with the opening of the letters of credit or about the import). But in the present case it is seen that at the instance of the third accused, the beneficiary was changed in respect of the letters of credit. There was no application from any of the licensees (importers as per the letters of credit). This is an important circumstance against the third accused.
It was the third accused who introduced the first accused to P.W. 4 who ultimately cleared the goods in Bhavanagar Port. Then the first accused gave several blank declaration forms signed by the licensees along with the shipping documents retired from the bank. The first accused also instructed P.W. 4 to send the relevant documents to the third accused and that whenever P.W. 4 wanted funds for clearance he was to contact the third accused who would arrange for the same. There is evidence to show that the P.W. 4 had in fact been in constant touch with the third accused and had been getting funds arranged by the latter.
After clearing the goods the relevant documents were addressed to the licences but actually sent to the third accused. P.W. 4 sent the R. Rs. (for the goods despatched from Bhavanagar to Delhi) also to the third accused.
These facts are not compatible with the position of third accused having acted in the usual course as a bank official, believing the first accused to be a mere indenting agent.
It was sought to be contended that P.W.4 had sent his communications only to "The Bank of Tokyo, Bombay Attention. Bhansali (third accused)" and not to the third accused himself. But that is not right. There is enough material to show that P.W. 4 had been writing to the third accused by name, and had also contacted him on several occasions over the telephone and that too at his residence. In fact soon after the 9 consignments were seized by the Customs Authorities P.W.4 contacted the third accused on the telephone and also met him.
I am of opinion that there are grounds to commit the third accused also for the offence u/s 120-B, I.P.C.
The prosecution tries to connect the accused 4 to 6 for the offence of conspiracy on the score that the Exchange Control Copy of the Import Licence of Safiullah and Company (of which P.W. 5 is a partner) which had come to the possession of accused 5 and 6 had been utilised for establishing a letter of credit in respect of one of the 33 consignments (actually imported by the first accused) and that the fourth accused took part in establishing that letter of credit. Under the import licence of Safiulla and Company, not only goat skins but also certain chemicals could be imported. There is material to show that the licence came to the hands of the accused 5 and 6 as clearing agents for clearing the consignment of chemicals which Safiulla and Company in fact imported. There is also material to show that the Exchange Control Copy of the said import licence had not been returned to the licensee but had been misused for establishing one letter of credit for one of the consignments out of the 33 consignments concerned in this case.
Ex.P.452, the application for opening letter of credit is purpoted to have been signed on behalf of Safiulla and Company, but what one finds is that in the place where the partner of the firm has to sign, the words "Safiullah & Co." having been written as if that is the signature of a particular person. This application had been presented by the fourth accused for opening the letter of credit.
It was contended that the opening of the letter of credit on the licence of Safiulla & Co. is an independent transaction and there is nothing to show that accused 4 to 6 had any connection with the first accused. But as already seen, according to the prosecution all the 33 consignments of goat skins had been procured by the first accused in Iran and transhipped to Bhavanagar Port. The first accused is said to have claimed all the 33 consignments as his though he is said to have not disclosed his identity but called himself as one P.C. Kapoor. It is not a case of the fourth accused individually importing one particular consignment of goat skins utilising the licence of Safiullah and Company.
Even, so the question is whether there are grounds to commit accused 4 to 6 for conspiracy. The only circumstance against accused 5 and 6 is that they having come into possession of the licence of Safiulla and Co., lawfully, had given it unauthorisedly to be utilised to cover one of the 33 consignments. As far as accused 4 is concerned the only circumstance is that he had presented the application for opening letter of credit, along with the indent. There is evidence that he was also introduced by accused 3 to P.W. 4 but it is not alleged that he was a party to the arrangement under which P.W. 4 had been engaged as the clearing agent. I am of the view that these circumstances are not indicative of these accused being parties to the conspiracy in question. It should be remembered that they came into picture only at the last stage, that is after the consignments arrived at Bhavanagar. It appears to me that accused 1 having imported 33 consignments, finding that in respect of one consignment no letter of credit had been opened, managed to get the licence of Safiullah and Co., from accused 5 and 6 and caused accused 4 to present the application to the bank. It is to be noted that even for this letter of credit the indent was in the name of Satish Kumar and company and the application had been processed by the bank as that of accused 1. Therefore I would uphold the order of discharge regarding the charge of conspiracy as far as accused 4 to 6 are concerned, though I do not agree with the reasons given by the Court below.
The next question is whether the case is not cognizable by the Court for want of a written complaint by the Director of Enforcement, as contemplated u/s 23(3) of the Foreign Exchange Regulation Act, 1947 (hereinafter referred to as the Act). The Court below says that the facts of the case disclose primarily and essentially an offence u/s 4(l) of the Act and not merely a conspiracy to commit the offence and that the prosecution cannot be allowed to evade the provisions of the Act and hence the case is not cognizable by the Court without a written complaint by the Director of Enforcement. The same contention is put forward by Mr. K.K. Venugopal appearing for accused 1 and 2 and it is stated that Section 23(3)(a) of the Act is a bar. He also contends that the alleged conspiracy is covered by Section 21 of the Act punishable u/s 23(l-A) thereof and hence Section 23(3)(b) of the said Act is a bar for the cognizance of the case in the absence of a written complaint by the Director of Enforcement. It is necessary to note the relevant provisions of the Act.
u/s 4(l) certain restrictions are placed on dealings in foreign exchange. Transgression of the provision contained in that Section (as well as trangression of certain other provisions of the Act) is made punishable u/s 23(l) of the Act.
