VIJAY MALLYA versus ENFORCEMENT DIRECTORATE, MIN. OF FINANCE
[2015] 8 S.C.R. 709, Supreme Court of India, 2015
Outcome: Dismissed (Dismissed)
Segment: Ratio
[2015] 8 S.C.R. 709 
VIJAY MALLYA 
v. 
ENFORCEMENT DIRECTORATE, MIN. OF FINANCE 
(Criminal Appeal No.1406 Of 2009) 
JULY 13, 2015 
• c; 
[ J. CHELAMESWAR AND 
ADARSH KUMAR GOEL, JJ!j'' 
A 
B 
Foreign Exchange Regulation Act, tt973: s.40 -
C 
Summons - Failure of appellant to appear on issuance of 
summons - Complaint filed before Magistrate and after 
considering records framed charges against appellant u/s. 56 
-Application for quashing of proceedings before High Court 
by appellant on the ground that wilful default of.appellant o 
could not have been inferred and that there was non 
application of mind in the issuance of summons ;;is well as 
in framing of charges - High Court held that framing of 
composite charge could not be treated to have caused 
prejudice so as to vitiate the proceedings - On appeal, held: E 
Complaint is maintainable if there is default in complying 
with the orders of summons by accused - The approach 
adopted by appellant is sheer abuse of process of Jaw -
Exemplary cost of Rs. 10 lakhs imposed - Cost- Summons. 
Dismissing the appeal with exemplary cost of Rs. 
10 lakhs, the Court 
HELD: 1. A complaint is maintainable if there is default 
F 
in not carrying out summons lawfully issued. The G 
averments in the complaint showed that the summons 
dated 21 •1 December, 1999 were refused by the appellant 
and earlier summons were not carried out deliberately. 
709 
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710 
SUPREME COURT REPORTS 
(2015] 8 S.C.R. 
A As regards summons dated 81h November, 1999, the 
explanation was offered by the appellant by Letter dated 
22"d November, 1999. From the tenor of the.letter, it 
appears that it was not a case of mere seeking 
accommodation by the appellant but requiring date to 
B be fixed by his convenience. Such stand by a person 
facing allegation of serious nature could hardly be 
appreciated. Obviously, the enormous money power 
makes him believe that the State should adjust its affairs 
C to suit his commercial convenience. [Paras 11 to 13) 
[718-B-C; 719-E; 720-A-B] 
2. The impugned order is not interfered with for more 
than one reason. The fact that the adjudicating officer 
chose to drop the present proceedings against the 
D · appellant does not absolve the appellant of the criminal 
liability incurred by him by virtue of the operation of 
Section 40 read with Section 56 of the Act. The offence 
under Section 56 read with Section 40 of the Act is an 
independent offence. If the factual allegations contained 
E in the charge are to be proved eventually at the trial of 
the criminal case, the appellant is still liable for the 
punishment notwithstanding the fact that the presence 
of the appellant was required by the adjudicating officer 
F in connection with an enquiry into certain alleged 
violations of the various provisions of the Act, but at a 
subsequent stage the adjudicating officer opined that 
there was either insufficient
or no material to proceed 
against the appellant for the alleged violations of the Act, 
G is immaterial. Secondly, an appeal against the 
conclusion of the adjudicating officer that the 
proceedings against the appellant for the alleged 
violation of the various provisions of the FERA Act are 
required to be dropped has not even attained finality. 
H Admittedly, such an order of the adjudicating officer
VIJAY MALL YA v. ENFORCEMENT DIRECTORATE, MIN. 711 
. 
OF FINANCE 
confirmed by the statutory appellate authority is pending A 
consideration in an appeal before the High Court. 
Though the result of such an appeal is immaterial for 
determining the culpability of the appellant for the alleged 
violation of Section 40 read with Section 56, the 
submission made on behalf of the appellant in this regard . B 
itself is inherently untenable. The entire approach 
adopted by the appellant is a sheer abuse of the process 
of law. [Paras 14to16] [720-A-F; 721-D-G] '1i· 
Dy. ChiefControlleroflmport and Export vs. Roshan Lal C 
Agarwal 2003 (2) SCR 621 : 2003 (4) SCC 139 -
distinguished. 
• 
Enforcement Directorate vs. M. Samba Siva Rao 2000 
(1) Suppl. SCR 51 : 2000 (5) SCC 431 - relied on. 
