PARLE EXPORTS PRIVATE LIMITED Vs. B K SOLANKI

JUDGEMENT

(1.) The proliferation of offences of strict liability or absolute liability in the post-war era has dealt a devastating blow at the classical concept of the criminal process predicated upon mens rea. Views are being expressed that there is a real danger that wide-spread imposition of criminal liability independent of a moral fault will result in such sanction being regarded with contempt and the theory of absolute prohibition may well have the opposite effect to that intended, and lend to weakening of respect for the law. The present case, in which a manufacturer of aerated drinks is being prosecuted under section 27 of the Foreign Exchange Regulation Act, 1973 (the Act) accentuates the necessity of exercise of extreme circumspection in prosecuting persons under regulatory offences.

(2.) Messrs. Parle (Exports) Pvt. Ltd. (`Parle) of Andheri, (West), Bombay, were negotiating with Messrs. Union Beverages at Sharjah and Messrs. Mohd, Nazer Al-Sayer & Sons Kuwait and Messrs. Dhofar Beverages Co., Salalah, for export of their concentrates with a view to enabling the foreign collaborators bottle and sell their products in Kuwait and Sharjah. As Parle had to face razor-sharp competition from other entrenched international giants like Pepsi Cola, 7-Up, Canada Dry, etc. the collaborators advised Parle to follow the practice of the international companies in honing a blits advertising campaign as a sale promotion strategy. Earlier, the Reserve Bank of India had permitted Parle to send publicity material free of cost to the tune of Rs. 3.33 lacs but Parle discovered to their dismay that the product cannot capture marker unless it is backed by high profile and expensive publicity drive. The publicity material sent earlier proved to be extremely inadequate and Parle on 1-2-1977 wrote to Reserve Bank of India requesting them to release foreign exchange of 25% of the F.O.B. value of the product vis., concentrate supplied for preparation and exhibition of publicity material like film for cinema and T.V. huge neon signs---radio jingle in local language---automatic vending machines-audio visual aids---transparencies printed on plastics etc. to be manufactured in foreign countries. Parle assured the bank that the foreign exchange remittance would be decreased progressively to 15% and 10% in the succeeding and subsequent years.

(3.) On 21st March, 1977, the Reserve Bank of India sought classification from Parle on various points including whether Parle are entitled to a share in the profits of the foreign associates or whether the profit is confined to those realised on exports only. Parle replied on 22nd March, 1977, giving the breakup of the sale of concentrates advertising expenses etc., and made it clear that they are not entitled to share in the profits of any foreign associates. As regards the technical know-how, Parle clarified that they do not get any reimbursement for the same because it is an international business practices for companies supplying concentrates to render technical assistance to the bottling plants as and when such service is needed. Simultaneously, on 3rd June, 1977, the Dy. Controller of Reserve Bank of India wrote to the Joint Controller of the Exchange Control Department recommending release of foreign exchange for advertising purpose. He also stipulated that Parle should forego the cash incentives in full but this condition was later-on withdrawn.The letter ends with the observation:-