Vijay Mallya v. Enforcement Directorate, Min. of Finance
[Citation -2015-LL-0713]

Citation 2015-LL-0713
Appellant Name Vijay Mallya
Respondent Name Enforcement Directorate, Min. of Finance
Court SUPREME COURT
Relevant Act Income-tax
Date of Order 13/07/2015
Judgment View Judgment
Keyword Tags departmental proceedings • foreign exchange • co-operative • reserve bank • brand name • usa
Bot Summary: Brief facts necessary for decision of this appeal are that the appellant was summoned by the Chief Enforcement Officer, Enforcement Directorate, under Section 40 of the Foreign Exchange Regulation Act, 1973with his passport and correspondence Criminal Appeal No.1406 of 2009 relating to a transaction with Flavio Briatore of M/s. Benetton Formula Ltd., London, to which the appellant, as Chairman of United Breweries Ltd., was a party. The trial court after considering the material on record summoned the appellant and 2 Page 2 of 16 Page 2 Criminal Appeal No.1406 of 2009 framed charge against him under Section 56 of the Act. The appellant challenged the order of the Magistrate dated 9 th August, 2001 in above Criminal Complaint No.16/1 of 2000 and also sought quashing of proceedings in the said complaint before the High Court by filing Criminal Revision Petition No.554 of 2001 on the ground that willful default of the appellant could not have been inferred and that there was non-application of mind in the issuance of summons as well as in framing the charge which was in violation of procedure laid down under Section 219 of the Criminal Procedure Code. Learned senior counsel for the appellant submitted that the default was not deliberate, intentional or willful which may be punishable under Section 56 of the Act and the appellant had sent reply and sought a fresh date on two occasions. The provisions of Section 40 itself, which confers power on the officer of the 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 of Section 40, and the investigation or the proceeding in the course of which such summons are issued have been deemed to be a judicial proceeding by virtue of sub-section of Section 40. If the factual allegations contained in the charge are to be proved eventually at the trial of the criminal case, the appellant is still liable for the punishment notwithstanding the fact that the presence of the appellant was required by the adjudicating officer in connection with an enquiry into certain alleged violations of the various provisions of the Act, but at a subsequent stage the adjudicating officer opined that there was either insufficient or no material to proceed 12 Page 12 of 16 Page 12 Criminal Appeal No.1406 of 2009 against the appellant for the alleged violations of the Act, is immaterial. In our opinion, the result of such an appeal is immaterial for determining the culpability of the appellant for the alleged violation of Section 40 read with Section 56, we must record that the submission made on behalf of the appellant in this regard itself is inherently untenable.


REPORTABLE IN SUPREME COURT OF INDIA CRIMINAL APPELLATE JURISDICTION CRIMINAL APPEAL NO.1406 OF 2009 VIJAY MALLYA APPELLANT VERSUS ENFORCEMENT DIRECTORATE, MIN. OF FINANCE ...RESPONDENT JUDGMENT ADARSH KUMAR GOEL, J. 1. This appeal has been preferred against judgment and order dated 21 st May, 2007 of High Court of Delhi at New Delhi in Criminal Revision Petition No.554 of 2001. 2. Brief facts necessary for decision of this appeal are that appellant was summoned by Chief Enforcement Officer, Enforcement Directorate, under Section 40 of Foreign Exchange Regulation Act, 1973 (the Act)with his passport and correspondence Criminal Appeal No.1406 of 2009 relating to transaction with Flavio Briatore of M/s. Benetton Formula Ltd., London, to which appellant, as Chairman of United Breweries Ltd., was party. Allegation against appellant was that he entered into agreement dated 1st December, 1995 with earlier mentioned English Company for advertisement of Kingfisher brand name on racing cars during Formula-I World Championships for years 1996, 1997 and 1998 providing for fee payable. Requisite permission of Reserve Bank of India was not taken which was in violation of provisions of Sections 47(1) & (2), 9(1)(c) and 8(1) of Act. Approval was later sought from Finance Ministry for payment on 19 th June, 1996, which was rejected on 4th February, 1999. Since appellant failed to appear in response to summons issued more than once, complaint dated 8th March, 2000 under Section 56 of Act was filed before Additional Chief Metropolitan Magistrate, New Delhi. trial court after considering material on record summoned appellant and 2 Page 2 of 16 Page 2 Criminal Appeal No.1406 of 2009 framed charge against him under Section 56 of Act. 3. appellant challenged order of Magistrate dated 9 th August, 2001 in above Criminal Complaint No.16/1 of 2000 and also sought quashing of proceedings in said complaint before High Court by filing Criminal Revision Petition No.554 of 2001 on ground that willful