Union of India vs K.R. Abdul Majeed and another

Swamikkannu, J.—This is an appeal by the Union of India represented by the Director of Enforcement, Enforcement Directorate, New Delhi, u/s 377(2) of the Code of Criminal Procedure against the judgment, dt. 17th November, 1979 on the file of the Court of the learned Chief Metropolitan Magistrate, Egmore, Madras, inter alia contending that the trial Court ought not to have shown lenience in awarding the sentence since the offence under the Foreign Exchange Regulation Act is an economic offence.

The Director of Enforcement, Enforcement Directorate, New Delhi, has given the complaint against the accused (1) K.R. Abdul Majeed, and (2) S.M. Amir Ali, the Respondents herein u/s 120-B of the I.P.C. read with Section 5(1) (aa) and 5(1) (c) of the Foreign Exchange Regulation Act, 1947, stating that A1, Abdul Majeed doing textile business at No. 213/51, Tude Street, Saigon, is an Indian National and A2 Amir Ali is a native of Koothanallur in Tanjore District, that on information that A1 was arriving at Meenambakkam Airport from Singapore by Air India Flight on 7th February, 1970 and A2 would also be present at the Airport to receive A1, the Officers of the Enforcement Directorate, waited at the Airport to apprehend the accused on 8th February, 1970. A1 was stopped at the Airport and was accosted by T.V. Sadagopan and his person was searched u/s 19-A of the Foreign Exchange Regulation Act, 1947. Incriminating documents like chits, carbon copies of manuscript letters written by A1 addressed to A2 at Koothanallur containing Code words instructing A2 to make payments of money to various persons in India were seized u/s 19-A of the Foreign Exchange Regulation Act. A1 gave a voluntary statement before T.V. Sadagopan on 8th February, 1970 admitting that he used to write letters to A2 using code words instructing him to make illegal payments to persons in India. Sheet No. 14 of the documents seized from A1 which was a carbon copy of a letter, dated 31st January, 1970 written by A1 to A2 contained the particulars of the names and addresses of various persons in India and the amounts to be paid to each one of them and according to the admission by A1, Amir Ali used to present the chit containing the Code message for receipt of payment of Indian currency to a person at No. 25/2, Pycrofts Road, Triplicane, and would receive from that person the amounts and distribute the amounts to various persons mentioned in the letters. These transactions were going on for along time as a result of the conspiracy entered into between the accused. The payments were made by order or on behalf of A1 resident outside India, in contravention of Section 15 (1) (aa) and 5(1) (c) and Section 23 (1) (b) of the Foreign Exchange Regulation Act, 1947. On 8th February, 1970, A2 had come to receive A1 at the time to Airport and was apprehended by Sri Subramaniam, Assistant Enforcement Officer, Madras at the Meenambakkam Airport and A2 voluntarily gave a statement corroborating the statement given by A1. The statement was recorded by Sri Subramaniam and A2 admitted having received the original of sheet No. 14 dated 30th January, 1970 seized from A2.

On 9th February, 1970, the Enforcement Officers searched the house of A2 at No. 10, Chinnappali Street. Koothanallur, in the presence of two independent witnesses, Mohamed Basheer and R.C. Vasudevan and seized under a mahazar, five items of documents marked A, B, C, D and R. A2 further gave a statement after the seizure of the documents admitting the entries in those documents having been made by him and the entries relate to the payments received by him under instructions, sent by A1 from Saigon, for payments to be made to various persons named in the letters. The payments were made in execution and in furtherance of the conspiracy between them. The documents showed that between 1969 and 1970, A2 had received 29 payments amounting to Rs. 50 lakhs from a local person in India, by order or on behalf of A1 and made 332 separate payments to persons named in India, in Indian currency amounting to Rs. 48,63,850 by order or on behalf of A1, 13 persons whose names were found in the documents C&F to whom payments were made in India, by A2 were contacted and all of them gave voluntary statements, admitting receipt of the payments from A.2.

The following are the persons:

Sri M. Ponnalagappa Chettiar, S/o. Murugappa Chettiar, 2631, Manojiappa Street, Thanjavur.

Sri R.M. Subbiah Chettiar, Kadivastralaya, East Main Road, Pudukkottai.

Sri S. Veerappa Chettiar, S.V.R. Cycle Mart, Kallukkatti, Karaikudi.

Sri R. Veerappan, 56 Nachiarkoil. West Street, Woriyur, Trichy.

Sri K.R.R.M. Ramanathan Chettiar, Ramanilayam, I-C/A, Katcheri Road, Mayuram .

Sri S. Abdui Gafoor, Perumal Koil Street, Karaikal,

Sri Haji K.M. Abdul Razack, Pallivasal Street, Ayappadl Village, Mayuram Taluk,

Sri N.K. Krishnappa Chettiar, Mo. 22, Banakkara Street, Mannargudi.

Sri S. Jayaraman, S/o. V. Sitaraman, No. 50-A, Agraharam, Tiruvanaikoil Trichy-5.

