RADHEYSHYAM KEJRIWAL v. STATE OF WEST BENGAL & Anr.

• [2011] 4 S.C.R. 889 RADHEYSHYAM KEJRIWAL v. STATE OF WEST BENGAL AND ANR. (Criminal Appeal No. 1097 of 2003) FEBRUARY 18, 2011 [HARJIT SINGH BEDI, P. SATHASIVAM AND CHANDRAMAULI KR. PRASAD,. JJ.] A B Foreign Exchange Regulation Act, 1973- ss. 50, 51 and 56 - Scope and applicability of - Charges against the C appellant for contravening the provisions of s.9(1)(f)(i) and s.8(2) rlw s.64(2) - Enforcement Directorate (ED) sought to prosecute appellant in a proceeding uls. 56 though on the self-same facts and cause of action, respondent-adjudicating authority had dropped charges framed against the appellant D u/s.50 - Plea of appellant that standard of proof required to bring home the charge in a criminal case is much higher than the adjudication proceeding and once the appellant was exonerated in the adjudication proceeding, his prosecution was an abuse of the process of Court - Held (per majority): E The yardstick would be to judge as to whether allegation in the adjudication proceedings and the proceedings for prosecution was identical and exoneration of the person concerned in the adjudication proceeding was on merits - In case it is found on merit that there was no contravention of F the provisions of the Act in the adjudication proceedings, the trial of the person concerned shall be an abuse of the process of the court - In the instant case, in the adjudication proceeding on merit the adjudicating authority had categorically held that the charges against the appellant for contravening the provisions of s.

9(1 )(f)(i) ands. 8(2) r/w s. 64(2) G were not sustainable - In the face of the finding by the Enforcement Directorate in adjudication proceeding that there was no contravention of any of the provisions of the Act, it 889 H 890 SUPREME COURT REPORTS [2011) 4 S.C.R. A would be unjust and an abuse of the process of the court to permit the Enforcement Directorate to continue with the criminal prosecution - Resultantly the appellant's prosecution is quashed - Held (per minority): The scheme of the Act makes it clear that adjudication by the concerned authorities B and prosecution are distinct and separate - The two proceedings are independent and irrespective of the outcome of the decision u/s.50, there cannot be any bar in initiating prosecution uls.56 - In the fight of the mandate of s.56, it is the duty of the Criminal Court to discharge the functions c vested with it and give effect to the legislative intention, particularly, in the context of the scope and object of FERA which was enacted for economic development of the country and augmentation of revenue.

The Enforcement Directorate alleged that the D appellant had contravened the provisions of Section 8(2) and 9(1 )(f)(i) of the Foreign Exchange Regulation Act, 1973 and accordingly rendered himself liable to imposition of penalty under Section 50 of the Act. Accordingly, adjudication proceeding as contemplated E under Section 51 of the Act were instituted against him for the aforesaid contraventions. The adjudication officer (the Special Director) came to the conclusion that the allegation made against the appellant of contravention of the provisions of Section 8, 9(1 )(f)(i) and Section 8(2) read F with Section 64(2) of the Act were not sustainable. The Enforcement Directorate did not challenge this order and it attained finality. The Enforcement Directorate on the same allegation G which was the subject matter of adjudication proceeding laid complaint against the appellant for prosecution under Section 56 of the Act before the Metropolitan Magistrate.

After the issuance of process and exoneration in the adjudication proceeding, the appellant filed H RADHEYSHYAM KEJRIWAL v. STATE OF WEST BENGAL 891 application for dropping the proceedings, inter alia, A contending that on the same allegation the adjudication proceedings having been dropped and the appellant exonerated, his continued prosecution is an abuse of the process of the Court. The Metropolitan Magistrate rejected his prayer. Aggrieved, the appellant preferred criminal B revision application which was dismissed by the High Court by the impugned order. In the instant appeal, dispute arose as to whether the Enforcement Directorate (ED) could prosecute the appellant in a proceeding under Section 56 of the FERA C when on the self-same facts and cause of action, the respondent-adjudicating authority· had dropped the charges framed against the appellant under Section 50 of the FERA. D It was contended on behalf of the appellant that standard of proof required to bring home the charge in a criminal case is much higher than the adjudication proceeding and once the appellant was exonerated in the adjudication proceeding, his prosecution was an abuse E of the process of Court. Allowing the appeal (per majority), Per Chandramauli Kr. Prasad, J. (for Harjit Singh Bedi, J. and himself): F HELD:

