The Director of Enforcement can file a complaint under Section 23 (1) (b) of the Foreign Exchange Regulation Act, 1947 without first initiating proceedings under Section 23D (1), but only if he is of the opinion that the penalty which he is empowered to impose would not be adequate.

ORDER OF THE COURT

BHARGAVA, J. (On behalf of Shelat, Vaidialingam, Hegde and Grover, JJ.):- (2-5-1969):- We have come to the finding that this was a fit case where the High Court of Madras should have allowed the applications under Section 561-A of the Code of Criminal Procedure and should have quashed the proceedings taken on the basis of the complaint dated 17th March, 1968. Consequently, the appeals are allowed. The order of the High Court is set aside and the proceedings are quashed. The detailed reasons will follows.

Judgement

BHARGAVA, J.:- (23-7-1969) - These appeals, by certificate, challenging a common Order of the High Court of Madras dismissing applications under Section 561-A of the code of Criminal Procedure presented by the appellants in the two appeals for quashing proceedings being taken against them in the Court of the Chief Presidency Magistrate, Madras, on the basis of a complaint filed on 17th March, 1968 by the respondent the Director of Enforcement, New Delhi. The Rayala Corporation Private Ltd., appellant in Criminal Appeal No. 18 of 1969, was accused No.1 in the complaint, while one M. R. Pratap, Managing Director of accused No.1, appellant in Criminal Appeal No. 19/1969 was accused No. 2. The circumstances under which the complaint was filed may be briefly stated.

2. The premises of accused No. 1 were raided by the Enforcement Directorate on the 20th and 21st December, 1968 and certain records were seized from the control of the Manager. Some enquiries were made subsequently and, thereafter, on the 25-8-1967, a notice was issued by the respondent to the two accused to show cause why adjudication proceedings should not be instituted against them for violation of Secs. 4 and 9 of the Foreign Exchange Regulation Act VII of 1947 (hereinafter referred to as "the Act") on the allegation that a total sum of 2,44,713.70 Swedish Kronars had been deposited in a Bank account in Sweden in the name of accused No. 2 at the instance of accused No. 1 which had acquired the foreign exchange and had failed to surrender it to an authorised dealer as required under the provisions of the Act. They were called upon to show cause in writing within 14 days of the receipt of the notice. Thereafter, some correspondence went on between the respondent and the two accused and, later, on 4th November, 1967, another notice was issued by the respondent addressed to accused No.2 alone stating that accused No. 2 had acquired a sum of Sw. Krs. 88,913.09 during the period 1963 to 1965 in Stockholm, was holding that sum in a bank account, and did not offer or cause it to be offered to the Reserve Bank of India on behalf of the Central Government, so that he had contravened the provisions of Section 4 (1) and Section 9 of the Act, and affording to him an opportunity under Section 23 (3) of the Act of showing, within 15 days from the receipt of the notice that he had permission or special exemption from the Reserve Bank of India in his favour for acquiring this amount of foreign exchange and for not surrendering the amount in accordance with law. A similar show cause notice was issued to accused No. 1 in respect of the same amount of 20th January, 1968, mentioning the deposit in favour of accused No. 2 and failure of accused No. 1 to surrender the amount, and giving an opportunity to accused No. 1 to produce the permission or special exemption from the Reserve Bank of India. On the 16th March, 1968, another notice was issued addressed to both the accused to show cause in writing within 14 days of the receipt of the notice why adjudication proceedings as contemplated in Section 23-D of the Act should not be held against them in respect of a sum of Sw. Krs. 1,55,801.41 which were held in a bank account in Stockholm in the name of accused No. 2 and in respect of which both the accused had contravened the provisions of Sections 4 (3), 4 (1), 5 (1) (e) and 9 of the Act. The notice mentioned that it was being issued in supersession of the first show