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PETITIONER: LENNART SCHUSSLER AND ANR.

       Vs.

RESPONDENT: DIRECTOR OF ENFORCEMENT & ANR.

DATE OF JUDGMENT: 14/10/1969

BENCH: REDDY, P. JAGANMOHAN BENCH: REDDY, P. JAGANMOHAN SIKRI, S.M. MITTER, G.K. HEGDE, K.S. RAY, A.N.

CITATION:  1970 AIR  549            1970 SCR  (2) 760  1970 SCC  (1) 152

ACT: Foreign  Exchange Regulation Act (7 of 1947), ss. 4  and  21 (1)--Indian  Penal  Code; s.  120-B-Illegal  acquisition  of foreign exchange and retention in foreign bank-Agreement  to do  so  whether  an  offence under s.  21(1)  of  Act  7  of 1947--Whether    applicability   of   s.   21(1)    excludes applicability  of  s.  120-B  I.P.C.--Retention  of  foreign exchange  not an offence at the time-when agreement  entered into-Subsequently  made  an offence--Acts  in  pursuance  of agreement after creation of offence whether to be treated as acts in pursuance of conspiracy.

HEADNOTE: The   Rayala   Corporation  (P)  Ltd.   manufactured   Halda typewriters  in India with materials imported  from  Sweden. Initially  it  made purchases through a firm known  as  A.B. Atvidabergs (later known as Facit A.B.). In 1963 the  Rayala Corporation  decided  to import  certain  materials  through another  firm  called the Associated  Swedish  Steels  A.B., Sweden (ASSAB).  Appellant No. 1 a Swedish national, was  at the  relevant  time export manager of A.B.  Atvidabergs;  in 1966  he also became a director of Rayala  Corporation.   In November  1968  appellant no. 1 was travelling  by  aircraft from Singapore to Karachi.  The aircraft became grounded  at Delhi.  The Director of Enforcement, New Delhi, acting under the Foreign Exchange Regulation Act, 1947 took appellant no. 1  into  custody  and detained him.  He was  served  with  a notice of adjudication tinder the Act; the notice  purported to  be  in  continuation  of one  already  given  to  Rayala Corporation  under  s.  23C of the  Act.   Appellant  No.  1 challenged his detention by a petition under Art. 32 of  the Constitution.  In this Court a statement was made on  behalf of  the respondents that a complaint had already been  filed against  the appellants under s. 120-B of the  Indian  Penal Code  read  with certain sections of  the  Foreign  Exchange Regulation  Act.  In the said complaint it was alleged  that in  1963  when appellant no. 2 had gone to  Sweden  he  told Appellant  no.   1  of  the decision  taken  by  the  Rayala

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Corporation to buy certain materials from ASSAB.  He further informed  Appellant no.  J that arrangements had  been  made with ASSAB to over invoice to the goods by 40%, and that the said  excess over the true value would be kept in a bank  in the  personal account of appellant no. 2. Appellant  no.   1 agreed to help Appellant no. 2 in opening-. the said account and  keeping it secret; he also agreed to keep a watch  over the  account and to bring copies of it Whenever  he  visited India.   This  according  to the  complaint  amounted  to  a conspiracy  between  Appellants  nos.  1 and  2  within  the meaning of s. 120-B of the Indian Penal Code for the purpose of illegal acquisition of foreign exchange by appellant  no. 2  and  retaining the same abroad in  contravention  of  ss. 4(3).  5(1)(e) and 9 of the Foreign Exchange Regulation  Act and  Rule 132-A of the Defence of India  (Amendment)  Rules, 1964.  It was alleged that appellant no.  1 actually sent to appellant no. 2 from time to time statements of the  illegal account opened in Sweden in pursuance of the conspiracy.  It was  further alleged that in November 1965 appellant no.   1 came to India and again agreed to continue helping appellant no.  2  in operating the foreign  account.   The  appellants filed petitions in the Madras High 761 Court  asking  it  to  quash  the  said  complaint.    These petitions  having been dismissed the appellants appealed  to this  Court. it was contended on behalf of the appellants  : (i)  that s. 120-B of the I.P.C. did not apply to  the  case because  s. 21 (1) of the Foreign Exchange  Regulation  Act, covered  the  same  grounds;  (ii)  that  when  the  alleged agreement  was  made  in 1963 the objects  of  it  were  not illegal  because they became so only on the enactment of  r. 132A of the Defence of India Rules in 1964 and the amendment of s. 4 of the Foreign Exchange Regulation Act in 1965.   It was  urged that, whatever appellant no.  1 did or agreed  to do  after the passing of these laws did not  constitute  any offence  and  therefore he could not be said to  have  taken part in a criminal conspiracy. HELD:     Per Sikri, Ray and Reddy, JJ.-The appeals must  be dismissed. (i)  The combined effect of the several provisions of s.  21 does  not support the view that sub-s. (1) covers a case  of criminal  conspiracy similar to s. 120-B.  Section  21  does not in terms deal with an agreement to commit an offence  or it  legal act in an illegal way but merely provides that  an agreement or contract by itself ought not to evade or  avoid the  provisions  of  the Act.  The  agreement  entered  into between.   ASSAB and appellant no. 2 would, if proved,  come within  the mischief of s. 21(1) but the agreement  such  is the one alleged to have been entered into between  appellant no.   1 and appellant no. 2 does not itself evade  or  avoid any of the provisions of the Act, rules, or directions.  The words directly or indirectly do not take in any agreement to be illegal acts in future. [769 H-770 B] (ii) For the offence of conspiracy as defined in s. 120-A of the  Indian Penal Code there must be a meeting of  minds  in the  doing of an illegal act or the doing of a legal act  by illegal  means.   If in the furtherance  of  the  conspiracy certain  persons are induced to do an unlawful  act  without the  knowledge of the conspiracy or the plot the  cannot  be held  to  be conspirators, though they may be guilty  of  an offence  to  the  specific unlawful  act.   The  offence  of conspiracy  is complete when two or more  conspirators  have agreed  to  do or cause to be do in act which it  itself  an offence, in which case no overt act need be established.  An agreement to do an illegal act which amounts to a conspiracy

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will  continue  as  long as the members  of  the  conspiracy remain in agreement and as long as they are acting in accord and in furtherance of the object for which they entered into the agreement. [770 D-F] The contention that the acts of appellant no.  1 in watching the bank account in Sweden on behalf of appellant no. 2  and keeping him informed about it did not constitute any offence and   therefore  he  was  not  guilty  of  the  offence   of conspiracy,  could not be accepted.  The several acts  which constitute  a conspiracy cannot be split up into  parts  and the  liability of appellant, no.  1 could not be  judged  by the  part  that  he played.  The entire  agreement  must  be viewed as a whole and it bad to be ascertained as to what in fact  the  conspirators intended to do or  the  object  they wanted to achieve-. [771 D-E] In  this  case  on the allegations  appellant  no.  2  asked appellant  no.  1 to help him in acquiring foreign  exchange illegally  and  appellant no. 1 agreed to  help  him.   This agreement though initially may not have been an offence  was none  the less an offence subsequently, but appellant no.  1 did  not withdraw from it and was said to have continued  to carry  out the agreement.  The help of appellant no.  1  was necessary to the design of appellant no. 2 because otherwise he would not know whether ASSAB was in fact, crediting  his, account in the bank with the amount of over 762 invoice Appellant no.  1 kept appellant no. 2 supplied  with necessary information from time to time and agreed while  in Madras  in  1965 to continue to help appellant  no.  2.  The several   acts  of  appellant  no.  1  were  all  acts-   in consequence of the agreement which had its origin in Sweden. Appellant no. 2 also in pursuance of the conspiracy acquired foreign  exchange in Sweden.  Therefore on  the  allegations contained  in the complaint appellant no.  1  and  appellant no. 2 could be charged with an offence under s. 120-B.  [771 H-772 E] M/s.   Rayala  Corporation (P) Ltd. & Anr.  v.  Director  of Enforcement, New Delhi [1970] 1 S.C.R. 639 and Denis Dowling Mulchv v. Queen L.R. 3 H.L. 305, 317, referred to. Per Mitter and Hedge, ]J. (dissenting).-The appeals must  be allowed. Per  Mitter, J.-(i) An agreement by two persons whereby  one agrees  to  help  the other  by  ’facilitating  transfer  of foreign  exchange from a foreign exporter into  the  banking account of that other is an agreement the object whereof  is not  only  the  acquisition  of  foreign  exchange  but  the retention  of  it abroad.  This is clearly an  agreement  to evade  the  operation  of  the  provisions  of  the  Foreign Exchange Regulation Act relating to the ill-gal  acquisition and retention of ’foreign exchange within the meaning of  s. 21 (1) of the Act.  So far as the violation of the different provisions  of  the Act or rule or direction or  order  made thereunder  are  concerned  the  Act  is  a  complete   code including within its ambit by reason of s. 21(1) a  criminal conspiracy to acquire foreign exchange abroad illicitly  and retaining the same abroad.  The offence alleged against  the appellants  in  the  present case therefore  fell  under  s. 23(1A)  read with s. 21(1) of the Act and no  complaint  lay under  s. 120-B of the Indian Penal Code. [781 E-F,  782  B, 783 H] (ii) In  the Rayala Corporation’s case this Court laid  down that  complaint under s. 23(1)(b) cannot be launched  before the  Director of Enforcement has taken up  the  adjudication proceedings  and made some inquiry in these proceedings  and formed  the opinion that it was necessary to have resort  to

