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PETITIONER: ENFORCEMENT DIRECTORATE AND ANR..

       Vs.

RESPONDENT: M.  SAMBA SIVA RAO & ORS.

DATE OF JUDGMENT:       09/05/2000

BENCH: S.N.Variava, Doraiswami raju, G.B.Pattanaik

JUDGMENT:

     PATTANAIK,J.

     All  these  appeals  are  directed  against  a  common judgment of a learned Single Judge of Delhi High Court and a common  question  of law arises and as such they  are  heard together  and are being disposed of by this common judgment. The  question  for  consideration in all  these  appeals  is whether  refusal  on the part of a person, who  is  summoned under  Section  40 of the Foreign Exchange  Regulation  Act, 1973  (hereinafter referred to as the Act) to comply  with the   directions  under  the   summons,  would  attract  the provisions  of Section 56 of the Act?  The High Court by the impugned judgment came to the conclusion that the provisions of  Section  56  of  the  Act will  not  get  attracted  for violations  of  the directions under Section 40 of  the  Act and,  accordingly,  the complaints filed for such  violation and  cognizance  taken  in  the complaint  cases  have  been quashed.

     Mr.   Mukul Rohtagi, the learned Additional  Solicitor General,  contended that the power having been conferred  on the  officers  of the Enforcement Directorate to summon  any person,  whose  attendance  is  necessary,  either  to  give evidence  or  to  produce  a  document,  in  course  of  any investigation or proceeding under the Act and the Act itself having  made it binding on the person summoned to attend, as provided  in sub- section (3) of Section 40, the refusal  on the  part of the person summoned to carry out the obligation under  the  statute, should be seriously viewed and must  be held  to  be a contravention of the provisions of  the  Act, making such contravention punishable under Section 56 of the Act,  and  the  High  Court was in  error  in  quashing  the complaints filed.

     Mr.   R.K.  Handoo, the learned counsel appearing  for the  accused  respondents in some of the appeals as well  as Mr.   A.K.Ganguly, the learned senior counsel, appearing for the  accused in some of the appeals, however contended  that the  orders/directions,  violation  of which  is  punishable under  Section  56 of the Act are those statutory orders  or directions  and  the summons issued under Section 40 has  no statutory  character  and, therefore, the said violation  by the person summoned, cannot be made punishable under Section 56  of  the  Act.  It was also further  contended  that  the

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offence  not being defined under the Act, one will have to examine  the definition of offence in General Clauses  Act and  on  such  an  examination, it  would  appear  that  the impugned  violation  cannot be held to be an offence  and, therefore, cannot be made punishable under Section 56 of the Act,  and  the High Court, therefore was fully justified  in quashing  the complaints filed.  For better appreciation  of the contentions raised, it would be necessary to extract the provisions  of  Section  40  and Section 56 of  the  Act  in extenso:

     Section 40:  Power to summon persons to give evidence and   produce   documents  (1)Any   Gazetted   officer   of Enforcement  shall  have  power to summon any  person  whose attendance he considers necessary either to give evidence or to produce a document during the course of any investigation or  proceeding  under  this Act.  (2)A  summons  to  produce documents  may  be for the production of  certain  specified documents  of  a  certain description in the  possession  or under the control of the person summoned.  (3)All persons so summoned  shall  be bound to attend either in person  or  by authorised  agents,  as  such officer may direct;   and  all persons  so summoned shall be bound to state the truth  upon any  subject  respecting  which they are  examined  or  make statements  and  produce such documents as may be  required; Provided that the exemption under Section 132 of the Code of Civil   Procedure,   1908,  shall  be  applicable   to   any requisition  for  attendance under this  Section.   (4)Every such  investigation  or  proceeding as  aforesaid  shall  be deemed  to  be a judicial proceeding within the  meaning  of Section 193 and 228 of the Indian Penal Code.

