VIJAY MALLYAversusENFORCEMENT DIRECTORATE, MIN. OF FINANCE

                   [2015] 8 S.C.R. 709


                      VIJAY MALLYA                           A
                            v.
   ENFORCEMENT DIRECTORATE, MIN. OF FINANCE
            (Criminal Appeal No.1406 Of 2009)
                      JULY 13, 2015                          B
                                            • c;

              [ J. CHELAMESWAR AND
             ADARSH KUMAR GOEL, JJ!j''

     Foreign Exchange Regulation Act, tt973: s.40 - C
Summons - Failure of appellant to appear on issuance of
summons - Complaint filed before Magistrate and after
considering records framed charges against appellant u/s. 56
-Application for quashing of proceedings before High Court
by appellant on the ground that wilful default of.appellant o
could not have been inferred and that there was non
application of mind in the issuance of summons ;;is well as
in framing of charges - High Court held that framing of
composite charge could not be treated to have caused
prejudice so as to vitiate the proceedings - On appeal, held: E
Complaint is maintainable if there is default in complying
with the orders of summons by accused - The approach
adopted by appellant is sheer abuse of process of Jaw -
Exemplary cost of Rs. 10 lakhs imposed - Cost- Summons.
                                                             F
    Dismissing the appeal with exemplary cost of Rs.
10 lakhs, the Court
    HELD: 1. A complaint is maintainable if there is default
in not carrying out summons lawfully issued. The G
averments in the complaint showed that the summons
dated 21 •1 December, 1999 were refused by the appellant
and earlier summons were not carried out deliberately.

                           709                               H
710       SUPREME COURT REPORTS                (2015] 8 S.C.R.


A As regards summons dated 81h November, 1999, the
  explanation was offered by the appellant by Letter dated
  22"d November, 1999. From the tenor of the.letter, it
  appears that it was not a case of mere seeking
  accommodation by the appellant but requiring date to
B be fixed by his convenience. Such stand by a person
  facing allegation of serious nature could hardly be
  appreciated. Obviously, the enormous money power
  makes him believe that the State should adjust its affairs
C to suit his commercial convenience. [Paras 11 to 13)
  [718-B-C; 719-E; 720-A-B]

         2. The impugned order is not interfered with for more
    than one reason. The fact that the adjudicating officer
    chose to drop the present proceedings against the
D · appellant does not absolve the appellant of the criminal
    liability incurred by him by virtue of the operation of
    Section 40 read with Section 56 of the Act. The offence
    under Section 56 read with Section 40 of the Act is an
    independent offence. If the factual allegations contained
E in the charge are to be proved eventually at the trial of
   the criminal case, the appellant is still liable for the
    punishment notwithstanding the fact that the presence
    of the appellant was required by the adjudicating officer
F in connection with an enquiry into certain alleged
    violations of the various provisions of the Act, but at a
    subsequent stage the adjudicating officer opined that
    there was either insufficient or no material to proceed
    against the appellant for the alleged violations of the Act,
G is immaterial. Secondly, an appeal against the
    conclusion of the adjudicating officer that the
    proceedings against the appellant for the alleged
    violation of the various provisions of the FERA Act are
    required to be dropped has not even attained finality.
H Admittedly, such an order of the adjudicating officer
 VIJAY MALLYA v. ENFORCEMENT DIRECTORATE, MIN. 711
          .         OF FINANCE

confirmed by the statutory appellate authority is pending A
consideration in an appeal before the High Court.
Though the result of such an appeal is immaterial for
determining the culpability of the appellant for the alleged
violation of Section 40 read with Section 56, the
submission made on behalf of the appellant in this regard . B
itself is inherently untenable. The entire approach
adopted by the appellant is a sheer abuse of the process
of law. [Paras 14to16] [720-A-F; 721-D-G] '1i·

     Dy. ChiefControlleroflmport and Export vs. Roshan Lal C
Agarwal 2003 (2) SCR 621 : 2003 (4) SCC 139 -
distinguished.                                  •

     Enforcement Directorate vs. M. Samba Siva Rao 2000
(1) Suppl. SCR 51 : 2000 (5) SCC 431 - relied on.       D

                  Case Law Reference

   2003 (2) SCR 621            distinguished      para 8

   2000 (1) Suppl. SCR 51      relied on          para 10      E

    CRIMINALAPPELLATE JURISDICTION: Criminal Appeal
No. 1406 of2009.

