IN THE HIGH COURT OF DELHI + Writ Petition (Crl.) No.800/2002 % Date of decision : 21st April, 2009 Sh. Devashis Bharracharya ............ Petitioner Through : Mr. S.K. Sharma, Advocate VERSUS Union of India & Anr. .............Respondent Through : Mr. P.P. Malhotra, Additional Solicitor General with Mr. Naveen K. Matta, Mr. Cheetan Chawla and Mr. Gaurav Sharma, Adv. CORAM: HON'BLE MS. JUSTICE GITA MITTAL 1.Whether reporters of local papers may be allowed to see the Judgment? Yes 2.To be referred to the Reporter or not? Yes 3.Whether the judgment should be reported in the Digest? Yes GITA MITTAL, J 1. By way of this writ petition under Article 226 of the Constitution of India, the petitioner assails the proceedings in complaint bearing no. 880/1 dated 27th May, 2002 entitled Enforcement Directorate vs. Sanjay Malviya and Ors. under section 56 of the Foreign Exchange Act, 1973 read with sub- section 3 and 4 of Section 49 of the Foreign Exchange Management Act, 1999 and prays for quashing thereof primarily on the ground that the same have been commenced without effecting statutory compliance of the mandatory provision of the proviso to sub clause (ii) of sub-section 2 of section 61 of the 1 Foreign Exchange Regulation Act, 1973. The petitioner has also assailed the order of the learned trial judge taking cognizance of the complaint and issuing summons to the petitioner. 2. The petitioner claims to be an ordinary director of the Intergroup C & E Ltd. ('ICE Ltd' for brevity) which was allotted six Integrated Services Digital Network telephone connection ('ISDN connections' for brevity) at their office premises E-380, Greater Kailash I, New Delhi in February, 2000 without STD/ISD dialing facility. On 3rd May, 2000, the Mahanagar Telephone Nigam Ltd. (MTNL for brevity) which was a service provider for these connections filed a criminal complaint before the Special Cell of the Delhi police alleging that the subscriber was misusing the telephone connection in violation of the provisions of the Indian Telegraph Act, 1885. The police raided the business premises of the company, arrested Sh. Sanjay Malviya, its managing director and Sh. Deepak Gupta, Technical Advisor and also seized all equipment attached with the telephone connection. A case bearing FIR No. 136/2000 was registered under section 420/120B of the Indian Penal Code read with Section 4/20 of the Indian Telegraph Act, 1885. 3. The allegations in the complaint were that one of the ISD and telephone lines was made into a permanent channel and thereafter by using sophisticated equipment, international calls were being distributed to Delhi and nearby areas illegally through the Public 2 Safety Telephone Network (PSTN network for brevity). In the complaint allegations were also made by the MTNL that the channels/connection allotted to the company were found busy day and night which indicated that the ISD and lines were being misused. Transmission of data from the USA to the connnection through ISD and connection was compressed. Instead of 24 calls, only one call would suffice to transmit the compressed data. It was complained that this resulted in loss to the MTNL of Rs.5 crores in foreign exchange. The further allegation in the complaint was that the equipment seized from the business premises of the petitioner was not of approved subscription of the telecom engineering centre, a nodal government agency under the Department of Telecommunication. 4. So far as the criminal case was concerned, the investigating agency of the special cell of the Delhi Police is stated to have filed a chargesheet against the petitioner and other accused persons in the court of the Metropolitan Magistrate, New Delhi under sections 405/420/120 B of the Indian Penal Code, 1860 read with Section 4/20 and 25 of the Indian Telegraph Act, 1885. The Intergroup Conventions and Exhibitions Ltd. (ICE Ltd. for brevity) is stated to have a civil suit for permanent and mandatory injunctions bearing no. 405/2000 entitled as ICE Ltd. vs. Mahanagar Telephone Nigam Ltd. against the illegal disconnection of the telephone services to the company. 3 5. The petitioner states that a notice dated 18th April, 2002 was received from the Enforcement Directorate, respondent no. 2 herein. His statement is stated to have been recorded by the Directorate of Enforcement under Section 40 of the Foreign Exchange Regulation Act, 1973 (hereinafter referred to as “FERA, 1973” for brevity) read with Section 49(3) & (4) of the Foreign Exchange Management Act, 1999 (hereinafter referred to as “FEMA, 1999” for brevity) on 13th November, 2000. 