Criminal Appeals Nos 18 and 19 of 1969
Appeal from the judgment and order dated October 16 1968  of the Madras High Court in Criminal Misc
Petition No 980 of 1968
642 AK Sen NC Raghavachari WS Sitaram and R Gopalakrishnan for the appellants
ST Desai BD Sharma and section P Nayar for the respondent
PR Gokulakrishnan Advocate General Tamil Nadu and V Rangam for the intervener
Bhargava J
These appeals by certificate challenge a common Order of the High Court of Madras dismissing applications under section 561A of the Code of Criminal Procedure presented by the appellants in the two appeals for quashing proceedings being taken against them in the Court of the Chief Presidency Magistrate Madras on the basis of a complaint filed on 17th March 1968 by the respondent the Director of Enforcement New Delhi
The Rayala Corporation Private Ltd appellant in Criminal Appeal No 18 of 1969 was accused No 1 in the complaint while one MR Pratap Managing Director of accused No 1 appellant in Criminal Appeal No 191969 was accused No 2
The circumstances under which the complaint was filed may be briefly stated
The premises of accused No 1 were raided by the Enforcement Directorate on the 20th and 21st December 1966 and certain records were seized from the control of the Manager
Some enquiries were made subsequently and thereafter on the 25th August 1967 a notice was issued by the respondent to the two accused to show cause why adjudication proceedings should not be instituted against them for violation of sections 4 and 9 of the Foreign Exchange Regulation Act VII of 1947 hereinafter referred to as the Act on the allegation that a total sum of 24471370 Swedish Kronars had been deposited in a Bank account in Sweden in the name of accused No 2 at the instance of accused No 1 which had acquired the foreign exchange and had failed to surrender it to
an authorised dealer as required under the provisions of the Act
They were called upon to show cause in writing within 14 days of the receipt of the notice
Thereafter some correspondence went on between the respondent and the two accused and later on 4th November 1967 another notice was issued by the respondent addressed to accused No 2 alone stating that accused No 2 had acquired a sum of Sw
8891309 during the period 1963 to 1965 in Stockholm was holding that sum in a bank account and did not offer or cause it to be offered to the Reserve Bank of India on behalf of the Central Government so that he had contravened the provisions of section 41 and section 9 of the Act and affording to him
an opportunity under section 233 of the Act of showing within 15 days from the receipt of the notice that he had permission or special exemp 643 tion from the Reserve Bank of India in his favour for acquiring this amount of foreign exchange and for not surrendering the amount in accordance with law
A similar show cause notice was issued to accused No 1 in respect of the same amount on 20th January 1968 mentioning the deposit in favour of accused No 2 and failure of accused No 1 to surrender the amount and giving an opportunity to accused No 1 to produce the permission or special exemption from the Reserve Bank of India
On the 16th March 1968 another notice was issued addressed to both the accused to show cause in writing
within 14 days of the receipt of the notice why adjudication proceedings as contemplated in section 23 D of the Act should not be held against them in respect of a sum of Sw
15580141 which were held in a bank account in Stockholm in the name of accused No 2 and in respect of which both the accused had contravened the provisions of sections 4 3  4 1  51e and 9 of the Act
The notice mentioned that it was being issued in supersession of the first show cause notice dated 25th August 1967 and added that it had since been decided to launch a prosecution in respect of Sw
8891309
The latter amount was the amount in respect of which the two notices of 4th November 1967 and 20th January 1968 were issued to the two accused while this notice of 16th March 1968 for adjudication proceedings related to the balance of the amount arrived at by deducting this sum from the original total sum of Sw
24471 370
The next day on 17th March 1968 a complaint was filed against both the accused in the Court of the Chief PresidenCy Magistrate Madras for contravention of the provisions of sections 4 1  5 1  e and 9 of the Act punishable under section 23 1  b of the Act
In addition the complaint also charged both the accused with violation of Rule 132 A2 of the Defence of India
Rules hereinafter referred to as the DI Rs Which was punishable under Rule 132 A4 of the said Rules
Thereupon both the accused moved the High Court for quashing the proceedings sought to be taken against them on the basis of this complaint
Those applications having been dismissed the appellants have come up in these appeals challenging the order of the High Court dismissing their applications and praying for quashing of the proceedings being taken on the basis of that complaint
In these appeals
Mr AK Sen appearing on behalf of the appellants has raised three points
In respect of the prosecution for violation of sections 41 51e and 9 of the Act punishable under section 23 1  b of the Act the principal ground raised is that section 231b of the Act is ultra rites Article 14 of the Constitution inasmuch as it provides for a punishment heavier and severer than the punishment or penalty provided for the same acts under section 231a of the Act
In the alternative the second point taken is that even if section 23  1  b is not void the complaint in 644 respect of the offences punishable under that section has not been filed properly in accordance with the proviso to section 23 D 1  of the Act so that proceedings cannot be competently taken on the basis of that complaint
The third point raised relates to the charge of violation of R 132 A2 of the DI Rs punishable under R 132 A4 of those Rules and is to the effect that R 132 A of the DI Rs was omitted by a notification of the Ministry of Home Affairs dated 30th March 1965 and consequently a prosecution in respect of an offence punishable under that Rule could not be instituted on 17th March 1968 when that Rule had ceased to exist
