important point
‘Initiation of Proceedings’ is different from ‘Commencement of Proceedings’. The two cannot be equated.

Headnote:(a)Words and Phrases – Cognizance – The expression “cognizance” has not been defined in the Code, but it is of indefinite import – It has no esoteric or mystic significance in criminal law – It merely means “become aware of” and when used with reference to a Court or a Judge, it connotes ‘to take notice of-judicially’ – It indicates the point when a Court or a Magistrate takes judicial notice of an offence with a view to initiating proceedings in respect of such offence said to have been committed by someone – ‘Taking cognizance’ does not involve any formal action of any kind – Cognizance is taken prior to commencement of criminal proceedings – Taking of cognizance is thus a sine qua non or condition precedent for holding a valid trial – Cognizance is taken of an offence and not of an offender – No rule of universal application can be laid down as to when a Magistrate can be said to have taken cognizance. (Para 12)
       (b)Code of Criminal Procedure, 1973 – Chapters XIV ands XVI – ‘Initiation of Proceedings’ is different from ‘Commencement of Proceedings’ – For commencement of proceedings, there must be initiation of proceedings – Without initiation of proceedings under Chapter XIV, there cannot be commencement of proceedings before a Magistrate under Chapter XVI – High Court was not right in equating initiation of proceedings with commencement of proceedings. (Para 15)
       (c)Code of Criminal Procedure, 1973 – Section 190 – Well settled that before a Magistrate can be said to have taken cognizance of an offence under Section 190(1) (a) of the Code, he must have not only applied his mind to the contents of the complaint presented before him, but must have done so for the purpose of proceeding under Section 200 and the provisions following that section – Where, however, he applies his mind only for ordering an investigation under Section 156(3) or issues a warrant for arrest of accused, he cannot be said to have taken cognizance of the offence. (Para 22)
       1951 SCR 312; (1960) 1 SCR 93; (1963) Supp (1) SCR 953; (1978) 4 SCC 58; AIR 1961 SC 986; (1973) 3 SCC 753; (1972) 1 SCR 571; (1976) 3 SCC 252; (1967) 1 SCR 520 – Relied upon.
       (d)Code of Criminal Procedure, 1973 – Section 190 – Evidently, cognizance of the offence was taken on May 24, 2002, i.e., the day on which the complaint was filed by passing an order – The process was issued on February 3, 2003 – It was in pursuance of the cognizance taken by the Court on May 24, 2002 that a subsequent action was taken under Section 204 – High Court therefore was not right in equating taking cognizance with issuance of process and in holding that the complaint was barred by law – The impugned order set aside. (Paras 25 and 26)
       (e)Code of Criminal Procedure, 1973 – Section 468 – Connecting the provision of limitation in Section 468 with issuing of process or taking of cognizance by the Court may make it unsustainable and ultra vires Article 14 of the Constitution. (Para 27)
       (2003) 8 SCC 559; (2007) 7 SCC 394 – Relied upon.
       (f)Code of Criminal Procedure, 1973 – Section 468 – Cognizance having already been taken within the prescribed period, question of limitation does not arise. (Para 29)
       (g)Code of Criminal Procedure, 1973 – Section 482 – High Court quashing the proceedings only on ground of limitation which order has been set aside – As the High Court did not go into the merits of the case, matter remitted back to the Chief Metropolitan Magistrate. (Para 30)
       Facts of the case:
       1.Respondent No.1 M/s. Videocon International Ltd. is a Public Limited Company incorporated under the Companies Act, 1956 having its business at Mumbai and Aurangabad in the State of Maharashtra.
       2.On October 13, 1989, the Company entered into an agreement with Radio Export (Moscow) for the supply of colour tubes, electrolytic capacitors, transformers, etc., for Rs.44,04,00,000/-. Television seta were to be procured by respondent no.1 from Japan and Korea.
       3.The payment was made by respondent No.1 Company to Japanese and Korean suppliers. But before any payment could be received by respondent No.1 from the USSR Company, there was political turmoil in the USSR and payment to foreign suppliers was disrupted.
       4.On January 5, 1993, Additional Director General, Directorate of Revenue Intelligence, Mumbai addressed a letter to the appellant alerting him about the activities of the Company in connection with the agreement to supply television sets to Radio Export, Moscow.
       5.Thereupon, the appellant obtained details of the export outstanding of the Company from its bankers. The Bank supplied necessary information and indicated that the export outstanding of the Company was Rs.16,60,00,000/-. The Reserve Bank of India turned down the request of the Company for reimbursement of differential amount remaining unpaid on the ground that the exports were effected from Korea and Japan and not from India and the Company was not entitled to reimbursement.
       6.On May 24, 2002, the appellant-complainant filed Criminal Complaint against the Company alleging that the Company had received an amount of Rs.44,04,00,000/- through State Bank of India, Bombay but it failed to take steps to realize export proceeds amounting to Rs.16,60,00,000/- within the stipulated period of six months and thereby contravened Section 18(2) and 18(3) read with Section 68(1), punishable under Section 56(1)(ii) of FERA.
       7.On the same day, i.e., May 24, 2002 the Chief Metropolitan Magistrate, Esplanade, Mumbai took cognizance of the offence and issued summons to the accused. On February 3, 2003, the Chief Metropolitan Magistrate issued process requiring the respondents to appear before the Court and answer the charge under FERA.
       8.In October, 2004, the respondents filed Criminal Writ Petition seeking quashing of criminal proceedings initiated vide complaint dated May 24, 2002 on the ground that cognizance was taken by the Court after the period of limitation and the proceedings were, therefore, liable to be quashed.
       9.The High Court, by the impugned order dated April 26, 2006, quashed the proceedings initiated against the respondents on the ground that cognizance could be said to have been taken when process was issued and since process was issued in February, 2003, the proceedings were time-barred.
       Findings of the Court:
       High Court erred in equating taking cognizance with issuance of process and in holding that the complaint was barred by law.
       Result : Impugned order set aside and matter remitted back to CMM.