default of appellant could not have been inferred and that there was non-application of mind in issuance of summons as well as in framing charge which was in violation of procedure laid down under Section 219 of Criminal Procedure Code. charge related to failure of appellant to appear on four occasions, i.e., 27 th September, 1999, 8th November,1999, 26th November, 1999 and 3rd January, 2000. In respect of first date, it was submitted that trial court itself accepted that service of summons was after time for appearance indicated in summons. In respect of second and third dates, appellant had responded and informed about his 3 Page 3 of 16 Page 3 Criminal Appeal No.1406 of 2009 inability to appear and for last date, summons was not as per procedure, i.e., by registered post. It was submitted that composite charge was against Section 219 of Criminal Procedure Code. 4. High Court rejected contentions by holding that framing of composite charge could not be treated to have caused prejudice so as to vitiate proceedings. It was further observed that default of appellant in relation to summons dated 15th September, 1999 for attendance on 27 th September, 1999 could not be taken into account and to that extent charge was liable to be deleted but with regard to defaults in relation to summons dated 7th October, 1989, 8th November, 2009 and 21st December, 1999, proceedings were not liable to be interfered with as appellant could contest matter before trial court itself in first instance. 5. We have heard Shri F.S. Nariman, learned senior counsel for appellant and Shri K. Radhakrishnan, 4 Page 4 of 16 Page 4 Criminal Appeal No.1406 of 2009 learned senior counsel for respondent. 6. When matter came up for hearing before this Court earlier, statement was made on behalf of appellant that appellant expressed regret for not responding to summons on which learned senior counsel for respondent took time to ascertain whether complaint could be withdrawn. Thereafter, it was stated that withdrawal of complaint may have impact on other matters and for that reason withdrawal was not possible. However, question whether non compliance was deliberate was required to be examined. Learned senior counsel for appellant submitted that default was not deliberate, intentional or willful which may be punishable under Section 56 of Act and appellant had sent reply and sought fresh date on two occasions. 7. It was further submitted that subsequent events which were not gone into by High Court may also be seen. complaint was filed on 8 th March, 2000. 5 Page 5 of 16 Page 5 Criminal Appeal No.1406 of 2009 During pendency of complaint, Act (FERA) was repealed on 1st June, 2000. Still, show cause notice dated 13th March, 2001 was issued to which reply was given and adjudicating officer vide order dated 10th January, 2002 dropped proceedings on merits. Appellate Board dismissed Revision Petition filed by Department on 16th March, 2004. Against said order, Criminal Appeal No.515 of 2004 was pending in High Court. 8. It was submitted that having regard to repeal of Act and exoneration of appellant by departmental authorities (even though appeal was pending in High Court), this Court in circumstances of case ought to quash proceedings, following law laid down in Dy. Chief Controller of Import and Export vs. Roshan Lal Agarwal1 as follows : 13. In view of findings recorded by us, learned Magistrate has to proceed with trial of accused-respondents. Shri Ashok Desai, learned Senior Counsel has, however, submitted that Imports and Exports (Control) Act, 1947 has since been repealed and in departmental proceedings taken under aforesaid Act, 1 (2003) 4 SCC 139 6 Page 6 of 16 Page 6 Criminal Appeal No.1406 of 2009 Central Government has passed orders in favour of respondents and, therefore, their trial before criminal court at this stage would be exercise in futility. He has placed before us copies of orders passed by Additional Director General of Foreign Trade on 16-8-1993 and also by Appellate Committee Cell, Ministry of Commerce, Government of India on 13-3-1997 by which appeals preferred by respondents were allowed by Appellate Committee and accused-respondents were exonerated. Having regard to material existing against respondents and reasons and findings given in aforesaid orders, we are of opinion that no useful purpose would be served by trial of accused-respondents in criminal court at this stage. proceedings of criminal cases instituted against accused-respondents on basis of complaints filed by Deputy Chief Controller of Imports and Exports are, therefore, quashed . Alternatively, explanation of appellant for non appearance may be looked into on merits instead of same being left to trial court. 