Prakash Kumar Sahai vs Union of India (UOI)

R.S. Garg, J.—Heard learned Counsel for the parties.

By this petition u/s 482 Code of Criminal Procedure the Petitioner seeks quashing of the prosecution case initiated on a complaint filed by the Assistant Director, Enforcement Directorate, (FERA), Govt. of India.

For proper appreciation of the case it is to be seen that the prosecution allegations in short are that the Petitioner had gone to Australia with an amount of 2000 U.S. dollars with his uncle, who was to go for a renal operation. According to the allegations, during the said period the Petitioner purchased five Omega watches after taking some loan from his uncle Dr. S.B. Sinha and did not declare the said articles. The value of the said watches was 3297.90 Australian dollars. The prosecution says that during the course of the investigation the accused made a confessional statement and as he has committed breach of Section 8(1) of the Foreign Exchange Regulation Act, he was liable to be prosecuted and convicted.

The accused, inter alia, submitted in his original application for quashing that there was no allegations against him, alleged confession was retracted and that the said confession was made under the coercion and pressure of the officers and under the compelling reasons because the accused-applicant had to go to attend the cremation. Along with the Supplementary Affidavit the order dated 7.12.2001 passed by the Special Director of Enforcement, Enforcement Directorate Govt. of India, New Delhi has also been pressed into service to contend the after making a detailed enquiry the concerned Spl. Director has recorded a positive finding that the Department/Prosecution has failed in proving violation of Section 8(1) of the FERA, 1973.

It is contended before me that the Spl. Director could record a finding against the present applicant on the basis of preponderance of probabilities and if he could not find any sufficient material against the accused even on the probabilities, the prosecution has no chances to secure conviction of the applicant before a Criminal Court as a Criminal Court would require the evidence beyond shadow of doubt. It is further contended that in absence of material to connect the applicant and in view of the findings recorded by the Spl. Director, the prosecution deserves to be quashed.

The Respondent has filed his counter affidavit, inter alia, submitting that the Magistrate was not unjustified in taking cognizance of the matter. It is submitted in the counter that the accused made a confessional statement u/s 40 of the FERA and as the accused is entitled to submit his entire defence before the learned Magistrate u/s 245 of the Code of Criminal Procedure and as at this stage a Judge taking cognizance simply has to see the probabilities and has not to look into the positivity of conviction, the order passed by the learned Magistrate is absolutely justified.

The law in relation to quashing is well settled. The Supreme Court in catena of authorities has said that the Courts while appreciating the charges u/s 482 have not to have a meticulous approach. The requirement at this stage is of a prima facie case and not of a positive approach that the prosecution ultimately would be successful in securing the conviction. The Supreme Court has further observed in number of cases that if there are no chances at all of securing a conviction and the accused is in a position to give a dent to the reliability of the prosecution case at the threshold, the Court would be justified in quashing the prosecution.

Learned Counsel for the Department has placed its strong reliance on the judgment of the Supreme Court in the matter of State of Maharashtra, Etc. Etc. Vs. Som Nath Thapa, Etc. Etc., to contend that better and clear conception of law would be that if there is a ground for presuming that the accused has committed the offence, a Court can justifiably say that a prima facie case against him exists, and so, frame a charge against him for committing that offence.

There can be no dispute about the said proposition of law. I have already observed that while taking cognizance of framing charges the Court only has to take into consideration that whether the allegations may lead to a conviction. The Court has not to see that the allegations in all probabilities would lead to a conviction.

In the matter of Madhao Rao v. Sambhaji Rao AIR 1998 SC 709 the Supreme Court has observed that the Court cannot be utilised for any oblique purpose and where, in the opinion of the Court, chances of an ultimate conviction are bleak and, therefore, no useful purpose is likely to be served by allowing a criminal prosecution to continue, the Court may while taking into consideration the said facts and case also quash the proceedings even though it may be at preliminary stage.

Section 8(1) of the Foreign Exchange Regulation Act (FERA) says that except with the previous general or special permission of the Reserve Bank, no person other than an authorized dealer shall in India, and no person resident in India other than an authorized dealer shall outside India purchase or otherwise acquire or borrow from, or sell, or otherwise transfer or lend to or exchange with, any person not being an authorized dealer, any foreign exchange provided that nothing in Sub-section (1) of Section 8 shall apply to any purchase or sell of foreign currency effected in India between any person and a money-changer. The Explanation appended to Sub-section (1) of Section 8 says that for the purpose of the said Sub-section, a person, who deposits foreign exchange with another person or opens an account in foreign exchange with another person, shall be deemed to lend foreign exchange to such other person.

From the very language of Sub-section (1) of Section 8 it would clearly appear that an authorized dealer in India is obliged and alone can deal in exchange of the currency. According to Sub-section (1) of Section 8, no person outside India can deal in the foreign exchange. None can purchase or otherwise acquire or borrow from any unauthorized person nor such an unauthorized person, who is an Indian but at the material time is stationed in any foreign country shall sell or otherwise transfer or lend or exchange with any person not being an authorized dealer.

