Non-Reportable

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL Nos. 1422-1423  of 2017 (Arising out of SLP (Crl.) Nos.6824-6825 of 2012)

THE ENFORCEMENT OFFICER  .... Appellant(s)

Versus

MOHAMMED AKRAM                                              ….Respondent(s)

J U D G M E N T

L. NAGESWARA RAO, J.

Leave granted.   

These  Appeals  are  preferred  against  the  judgment

dated 29.07.2011 in Criminal Appeal No.940 of 2007 of the

High  Court  of  Karnataka  at  Bangalore  and the  judgment

dated 10.01.2012 in Criminal Revision Petition No.1177 of

2011.   

2. Notice was issued to the Respondent on 24.08.2012.

As service could not be effected in the normal course, by an

order dated 08.05.2014, this Court directed the Appellant

to take appropriate steps for effecting the service on the

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Respondent as per the procedure prescribed under Section

65 of Chapter VI of the Code of Criminal Procedure, 1973

(Cr.  P.C.).   As  the  Respondent  could  not  be  served,  the

Registry of this Court was directed to reissue summons to

the  Respondent  which  were  to  be  served  through  the

Special  Court (Economic Offences),  Bangalore,  Karnataka.

A  report  was received from the Special  Court  (Economic

Offences), Bangalore that the Respondent was not available

at the time when the Bailiff visited the last known address

to serve the summons.   Following the procedure prescribed

in Section 65 Cr. P.C., the Bailiff affixed the summons on the

door of the Respondent’s house at his last known address.

The Respondent  is  deemed to  have been served.   None

appeared for the Respondent today.

3. The  Assistant  Director,  Enforcement  Directorate

(FERA), Bangalore filed a complaint against the Respondent

and two others for an offence punishable under Section 56

(1)  (ii)  of  the  Foreign  Exchange  Regulation  Act,  1973

(hereinafter  referred  to  as  the  ‘FERA  1973’).     It  was

alleged  in  the  complaint  that  M/s  Pheroze  Framrose,

situated  at  Richmond  Circle,  Bangalore  which  was  an

authorised  Money  Changer,  indulged  in  releasing

substantial foreign exchange in contravention of the laws.

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Mr.  Bom R.  Munshi  and Mr.Clarence Fernandes who were

employees of M/s Pheroze Famrose, were summoned during

the  course  of  enquiry  and  they  admitted  that  foreign

exchange worth Rs.50 crores was released on the basis of

bogus documents by the Money Changer.   Summons were

issued under Section 40 of FERA on 23.10.1997 directing

the  Respondent  and  two  others  to  appear  before  the

Enforcement  Officer,  Bangalore  on  24.10.1997.   The

Respondent and others failed to respond to the summons.

As the Respondent and two others did not appear before

the Enforcement Officer, CC No.86 of 1998 was filed before

the Special  Court  (Economic Offences),  Bangalore by the

Assistant  Director,  Enforcement  Directorate  (FERA),

Bangalore.  The  Respondent  was  represented  in  the  said

proceedings by an Advocate.

4. By a  judgment  dated 20.12.2006,  the Special  Court

(Economic  Offences),  Bangalore  dismissed  the  complaint

and acquitted the Respondent for  the offence punishable

under Section 56 (1) of FERA, 1973.   The case against the

two other accused were split up and they were directed to

face  trial.   It  was  held  by  the  Special  Court  that  the

summons issued by the Enforcement Directorate were not

duly served on the Respondent personally. The submission

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on behalf of the complainant that service of summons on

the  Respondent  was  effected  by  affixing  a  copy  of  the

summons on door of the house of the Respondent was not

accepted  by  the  Special  Court.   It  was  held  that  the

complainant failed to prove the address of the Respondent

by  adducing  any  evidence.    As  the  authorities  did  not

prove the valid service of summons on the accused either

personally or by substituted service, according to the Trial

Court,  the  contravention  of  Section  40  (3)  FERA did  not

arise.   That apart, the Trial Court further held that refusal

to  appear  before  the  Enforcement  Officer  in  spite  of

summons under Section 40 (1) of FERA cannot be regarded

as a contravention of the Act.   The Special Court followed

the judgment of the Kerala High Court in Itty v. Assistant

Director, reported in 1992 (58) E.L.T. 172 (Ker).

5. Criminal  Appeal  No.940  of  2007  was  filed  by  the

Appellant assailing the said judgment of the Special Court

dated 20.12.2006 in CC No.86 of 1998.   The High Court

dismissed  the  appeal  by  following  the  judgment  of  the

Kerala  High  Court  in  Itty’s  case  (supra), holding  that

disobedience of summons for appearance does not amount

to  contravention  of  the  provisions  of  FERA,  1973.   The

Appellant  preferred  a  Criminal  Revision  Petition  under

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Section 397 Cr. P.C. requesting for setting aside the order

passed  by  the  High  Court  in  Criminal  Appeal  No.940  of

2007 which came to be rejected as being not maintainable.

The said judgments of the High Court in Criminal Appeal

No.940 of 2007 dated 29.07.2011 and judgment in Criminal

Revision  Petition  No.1177  of  2011  dated  10.01.2012  are

subject matter of these appeals.