D 
Case Law Reference 
2003 (2) SCR 621 
distinguished 
para 8 
2000 (1) Suppl. SCR 51 
relied on 
para 10 
E 
CRIMINALAPPELLATE JURISDICTION: Criminal Appeal 
No. 1406 of2009. 
From the Judgmen.t and Order dated 21.05.2007 in 
F 
Criminal Revision Petition No. 554 of 2001 of the High Court 
of Delhi at New Delhi. 
F.S. Nariman, Ajay Bhargava, Vanita Bhargava, Diwakar 
Maheshwari, Karun Mehta, Suveni (For Khaitan & Co.) for the 
Appellant. 
G 
K. Radhakrishnan, Rupesh Kumar, Surinder Kr. Gupta, 
B.V. Balaram Das for the Respondent. 
The Judgment of the Court was delivered by. 
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SUPREME COURT REPORTS 
(2015] 8 S.C.R. 
A 
ADARSH KUMAR GOEL, J. 1. This appeal has been 
B 
preferred against judgment and order dated 21•1 May, 2007 
of the High Court of Delhi at New Delhi in Criminal Revision 
Petition No.554 of 2001. 
2. Brief facts necessary for decision of this appeal are 
that the appellant was summoned by the Chief Enforcement 
Officer, Enforcement Directorate, under Section 40 of the 
Foreign Exchange Regulation Act, 1973 ("the Act") with his 
passport and correspondence relating to a transaction with · 
C Flavio Briatoreof Mis. Benetton Formula Ltd., London, to which 
the appellant, as Chairman of United Breweries Ltd., was a 
party. Allegation against the appellant was that he entered into 
an agreement dated 1•1 December, 1995 with the earlier 
mentioned English Company·for advertisement of 'Kingfisher' 
D brand name on racing cars during Formula-I World 
Championships for the years 1996, 1997 and 1998 pr9viding 
for fee payable. Requisite permission of the Reserve Bank of 
India was not taken which was.·in violation of provisions of 
Sections 47(1) & (2), 9(1)(c) and 8(1) of the Act. Approval 
E was later sought from Finance Ministry for payment on 191h 
June, 1996, which was rejected on 4th February, 1999. Since 
the appellant failed to appear in response to summons issued 
more than once, a complaint dated 81h March, 2000 under 
F Section 56 of the Act was filed before the Additional Chief 
Metropolitan Magistrate, New Delhi. The trial
court after 
considering the material on record summoned the appellant 
and framed charge against him under Section 56 of the Act. 
3. The appellant challenged the order of the Magistrate 
G dated 9th August, 2001 in above Criminal Complaint No.16/1 
of 2000 and also sought quashing of proceedings in the said 
complaint before the High Court by filing Criminal Revision 
Petition No.554 of 2001 on the ground that willful default of the 
H appellant could not have been inferred and that there was non-
application of mind in the issuance of summons as well as in
VIJAY MALL YA v. ENFORCEMENT DIRECTORATE, MIN. 713 
OF FINANCE [ADARSH KUMAR GOEL, J.) 
framing the charge which was in violation of procedure laid A 
down under Section 219 of the Criminal Procedure Code. The 
charge related to failure of the appellant to appear on four 
occasions, i.e., 27th September, 1999, SthNovember,1999, 
26th November, 1999 and 3rd January, 2000. In respect of first 
date, it was submitted that the trial court itself accepted that B 
the service of summons was after the time for appearance 
indicated in the summons. In respect of second and tl)ird 
dates, the appellant had responded and informed about his 
inability to appear and for the last date, summons was not as 
per procedure, i.e., by registered post. It was submitted C 
that composite charge was against Section 219 of the Criminal 
Procedure Code. 
4. The High Court rejected the contentions by holding that 
framing of composite charge could not be treated to have D 
caused prejudice so as to vitiate the proceedings. It was further · 
observed that default of the appellant in relation to sLimmons 
dated 15th September, 1999 for attendance on 27th September, 
1999 could not be taken into account and to that extent the 
charge was liable to be deleted but with regard to the defaults E 
in relation to summons dated 7th October, 1989, Bth November, 
2009 and 21•t December, 1999, the proceedings were not 
liable to be interfered with as the appellant could contest the 
matter before the trial court
itself in the first instance. 
5. We have heard Shri F.S. Nariman, learned senior 
counsel forthe appellant and Shri K. Radhakrishnan, learned 
senior counsel for the respondent. 
