S.K. JAIN Vs. UNION OF INDIA

JUDGEMENT

(1.) THIS appeal under Section 35 of the Foreign Exchange Management Act 1999 ('FEMA') read with Section 54 of the Foreign Exchange Regulation Act, 1973 („FERA?), is an off -shoot of the 'Jain Hawala Diaries' case which ended in the quashing of the criminal proceedings as a result of the judgment of the High Court upheld by the Supreme Court in Central Bureau of Investigation v. V.C. Shukla (1998) 3 SCC 410 [hereinafter referred to the V.C. Shukla case].

(2.) THE present proceedings which emanated under FERA are stated to stand on a different footing, not affected by the closure of the criminal proceedings since FERA is a complete code in itself. The Background

(3.) THE CBI registered FIR No. RC 1(A)/95 ACU (VI) on 4th March 1995 against Mr. S.K. Jain and Mr. J.K. Jain, the Appellants herein and certain others for the offence both under the Prevention of Corruption Act, 1988 („PCA?) as well as FERA. The FIR stated that the entries in the diaries revealed that payments to 119 persons through hawala channels "were partly explained by the accused S.K. Jain who is the master of the said documents and the employer of the accused J.K. Jain who had maintained the documents in his own handwriting in the coded words and figures. '' The total amount disbursed was estimated to be about Rs. 65.47 crores during the years 1985 to 1991. It was stated that the major part of the above amount, i.e., Rs.53.5 crores (approx) had been transferred to a number of named persons illegally through hawala channels and that this constituted an offence under Section 56 read with Section 8 (1) FERA. The FIR further stated that in relation to the alleged payment through hawala channels ''a report of the SP has been sent to the Directorate of Enforcement who are the competent authority to file the statutory/complaints under the provisions of FERA 1973. It has been recommended to the Directorate of Enforcement to launch prosecution case against 15 persons who were found to have violated the provisions of FERA 1973. '' Letters were also stated to have been sent to the Income Tax and Customs Departments for appropriate legal action under the concerned statutes.