The prosecution in brief is that Dr. S.B. Sinha lent certain amount to the present applicant and the present applicant borrowed the money from an unauthorized dealer, that is, Dr. S.B. Sinha for purchasing five Omega watches. The prosecution case in brief or in nutshell is that while taking the money on loan from Dr. S.B. Sinha, the accused committed an offence punishable u/s 8(1) of the Act.

Section 40 of the Act provides that the Gazetted Officer of the 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 investigation or proceeding under the Act. According to Sub-section (3) of Section 40 a person so summoned shall be bound to attend either in person or by authorized agents. However, such investigation made u/s 40 of the Act or the proceedings drawn, as aforesaid provided u/s 40, shall be deemed to be a judicial proceeding within the meaning of Sections 193 and 228 of the Indian Penal Code. Placing reliance upon Sub-section (4) of Section 40 of the Act learned Counsel for the Department has submitted that such proceedings are judicial proceedings, the statements recorded by the Gazetted Officer of Enforcement would assume importance and cannot be ignored at this stage.

A perusal of Section 193 of the Indian Penal Code would make it clear that a person during the course of a judicial enquiry shall not give any false evidence and if he gives any false evidence then he would be liable to be punished. Section 228 of the Indian Penal Code provides that intentional insult or interruption to public servant while sitting in judicial proceedings shall be an offence. A juxtapose reading of Section 193 with Section 228 and Sub-section (4) of Section 40 of the Foreign Exchange Regulation Act would make it clear that it compels a person summoned to speak the truth before the said Officer and not to offer any insult or cause any hindrance. Such proceedings are deemed to be judicial proceedings to compel a man to give the correct statement but such statement do not become the gospel truth. A confessional statement can always be retracted and if the retraction if for the valid and justifiable reason, the Court can ignore such confessional statements. A confession would be binding upon a maker if it is made of his own freewill without any coercion or pressure. In the present case the applicant has submitted before this Court that he had retracted the confession and is further relying upon the findings recorded by the Special Director to say that a competent Officer of the Department himself has found that the confession would not bind the present applicant because it was made under compelling circumstances.

It would be advisable and useful to refer to the findings recorded by the Special Director in his order passed u/s 8(1) of the Foreign Exchange Regulation Act, 1973.

Undisputed the facts on strength of which the prosecution has been launched are similar and identical on strength of which proceedings u/s 8(1) were drawn by the Special Director. It would be necessary to note that the order dated 7.12.2001 (Annexure-9) passed by the Special Director came into existence after the prosecution was launched. The Special Director has referred to the allegations made by the Department and has dealt the show cause submitted by the present applicant in extenso. On page 8 of its order it has given the findings for the orders.

The Special Director has found that the statement recorded on 12.4.1999 was not voluntary and was under some coercion. Accordingly agreeing with the arguments raised by the present applicant the concerned Special Director has recorded a finding that the notice on his return to India has surrendeed U.S. dollar 1510 and Singapoorian dollar 50 to the authorized dealer on 4.3.1995. The Special Director further found that the explanation of the notice had force that a person, who was in possession of sufficient amount would ordinarily not borrow money and that too, in fractions. The Special Director further found that neither the bills were in name of the present applicant nor he had committed any violation. The Spl. Director further found that prima facie there were no evidence to connect the present applicant with the alleged offence and there were no reasons to draw a presumption against the present applicant u/s 72 of the Act. The Spl. Director further recorded that during the interrogation the Investigation Officer did not question the notice (present applicant) in regard to the disposal of the five wrist watches. The Spl. Director had concluded that the charge of violation of Section 8(1) of FERA, 1973 levelled against the notice (present applicant) were not substantiated by supportive or corroborative evidence.

Undisputedly the Spl. Director could have recorded a finding in favour of the Department on preponderance of probabilities. If the probabilities are to be considered then there is always some scope for presumption and surmises. While presuming something on the basis of the probabilities an officer can always record that a particular thing was probable and that on such a probability a finding can be recorded against the wrong doer. In our criminal judicial system, the probabilities have no role to play. The prosecution has to lead the evidence to prove the case beyond shadow of doubt or to such a reasonable certainty that but for that possibility alone no other view or any possible view of the case is possible. In the present case if on preponderance of probabilities the accused could not be held guilty, it would be too much to say that the prosecution would be able to prove its case beyond the shadow of doubt or to a reasonable certainty. As already observed the Special Director has found that the Department failed in proving the charges levelled u/s 8(1) of the Act. If that be so, what further evidence the prosecution agency has up its sleeve which it is likely to produce before the Court. The cat is out of the bag. The evidence has already been produced before the Spl. Director and on the very same evidence, the prosecution is placing its strong reliance. If a finding regarding violation of Section 8(1) of FERA, 1973 cannot be recorded on probabilities then a finding for commission of an offence u/s 8(1) of FERA, 1973 cannot be recorded.

After going through the entire materials available on record and taking into consideration the order passed by the Spl. Director, Enforcement, I am of the opinion that at this stage in view of the order of the Special Director the prosecution deserves to be quashed. It is accordingly quashed. The petition is allowed.