6. “An opportunity notice” dated 17th May, 2002 was thereafter served upon the petitioner on the 25th May, 2002 in purported compliance of the proviso to Section 61(2)(ii) of the FERA, 1973 read with Section 49(3) and 49(4) of FEMA, 1999. This notice required the petitioner to state in writing within three days from the date of receipt of the notice, as to whether he had previous general or special permission of the Reserve Bank of India for the transactions detailed in the notice. The petitioner was also notified that if he failed to furnish the requisite information within the specified time, a complaint under Section 56 of FERA, 1973 read with Section 49 (3) & (4) of the FEMA, 1999 for the alleged contravention shall be filed in a court of law. 7. The petitioner contested the allegations made in the notice by a communication dated 27th May, 2002 and submitted a detailed reply denying that he had committed any violation of FERA, 1973. Certain clarifications were also sought with regard to the 4 allegations and violations alleged by the respondent no. 2 in their notice under reply. On 7th June, 2002, the petitioner claims to have read a newspaper report in the newspapers “English Daily” and Hindustan Times, stating that the respondent no. 2 has filed a criminal complaint against the petitioner and other accused persons for alleged violations of the provisions of FERA, 1973. 8. As per the available record, the respondent no. 2 filed criminal complaint no. 880/2001 dated 27th May, 2002 under section 56 of the FERA, 1973 read with sub-sections 3 and 4 of Section 49 of FEMA, 1999 before the court of Additional Chief Metropolitan Magistrate who took cognizance of the complaint vide an order dated 27th May, 2002 and summoned all accused persons including the petitioner for appearance on 20th August, 2002. It is submitted on behalf of the petitioner that on the inspection of the court record, it has been revealed that the respondent no. 2 illegally and arbitrarily did not place the communication dated 27th May, 2002 sent by the petitioner alongwith the criminal complaint which was filed in court. 9. Aggrieved by the action of the respondent no. 2 in filing the complaint before the expiry of the three days granted to show cause in answer to the notice dated 17th May, 2002 (served on the petitioner on 25th may, 2002), the petitioner has filed the present writ petition contending that the criminal complaint no. 880/2001 was filed by the respondent in breach of specific statutory 5 provisions as well as the principles of natural justice and in violation of Article 14 of the Constitution of India. The complaint and proceedings initiated by the respondent are also assailed as without jurisdiction and amounting to a misuse of the process of law. The petitioner also assails the order dated 27th May, 2002 passed by the Additional Chief Metropolitan Magistrate, New Delhi taking cognizance of the complaint and issuing of notice to the petitioner as being without application of mind. 10. In support of these submissions, learned counsel for the petitioner places reliance on the statutory provisions governing the subject as well as on the pronouncements reported at 1998 SCC (Crl.) 1400 Pepsi Foods Limited vs Special Judicial Magistrate (para nos. 28 & 29); AIR 1992 SC 604 (para 108) State of Haryana vs. Ch. Bhajanlal (para 108 at page 629); (1989) 37 DLT 251 Lachman Singh vs Mahendra Singh (paras 2 & 4). 11. The case of the petitioner rests on a specific challenge based on the provisions of FERA, 1973 and the rules framed thereunder. The submission is that inasmuch as the opportunity notice under section 61 (2)(ii) of FERA is statutorily required, full particulars of the date of notice and its service are required to be mentioned in the complaint. The further submission is that in order for the complainant to make out a prima facie case, it is essential that the copy of the notice as well as the proof of its service upon the accused person is 6 placed on the record of the court along with the complaint. Failure to do so as in the instant case, renders the entire action illegal. It is further asserted that the complaint also does not contain any statement as to the mode and manner of service of the complaint. For this reason, it has been contended that cognizance of the complaint has been taken and notice issued in a routine manner and without any application of mind. 12. On the other hand, Mr. P.P. Malhotra, learned Additional Solicitor General appearing for the respondent has contended that the fact that the