Section 21(1) of the Act speaks of contracts in contravention of the provisions of the Act. It is in the following terms:
21(1): No person shall enter into any contract or agreement which would directly or indirectly evade or avoid in any way the operation of any provision of this Act or of any rule, direction or order made thereunder.
Transgression of the provision contained in the above section is made punishable u/s 23 (1-A).
u/s 23(1) which provides for punishment for contravention of Section 4 (as well as some other sections of the Act), there is also provision for adjudication by the Director of Enforcement and imposing penalty. Such provision for adjudication is not found in Section 23(l-A). Section 23-D deals with the power to adjudicate and the procedure to give complaint.
I would extract Sub-section (l) and (1-A) of Section 23 and Section 23-D (1).
Section 23 (1): If any person contravenes the provisions of Section 4, Section 5; Section 9, Section 10, Sub-section (2) of Section 12, Section 17, Section 18-A or Section 18-B or of any rule, direction or order made thereunder, he shall.
(a) be liable to such penalty not exceeding three times the value of the foreign exchange in respect of which the contravention has taken place, or five thousand rupees, whichever is more, as may be adjudged by the Director of Enforcement in the manner hereinafter provided or
(b) upon conviction by a Court, be punishable with imprisonment for a term which may extend to two years, or with fine, or with both.
(1-A): If any person contravenes any of the provisions of this Act, or of any rule, direction or order made thereunder, for the contravention of which no penalty is expressly provided he shall upon conviction by a Court, be punishable with imprisonment for a term which may extend to two years, or with fine, or with both.
Section 23-D(l): For the purpose of adjudging under Clause (a) of Sub-section (l) of Section 23 whether any person has committed a contravention, the Director of Enforcement shall hold an inquiry in the prescribed manner after giving that person a reasonable opportunity of being heard and if, on such inquiry, he is satisfied that the person has committed the contravention, he may impose such penalty as he thinks fit in accordance with the provisions of the said Section 23,
Provided that, if, at any stage of the inquiry, the Director of Enforcement is of opinion that having regard to the circumstances of the case, the penalty which he is empowered to impose would not be adequate, he shall, instead of imposing any penalty himself make a complaint in writing to the Court.
Section 23(3) is the one which deals with the bar for taking cognizance without a written complaint by the Director of Enforcement. Sub-clause (a) of the above Sub-section (3) (of Section 3) deals with cases punishable u/s 23(1). Sub-clause (b) deals with cases punishable u/s 23 (1-A) (as well as u/s 23-F). While under Clause (a) a complaint in writing must be made by the Director of Enforcement under Clause (b) it may be either by the Director of Enforcement or any officer authorised by the Central Government or the Reserve Bank by a general or special order. There is also a proviso to the abovesaid sub Clause (b) which is not necessary to be noted.
It was already noticed that it is u/s 23 (1), an adjudication by the Director of Enforcement and imposing of a penalty is provided (apart from punishment upon conviction by a Court) and that in Section 23 (1-A) there is no such provision of adjudication and imposing of a penalty. Naturally Section 23-D which speaks of the power to adjudicate and the stage at which a complaint can be given, has reference only to Sub-section (1) of Section 23. There is no reference to Sub-section (1) of Section 23. Therefore it is clear that while cognizance by a criminal Court can be taken only on a written complaint by the Director of Enforcement or some other officer as the case may be, both in a case falling u/s 23(l) and that falling u/s 23 (1-A), the procedure prescribed in Section 23-D has to be followed only if the case falls u/s 23 (1) and not when it comes u/s 23 (1-A).
I would first take up the contention that the alleged conspiracy falls u/s 21 (1) punishable u/s 23 (1-A) and hence the case is not cognizable without a written complaint as contemplated u/s 23 (3)(b). It was already noticed that Section 21(1) prohibits persons entering into a contract or agreement which would directly or indirectly evade or avoid in any way the operation of any provision of the Act or of any rule, direction or order made thereunder. From the very language of the section it is quite clear that that has no application to a criminal conspiracy punishable u/s 120-B I.P.C. The provision contained in Sub-section (2) to (4) of the said section strengthens the above view. No further elaboration is necessary because the matter is concluded by a judgment of the Supreme Court reported in Lennart v. Director of Enforcement 1970 Criminal Law Journal 707. There the majority has held that Section 21 of the Act does not cover criminal conspiracy punishable u/s 120-B, I.P.C. At page 712, the position is summarised thus:
What Section 21 (1) provides is that the Provisions of the Act must be avoided or evaded by the agreement or contract itself. The contracts or agreements are those which are entered into during the course of commercial transactions and it is the intention of the legislature to prohibit that such contracts or agreements ought not to provide for the evasion or avoidance of any of the provisions of the Act either directly or indirectly. The combined effect of the several provisions of Section 21 does not incline us to the view that Sub-section (1) covers a case of criminal conspiracy similar to Section 120-B. Section21 does not in terms deal with an agreement to commit an offence or a legal act in an illegal way but merely provides that an agreement or contract by itself ought not to evade or avoid the provisions of the Act.