6. The sole point that arises for our consideration in this

case is whether disobedience to respond to the summons

issued  under  Section  40(3)  FERA  would  amount  to  an

offence  under  Section  56  of  FERA,  1973.  This  point  has

come  up  for  consideration  before  this  Court  in

Enforcement Director and Anr. v. M.Samba Siva Rao

and Ors. (2000) 5 SCC 431.  Due to the divergence of

opinion of the High Courts of Kerala, Madras on one hand

and High Court  of  Andhra Pradesh on the other,  a  three

Judge Bench of this Court considered the matter and held

as follows:

“4. A  learned Single  Judge of  the Kerala High Court  considered  this  question  in  the  case of Itty v. Asstt.  Director [(1992)  58  ELT  172 (Ker)]. On a conjoint reading of Sections 40 and 56 of the Act,  the learned Judge came to the conclusion that the failure to obey the summons issued under Section 40(1) cannot be held to be a  contravention  of  the  provisions  of  the  Act, rule,  direction or  order  inasmuch as  it  is  only

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when  directions  pertaining  to  some  money value  involved  are  disobeyed,  such disobedience is punishable under Section 56 of the Act. The learned Judge applied the ordinary rules of construction that penal statutes should receive a strict construction and the person to be  penalised  must  come  squarely  within  the plain words of the enactment. We are unable to accept  the  constructions  put  in  the  aforesaid judgment as in our view clauses (i) and (ii) of Section  56(1)  are  material  for  deciding  the quantum of punishment and further, there is no reason why the expression “in any other case” in  Section  56(1)(ii)  should  be  given  any restrictive meaning to the effect that it must be in relation to the money value involved, as has been  done  by  the  Kerala  High  Court.  The summons  issued  under  Section  40,  if  not obeyed, must be held to be a contravention of the  provisions  of  the  Act  and  at  any  rate,  a contravention  of  a  direction  issued  under  the Act,  and  therefore,  such  contravention  would squarely come within the ambit of Section 56 of the Act. The question came up for consideration before  a  learned  Single  Judge  of  the  Madras High  Court  in  the  case  of C.Sampath Kumar v. A.N.Dyaneswaran [  Criminal  OPs  Nos. 5468  and  5629  of  1996  dated  1-8-1997]  and was  disposed  of  by  the  learned  Judge  of  the Madras High Court by judgment dated 1-8-1997. The  Madras  High  Court  also  came  to  the conclusion that the entire Section 56 of the Act is identified and substantiated only in terms of the extent and value of the money involved in the  offence,  and  therefore,  violation  or contravention  of  summons,  issued  under Section 40 of the Act  unrelated to the money involved in the investigation cannot be held to be  punishable  under  Section  56.  Against  the aforesaid judgment of  the Madras High Court, the  department  had  preferred  appeals  to  this Court,  which  were  registered  as  Criminal Appeals Nos. 143-44 of 1998, but the question raised was not necessary to be answered as the persons  concerned  appeared  before  the

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Enforcement  Authorities  and were  arrested  by the said Enforcement Authorities and, therefore, this Court kept the questions of law open by its order dated 20-7-1998. In yet another case, the question  arose  for  consideration  before  the Madras High Court in Criminal OP No. 5718 of 1996 and a learned Single Judge did not agree with the earlier decision of the said High Court in Criminal OPs Nos. 5468 and 5629 of 1996 and referred the matter to a Division Bench by his order dated 13-8-1997 and it was submitted at the  Bar  that  the  Division  Bench  has  not  yet disposed of the matter. The question came up for  consideration  before  the  Andhra  Pradesh High  Court  in  the  case  of P.V.  Prabhakara Rao v. Enforcement  Directorate, Hyderabad [1998 Cri LJ 2507 (AP)] and the said High  Court  has  taken the view that  failure  to attend  and  give  statement  in  pursuance  of summons issued under Section 40 of  the Act, clearly amounts to disobeyance of the directions given by the authority concerned and therefore, provisions of sub-section (1) of Section 56 apply. The learned Judge of the Andhra Pradesh High Court interpreted the expression “in any other case” in clause (ii) of Section 56(1) to mean that the  said  provision  would  get  attracted  even though no amount or  value is  involved in the contravention in question. The aforesaid view of the Andhra Pradesh High Court appears to us, is the  correct  interpretation  of  the  provisions contained in Sections 40 and 56 of the Act.”     

7. The question of service under Section 40(3) of FERA,

1973 not being effected on the Respondent is irrelevant at

this point of time as he was represented by an Advocate

before the Trial Court.  It appears that the Respondent is

not  interested  in  these  proceedings.   In  any  event,  the

judgment of  the High Court  cannot be sustained as it  is 7

contrary  to  the  law  laid  down  by  this  Court  in

Enforcement Director and Anr. v. M. Samba Siva Rao

and Ors. (supra).

8. For the aforementioned reasons, the judgment of the

High Court is set aside and the appeals are allowed.        

                 ..…..............................J                                               [S.A.BOBDE]

                   ..…................................J                                                                [L. NAGESWARA RAO]

New Delhi, August 17, 2017

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