    From the Judgmen.t and Order dated 21.05.2007 in           F
Criminal Revision Petition No. 554 of 2001 of the High Court
of Delhi at New Delhi.

    F.S. Nariman, Ajay Bhargava, Vanita Bhargava, Diwakar
Maheshwari, Karun Mehta, Suveni (For Khaitan & Co.) for the
Appellant.                                                  G

     K. Radhakrishnan, Rupesh Kumar, Surinder Kr. Gupta,
B.V. Balaram Das for the Respondent.

    The Judgment of the Court was delivered by.                H
712         SUPREME COURT REPORTS                 (2015] 8 S.C.R.


A          ADARSH KUMAR GOEL, J. 1. This appeal has been
      preferred against judgment and order dated 21•1 May, 2007
      of the High Court of Delhi at New Delhi in Criminal Revision
      Petition No.554 of 2001.

B       2. Brief facts necessary for decision of this appeal are
  that the appellant was summoned by the Chief Enforcement
   Officer, Enforcement Directorate, under Section 40 of the
  Foreign Exchange Regulation Act, 1973 ("the Act") with his
  passport and correspondence relating to a transaction with ·
C Flavio Briatoreof Mis. Benetton Formula Ltd., London, to which
  the appellant, as Chairman of United Breweries Ltd., was a
  party. Allegation against the appellant was that he entered into
  an agreement dated 1•1 December, 1995 with the earlier
  mentioned English Company·for advertisement of 'Kingfisher'
D brand name on racing cars during Formula-I World
  Championships for the years 1996, 1997 and 1998 pr9viding
  for fee payable. Requisite permission of the Reserve Bank of
  India was not taken which was.·in violation of provisions of
  Sections 47(1) & (2), 9(1)(c) and 8(1) of the Act. Approval
E was later sought from Finance Ministry for payment on 191h
  June, 1996, which was rejected on 4th February, 1999. Since
  the appellant failed to appear in response to summons issued
  more than once, a complaint dated 81h March, 2000 under
F Section 56 of the Act was filed before the Additional Chief
  Metropolitan Magistrate, New Delhi. The trial court after
  considering the material on record summoned the appellant
  and framed charge against him under Section 56 of the Act.

       3. The appellant challenged the order of the Magistrate
G dated 9th August, 2001 in above Criminal Complaint No.16/1
  of 2000 and also sought quashing of proceedings in the said
  complaint before the High Court by filing Criminal Revision
  Petition No.554 of 2001 on the ground that willful default of the
H appellant could not have been inferred and that there was non-
  application of mind in the issuance of summons as well as in
 VIJAY MALLYA v. ENFORCEMENT DIRECTORATE, MIN. 713
       OF FINANCE [ADARSH KUMAR GOEL, J.)

framing the charge which was in violation of procedure laid A
down under Section 219 of the Criminal Procedure Code. The
charge related to failure of the appellant to appear on four
occasions, i.e., 27th September, 1999, SthNovember,1999,
26th November, 1999 and 3rd January, 2000. In respect of first
date, it was submitted that the trial court itself accepted that B
the service of summons was after the time for appearance
indicated in the summons. In respect of second and tl)ird
dates, the appellant had responded and informed about his
inability to appear and for the last date, summons was not as
per procedure, i.e., by registered post. It was submitted C
that composite charge was against Section 219 of the Criminal
Procedure Code.

     4. The High Court rejected the contentions by holding that
framing of composite charge could not be treated to have D
caused prejudice so as to vitiate the proceedings. It was further ·
observed that default of the appellant in relation to sLimmons
dated 15th September, 1999 for attendance on 27th September,
1999 could not be taken into account and to that extent the
charge was liable to be deleted but with regard to the defaults E
in relation to summons dated 7th October, 1989, Bth November,
2009 and 21•t December, 1999, the proceedings were not
liable to be interfered with as the appellant could contest the
matter before the trial court itself in the first instance.
                                                                 F
    5. We have heard Shri F.S. Nariman, learned senior
counsel forthe appellant and Shri K. Radhakrishnan, learned
senior counsel for the respondent.

     6. When the matter came up for hearing before this Court G
earlier, a statement was made on behalf of the appellant that
the appellant expressed regret for not responding to the
summons on which learned senior counsel for the respondent
took time to ascertain whether the complaint could be
withdrawn. Thereafter, it was stated that withdrawal of the H
714         SUPREME COURT REPORTS                    (2015] 8 S.C.R.


