Case: S.K. Sinha, Chief Enforcement Officer Vs. Videocon International Ltd. &amp; Others

4. Respondent No.1-M/s. Videocon International Ltd.for short) is aincorporated under the Companies Act, 1956 having its business at Mumbai and Aurangabad in the State of Maharashtra. On October 13, 1989, the Company entered into an agreement with Radio Export (Moscow) for the supply of colour tubes, electrolytic capacitors, transformers, etc., for Rs.44,04,00,000/-. The payment was made by respondent No.1 Company to Japanese and Korean suppliers. But before any payment could be received by respondent No.1 from the USSR Company, there was political turmoil in the USSR and payment to foreign suppliers was disrupted. On January 5, 1993, Additional Director General, Directorate of Revenue Intelligence, Mumbai addressed a letter to the appellant alerting him about the activities of the Company in connection with the agreement to supply television sets to Radio Export, Moscow. Based on the information forwarded by the Directorate of Revenue Intelligence, Bombay, the appellant addressed two letters to the Chief Manager of Indian Bank, Nariman Point, Bombay requesting the Bank to supply details of the export outstanding of the Company. Indian Bank supplied necessary information and indicated that the export outstanding of the Company was Rs.16,60,00,000/-. The Reserve Bank of India turned down the request of the Company for reimbursement of differential amount remaining unpaid on the ground that the exports were effected from Korea and Japan and not from India and the Company was not entitled to reimbursement. In pursuance of the summons issued under Section 40 of the Foreign Exchange Regulation Act, 1973 (hereinafter referred to asOn May 24, 2002, the appellant-complainant in the capacity as Chief Enforcement Officer, Government of India, filed Criminal Complaint No. 1149/S/2002 against the Company alleging that the Company had received an amount of Rs.44,04,00,000/- through State Bank of India, Bombay but it failed to take steps to realize export proceeds amounting to Rs.16,60,00,000/- within the stipulated period of six months. It thereby contravened Section 18(2) and 18(3) read with Section 68(1), punishable under Section 56(1)(ii) of FERA. On the same day, i.e. on May 24, 2002, after hearing the learned counsel for the Department, the Chief Metropolitan Magistrate, Esplanade, Mumbai took cognizance of the offence and issued summons to the accused. On February 3, 2003, the Chief Metropolitan Magistrate issued process requiring the respondents to appear before the Court and answer the charge under FERA.6. In October, 2004, the respondents filed a petition being Criminal Writ Petition No. 476 of 2005 in the High Court of Judicature at Bombay by invoking Article 227 of the Constitution as also Section 482 of the Code of Criminal Procedure, 1973 (hereinafter referred to as) seeking quashing of criminal proceedings initiated vide complaint dated May 24, 2002 on the ground that cognizance was taken by the Court after the period of limitation and the proceedings were, therefore, liable to be quashed. The High Court, by the impugned order dated April 26, 2006, quashed the proceedings initiated against the respondents on the ground that cognizance could be said to have been taken when process was issued and since process was issued in February, 2003, the proceedings were time-barred. The complaint was, therefore, quashed by the High Court. The said order is challenged by the appellant in the present appeal.7. Notice was issued by this Court on September 29, 2006. The respondents appeared. Counter affidavit and rejoinder affidavit were then filed. The Registry was directed to place the matter for final hearing on a non-miscellaneous day and that is how the matter is placed before us.

Court's reasoning:
15. From the above scheme of the Code, in our judgment, it is clear thatdealt with in Chapter XIV, is different fromcovered by Chapter XVI. For commencement of proceedings, there must be initiation of proceedings. In other words, initiation of proceedings must precede commencement of proceedings. Without initiation of proceedings under Chapter XIV, there cannot be commencement of proceedings before a Magistrate under Chapter XVI. The High Court, in our considered view, was not right in equating initiation of proceedings under Chapter XIV with commencement of proceedings under Chapter XVI.In our opinion, it would not be necessary for us to express any opinion one way or the other on the larger question. We have already held in the earlier part of the judgment that in the case on hand, cognizance of an offence had already been taken by the Chief Metropolitan Magistrate, Mumbai on May 24, 2002, well within the period prescribed by sub-section (3) of Section 49 of FEMA within two years of coming into force of the Act from June 1, 2000. We, therefore, express no opinion on the question raised by the learned counsel for the respondent.30. As regards quashing of proceedings on merits, the learned counsel for the appellant is right in submitting that the High Court has not at all touched the merits of the case and proceedings were not quashed on the ground that the provisions of FERA do not apply to the case before the Court. The High Court dealt with only one point as to whether the proceedings were liable to be quashed on the ground that they were time-barred and upholding the contention of the accused, passed the impugned order. As we are of the view that the High Court was not right in quashing the proceedings on the ground of limitation, the order deserves to be set aside by remitting the matter to the Chief Metropolitan Magistrate, Mumbai to be decided in accordance with law. We may, however, clarify that it is open to the respondents to take all contentions including the contention as to applicability or otherwise of FERA to the facts of the case. As and when such question will be raised, the Court will pass an appropriate order in accordance with law.