In that case also the accused were charged for an offence punishable u/s 120-B, I.P.C. The contention put forward was that the alleged conspiracy was an agreement as contemplated u/s 21 of the Act, and that therefore Section 23(3)(b) is a bar for taking cognizance of the case without a written complaint by the Director of Enforcement etc. That contention was negatived by the Supreme Court holding that the agreement or contract referred to in Section 21(l) of the Act is a commercial contract and it does not confer a criminal conspiracy. Therefore if the charge is for criminal conspiracy punishable u/s 120-B, I.P.C, there is no scope for the contention that Section 23(3)(b) is a bar. For the present, the question whether the agreement between the accused is a commercial contract does not arise. The only point is, if the charge u/s 120-B, I.P.C. is otherwise sustainable, whether Section 23(3)(b) of the Act is a bar for the cognizance of the case without a written complaint by the Director of Enforcement. As already indicated, the said charge is sustainable on facts. In view of the decision of the Supreme Court referred above, Section 23(3)(b) of the Act cannot be invoked as a bar for the cognizance of the case.
Because of the above position, Mr. Venugopal pressed only the other aspect, namely, that Section 23(3)(a) is a bar for taking cognizance. The bar under the said section would be applicable if the accused are charged for contravention of Section 4 of some other sections of the Act punishable u/s 23(1) of the Act. In the present case, sections other than Section 4 referred to in the punishing section namely Section 23(1) are not relevant. Section 4(1) (read with Section 23(1) alone is invoked. If the charge against the accused is for having actually contravened Section 4(1) punishable u/s 23(1), then surely the bar u/s 23(3)(a) would be attracted. But the accused are not charged so. The charge is (apart from the charge of cheating and that that under the Customs Act) one of criminal conspiracy to commit certain offences including an offence u/s 4(1) read with Section 23(1). Conspiracy to commit an offence is entirely different and distinct from the commission of the offence itself .If two or more persons agree to commit an offence (whether the offence agreed to be committed was ultimately committed or not) the offence of criminal conspiracy is complete. This position is made clear in Bimbadhar v. Orissa State AIR 1955 Supreme Court 469 where it has been held that the offence of criminal conspiracy consists in the very agreement between two or more persons to commit a criminal offence, irrespective of the further consideration whether or not that offence has been committed.
That being so, even when the offence agreed to be committed has in fact been committed in pursuance of the agreement (conspiracy) the accused can be charged not only for the offence so committed but also for criminal conspiracy. In such cases, there are two distinct offences one punishable u/s 120-B I.P.C. and the other for the specific offence committed in pursuance of the conspiracy. Therefore the notion that once the offence agreed to be committed has in fact been committed, the accused can be charged only for that offence and not for criminal conspiracy is unfounded. There is no meaning in saying that in such a situation there is not merely a criminal conspiracy but a completed offence. It is needless to stress that criminal conspiracy is an offence by itself and if any offence is committed in pursuance of the conspiracy, the accused are liable to be punished for such offence separately.
Earlier there was a view that where the matter has gone beyond the stage of mere conspiracy and offences are alleged to have been actually committed in pursuance thereof, a charge u/s 120-B, I.P.C. is not sustainable and that the accused who actually took part in the commission of the offence (which was in pursuance of the conspiracy) should be charged with the substantive offence while those who are alleged to have abetted it by conspiracy should be charged with the offence of abetment u/s 109, I.P.C. This theory has been exploded by the Supreme Court in The State of Andhra Pradesh Vs. Kandimalla Subbaiah and Another, At page 1244, it is observed thus:
Conspiracy to commit an offence is itself an offence and a person can be separately charged, with respect to such a conspiracy. There is no analogy between Section 120-B, and Section 109, I.P.C. There may be an element of abetment in a conspiracy, but conspiracy is something more than an abetment. Offences created by Ss.109 and 120-B, I.P.C, are quite distinct and there is no warrant for limiting the prosecution to only one element of conspiracy, that is, abetment when the allegation is that what a person did was something over and above that. Where a number of offences are committed by several persons in pursuance of a conspiracy it is usual to charge them with those offences as well as with the offence of conspiracy to commit those offences.
In the present case, though according to the prosecution a contravention of Section 4(l) punishable u/s 23 (1) of the Act (as well as the offence of cheating and that under the Customs Act) had been committed, none of the accused is charged for an offence u/s 4 (1) read with Section 23 (1). The charge is u/s 120-B, I.P.C. for a criminal conspiracy amongst the accused for committing such offence and other offences. Undoubtedly a charge u/s 120-B is cognizable by the criminal Court u/s 190 of the Code. The question is whether the jurisdiction of the Court to take such cognizance u/s 190 of the Code can be said to have been taken away by Section 23 (3) (a) of the Act.
What is contended is that though the charge against the accused is u/s 120-B, I.P.C, it is only a device to evade the bar u/s 23 (3) (a) of the Act. It is contended that the facts alleged by the prosecution constitute violation of Section 4 (1) punishable u/s 23 (1) of the Act and that the prosecution in order to evade the bar u/s 23(3)(a), has adopted the device of charging the accused for the offence u/s 120-B, I.P.C, as well as u/s 420, I.P.C. and Section 132 of the Customs Act.
