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REPORTABLE

IN THE SUPREME COURT OF INDIA CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO.1406 OF 2009

VIJAY MALLYA                             …APPELLANT

VERSUS

ENFORCEMENT DIRECTORATE,  MIN. OF FINANCE                ...RESPONDENT

J U D G M E N T

ADARSH KUMAR GOEL, J.

1. This appeal has been preferred against judgment

and order      dated 21st 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

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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

of  ‘Kingfisher’  brand  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

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framed charge against  him under Section 56 of  the

Act.

3. The  appellant  challenged  the  order  of  the

Magistrate                 dated 9 th 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

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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.

5. We have heard Shri F.S. Nariman, learned senior

counsel for the appellant and Shri K. Radhakrishnan,

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learned  senior  counsel  for   

the respondent.   

6. When the matter came up for hearing before this

Court 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

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

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 were not gone into by the High Court may also

be seen.  The complaint was filed on 8th March, 2000.

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During pendency of the complaint, the Act (FERA) was

repealed on 1st June, 2000.  Still,  show cause notice

dated 13th March, 2001 was issued to which reply was

given  and  the  adjudicating  officer  vide  order  dated

10th January, 2002 dropped the proceedings on merits.

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  quash

proceedings,  following  law  laid  down  in  Dy.  Chief

Controller of Import and Export vs. Roshan Lal

Agarwal  1 as follows :

“13. In view of the findings recorded by us, the learned 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  and  in  the  departmental proceedings taken under the aforesaid Act,

1 (2003) 4 SCC 139

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the Central 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 of Foreign Trade on 16-8-1993 and also by the Appellate  Committee  Cell,  Ministry  of Commerce,  Government  of  India  on 13-3-1997 by which the appeals  preferred by  the  respondents  were  allowed  by  the Appellate  Committee  and  the accused-respondents  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.  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”.

Alternatively, explanation of the appellant for non

appearance may be looked into on merits instead of

the same being left to the trial court.   

9. Before  we consider  the  submissions  made,  the

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

(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

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during the course of  any 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 (5 of 1908)  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 (45of 1860).

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, 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  (i) in the case of an offence the amount or value involved in which exceeds one lakh of rupees with imprisonment for a term which shall  not  be  less  than six months,  but  which  may  extend  to

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seven  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 months;  (ii)in any other case, with imprisonment for a term which may extend to three years or with fine or with both.”

10. In  Enforcement  Directorate vs. M.  Samba

Siva Rao  2, it was observed :

“3. xxxxxxxx The Foreign Exchange Regulation Act, 1973 was 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  provisions  thereof should  be  construed  so  as  to  make  it workable  and  the  interpretation  given should  be  purposive  and  the  provisions should  receive  a  fair  construction  without doing  any  violence  to  the  language 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 any  investigation,  makes  it  binding  as provided  under  sub-section  (3)  of  Section 40, and the investigation or the proceeding in the course of  which such summons are issued have been deemed to be a judicial proceeding  by  virtue  of  sub-section  (4)  of Section  40.  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.”

2 (2000) 5 SCC 431

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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 21st

December,  1999 were refused by the 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 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”.

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 law 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 40(3) is reproduced below for kind perusal and ready reference to this Hon’ble Court :

“Section 40(3) :

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(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.”

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  and  dates  mentioned  in  the respective  summons  and  has  thus, contravened the provisions of Section 56 of the Act.”

12. As regards summons dated 8th November, 1999,

learned senior counsel for the appellant has referred

to  the  explanation  offered  by  the  appellant.   Letter

dated 22nd 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  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  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.”

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

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allegation  of  serious  nature  could  hardly  be

appreciated.  Obviously,  the  enormous  money power

makes  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  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

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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 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 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

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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.  

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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 of the process of law.  Any

other view of the matter would only go to once again

establishing  the  notorious  truth  stated  by  Anatole

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

quantified  at  rupees  ten  lakhs  to  be  paid  to  the

Supreme Court Legal Service Authority.

……..…………………………….J.               [ J. CHELAMESWAR ]

.….………………………………..J.               [ ADARSH KUMAR GOEL ]

NEW DELHI JULY 13, 2015

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ITEM NO.1A-For Judgment    COURT NO.4         SECTION II       S U P R E M E  C O U R T  O F  I N D I A

     RECORD OF PROCEEDINGS Criminal Appeal  No(s).  1406/2009 VIJAY MALLYA                   Appellant(s)

                  VERSUS

ENFORCEMENT DIRECTORATE, MIN.OF FINANCE.          Respondent(s)

Date  :  13/07/2015  This  appeal  was  called  on  for pronouncement of JUDGMENT today. For Appellant(s)

               M/s. Khaitan & Co.   For Respondent(s)  Mr. Surender Kumar Gupta, Adv.

Mr. B.K. Prasad, Adv.                 Mr. B. V. Balaram Das,Adv.   Hon'ble Mr. Justice Adarsh Kumar Goel pronounced

the judgment of the Bench comprising Hon'ble Mr. Justice J. Chelameswar and His Lordship.

The appeal is dismissed in terms of the signed Reportable  judgment  with  exemplary  costs  quantified  at rupees ten lakhs to be paid to the Supreme Court Legal Service Authority.  

(VINOD KR.JHA)     (RENUKA SADANA) COURT MASTER COURT MASTER (Signed Reportable judgment is placed on the file)

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