Radheshyam Kejriwal vs State Of West Bengal & Anr

2. Shorn of unnecessary details facts giving rise to the present appeal are that on 22nd May, 1992 various premises in occupation of the appellant Radheshyam Kejriwal besides other persons were searched by the officers of the Enforcement Directorate. The appellant was arrested on 3rd May, 1992 by the officers of the Enforcement Directorate in exercise of the power under Section 35 of the Foreign Exchange Regulation 2 Act, 1973 (hereinafter referred to as the `Act') and enlarged on bail on the same day. Further the appellant was summoned by the officers of the Enforcement Directorate to give evidence in exercise of the power under Section 40 of the Act and in the light thereof his statement was recorded on various dates, viz.

22nd May, 1992, 10th March, 1993, 16th March, 1993, 17th March, 1993 and 22nd March, 1993. On the basis of materials collected during search and from the statement of the appellant it appeared to the Enforcement Directorate that the appellant, a person resident in India, without any general or specific exemption from Reserve Bank of India made payments amounting to Rs.24,75,000/- to one Piyush Kumar Barodia in March/April, 1992 as consideration for or in association with the receipt of payment of U.S. $ 75,000 at the rate of Rs.33/-

After considering the submissions of both sides, Special Director passed an order dated 18.11.1996 holding that the Enforcement Directorate had failed to make out a prima facie case in support of charges of violation of Sections 8(2) and 9(1)(f)(i) of the FERA and directed that the aforementioned Departmental proceedings be dropped. It is relevant to point out that in the meantime i.e. on 26.07.1995, the respondents filed a complaint against the appellant in the Court of Chief Metropolitan Magistrate, Calcutta on the same cause of action which was taken cognizance by the Magistrate. According to the appellant, inasmuch as the same issues having already been adjudicated by the authority concerned, the Magistrate ought to have dropped the complaint and the continuation of the proceedings would result in abuse of the process of the 4 Court. Aggrieved by the order of the Magistrate in not dropping the proceedings and continuing the same, the appellant preferred revision before the High Court being CRR No. 3593 of 1997. By the impugned order, the High Court accepting the stand of the Department refused to quash the criminal proceedings and dismissed the revision.

There was another firm, M/s Young India and Transport Company in which the minor children of the appellant and his two employees were partners. In the assessment proceeding, the assessing authority reached the conclusion that it was not a genuine firm and the instrument of partnership was invalid and inoperative. Therefore, the proceedings under Sections 147 and 148 of the Income Tax Act were initiated against the appellant and his assessment was reopened. In pursuance of the notice under Section 148, the appellant filed his return showing his income as Rs. 29,500/-. By an order dated 17.03.1969, the Income Tax Officer assessed the income of the appellant as Rs. 52,634/- and this figure was arrived at by adding the income of M/s Young India and Transport Company and for the same assessment year as though it was the income of the appellant. The appellant made a statement in the verification to the return filed on 02.12.1971 and delivered an account/statement which according to the 4 assessing authority was false or the assessee knew or believed to be false. On the basis of this assessment, the prosecution was launched and the complaint by the authorised authority was filed on 09.09.1977. Meanwhile, the appellant-assessee filed an appeal before the Income Tax Appellate Tribunal and the Tribunal by its order dated 24.02.1977 allowed the appeal and held that there was no substantial material to hold that the appellant was the owner of the entire business. The Appellate Tribunal also observed that the assessing authority arrived at wrong conclusion from the facts on record and held that the business run in the name of M/s Young India and Transport Company belonged to the assessee and accordingly the appellate authority deleted the addition of Rs. 23,134/-

After the close of the enquiry those goods were ordered to be confiscated. In addition, penalty was imposed on some of the accused. Thereafter, on February 19, 1965, the Assistant Collector of Customs, Bombay after obtaining the required sanction of the Government filed a complaint against five persons including the appellants in Criminal Appeal No. 35 of 1967 (accused Nos. 1 and 2 in the case) under Section 120-B, I.P.C. read with Clauses (37), (75), (76) and (81) of Section 167 of the Sea Customs Act, 1878 (Act VIII of 1878) as well as under Section 5 of the Imports and Exports (Control) Act, 1947. Before the commencement of the enquiry in that complaint, the 1st accused filed the application mentioned above on August 3, 1965. In the enquiry held by the Collector of Customs, he gave the benefit of doubt to accused Nos. 1 and 2. This is what he stated therein:

24. In the result the appeal is allowed, the impugned judgment of the learned Metropolitan Magistrate and the order affirming the same by the High Court are set aside and appellant's prosecution is quashed.

On 27.03.1997, the appellant filed an application before the Metropolitan Magistrate, Calcutta for dropping the proceedings. Vide order dated 02.09.1997, the Metropolitan Magistrate rejected the said application and held that there is no bar to proceed with the criminal case as the proceeding before the FERA Board is separate.

from the total income of the assessee. After the Appellate Tribunal passed the order, allowing the appeal in favour of the appellant, the assessee filed a petition before the Magistrate to drop the criminal proceedings. The Magistrate by his order dated 02.09.1979 dismissed the said application and held that the prosecution has got a right to lead evidence in support of his complaint and the court can come to the conclusion 4 whether or not any criminal offence is made out. The Magistrate also observed that the order of the Tribunal can be taken only as evidence. Aggrieved by the same, the appellant-

The ratio laid down in the decision is that in view of conclusion of the Income Tax Appellate Tribunal, the Department is not permitted to continue the criminal proceeding which was pending before the Magistrate and the finding of the Appellate Tribunal is a conclusive one. Based on such conclusion, this Court quashed the criminal proceeding and allowed the appeal of the assessee.

Being aggrieved, the appellant-Bank and its officers as well as the Union of India have filed Civil Appeals before this Court.

34. In the present case, after remand by the High Court, civil proceedings as well as criminal proceedings are required to be decided on the evidence, which may be brought on record by the parties."

24) In view of the above analysis and discussion, I agree with the conclusion arrived at by the Metropolitan Magistrate, Calcutta as well as the decision of the High Court.

Consequently, the appeal fails and the same is dismissed.

...........................................J. (P. SATHASIVAM) NEW DELHI;

FEBRUARY 18, 2011.