On these three grounds the order quashing the proceedings being taken on the complaint in respect of all the offences mentioned in it has been sought in these appeals
To appreciate the first point raised before us and to
deal with it properly we may reproduce below the provisions of section 23 and section 23 D1 of the Act  23
Penalty and procedure 1 If any person contravenes the provisions of section 4 section 5 section 9 section 10 sub section
2 of section 12 section 18 section 18A or section 18B or of 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 adjudged 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
IA 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
lB Any Court trying a contravention under sub section 1 or sub section IA and the authority adjudging any contravention under clause a of sub section 1  may if it thinks fit and in addition to any sentence or penalty which it may impose for such contravention direct that any currency security gold or silver or goods or any other money or property In respect of which the contravention has taken place 645 shall be confiscated to the Central Government and further direct that the foreign exchange holdings if any of the person committing the contravention or any part thereof shall be brought back into India or shall be retained outside India in accordance with the directions made in this behalf
Explanation
For the purposes of this sub section property in respect of which contravention has taken place shall include deposits in a bank where the said property is converted into such deposits
2 Notwithstanding anything contained in section 32 of the Code of Criminal Procedure 1898 Act 5 of 1898 it shall be lawful for any magistrate of the first class specially empowered in this behalf by the State Government and for
any presidency magistrate to pass a sentence of fine exceeding two thousand rupees on any person convicted of an offence punishable under this section
3 No Court shall take cognizance a of any offence punishable under sub section 1 except upon complaint in writing made by the Director of Enforcement or aa of any offence punishable under sub section 2 of section 191 i where the offence is alleged to have been committed by an officer of Enforcement not lower in rank than an Assistant Director of Enforcement except with the previous sanction of the Central Government ii Where the offence is alleged to have been committed by a Officer of Enforcement lower in rank than an Assistant Director of Enforcement except with the previous sanction of the Director of Enforcement or b of any offence punishable under sub section IA 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
646 4 Nothing in the first proviso to section 188 of the Code of Criminal Procedure 1898 Act 5 of 1898 shall apply to any offence punishable under this section 23D Power to adjudicate 1 For the purpose of adjudging 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 opportunity 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 instead of imposing any penalty himself make a complaint in writing to the Court
 A plain reading of section 23 1  of the Act shows that under this sub section provision is made for action being taken against any per son who contravenes the provisions
of sections 4 5 9 10 122 1818A or 18B or of any rule direction or order made thereunderand cls
a and b indicate the two different proceedings that can be taken for such contravention
Under cl
a the person is liable to a penalty only and that penalty cannot exceed three times the value of the foreign exchange in respect of which the contravention has taken place or Rs 5000  whichever is more
This penalty can be imposed by an adjudication made by the Director of Enforcement in the manner provided in section 23D of the Act
The alternative punishment that is provided in cl
b is to be imposed upon conviction by a Court when the Court can sentence the person to imprisonment for a term which may extend to two years or with fine or with both
Clearly the punishment provided under section 23 1b is severer and heavier than the penalty to which the person is made liable if proceedings are taken under section 231a instead of prosecuting him in a Court under section 23 1b
The argument of Mr Sen is that this section lays down no principles at all for determining when the per son concerned should be proceeded against under section 231a and when under section 231b and it would appear that it is left to the arbitrary discretion of the Director of Enforcement to decide which proceedings should be taken
The liability of a person for more or less severe punishment for the same act at the sole discretion and arbitrary choice of the Director of Enforcement 647 it is urged denies equality before law guaranteed under article 14 of the Constitution
The submission made would have carried great force with us but for our view that the effect of section 23D of the Act is that the choice in respect of the proceeding to be taken under section 231a or s
231b has not been left to the unguided and arbitrary discretion of the Director of Enforcement but is governed by principles indicated by that section
In this connection it is pertinent to note that section 23 1 of the Act as originally enacted in 1947 did not provide for alternative punishment for the same contravention and contained only one single provision under which any person contravening any of the provisions of the Act or of any rule direction or order made thereunder was punishable with imprisonment for a term which could extend to two years or with fine or with bOth with the additional clause that any Court trying any such contravention might if it thought fit and in addition to any sentence which it might impose for such contravention direct that any currency security gold or silver or goods or other property in respect of which the contravention has taken place shall be confiscated
No question of the applicability of article 14 of the Constitution could therefore arise while the provision stood as originally enacted
Parliament by Foreign Exchange Regulation Amendment Act XXXIX of 1957 amended section 231 and at the same time also introduced section 23D in the Act