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the  more  drastic provisions of conviction by  a  court  as envisaged   by  s.  23(1)(b).   In  the  present   case   no proceedings had been started either against appellant no.  1 or   appellant  no.  2  in  pursuance  of  the   notice   of adjudication  issued against them.  Therefore in respect  of the substantive offences for contravention of the  different sections  of the Act the Director of Enforcement  could  not make a Complaint before first having followed the  Procedure laid down in s. 23D of the Act.  It would be absurd to allow him to file a complaint for violation of s. 21(1) by  making a  charge under s. 120-B I.P.C. when the overt acts  alleged were  contravention  of  different  provisions  of  the  Act punishable   only  under  s.  23(1)(b)  ’by  following   the procedure indicated in s. 23D To allow the prosecution to be proceeded with at this stage would in effect be  stultifying in  s. 23(1)(b).  Accordingly the complaint filed  under  s. 120B  of the I.P.C. against the appellants must be  quashed. [782 C-F] Per Hegde, J.-(i) The appeals must be allowed following  the rule  laid, down by this Court in the  Rayala  Corporation’s case.  It is a fundamental principle of law that what cannot be  done  directly  should  not  be  permitted  to  be  done indirectly. [784 A-B] (i)  From  the  facts and circumstances of the case  it  was clear  that the complaint was not a bona fide one.   It  had been  filed  with a collateral purpose viz. to  justify  the unlawful  detention  of appellant no.  1 in  this   country. [784 B-C] 763 (iii)     Even if all the facts stated in the complaint were accepted  as correct the same did not amount to  an  offence under  s. 120B of the Indian Penal Code.  These  allegations merely made out that appellant no.  1 was in accessory after the  fact  and not that he was a conspirator.  If  a  person agreed  with  a  robber to receive the  stolen  property  to arrange  for  its  safe keeping he does  not  become  a  co- conspirator with the robber in the commission of the offence of  robbery.   On  the  facts  alleged  it  was  clear  that appellant   no.  1  had  nothing  to  do  either  with   the acquisition of foreign exchange by appellant no. 2 or in the matter  of  the latter’s failure to repatriate the  same  to this  country.   The  allegation against  him  was  that  he provided facility for its retention in Sweden. [786 A-B]

JUDGMENT: CRIMINAL APPELLATE JURISDICTION : Criminal Appeals Nos.  113 and 163 of 1969. Appeals from the judgment and order dated April 16, 1969  of Madras High Court in Criminal Misc.  Petitions Nos. 469  and 621 of 1969. A.   K.  Sen,  N. C. Raghavachari, W. S. Setharaman  and  R. Gopalakrishnan,  for  the  appellant (in Cr.A.  No.  113  of 1969). M.   C.  Setalvad, N. C. Raghavachari, W. S. Setharaman  and R.   Gopalakrishnan,  for the appellant (in Cr.  A. No.  163 of 1969). Jagadish  Swarup,  Solicitor-General, R. H.  Dhebar,  B.  D. Sharma  and  S. P. Nayar, for the respondents (in  both  the appeals). The  Judgment of SIKRI, RAY and JAGAN MOHAN REDDY, JJ.   was delivered  by  REDDY  J. MITTER  and  HEGDE,  JJ.  delivered dissenting Opinions. Jagamohan Reddy, J. The Director of Enforcement, New  Delhi,

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filed  a  complaint on February 16, 1969  before  the  Chief Presidency  Magistrate,  Madras against  Lennart  Schussler, accused  1, and M. R. Pratap, accused 2, Managing  Director, The  Rayala Corporation Ltd. hereinafter referred to as  A.1 and  A.2  respectively, under section 120-B I.P.C.  and  ss. 4(3), 5(1) (e) and 9 of the Foreign Exchange Regulation  Act (VII)  of 1947 (hereinafter called the Act).   Two  Criminal Miscellaneous  Petitions, one filed by A.1 being No  469  of 1969  and the other filed by A.2 being No. 621 of  1969  for quashing  the complaint were dismissed which by  the  Madras High Court by a common judgment against these two appeals by certificate have been filed. The  complaint  which is in respect of  the  acquisition  of 88913.09  Swiss Kronars in contravention of the  Act  states that  on  reliable  information received  by  the  Assistant Director  of Enforcement, Madras that A 2 was utilising  his position as Managing Director of the Rayala Corporation Ltd. in  acquiring  foreign exchange illicitly, on  December  20, 1966,  a  search was conducted of the premises of  the  Said company in the presence of A-2, 764 Jaga Rao and the legal advisor of the company one Sita  Ram. During  the  search  certain documents  were  recovered  and seized, one of which was a letter dated the 25th March  1965 in Swedish language from the Associated Swedish Steels  A.B. Sweden,  as  ASSAB  to A with the  enclosures.   The  Rayala Corporation  Private Ltd. was a concern manufacturing  Halda typewriters  for which purpose certain materials were  being imported  from  Sweden.  The firm with which  initially  the transactions  were  being  entered into was  known  as  A.B. Atvidabergs,  later  known  as Facit AB, of  which  A  1,  a Swedish  national,  has  been the  export  manager.   It  is alleged  that  in  August 1963, A 2 Jaga Rao  and  A  1  met together  at  Stockholm  and  agreed  to  a  plan  regarding purchase  of  certain  raw materials,  namely,  steel  alloy sheets  directly from ASSAB instead of purchasing them  from Atvidabergs.   At  that  meeting  A  2  informed  A  1  that henceforth  he would buy material on behalf of  his  company from ASSAB instead of M/s Atvidabergs.  A 2 further informed A 1 that the arrangement made between him and the ASSAB  was to  over in voice the value of goods by 40 per cent  of  the true  value and that he should be paid the difference of  40 per  cent  on  account of the  aforesaid  over-invoicing  by crediting  it to his personal account and that  since  under the  laws of India this acquisition by him was unlawful  and had  to  be kept secret, it should not be mentioned  in  the official  correspondence of Messrs Rayala  Corporation  with the  Swedish firm.  He requested the first accused  to  help him  in  opening  the account  in  Swenska  Handles  Banken, Sweden, in order not only to transfer the money lying to his credit  in Atvidabergs but also to have further deposits  to his personal account from ASSAB on account of the difference between  the actual value and the over-invoiced value.  A  1 agreed to act is requested by A 2. A 2 made arrangement with ASSAB  to intimate to A 1 the various amounts credited to  A 2’s  account  and  asked  A  1 to  keep  a  watch  over  the correctness  of the account and to further intimate  to  him the  account position from time to time  through  unofficial channels  and  whenever A 1 came to India.  A 1 is  said  to have  agreed to comply with this request.   Subsequently  in November  1965  A 1 came to India when he is  said  to  have brought  the incriminating letter dated the 25th March  1965 which  was seized.  He is said to have also agreed  at  that time with A 2 to continue to help him to accumulate  foreign exchange.  illegally in the same manner.  In September  1966

