GHANSHYAM DAS MOOLRAJANI Vs. ENFORCEMENT DIRECTORATE

JUDGEMENT

(1.) THE petitioner in this writ petition has prayed for mandamus to the effect that the respondents be restrained from continuing with the departmental proceedings initiated against him under Sections 50 and 51 of the Foreign Exchange Regulation Act 1973 (for short "the FERA" ).

(2.) FACTUAL background giving rise to this petition is that the petitioner had set up a business of garment export and he for that purpose incorporated a firm on 17. 3. 1994 with his nephew, Shri Mukesh Moolrajani. This firm was engaged in the business of exporting garments to foreign countries. The firm however ran into trouble on account of the fact that it failed to realise the remittances of five consignments sent to Hongkong in Nov. & Dec. , 1994. The firm had to therefore abandon the business after December 1994 and ultimately it was dissolved in the year 1996. According to the petitioner, the said firm was duped into exporting said goods to certain company in Hongkong by one Shri Ashok Ramchandani who told the petitioner that he was importer having business interests in Hongkong and Philippines and that the payments would be received in India within 90 days of the dispatch. When the remittance was not realised the petitioner even tried to take the goods back. In that process, to his utter dismay, he found that the address of the buyers supplied by Shri Ashok Ramchandani were not correct and the buyer was a fake entity with no real existence. The firm became defaulter only because it could not secure the receipt of full value of the goods exported form the country within the prescribed period of time. This was taken by the respondent department as violation of section 18 (2) of the FERA. The Enforcement Officer (respondent No. 3) therefore filed a complaint against the petitioner u/s. 56 of the FERA in the court of Special Judge (Economic Offences), Jaipur and that court has taken cognizance against the petitioner as well as others on 31. 5. 2002.

(3.) ON the other hand, Shri Kamlakar Sharma, learned Assistant Solicitor General appearing for respondents opposed the writ petition and argued that the proceedings before the departmental authorities are only adjudicatory in nature and so far as the criminal liability of the petitioner is concerned, they shall be decided by the court of competent jurisdiction where complaint under Section 56 of the FERA has been filed. Present writ petition which has been filed merely against the show cause is not maintainable because the authority issuing such notice has not been shown to be lacking in authority. The writ petition is therefore liable to be dismissed as misconceived. Pendency of criminal case is not a bar to the initiation of departmental proceedings which are adjudicatory in nature. Scope, nature and effect of the two proceedings is entirely different from one another. ONe cannot be stalled on account of pendency of the other. He therefore argued that the criminal proceedings cannot operate as a bar for initiation or continuation of adjudicatory proceedings. Both the proceedings are independent from one another. In fact, the petitioner in spite of being served with show cause notice and reminder failed to respond to the same. Various judgments of the Supreme Court relied on by the learned counsel for the petitioner are all relating to service jurisprudence on the question whether disciplinary proceedings can be continued simultaneously with the criminal trial. Those judgments cannot be applied to the proceedings under the FERA. Even otherwise, the Hon'ble Supreme Court in State of Rajasthan vs. B. K. Meena & Others - AIR 1997 SC 13 held that there is no legal bar for both disciplinary proceedings and criminal prosecution to go on simultaneously. However, in certain situations, it may not be `desirable', `advisable' or `appropriate' to proceed with the disciplinary enquiry when a criminal case is pending on identical charges. Shri Kamlakar Sharma, learned counsel for the respondents, relied on a recent judgment of the Hon'ble Supreme Court in Standard Chartered Bank & Others vs. Directorate of Enforcement & Others - (2006) 4 SCC 278 and argued that the Supreme Court in that case has conclusively held that adjudication under the FERA need not precede prosecution because both are independent of each other and each subserves a purpose. Both of these proceedings can be launched and pursued simultaneously. Shri Kamlakar Sharma, learned counsel for the respondents submitted that the argument that in view of section 8 of the FEMA now the authority was denuded of its powers to issue the impugned notice with reference to the provisions of FERA is wholly misconceived because such argument proceeds on the ignorance of the provisions relating to repeal and saving as contained in FEMA. He therefore prayed that the writ petition be dismissed.