It was by this amendment that two alternative proceedings for the same contravention were provided in section 23 1 
In thus introducing two different proceedings Parliament put in the forefront proceedings for penalty to be taken by the Director of Enforcement by taking up adjudication while the punishment to be awarded by the Court upon conviction was mentioned as the second type of proceeding that could be resorted to
Section 23D1 is also divisible into two parts
The first part lays down what the Director of Enforcement has to do in order to adjudge penalty under section 23  1  a and the second part contained in the proviso gives the power to the Director of Enforcement to file a complaint instead of imposing a penalty himself
In our opinion these two sections 23D and 23D1 must be read together so that the procedure laid down in section 23D1 is to be followed in all cases in which proceedings are intended to be taken under section 23 1
The effect of this interpretation is that whenever there is any contravention of any section or rule mentioned in section 23 1  the Director of Enforcement must first proceed trader the principal clause of section 23D1 and initiate proceedings for adjudication of penalty
He cannot at that stage at his discretion choose to file a complaint in a Court for prosecution of the person concerned for the offence under section 23 1 b
The Director of Enforcement can only file a complaint by acting Ll4Sup69 12 648 in accordance with the proviso to section 23D1 which clearly lays down that the complaint is only to be filed in those cases where at any stage of the inquiry the Director of Enforcement comes to the opinion that having regard to the circumstances of the case the penalty which he is empowered to impose would not be adequate
Until this requirement is satisfied he cannot make a complaint to the Court for prosecution of the person concerned under section 23 1 b
The choice of the proceeding to be taken against the person who is liable for action for contravention under section 23 1 is thus not left entirely to the discretion of the Director of Enforcement but the criterion for making the choice is laid down in the proviso to section 23D1
It cannot possibly be contended and no attempt was made by Mr Sen to contend that if we accept this interpretation that the right of the Director of Enforcement to make a complaint to the Court for the offence under section 23 1 b can be exercised only in those cases where in accordance with the proviso he comes to the opinion that the penalty which he is empowered to impose would not be adequate the validity of section 23 1 b of the Act can still be challenged
In this connection it was urged before us that the language of the principal clause of section 23D1 taken together with the language of the proviso does not justify an interpretation that a complaint for an offence under section 23 1 b cannot be made by the Director of Enforcement except in accordance with the proviso particularly because the principal clause of section 23D1 merely lays down the procedure that has to be adopted by the Director Of Enforcement when proceeding under section 23 1 a and contains No words indicating that such a proceeding must invariably be resorted to by him whenever he gets information of a contravention mentioned in section 231
The language does not contain any words creating a bar to his proceeding to file a complaint straightaway instead of taking proceedings for adjudication under section 23D1
It is true that neither in section 231 itself nor in section 23D1 has the Legislature used specific words excluding the filing of a complaint before proceedings for adjudication are taken under section 23D1
If any such words had been used no such controversy could have been raised as has been put forward before us in these appeals
We have however to gather the intention of the Legislature from the enactment as a whole
In this connection significance attaches to the fact that section 23D1 was introduced simultaneously with the provision made for alternative proceedings under section 23 1 in its two cls
a and b
It appears to be obvious that the Legislature adopted this course so as to ensure that all proceedings under section 231 are taken in the manner laid down in section 23D1
Parliament must be credited with the knowledge that if provision is made for two alternative punishments for the same act one differing from the other without any limitations such a provision would be void under article 14 of 649 the Constitution and that is the reason why Parliament simultaneously introduced the procedure to be adopted under section 23D1 in the course of which the Director of Enforcement is  to decide whether a complaint is to be made in Court and under what circumstances he can do so
We have also to keep in view the general principle of interpretation that if a particular interpretation will enure to the validity of a law that interpretation must be preferred
In these circumstances we have no hesitation in holding that whenever there is a contravention by any person which is made punishable under either cl
aor cl
b of section 231 the Director of Enforcement must first initiate proceedings under the principal clause of section 23D 1  and he is empowered to file a complaint in Court only when he finds that he is required to do so in accordance with the proviso
It is by resorting to the proviso only that he can place that person in greater jeopardy of being liable to a more severe punishment under section 231b of the Act
The view we have taken is in line with the decision of this Court in Shanti Prasad Jain vs The Director of Enforcement1 where this Court considered the validity of section 231a and section 23D which were challenged on the ground of two alternative procedures being applicable for awarding punishment for the same act
The Court noticed the position in the following words  It will be seen that when there is a contravention of section 4 1  action with respect to it is to be taken in the first instance by the Director of Enforcement
He may either adjudge the matter himself in accordance with section 231a or he may send it on to a Court if he considers that a more severe penalty than he can impose is called for
Now the contention of the appellant is that when the case is