A     complaint may have impact on other matters and for that reason
      withdrawal was not possible. However, the question whether
      the non compliance was deliberate was required to be
      examined. Learned senior counsel for the appellant submitted
      that the default was not deliberate, intentional or willful which
B     may be punishable under Section 56 of the Act and the
      appellant had sent reply and sought a fresh date on two
      occasions.

         7. It was further submitted that subsequent events which
C were not gone into by the High Court may also be seen. The
  complaint was filed on 81h March, 2000. During pendency of
  the complaint, the Act (FERA) was repealed on 1" June, 2000.
  Still, show cause notice dated 13th March, 2001 was issued to
  which reply was given and the adjudicating officer vide order
D dated 1Oth January, 2002 dropped the proceedings on merits.
  The Appellate Board dismissed the Revision Petition filed by
  the Department on 16th March, 2004. Against the said order,
  Criminal Appeal No.515 of 2004 was pending in the High
  Court.
E
          8 .. It was submitted that having regard to repeal of the Act
      and exoneration of the appellant by the departmental
      authorities (even though an appeal was pending in the High
      Court), this Court in the circumstances of the case ought to
F     quash proceedings, following law laid down in Dy. Chief
      Control/er of Import and Export vs. Roshan Lal Agarwa/1
      as follows:

           "13. In view of the findings recorded by us, the learned
G          Magistrate has to proceed with the trial of the accused-
           respondents. Shri Ashok Desai, learned Senior
           Counsel has, however, submitted that the Imports and
           Exports (Control) Act, 1947 has since been repealed

H ' (2003) 4 sec 139
 VIJAY MALLYA v. ENFORCEMENT DIRECTORATE, MIN. 715
       OF FINANCE [ADARSH KUMAR GOEL, J.]

     and in the departmental proce_edings taken under the            A
     aforesaid Act, the Centra_I Government has passed
     orders in favour of the respondents and, therefore, their
     trial before the criminal court at this stage would be an
     exercise in futility. He has placed before us copies of
     the orders passed by the Additional Director General            B
     of .Foreign Trade on 16-8-1993 and also by the
     Appellate Committee Cell, Ministry of Commerce,
     Govemmentoflndia on 13-3-1997 by which the appeals
     preferred by the respondents were allowed by the
     Appellate Committee and the accused-respondents                 C
     were exonerated. Having regard to the material existing
     against the respondents and the reasons and findings
     given in the aforesaid orders, we are of the opinion that
     no useful purpose would be served by the trial of the
     accused-respondents in the criminal court at this stage.        D
     The proceedings of the criminal cases instituted against
     the accused-respondents on the basis of the complaints
     filed by the Deputy Chief Controller of Imports and
     Exports are, therefore, quashed". ·                             E
    Alternatively, explanation of the appellant for non
appearance may be looked into on merits instead of the same
being left to the trial court.
                                                        1..:.h....
    9. Before we consider the submissions made, the                  F
provisions of Section 40 and 56 of the Act may be noticed
which are as follows :

     "Section 40 - Power to summon persons to give
     evidence and produce documents                G

      (1) Any Gazetted Officer of Enforcement shall have
     power to summon any person whose attendance he
     considers necessary either to give evidence or to
     produce a document during the course of any H
716    SUPREME COURT REPORTS                   [2015] 8 S.C.R.


A     investigation or proceeding under this Act.

      (2) A summon to produce documents may be for the
      production of certain specified documents or for the
      production of all documents of a certain description in
B     the possession or under the control of the person
      summoned.

      (3) All persons so summoned shall be bound to attend
      either in person or by authorised agents, as such officer
c     may direct; and all persons so summoned shall be
      bound to state the truth upon any subject respecting
      which they are examined or make statements and
      produce such documents as may be required:

      Provided that the exemption under section 132 of the
D
      Code of Civil Procedure, 1908 (5of1908) shall be
      applicable to any requisition for attendance under this
      section.

      (4) Every such investigation orproceeding as aforesaid
E     shall be deemed to be a judicial proceeding within
      the meaning of sections 193 and 228 of the Indian
      Penal Code, 1860(45of1860).