petitioner has annexed a copy of the opportunity notice with the petition, itself evidences that he was duly served and had even filed a reply to the same. The submission of the learned ASG is that the petitioner's grievance is of insufficiency of notice which is a matter of his defence. It is contended that the petitioner would have adequate opportunity to establish the same in the trial at the pre-charge stage. It is submitted that according to the respondent, this notice was served by affixation in the presence of panchas and the panchnama in this behalf, would be proved before the trial court. In support of these submissions, reliance is placed on the judicial pronouncements reported at (1984) 3 ECC 319 A.S.G. Jothimani v. Dy. Director of Enforcement (page 18) ; (2002) 3 SCC 269 (paras 2, 14.5) Medchl Chemicals & Pharma (P) Ltd. vs. Biological E. Ltd.; (2006) 3 SCC 658 : 2006 (2) 7 JCC 114 (para 29) Musaraf Hossain Khan vs. Bhagheeratha Engg. Ltd. & Ors. ; 1999 (110) ELT 313 (para 11) Assistant Collector, Customs v. L.R. Malwani. 13. As far the service of the notice of the notice is concerned, the petitioner points out that no proof of service has been filed along with the complaint. So far as the examination of witnesses to the panchanama are concerned, the submission is that the respondents have not cared to cite any of the persons in the list of witnesses. It is contended that so far as the criminal trial is concerned, the respondent would stand precluded from examining any witness who has not been cited as a witness. 14. The entire challenge by the petitioner rests on the contention that the prosecution of the petitioner under FERA, 1973 is illegal and without jurisdiction for failure to comply with the proviso to clause (ii) of sub-section 2 of Section 61. In order to appreciate the submissions made by both sides, it would be appropriate for this court to consider the relevant extract of the provisions of section 61 in extenso which reads thus :- “61. Cognizance of offences - (1) Notwithstanding anything contained in section 29 of the Code of Criminal procedure, 1973, it shall be lawful for any metropolitan magistrate and for any magistrate of the first class to pass a sentence of imprisonment for a term exceeding three years or of fine exceeding five thousand rupees on any person convicted of an offence punishable under section 56.) (2) No Court shall take cognizance - (i) xxx 8 (ii) of any offence punishable under section 56 or section 57, except upon complaint in writing made by- (a) the Director of Enforcement; or (b) any officer authorised in writing in this behalf by the Director of Enforcement or the Central Government; or (c) any officer of the Reserve Bank authorised by 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 of 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.” 15. Section 61 of the statute thus sets out the statutory requirements which are mandatorily to be satisfied in order to enable a court to take cognizance of the offences under the Act. Cognizance of an offence punishable under section 56 and 57 of FERA, 1973 can be taken by a court only upon a written complaint made by the Director of Enforcement, the Central Government or the Reserve Bank of India or by a person authorised by anyone of them to make a complaint. As per the proviso to clause 2 of sub- section 2 of section 61, in case of an alleged contravention which prohibits the doing of an act without permission, no complaint shall be made without giving an opportunity to such person to show that he had such permission. Inherent in this statutory requirement would be the opportunity to a person to show that there was no requirement of such permission. 9 16. In an unreported decision by the Bombay High Court in Crl.A.No. 39/1952 entitled State v. B. Albuquerque, it was held that the opportunity should be given by the Reserve Bank or the Central Government or a person authorised in that behalf and not by an investigating officer. 