* 1 * IN THE HIGH COURT OF JUDICATURE AT BOMBAY CRIMINAL APPELLATE JURISDICTION CRIMINAL APPLICATION NO. 1982 OF 2008 1. First Global Stockbroking Pvt. Ltd 2. Shankar Sharma 3. Devina Mehra ..............Applicants. V/S. 1. Shri. Anil Rishiraj, Enforcement Officer. Office of the Directorate of Enforcement 2. The State of Maharashtra ..............Respondents. ----------- Shri. Vishal Khanavkar with Mr. Kedar Dighe, adv. for applicants. Shri. D.N. Salvi with Shri. Mandar Gosami, adv.for Union of India-respondent no.1. Ms. Alpana Jhaveri, APP for State-respondent no.2. CORAM :- S.C. DHARMADHIKARI, J. DATED :- 3 rd FEBRUAR Y, 2010. P.C. :- 1. Rule. 2. Respondents waive service. * 2 * 3. Rule made returnable forthwith. 4. This Criminal Application invokes this court s jurisdiction under Article ’ 227 of the Constitution of India read with Section 482 CrPC, to challenge an order dated 27/3/2008 passed by the court of Sessions for Greater Bombay in Criminal Revision Application No. 921 of 2005. By the order under challenge, the learned Additional Sessions Judge, has upheld the order of the Magistrate issuing process and dismissed the Revision Application of the applicant. 5. It is common ground that respondent no.1 has filed a complaint before the Chief Metropolitan Magistrate, Esplanade bearing C.C. No. 122/W/2002 against several accused including the applicants before me. 6. The charges are that the offences punishable under Section 120B of Section 56(1)(ii) read with Section 19(1)(b) of FERA, 1973, Section 64(2), 68(1) and 68(2) of FERA, 1973 all read with Section 49(3) and 49(4) of the FEMA, 1999 have been committed by the accused. It is stated that accused no.1, 5 to 9 are private limited companies dealing in Finance, shares and stock broking. Accused nos. 2 and 3 are the Directors of these companies. Accused no.4 is a Director in accused nos. 5, 6 and 8 whereas, accused no.10 is a private limited company dealing in finance and shares. It is stated that the Directors are responsible for and in-charge of the business of the companies in question. Accused no.12 is also a private limited company and accused no. * 3 * 13 is a Director thereof. It is stated that accused nos.14 to 17 are banking companies and officers of the banking company. 7. After referring to the searches carried out by the Income Tax Department at premises of with accused no.1 in Mumbai and after seizure of documents thereat, it is alleged that the I.T. Department sent a reference to the Enforcement Directorate, Mumbai during September, 2001 to the effect that accused no.1 had sold some equity shares of M/s. Himachal Futuristic Communications Limited (HFCL) to certain Foreign Institutional Investors (FIIs) during March, 2000 at the rate of Rs.1,060/- per share when the prevailing market price was Rs.2,100/- to Rs.2,211/- per share. The shares of these institutions were thus sold at almost 50% of the prevailing market price. It is alleged that the Income Tax Department suspects that accused no.1 received differential value in the transaction from the FIIs outside India in an unauthorised manner. The Enforcement Directorate initiated inquiries with Stock Exchange Board of India (SEBI) and in the preliminary Inquiry Report, the SEBI indicted accused no.1. Thereafter, the Enforcement Directorate issued Directives calling upon accused no.1 to produce documents, summons were issued, transactions were reported also by RBI. Further, it came to the Enforcement Directorate s knowledge that during the period ’ when the Foreign Exchange Regulation Act, 1973 (hereinafter referred to as `the 1973 Act ) was in force, the transactions were undertaken and that is ’ * 4 * how fresh summons were issued to accused nos.2 and 3 who are the Directors of accused no.1. A reference is made to summons for production of documents and filing of complaints in paragraphs 9 to 15 of the complaint. A reference is also made to the examination of certain accused and their statements and thereafter it is alleged that accused no.1 in furtherance of the conspiracy without any prior or specific permission from R.B.I. as required under Section 19(1)(b) of the 1973 Act transferred shares of HFCL to FIIs and thereby committed offences punishable under the 1973 Act read with the 1999 Act. Accused nos. 2 and 3 are also alleged to have committed these offences and therefore the complaint filed on 11/2/2002 alleges that the accused have committed these offences and process be issued, so also, they be dealt with according to law. 8. Upon this complaint, the learned Chief Metropolitan Magistrate, Esplanade, Mumbai passed an order on 11/2/2002 directing issuance of process to all the accused. 