F 
6. When the matter came up for hearing before this Court G 
earlier, a statement was made on behalf of the appellant that 
the appellant expressed regret for not responding to the 
summons on which learned senior counsel for the respondent 
took time to ascertain whether the complaint could be 
withdrawn. Thereafter, it was stated that withdrawal of the H
714 
SUPREME COURT REPORTS 
(2015] 8 S.C.R. 
A 
complaint may have impact on other matters and for that reason 
withdrawal was not possible. However, the question whether 
the non compliance was deliberate was required to be 
examined. Learned senior counsel for the appellant submitted 
that the default was not deliberate, intentional or willful which 
B may be punishable under Section 56 of the Act and the 
appellant had sent reply and sought a fresh date on two 
occasions. 
7. It was further submitted that subsequent events which 
C were not gone into by the High Court may also be seen. The 
complaint was filed on 81h March, 2000. During pendency of 
the complaint, the Act (FERA) was repealed on 1" June, 2000. 
Still, show cause notice dated 13th March, 2001 was issued to 
which reply was given and the adjudicating officer vide order 
D dated 1 Oth January, 2002 dropped the proceedings on merits. 
E 
The Appellate Board dismissed the Revision Petition filed by 
the Department on 16th March, 2004. Against the said order, 
Criminal Appeal No.515 of 2004 was pending in the High 
Court. 
8 .. It was submitted that having regard to repeal of the Act 
and exoneration of the appellant by the departmental 
authorities (even though an appeal was pending in the High 
Court), this Court in the circumstances of the case ought to 
F quash proceedings, following law laid down in Dy. Chief 
Control/er of Import and Export vs. Roshan Lal Agarwa/1 
as follows: 
"13. In view of the findings
recorded by us, the learned 
G 
Magistrate has to proceed with the trial of the accused-
respondents. Shri Ashok Desai, learned Senior 
Counsel has, however, submitted that the Imports and 
Exports (Control) Act, 1947 has since been repealed 
H ' (2003) 4 sec 139
VIJAY MALL YA v. ENFORCEMENT DIRECTORATE, MIN. 715 
OF FINANCE [ADARSH KUMAR GOEL, J.] 
and in the departmental proce_edings taken under the A 
aforesaid Act, the Centra_I Government has passed 
orders in favour of the respondents and, therefore, their 
trial before the criminal court at this stage would be an 
exercise in futility. He has placed before us copies of 
the orders passed by the Additional Director General B 
of .Foreign Trade on 16-8-1993 and also by the 
Appellate Committee Cell, Ministry of Commerce, 
Govemmentoflndia on 13-3-1997 by which the appeals 
preferred by the respondents were allowed by the 
Appellate Committee and the accused-respondents C 
were exonerated. Having regard to the material existing 
against the respondents and the reasons and findings 
given in the aforesaid orders, we are of the opinion that 
no useful purpose would be served by the trial of the 
accused-respondents in the criminal court at this stage. 
D 
The proceedings of the criminal cases instituted against 
the accused-respondents on the basis of the complaints 
filed by the Deputy Chief Controller of Imports and 
Exports are, therefore, quashed". 
· 
E 
Alternatively, explanation of the appellant for non 
appearance may be looked into on merits instead of the same 
being left to the trial court. 
1..:.h .... 
9. Before we consider the submissions made, the F 
provisions of Section 40 and 56 of the Act may be noticed 
which are as follows : 
"Section 40 - Power to summon
persons to give 
evidence and produce documents 
G 
(1) Any Gazetted Officer of Enforcement shall have 
power to summon any person whose attendance he 
considers necessary either to give evidence or to 
produce a document during the course of any H
716 
A 
B 
c 
D 
E 
F 
SUPREME COURT REPORTS 
[2015] 8 S.C.R. 
investigation or proceeding under this Act. 
(2) A summon to produce documents may be for the 
production of certain specified documents or for the 
production of all documents of a certain description in 
the possession or under the control of the person 
summoned. 
(3) All persons so summoned shall be bound to attend 
either in person or by authorised agents, as such officer 
may direct; and all persons so summoned shall be 
bound to state the truth upon any subject respecting 
which they are examined or make statements and 
produce such documents as may be required: 
Provided that the exemption under section 132 of the 
Code of Civil Procedure, 1908 (5of1908) shall be 
applicable to any requisition for attendance under this 
section. 
(4) Every such investigation or proceeding as aforesaid 
shall be deemed to be a judicial proceeding within 
the meaning of sections 193 and 228 of the Indian 
Penal Code, 1860(45of1860). 