17. Having regard to the penal consequences of committing the contravention of FERA, 1973 noticed hereinabove which includes incarceration, there can be no manner of doubt that such an opportunity has to be a meaningful opportunity and not merely a notional compliance of the statutory provisions. The respondents do not dispute that the notice dated 17th May, 2002 has been served on the petitioner on 25th May, 2002 which was a Saturday. The three-day period with effect from the 25th May, 2002 would have lapsed on about 28th May, 2002. Without going into the question as to whether the three-day period given by the respondent, was adequate notice or not, it may firstly be examined as to whether the period given in the notice, was adhered to by the respondent or not. 18. It is well settled that where an action under the statute entails civil consequences, then even if an opportunity of being heard may not be explicitly set out in the applicable legal provisions, the adherence to the principles of natural justice has to be read into such a statute. For this reason, so far as the provisions of FERA was concerned, the legislature has enacted the 10 proviso to clause (ii) of sub-section 2 of Section 61 requiring an opportunity to show that the noticee had the requisite permission. 19. There can be no dispute that the action permitted under section 61 of the FERA, 1973 certainly results in drastic penal consequences. The statute prescribes that it shall be lawful for any Metropolitan Magistrate and for any Magistrate of the First Class to pass a sentence of imprisonment for a term exceeding three years or of fine exceeding five thousand rupees on any person if found guilty of the offence under clause (ii) of sub- section 2 of Section 61 of the Act. The present case is not a case where the legislation does not prescribe compliance of the principles of natural justice. 20. This discussion would be incomplete without adverting to the highest pedestal on which this compliance has been placed by the Apex Court in the pronouncement reported at AIR 1978 SC 851 Mohinder Singh Gill vs. Chief Election Commissioner, wherein the Apex Court had placed natural justice on the highest pedestal which it observed that :- “Indeed, natural justice is a pervasive facet of secular law where a spiritual touch enlivens legislation, administration and adjudication, to make fairness a creed of life. It has many colours and shades, many forms and shapes and, save where valid law excludes, it applies when people are affected by acts of authority. It is the bone of healthy government, recognised from earliest times and not a mystic testament of judge-made law. Indeed, from the legendry days of Adam and of Kautilya's Arthasastra – the rule of law has had this stamp of natural justice, which makes it social 11 justice. We need not go into these depths for the present except to indicate that the roots of natural justice and its foliage are noble and not newfangled. Today its application must be sustained by current legislation, case law or other extant principle, not the hoary chords of legend and history. Our jurisprudence has sanctioned its prevalence even like the Anglo-American system. Law cannot be divorced from life and so it is that the life of the law is not logic but experience. If, by the experimental test, importing the right to be heard will paralyse the process, law will exclude it. It had been said that no army can be commanded by a debating society, but it is also true that the House of Commons did debate, during the days of debacle and disaster, agony and crisis of the Second World War, the life-and-death aspects of the supreme command by the then British Prime Minister to the distress of all our friends and to the delight of all our foes' – too historic to be lost on Jurisprudence. Law lives not in a world of abstractions but in a cosmos of concreteness and to give up something good must be limited to extreme cases. If to condemn unheard is wrong, it is wrong except where it is overborne by dire social necessity. Such is the sensible perspective we should adopt if ad hoc or haphazard solutions should be eschewed.” 21. So far as the nature and extent of inquiry is concerned, discretion in this behalf has been left to the authority concerned. There is no rigid rule nor absolute proposition with regard to the scope and extent. The Apex Court analysed the requirement of flexibility in the application of principles of natural justice in AIR 2003 SC 1659 : JT 2003 (5) SC 509 : 2003 (9) SCC 731 State of Maharashtra & Anr. vs. Jalgaon Municipal Council & Ors., and observed thus:- “32. The caution of associating rules of natural justice 12 with the flavour of flexibilities would not permit the Courts applying different standards of procedural justice in different cases depending on the whims or personal phiolosphy of the decision maker. The basic principles remain the same; they are to be moulded in their application to suit the peculiar situations of a given case, for the variety and complexity of situations defies narration. That is flexibility. Some of the relevant factors which enter the judicial process of thinking for determining