     Section  56:   Offences and prosecutions:   (1)Without prejudice  to  any  award  of penalty  by  the  adjudicating officer under this Act, if any person contravenes any of the provisions of this Act [other than Section 13, Clause (a) of sub-section(1)  of (Section 18, Section 18A), clause (a)  of sub-section  (1) of Section 19, sub-section(2) of Section 44 and  Section  57 and 58] or of any rule, direction or  order made  thereunder,  he shall, upon conviction by a court,  be punishable (i)in the case of an offence the amount or value involved   in  which  exceeds  one   lakh  of  rupees   with imprisonment  for  a term which shall not be less  than  six months,  but which may extend to seven years and with  fine; Provided  that  the Court may, for any adequate and  special reasons  to be mentioned in the judgment, impose a  sentence of  imprisonment for a term of less than six months;  (ii)in any  other  case,  with imprisonment for a  term  which  may extend  to three years or with fine or with both.  (2)If any person  convicted of an offence under this Act [not being an offence  under  Section  13  or clause  (a)  of  sub-section (1)(Section  18 or Section 18A) or clause (a) of sub-section (1)  of  Section  19 or sub- section (2) of  Section  44  or section  57 or Section 58] is again convicted of an  offence under  this Act [not being an offence under 13 or clause (a) of  sub-section (1) of [Section 18 or Section 18A] or clause (a)  of sub-section (1) of Section 19 or sub-section (2)  of Section  44  or  Section  57 or Section  58],  he  shall  be punishable  for the second and for every subsequent  offence with  imprisonment  for a term which shall not be less  than six  months  but  which may extend to seven years  and  with fine:   Provided  that the court may, for any  adequate  and special  reasons  to be mentioned in the judgment, impose  a sentence of imprisonment for a term of less than six months.

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(3)Where  a person having been convicted of an offence under this  Act  [not being an offence under Section 13 or  clause (1)  of sub-sec.(1) of [section 18 or section 18A] or clause (a)  of sub-section (1) of Section 19 or sub-section (2)  of section  44 or section 57 or section 58] is again  convicted of  an  offence under this Act [not being an  offence  under Section  13 or clause (a) of sub-section (1) of [section  18 or section 18A], or clause (a) of sub-section (1) of Section 19 or sub-section (2) of Section 44 or Section 57 or section 58],  the  court by which such person is convicted  may,  in addition  to any sentence which may be imposed on him  under this  section, by order, direct that, that person shall  not carry  on  such business as the court may specify,  being  a business  which  is likely to facilitate the  commission  of such  offence, for such period not exceeding three years, as may  be  specified  by the court in the order.   (4)For  the purpose  of sub-section (1) and (2), the following shall not be considered as adequate and special reasons for awarding a sentence of imprisonment for a term of less than six months, namely  (i)the fact that the accused has been convicted for the  first time of an offence under this Act.  (ii)the  fact that  in  any  proceeding  under  this  Act,  other  than  a prosecution,  the accused has been ordered to pay a  penalty or  goods in relation to such proceedings have been  ordered to  be confiscated or any other penal action has been  taken against  him  for the same offence;  (iii)the fact that  the accused was not the principal offender and was acting merely as  a carrier of goods or otherwise was a secondary party in the  commission of the offence;  (iv)the age of the accused. (5)For  the  purposes of sub-sections (1) and (2), the  fact that  an  offence under this Act has caused  no  substantial harm  to the general public or to any individual shall be an adequate  and  special  reason for awarding  a  sentence  of imprisonment for a term of less than six months.  (6)Nothing in  [the  proviso  to Section 188 of the  Code  of  Criminal Procedure, 1973] shall apply to any offence punishable under this Section.

