1984 Supreme(Mad) 81

1984 3 ECC 319
Natarajan, J.
A.S.G. Jothimani Nadar
Versus
The Deputy Director, Enforcement Directorate
Decided on: 24/2/1984
.

A criminal prosecution under Section 9(1)(b) of the Foreign Exchange Regulation Act, 1973, is independent of the adjudication proceedings under Section 51 of the Act, and a contravention of Section 9(1)(b) constitutes a penal contravention under Section 56 of the Act. A second show cause notice is not required before launching a prosecution under Section 56 of the Act, in addition to the show cause notice issued during adjudication proceedings, as the proviso to Section 61(2) of the Act requires an opportunity for the accused to show that they had obtained the requisite permission at some point before the filing of the complaint, which can be fulfilled by a show cause notice issued during the adjudication proceedings.

Headnote:

FOREIGN EXCHANGE REGULATION ACT, 1973 - SECTION 9(1)(B) - SECTION 51 - SECTION 56 - SECTION 61(2) - CRIMINAL PROSECUTION - ADJUDICATION PROCEEDINGS - SHOW CAUSE NOTICE - VALIDITY OF PROSECUTION - SCOPE OF SECTION 56 - INTERPRETATION OF SECTION 61(2) PROVISO - MANDATORY OR DIRECTORY - SECOND SHOW CAUSE NOTICE REQUIREMENT - APPLICABILITY OF SECTION 23(1) OF THE FOREIGN EXCHANGE REGULATION ACT, 1947.

Fact of the Case:

Petitioner, a repatriate from Sri Lanka, was found in possession of Indian currency worth Rs. 30,000 during a search of his house by Enforcement Directorate officers. He initially claimed to have received the money from a Sri Lankan individual for delivery to another person, but later changed his statement, claiming the money belonged to an Indian individual. Adjudication proceedings were initiated, and a penalty of Rs. 4,000 was imposed, along with confiscation of the seized money. Subsequently, a complaint was filed against the petitioner under Section 9(1)(b) of the Foreign Exchange Regulation Act, 1973 (FERA), leading to the filing of a petition to quash the proceedings.

Finding of the Court:

The court held that the criminal prosecution under Section 9(1)(b) of FERA was independent of the adjudication proceedings and could proceed concurrently. The contravention of Section 9(1)(b) was a penal contravention under Section 56 of FERA, and the prosecution was not dependent on the outcome of the adjudication proceedings. The court also rejected the petitioner's arguments that a second show cause notice was required before launching the prosecution, as the proviso to Section 61(2) of FERA did not mandate such a notice. The court interpreted the proviso as requiring an opportunity for the accused to show that they had obtained the requisite permission at some point before the filing of the complaint, which could be fulfilled by a show cause notice issued during the adjudication proceedings.

Issues: 1. Whether a criminal prosecution under Section 9(1)(b) of FERA is dependent on the outcome of adjudication proceedings under Section 51 of FERA? 2. Whether a contravention of Section 9(1)(b) of FERA constitutes a penal contravention under Section 56 of FERA? 3. Whether a second show cause notice is required before launching a prosecution under Section 56 of FERA, in addition to the show cause notice issued during adjudication proceedings? 4. Interpretation of the proviso to Section 61(2) of FERA and its applicability to the present case.

Ratio Decidendi: 1. The court held that the criminal prosecution under Section 9(1)(b) of FERA was independent of the adjudication proceedings under Section 51 of FERA. The court relied on the clear language of Section 56 of FERA, which states that a contravention of any provision of the Act, except certain specified sections, is punishable upon conviction by a court, without prejudice to any penalty imposed by the adjudicating officer. 2. The court held that a contravention of Section 9(1)(b) of FERA constitutes a penal contravention under Section 56 of FERA. The court noted that Section 56 makes the contravention of any provision of the Act, except certain specified sections, punishable upon conviction by a court. 3. The court held that a second show cause notice is not required before launching a prosecution under Section 56 of FERA, in addition to the show cause notice issued during adjudication proceedings. The court interpreted the proviso to Section 61(2) of FERA as requiring an opportunity for the accused to show that they had obtained the requisite permission at some point before the filing of the complaint, which could be fulfilled by a show cause notice issued during the adjudication proceedings.

Final Decision: The petition to quash the proceedings against the petitioner was dismissed. The court instructed the trial court to dispose of the case on merits, without being influenced by the dismissal of the petition or the observations made in the judgment.