      Section 56 - Offences and prosecutions
F
       (1)Without prejudice to any award of penalty by the
      adjudicating officer under this Act, if any person
      contravenes any of the provisions of this Act [other than
      Section 13, Clause (a) of sub-section(1) of (Section 18,
G     Section 18A), clause (a) of sub-section (1) of Section
      19, sub-section(2) of Section 44 and Section 57 and
      58] or of any rule, direction or order made thereunder,
      he shall, upon conviction by a court, be punishable

H     (ij in the case of an offence the amount or value involved
    VIJAY MALLYA v. ENFORCEMENT DIRECTORATE, MIN. 717
          OF FINANCE [ADARSH KUMAR GOEL, J.)

        in which exceeds one lakh of rupees with imprisonment A
        for a term which shall not be less than six months, but
        which may extend to severi years and with fine; Provided
        that the Court may, for any adequate and special
        reasons to be mentioned in the judgment, impose a
        sentence of imprisonment for a term of less than six B
        months;

        (ii) in any other case, with imprisonment for a term which
        may extend to three years or with.fine or with both."
                                                                     .c
   10. In Enforcement Directorate vs. M. Samba Siva
Raol, it was observed :

        "3. xxxxxxxx

        The Foreign Exchange Regulation Act, 1973 was                 D
        enacted by Parliament, basically for the conservation
        of the foreign exchange resources of the country and
        the proper utilisation thereof in the interest of economic
        development of the country. The Act having been
        enacted in the interest of national economy, the              E
        provisions thereof should be construed so as to make
        it workable and the interpretation given should be
        purposive arid the provisions should receive a fair
        construction without doing any violence to the language       F
        employed by the legislature. The provisions of Section
        40 itself, which confers power on the officer of the
        Enforcement Directorate, to summon any person whose
        attendance he considers necessary during the course
        of anyinvestigation, makes it binding as provided under       G
        sub-section (3) of Section 40, and the investigation or
        the proceeding in the course of which such summons
        are i.ssued have been deemed to be a judicial

2
    (2000) 5 sec 431                                                  H
718       SUPREME COURT REPORTS                   [2015] 8 S.C.R.


A        proceeding by virtue of sub-section (4) of Section 40.
         These principles should be borne in mind, while
         interpreting the provisions of Section 40 and its effect,
         if a person violates or disobeys the directions issued
         under Section 40."
B
         11. The above observations clearly show that a complaint
    is maintainable if there is default in not carrying out summons
    lawfully issued. The averments in the complaint show that the
    summons dated 21•i December, 1999 were refused by the
C . appellant and earlier summons were not carried out
    deliberately. The averments in paras 3 and 4 of the complaint
    are as follows :

         "3. That the complainant issued a summons dated
o        21.12.1999 under Section 40 of FERA, 1973 in
         connection with the impending investigations for the
         appearance of the accused on 3. 1. 2000 but the same
         have been returned back by the postal authorities with
         the remarks "refused".
E
         It is submitted that the accused has deliberately
         avoided his appearance before the Investigating Officer
         and on account of his non co-operative attitude the
         investigation has come to a standstill.
F
         4. It is respectfully submitted that the accused has been
         intentionally avoiding his appearance before the
         Enforcement Directorate knowing fully well that non
         compliance of the directions made under Section 40
G        of the Act renders the person liable for prosecution in a
         Court of/aw under Section 56 of the Act which is a non-
         bailable offence. It is further submitted that by virtue of
         Section 40(3) of the Act, the accused was bound to
         appear before the Officers of the Enforcement
H        Directorate in the best interest of investigation. Section
 VIJAY MALLYA v. ENFORCEMENT DIRECTORATE, MIN. 719
       OF FINANCE [ADARSH KUMAR GOEL, J.]

     40(3) is reproduced below for kind perusal and ready A
     reference to this Hon'ble Court:

     "Section 40(3) :

    · (3) All persons so summoned shall be bound to attend
                                                                8
      either in person or by authorised agents, as such officer
      may direct; and all persons so summoned shall be
      bound to state the truth upon any subject respecting
      which they are examined or make statements and
      produce such documents as may be required."               c
       It is respectfully submitted that non compliance of any
     rule, directions or law is punishable under Section 56
     of the Act. The accused willfully failed to appear before
     the Enforcement Directorate at the given venue, time
                                                               0
     and dates mentioned in the respective summons and
     has thus, .contravened the provisions of Section 56 of
     the Act."