transferred to a Court it will be tried in accordance with the procedure prescribed by the Criminal Procedure Code but that when the Director himself tries it he will follow the procedure prescribed therefor under the Rules framed under the Act and that when the law provides for the same offence being tried under two procedures which are substantially different and it is left to the discretion of an executive officer whether the trial should take place under the one or the other of them there is clear  discrimination and article 14 is contravened
Therefore section 231a must it is argued be struck down as unconstitutional and the imposition of fine on the appellant under that section set aside as illegal 1  650 The Court then distinguished the provisions of the Act with the law considered in the case of State of West Bengal vs Anwar A1i1 and held  Section 23D confers authority on the very officer who has power to try and dispose of a case to send it on for trial to a Court and that too only when he considers that a more severe punishment than what he is authorised to impose should be awarded
 On this view about the effect of section 23D the Court gave the decision that the power conferred on the Director of Enforcement under section 23D to transfer cases to a Court is not unguided and arbitrary and does not offend article 14 of the Constitution and section 23 1 a cannot be assailed as unconstitutional
In that case the argument was that section 231a should be struck down because the procedure prescribed by it permitted proceedings to be taken by the Director of Enforcement himself which procedure did not confer the same rights on the defence as the procedure prescribed for trial if the Director of Enforcement filed a complaint for the offence under section 23 1 b
In the case before us it is section 231b which is challenged and on a slightly different ground that it provides for a higher punishment than that provided by section 23 1 a
The answer to both the questions is found in the view taken by us in the present case as well as by this Court in the case of Shanti Prasad Jain2 that the Director of Enforcement though he has power to try the case under section 23 1 a can only send the case to the Court if he considers that a severer punishment than what he is authorised to impose should be awarded
The Court in that case also thus accepted the principle that section 23D limits entirely the procedure the Director of Enforcement has to observe when deciding whether the punishment should be under section 23 1 a or under section 23 1 b
However we consider that in this case there is considerable force in the second point urged by Mr Sen on behalf of the appellants that the respondent in filing the complaint on 17th March 1968 did not act in accordance with the requirements of the proviso to section 23D1
We have held above that the proviso to section 23D1 lays down the only manner in which the Director of Enforcement can make a complaint and this provision has been laid down as a safeguard to ensure that a person who is being proceeded against for a contravention under section 231 is not put in danger of higher and severer punishment at the choice and sweet will of the Director of Enforcement
When such a safeguard is provided by legislature it is necessary that the authority which takes the step of instituting against that person proceedings in which a severer punishment can be awarded complies strictly 1  2 19631 2 SCR 297 651 with all the conditions laid down by law to be satisfied by him before instituting that proceeding
in the present case therefore we have to see whether the requirements of the proviso to section 23D1 were satisfied at the stage when the respondent filed the impugned complaint on 17th March 1968
The proviso to section 23D1 lays down that the complaint may be made at any stage of the enquiry but only if having regard to the circumstances of the case the Director of Enforcement finds that the penalty which he is empowered to impose would not be adequate
It was urged by Mr Sen that in this case the complaint was not filed as a result of the enquiry under the principal clause of section 23D1 at all and in any case there was no material before the respondent on which he could have formed the opinion that the penalty which he was empowered to impose would not be adequate in respect of the stun of Sw
8891309 which it was alleged had been acquired by the two accused during the period 1963 to 1965 and kept in deposit against law
Arguments at some length were advanced before us on the question as to what should be the stage of the enquiry at which the Director of Enforcement should form his opinion and will be entitled to file the complaint in Court
It appears to us that it is not necessary in this case to go into that question
It is true that the enquiry in this case under section 23D 1  had been instituted by the issue of the show cause notice dated 25th August 1967 that being the notice mentioned in Rule 3 1  of the Adjudication Proceedings and Appeal Rules 1957
On the record however does not appear that even after the issue of that notice any such material came before the respondent which could be relevant for forming an opinion that the penalty which he was empowered to impose for the contravention in respect of the sum of Sw
8891309 would not be adequate
The respondent in the case of accused No 2 appears to have formed a prima
facie opinion that a complaint should be made against him in Court when he issued the notice on 4th November 1967 under the proviso to section 233 of the Act and a similar opinion in respect of accused No 1 when he issued the notice on 20th January 1968 under the same proviso
There is however no information on the record to indicate that by the time these notices were issued any material had appeared before the respondent in the course of the enquiry initiated by him through the notice dated 25th August 1967 which could lead to the opinion being formed by the respondent that he will not be in a position to impose adequate penalty by continuing the adjudication proceedings
Even subsequently when one of the accused replied to the notice there does not appear to have been brought before the respondent any such relevant material