Section 50 of the Foreign Exchange Regulation Act, 1973 (FERA) provides for mandatory penalty and fixes the outer limit of such penalty on any person contravening the provisions of the Act which is G to be adjudged by the Director of Enforcement or any other officer of the Enforcement not below the rank of an Assistant Director empowered by the Central Government. The procedure and the power to adjudicate penalty has -:~~ . ·H 892 SUPREME COURT REPORTS [2011] 4 S.C.R. A been provided under Section 51 of the Act. From a plain reading of Section 51 of the Act it is evident that for adjudging the penalty under Section 51 of the Act for contravention of the provisions of the Act or any rule, direction or order made thereunder the adjudicating B officer is to be satisfied that the person has committed the contravention after holding an inquiry in the prescribed manner and after giving the person concerned a reasonable opportunity of making representation. Thus besides the procedural requirement c the sine qua non for imposition of penalty under Section 51 of the Act is that the adjudicating officer has to record its satisfaction that the person concerned has committed the contravention of any of the provisions of the Act or of any rule, direction or order made thereunder. [Paras D 8, 9) [903-E-H; 904-A-G]

As would be evident from the preamble of the FERA, it was enacted for the conservation of foreign exchange resources of the Country and the proper utilization thereof in the economic development of the E Country. The proceedings under Section 51 and 56 of the Act are independent of each other and the finding in an adjudication proceeding under Section 51 of the Act is not binding in the proceeding for prosecution under Section 56 of the Act and both can go hand in hand. F Further, the prosecution can be launched even before conclusion of adjudication proceeding under Section 51 of the Act. [Paras 10, 11] [904-H; 905-H; 906-A-C] 3, The standard of proof in a criminal case is much G higher than that of the adjudication proceeding. The Enforcement Directorate has not been able to prove its case in the adjudication proceeding and the appellant has been exonerated on the same allegation. The appellant is facing trial in the criminal case. Therefore, the H determination of facts in the adjudication proceeding • RADHEYSHYAM KEJRIWAL v. STATE OF WEST 893 BENGAL cannot be said to be irrelevant in the criminal case. A However, the finding in an adjudication proceeding is not binding in the proceeding for criminal prosecution. A person held liable to pay penalty in adjudication proceeding cannot necessarily be held guilty in criminal trial. Adjudication proceedings are decided on the basis B of preponderance of evidence of a little higher degree whereas in a criminal case entire burden to prove beyond all reasonable doubt lies on the prosecution. [Paras 15, 16] [909-H; 910-A-B; 911-F-G]

The yardstick would be to judge as to whether allegation in the adjudication proceeding as well as proceeding for prosecution is identical and the exoneration of the person concerned in the adjudication proceeding is on merits. In case it is found on merit that there is no contravention of the provisions of the Act in the adjudication proceeding, the trial of the person concerned shall be in abuse of the process of the court. [Para 19) [916-A-B] c 0

In the instant case, in the adjudication proceeding E on merit the adjudicating authority has categorically held that "the charges against Shri Radheshyam Kejriwal for contravening the provisions of Section 9(1 )(f)(i) and Section 8(2) read with Section 64(2) of the Foreign Exchange Regulation Act, 1973 cannot be sustained". In F the face of the aforesaid finding by the Enforcement Directorate in adjudication proceeding that there is no contravention of any of the provisions of the Act, it would be unjust and an abuse of the process of the court to permit the Enforcement Directorate to continue with the G criminal prosecution. [Para 23] [919-F-!'i; 910-A] ·~

In the result the impugned judgment of the Metropolitan Magistrate and the order affirming the same H 894 SUPREME COURT REPORTS [2011) 4 S.C.R. A by the High Court are set aside and appellant's prosecution is quashed. [Para 24] [920-B]