9. It is clear from the record that the applicants appeared and applied for discharge from the proceedings. The applications in that behalf were made on 20/08/2002 and 16/11/2002. On these applications, after hearing the parties, the learned Additional Chief Metropolitan Magistrate, 3rd Court, Esplanade, Mumbai passed an order on 16/06/2005 rejecting them. 10. Aggrieved by this rejection, the applicants preferred a Criminal Revision * 5 * Application before the Court of Sessions of Greater Bombay upon which the impugned order has been passed. 11. Mr. Kulkarni and Mr. Khanavkar, learned counsel appearing for the applicants contended that the complaint was ex-facie barred by law. A complaint which is barred by law could not have been entertained, leave alone, process issued summoning the accused in furtherance thereof. It is contended that the courts below failed to appreciate that the 1973 Act has been repealed by the Parliament and now what is in force is the Foreign Exchange Management Act, 1999 (for short `the 1999 Act ). Inviting my ’ attention to Section 49 of the 1999 Act, it is contended by the learned counsel that the consequences of repeal are clear. The said provision deals with repeals and savings. The 1973 Act is repealed and the appellate board constituted thereunder is dissolved. On dissolution of the board, all officers and employees including the Chairman cease to hold office. The learned counsel submits that by virtue of Section 49(3), the court cannot take cognizance of the offence under the 1973 Act. It is contended that the period of 2 years provided in Section 49(3) applies only to adjudication proceedings and not to cognizance of the offences. Once the Act is repealed and cognizance is barred, then, the complaint could not have been entertained. Hence, the impugned orders are bad in law and erroneous and be set aside. In other words, this Application be allowed. * 6 * 12. The counsel have tendered written submissions but all arguments are based on this legal contention. 13. It is then contended that FERA was repealed by FEMA with effect from 1/06/2000 [vide GSR 371(JE) dated 1/05/2000]. Prior to the repeal the Enforcement Directorate or any of the officers authorized by ED could file criminal prosecution against a person for violating any of the provisions of FERA, pursuant to Section 61 of FERA. However, after the repeal of FERA, FEMA dismantled the entire Enforcement Directorate under FERA and a fresh Enforcement Directorate was constituted under the provisions of Section 36 of FEMA. What is worth noting is that there is no provision for filing criminal prosecution in FEMA and hence the new Enforcement Directorate constituted under FEMA and/or any of the officers under the new Enforcement Directorate are not legally empowered to initiate criminal prosecution against any person. In short, after 31/5/2000, there remained no Enforcement Directorate or Officer of Enforcement Directorate who could file criminal complaint for violation of Foreign Exchange law of the land. 14. According to the Applicants, admittedly, the learned Additional Chief Metropolitan Magistrate has taken cognizance against the applicants/accused on May 31, 2002 i.e. well after 1/6/2000. As per Section 49(3) notwithstanding anything contained in any other law for the time being in “ force, no court shall take cognizance of an offence under the repealed act * 7 * and no adjudicating officer shall take notice of any contravention under Section 51 of the repealed Act after the expiry of a period of two years from the date of the commencement of this Act. The applicants state and submit that the Section is divided into two distinct parts/sentences, both joined by the conjunction `and . The first part unambiguously deals only with taking ’ of cognizance by court in criminal prosecution, while the subsequent part deals only with civil adjudication. It is common knowledge that a conjunction combines two different and distinct sentences. Therefore, Section 49(3) has to be split and read as : No court shall take cognizance of an offence under the repealed Act. “ AND No adjudicating officer shall take notice of any contravention under Section 51 of the repealed Act after the expiry of a period of two years from the date of the commencement of this Act. 15. The applicants submit that the Rule of Last Antecedent widely relied upon while interpreting provisions of law in the strict grammatical sense, supports the aforesaid submission of the applicants. As per the said rule of interpretation, `relative and qualifying words, phrases and clauses are applied to the antecedent immediately preceding the said clause. In Section 49(3), the relative/qualifying phrase is after the expiry of a period of two years ‘ from the date of commencement of this Act while the two antecedents are ’ * 8 * (1) no court shall take cognizance of an