In this connection the observation of the Supreme Court in Basir-ul-Huq v. State of West Bengal AIR 1953 S.C. 293 is relied on. That was a case where the Appellants before the Supreme Court gave a complaint to the police which was ultimately found to be false. The person against whom the above false complaint had been made, prosecuted the Appellants for an offence punishable u/s 500, I.P.C. The question was whether the Court was competent to take cognizance of the complaint u/s 500, I.P.C, in the face of Section 195 of the Code. The contention was that the complaint to the police officer having been found to be false, the Appellants were punishable for an offence u/s 182, I.P.C, that the offence under that section cannot be taken cognizance of by the Court without a written complaint by the public servant concerned (by virtue of Section 195 (1) of the Code) and that the charge u/s 500, I.P.C. being founded on the same facts which constitute an offence u/s 182, I.P.C, the said charge is also not cognizable without a complaint u/s 195(1) of the Code. This contention was negatived by the Supreme Court.
It has been pointed out that if the same set of facts constitute an offence which attracts the provision contained in Section 195 of the Code and also another distinct and separate offence which does not attract the said section of the Code, there can be no bar for taking cognizance of the latter-mentioned offence without resorting to Section 195 of the Code. It is to be noted that the giving of the complaint to the Police Officer constituted the offence u/s 182, I.P.C, as well as that u/s 500 I.P.C. In other words, the same set of facts constituted two different offences, one punishment u/s 182, I.P.C, and the other punishable u/s 500 I.P.C. Even under such circumstances, it was held that the cognizance of the Court is not barred by Section 195 of the Code with regard to the latter-mentioned offence.
What is relied on by the accused is the observation contained in the above judgment of the Supreme Court where it is stated that the provisions of Section 195 of the Code cannot be evaded by resorting to devices or camouflages. This is what the Supreme Court observed at page 296.
Though, in our judgment, Section 195 does not bar the trial of an accused person for a distinct offence disclosed by the same facts and it is not included within the ambit of that Section, it has also to be borne in mind that the provisions of that section cannot be evaded by resorting to devices or camouflages. The test whether there is evasion of that section or not is whether the facts disclose primarily and essentially an offence for which a complaint of the Court or of the public servant is required. In other words, the provisions of the section cannot be evaded by the device of charging a person with an offence to which that section does not apply and then convicting him of an offence to which it does, upon the ground that such latter offence is a minor offence of the same character, or by describing the offence as being one punishable under some other section of the I.P.C, though in truth and substance the offence falls in the category of sections mentioned in Section 195, Code of Criminal Procedure, Merely by changing the garb or label of an offence which is essentially an offence covered by the provisions of Section 195 prosecution for such an offence cannot be taken cognizance of by misdescribing it or by putting a wrong label on it.
I fail to see how the above observations would help the accused in the present case. What the Supreme Court has pointed out is while a person is an accused is really for an offence which comes under the mischief of Section 195 of the Code, the prosecution cannot be allowed to evade the bar just by misdescribing of putting a wrong label to the charge. Can the charge of criminal conspiracy in this case be called a misdescription or a wrong label to the charge u/s 4(1) read with Section 23(1) of the Act? The charge reads that the accused had entered into an agreement to do certain illegal acts including the commission of an offence punishable under Section4 (i) read with Section 23 (1) of the Act. On this charge the accused can never be convicted for an offence u/s 4 (1) read with Section 23 (1) itself. If the accused are found guilty they can be convicted only for the offence u/s 120-B I.P.C, and nothing more. The mere fact that Section 4(1) and 23(1) of the Act are referred to in the charge of criminal conspiracy should not cloud the issue. It was already noticed that criminal conspiracy is complete once two or more persons agree to commit an offence. The charge in this case is only that the accused had entered into such an agreement which is punishable u/s 120-B, I.P.C.
The commission of the offence of criminal conspiracy always precedes the commission of offence or offences which are committed in pursuance of the conspiracy. In this case also the transgression of Section 4(1) of the Act which is punishable u/s 23 (1) of the Act had taken place only when foreign exchange was paid to Rahimi, the nominee of the first accused. This event had taken place very much subsequent to the alleged criminal conspiracy. Several months prior to the actual payment of foreign exchange, the letters of credit had been opened. According to the prosecution, the criminal conspiracy had been hatched even prior to such opening of letters of credit.
The ''facts ''constituting a particular offence which is said to have been committed in pursuance of a criminal conspiracy can never constitute an offence of a criminal conspiracy itself, for the simple reason that the conspiracy is hatched earlier to the commission of the other offence. Facts constituting a criminal conspiracy would be the facts relating to the actual agreement between the accused. The facts relating to events that happen in pursuance of the conspiracy cannot be said to "constitute" the offence of criminal conspiracy. Those facts relating to the subsequent events are adduced only as circumstantial evidence to prove the alleged criminal conspiracy.