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also  A 1 arrived at Madras where he stayed for a month  and at that time also he brought further details of the account. The gravamen of the charge is set out in paragraph 9 of  the complaint  as  follows :"Thus it is clear that A 1 and  A  2 agreed  to commit illegal acts.. namely, acquisition by A  2 of foreign exchange illicitly and retaining the same  abroad without surrendering the same to the Government of India and also to defraud the Government of 765 India of  foreign  exchange  thereby  contravening  Sections 4(3), 5 (1 ) (e)    and 9 of the Foreign Exchange Regulation Act and Rule 132A of     the  Defence of  India  (Amendment) Rules, 1964 and further  that between August 1963 and 1966 A 1 and A 2 in pursuance of the said agreement did commit acts in contravention of sections 4 (3) , 5 (1) (e) and 9 of  the Foreign  Exchange  Regulating  Act and Rule  132  A  of  the Defence  of  India  (Amendment)  Rules,  1964  and   thereby committed offence punishable under sec. 120 B of the  Indian Penal Code, read with sections 4(3), 5 (1) (e) and 9 of  the F.E.R.  Act  and  Rule  132  A  of  the  Defence  of   India (Amendment) Rules, 1964". The complaint also refers to the fact that C.C. No. 8736  of 1968  had already been filed against the Rayala  Corporation Private Ltd.  In view of this reference it is necessary, for a  better  appreciation  of  the  issues  involved  in  this petition, to give a brief account of the earlier proceedings taken by the Directorate of Enforcement in this regard.   It appears  that  the earlier notice sent  by  the  Enforcement Directorate   dated  the  25th  August  1967  was  for   the contravention  of  the Act in respect  of  244,713.70  Swiss Kronars  alleged  to  have  been deposited  in  A  2’s  bank account,  which  amount included  88,913.09  Kronars.   This notice was followed by a further show cause notice under  s. 23(3)  of the Act dated the 4th November 1967 to A 2  as  to why  he  should not be prosecuted in  respect  of  88,913.09 Swiss Kronars.  A 2 in his reply of November 13, 1967 to the show  cause  notice  of  the 25th  August  1967  denied  the allegations.    The  Enforcement  Director  further   issued another  show cause notice dated the 15th November  1967  to the  other  directors  of the Corporation  and  its  General Manager,  Jaga Rao in continuation of the notice  dated  the 25th  August  asking  them to show  cause  why  adjudication proceedings  should  not be instituted.   On  November   29, 1967,  A  2 replied to the notice of the 4th  November  1967 denying the allegations.  Thereafter on January 20, 1968 the Director  of  Enforcement  issued a  notice  to  the  Rayala Corporation  to show cause why if should not  be  prosecuted for  violation in respect of 88,913.09 Swiss  Kronars.   Two months  later,  namely, on March 16, 1968,  a  revised  show cause  notice  was  issued  to  the  Corporation  and  A   2 superseding the notice of 25th August 1967 and intimating to them that they were prosecuting the Corporation and A 2  for the contravention of the Foreign Exchange Regulation Act  in respect  of  88.013.09 Kronars.  Four  days  thereafter  the Director  of  Enforcement  filed  a  complaint  against  the Corporation  and A 2 under r. 132-A of the Defence of  India Rules and ss. 4 (1). 4 (3). and 5 (1) (e) of the Act.  ]Both the  Corporation and A 2- filed Criminal  Misc.   Petitions, being respectively No, 978 and 980 of 1968. for quashing the complaint  but  the  High Court of  Madras  dismissed  these petitions in October 766 1968.   Two  appeals by certificate preferred  against  that order,  being Criminal Appeals Nos. 18 and 19 of 1969,  were allowed  by this Court on July 23, 1969, setting  aside  the

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order of the High Court rejecting the applications under  s. 561  A of the Code, of Criminal Procedure for  quashing  the proceedings against the appellants therein.  While the above proceedings were pending, A 1 who happened to be a passenger travelling  by  an aircraft from Singapore  to  Karachi  via Palam  was detained on November 27, 1968 by the officers  of the Office of the Enforcement Directorate when the  aircraft which  had  landed  at  Palam  on  November  26,  1968   for refuelling  had  to be temporarily grounded  due  to  engine trouble.  On November 30, 1968, the Enforcement  Directorate served a notice for adjudication on A 1 in his capacity as a director  of the, Rayala Corporation which was purported  to be in continuation of the previous adjudication notice dated August  25,’1967 issued to the company under s. 23 C of  the Act.  These allegations were also denied by A 1 on the  30th January  1969  and  on 5th February 1969 A 1  filed  a  writ petition  in  this Court for the issue of a writ  of  habeas corpus.   It is however unnecessary to narrate  the  various stages of this and the subsequent. petitions for directing A 1’s  release and for according him permission to leave  this country  for Sweden.  The subsequent writ petition filed  by him after the withdrawal of the first one filed on 5th  Feb- ruary  1969, came up for hearing along with  these  criminal appeals  and  this Court on the 10th  September  1969  while allowing the writ petition to be withdrawn passed a  consent order  permitting  A  1 to depart  from  India  provided  he furnishes  ban guarantee in the foreign exchange  equivalent of Rs. 1,50,0001- in Swedish Kronars and on his  undertaking to appear before the Chief Presidency Magistrate, Madras  or any  other  Magistrate to whom the complaint case  might  be transferred at the time of the disposal thereof. The  main  question in these appeals is whether A 1  can  be charged  in  respect  of acts alleged  against  him  in  the complaint  with  an  offence under s. 120B  I.P.C.  or  with offences under the several provisions of the Act and r.  132 A of the Defence of India Rules, read with s. 120B I.P.C. Before considering this question it is necessary to  mention that at the time of the alleged agreement between A 1 and  A 2  at Stockholm neither the Defence of India Rules  nor  the Foreign  Exchange  Regulation Act  contained  any  provision specifically  making it an offence for a person resident  in India to acquire foreign exchange abroad.  Rule 132 A of the Defence  of  India Rules was added on 21st January  1964  by Defence of India (Amendment) Rules 1964 by which dealings in foreign exchange by persons other than an authorised  person were prohibited.  The 767 provision remained in force till 31st March 1965 when it was repealed.  Section 4 of the, Foreign Exchange Regulation Act was  also amended as from 1st April 1965 so as  to  prohibit the buying or otherwise acquiring or borrowing or selling or otherwise  transferring or lending to any person other  than an  authorised  dealer  any  foreign  exchange  without  the previous general or special permission of the Reserve  Bank. It  is therefore apparent that at the time when the  alleged agreement  between  A 1, A 2 and Jaga Rao is  said  to  have taken  place in Stockholm in August 1963 it was  neither  an offence  under the Defence of India Rules nor wider the  Act to acquire foreign exchange in a foreign country.  But it is contended by the learned Solicitor General that pursuant  to that agreement A 1 continued to help and agreed to help even after it became an offence under the Defence of India  Rules or under the Act and consequently no exception can be. taken to the complaint against A-1. At any rate,, s. 21(1) of  the Act  would  cover  such agreements which  are  offences  and

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consequently the accused can be charged with s. 120B  I.P.C. On  the other hand, learned counsel for the appellants  Shri Asoke Sen submits that firstly, there was no mention of  any allegation  against  A 1 in the several show  cause  notices issued either to the Rayala Corporation or to the  directors of  that  Corporation or to A 2 but it is an  after  thought brought  about  by the mechanisation of Jagga  Rao  who  was hostile and inimical ’to A 2; secondly, as it appears on the enquiry  made  by  A 2 at the instance  of  the  Enforcement Directorate from Swenska Handels Banken, Stockholm, that  in fact  there is no account is alleged either in the  name  of the  Rayala  Corporation  or in the  name  of  the  Managing Director  of  the Rayala Corporation, that is,  A  2.  there would  be  no  basis for the  complaint;  and  thirdly,  the agreement alleged does not either come under s. 120B  I.P.C. or would amount to a contravention of any of the  provisions of  the  Act including s. 21(1) thereof.  It  would  not  be necessary  at this stage to go into these questions  because what has to be seen is whether, assuming the facts as stated in  the complaint to be true, A 1 and A 2 could  be  charged with  the  offences specified therein.  The answer  to  this question  must depend upon the nature of the part which A  1 agreed  to play in the acquisition of the  foreign  exchange under  which  agreement  he is said  to  have  continued  to participate  in the conspiracy by rendering, help to A 2  in acquiring  foreign exchange even after 21st of January  1964 and also till after the amendment of s. 4(1 of the Act. Under s. 120B there must be an agreement between two or more persons to commit an offence or where the agreement does not amount to an offence in the doing of an act which is  legal, in an illegal way there should also be established an  overt act.  In 768 so far as the offence under r, 132A of the Defence of  India Rules  is  concerned,  in 1963 what Pratap did  was  not  an offence,  nor  was it an offence under the Act as s.  4  was amended  with effect from 1st April 1965.  In so far as  any acts which may be considered to constitute an offence  under r.  132A of the Defence of India Rules, it has been held  by this  Court  in  Criminal Appeals Nos. 18 and  19  of  1969, decided  on  23rd  July 1969  (Rayala  Corporation  etc.  v. Director of Enforcement) that no prosecution can be launched for an offence under that provision subsequent to the repeal as there is no saving provision thereunder. It is then contended that the agreement entered into in 1963 continued  to  be effective even after  the  acquisition  of foreign  exchange became an offence after tile amendment  of the  Act  on  1st April 1965, and at  any  rate  after  this amendment  an agreement by A 1 to assist A 2 was again  said to  have  been  arrived  at  in  Madras  in  1965.   It  is, therefore,  necessary to examine whether such  an  agreement would  constitute an offence and if so under what  provision of  law.   The agreement in Madras has a  reference  to  the initial agreement in Sweden.  This alleged agreement between A.  1 and A. 2, as set out in the complaint, can be  briefly stated to consist of the following, namely, in August 1963 A 2  asked A 1 to help him (a) to open an account  in  Swenska Handels  Banken, Stockholm, (b) to get the money lying to  A 2’s  credit with Atvidaberge accumulated by him as a  result of  over-invoicing transferred to Pratap’s account with  the bank-  and (c) to keep a watch on and check the  correctness of the account of the acquisitions from time to time and not to  mention anything in ,,he official correspondence but  to give information otherwise.  Even in Madras in 1965, A-1. is alleged  to have agreed to keep a watch on the  account  and