     The  answer to the questions raised would depend  upon an   analysis  and  interpretation  of  the  aforesaid   two provisions of the Act.  The Foreign Exchange Regulation Act, 1973  was  enacted  by  the Parliament,  basically  for  the conservation  of  the  foreign  exchange  resources  of  the country  and the proper utilisation thereof in the  interest of economic development of the country.  The Act having been enacted  in the interest of national economy, the provisions thereof  should  be construed so as to make it workable  and the  interpretation  given  should  be  purposive  and   the provisions  should receive a fair construction without doing any  violence  to the language employed by the  Legislature. The  provisions of Section 40 itself, which confers power on the officer of Enforcement Directorate, to summon any person whose  attendance, he considers necessary during the  course of  any  investigation, makes it binding as  provided  under sub- section (3) of Section 40, and the investigation or the proceeding  in course of which such summons are issued  have been  deemed  to  be  a judicial  proceeding  by  virtue  of sub-section  (4) of Section 40.  These principles should  be borne  in mind, while interpreting the provisions of Section 40  and  its  effect, if a person violates or  disobeys  the directions  issued under Section 40.  Before embarking  upon an  in-depth inquiry into the provisions of the Act for  the purpose  of interpretation of Sections 40 and Section 56, it would  be appropriate to notice some of the decisions  given by  different High Courts on the subject.  A learned  Single

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Judge  of the Kerala High Court considered this question  in the case of Itty vs.  Assistant Director, 1992(58) E.L.T.172 (Ker.).   On a conjoint reading of Sections 40 and 56 of the Act,  the  learned  Judge came to the  conclusion  that  the failure  to  obey  the summons issued  under  Section  40(1) cannot  be  held to be a contravention of the provisions  of the  Act,  Rule, direction or order inasmuch as it  is  only when  directions pertaining to some money value involved  is dis-obeyed, such disobedience is punishable under Section 56 of the Act.  The learned Judge applied the ordinary rules of construction  that  penal statutes should receive  a  strict construction  and  the  person  to be  penalised  must  come squarely  within  the plain words of the enactment.  We  are unable  to  accept  the constructions put in  the  aforesaid judgment  as  in  our view clauses (i) and (ii)  of  Section 56(1)  are  material for deciding the quantum of  punishment and  further, there is no reason why the expression in  any other  case  in  Section  56(1)(ii)  should  be  given  any restrictive  meaning  to  the  effect that  it  must  be  in relation  to  the money value involved, as has been done  by the Kerala High Court.  The summons issued under Section 40, if  not  obeyed, must be held to be a contravention  of  the provisions  of the Act and at any rate, a contravention of a direction   issued  under  the   Act,  and  therefore,  such contravention  would  squarely  come  within  the  ambit  of Section   56  of  the  Act.    The  question  came  up   for consideration  before  a learned Single Judge of the  Madras High  Court  in  the  case of C.  Sampath  Kumar  vs.   A.N. Dyaneswaran in Criminal O.P.  No.  5468 and 5629 of 1996 and was  disposed  of  by the learned Judge of the  Madras  High Court  by judgment dated 1.8.97.  The Madras High Court also came to the conclusion that the entire Section 56 of the Act is  identified and substantiated only in terms of the extent and  value  of  the  money  involved  in  the  offence,  and therefore,  violation  or contravention of  summons,  issued under Section 40 of the Act un-related to the money involved in  the investigation cannot be held to be punishable  under Section  56.   Against the aforesaid judgment of the  Madras High  Court,  the department had preferred appeals  to  this Court,  which  were  registered  as  Criminal  Appeal   Nos. 143-144/98,  but the question raised was not necessary to be answered  as  the  persons  concerned  appeared  before  the Enforcement  Authorities  and  were  arrested  by  the  said Enforcement  Authority  and, therefore, this Court kept  the questions  of  law open by its order dated 20th July,  1998. In  yet  another case, the question arose for  consideration before  the Madras High Court in Criminal O.P.  No.  5718/96 and  a  learned Single Judge did not agree with the  earlier decision of the said High Court in Criminal O.P.  Nos.  5468 and 5629 of 1996 and referred the matter to a Division Bench by his Order dated 13th of August, 1997 and it was submitted at  the Bar that the Division Bench has not yet disposed  of the  matter.  The question came up for consideration  before the   Andhra  Pradesh  High  Court  in  the  case  of   P.V. Prabhakara  Rao  vs.  Enforcement Directorate,  Hyderabad  & Anr.,  reported in 1998 Crl.LJ.2507 and the said High  Court has taken the view that failure to attend and give statement in  pursuance of summons issued under Section 40 of the Act, clearly  amounts  to disobeyance of the directions given  by the  concerned  authority  and   therefore,  provisions   of sub-section (1) of Section 56 applies.  The learned Judge of Andhra Pradesh High Court interpreted the expression in any other case in clause (ii) of Section 56(1) to mean that the said  provision would get attracted even though no amount or value  is  involved in the contravention in  question.   The

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aforesaid  view of the Andhra Pradesh High Court appears  to us,   is  the  correct   interpretation  of  the  provisions contained in Sections 40 and 56 of the Act.