Supposing in this case the prosecution was able to get direct evidence about the actual hatching of the criminal conspiracy, then it need not even refer to the facts relating to the subsequent events that took place in pursuance of the conspiracy. I am saying this only to emphasise that the facts spoken to by the prosecution including the facts relating to the actual payment of foreign exchange are only pieces of circumstantial evidence to prove the alleged criminal conspiracy.
Thereafter, it is clear, the same set of facts that constitute an offence u/s 4(1) read with Section 23(1) of the Act cannot constitute the offence of criminal conspiracy. The Supreme Court, in the above case, has held that even where the same set of fact constitute an offence coming under the provision containing the bar for jurisdiction and also an offence which does not come under the said bar, there is no impediment to charge the accused for the latter offence (without a written complaint by the proper authority), provided the two offences are distinct. In the present case, I have sufficiently indicated that the charge of criminal conspiracy is an independent distinct offence than the one punishable u/s 4(1) read with Section 23(1) of the Act and further the same set of facts do not ''constitute'' both the offences.
It may also be remembered that there should be two or more persons to enter into a criminal conspiracy, whereas as an offence u/s 4(1) read with Section 23(1) of the Act can be committed by a single person. In the present case it should be noted that while the prosecution charged on the whole seven accused for the offence of criminal conspiracy, one of the objects of which was to commit an offence u/s 4(1) read with Section 23(1) of the Act, it is not the allegation of the prosecution that all the actually committed the said offence in pursuance of the criminal conspiracy. The Director of Enforcement had conducted an enquiry only against the first accused as contemplated u/s 23(d)(1) of the Act. If he had so chosen he could have filed a complaint in the criminal Court as per the proviso of the above said Section, without imposing a penalty. That would be a complaint for an offence u/s 4(1) punishable u/s 23(1) of the Act. In such a complaint no doubt he can include the offence u/s 120-B I.P.C. But as far as the other accused are concerned, the procedure contemplated u/s 23-D of the Act would have no application inasmuch as they are not said to have transgressed the provision contained in Section 4, enabling the Director of Enforcement to adjudicate against them. This again would go to show that the offence of criminal conspiracy is entirely different from the offence which is said to have been committed in pursuance of the conspiracy.
Mr. Venugopal relied on three decisions of the Bombay High Court in support of his contention that Section 23(3)(a) of the Act is a bar for taking cognizance of the offence u/s 120-B, I.P.C. The first case is the one reported in Mis: Phoneix Mills Ltd. v. Central Bureau of Investigation 75 BLR 87 that is a case where the accused were said to have disposed of certain goods in contravention of the conditions of the import licence and thereby committed an offence punishable u/s 5 of the Imports and Exports (Control) Act 1947. Section 6 of the Said Act prohibited taking cognizance of the above offence without a written complaint by an officer authorised by the Central Government. But the case was charged by the Police purporting to be u/s 120-B I.P.C, read with Section 5 of the Imports and Exports (Control) Act. A Division Bench of the Bombay High Court held that the case cannot be taken cognizance of. As the charge sheet filed by the police stood, if I may say so with respect, the view that it came within the mischief of the bar u/s 6 of the Act is unexceptionable. The charge as extracted at page 90 of the report was:
Thus in pursuance of the said conspiracy during the said period at Bombay and in furtherance of the common intention of the accused Nos. 2 to 4, the imported goods mentioned above have been disposed of by the accused persons in contravention of the conditions mentioned above. Thus the accused persons mentioned above have committed the breach of conditions of the Imports and Exports (Control) Act, 1947, and these accused persons have committed offences u/s 120-B I.P.C, read with Section 5 of the Imports and Exports (Control) Act 1947,
It may be seen that it is in reality a charge u/s 5 of the said Act, for it is explicit from the wording of the charge that the accused were sought to be punished for what they were alleged to have committed in pursuance of the conspiracy, and not for the conspiracy itself, though Section 120-B I.P.C,, is mentioned as the punishing section. I am of the view that on that charge the accused cannot be convicted for criminal conspiracy but they can be convicted for an offence u/s 5 of the Import and Exports (Control) Act. Therefore the charge said to be for an offence u/s 120-B, I.P,C, was only a camouflage for a charge u/s 5. That is certainly not permissible.
Even if the charge had been properly framed for criminal conspiracy, a view that on the facts of that case no such conspiracy was disclosed would be justified, for the only allegation is that all the accused sold the imported goods contrary to the conditions of import. The factum of sale constitutes an offence u/s 5 of the Imports and Exports (Control) Act, but that by itself cannot lead one to infer that there ought to have been a criminal conspiracy preceding the sales. It is needless to point out that in every case where two or more persons commit an offence, it cannot be said that they ought to have entered into a criminal conspiracy to commit that offence.
But I respectfully disagree with the reasons given by the learned Judges for quashing the charge. One reason is based on the theory that conspiracy is one form of abetment and once the overt act contemplated by the conspiracy is committed, there can be only a charge of abetment and that there can be no charge of criminal conspiracy. This goes counter to the decision of the Supreme Court in The State of Andhra Pradesh Vs. Kandimalla Subbaiah and Another,
Another reason given by the learned Judges appears to be that the offence of criminal conspiracy is a lesser offence than the offence committed in pursuance of the conspiracy. This again is against the principle laid down in the above decision of the Supreme Court. As criminal conspiracy is a separate distinct offence, there is no question of the same being a lesser offence than that disclosed by the overt act committed in pursuance of the conspiracy, apart from the fact that the punishment for criminal conspiracy is not lesser than that for the other. It was already noticed that on a charge for the overt act (said to have been committed in pursuance of a conspiracy) the accused cannot possibly be convicted for criminal conspiracy to commit the act. If it is lesser offence, that would not be so.