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bring  him  statements of the account.  The offence by  A  2 under  the Act would consist of setting the goods which  the Rayala  Corporation was purchasing over-invoiced by  40  per cent so that permission to remit foreign exchange from India to  the  extent of the amount of the over-invoice  could  be obtained  from the Reserve Bank and after money is  received in Sweden by the Swedish company that company was to  credit Pratap’s (A 2) account with 40 per cent of the  over-invoice price.   If  these  facts are  established,  they  certainly amount  to  a contravention of cl. (1) and cl. (3) of  s.  4 which provide that where any foreign exchange is acquired by any  person  other  than by any authorised  dealer  for  any particular  purpose or where any person has  been  permitted conditionally  to acquire foreign exchange, the said  person shall  not  use the foreign exchange so  acquired  otherwise than for that purpose or as the case may be, fail to  comply with any condition to which. the permission granted to  him’ is  subject, and where any foreign’ tax. change so  acquired cannot be so used or. as the case may be the 769 condition  cannot  be complied with, the said  person  shall without  delay  sell the foreign exchange to  an  authorised dealer.  Now it is alleged that A 2 Pratap has in breach  of this condition on which foreign exchange was released to the Rayala  Corporation to pay the actual cost of the goods  has not  only  not  complied with the conditions  on  which  the permission was granted but has also committed default in not selling  the  foreign exchange so acquired  by  him  without delay to an authorised dealer. Before dealing with the question whether the agreement of  A 1  to  help A 2 amounts to  criminal  conspiracy  punishable under s. 120B I.P.C., it will be convenient first to dispose of the submission that s. 120B I.P.C. does not apply because s.  21(1) covers the same ground.  It would appear that  the alleged  agreement  between  A 1 and A 2 is  not  one  which transgresses s. 21 (1) of the Act.  What s. 21 (1)  provides is that the provisions of the Act must be avoided or  evaded by  the  agreement  or contract itself.   The  contracts  or agreements  are  those, which are entered  into  during  the course of commercial transactions and it is the intention of the   legislature  to  prohibit  that  such   contracts   or agreements ought not to provide for the evasion or avoidance of  ,in any of the provisions of the Act either directly  or indirectly.  This assumption is made clear by the subsequent sub-section in which the legislature is anxious to  preserve the  integrity of these transactions by providing  that  any reference  to any act being done without the  permission  of the Central Government or Reserve Bank shall not render  the agreement  invalid and it shall be an implied term of  every contract  governed  by  the law of any part  of  India  that anything  agreed  to be done by any term  of  that  contract which is prohibited to be clone by or under any of the  pro- visions  of  this  Act except with  the  permission  of  the Central Government or Reserve Bank shall not be done  unless such  permission  is granted.  Sub-sec.  (3)  provides  that notwithstanding anything in the Act or any provision in  the contract  that  anything for Article permission  has  to  be obtained from the Central Government or Reserve Bank-  shall not  be done without that permission, no  legal  proceedings shall  be prevented from being brought in India  to  recover any sum which apart from any of the said provisions and  any such  term  would  be  due whether as  a  debt,  damages  or otherwise  but subject to the certain condition-is  provided in  cls. (a) to (c) therein.. Similarly, sub-s.  (4)  states that nothing shall be deemed to prevent any instrument being

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a  bill  of  exclaim ’ or promissory note in  spite  of  any inhibitions  in.  the  Act and  notwithstanding  ’  anything contained  in the Negotiable Instruments Act.  The  combined effect of the several provisions of s.21 does not incline us t0  the  view  that sub-s. (1) covers  a  case  of  criminal conspiracy similar to s. 120B.  Section 21 does not in terms deal with an agreement to commit in offence or a legal act 770 in  an illegal way but merely provides that an agreement  or contract  by  itself  ought  not  to  evade  or  avoid   the provisions  of the Act.  The agreement entered into  between ASSAB  and  A  2 Pratap would, it proved,  come  within  the mischief  of S. 21 ( 1 ) but the agreement such as  the  one alleged  to have been entered into between A 1 and A 2  does not itself evade or avoid any of the provisions of the  Act, rules  or directions.  The words directly or  indirectly  do not take in any agreement to do illegal acts in future. It  now  remains to be seen whether  the  alleged  agreement which A 1 and A 2 arrived at in Stockholm in 1963 and  again in  Madras  in  1965, would, if  established,  amount  to  a criminal  conspiracy.  The first of the offences defined  in S.  120A  Penal  Code  which  is  itself  punishable  as   a substantive  offence  is the very agreement between  two  or more  persons to do or cause to be done an illegal act or  a legal  act by illegal means subject however to  the  proviso that  where the agreement is not an agreement to  commit  an offence the agreement does not amount to a conspiracy unless it  is  followed  up by an overt act done  by  one  or  more persons in pursuance of such an agreement.  There must be  a meeting  of  minds in the doing of the illegal  act  or  the doing  of  a  legal  act  by  illegal  means.   If  in   the furtherance of the conspiracy certain persons are induced to do  an unlawful act without the knowledge of the  conspiracy or  the plot they cannot be held to be conspirators,  though they may be guilty of an offence pertaining to the  specific unlawful  act.  The offence of conspiracy is  complete  when two  or more conspirators have agreed to do or cause  to  be done  an  act which is itself an offence, in which  case  no overt  act  need be established.  It is also clear  that  an agreement to do an illegal act which amounts to a conspiracy will  continue  as  long as the members  of  the  conspiracy remain in agreement and as long as they are acting in accord and in furtherance of the object for which they entered into the agreement. As has been noticed earlier at the time A 1 and A 2  entered into  an agreement though A 2 thought it was an  offence  to acquire  foreign exchange by the method he was employing  it was  not  in fact an offence.  It is none the  less  alleged that A 1 agreed to help in the belief that what he is  doing would  be  to  assist  A  2  to  acquire  foreign   exchange illegally.  This agreement continued and A 1 was assisting A 2  even  after the acquisition of  foreign  exchange  became illegal  and  is said to have agreed even after he  came  to Madras in 1965 to continue to help in acquiring the  foreign exchange.  It is however contended that the agreement of A 1 with  A 2 does not amount to a criminal  conspiracy  because all  that A 1 has agreed to do was, to help A 2 to  open  an account in the Swedish Bank, have the amounts living to  the credit of A 771 with Atvidabergs to that account and to help A 2 by  keeping a  watch  over the account.  It is true that none  of  these acts  amounts  to  an offence, because the  opening  of  the account in the Bank and having the amounts transferred  from Atvidabergs was not an offence in August 1963, and there  is

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nothing to show that A 1 had not completed that part of  the agreement  relating  to Atvidabergs and the opening  of  the account  with  the bank before January 1964 or that  he  had rendered  the assistance after that date.  If this  part  of the  agreement  does  not amount to a conspiracy  to  do  an unlawful  act,  then  it is submitted  that  the  subsequent watching  over the account and sending or bringing a  state- ment  of the account of A 2 relating to the  acquisition  of the  foreign  exchange does not amount to an  offence.   The agreement  which constitutes an offence, it is said  is  the one  between A 2 and ASSAB.  The subsequent act of A  1  was neither  necessary  to  acquire  nor  does  it  further  the acquisition of the foreign exchange in contravention of  the provisions of the Act and is therefore not an offence  under s.  120B of the Penal Code.  This argument  would  postulate that the several acts which constitute it can be split up in parts and the criminal liability of A 1 must only be  judged by  the part he has played.  It appears to us that  this  is not a justifiable contention, because what has to be seen is whether the agreement between A 1 and A 2 is a conspiracy to do  or continue to do something which is illegal and  if  it is, it is immaterial whether the agreement to do any of  the acts in furtherance of the commission of the offence do  not strictly amount to an offence.  The entire agreement must be viewed as a whole and it has to be ascertained as to what in fact  the  conspirators intended to do or  the  object  they wanted to achieve.  As observed by Willis, J. in his 1 1 the answer  given on behalf of the Judges when consulted by  the Lord Chancellor in Denis Dowling Mulcahy v. Queen (1)               "A  conspiracy  consists  not  merely  in  the               intention of two or more, but in the agreement               of two or more to do an unlawful act or to  do               a  lawful act by unlawful means.  So  long  as               such  a design rests in intention only, it  is               not  indictable.  When two agree to  carry  it               into  effect, the very plot is an act in  it&-               ,If,  and  the  act of  each  of  the  parties               promise  against promise, actus contra  actum,               capable   of   being  enforced,   if   lawful,               punishable if for a criminal object or for the                             use of criminals means." In this case on the allegations A 2 asked A 1 to help him in acquiring foreign exchange illegally and A 1 agreed to, help him.  This agreement though initially may not, have been  an offence (1) L.R3H.L. 305,317 SLIP.  CI/70-4 772 was  none the, less an offence subsequently but A 1 did  not withdraw from it and was said to have continue to carry  out that  agreement.  A 1’s help was necessary for A 2’s  design because  otherwise  he would not know whether ASSAB  was  in fact  crediting his account in the bank, with the amount  of over-invoice.  Only when ASSAB credited A 2’s account  could he  be said to have acquired the foreign exchange till  then it was only an understanding or agreement under which it  is enforceable  a debt would be created in favour of A  2.  The knowledge  that the amount was being credited from  time  to time was an essential part of the agreement, between A 1 and A  2  and would be in furtherance of  illegal  and  unlawful design   to  acquire  foreign  exchange  contrary   to   the provisions of the Act.  It consisted in, as has already been stated in A 1 keeping a watch over the accounts, his  coming over to India on several occasions, his bringing a letter in reply to his letter, with a statement of account annexed  in