offence under the repealed Act and (2) no adjudicating officer shall take notice of any contravention under Section 51 of the repealed Act. Needless to mention that the antecedent immediately preceding the qualifying phrase is antecedent no.2 i.e. no adjudicating officer shall take notice of any contravention under Section 51 of the Repealed Act. Moreover, the qualifying phrase is not separated from the antecedent no.2 with a coma so as to indicate that the qualifying phrase is applicable to both the antecedents. The applicants therefore, submit that the sunset period of two years is provided only for the adjudicating officer to take notice of any contravention under Section 51 of FERA and not for the courts to take cognizance. 16. Reliance is placed upon the following decisions by the learned counsel to support their contentions : (i). Mahadeolal Kanodia V/s. The Administrator General of West Bengal, AIR 1960 S.C. 936 (V 47 C 166). (ii). The Siemens Engineering and Manufacturing Co. of India Ltd V/S The Union of India and another AIR 1976 S.C. 1785. (iii) Mongibai Hariram and another V/S. The State of Maharashtra and Another AIR 1966 S.C. 882 (V 53 C 166). 17. Mr. Salvi, appearing on behalf of the prosecution, on the other hand contended that the complaint is not barred. It is filed within the period of 2 * 9 * years stipulated by law. Mr. Salvi submits that the construction placed on Section 49 by the applicants is erroneous and contrary to the legislative intent. The legislative intent is clear, inasmuch as, both criminal proceedings and adjudication under the old Act is saved provided their cognizance and taking notice is within the stipulated period. It is contended by Mr. Salvi that the provision in question will have to be read as a whole and together with the other provisions of the Act. When so read, it is apparent that what is saved under the Repealed Act, are proceedings which are not only in the nature of adjudication but commenced by virtue of filing a criminal complaint in a competent criminal court. If the word `and appearing in ’ sub-section 3 of Section 49 is read in the manner suggested by the applicants, then the purpose and object of inserting Section 49 would be defeated. It is clear that both proceedings are contemplated under the provision in question and therefore the word `and will have to be read ’ conjunctively and not disjunctively. The interpretation placed by the applicants would mean that and will have to be read as or . If such “ ” “ ” an intent is not apparent from the statutory provision, then, by interpretative process, this court cannot read the provision in question, so as to bifurcate the proceedings. In these circumstances, there is no substance in the application and it deserves to be dismissed. 18. At the outset, I must clarify, that although in the written submissions, * 10 * several pleas have been raised with regard to the merits of the transaction, I am not inclined to deal with them. It will not be possible to hold only on the version of the applicants, that the transactions were authorised by law. The complaint would have to be read as a whole and to my mind it discloses commission of offences under the relevant statutory provisions. On the basis of the applicants version on the merits of the matter, the complaint cannot be quashed. Therefore, it is clarified that all pleas and contentions on merits of the controversy are kept open for being raised at an appropriate stage. 19. The only contention therefore surviving for my consideration is about interpretation of Section 49 and more particularly sub-section 3 thereof. This provision reads as under :- “S.49 Repeal and Saving : (1) The Foreign Exchange Regulation Act, 1973 is hereby repealed and the appellate Board constituted under sub-section (1) of Section 52 of the said Act (hereinafter referred to as the repealed Act) shall stand dissolved. (2). On the dissolution of the said Appellate Board, the person appointed as Chairman of the Appellate Board and every other person appointed as Member and holding office as such immediately before such date shall vacate their respectives offices and no such Chairman or other person shall be entitled to claim any compensation for the * 11 * premature termination of the term of his office or of any contract of service. (3). Notwithstanding anything contained in any other law for the time being in force, no court shall take cognizance of an offence under the repealed Act and no adjudicating officer shall take notice of any contravention under Section 51 of the repealed Act after the expiry of a period of two years from the date of the commencement of this Act. (4). Subject to the provisions of sub-section (3) all offences committed under the repealed Act shall continue