Case: M/s. Videocon Industries Ltd. &amp; Another Vs. State of Maharashtra &amp; Others

is as follows:- "However, in a case like the present one in which the penalty proceeding under Section 51 of the Act and the prosecution under Section 56 of the Act though launched together but the penalty proceeding culminated earlier exonerating the person, the question would arise as to whether continuance of the prosecution would be permissible or not. In other words, the question with which we are concerned is the impact of the findings which are recorded on the culmination of adjudication proceedings on criminal proceeding and in case in the adjudication proceedings the person concerned is exonerated can he ask for dropping of the criminal proceeding on that ground alone". 17. Thereafter, it has referred to various authorities, namely, Collector of Customs v. L.R. Melwani, AIR 1970 SC 962 B.N. Kashyap v. Emperor, AIR 1945 Lah 23 K.G. Premshankar v. Inspector of Police, 2002(4) R.C.R.(Criminal) 596 : (2002) 8 SCC 87 Iqbal Singh Marwah v. Meenakshi Marwah, 2005(2) R.C.R.(Criminal) 178 : (2005) 4 SCC 370 Uttam Chand v. ITO, (1982) 2 SCC 543 G.L. Didwana v. ITO, (1995) Supp (2) SCC 724 and K.C. Builders v. CIT, (2004) 2 SCC 731 and eventually ruled that:- "We find substance in the submission of Mr Sharan. There may appear to be some conflict between the views in Standard Chartered Bank (1) and L.R. Melwani holding that adjudication proceedings and criminal proceeding are two in- dependent proceedings and both can go on simultaneously and finding in the adjudication proceedings is not binding on the criminal proceeding and the judgments of this Court in Uttam Chand, G.L. Didwania and K.C. Builders wherein this Court had taken a view that when there is categorical finding in the adjudication proceedings exonerating the person which is binding and conclusive, the prosecution cannot be allowed to stand. The judgments of this Court are not to be read as a statute and when viewed from that angle there does not seem any conflict between the two sets of decisions. It will not make any difference on principle that latter judgments pertain to cases under the Income Tax Act". 18. In the ultimate eventuate, the following principles were culled out from the decisions referred to in the judgment. The majority has put it thus:- "The ratio which can be culled out from these decisions can broadly be stated as follows: (i) Adjudication proceedings and criminal prosecution can be launched simultaneously; (ii) Decision in adjudication proceedings is not necessary before initiating criminal prosecution; (iii) Adjudication proceedings and criminal proceedings are independent in nature to each other; (iv) The finding against the person facing prosecution in the adjudication proceedings is not binding on the proceeding for criminal prosecution; (v) Adjudication proceedings by the Enforcement Directorate is not prosecution by a competent court of law to attract the provisions of Article 20(2) of the Constitution or Section 300 of the Code of Criminal Procedure; (vi) The finding in the adjudication proceedings in favour of the person facing trial for identical violation will depend upon the nature of finding. If the exoneration in adjudication proceedings is on technical ground and not on merit, prosecution may continue; and (vii) In case of exoneration, however, on merits where the allegation is found to be not sustainable at all and the person held innocent, criminal prosecution on the same set of facts and circumstances cannot be allowed to continue, the underlying principle being the higher standard of proof in criminal cases". 19. Clarifying the position, the majority observed that the yardstick would be to judge as to whether the allegation in the adjudication proceedings as well as the proceeding for prosecution is identical and the exoneration of the person concerned in the adjudication proceedings is on merits. In case it is found on merit that there is no contravention of the provisions of the Act in the adjudication proceedings, the trial of the person concerned shall be an abuse of the process of the court. On the basis of the aforesaid principles, the majority proceeded to analyse the factual matrix and analysed the finding recorded by the adjudicating authority and opined when there is a finding by the Enforcement Directorate in the adjudication proceeding that there is no contravention of any of the provisions of the Act, it would be unjust and an abuse of the process of the court to permit the Enforcement Directorate to continue with the criminal prosecution.20. We respectfully concur with the said view and do not perceive any reason to disagree with the same and refer the pronouncement inRadheshyam Kejriwal (supra) for reconsideration by the larger Bench.21. Coming to the facts of the case, we find that the tribunal has arrived at a conclusion that the appellant cannot be held guilty for Section 18(2) read with