Section 56 - Offences and prosecutions 
(1)Without prejudice to any award of penalty by the 
adjudicating officer under this Act, if any person 
contravenes any of the provisions of this Act [other than 
Section 13, Clause (a) of sub-section(1) of (Section 18, 
G 
Section 18A), clause (a) of sub-section (1) of Section 
19, sub-section(2) of Section 44 and Section 57 and 
58] or of any rule, direction or order made thereunder, 
he shall, upon conviction by a court, be punishable 
H 
(ij in the
case of an offence the amount or value involved
VIJAY MALL YA v. ENFORCEMENT DIRECTORATE, MIN. 717 
OF FINANCE [ADARSH KUMAR GOEL, J.) 
in which exceeds one lakh of rupees with imprisonment A 
for a term which shall not be less than six months, but 
which may extend to severi years and with fine; Provided 
that the Court may, for any adequate and special 
reasons to be mentioned in the judgment, impose a 
sentence of imprisonment for a term of less than six B 
months; 
(ii) in any other case, with imprisonment for a term which 
may extend to three years or with.fine or with both." 
.c 
10. In Enforcement Directorate vs. M. Samba Siva 
Raol, it was observed : 
"3. xxxxxxxx 
The Foreign Exchange Regulation Act, 1973 was D 
enacted by Parliament, basically for the conservation 
of the foreign exchange resources of the country and 
the proper utilisation thereof in the interest of economic 
development of the country. The Act having been 
enacted in the interest of national economy, the E 
provisions thereof should be construed so as to make 
it workable and the interpretation given should be 
purposive arid the provisions should receive a fair 
construction without doing any violence to the language F 
employed by the legislature. The provisions of Section 
40 itself, which confers power on the officer of the 
Enforcement Directorate, to summon any person whose 
attendance he considers necessary during the course 
of anyinvestigation, makes it binding as provided under G 
sub-section (3) of Section 40, and the investigation
or 
the proceeding in the course of which such summons 
are i.ssued have been deemed to be a judicial 
2 (2000) 5 sec 431 
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718 
SUPREME COURT REPORTS 
[2015] 8 S.C.R. 
A 
proceeding by virtue of sub-section (4) of Section 40. 
B 
These principles should be borne in mind, while 
interpreting the provisions of Section 40 and its effect, 
if a person violates or disobeys the directions issued 
under Section 40." 
11. The above observations clearly show that a complaint 
is maintainable if there is default in not carrying out summons 
lawfully issued. The averments in the complaint show that the 
summons dated 21•i December, 1999 were refused by the 
C . appellant and earlier summons were not carried out 
deliberately. The averments in paras 3 and 4 of the complaint 
are as follows : 
"3. That the complainant issued a summons dated 
o 
21.12.1999 under Section 40 of FERA, 1973 in 
connection with the impending investigations for the 
appearance of the accused on 3. 1. 2000 but the same 
have been returned back by the postal authorities with 
the remarks "refused". 
E 
F 
G 
H 
It is submitted that the accused has deliberately 
avoided his appearance before the Investigating Officer 
and on account of his non co-operative attitude the 
investigation has come to a standstill. 
4. It is respectfully submitted that the accused has been 
intentionally avoiding his appearance before the 
Enforcement Directorate knowing fully well that non 
compliance of the directions made under Section 40 
of the Act renders the person liable for prosecution in a 
Court of/aw under Section 56 of the Act which is a non-
bailable offence. It is further submitted that by virtue of 
Section 40(3) of the Act, the accused was bound to 
appear before the Officers of the Enforcement 
Directorate in the best interest of investigation. Section
VIJAY MALLYA v. ENFORCEMENT DIRECTORATE, MIN. 719 
OF FINANCE [ADARSH KUMAR GOEL, J.] 
40(3) is reproduced below for kind perusal and ready A 
reference to this Hon'ble Court: 
"Section 40(3) : 
· (3) All persons so summoned shall be bound to attend 8 
either in person or by authorised agents, as such officer 
may direct; and all persons so summoned shall be 
bound to state the truth upon any subject respecting 
which they are examined or make statements and 
produce such documents as may be required." 
c 
It is respectfully submitted that non compliance of any 
rule, directions or law is punishable under Section 56 
of the Act. The accused willfully failed to appear before 
the Enforcement Directorate at the given venue, time 0 
and dates mentioned in the respective summons and 
has thus, .contravened the provisions of Section 56 of 
the Act." 