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November 1965 from ASSAB to himself, in which the amount  of foreign  exchange  credited by ASSAB to A 2’s  account  with Swenska  Handels Banken was mentioned, his statement at  the time of handing it over that he brought the letter in person as he did not want to send it by post in view of the  nature of the transactions and his further agreeing in Madras  with A 2 that he will continue to help him.  The several acts  of A  1 are all acts in consequence of the agreement which  had its  origin in Sweden.  A 2 Pratap one of  the  conspirators also  in  furtherance of that  conspiracy  obtained  foreign exchange  invoices  which were over priced with  a  view  to acquire  the  same in Sweden.  It would,  therefore,  appear that on the allegations contained in the complaint A 1 and A 2 could be charged with an offence under s. 120B. These  appeals  are  accordingly dismissed with  a  word  of caution  that  nothing that has been stated here  should  be taken   as  establishing  any  of  the  facts  required   to constitute the offence which if the prosecution case has  to be sustained must be proved at the trial in accordance  with law. Mitter,  J. These two appeals by certificate arise out of  a common judgment of the Madras High Court in Crl.  M.P.  469/ 1969  and Crl.  M.P. No. 621/1969, the object of both  being to quash the complaint in C.C. No. 5438 of 1969 on the  file of  the  Court of the Chief Presidency  Magistrate,  Egmore, Madras.   Cr.   M.P. 469 of 1969 was  by  Lennart  Schussler while  Cr.   M.P.  621/  1969 was  by  M.  R.  Pratap.   The complaint  before the Chief Presidency Magistrate was  filed on February 16, 1969 by the’ Director of Enforcement against Schussler and Pratap under s. 120-B of the Indian Penal Code read   with  various  sections  of  the   Foreign   Exchange Regulation Act, 1947. 773 In order to appreciate how the complaint came to be made, it is  necessary  to note a few facts which preceded  it.   The Rayala Corporation Private Ltd., (hereinafter referred to as the ’Corporation’) used to manufacture Halda typewriters and in   that   connection  import  materials  through   A.   B. Atvidabergs,  Sweden later known as Facit AB.  M. R.  Pratap was the Managing Director of the Corporation.  Schussler,  a Swedish  national, has been export manager of Facit  AB  for many  years.   He became a director of  the  corporation  in April 1956.  On information received about violation of  The Foreign Exchange Regulation Act (hereinafter referred to  as the  ’Act’) the Enforcement Directorate raided the  premises of the corporation at Madras on 20th and 21st December, 1966 and seized certain records.  According to the information at the  Directorate  a  plan had been hatched  in  August  1953 between Pratap, Schussler and one Jaggarao, General  Manager of  the Corporation, in Stockholm regarding purchase of  raw materials  by the corporation directly from a firm known  as ASSAB  instead of Facit AB to give effect to an  arrangement already made by Pratap with ASSAB to over-invoice the  value of  the goods imported by the corporation by 4O %  of  their true  value thereof and the difference of 40 per cent to  be paid to the personal account of Pratap.  The part played  by Schussler  was  to  help Pratap in  opening  an  account  in Swenska  Bandela Banken, Sweden (hereinafter referred to  as the  ’bank’) and to transfer the moneys lying to his  credit to  Facit  AB  and  to have further  deposits  made  to  his personal account on account of over-invoicing by Assab.   It is  the  case  of  the  Directorate  that  Pratap  had  been acquiring  large amounts of foreign exchange abroad by  the, above  means  from  before 1963 and had  retained  the  same abroad  to  put  it beyond the reach of  the  Government  of

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India.  On August 25, 1967 the Enforcement Directorate  sent a  notice to the corporation and Pratap alleging  violations of  ss.  4 (1) and 9 of the Act calling upon  them  to  show cause why adjudication proceedings under the Act should  not be  had.   The notice was not only in respect  of  88,913-09 Krs. but an additional sum making a total of 244,713-70  Sw. Krs. alleged to have been deposited in a bank account.  This was  followed by a further show cause notice dated  November 4, 1967 from the Directorate to Pratap under s. 23(3) of the Act for prosecuting him under the Act in respect of  88,913- 09  Krs.   On November 13, 1967 Pratap replied to  the  show cause notice dated August 25, 1967 denying the  allegations. On  November  15,  1967 the  Directorate,  sent  show  cause notices  to the other Directors of the Corporation  and  its Manager  in  continuation of the notice  dated  25th  August asking  them  to  show cause  why  adjudication  proceedings should  not  be instituted.  On 29th  November  1967  Pratap denied the allegations in the notice dated 4th November.  On 20th January 1968 notice was issued by the Director of En- 774 forcement to the Corporation to show cause why it should not be  prosecuted  for the violation of the Act in  respect  of 88,913-09 Sw. Krs.  On March 16, 1968 a revised adjudication show cause notice was issued by the Director of  Enforcement to  the Corporation and Pratap superseding the notice  dated August   25,  1967  and  informing,  them  that  they   were prosecuting  the  Corporation and Pratap for  88,913-09  Sw. Krs.  and adjudicating in respect of 155,801 Sw.   Krs.   On March 20, 1968 the Director of Enforcement filed a complaint against  the Corporation and Pratap under rule 132A  of  the Defence of India Rules and ss. 4(1), 4(3) and 5(1)(e) of the Act.   The Corporation and Pratap filed Cr.  M. Ps. 978  and 980 of 1968 for quashing, the complaint.  The High Court  of Madras  dismissed  these  petitions in  October  1968.   The appeals  preferred  to  this Court  on  a  certificate  were disposed of in July 1969 quashing the complaint. Schussler  happened to be a passenger travelling by an  air- craft from Singapore to Karachi via Palam in November  1968. When the aircraft touched at Palam for a short space of time engine trouble was noticed and all the passengers  including Schussler  were  asked to spend the rest of the night  at  a hotel until the aircraft became airworthy once more.  Before Schussler  could  board  the plane the next  day  i.e.  27th November  1968 he was taken to the  Enforcement  Directorate office  and  interrogated.   His departure  from  India  was prohibited  at the instance of the Director  of  Enforcement under  the Foreigners Order of 1948.  On November  30,  1968 Schussler  was  served  with an  adjudication  notice  dated November  15, 1967 under s. 23-C of the Act in his  capacity as Director of the Corporation and the notice was  described as in continuation of the previous adjudication notice dated 25th  August 1967 issued to the company.  On  13th  December 1968 Schussler replied to the show cause notice denying  the allegations.  On January 21, 1968 Schussler was served  with another  adjudication notice similar to the notice  of  16th March  1968 in his capacity as Director of  the  Corporation under  s. 23-C of the Act.  On 30th January  1969  Schussler denied the allegations in the last adjudication notice.   On February  5,  1969 Schussler filed a Writ Petition  in  this Court for the issue of a writ of habeas corpus etc.  On 17th February,  1969  when  the said Writ Petition  came  up  for hearing before this Court a statement was made on behalf  of the  respondents that a complaint C.C. No. 5438 of 1969  had already  been  filed in the Court of  the  Chief  Presidency Magistrate  Madras under s. 120B I.P.C. read with  different