Mr ST Desai on behalf of the respondent drew our attention to para
3E of the petition presented by accused No 1 for 652 certificate under article 1321 and article 1341c of the Constitution in this case which contains the following pleading  In this case having issued show cause notice dated 25 8 67 in respect of the subject matter of the pending prosecution and having taken various acts taking statements taking recorded statements investigations the respondent did not hold an enquiry for the purpose of his forming an opinion that the accused is guilty of violations and that the penalty is not adequate and as such the prosecution filed in CC 8756 of 68 is liable to be quashed on this ground
 Relying on this pleading Mr Desai urged that it amounts to a admission by accused No 1 that during enquiry various statements were taken and recorded and investigations made so that we should not hold that there was no material on the basis of which the respondent could  have formed the opinion that it was a fit case for making a complaint
The pleading does not show that any statements were taken or recorded during the course to the enquiry held under section 23D 1  of the Act in the manner laid down by the Adjudication Proceedings and Appeal Rules 1953 Under those Rules after a notice is issued the Director of Enforcement is required to consider the cause shown by such person in response to the notice and if he is of the opinion that adjudication proceedings should be held he has to fix a date for the appearance of that person either personally or through his lawyer or other authorised representative
Subsequently he has to explain that the person proceeded against or his lawyer or authorised representative the offence alleged to have been committed by such person indicating the provisions of the Act or of the rules directions or orders made thereunder in respect of which contravention is alleged to have taken place and then he has to give an opportunity to such person to produce such documents or evidence a he may consider relevant to the inquiry
It is on the conclusion of such an inquiry that the Director can impose a penalty under section 231a
In the present case there is no material at all show that any proceedings were taken in the manner indicate by the Rules referred to above
There does not appear to has been any cause shown by either of the two accused or consideration of such cause by the respondent to decide whether adjudication proceedings should be held
It is true that there is some material to indicate that after the issue of notice dated 25 8 1967 some investigations were carried on by the respondent but these investigations would not be part of the inquiry which had to be held in accordance with Adjudication Proceedings and Appeal Rules 1957
It appears that at one stage before the complaint was filed a writ petition was moved under article 226 of the Constitution in the High Court of Madras praying for the quashing of 653 the notice dated 25th August 1967
The order made  by the High Court on one of the interim applications in connection with that notice shows that while that writ petition was pending some investigations were permitted by the Court but further penal proceedings in pursuance of that notice were restrained
This clearly indicates that whatever statements were recorded by the respondent as mentioned in the petition of accused No 1 referred to above must have been in the course of investigation and not in the course of the inquiry under section 23D  1  of the Act
The record before us therefore does not show that any material at all was available to the respondent in the course of the enquiry under section 23D 1  on the basis of which he could have formed an opinion that it was a fit case for making a complaint on the ground that he would not be able to impose adequate penalty
The complaint has therefore to be held to have been filed without satisfying the requirements and conditions of the proviso to
section 23D1 of the Act and is in violation of the safeguard provided by the Legislature for such contingencies
The complaint insofar as it related to the contravention by the accused of provisions of sections 4  1  5  1   e  and 9 of the Act punishable under section 23113 is concerned is invalid and proceedings being taken in pursuance of it must be quashed
There remains for consideration the question whether proceedings could be validly continued on the complaint in respect of the charge under R 132A4 of the DIRs
against the two accused
The two relevant clauses of Rule 132A are as follows 132A 2 No person other than an authorised dealer shall buy or otherwise acquire or borrow from of sell or otherwise transfer or lend to or exchange with any person not being an authorised dealer any foreign exchange    
4 If any person contravenes any of the provisions this rule he shall be punishable with imprisonment for a term which may extend to two years or with fine or with both and any court trying such contravention may direct that the foreign exchange in respect of which the court is satisfied that this rule has been contravened shall be forfeited to the Central Government
 The charge in the complaint against the two accused was that they had acquired foreign exchange to the extent of Sw
8891309 in violation of the prohibition contained in R I32A2 during the period when this Rule was in force so that they became liable to punishment under R132A4
Rule 132 A as a whole ceased to be in existence as a result of the notification issued by the Ministry 654 of Home Affairs on 30th March 1955 by which the Defence of India Amendment Rules 1965 were promulgated
Clause 2 of these Amendment Rules reads as under  In the Defence of India Rules 1962 rule 132A relating to prohibition of dealings in foreign exchange shall be omitted except as respects things done or omitted to be done under that rule
 The argument of Mr Sen was that even if there was a contravention of R 132A2 by the accused when that Rule was in force the act of contravention cannot be held to be a thing done or omitted to be done under that rule so that after that rule has been omitted no prosecution in respect of that contravention can be instituted