12. As regards summons dated .81h November, 1999, 
learned senior counsel for the appellant has referred to the E 
explanation offered by the appellant. Letter dated 22°d 
November, 1999 is as follows : 
''.As you will appreciate, I am the Chairman of several 
public Companies both in India as well as in the USA F 
and, therefore, my schedule is finalized several months 
in advance. During the fiscal year end period, the 
problem only gets compounded. 
I would, therefore, request you to excuse me from the G 
personal appearance on November 26, 1999 as I will 
be out of India. 
I am willing to fix a mutually convenient date to appear
before you." 
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SUPREMECOURTREPORTS 
(2015] 8 S.C.R. 
A 
13. From the tenor of the letter, it appears that it was not a 
case of mere seeking accommodation by the appellant but 
requiring date to be fixed by his convenience. Such stand by 
a person facing allegation of serious nature could hardly be 
appreciated. Obviously, the enormous money power makes 
B him believe that the state should adjust its affairs to suit his 
commercial convenience. 
14. In our opinion, the appeal is required to be dismissed 
for more than one reason. The fact that the adjudicating officer 
C chose to drop the proceedings against the appellant herein 
does not absolve the appellant of the criminal liability incurred 
by him by virtue of the operation of Section 40 read with Section 
56 of the Act. The offence under Section 56 read with Section 
40 of theAct is an independent offence . .If the factual allegations 
D contained in the charge are to be proved eventually at the trial 
of the criminal case, the appellant is still liable for the 
punishment notwithstanding the fact that the presence of the 
appellant was required by the adjudicating officer in connection 
with an enquiry into certain alleged violations of the various 
E provisions of the Act, but at a subsequent stage the 
adjudicating officer opined that there was either insufficient or 
no material to proceed against the appellant for the alleged 
violations of the Act, is immaterial. The observations made by 
F this Court in Roshanla/ Agarwal
(supra), in our opinion, must 
be confined to the facts of that case because this Court 
recorded such a conclusion "having regard to the material 
·existing against the respondent and the reasons and findings 
given in the aforesaid orders ..... ". The said case cannot be 
G read as laying down a general statement of law that the 
prosecution of the accused, who is alleged to be guilty of an 
offence of not responding to the summons issued by a lawful 
authority for the purpose of either an inquiry or investigation 
into another substantive offence, would not be justified. 
H Exonerating such an accused, who successfully evades the
· VIJAY MALL YA v. ENFORCEMENT DIRECTORATE, MIN. 721 
OF FINANCE [ADARSH KUMAR GOEL, J.] 
process of law and thereby commits an independent offence A 
on the grouRd that he is found to be not guilty of the substantive 
offence would be destructive of law and order, apart from being 
against public interest. Such an exposition of law would only 
encourage unscrupulous elements in the society to defy the 
authority conferred upon the public servants to enforce the law B 
with impunity. It is also possible, in certain cases that the time 
gained by such evasive tactics adopted by a person 
summoned itself would result in the destruction of the material 
which might otherwise constitute valuable evidence for 
establishing the commission of a substantive offence by such C 
a recalcitrant accused. 
15. Secondly, an appeal against the conclusion of the 
adjudicating officer that the proceedings against the appellant 
herein for the alleged violation of the various provisions of the D 
FERAAct are required to be dropped has not even attained 
finality. Admittedly, such an order of the adjudicating officer 
confirmed by the statutory app.ellate authority is pending 
consideration in an appeal before the High Court. Though, in 
our opinion, the result of such an appeal is immaterial for E 
determining the culpability of the appellant for the alleged 
violation of Section 40 read with Section 56, we must record 
that the submission made on behalf of the appellant in this 
regard itself
is inherently untenable. 
F 
16. For all the abovementioned reasons, we do not see 
any merit in the appeal. We are also of the opinion that the 
entire approach adopted by the appellant is a sheer abuse cif 
the process of law. Any other view of the matter would only go 
to once again establishing the notorious truth stated by Anatole G 
France that- "the law in its majestic equality, forbids the rich 
as well as the poor to sleep under bridges, to beg in the streets 
and to steal bread". 
17. The appeal is dismissed with exemplary costs 
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[2015) 8 S.C.R. 
A 
quantified at rupees ten lakhs to be paid to the Supreme Court 
Legal Service Authority. 
Devika Gujral 
Appeal dismissed.