Parallel Proceedings for FERA Violation; If the Exoneration in Adjudication proceedings is on merit, Criminal Prosecution cannot be allowed to Continue; SC [Read Judgment]

Supreme Court upheld the Order of discharge of Videocon Industries on FERA Criminal prosecution.

Supreme Court of India, in M/S VIDEOCON INDUSTRIES VS. STATE OF MAHARSHTRA, has upheld the order of a Chief Metropolitan Magistrate discharging Videocon Industries Ltd. and its officer who were facing trial for the offence punishable under Section 56(1) (i) of the Foreign Exchange Regulation Act, 1973 for the alleged contravention of the provisions of Sections 18(2) and 18(3) of the Act. Court has re-iterated that in Case of parallel proceedings, if the exoneration in adjudication proceedings by the Tribunal is on merit, criminal prosecution on the same set of facts and circumstances cannot be allowed to continue, the underlying principle being the higher standard of proof in criminal cases.

Division Bench comprising of Justices Dipak Misra and Shiva Kirti Singh set aside the orders of Revisional Court as well as the High Court by observing that the Tribunal has found that the Company not guilty for Section 18(2) read with Section 18(3) of FER Act, 1973, not on technical grounds, but on merits. The Court also observed that the pronouncement in Radheshyam Kejriwal v. State of West Bengal & Anr is a binding precedent.

BACKGROUND

The adjudicating authority had imposed penalty of Rs.2,00,00,000/- (Rupees two crore only) against the company which was later set aside by the Tribunal. The Criminal proceedings under Section 56(1) (i) of the Foreign Exchange Regulation Act, 1973 was going on, in CJM Court. After the Tribunal held the Company not guilty, the CJM allowed the application moved by the Company and discharged the accused. The Revisional Court reversed the findings of CJM on discharge application. The Company’s application before the High Court also got rejected. The Tribunal findings were not challenged by the state either.

RADHESHYAM KEJRIWAL CASE

In Radheshyam Kejriwal Case, following principles were laid down by the Apex Court

• Adjudication proceedings and criminal prosecution can be launched simultaneously;


• Decision in adjudication proceedings is not necessary before initiating criminal prosecution;


• Adjudication proceedings and criminal proceedings are independent in nature to each other;


• The finding against the person facing prosecution in the adjudication proceedings is not binding on the proceeding for criminal prosecution;


• Adjudication proceedings by the Enforcement Directorate is not prosecution by a competent court of law to attract the provisions of Article 20(2) of the Constitution or Section 300 of the Code of Criminal Procedure;


• The finding in the adjudication proceedings in favour of the person facing trial for identical violation will depend upon the nature of finding. If the exoneration in adjudication proceedings is on technical ground and not on merit, prosecution may continue; and


• In case of exoneration, however, on merits where the allegation is found to be not sustainable at all and the person held innocent, criminal prosecution on the same set of facts and circumstances cannot be allowed to continue, the underlying principle being the higher standard of proof in criminal cases.

TRIBUNAL HELD APPELLANT NOT GUILTY ON MERITS, NOT ON TECHNICAL GROUNDS

In the instant case, the High Court, referring to Radheshyam Kejriwal case, allowed the prosecution to continue by observing that the exoneration in adjudication proceedings is on technical ground and not on merit. The Apex Court setting aside the judgment of High Court held “the tribunal has arrived at a conclusion that the appellant cannot be held guilty for Section 18(2) read with Section 18(3) of FER Act, 1973 and the advice of the Reserve Bank of India given in its letters dated 21.1.1992 and 18.2.1994 deserve to be accepted as they are totally in consonance with legal provisions. The High Court, without an assail to the order passed by the tribunal, has adverted to the same and opined that it does not subscribe to the view expressed by the tribunal that Section 18(2) and 18(3) of the Act were not applicable to the transaction in question. The High Court could not have done that. We may note with profit that the High Court after stating that has reproduced paragraph 38 and (vi) and opined that the findings given by the tribunal are based on technical grounds and, therefore, the prosecution is liable to continue. As we perceive, the judgment of the tribunal is on merits, inasmuch as findings have been recorded after analysis of facts and the conclusion has been arrived at that the appellants have not violated the provisions of the Act. In such a situation, it cannot be said that it is a judgment rendered on technical grounds and, therefore, we are compelled to hold that the High Court has totally erred in law.”

Read the Judgment here.