9. Before we consider submissions made, provisions of Section 40 and 56 of Act may be noticed which are as follows : 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 document 7 Page 7 of 16 Page 7 Criminal Appeal No.1406 of 2009 during course of any investigation or proceeding under this Act. (2) summon to produce documents may be for production of certain specified documents or for production of all documents of certain description in possession or under control of 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 truth upon any subject respecting which they are examined or make statements and produce such documents as may be required: Provided that exemption under section 132 of Code of Civil Procedure, 1908 (5 of 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 judicial proceeding within meaning of sections 193 and 228 of Indian Penal Code, 1860 (45of 1860). Section 56 - Offences and prosecutions (1)Without prejudice to any award of penalty by adjudicating officer under this Act, if any person contravenes any of 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 court, be punishable (i) in case of offence amount or value involved in which exceeds one lakh of rupees with imprisonment for term which shall not be less than six months, but which may extend to 8 Page 8 of 16 Page 8 Criminal Appeal No.1406 of 2009 seven years and with fine; Provided that Court may, for any adequate and special reasons to be mentioned in judgment, impose sentence of imprisonment for term of less than six months; (ii)in any other case, with imprisonment for term which may extend to three years or with fine or with both. 10. In Enforcement Directorate vs. M. Samba Siva Rao2, it was observed : 3. xxxxxxxx Foreign Exchange Regulation Act, 1973 was enacted by Parliament, basically for conservation of foreign exchange resources of country and proper utilisation thereof in interest of economic development of country. Act having been enacted in interest of national economy, provisions thereof should be construed so as to make it workable and interpretation given should be purposive and provisions should receive fair construction without doing any violence to language employed by legislature. provisions of Section 40 itself, which confers power on officer of Enforcement Directorate, to summon any person whose attendance he considers necessary during course of any investigation, makes it binding as provided under sub-section (3) of Section 40, and investigation or proceeding in course of which such summons are issued have been deemed to be judicial proceeding by virtue of sub-section (4) of Section 40. These principles should be borne in mind, while interpreting provisions of Section 40 and its effect, if person violates or disobeys directions issued under Section 40. 2 (2000) 5 SCC 431 9 Page 9 of 16 Page 9 Criminal Appeal No.1406 of 2009 11. above observations clearly show that complaint is maintainable if there is default in not carrying out summons lawfully issued. averments in complaint show that summons dated 21 st December, 1999 were refused by appellant and earlier summons were not carried out deliberately. averments in paras 3 and 4 of complaint are as follows : 3. That complainant issued summons dated 21.12.1999 under Section 40 of FERA, 1973 in connection with impending investigations for appearance of accused on 3.1.2000 but same have been returned back by postal authorities with remarks refused . It is submitted that accused has deliberately avoided his appearance before Investigating Officer and on account of his non co-operative attitude investigation has come to standstill. 4. It is respectfully submitted that accused has been intentionally avoiding his appearance before Enforcement Directorate knowing fully well that non compliance of directions made under Section 40 of Act renders person liable for prosecution in Court of law under Section 56 of Act which is non-bailable offence. It is further submitted that by virtue of Section 40(3) of Act, accused was bound to appear before Officers of Enforcement Directorate in best interest of investigation. Section 40(3) is reproduced below for kind perusal and ready reference to this Hon ble Court : Section 40(3) : 10 Page 10 of 16 Page 10 Criminal Appeal No.1406 of 2009 (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 truth upon any subject respecting which they are examined or make statements and produce such documents as may be required. It is respectfully submitted that non compliance of any rule, directions or law is punishable under Section 56 of Act. accused willfully failed to appear before Enforcement Directorate at given venue, time and dates mentioned in respective summons and has thus, contravened provisions of Section 56 of Act. 12. As regards summons dated 8th November, 1999, learned senior counsel for appellant has referred to explanation offered by appellant. Letter dated 22nd November, 1999 is as follows : As you will appreciate, I am Chairman of several public Companies both in India as well as in USA and, therefore, my schedule is finalized several months in advance. During fiscal year end period, problem only gets compounded. I would, therefore, request you to excuse me from personal appearance on November 26, 1999 as I will be out of India. I am willing to fix mutually convenient date to appear before you. 13. From tenor of letter, it appears that it was not case of mere seeking accommodation by appellant but requiring date to be fixed by his convenience. Such stand by person facing 11 Page 11 of 16 Page 11 Criminal Appeal No.1406 of 2009 allegation of serious nature could hardly be appreciated. Obviously, enormous money power makes him believe that State should adjust its affairs to suit his commercial convenience. 