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sections  of  the  Act.  A suggestion  was  then  made  that Schussler  might  be  permitted to  leave  India  by  giving security  by  way  of a bank  guarantee  for  Rs.  1,50,000. Ultimately on April 21, 1969 when the Writ Petition came  up for  hearing before this Court a consent order was made  and the  respondent agreed to withdraw the order dated  November 30, 1968 under the Foreigners Act on condition that 775 Schussler  should move for bail before the Chief  Presidency Magistrate  and then apply for permission to the  Foreigners Registration  Officer to leave India.  The Chief  Presidency Magistrate granted ball to Schussler on two sureties but his application  for permission to the  Foreigners  Registration Officer  was  rejected  on  the  objection  raised  by   the Additional   Director,  Enforcement.   On  April  30,   1969 Schussler filed Writ Petition No. 144 of 1969 for the  issue of  a writ of habeas corpus directing the  respondents,  the Foreigners  Regional  Registration Officer  and  others,  to allow  him  to leave the territory of India  and  for  other reliefs.  This Writ Petition came up for hearing before this Court along with the above Criminal Appeals Nos. 113 and 163 of  1969  on  8th September.  On 10th  September  the  Court ordered  that the Foreigners Regional  Registration  Officer would permit him to leave India on condition of his giving a bank guarantee for 155,800 Sw.  Krs. and on his  undertaking to  appear before the Chief Presidency Magistrate Madras  or any  other  Magistrate to whom the complaint case  might  be transferred at the time of disposal. The complaint in this case filed on February 16, 1969 by the Director  of  Enforcement recites that to the  knowledge  of Schussler Pratap had before August 1963 acquired foreign ex- change amounting to 756,529 Sw.  Krs. by getting Facit AB to over-invoice the goods imported by the Corporation by 40 per cent  of  their  true  value and  that  in  August  1963  an agreement  was  arrived  at  in  Stockholm  between  Pratap, Schussler and Jaggarao for the opening of an account in  the name  of Pratap in the bank with the help of  Schussler  not only to transfer the moneys lying to the credit of Pratap in Facit  AB but also to cause further deposits to be  made  in the  said  account from Assab on account  of  similar  over- invoicing by Assab of the value of the goods to be bought by the  Corporation.  Support for the case of  the  Directorate that Pratap had been acquiring foreign exchange illicitly by the  above device of over-invoicing and retaining  the  same abroad in a Swedish bank was said to be received as a result of the search of the premises of the Corporation in December 1966 and in particular the seizure of the letter dated March 25,  1965  from Assab to Schussler in reply  to  Schussler’s letter (not in the record) to the Assab.  Reference is  made in  the  complaint to several invoices and  other  documents seized during the course of search allegedly lending support to the case of the Directorate.  According to the  complaint such  device had been adopted by the Corporation and  Pratap in respect of 14 invoices involving 88,913-09 Krs. which had been  released  and  secured for import  of  goods  but  was actually  not utilised for the purpose and kept back  abroad credited  to the personal account of Pratap  thus  violating the  order  made by the Central Government  by  Notification dated 25th Sep- 776 tember  1958 No. F. 1(67)/E/57 under S. 9 of the Act.   This amount of 88,913-09 Sw.  Krs. was said to have been acquired surreptitiously  in the year 1964-65 by Pratap  without  the previous or general permission of the Reserve Bank of  India and Pratap had failed to offer the same to the Reserve  Bank

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or  to  any author raised dealer within one month  from  the date  of  the  acquisition  in  terms  of  the  notification mentioned.  The complaint goes on to relate that the  letter of  25th March, 1965 was brought by Schussler in  person  to India  when  he came here in November 1965.   The  complaint also  alleges  that in November 1965 Schussler  agreed  with Pratap "to continue to help him and accordingly did help him to accumulate foreign exchange illegally in the same manner. Thereafter  even  later when Schussler  became  Director  of Rayala  Corporation similar transactions were  continued  by him and Pratap." In September 1966 Schussler came to  Madras bringing further details of the said account.  The complaint winds  up with the statement that Schussler and  Pratap  had agreed to commit illegal acts, namely, acquisition by Pratap of foreign exchange illicitly and retaining the same  abroad without  surrendering it to the Government of India  and  to defraud the Government of India of foreign exchange  thereby contravening  sections  4(3), 5(1)(e) and 9 of the  Act  and Rule  132A  of the Defence of India Rules 1962  and  further between  August  1963  and  1966  Schussler  and  Pratap  in pursuance   of  the  said  agreement  did  commit  acts   in contravention  of the said sections of the Act and the  said r. 132A and thereby committed an offence punishable under s. 120B of the Indian Penal,Code read with the said sections of the Act and the said rule.               The relevant provisions of the Act may now  be               noticed.   Sub-s.  (1) of s. 4 of the  Act  as               originally provided that :               "Except  with the previous general or  special               permission  of  the Reserve  Bank,  no  person               other  than  an  authorised  dealer  shall  in               India,  and no person resident in India  other               than an authorised dealer shall outside India.               buy or borrow from, or sell or lend to, or ex-               change   with,   any  person  not   being   an               authorised dealer, any foreign exchange." The above was considered to be sufficient to attract the ban on  acquisition of foreign exchange by other means  e.g.  by over invoicing the price of goods imported as was alleged to have been done by the Corporation and Pratap The section  as amended  with effect from April 1, 1965 contains  the  words "or  otherwise  acquire" in between the words "by"  and  "or borrow  from"  and  the words  "or  otherwise  transfer"  in between the words "sell" and "or lend to".  Rule 132A of the Defence  of India Rules was promulgated on January 21,  1964 cured the lacuna in s. 4(1) of 777 the  Act as from the said date.  But this rule  was  omitted from  the  rules by a notification dated March 30,  1965  in view of the amendment of s. 4(1) which became effective from April 1, 1965.               S.    4(3)  prohibits the use of  any  foreign               exchange for a purpose other than for which it               was given and, runs as follows :               "Where any foreign exchange is acquired by any               person other than an authorised dealer for any               particular  purpose, or where any  person  has               been   permitted  conditionally   to   acquire               foreign  exchange, the said person  shall  not               use the foreign exchange so acquired otherwise               than  for that purpose or as the case may  be,               fail to comply with any condition to which the               permission  ,,,-ranted to him is subject,  and               where any foreign exchange so acquired  cannot               be used or, as the case may be, the conditions

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             cannot be complied with, the said person shall               without delay sell the foreign exchange to  an               authorised dealer."               Section  5  contains certain  restrictions  on               payments.  The Provisions, s. 5 (1) (e)  reads               :               "Save as may be provided in and in  accordance               with any general or special exemption from the               provisions  of this sub-section which  may  be               granted conditionally by the Reserve Bank,  no               person in, or resident in, India shall-               (a) to (d)               (e)   make any payment to or for the credit of               any   person  as  consideration  for   or   in               association with-               (i)   the  receipt by any person of a  payment               or  the acquisition by any person of  property               outside India;               (ii)  the  creation or transfer in  favour  of               any  person  of  a  right  whether  actual  or               contingent  to  receive a payment  or  acquire               property outside India;               Section 9 reads               " The Central Government may, by  notification               in  tile official Gazette, order every  person               in, or resident in, India-               (a)   who owns or holds such foreign  exchange               as  may be specified in the  notification,  to               offer  it, or cause it to be offered for  sale               to  the Reserve Bank on behalf of the  Central               Government  or to such person as  the  Reserve               Bank may authorise for purpose, at such price               778               as  the  Central Government may fix,  being  a               price  which is in the opinion of the  Central               Government  not less than the market  rate  of               the  foreign exchange when it is  offered  for               sale;               (b)   who  is entitled to assign any right  to               receive,  such  foreign  exchange  as  may  be               specified in the notification to transfer that               right  to  the Reserve Bank on behalf  of  the               Central   Government   on  payment   of   such               consideration   therefore   as   the   Central               Government may fix :               Provided  that the Central Government  may  by               the said notification or another order  exempt               any  persons  or  class of  persons  from  the               operation of such order               Provided further that nothing in this  section               shall  apply to any foreign exchange  acquired               by  a  person from an  authorised  dealer  and               retained  by  him with the permission  of  the               Reserve Bank for any purpose."               The  other provisions which are  necessary  to               note are               "S.  21  (1) No person shall  enter  into  any               contract or agreement which would directly  or               indirectly  evade  or  avoid in  any  way  the               operation  of any provision of this Act or  of               any rule, direction or order made thereunder.               S.    23(1).   If any person  contravenes  the               provisions of section 4, section 5, section 9,               section  10 or subsection (2) of  section  12,               section  17, section 18A or section 18B or  of