He conceded the possibility that if a prosecution had already been started while R 132A was in force that prosecution might have been competently continued
Once the Rule was omitted altogether no new proceeding by way of prosecution could be initiated even though it might be in respect of an offence committed earlier during the period that the rule was in force
We are inclined to agree with the submission of Mr Sen that the language contained in  el 2 of the Defence of India Amendment Rules 1965 can only afford protection to action already taken while the rule was in force but cannot justify initiation of a new proceeding which will not be a thing done or omitted to be done under the rule but a new act of initiating a proceeding after the rule had ceased to exist
On this interpretation the complaint made for the offence under R 132A4 of the DI Rs after 1st April 1965 when the rule was omitted has to be held invalid
This view of ours is in line with the general principle enunciated by
this Court in the case of section Krishnan and Others  vs The State of Madras1 relating to temporary enactments in the following words  The general rule in regard to a temporary statute is that in the absence of special provision to the contrary proceedings which are being taken against a person under it will ipso facto terminate as soon as the statute expires Mention may also be made to a decision of a learned single Judge of the Allahabad High Court in Seth Jugmendar Das and Others vs State2 where a similar view was taken when considering the effect of the repeal of the Defence of India Act 1939 and the 1  2 AIR 1951 All 703
655 Ordinance No XII of 1946 which had amended section 1 4 of that Act
On the other hand Mr Desai on behalf of the respondent relied on a decision of the Privy Council in Wicks vs Director of Public Prosecutions1
In that case the appellant whose case came up before the Privy Council was convicted for contravention of Regulation 2A of the Defence General Regulations framed under the Emergency Powers Defence Act 1939 as applied to British subjects abroad by section 3 1 b of the said Act
It was held that at the date when the acts which were the subjectmatter of the charge were committed the regulation in question was in force so that if the appellant had been prosecuted immediately afterwards the validity of his conviction could not be open to any challenge at all
But the Act of 1939 was a temporary Act and after various extensions it expired on February 24 1945
The trial of the accused took place only in May 1946 and he was Convicted and sentenced to four years  penal servitude on May 28
In these circumstances the question raised in the appeal was Is a man entitled to be acquitted when he is proved to have broken a Defence Regulation at a time when that regulation was in operation because his trial and conviction take place after the regulation expired  The Privy Council took notice of sub section 3 of section 11 of the Emergency Powers Defence Act 1939 which laid down that the expiry of this Act shall not affect the operation thereof as respects things previously done or omitted to be done
It was argued before the Privy Council that the phrase things previously done does not cover offences previously committed
This argument was rejected by Viscount Simon on behalf of the Privy Council and it was held that the appellant in that cane could be convicted in respect of the offence which he had committed when the regulation was in force
That case howeveris distinguishable from the case before us inasmuch as in that case the saving provision laid down that the operation of that Act itself was not to be affected by the expiry as respects things previously done or omitted to be done
The Act could therefore be held to be in operation in respect of acts already committed so that the conviction could be validly made even after the expiry of the Act in respect of an offence committed before the expiry
In the case before us the operation of R 132A of the DI Rs has not been continued after its omission
The language used in the notification only affords protection to things already done under the rule so that it cannot permit further application of that rule by instituting a new prosecution in respect of something already done
The offence alleged against the accused in the present case is in respect of acts done by them which cannot be held to be acts under that rule
The difference in the language thus makes 1 1947 AC 362
656 it clear that the principle enunciated by the Privy Council in the case cited above cannot apply to the notification with which we are concerned
Reference was next made to a decision of the Madhya Pradesh High Court in State of Madhya Pradesh vs Hiralal Sutwala1 but there again the accused was sought to be prosecuted for an offence punishable under an Act on the repeal of which section 6 of the had been made applicable
In the case before us section 6 of the cannot obviously apply on the omission of R 132A of the DIRs
for the two obvious reasons that section 6 only applies to repeals and not to omissions and applies when the repeal is of a Central Act or Regulation and not of a Rule
If section 6 of the had been applied no doubt this complaint against the two accused for the offence punishable under R 132A of the DIRs
could have been instituted even after the repeal of that rule
The last case relied upon is 1
K Gas Plant Manufacturing Co Rampur Ltd and Others vs The King Emperor2
In that case the Federal Court had to deal with the effect of sub section
4 of section 1 of the Defence of India Act 1939 and the Ordinance No XII of 1946 which were also considered by the Allahabad High Court in the case of Seth Jugmendar Das  Ors2
After quoting the amended sub section
4 of section 1 of the Defence of India Act the Court held  The express insertion of these saving clauses was no doubt due to a belated realisation that the provisions of section 6 of the X of 1897 apply only to repealed statutes and not to expiring statutes and that the general rule in regard to the expiration of a temporary statute is that unless it contains some special provision to the contrary after a temporary Act has expired no proceedings can be taken upon it and it ceases to have any further effect