Sri. Valliappan, 232, A/1, South Market Street, Madurai,

Sri M. Raman. S/o. Muthu Karuppan, 1-A, Kizhavadempokki Street, Madurai.

Sri S.R. Lourduswamy, S/o. Irudyasami, St. James Building, Thanjavur Main Road Tiruvarambur, Trichy-5.

A.2 was served with two separate show cause notices dated 9th December, 1970 by the Director of Enforcement, u/s 5(1) (aa) and Section 5(1) (c) of the Foreign Exchange Regulation Act, 1947, for having received Rs. 50 lakhs by order or on behalf of A1 in 29 payments and for having made 332 payments amounting to Rs. 48,63,850. A2 appeared at the time of personal hearing and pleaded guilty to the charges u/s 5(1) (aa) and 5(i) (c) of the Foreign Exchange Regulation Act, 1947. In view of the gravity of the offences, the adjudication authority found the penalty he was empowered to impose would not be adequate, ordered prosecution for the offences u/s 5(1) (aa) and 5(1) (c) of the Foreign Exchange Regulation Act and the sanction of the Government u/s 196-A of the Code of Criminal Procedure was obtained. Hence the complaint was before the lower Court.

The prosecution examined initially eight witnesses, P.W.1 T.V. Sadagopan, Chief Enforcement Officer, P.W.2 B. Edward, Superintendent of Central Excise, P.W.3 S. Subra-maniam, Inspector of Central Excise, P.W.4 Krishnaswami, Assistant Director of Enforcement, P.W.5 R.M. Murugappan, Enforcement Officer, P.W.6 K. Thiruvadinathan, Superintendent, Central Excise at Madurai P.W.7 H.N. Bhat, Chief Enforcement Officer at Bangalore and P.W.8 R. Chandran, Sales Promotion Officer in Air India, Madras.

With respect to the evidence unfurled through the above eight witnesses, the accused were charged by the lower Court. With regard to the incriminating circumstances in the evidence of P. Ws.1 to 8, they have denied their versions. A.1 stated that the statement was given by him at the Custom House only and it was not given voluntarily. A.2 has admitted that he gave voluntarily. But A.2 has admitted making payment to P.W.5, but has denied knowledge to other persons to the charges framed under Ss.5(1)(aa) and 5(1) (c) of the Foreign Exchange Regulation Act, 1947, read with S. 120(B) of the Indian Penal Code against A1 and A2 and u/s 5(1) (aa) and 5(l)(c) against A1. Both the accused pleaded not guilty. The accused have also further cross-examined P. Ws. 1 to 8.

The prosecution examined four more persons, P.W.9 R.M. Subbiah, P.W.10 Pon Alagappa Chettiar, P.M. 11 KR. Mm. Ramana-than Chettiar and P.W. 12 NK.M. Krishnappa Chettiar. P.1 to 55 were marked on behalf of the prosecution. M.O.1 series Indian Currency to the tune of Rs. 3,100 were also marked as material objects on behalf of the prosecution, before the lower court. On behalf of the defence, D.1 to D.3 were marked.

On the point whether the prosecution has established the charge against the accused beyond reasonable doubt, the trial court held that the prosecution has clearly established the charges against the accused, and found them guilty of the charges framed against them. A.1 and A.2 were each sentenced by the trial court to undergo rigorous imprisonment for six months and in addition A.1 was sentenced to pay a fine of Rs. 3,000 in default to suffer rigorous imprisonment for three months and A.2 was sentenced to pay a fine of Rs. 2,000 in default to suffer rigorous imprisonment for one month, in respect of the first charge u/s 5(1) (aa) and 5(1) (c) of the Foreign Exchange Regulation Act read with Section 120-B of Indian Penal Code. In respect of the second charge u/s 5(1) (aa) and 5(1) (c) read with Section 23(l) (b) of the Foreign Exchange Regulation Act, against A.2, A.2 was sentenced to undergo rigorous imprisonment for six months and the sentences under both the charges were ordered to run concurrently.

This appeal has been filed for enhancing the sentence imposed on the Respondents herein by the lower court.

The point for consideration is whether the appeal filed by the Appellant-Union of India represented by the Director of Enforcement, Enforcement Directorate, New Delhi, is maintainable u/s 377(2) of the Criminal Procedure Code.

Section 377 of the Code of Criminal Procedure reads as follows:

Appeal by the State Government against sentence: (1) save as otherwise provided in sub S.(2), the State Government may, in any case of conviction on a trial held by any Court other than a High Court, direct the Public Prosecutor to present an appeal to the High Court against the sentence on the ground of its inadequacy.

(2) If such conviction is in a case in which the offence has been investigated by the Delhi Special Police Establishment Act, 1946, or by any other agency empowered to make investigation into an offence under any Central Act other than this Code, the Central Government may direct the Public Prosecutor to present an appeal to the High Court against the sentence on the ground of its inadequacy.

(3) When an appeal has been filed against the sentence on the ground of its inadequacy, the High Court shall not enhance the sentence except after giving to the accused a reasonable opportunity of showing cause against such enhancement and while showing cause, the accused may plead for his acquittal or for the reduction of the sentence.