Section 18(3) of FER Act, 1973 and the advise of the Reserve Bank of India given in its letters dated 21.1.1992 and 18.2.1994 deserve to be accepted as they are totally in consonance with legal provisions. The High Court, without an assail to the order passed by the tribunal, has adverted to the same and opined that it does not subscribe to the view expressed by the tribunal that Section 18(2) and 18(3) of the Act were not applicable to the transaction in question. The High Court could not have done that. We may note with profit that the High Court after stating that has reproduced paragraph 38 and (vi) and opined that the findings given by the tribunal are based on technical grounds and, therefore, the prosecution is liable to continue. As we perceive, the judgment of the tribunal is on merits, inasmuch as findings have been recorded after analysis of facts and the conclusion has been arrived at that the appellants have not violated the provisions of the Act. In such a situation, it cannot be said that it is a judgment rendered on technical grounds and, therefore, we are compelled to hold that the High Court has totally erred in law.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]14. It is obligatory to note at the outset that the findings recorded and the conclusions arrived at by the tribunal are founded on analysis of statutory provisions, the applicability of the letters issued by the Reserve Bank of India and the nature of transaction carried out between the parties. It is beyond any stretch of doubt that the decision rendered by the tribunal is on merits. It is not an adjudication on any technical foundation. The decision on merits was allowed to rest by the revenue. The learned Magistrate, as has been stated earlier, relying upon the decision in Radheshyam Kejriwal (supra) discharged the accused person. The learned Additional Sessions Judge, as is evident, followed the view expressed in the dissenting opinion. The High Court has noted the same and has not really adverted to the said facet. At this juncture it is necessary to state that the revisional court should have followed the view expressed by the majority and not the minority. The approach is absolutely erroneous. Be that as it may, as the order passed by the High Court would show, it has referred to the principles culled out in Radheshyam Kejriwal (supra) and thereafter had proceeded, as has been indicated earlier, to record its opinion about the transaction on which the tribunal has rendered its verdict.Clarifying the position, the majority observed that the yardstick would be to judge as to whether the allegation in the adjudication proceedings as well as the proceeding for prosecution is identical and the exoneration of the person concerned in the adjudication proceedings is on merits. In case it is found on merit that there is no contravention of the provisions of the Act in the adjudication proceedings, the trial of the person concerned shall be an abuse of the process of the court. On the basis of the aforesaid principles, the majority proceeded to analyse the factual matrix and analysed the finding recorded by the adjudicating authority and opined when there is a finding by the Enforcement Directorate in the adjudication proceeding that there is no contravention of any of the provisions of the Act, it would be unjust and an abuse of the process of the court to permit the Enforcement Directorate to continue with the criminal prosecution.20. We respectfully concur with the said view and do not perceive any reason to disagree with the same and refer the pronouncement inRadheshyam Kejriwal (supra) for reconsideration by the larger Bench.21. Coming to the facts of the case, we find that the tribunal has arrived at a conclusion that the appellant cannot be held guilty for Section 18(2) read with Section 18(3) of FER Act, 1973 and the advise of the Reserve Bank of India given in its letters dated 21.1.1992 and 18.2.1994 deserve to be accepted as they are totally in consonance with legal provisions. The High Court, without an assail to the order passed by the tribunal, has adverted to the same and opined that it does not subscribe to the view expressed by the tribunal that Section 18(2) and 18(3) of the Act were not applicable to the transaction in question. The High Court could not have done that. We may note with profit that the High Court after stating that has reproduced paragraph 38 and (vi) and opined that the findings given by the tribunal are based on technical grounds and, therefore, the prosecution is liable to continue. As we perceive, the judgment of the tribunal is on merits, inasmuch as findings have been recorded after analysis of facts and the conclusion has been arrived at that the appellants have not violated the provisions of the Act. In such a situation, it cannot be said that it is a judgment rendered on technical grounds and, therefore, we are compelled to hold that the High Court has totally erred in law.