Therefore offences committed against temporary Acts must be prosecuted and punished before the Act expires and as soon as the Act expires any proceedings which are being taken against a person will ipso facto terminate
 The Court cited
with approval the decision in the case of Wicks vs Director of Public Prosecutions4 and held that in view section 1 4 of the Defence of India Act 1939 as amended by Ordinance No XII of 1946 the prosecution for a conviction for an offence committed when the Defence of India Act was in force was valid even after the Defence of India Act had ceased to be in force
That case is however distinguishable from the case 1 AIR 1959 MP 93
2 3 AIR 1951 All 703
4 1947 AC 362
657 before us in two respects
In that case the prosecution had been started before the Defence of India Act ceased to be in force and secondly the language introduced in the amended sub section
4 of section 1 of the Act had the effect of making applicable the principles laid down in section 6 of the  so that a legal proceeding could be instituted even after the repeal of the Act in respect of an offence committed during the time when the Act was in force
As we have indicated earlier the notification of the Ministry of Home Affairs omitting R 132A of the DIRs did not make any such provision similar to that contained ms 6 of the 
Consequently it is clear that after the omission of R 132A of the DIRs no prosecution could be instituted even in respect of an act which was an offence when that Rule was in force  In this connection Mr Desai pointed out to us that simultaneously with the omission of R 132A of the DIRs section 42 of the Act was amended so as to bring the prohibition contained in R 132A2 under section 41 of the Act
He urged that from this simultaneous action taken it should be presumed that there was no intention of the Legislature that acts which were offences punishable under R 132A of the DIRs should go unpunished after the omission of that rule
It however appears that when section 41 of the Act was amended the Legislature did not make any provision that an offence previously committed under R 132A of the DIRs would continue to remain punishable as an offence of contravention of section 4  1  of the Act nor was any provision made  permitting operation of R 132A itself so as to permit institution of prosecutions in respect of such offences
The consequence is that the present complaint is incompetent even in respect of the offence under R 132A4
This is the reason why we hold that this was an appropriate case where the High Court should have allowed the applications under section 561A of the Code of Criminal Procedure and should have quashed the proceedings on this complaint
Consequently as already directed by our short order dated 2nd May 1969 the appeals are allowed the order of the High Court rejecting the applications under section 561A of the Code of Criminal Procedure is set aside and the proceedings for the prosecution of the appellants are quashed
VPS Appeals allowed


Summary:
The premises of the first appellant were raided by the Enforcement Directorate and certain records were seized
The second appellant was the first appellant s managing director
Thereafter on 25th August 1967 notice was issued by the respondent to the two appellants to show cause within fourteen days why adjudication proceedings should not be instituted against them under section 23D1 of the Foreign Exchange Regulation Act 1947 for violation of sections 4 and 9 of the Act on the allegation that 24471370 Swedish Kronars had been deposited by them in a bank account in Sweden instead of surrendering the foreign exchange to an authorised dealer as required by the Act
After investigation on 4th November 1967 another notice was issued to the second appellant stating that out of the total sum mentioned he had acquired during 1963 to 1965 Sw
8891309 that he held the amount in a bank in Sweden instead of offering it to the Reserve Bank of India and thereby contravened sections 41 and 9 of the Act and asking him to show if he had any special exemption for acquiring the foreign exchange
A similar show cause notice was issued to the first appellant in
respect of the same amount on 20th January 1968
On 16th March 1968 in supersession of the show cause notice dated 25th August 1967 a further notice was addressed to both the appellants to show cause within 14 days why adjudication proceedings under section 23D of the Act should not be held against them in respect of the balance of Sw
15580141 and added that it had since been decided to launch a prosecution in respect of the Sw
8891309 and on the 17th March 1968 a complaint was filed against both the appellants in the Chief Presidency Magistrate s Court for contravention of sections 41 51e and 9 of the Act punishable under section 231b of Act and for violation rule 132A2 of the Defence of India Rules 1962 punishable under rule 132A4
Thereupon the appellants fried applications in the High Court under section 561A Criminal Procedure Code for quashing the proceedings in the Magistrate s court but the applications were dismissed
In appeal to this Court it was contended that 1 The punishment under section 231b is severer and heavier than the penalty to which a person is made liable if adjudication proceedings are taken under section 231a but the section lays down no principles at all for determining when the person concerned should be proceeded againstunder section 231a and when under section 231b and has left it to the arbitrary discretion of the respondent and hence violates Aft
14 of Constitution 2 Even if section 231b is not void the respondent did not act in accordance with the 640 requirements of the proviso to section 23D1which lays down that a con plaint may be made at any stage of the enquiry but only if having regarto the circumstances of the case the Director of Enforcement finds the the penalty which he is empowered to impose under section 231a would not be adequate and 3 Since the Notification issued by the Ministry of Home Affairs dated 30th March 1965 provided that R 132A shall be omitted except as respects things done or omitted to be done under that Rule a prosecution in respect of an offence punishable under that Rule could not be instituted on 17th March 1968 when that Rule had ceased to exist even though it might be in respect of an offence committed earlier during the period that the rule was in force