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             any rule, direction or order made  thereunder,               he shall-               (a)   be liable to such penalty not  exceeding               three times the value of the foreign  exchange               in  respect  of which  the  contravention  has               taken   place,   or  five   thousand   rupees,               whichever  is more, as may be  adjudicated  by               the  Director  of Enforcement  in  the  manner               hereinafter provided, or               (b)   upon   conviction   by   a   Court,   be               punishable with imprisonment for a term  which               may extend to two years, or with fine, or with               both.               (1A)If  any  person  contravenes  any  of  the               provisions  of  this  Act  or  of  any   rule,               direction  or order made thereunder,  for  the               contravention of which no penalty is expressly               provided,  he  shall,  upon  conviction  by  a               court,  be punishable with imprisonment for  a               term  which may extend to two years,  or  with               fine, or with both,               779               (3)   No court shall take cognizance-               (a) of     any  offence punishable under  sub-               section               (1) except upon a complaint in writing made by               the               Director of Enforcement, or               (aa)               (b)   of  any  offence punishable  under  sub-               section  (1A) of this section or section  23F,               except  upon complaint in writing made by  the               Director   of  Enforcement  or   any   officer               authorised  in  this  behalf  by  the  Central               Government or the Reserve Bank by a general or               special order               Provided  that where any such offence  is  the               contravention of any of the provisions of this               Act  or  any  rule, direction  or  order  made               thereunder which prohibits the doing of an act               without permission, no such complaint shall be               made unless the person accused of the, offence               has been given an opportunity of showing  that               he had such permission.               23C.   (1)   If  the   person   committing   a               contravention is a company, every person  who,               at  the time the contravention was  committed,               was in-charge of, and was responsible to,  the               company for the conduct of the business of the               company  as  well  as the  company,  shall  be               deemed  to be guilty of the contravention  and               shall  be liable to be proceeded  against  and               punished accordingly :               Provided  that nothing contained in this  sub-               section shall render any such person liable to               punishment if he proves that the contravention               took  place without his knowledge or  that  he               exercised  all due diligence to  prevent  such               contravention.               23D. (1) For the purpose of adjudicating under               clause  (a) of sub-section (1) of  section  23               whether    any   person   has   committed    a               contravention,  the  Director  of  Enforcement               shall hold an inquiry in the prescribed manner               after giving that person a reasonable opportu-

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             nity  of being heard and if, on such  inquiry,               he is satisfied that the person has  committed               the contravention, he may impose such  penalty               as  he  thinks  fit  in  accordance  with  the               provisions of the said section 23 :               Provided that if, at any stage of the inquiry,               the Director of Enforcement is of opinion that               having  regard  to the  circumstances  of  the               case,  the  penalty which he is  empowered  to               impose would not be adequate, he shall,                780               instead of imposing any penalty himself,  make               a complaint in writing to the court.               (2)   While  holding  an  inquiry  under  this               section,  the  Director of  Enforcement  shall               have   power   to  summon  and   enforce   the               attendance  of any person to give evidence  or               to  produce  a  document or  any  other  thing               which,  in  the  opinion of  the  Director  of               Enforcement,  may be useful for,  or  relevant               to, the subject-matter of the inquiry. Of  the  two agreements mentioned in the complaint  the  one arrived at in August 1963 was not unlawful.  S. 4(1) of  the Act  did not make it unlawful for anyone to acquire  foreign exchange  abroad.  Any foreign exchange acquired  by  Pratap after  January  21, 1964 when Rule 132-A of the  Defence  of India Rules was promulgated would be an unlawful acquisition but  there could be no conspiracy under s. 120-A in  respect of the agreement arrived at in August 1963.  In paragraph  7 of  the  complaint it was only Pratap who was  charged  with contravention of s. 9 of the Act in respect of 88,913-09 Sw. Krs.  but  the  agreement  of  November  1965  stands  on  a different   footing.   According  to  paragraph  8  of   the complaint,  Schussler  agreed  with  Pratap  at  Madras   in November 1965 to help him to accumulate foreign exchange  as before  by getting the same credited to his account  in  the bank.   This agreement would be one in violation of s.  4(1) and 9 of the Act.  However any violation of S. 4(1) or S.  9 or  S-.4-(3) and s. 5 (1) (e) the last two provisions  being hardly applicable to the facts of the case-would be offences under   the  Act,  in  respect  whereof  the   Director   of Enforcement was competent to levy penalty under s.  23(1)(a) of  the Act after following the procedure  for  adjudication prescribed in s. 23D of the Act or alternatively by making a complaint in court under s. 23 (1) (b). The  recent judgment of this Court in M/s.  Rayala  Corpora- tion (P) Ltd. & another v. The Director of Enforcement,  New Delhi(1)  arising out of the complaint in Case No.  8736  of 1968  has  laid down that before a complaint  can  be  filed under s. 23 (1)(b) the Director of Enforcement must not only initiate proceedings under S. 23(1)(a) but proceed with  the inquiry  under  s.  23-D(1) and form an  opinion  in  course thereof that having regard to the circumstances of the case, the penalty which he was empowered to impose under s. 23 (1) (a) would not be adequate and that it was necessary to  make a  complaint  in writing to the court instead of  levying  a penalty himself. 1970] 1 S.C. R. 619. 781 Mr.  Sen arguing the appeal of Schussler contended that  the Act  was a complete Code containing provisions not only  for punishment of violation of different sections of the Act but also  a conspiracy to commit acts prohibited under  the  Act which   might   otherwise  have  been   amenable,   to   the jurisdiction  under s. 120-A and 120-B of the  Indian  Penal

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Code.  In this connection, he referred to the provisions  in s.  21 (1) of the Act.  Under s. 21 (1) any agreement  which could directly or indirectly evade in any way the  operation of the provisions of the Act or any rule direction or  order made thereon was forbidden.  The contravention of s. 21  (1) does not find a place in s. 23 ( 1 ) of the Act but it would be an offence covered by s. 23(1A) and any contravention  of s.  21  (1) would be punishable upon conviction by  a  court with  imprisonment for a term which may extend to two  years or  with fine or with both.  The punishment is the  same  as the  one prescribed under s. 23 (1) (b) and is greater  than that laid down in s.     120-B(2) of the Indian Penal Code. The  learned  Solicitor-General  arguing  the  case  of  the respondents  contended  that  s.  21 (1)  did  not  touch  a criminal  conspiracy  which is covered by s.  120-A  of  the Penal  Code.  I find myself unable to accept this  argument. An  agreement  which  can  form  the  basis  of  a  criminal conspiracy  under s. 120-A may. inter alia be one to  do  or cause to be done an illegal act or at offence.  Under s.  21 (1)  of the Act any agreement which directly  or  indirectly evades  in  any  way  the  operation  of  the  Act  etc.  is forbidden.   An agreement by two persons whereby one  agrees to  help  the  other by  facilitating  transfer  of  foreign exchange from a foreign exporter into the banking account of that  other is an agreement the object whereof is  not  only the acquisition of foreign reign exchange but the  retention of  it  abroad.  This is clearly an agreement to  evade  the operation  of  the  provisions of the Act  relating  to  the illegal acquisition and retention of foreign exchange. In  my view, the Act is a complete Code with regard  to  the offences specified by it though it is not a  self-sufficient Code   with   regard  to  the  procedure  to   be   followed irrespective  of  the provisions of the  Criminal  Procedure Code.   It is true that there are different sections in  the Act regarding the power to search. persons believed to  have secreted  any documents which will be useful or relevant  to any proceeding under the Act (s. 9-A), to arrest any  person believed to be guilty of an offence punishable under the Act (19-B),  to  stop and search conveyances (19-C),  to  search premises (19-D), to examine persons during the course of any enquiry  in  connection with any offence (19-E),  to  summon persons to give evidence and produce documents in connection with enquiries (19-F), to retain custody of documents (19-G) which  are  not  in consonance with the  provisions  of  the Procedure Code. 782 S.   24A contains a very special rule of evidence  regarding the proof of   documents  seized and the  evidentiary  value thereof at complete  variance with the Indian Evidence  Act. Some of these powers are more drastic and are in addition to similar powers contained in the Code of Criminal  Procedure. But  so far as the violation of the different provisions  of the  Act, or rule or direction or order made thereunder  are concerned, the Act is a complete Code including in its ambit a  criminal  conspiracy to acquire foreign  exchange  abroad illicitly  and  retaining the same abroad by reason  of  the provision of s. 21 (1). The  judgment  of this Court in Cr.  As. 18 and 19  of  1969 lays  down  that a complaint under s. 23 (1) (b)  cannot  be launched before the Director of Enforcement has taken up the adjudication  proceedings  and made some  inquiry  in  those proceedings and formed the opinion that it was necessary  to have resort to the more drastic provision of conviction by a court as envisaged by S. 23 (1)(b). No proceedings have been started either against Schussler or

