Case: Vijay Mallya Vs. Enforcement Directorate,Min.Of Finance

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) with his passport and correspondence relating to a transaction with Flavio Briatore of M/s. 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 1st December, 1995 with the earlier mentioned English Company for advertisement ofbrand name on racing cars during Formula-I World Championships for the years 1996, 1997 and 1998 providing 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 was later sought from Finance Ministry for payment on 19th 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 8th March, 2000 under 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 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 appellant could not have been inferred and that there was non-application of mind in the issuance of summons as well as in framing the charge which was in violation of procedure laid 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, 8th November,1999, 26th November, 1999 and 3rd January, 2000. In respect of first date, it was submitted that the trial court itself accepted that the service of summons was after the time for appearance indicated in the summons. In respect of second and third 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 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 caused prejudice so as to vitiate the proceedings. It was further observed that default of the appellant in relation to summons 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 in relation to summons dated 7th October, 1989, 8th November, 2009 and 21st 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.

Court's reasoning:
14. In our opinion, the appeal is required to be dismissed for more than one reason. The fact that the adjudicating officer 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 the Act is an independent offence. If the factual allegations 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 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 this Court in Roshanlal Agarwal (supra), in our opinion, must be confined to the facts of that case because this Court recorded such a conclusionregard to the material existing against the respondent and the reasons and findings given in the aforesaid orders…..The said case cannot be 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. Exonerating such an accused, who successfully evades the process of law and thereby commits an independent offence on the ground 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 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 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 FERA Act are required to be dropped has not even attained finality. Admittedly, such an order of the adjudicating officer confirmed by the statutory appellate authority is pending consideration in an appeal before the High Court. Though, in our opinion, 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, we must record that the submission made on behalf of the appellant in this regard itself is inherently untenable.