     The  learned  Judge  of the Delhi High  Court  in  the impugned Judgment is of the view that Section 56 would bring within  its sweep only such violation or contravention which under different provisions of the Act have been deemed to be a  contravention  under the Act like Section 43(4),  Section 8(1)  read  with  Sec.45(1), Section 49 and so on.   We  are unable  to  accept  this interpretation put by  the  learned Judge  as in our view such interpretation given, would  make the  power  to summons under Section 40 meaningless and  the provisions of sub-section(3) of Section 40 making it bounden duty  for  the persons summoned to attend purposeless.   The learned  Judge  of the Delhi High Court also  committed  the same  error  as the learned Single Judge of the Kerala  High Court  in  interpreting  clause  (ii) of  Section  56(1)  by holding  that the same is identified and substantiated  only in terms of the money involved in the offence.  On behalf of the  department,  an argument had been advanced  before  the learned  Single  Judge  of  the Delhi High  Court  that  the provisions  of  the  Foreign Exchange Regulation  Act  is  a complete code in itself but the same contention did not find favour  with  the  learned  Single  Judge.   Obviously,  the judgment  of  this  Court in the case of Central  Bureau  of Investigation  vs.  State of Rajasthan and Ors., 1996(9) SCC 735  had  not been brought to the notice of the High  Court. In   the   aforesaid  case,  one   of  the   questions   for consideration  before this Court was whether the  provisions of  Sections 4 and 5 of the Code of Criminal Procedure would come  in aid of the investigation of the offence under  FERA by  a  member  of police force like an officer  of  DSPE  in accordance  with the Code of Criminal Procedure?  This Court held:   ............But  FERA  is   a  self-contained  code containing   comprehensive  provisions   of   investigation, inquiry  and  trial  for the offences under that  Act.   The provisions  under  FERA gives power to the officers  of  the Directorate of Enforcement or other officers duly authorised by  the Central Government under FERA to search, confiscate, recover,  arrest, record statements of witnesses etc.   FERA contains provisions for trial of the offences under FERA and imposition  of punishment for such offences.  FERA, being  a special   law,  containing   provisions  for  investigation, enquiry, search, seizure, trial and imposition of punishment for  offences under FERA, Section 5 of the Code of  Criminal Procedure  is  not applicable in respect of  offences  under FERA.

     In  view of the aforesaid authoritative  pronouncement of this Court, the ultimate conclusion of the learned Single Judge  of the Delhi High Court in the impugned Judgment that the  Union  of India can prosecute the accused for  offences under  the  provisions of Section 174 or any other  relevant provision  under chapter 10 of the IPC relating to contempts of  the  lawful  authority  of   public  servants,  is   not sustainable  in law.  As has been stated earlier, bearing in mind  the  purpose  for  which  an  officer  of  Enforcement Directorate have been empowered to summon persons, either to give evidence or to produce a document and the provisions of the  Act,  making the persons summoned, bound to  state  the truth  and further the investigation in question having been made  to  be  a judicial proceeding within  the  meaning  of Sections  193  and 228 of the Indian Penal Code, on a  plain literal  meaning being given to the language used in Section

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56  of  the  Act,  we are of  the  considered  opinion  that violation or contravention of the directions given under the summons  under  Section 40 would come within the purview  of Section  56  and, therefore would be punishable  thereunder, and  the  impugned judgment of the Delhi High Court as  well the  judgment of Kerala High Court must be held to have been wrongly  decided.   We,  therefore, set aside  the  impugned judgments  of  the learned Single Judge of Delhi High  Court and allow these appeals and direct that the complaint

     proceedings  may be proceeded with, in accordance with law.