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Pratap in pursuance of the notices dated 30th November  1963 and  21st January 1969.  It would therefore appear  that  in respect of the substantive offences for contravention of the different  sections of the Act, the Director of  Enforcement cannot  at present make a complaint as he has  not  followed the procedure laid down in s. 23-D of the Act.  It would  be absurd to allow him to file a complaint for violation of  S. 21  (1)  by making a charge under s. 120-B I.P.C.  when  the overt acts alleged are contravention of different provisions of the Act, punishable only under s. 23 (1) (b) by following the   procedure  indicated  in  s.  23-D.   To   allow   the prosecution  to  be proceeded with at this  stage  would  in effect  be  stultifying  s.  23  (1)  (b)  by  allowing  the establishment  of commission of offences punishable only  by following  a  procedure not yet adopted by the  Director  of Enforcement. Mr.  Sen relied on the decision in Rex v. Barnett(1) in  aid of  his contention that when a statute makes  unlawful  that which was lawful before and appoints a specific remedy  that remedy and no other must be pursued.  In that case a  number of persons alleged to be dealers in scrap metal were charged on  a  count  of  an indictment  to  the  effect  that  they conspired  together  and  with  other  persons  unknown   to contravene the provisions of S. 1 of the Auctions  (Building Agreements)  Act, 1927, by being dealers, agreeing to  offer and  accept  consideration as an inducement  or  reward  for abstaining from bidding at sales by auction.  What in effect had happened there was that the prosecution alleged that a (1)  [1951] 2 K.B. 425. 783 number of persons had agreed to form a ring and in pursuance of that agreement they attended at auction sales where cable and other Ministry of Supply commodities were being sold and that  after  some representatives of the ring  bid  for  and acquired goods on behalf of the ring they were- re-auctioned and the profits shared by the ring in an agreed  proportion. The  forming of a ring in order to bid at an auction in  the way  indicated was not an, offence at law up to the  passing of the Act of 1927 and it was therefore submitted on  behalf of  the  persons  who  had been  convicted  on  a  count  of indictment at the Central Criminal Court before the Court of Criminal  Appeal  that as the agreement was not  an  offence under  the common law and only became one under the  Act  of 1927 the procedure laid down by the Act should be, followed. The  submission  on behalf of the prosecution was  that  the indictment  alleged  was a conspiracy  which  was  something different from the offences which the, Act created.  It  was pointed  out  by the Court of Appeal that  although  it  was possible to frame a charge alleging conspiracy to contravene this  Act in any given set of circumstances, the court  must ascertain what in fact was alleged.  According to the  court :               "In alleging the conspiracy to contravene  the               Act   particulars   are   given,   and   those               particulars  are ’by, being dealers,  agreeing               to,  offer  and  accept  consideration  as  an               inducement  or  reward  for  abstaining   from               bidding at sales by auction.’ This Court is of               opinion   that  those  particulars   of   this               particular   conspiracy  describe   in   terms               offences   which  the  Act  creates,  or   are               substantially the same." The  same  can  be  said on the facts  of  this  case.   The particulars of conspiracy alleged in this case are  offences which  the  Act  has created.  In my view  the  Director  of

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Enforcement must first take up the adjudication proceedings, it  being  open  to him in the course  thereof  to  form  an opinion  that  the penalty which he may impose will  not  be adequate  having  regard to the circumstances of  the  case, whereupon  he can make a complaint in writing to the  Court. He can at the same time make a complaint about the agreement to evade the operation of the provisions of the Act  calling for  punishment under s. 23(1A) of the Act.   The  agreement with  overt  acts  alleged for proving  a  conspiracy  under s.   120-B  I.P.C. is in reality an offence under s.  23(1A) read with s.   21 ( 1 ). The complaint does not lie at  this stage and must be quashed. In  the result I would allow the appeals and quash the  com- plaint made on 16th February 1967. 784 Hegde,  J. I have gone through the judgment just,, now  read out by my esteemed colleague Mitter J. I agree with him that these appeals should be allowed following the rule laid down by this Court in M/s.  Rayala Corporation (P) Ltd. and  anr. v. The Director of Enforcement, New Delhi(1).  In my opinion it  is  a fundamental principle of law that what  cannot  be done directly should not be permitted to be done indirectly. From the facts and circumstances of the case I am  satisfied that the complaint with which we are concerned is not a bona fide one.  It has been filed with a collateral purpose  viz. to  justify  the unlawful detention of  Schussler,  in  this country.  It may be noted that in the first complaint  filed by the Director of Enforcement, the allegation was that  the Rayala  Corporation  and  its  Managing  Agent,  Pratap  had contravened   the   provision  of   the   Foreign   Exchange Regulations  Act.   When that complaint  was  pending  trial Schussler came to deplane in this country due to some engine trouble  in  the plane in which lie  was  travelling.   That occasion   was  availed-to  detain  him  illegally   in-this country.  I am convinced that Schussler’s detention in  this country was unjustified. Even  if we accept all the facts stated in the complaint  as correct, the same do not amount to an offence under s. 120-B of the Indian Penal Code.  According to the complaint Pratap and   Schussler  "agreed  to  commit  illegal  acts   namely acquisition  by A-2 (Pratap) foreign exchange illicitly  and retaining  the same abroad without surrendering,the same  to the  Government of India and also to defraud the  Government of  India of foreign exchange thereby contravening  Sections 4(3), 5(1)(e) and 9 of the Foreign Exchange Regulations  Act and  Rule 132-A of the Defence of India  (Amendment)  Rules, 1964  and further that between August, 1963 and August  1966 A-1  (Schussler) and A-2 (Pratap) in pursuance of  the  said agreement did commit acts in contravention of sections 4(3), 5 (1) (e) and 9 of the Foreign Exchange Regulations Act  and Rule  132-A of the Defence of India (Amendment) Rules,  1964 and thereby committed offence punishable under s. 120 (b) of the  Indian Penal Code read with ss. 4 (3), 5 (1) (e) and  9 of  the  F.E.R. Act and Rule 132-A of the Defence  of  India (Amendment) Rules, 1964." The material allegations made in the complaint read as  fol- lows :               "The  Rayala Corporation Private Limited is  a               Private  Limited Company with headquarters  at               Madras,               (1)   [1970] 1 S.C.R. 639.                785               manufacturing   ’HALDA’  typewriters  out   of               materials  imported from  aboard.   Originally               they were importing raw materials through  one

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             A. B. Atvidabergs , Sweden, now known as Facit               AB.  The first accused has been working as the               Export  Manager  of  that  concern.   The  raw               material  supplied  by Atvidabergs  was  over-               invoiced  at the instance of the ’And  accused               and  thereby  foreign exchange  was  illicitly               acquired  in  Swedish Kronara to the  tune  of               7,56,529/-  by the 2nd accused  Pratap  before               August 1963 with the full knowledge of the 1st               accused. Later in August 1963 the 2nd accused and the General Manager of  Rayala Corporation Mr. Jagga Rao went to Sweden.   There Jagga Rao, 2nd accused and the first accused met to-ether at Stockholm and agreed to a plan regarding purchase of certain raw  materials  viz., steel alloy sheet directly  from  M/s. Associated  Swedish Steels AB, Sweden, also known as  ASSAB, instead of purchasing the same from M/s.  Atvidabergs.   The 2nd accused told the first accused that henceforth he  would buy  on behalf of his company raw materials from ASSAB.   He in  found him of the arrangements made with ASSAB people  to over-invoice the value of the goods by 40% of the true value and that he should be paid the difference of 40% on  account of  aforesaid  over-invoicing to his personal  account.   He also told the 1st accused that since under the laws of India this acquisition by him was unlawful, it had got to be  kept a secret, without any mention in the official correspondence of  M/s.   Rayala  Corporation with the  Swedish  firm.   He requested  the  first  accused to help  him  in  opening  an account in Swenska Handels Banken, Sweden in order not  only to transfer the money lying to his credit in Atvidabergs but also  to have further deposits to his personal account  from ASSAB on account of the difference between the actual  value and the overinvest value.  A-1 agreed to act as requested by the  second accused.  A-2 also made arrangements with  ASSAB to  intimate  to A-1 the various amounts credited  to  A-2’s account  and asked A-1 to keep a watch over the  correctness of  the account, which A-1 agreed to do so.  A-2 also  asked A-1  to  intimate to him the account position from  time  to time  through unofficial channels or whenever A-1  comes  to India  periodically.   In  fact  A-1  was  coming  to  India periodically  once  in  six  months, since  he  was  also  a Director of a company called Facit Asia Ltd., in Madras.  In pursuance of this conspiracy between the two accused the 2nd accused  arranged with ASSAB to have the difference  between the over-invoiced price and the actual price credited to the personal  account of the second accused in  Ovenska  Handels Banken and the statement of account sent to A-1". 786 These  allegations  merely make out that  Schussler  was  an accessory after the fact and not that he was a  conspirator. If  a  person  agreed with a robber to  receive  the  stolen property  and  arrange  for its safe keeping,  he  does  not become.  a co-conspirator with the robber in the  commission of  the  offence of robbery-.  On the facts  alleged  it  is clear  that  Schussler  had nothing to do  either  with  the acquisition  of foreign exchange by Pratap or in the  matter of Pratap’s failure to repatriate the same to this  country. The accusation against him is that he provided facility  for its retention in Sweden. In  the  result  I  allow  these  appeals  and  acquit   the appellants                         ORDER In  accordance  with  the opinion  of  the  majority,  these appeals are dismissed. G.C.

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787