The learned Judges referred to Rex. v. Burnett and Ors. 1951 1 All E.R. 917. But that was not based on any of the above theories. It is a case of indictment of the accused for conspiracy to contravene Section (1) of the Auctions (Bidding Agreement) Act, 1927, "by, being dealers, agreeing to offer and accept consideration as an inducement or reward for abstaining from bidding at sales by auction." The said Section 1(1) itself provides for punishment of such agreement (conspiracy) for it says, "If any dealer agrees to give consideration to any other person as an inducement or reward for abstaining from bidding at sales by auction shall be liable on summary conviction to a fine not exceeding �.100 or a term of imprisonment for any period not exceeding six months or to be both such fine and imprisonment. "It would be thus seen that it was a clear case of the particulars of conspiracy given in the charge were in terms (or at least substantially the very offence which the said Act prescribed u/s 1(1). Therefore the court held that only the summary procedure contemplated under the above Act had to be followed. This has absolutely no application to a case where criminal conspiracy and the overt act which is said to have been committed in pursuance of the same are two distinct and independent offences.
Mr. Venugopal referred to the above English Case, not in connection with his contention of the bar contained in Section 23(3) (a) of the Act, but only in connection with his contention on Section 23(3) (b) of the Act. However it must be remembered that Section 21 to which Section 23 (3) (b) applies does not deal with conspiracy in contrast to the provision in the English Act and therefore cognizance of a charge of criminal conspiracy is not barred by Section 23(3)(b). That is the decision by the Supreme Court referred to earlier.
The next Bombay case is an unreported decision of a Single Judge in Criminal Revision Application Nos. 402 of 1973 and 501 of 1973 The State of Maharashtra v. R. Rajan alias Rameiah Rajan and others), the judgment being dated 20th November 1973. There the accused were charge-sheeted, for an offence u/s 120-B, I.P.C. read with Sections419, 420, 467, 471 and 468 I.P.C and Sections 4 and 5 of the Act. The learned Judge held that the charge sheet was not cognizable by virtue of Section 23(3) of the Act (It is not stated whether Clause (a) or Clause (b) of the above said section is applicable but from the discussion it appears Clause (a) had been invoked). The learned Judge held that the conspiracy, the cheating and the fabrication were all integrally and inseparably connected and woven with the ''truth and substance'' of the offence of contravening Sections 4 and 5 punishable u/s 23(1) of the Act and that if the offence under the Act are taken away nothing remains in the charge sheet. It was in that view it was held that the charge-sheets were not cognizable by the Court, there being no complaint by the Director of Enforcement as contemplated u/s 23(3). With great respect to the learned Judge, I am unable to agree with the reasoning. The object of the criminal conspiracy being to commit transgression of the provisions contained in Sections 4 and 5 of the Act apart from committing other offences, it is true that the conspiracy is closely connected with such transgression, but the question is whether the said conspiracy is not a distinct and a separate offence. There is no question of taking away the offence under the Act or adding that. The transgression of the provisions of the Act is referred to in a charge of conspiracy only as the object of the conspiracy. In a charge of criminal conspiracy though there might be reference to the provisions of the Act, the accused are not sought to be charged for the transgression of those provisions.
The third decision of the Bombay High Court which is also unreported is by a Division Bench rendered in Criminal Revision Application No. 582 of 1974 (The Lennart Schussler and Another Vs. The Director of Enforcement and Another, the judgment being dated 23rd June 1976. In that case originally there were two complaints. One was by the Assistant Collector of Customs. The other was by the Director of Enforcement under the Act alleging that by agreement among the accused imports were made and foreign exchange armed against the provisions of the Act. But, the complaint by the Director of Enforcement had not been properly laid inasmuch as he had not followed the provisions contained in Section 23 (d) of the Act. Therefore what survived, when the matter came up before the Division Bench, was only the complaint by the Assistant Collector of Customs presumably for offence under the Customs Act. However, the learned Judges went into the question whether the alleged agreement between the accused fell u/s 21 of the Act, and then concluded that the complaint by the Assistant Collector of Customs not cognizable. With respect, I am unable to follow.
It was already noticed that in Lennart v. Director of Enforcement, the Supreme Court held that a charge for criminal conspiracy can be taken cognizance of without a written complaint by Director of Enforcement and that the same does not come u/s 21 of the Act (if it came u/s 21 and thereby became punishable u/s 23 (1-A). Section 23(3)(b) of the Act would bar cognizance without a written complaint'' by the Director of Enforcement). In that case, it had not even been mentioned before the Supreme Court that inasmuch as in pursuance of the alleged criminal conspiracy overt acts punishable u/s 23 (1) of the Act had been committed, the prosecution was evading the bar contained in Section 23(3) (a) of the Act.
