LAMBERT KROGER Vs. ENFORCEMENT DIRECTORATE

JUDGEMENT

(1.) This Petition has been filed under Section 439 of the Criminal Procedure Code for grant of bail to the Petitioner Mr. Lambert Kroger, a German National who is the accused in the Criminal Complaint filed by the Enforcement Officer, Enforcement Directorate (Foreign Exchange Regulation Act), Ministry of Finance, Government of India, under Section 56 read with Section 61 (2)(ii) of the Foreign Exchange Regulation Act, 1973 (FERA) for offences committed under Sections 19(l)(d), 29(l)(b) read with Section 68 and Sections 29(l)(a) and 30(1) of the said Act.

(2.) The Petitioner was arrested on 8th July, 1999. Though the Petitioner Filed an application for bail in the Court of the Additional Chief Metropolitan Magistrate, it was dismissed on 30th July, 1999 observing that the investigation was at a crucial stage and that if the Petitioner was released on bail there was every possibility of the inves- tigation being hampered and the evidence being tampered with. Later on the Petitioner filed an application for bail in the Court of the Additional Sessions Judge and it was dismissed on 21th August 1999 pointing out that the accused was involved in a serious economic offence and that the investigation was at the initial stage. Thereafter the above mentioned Criminal Complaint was Filed in the Court of the Additional Chief Metropolitan Magistrate. Patiala House Courts, New Delhi on 4th September 1999.

(3.) According to the Criminal Complaint filed by the Enforcement Directorate against the Petitioner, the business premises of M/s. Maple Leaf Trading International Pvt. Ltd. at S-485, GK-II, New Delhi were searched by the officers of the Enforcement Directorate on 2nd July, 1999 under Section 37 of FERA 1973 and incriminating documents and articles were recovered and seized. During the course of investigation. it emerged that Mr. Cliff Roy, a British Citizen and Mr. Lambert Kroger, a German National discussed certain design and plan for business/trading in India and accordingly on 15th April, 1998, the company, M/s. Maple Leaf Trading International Pvt. Ltd., was incorporated at New Delhi. Initially the Directors of the company were M/s. Anil Bhalla, Rajesh Sethi, B.S. Jafa Rahul Krishna. On 15-4-1998 itself a resolution was passed appointing Mr. Cliff Roy also as a Director of the company. Later on M/s. Anil Bhalla, Rajesh Sethi, Rahul Krishna and B.S. Jafa resigned and in their place Mr. Lambert Kroger (Petitioner herein) and Mr. Paul Singh Clare, another British Citizen were appointed as Directors. Later Mr. Lambert Kroger was appointed as Managing Director of the Company. Thus though the company was incorporated in India by Indians, it was handed over finally in the hands of M/s. Cliff Roy. Paul Singh Clare and Lambert Kroger. One M/s. Picadily Invest AG of Switzerland also invested in the company to the tune of Rs. 13,30,500.00 and Mr. Cliff Roy represented the said Swiss Company in India under a Special Power of Attorney. Thus 51% shares of the Com- pany were allotted to M/s. Picadily Invest AG of Switzerland on 28th May, 1998. M/s. Maple Leaf Trading International Pvt. Ltd. filed an application to the Reserve Bank Of India on 21st May, 1998 in the format of FC (RBI) to avail the facility of Simplified Procedure of Automatic Route of Approval vide A.D..(M.A.) series circular No.2 dated 20th January, 1998 and Notification No. FERA 180/98-RB dated 13th January, 1998 issued by the RBI. In the said application the Company chose the Services Sector describing its activity as "Business Management Consultancy for Trading Marketing and Selling of Goods and Services". On the basis of the said application the Reserve Bank of India allotted Registration Number to the Company on 29th June, 1998. Even though the above mentioned application to the Reserve Bank of India was filed only on 21st May, 1998, the Company had made its first presentation and started gold coin trading activity on 17th May, 1998. Even though the Registration Number was allotted to the Company by the Reserve Bank of India only on 29th June, 1998, the Company had signed the first contract for the trading in gold coins on 27th May, 1998. The actual activity of the Company i.e. the trading in Maple Leaf Gold Coins was found to be completely different and separate from the activity stated in the application dated 21st May, 1998. It was also found to be out of the list of lndustries/ Items mentioned in Annexure-III of the RBI Notification No. FERA 180/98-RB dated 13th January, 1998. It is alleged in the Criminal Complaint that during the investigation it was revealed that the accused Lambert Kroger come to India in December, 1997 on Business Visa for the trading of Maple Leaf Gold Coins and, as pre-planned, joined the Company as Director and finally as Managing Director for the said trading activity and took control of the Company. It is further alleged that the accused failed to produce any general or special permission of the RBI in his name for carrying on trading activities in India. It is also alleged that the accused a foreign national, failed to produce any prior permission of the Reserve Bank of India for opening a personal account in ABN AMRO Bank, New Delhi bearing No. 6414338 with repatriation facility. This showed his intention for remittance outside India out of any money receivable/received by him in India by reason of such unauthorised trading in Maple Leaf Gold Coins either in the colour of salary or commission. It is mentioned that the other two directors Mr. Cliff Roy and Mr. Paul Singh Clare have already remitted Rs. 9,00,000.00 and Rs. 18,00,000.00 respectively outside India from their personal accounts. According to the complaint the Company was engaged in the trading of maple leaf gold coins under a marketing plan and scheme wherein the Company has entered into written agreement for contract of sale with the general public at large. The only basis rule of the scheme was to first invest your own money and then keep enrolling new members for return in the form of gold coins of certain value in Indian currency after fulfilment of the terms and conditions of the agreement like money circulation schemes. It is stated that trading in maple leaf gold coins is different and even out of the purview of permissible activities as per notification No. FERA 180/98-RB dated 13th January 1998 issued in pursuance of clause (a) and clause(d) ofsub-section(l) of Section 19 read with clause (b) of sub-section (1) of Section 29 of FERA 1973. According the complaint, the Company has contravened the provisions of Section 19(l)(a) and (d) and Section 29(l)(b) of FERA 1973 read with Section 68 of FERA 1973. It is further alleged that the accused was engaged in the trading of maple leaf gold coins in the name of style of the company without any general or special permission of RBI and was maintaining a Bank Account in India with repatriation facility to outside India without any prior permission of the RBI and thus contravened the provisions of Section 29(l)(a) and Section 30 (1) of FERA 1973. It is also stated in the complaint that further investigations in respect of large number of transactions running in crores of rupees done by the Company, the accused and the other directors in relation to the trading in maple leaf gold coins are being carried out by the Enforcement Directorate under the provisions of FERA 1973 and that two of the directors namely Mr. Cliff Roy and Mr. Paul Singh Clare are reported to be beyond the territory of India and that examination of various persons and witnesses are still in process. According to the complaint the accused is involved not only in mere breach of permissions or conditions of the Reserve Bank of India but also in the contravention of the various provisions of FERA 1973. It is stated that during the course of investigation opportunity notices as required by the proviso to Section 61(2)(ii) of FERA 1973, were issued on 25th August, 1999 to the Company, Mr. Cliff Roy, Mr. Paul Singh Clare and Mr. Lambert Kroger to state in writing within seven days of receipt of the notice whether they had permission of RBI- for trading in maple leaf gold coins etc. as per provisions of FERA 1973. They were also required to furnish copies of such. permission) if any. The said opportunity notice was served upon the accused in judicial custody at Tihar Jail No.4 in person on 25th August, 1999. But no reply to the said notice was received till the time of filing the complaint on 4th September, 1999. It is also stated in the complaint that filing of further complaint(s) would be considered after the investigations were completed in the case.