The present appeal has been filed by the Director of Enforcement, Enforcement Directorate, New Delhi. It is not an offence investigated by the Delhi Special Police Establishment Act, 1946, or by any other agency empowered to make investigation into an offence under any Central Act or the Criminal Procedure Code. Though the Counsel for the Central Government may appear in this appeal, yet it is relevant to note that the appeal has been presented only by the Enforcement Director, Directorate of Enforcement, New Delhi. In the instant case, the complainant himself is Director of Enforcement, Enforcement Directorate, New Delhi. So the appeal has been preferred by him before this Court. The point is whether such an appeal preferred by the Director of Enforcement, Enforcement Directorate, New Delhi, can come under the purview of Section 377(2) of the Code of Criminal Procedure. The investigation in this case had been done by the Enforcement Directorate, Madras. In similar circumstances, it was held in The Assistant Collector of Central Excise (Preventive), Madras v. V. Krishnamurthy 1983 L.W. (Crl.) 196 that an appeal preferred by the Assistant Collector of Central Excise u/s 377(2) of the Code of Criminal Procedure through his counsel, on the ground of inadequacy of the sentence awarded, is not competent, and is liable to be dismissed for that reason. It is observed by the Bench of our High Court in the said decision as follows:

The Supreme Court in Eknath Shankarrao Mukkawar Vs. State of Maharashtra, after having observed that if in a Central Act not being the Criminal P.C., provision is made empowering a particular agency to make investigation of offences under that Act, then the Central Government alone will be the competent authority to prefer an appeal u/s 377(2), Crl.P.C., held that the true test, therefore, u/s 377(2), Crl.P.C., is whether, the offence is investigated by any other agency empowered to make investigation under the Central Act other than the Code of Criminal Procedure In other words, there may be an express provision in the Central Act empowering the making of investigation under that Act.

Now, bearing in mind the principles laid down in all the above cited cases, when the question involved in this case is examined, we are of the view that the customs officer and the officer under the Gold (Control) Act, is not empowered to make investigation in the strict legal sense of the terms as used in Section 377(2), Code of Criminal Procedure for the following reasons:

There is no express provision found in the Customs Act or under the Gold (Control) Act nor has any such provision been brought to the notice of this Court by the counsel for the Appellant just like Section 3 of the Delhi Special. Police Establishment Act, empowering the agency under the Customs Act or under the Gold (Control) Act to make investigation under the relevant Act.

There is no provision in these Acts similar to Section 173. Crl.P.C., for the filing of a final report on completion of investigation.

The initiation of prosecution under the Customs Act is made only on the filing of a complaint in writing, that too with the previous sanction of the Collector of Customs. Similarly under the Gold (Control) Act the prosecution is launched only on a complaint in writing made by the officer specified in the said Act.

The cognizance of an offence under these Acts is taken by the Court only u/s 190(1)(a) on receipt of a complaint of facts constituting such an offence, unlike cases where cognizance is taken by a Court u/s 190(1) (b) on receipt of a report filed u/s 173, Crl.P.C.

Therefore, from the mere fact that the formation of opinion as to whether or not there is a case to place the offender on trial rests on the officer of Customs, it cannot be said that there is ''investigation'' within the meaning of the said term in Section 377(2), Code of Criminal Procedure as viewed by Maheswaran, J. Further we feel that Maheswaran, J has distinguished Eknath Shankarrao Mukkawar Vs. State of Maharashtra, on the ground that the powers of the Food Inspector are very different from the powers of the Customs Officials. Similarly, that decision cannot be distinguished, as contended by Mr. C. Krishnan, on the ground that the agency under the Prevention of Food Adulteration Act is a machinery belonging to the State Government. But the true test laid down by the Supreme Court in Eknath Shankarrao Mukkawar Vs. State of Maharashtra, for the application of Section 377 (2), Crl.P.C., is to find out whether there is a specific provision in the Central Act concerned empowering any agency to make investigation into the offence under that Act, thereby meaning that in the absence of any such provision there is no ''investigation'' within the meaning of S 377(2). Therefore, even though in Eknath Shankarrao Mukkawar Vs. State of Maharashtra, the fact related to an offence under the Prevention of Food Adulteration Act, the principle laid down was clearly applicable to all the Central Acts. Hence, in view of all the discussions made above, we are in agreement with the view taken by Suryamurthy, J., holding that the customs officer is not an agency empowered to make ''investigation'' within the meaning of that expression as used in Section 377(2), Crl.P.C.

On the analogy of the above principles, we hold that the Assistant Collector of Central Excise under the Gold (Control) Act is also not an agency empowered to make investigation within the meaning of Section 377(2), Crl.P.C.

In the result, we conclude that the appeals preferred by the learned Counsel on behalf of the Appellants u/s 377(2), Crl. P.C., are not competent and accordingly, all the appeals are dismissed.

Applying the ratio decidendi in the above bench decision of our High Court, I find that the present appeal preferred by Union of India represented by the Director of Enforcement, Enforcement Directorate, New Delhi, is not maintainable. Hence this appeal is dismissed as not maintainable.