    12. As regards summons dated .81h November, 1999,
learned senior counsel for the appellant has referred to the   E
explanation offered by the appellant. Letter dated 22°d
November, 1999 is as follows :

     ''.As you will appreciate, I am the Chairman of several
     public Companies both in India as well as in the USA F
     and, therefore, my schedule is finalized several months
     in advance. During the fiscal year end period, the
     problem only gets compounded.

     I would, therefore, request you to excuse me from the G
     personal appearance on November 26, 1999 as I will
     be out of India.

     I am willing to fix a mutually convenient date to appear
     before you."                                             H
720         SUPREMECOURTREPORTS                       (2015] 8 S.C.R.


A         13. From the tenor of the letter, it appears that it was not a
      case of mere seeking accommodation by the appellant but
      requiring date to be fixed by his convenience. Such stand by
      a person facing allegation of serious nature could hardly be
      appreciated. Obviously, the enormous money power makes
B     him believe that the state should adjust its affairs to suit his
      commercial convenience.

         14. In our opinion, the appeal is required to be dismissed
    for more than one reason. The fact that the adjudicating officer
C chose to drop the proceedings against the appellant herein
    does not absolve the appellant of the criminal liability incurred
    by him by virtue of the operation of Section 40 read with Section
    56 of the Act. The offence under Section 56 read with Section
    40 of theAct is an independent offence . .If the factual allegations
D contained in the charge are to be proved eventually at the trial
    of the criminal case, the appellant is still liable for the
    punishment notwithstanding the fact that the presence of the
    appellant was required by the adjudicating officer in connection
   with an enquiry into certain alleged violations of the various
E provisions of the Act, but at a subsequent stage the
    adjudicating officer opined that there was either insufficient or
   no material to proceed against the appellant for the alleged
   violations of the Act, is immaterial. The observations made by
F this Court in Roshanla/ Agarwal (supra), in our opinion, must
   be confined to the facts of that case because this Court
   recorded such a conclusion "having regard to the material
  ·existing against the respondent and the reasons and findings
   given in the aforesaid orders ..... ". The said case cannot be
G read as laying down a general statement of law that the
   prosecution of the accused, who is alleged to be guilty of an
   offence of not responding to the summons issued by a lawful
   authority for the purpose of either an inquiry or investigation
   into another substantive offence, would not be justified.
H Exonerating such an accused, who successfully evades the
· VIJAY MALLYA v. ENFORCEMENT DIRECTORATE, MIN. 721
        OF FINANCE [ADARSH KUMAR GOEL, J.]

process of law and thereby commits an independent offence A
on the grouRd that he is found to be not guilty of the substantive
offence would be destructive of law and order, apart from being
against public interest. Such an exposition of law would only
encourage unscrupulous elements in the society to defy the
authority conferred upon the public servants to enforce the law B
with impunity. It is also possible, in certain cases that the time
gained by such evasive tactics adopted by a person
summoned itself would result in the destruction of the material
which might otherwise constitute valuable evidence for
establishing the commission of a substantive offence by such C
a recalcitrant accused.

      15. Secondly, an appeal against the conclusion of the
adjudicating officer that the proceedings against the appellant
herein for the alleged violation of the various provisions of the D
FERAAct are required to be dropped has not even attained
finality. Admittedly, such an order of the adjudicating officer
confirmed by the statutory app.ellate authority is pending
consideration in an appeal before the High Court. Though, in
our opinion, the result of such an appeal is immaterial for E
determining the culpability of the appellant for the alleged
violation of Section 40 read with Section 56, we must record
that the submission made on behalf of the appellant in this
regard itself is inherently untenable.
                                                                  F
     16. For all the abovementioned reasons, we do not see
any merit in the appeal. We are also of the opinion that the
entire approach adopted by the appellant is a sheer abuse cif
the process of law. Any other view of the matter would only go
to once again establishing the notorious truth stated by Anatole G
France that- "the law in its majestic equality, forbids the rich
as well as the poor to sleep under bridges, to beg in the streets
and to steal bread".

    17. The appeal is dismissed with exemplary costs             H
722          SUPREME COURT REPORTS                 [2015) 8 S.C.R.


A     quantified at rupees ten lakhs to be paid to the Supreme Court
      Legal Service Authority.

      Devika Gujral                                Appeal dismissed.