the extent of moulding the nature and scope of fair hearing and may reach to the extent of right to hearing being excluded are: (i) the nature of the subject-matter, and (ii) exceptional situations. Such exceptionality may be spelled out by (i) need to take urgent action for safeguarding public health or safety or public interest, (ii) the absence of legitimate exceptions, (iii) by refusal of remedies in discretion, (iv) doctrine of pleasure such as the power to dismiss an employee at pleasure, (v) express legislation. There is also a situation, which Prof. Wade & Forsyth terms as "dubious doctrine" that right to a fair hearing may stand excluded where the Court forms an opinion that a hearing would make no difference. Utter caution is needed before bringing the last exceptional into play. (Administrative Law, ibid, at pp. 543-544).” 22. In the pronouncement of the Apex Court reported at (1980) 4 SCC 379 S.L. Kapoor vs. Jagmohan, the court held that the notice must be given in the context of the proposed action and merely furnishing the information casually or for some other purpose would not amount to proper notice. It was held that the requirement of natural justice are met only if opportunity to represent is given in view of the proposed action. The demands of natural justice are not met even if the very person proceeded against has furnished the information on which the action is based, if it is furnished in a casual way or for some other purpose. 13 23. In this background, the opportunity which the respondents are directed to give under the proviso to clause (ii) of sub-section 2 of Section 61 is a matter which is required to be treated with utmost seriousness with which the respondents do not appear to have treated the same in the instant case. 24. There can also be no dispute that the requirement of the statute is mandatory so far as giving the opportunity of the person accused of an offence under section 56 or 57 is concerned. 25. The well settled principle that where law mandates something to be done in a particular way, then it has to be done in that way or not at all is so well settled that it needs no elaboration. (Ref : 1875 (1) CHD Div. 426 : 1945 LJ CH 373 Tailor v. Tailor ; (1936) 63 IA 372 : AIR 1936 PC 253 Nazir Ahmed vs. King Emperor ; AIR 1954 SC 322 Rao Shiv Bahadur Singh & Anr. vs. State of U.P. ; AIR 1961 SC 1527 Deep Chand vs. State of Rajasthan; AIR 1964 SC 358 State of U.P. vs. Singhara Singh & Ors. ; (1999) 3 SCC 422 Babu Verghese & Ors. vs. Bar Council of Kerala & Ors.). 26. The proviso to Sub-Section 2 of Sub-Section 1 mandates that no complaint can be made under FERA of 1973 unless the person accused of the offence has been given an opportunity of showing that he had such permission. 27. Sub para XIX of paras 2 of the complaint dated 17th May, 2002 filed by the respondents shows that the respondents have 14 stated that the accused persons have been given an opportunity to the petitioner as required by the proviso of Section 61 (ii) of FERA, 1973. It is stated that the accused persons were given an opportunity to state in writing within three days from the date of the receipt of this notice as to whether they had obtained any general or special permission of the Reserve Bank of India for the alleged transaction. The complaint does not disclose the date of this notice. However, in the list of documents, the same is mentioned as the “Opportunity notice” at serial no. 2. There is certainly no mention of the reply received by the respondent from the petitioner. It is apparent therefrom that the complaint was drafted before or at the same time of the preparation of the notice dated 17th May, 2002. In any case, the same was before the receipt of the reply from the petitioner. Thus, the complaint appears to have been filed without considering the objections of the petitioner in its reply dated 27th May, 2002. 28. The complaint which has been filed by the respondent under Section 56 read with sub-Sections 3 & 4 of Section 56 of FERA, 1973 and sub-sections 3 & 4 of Section 49 of FEMA, 1999 has been signed on 27th May, 2002 and filed in the court of ACMM. 29. The respondents have also admittedly received the petitioner's reply on 27th May, 2002. In this background, it is apparent on that the respondent did not wait the three-day period which they had notified the petitioner with regard to filing of its 15 reply. 30. From the factual narration set out hereinabove, it would appear that the service of the notice dated or signed on 17th May, 2002 was merely in the nature of a technical and notional