The further question is whether cognizance can be taken of the charges u/s 420, I.P.C. and that u/s 132 of the Customs Act. It is contended that the facts that constitute a specific offence u/s 4(l) punishable u/s 23 (1) of the Act also constitute the offence of cheating. Assuming it to be so, it is not possible to hold that the offence of cheating is not an independent and distinct one from that punishable u/s 23 (T) of the Act. The facts constituting the offence u/s 132 of the Customs Act are not even the same as those constituting an offence punishable u/s 23 (1) of the Act. There can be no doubt that it is a distinct offence.
Once these offences are distinct separate offences and not the same as the offence punishable u/s 23 (1) of the Act, cognizance without a complaint by the Director of Enforcement cannot be barred. Only when the prosecution really charges the accused for an offence punishable u/s 23 (1) of the Act but in order to evade the bar contained in Section 23(3) adopts a device or camouflage making a misdescription or putting a wrong label, the bar would be attracted. If the offence charged is not really one punishable u/s 23(1) but a distinct separate offence, then the question of the prosecution adopting a device or camouflage or misdescribing or putting a wrong label does not arise. If really two offences are made out for one of which a special complaint is necessary and for the other such a complaint is not necessary, then in a prosecution for the latter offence for which no special complaint is necessary it cannot possibly be said that the prosecution is evading the provision requiring a special complaint. The question of evasion would arise only when the offence charged is one coming within the purview of the bar of cognizance without a special complaint, but the prosecution by misdescribing or putting a wrong label to the offence or by some device or camouflage, charge the accused without such a special complaint. That is the ratio of the decision of the Supreme Court in Basir-ul-huq and Others Vs. The State of West Bengal, referred to above.
In S.A. Venkataraman Vs. The State, at page 110 their Lordships of the Supreme Court held that if a general power to take cognizance of an offence is vested in a Court, any prohibition to the exercise of that power must be confined to the terms of the prohibition. The offences under Sections 120-B and 420, I.P.C. as well as that u/s 132, Customs Act do not come under the prohibition contained in Section 23 (3) of the Act. Therefore, there can be no bar for the cognizance of the said offence without a complaint as contemplated under the said Section. Of course it would be a different matter if those Section are mentioned in the charges only as a device to get over the bar. So long as they are distinct offences and cannot be said to be a misdescription or a wrong label of an offence coming under the bar, there is no question of the prosecution adopting any device to get over the bar.
Mr. Venugopal referred to V.V.L. Narasimhamurthy, In re AIR 1955 Mad 237 a decision of a single Judge of this Court. In this case it has been observed that where on facts disclosed in the complaint two offences are made out, one u/s 193 I.P.C. for which a complaint by Court is necessary and the other under Sections 467 and 471, I.P.C for which a complaint by Court is not necessary, the party should not be allowed to evade the provisions relating to a complaint by Court and that the Court should not take cognizance unless there is a complaint by Court as required by Section 195 (1)(b) of the Code. Unless on facts, this case is understood as holding that the offences are not distinct and that one is a camouflage for the other, it appears to be not in accord with Razir-ul-Huq v. State of West Bengal (Supra) and S.A. Venkatraman v. The State (Supra)
The result is there is no bar for the cognizance of the charge u/s 120-B read with the various provisions referred to in the charge sheet, as well as those u/s 420 I.P.C. and u/s 132 of the Customs Act without a written complaint by the Director of Enforcement.
The observation of the Court below that interests of ''justice do not require that first accused should be prosecuted as he had already been fined by the Director of Enforcement for contravening the provision of the Act is uncalled for and without jurisdiction. He is being prosecuted for other offences not covered by the adjudication by the Director of Enforcement.
The only remaining question is whether the facts disclose the necessary ingredients of the offence u/s 420, I.P.C. as well as that u/s 132 of the Customs Act.
As already seen accused 1 and 7 were charged for an offence u/s 420, read with Section 34, I.P.C. on several counts. Accused 1 and 4 to 7 were charged for similar offence on one count. I have already held that there is no material to commit accused 4 to 6 for criminal conspiracy .From the acts attributed to them it is also not possible lo hold that they are parties to the offence of cheating.
The only circumstance, as far as accused 5 and 6 are concerned, is that they had unauthorisedly parted with the exchange control copy of the licence of Safiulla and Company (to be made use of by the first accused for opening a letter of credit.). The fourth accused is said to have presented the particular letter of credit. As there is nothing to show that any of these accused should have had knowledge of the over invoicing of the goods, they cannot be charged for the offence of cheating.
As the seventh accused is dead and the charges against him had abated the charge of cheating and that under Customs Act can survive only as against the first accused. On behalf of the first accused, it is contended that there is no element of cheating in the transaction, much less an offence u/s 420, I.P.C. having been committed.
This contention is not acceptable. Section 415, I.P.C. defines the offence of cheating. The ingredients are (1) The accused should play deception and fraudulently and dishonestly induce the victim to act. (2) The latter, due to such deception, inducement etc., should either (i) deliver any property to any person or consent that any person shall retail any property; or (ii) do anything which he would not do if he were not so deceived or omit to do anything which he would not omit if he were not so deceived, and such act or omission causes or is likely to cause damage or harm to the victim either in body or mind, or reputation or property.