14. In our opinion, appeal is required to be dismissed for more than one reason. fact that adjudicating officer chose to drop proceedings against appellant herein does not absolve appellant of criminal liability incurred by him by virtue of operation of Section 40 read with Section 56 of Act. offence under Section 56 read with Section 40 of Act is independent offence. If factual allegations contained in charge are to be proved eventually at trial of criminal case, appellant is still liable for punishment notwithstanding fact that presence of appellant was required by adjudicating officer in connection with enquiry into certain alleged violations of various provisions of Act, but at subsequent stage adjudicating officer opined that there was either insufficient or no material to proceed 12 Page 12 of 16 Page 12 Criminal Appeal No.1406 of 2009 against appellant for alleged violations of Act, is immaterial. observations made by this Court in Roshanlal Agarwal (supra), in our opinion, must be confined to facts of that case because this Court recorded such conclusion having regard to material existing against respondent and reasons and findings given in aforesaid orders .. . said case cannot be read as laying down general statement of law that prosecution of accused, who is alleged to be guilty of offence of not responding to summons issued by lawful authority for purpose of either inquiry or investigation into another substantive offence, would not be justified. Exonerating such accused, who successfully evades process of law and thereby commits independent offence on ground that he is found to be not guilty of substantive offence would be destructive of law and order, apart from being against public interest. Such exposition of law would only encourage unscrupulous elements in society to defy authority conferred upon 13 Page 13 of 16 Page 13 Criminal Appeal No.1406 of 2009 public servants to enforce law with impunity. It is also possible, in certain cases that time gained by such evasive tactics adopted by person summoned itself would result in destruction of material which might otherwise constitute valuable evidence for establishing commission of substantive offence by such recalcitrant accused. 15. Secondly, appeal against conclusion of adjudicating officer that proceedings against appellant herein for alleged violation of various provisions of FERA Act are required to be dropped has not even attained finality. Admittedly, such order of adjudicating officer confirmed by statutory appellate authority is pending consideration in appeal before High Court. Though, in our opinion, result of such appeal is immaterial for determining culpability of appellant for alleged violation of Section 40 read with Section 56, we must record that submission made on behalf of appellant in this regard itself is inherently untenable. 14 Page 14 of 16 Page 14 Criminal Appeal No.1406 of 2009 16. For all abovementioned reasons, we do not see any merit in appeal. We are also of opinion that entire approach adopted by appellant is sheer abuse of process of law. Any other view of matter would only go to once again establishing notorious truth stated by Anatole France that law in its majestic equality, forbids rich as well as poor to sleep under bridges, to beg in streets and to steal bread . 17. appeal is dismissed with exemplary costs quantified at rupees ten lakhs to be paid to Supreme Court Legal Service Authority. .. .J. [ J. CHELAMESWAR ] . . ..J. [ ADARSH KUMAR GOEL ] NEW DELHI JULY 13, 2015 15 Page 15 of 16 Page 15 Criminal Appeal No.1406 of 2009 ITEM NO.1A-For Judgment COURT NO.4 SECTION II S U P R E M E C O U R T O F I N D I RECORD OF PROCEEDINGS Criminal Appeal No(s). 1406/2009 VIJAY MALLYA Appellant(s) VERSUS ENFORCEMENT DIRECTORATE, MIN.OF FINANCE. Respondent(s) Date : 13/07/2015 This appeal was called on for pronouncement of JUDGMENT today. For Appellant(s) M/s. Khaitan & Co. For Respondent(s) Mr. Surender Kumar Gupta, Adv. Mr. B.K. Prasad, Adv. Mr. B. V. Balaram Das,Adv. Hon'ble Mr. Justice Adarsh Kumar Goel pronounced judgment of Bench comprising Hon'ble Mr. Justice J. Chelameswar and His Lordship. appeal is dismissed in terms of signed Reportable judgment with exemplary costs quantified at rupees ten lakhs to be paid to Supreme Court Legal Service Authority. (VINOD KR.JHA) (RENUKA SADANA) COURT MASTER COURT MASTER (Signed Reportable judgment is placed on file) 16 Page 16 of 16 Page 16 Vijay Mallya v. Enforcement Directorate, Min. of Finance
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