HELD 1 The choice whether the proceeding be taken under section 231a or 231b against the person who is liable for action for contravention under section 231 is not left entirely to the discretion of the Director of Enforcement but the criterion for making the choice is indicated in the proviso to section 23D1
648 A B The Foreign Exchange Regulation Amendment Act 1957 amended section 231 and at the same also introduced section 23D
The intention of the Legislature from such simultaneous amendment was that the two sections are to be read together
While providing for alternative proceedings under section 231a and section 231b the Legislature ensured that the procedure laid down in section 23D1 was to be followed in all cases in which proceedings are intended to be taken under section 23 1 
Thus whenever there is any contravention of any section or rule mentioned in section 23 1 the Director of Enforcement must first proceed under the principal clause of section 23D1 and initiate proceedings for adjudication of penalty
He cannot at that stage in his discretion choose to file a complaint in a court for prosecution of the person concerned for the offence under section 231b
Though the Legislature has not used in either of the sub sections specific words excluding the filing of a complaint before proceedings for adjudication are taken under section 23D1 it must be presumed that Parliament knew that if provision was made for two alternative punishments for the same act one differing from the other and without any limitations such a provision would be void under article 14
In view of the principle that an interpretation which would save a section should be preferred sections 231 and 23D1 must be interpreted to mean that the Director of Enforcement must first initiate proceedings under the principal clause of section 23D1 for adjudication of penalty and that he is empowered to file a complaint in court for the offence under section 231b only when at any stage of the adjudication enquiry he comes to the opinion that having regard to the circumstances of the case the penalty which he is empowered to impose would not be adequate
647 D F H 648 E H 649 A C Shanti Prasad Jain vs The Director of Enforcement   followed
2 When such a safeguard is provided by the Legislature it is necessary that the authority which takes the steps of instituting against that person proceedings in which a severer punishment can be awarded complies strictly with all the conditions laid down by law that is the Director could file a complaint for prosecution in court only if having regard to the circumstances of the case he finds that the penalty that he is empowered to impose in the adjudication proceedings would not be adequate
650 G H 
In the present case the enquiry had been instituted by the issue of the show cause notice dated 25th August 1967
But it does not appear on 641 the record that even after the issue of that notice any such material came before the respondent which could be relevant for forming an opinion that the penalty which he was empowered to impose for the contravention in respect Sw
8891309 would not be adequate
No doubt some investigation was made but the investigation would not be part of the enquiry which had to be held in accordance with the Act and the Adjudication Proceedings and Appeal Rules 1957
Neither of the appellants had shown cause in pursuance of the notice and there was no consideration of such cause to decide whether adjudication proceedings should be held or not
Nor were any statements taken or recorded during an enquiry under section 23D1
Whatever statements were recorded were in the course
of investigation and not in the course of an enquiry under section 23D1
Therefore the complaint must be held to have been filed without satisfying the requirements and conditions of the proviso to section 23D1 of the Act and in so far as it related to the contravention of the provisions of sections 41 51e and 9 of the Act punishable under section 231b it must be held invalid
651 D E 652 C D F G 653 B D 3 The language used in the Notification of 30th March 1965 only affords protection to action already taken while the rule was in force but cannot justify initiation of a new proceeding which will not be a thing done or omitted to be done under the rule but a new act of initiating a proceeding after the rule had ceased to exist
The offence alleged against the appellants is in respect of acts done by them which cannot be held to be acts under that rule
Unlike case of Wicks vs Director of Public Prosecutions 1947 AC 362 where an express provision was made
that the operation of the Emergency Powers Defence Act 1939 a temporary Act was not to be affected by its expiry as respects things previously done or omitted to be done in
the present case the operation of r 132A of the Defence of India Rules has not been continued after its omission
Section 6 of the  also could not be invoked
because the section does not apply to temporary statutes or rules and omissions
It only applies to repeals to
Central Acts
Further the Notification of the Ministry of Home Affairs omitting R 132A did not make any such provision similar to that contained in section 6 of the 
Moreover though section 41 of the Foreign Exchange Regulation Act was amended simultaneously with the omission of the r 132A the Legislature did not make any provision that an offence previously committed under r 132A would continue to remain punishable as an offence of contravention of section 41 of the Act nor was any provision made permitting operation of r 132A itself to permit institution of prosecutions in respect of such offences
Consequently after the omission of r 132A the complaint is incompetent even in respect of the offence under Rule 132A4
654 A D 655 F H 656 B C E F 657 A F section Krishnan  Ors
vs The State of Madras 1951 SCR 621 applied
State of MPv
Hiralal Sutwala AIR 1959 MP 93 1
K Gas Plant Manufacturing Co Ramput vs The King Emperor  distinguished
Seth Jugmendar Das vs State AIR 1951 All 703 referred to