to be governed by the provisions of the repealed Act as if that Act had not been repealed. (5) Nothwithstanding such repeal,- (a) anything done or any action taken or purported to have been done or taken including any rule, notification, inspection, order or notice made or issued or any appointment, confirmation or declaration made or any licence, permission, authorisation or exemption granted or any document or instrument executed or any direction given under the Act hereby repealed shall, insofar as it is not inconsistent with the provisions of this Act, be deemed to have been done or taken under the corresponding provisions of this Act; (b) any appeal preferred to the appellate board under sub-section (2) or section 52 of the repealed Act but not disposed of before the commencement of this act shall stand transferred to and shall be disposed of by the Appellate Tribunal constituted under this Act; * 12 * (C) every appeal from any decision or order of the Appellate Board under sub-section (3) or sub-section (4) of Section 52 of the repealed Act shall, if not filed before the commencement of this Act, be filed before the High Court within a period of sixty days of such commencement : Provided that the High Court may entertain such appeal after the expiry of the siad period of sixty days if it is satisfied that the appellant was prevented by sufficient cause from filing the appeal within the said period. (6) Save as otherwise provided in sub-section (3), the mention of particular matters in sub-sections (2), (4) and (5) shall not be held to prejudice or affect the general application of section 6 of the General Clauses Act, 1897 (10 of 1987), with regard to the effect of repeal.” 20. A bare perusal of the 1999 Act would make it apparent that the 1999 Act has been brought on the statute book by the legislature so as to deal with the developments which have taken place after the 1973 Act was enacted. The statement of objects and reasons sets out that the 1973 Act was repealed by the 1999 Act. Several amendments were made to the 1973 Act but even thereafter significant developments have taken place. There is substantial increase in the foreign exchange reserves, growth in foreign trade, rationalization of tariffs, current account convertibility, liberalization of Indian investments abroad, increased access to external commercial borrowings by * 13 * Indian Corporates and participation of foreign institutional investors in the stock markets in India. It is in these circumstances that the Parliament decided to repeal and replace the old Act with the 1999 Act. 21. The definitions are set out in Section 2 in Chapter-I. Chapter-II deals with Regulation and Management of Foreign Exchange. Chapter-III deals with Authorised Person, whereas, Chapter-IV provides for Contravention and Penalties. Chapter-V is entitled Adjudication and Appeal. Then comes Chapter-VI which is dealing with Directorate of Enforcement. Chapter-VII in which Section 49 falls is entitled `Miscellaneous .’ 22. A combined reading of all the Sections of 1999 Act would make it apparent that the intent was to replace the 1973 Act with the New Act. However, the legislature inserted Section 49 dealing with repeal and saving while repealing the old Act and dissolving, the appellate board by this provision, it is stated that notwithstanding anything contained in any other law for the time being in force, no court can take cognizance of offences under the repealed Act and no adjudicating officer would take notice of any contravention under Section 51 of the Repealed Act after the expiry of a period of 2 years from the date of commencement of the Act, that is, the 1999 Act. To my mind, the legislature was aware that both proceedings under the 1973 Act may have been initiated, instituted and pending. Therefore, when the old Act provides for adjudication and penalties, so also, * 14 * offences, then the intent is that both are saved. They are saved provided the court takes cognizance and the adjudicating officer takes notice of any contravention within the period specified therein. It is not disputed by the learned counsel appearing for the applicants that the 1973 Act provided for offences and penalties. It is not disputed that both criminal proceedings and adjudication proceedings could have been initiated and commenced under the old Act. Once they are commenced, then, naturally the intent is to save both. However, the legislature has taken care that the proceedings under the old Act cannot continue for ever after the Repeal thereof. The parties to the proceedings under the old Act should not be harassed and dragged into criminal and adjudication proceedings after its repeal and that too for an indefinite period. Therefore, with a view to balance the rights