judgment

C.K. Thakker, J. —

1.Leave granted.

2.In the present appeal, we are called upon to decide the correctness or otherwise of the proposition of law by the High Court of Judicature at Bombay whether issuance of process in a criminal case is one and the same thing or can be equated with taking cognizance by a Criminal Court? And if the period of initiation of criminal proceedings has elapsed at the time of issue of process by a Court, the proceedings should be quashed as barred by limitation?

3.To appreciate the controversy raised in the appeal instituted by the Chief Enforcement Officer, Enforcement Directorate, Government of India (appellant herein), few relevant facts may be noted.

4.Respondent No.1 M/s. Videocon International Ltd. (Company for short) is a Public Limited Company incorporated under the Companies Act, 1956 having its business at Mumbai and Aurangabad in the State of Maharashtra. On October 13, 1989, the Company entered into an agreement with Radio Export (Moscow) for the supply of colour tubes, electrolytic capacitors, transformers, etc., for Rs.44,04,00,000/-. The payment was made by respondent No.1 Company to Japanese and Korean suppliers. But before any payment could be received by respondent No.1 from the USSR Company, there was political turmoil in the USSR and payment to foreign suppliers was disrupted. On January 5, 1993, Additional Director General, Directorate of Revenue Intelligence, Mumbai addressed a letter to the appellant alerting him about the activities of the Company in connection with the agreement to supply television sets to Radio Export, Moscow. Based on the information forwarded by the Directorate of Revenue Intelligence, Bombay, the appellant addressed two letters to the Chief Manager of Indian Bank, Nariman Point, Bombay requesting the Bank to supply details of the export outstanding of the Company. Indian Bank supplied necessary information and indicated that the export outstanding of the Company was Rs.16,60,00,000/-. The Reserve Bank of India turned down the request of the Company for reimbursement of differential amount remaining unpaid on the ground that the exports were effected from Korea and Japan and not from India and the Company was not entitled to reimbursement. In pursuance of the summons issued under Section 40 of the Foreign Exchange Regulation Act, 1973 (hereinafter referred to as FERA), Raj Kumar Dhoot, Director of the Company appeared before the Department on April 25, 1999 and made a statement that there was an agreement between the Company and M/s Radio Export, Moscow for supply of two lakh television sets and other equipments for Rs.44,04,00,000/-. The amount was received by the Company through State Bank of India, Overseas Branch, Bombay. He further stated that the television sets had been procured from Korea and Japan who had been paid equivalent to Rs.19,00,00,000/- in foreign exchange. Export bills raised from the sale to M/s Radio Export, Moscow were equivalent to Rs.16,00,00,000/-. Whereas the contract with the suppliers in Korea and Japan stipulated payment in US Dollars, the contract with the USSR Company required payment in Indian Rupees. Since the value of Rupee against the US Dollar fell down, the Company had to pay more Rupees to their foreign suppliers. On June 1, 2000, FERA was replaced by the Foreign Exchange Management Act, 1999 (hereinafter referred to as FEMA).

5.On May 24, 2002, the appellant-complainant in the capacity as Chief Enforcement Officer, Government of India, filed Criminal Complaint No. 1149/S/2002 against the Company alleging that the Company had received an amount of Rs.44,04,00,000/- through State Bank of India, Bombay but it failed to take steps to realize export proceeds amounting to Rs.16,60,00,000/- within the stipulated period of six months. It thereby contravened Section 18(2) and 18(3) read with Section 68(1), punishable under Section 56(1)(ii) of FERA. On the same day, i.e. on May 24, 2002, after hearing the learned counsel f

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2008 Supreme(SC) 126

important point‘Initiation of Proceedings’ is different from ‘Commencement of Proceedings’. The two cannot be equated.

Cases Referred (11)

important point
‘Initiation of Proceedings’ is different from ‘Commencement of Proceedings’. The two cannot be equated.