It would be seen that there can be cheating even without the victim delivering any property as a result of the deception. If there is delivery of property due to deception (or certain other circumstances exist), the offence of cheating would be punishable u/s 420, I.P.C. Even if there is no delivery of property (or the other circumstances mentioned in Section 420, I.P.C. do not exist) there could be cheating, but it would be punishable only u/s 417, I.P.C. which is a lesser offence than that punishable u/s 420, I.P.C.
In the present case, accused 1 is said to have played deception on the Bank of Tokyo, Bombay and fraudulently and dishonestly induced the bank to open letters of credit. The deception and fraud lies in the fact that the accused wanted to earn foreign exchange by illegal means, but it appears that the letters of credit were for the purpose of importing goat skins to the value shown. If these facts are established, to make out an offence of cheating there need not necessarily be delivery of property. It is enough if damage or harm is caused or is likely to be caused "in body, mind, reputation or property". The victim being a bank there may not be harm to body or mind. But it cannot be said that there would be no harm or likelihood of harm to reputation or property. The bank is a licensed dealer in foreign exchange and if the accused is allowed to earn foreign exchange illegally through the media of the bank, undoubtedly its reputation is likely to be affected. There is also the likelihood of harm to its property. Letters of credit had been opened in the names of the various licensees who were really nowhere in the picture. If none cleared the shipping documents, it would particularly result in harm to the property of the Bank.
Mr. Venugopal referred to Tarapore and Co. Vs. V/O Tractoroexport and Another, There the Supreme Court points out that once a letter of credit is opened, it constitutes a bargain between the Banker an absolute obligation to pay irrespective of any dispute there may be between the parties as to whether the goods are up to contract or not. This does not help regarding the question whether the facts constitute cheating.
It is contended that as the full value as per the shipping documents had been paid in Indian Currency to the Bank of Tokyo, Bombay, there can be no question of cheating as the said bank had released foreign exchange only corresponding to the value of the Indian Currency paid. This contention overlooks the fact that according to the prosecution, the bank had been made to release foreign exchange far in excess of what it would have released but for the deception. The fact that Indian Currency had been paid (in retiring the shipping documents) is no answer to the case that due to deception played on it the bank had released foreign exchange which it would not have been released otherwise.
I am also not impressed with the contention that the bank cannot be said to have parted with any property (due to deception played on it) and that therefore the offence would not fall u/s 420, I.P.C, Foreign Exchange is property. The fact that Bank of Tokyo did not pay foreign exchange to any one but it had only a book adjustment by which the bank at Tehran paid may not make any difference. Assuming that the offence punishable u/s 420, I.P.C. is not made out, still the accused would be liable to answer a charge u/s 417, I.P.C. It is for the trial Court to decide whether the charge of cheating is proved; and if so whether the accused is liable to be convicted under Section420, I.P.C. or u/s 417, I.P.C.
The decision of Krishnaswamy Reddy, J. in Public Prosecutor v. N.A. Abdul Wahab and Ors. 1970 L.W. CrI. 27 (S.N.) the judgment being dated 10th March 1970 is relied on by Mr. K.K. Venugopal. In that case the reason given by the learned Judge for holding that the charge of cheating is not made out is that the Banks in India or the Reserve Bank were not concerned with the nature or the quality of the goods imported into this country under the licence and they were concerned only in respect of the amounts covered by the licences in respect of the import of goods and whether the amounts to be remitted to the foreign country exceeds the limit mentioned in those licences.
But the learned Judge in a subsequent case, namely B.P. Patel and Anr. v. State by Special Police Establishment, Madras Crl. A. 716 of 1969, the judgment being dated 30th April 1974, has indicated that the above view of his in Criminal Revision Case No. 865 of 1969 is not correct. The learned Judge, in the latter case, after observing that in the earlier case the correct position had not been brought to his notice, held that the conviction of the accused (in the latter case) for the offence u/s 420 I.P.C. (under circumstances similar to the present case) is correct.
Therefore, there is undoubtedly a prima facie case for committing accused-1 for the offence u/s 420, I.P.C. on the several counts.
The charge u/s 132, Customs Act also can be only against the first accused as the seventh accused is dead. The substance of the allegation is that the first accused (along with the seventh accused) had caused false declarations in the shipping documents and invoices to be made in respect of the value of the goods. u/s 132 of the Customs Act making or causing to be made etc., of any declaration, statement or document knowing or having reason to believe that such declaration, statement or document is false in any material particular is punishable. The contention on behalf of the first accused is that according to the prosecution there had been only an over-invoicing of the goods and not an under-invoicing and therefore the falsity of the declaration cannot be said to be in respect of "any material particular", as contemplated in Section 132 of the Customs Act. Particularly after the coming into force of the Act (Foreign Exchange Regulation Act) it is not possible to accede to the contention that a false declaration of over-invoicing is not one coming u/s 132 of the Customs Act. A false declaration giving a very highly inflated value of the good would prima facie be a declaration which is false in material particular as contemplated under the said section.
The result is the revision petition is allowed against accused 1 to 3 but dismissed against accused 4 to 6. The papers are directed to be sent to the Chief Metropolitan Magistrate, Egmore, Madras, who will frame the necessary charges against accused 1 to 3 as indicated above and commit them to take their trial.