of such parties, so also, to save the proceedings from being completely barred, that the legislature stepped in. To the extent that there is non-obstante clause in Section 49(3), the provisions of the general law, namely, the General Clauses Act would not come into play. However, if sub-section 4 is perused, it is clear that the legislative intent is to permit continuation of proceedings under the old Act. If the court takes cognizance within 2 years from the date of commencement of the 1999 Act, then, such proceedings can continue. That is how, Section 49(4) of the 1999 Act reads. Therefore, if the various sub-sections of Section 49 are read together and harmoniously, it would be * 15 * apparent that even offences of which cognizance has been taken by a court, can be continued and trial thereof is not barred, provided, cognizance is taken within the statutory period. If such was not the intent, then, there would not have been another non-obstante clause in Section 49(5). Therefore, if the two non-obstante clauses and the saving in sub-sections 6 of Section 49 are read harmoniously, then, the intent is that the offences can be tried and taken cognizance of, so also, the adjudication proceedings can continue provided the time limit is adhered to. Any other interpretation would frustrate and defeat the legislative intent. 23. It is not possible to agree with the applicants that the word and “ ” should be read disjunctively and not conjunctively. To my mind, sub-section 3 must be read in its entirety and without omitting any words therein. It is well settled that even a sub-section and parts of any section must be read as a whole, so as to make a consistent enactment. It cannot be assumed that the legislature intended to end others and save only some proceedings as urged in the present case. The intention to discontinue and end one of the proceeding must be clearly spelt out. If the entire sub-section is read, it is apparent that both offences and adjudication proceedings can continue after the expiry of a period of 2 years provided the statutory limit for their cognizance and notice is adhered to. The outer limit is 2 years from the date of commencement of the 1999 Act. The word and only clarifies that “ ” * 16 * both offences and adjudication proceedings can continue. If the offences under the old Act continue, then, those can be proved only in a court of law, that is a criminal court. That court must be in a position to take cognizance of such offences. Therefore, the words no court should take cognizance of “ the offence under the Repealed Act have been inserted. Further, the ” adjudication proceedings are dealt with by adjudicating officer. A court takes cognizance whereas the adjudicating officer takes notice. There are offences carved out and made punishable by the 1973 Act. A contravention of the provisions of the old act and more particularly Section 51 which results in penalties and such penalties are inflicted and imposed in adjudication proceedings. Therefore the word and divides the proceedings for the “ ” purpose of complete enumeration and consistent enactment. The outer limit is provided for both. If such an interpretation is not placed on the provision in question, then, it would be rendered nugatory and the legislative object and purpose stands nullified. At all costs, an interpretation which produces such results must be avoided. When the language is plain and clear and the legislature has spoken in clearest terms, then, there there is no scope for any interpretation. 24. Once such conclusion is reached, then, to my mind, the courts below were in no error in rejecting the application for discharge and upholding the order issuing process. * 17 * 25. The decisions brought to my notice by the learned counsel for the applicants are clearly distinguishable. In Principles of Statutory “ Interpretation by Hon ble Mr. Justice G.P. Singh, 11 ” ’ th Edition 2008, page 455, the learned Author has succinctly set out the principles where the provisions have been construed either conjunctively or disjunctively. He refers to the decisions rendered by the Supreme Court of India and other courts out of India. The learned Author comments thus :- 7. Conjunctive and Disjunctive Words Or and And : “ “ ” “ ” . The word `or is normally disjunctive and `and is normally ’ ’ conjunctive but at times they are read as vice versa to give effect to the manifest intention of the Legislature as disclosed from the context. As stated by SCRUTTON, L.J.: You do sometimes read `or as `and “ ’ ’ in a statute. But you do not do it unless you are obliged because `or’ does not generally mean ``and and `and does not generally mean ’ ’ `or . And as pointed out by LORD HALSBURY the reading of `or as ’ ’ `and is not to be resorted