DIRECTOR Vs. SHAM B BHATIA

JUDGEMENT

(1.) THIS petition is for cancellation of bail granted in favour of respondent No. 1 by the Additional Chief Metropolitan Magistrate, 4th Court, Esplanade, Bombay. This petition is preferred by one S. K. Agarwal, Assistant Director, Enforcement Directorate, Bombay. It is stated that respondent No. 1 was the Managing Director of a Company, called M/s. Orson Electronics Ltd. and a Director of another Company called Lan Eased Software Systems Ltd. during the period 1984 to 1987. In that period, the Director of Revenue Intelligence of Government of India, received information that Orson Electronics Ltd. was resorting to manipulations with regard to invoices relating to imports of T. V. components from Japan. As such, the Director of Revenue Intelligence conducted enquiries and received reports about the activities of the 1st respondent and Orson Ltd. So also, on 27/28th August, 1992, the Income-tax authorities conducted searches in the premises of Lan Eased in Bombay and Hyderabad and of the 1st respondents residence. Respondent No. 1 was then examined under section 40 of FERA on 28th August, 1992 and therein he admitted that Lan Eseda had not till then recovered a total U. S. $ 1. 2 Million (approximately Rs. 3 crores) due from the purchasers abroad to Lan Eseda from its exports. The respondent No. 1 furnished details of outstanding in respect of exports made by Lan Eseda in November - December 1991, enclosures containing letters dated 6-7-1992, 23-7-1992 and 7-8-1992 allegedly written by him to the Reserve Bank of India about delay in realisation of export outstandings. The Enforcement Directorate made enquiries with the Reserve Bank of India, and it was informed that the Reserve Bank of India ,never received any such letters referred to above from respondent No. 1 nor had granted permission for extension of the time limit for recovery of outstanding proceeds of export by Lan Eseda and that Lan Eseda was granted Export Code Number only in March, 1992 i. e. after the exports had taken place in November-December 1991. Respondent No. 1 was questioned about his frequent visits to Europe between 1987 to 1992. Thereafter, respondent No. 1 was issued summons by the Enforcement Directorate, directing him to appear at the office, on 28-11-1995, 4-12-1995, 21-12-1995, 15-2-1996, 11-4-1996 and 28-5-1996, but he did not comply with the same. The summonses sent by post were duly returned with the remarks "refused", "not Found" etc. When attempts were made to serve personally, it could not be done as it was informed that respondent No. 1 was either out of town or indisposed. Ultimately, summons dated 21-12-1995 was affixed on the door of his flat. When summons was served on 16-1-1997, respondent No. 1 assured to remain present on 17-1-1997, but he did not attend till 16-6-1997. On 16-6-1997, he appeared and his statement came to be recorded, wherein he admitted that Lan Eseda had failed to realise the amount of U. S. $ 12,20,000 (about Rs. 3 crores) from its exports. Respondent No. 1 also admitted that over invoicing in respect of 2 out of 10 consignments of T. C. Kits imported by Orson from Japan between January, 1986 and June 1986 and under invoicing in respect of the remaining 8 consignments. The respondent No. 1 also admitted that over-invoicing was to the extent of Japanese Yen 39, 67,830 and under invoicing was to the extent of 1,54,05,331 Japanese Yen and U. S. Dollars 9,035. 92. He further admitted that a Japanese Company called Supra (Japan) Ltd. gave price concession to Orson amounting to 700 to 800 Million Japanese Yen between 1984 and 1985. On account of these concessions, the Supra (Japan) Ltd. has received back 500 Million Yen from Orson and has yet to receive from Orson a further 300 Million Yen.

(2.) BECAUSE of the aforesaid facts, it was found that respondent No. 1 had contravened the provisions of sections 8 (3) and 8 (4) of FERA by not utilising the foreign exchange of Japanese Yen for the purpose for which it was required in respect of the first two consignments. He also contravened the provisions of section 8 (1) of FERA in respect of the remaining 8 consignments, by otherwise acquiring and transferring Japanese Yen 1,54,05,331 and U. S. Dollars 9,035. 92. He contravened section 8 (1) of FERA by acquiring and transferring to Supra (Japan) Ltd. , foreign exchange amounting to Japanese Yen 500 Million on account of price concession. He further contravened section 9 (1) (c) of FERA by acknowledging to Supra (Japan) Ltd. a debt of Japanese Yen 300 Million in respect of balance price concessions. Respondent No. 1 came to be arrested on 17-6-1997, and produced before the Additional Chief Metropolitan Magistrate with Remand Application No. 3/97 stating the aforesaid facts and claiming custody remand of respondent No. 1 for 14 days. It was stated that the Enforcement Directorate was making a crucial enquiries locally and abroad to ascertain whether the entire software work undertaken by Lan Eseda had been completed as per the initial contract given to it.

(3.) ON the same day, when respondent No. 1 was produced before the Metropolitan Magistrate, an application for grant of bail was moved by him and the learned Magistrate on hearing both sides, directed release of the respondent No. 1 on bail by his order dated 17-6-1997, on execution of personal bond and security bond of Rs. 2 Lakhs or cash of the like amount, on condition that he would attend the office of Director of Enforcement, every day for 15 days till 1st July, 1997 and give full co-operation for further interrogation in an enquiry to the officer concerned. He was also directed to attend office between 10 a. m. to 1 p. m. and not to leave Bombay City without permission of the Court and Investigating Officer. His passport was stated to be deposited with the CBI and respondent No. 1 was directed not to take back the passport for a period of one month. This order is impugned in the present petition, filed under section 439 (2) and 437 (5) and section 482 of the Criminal Procedure Code.