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No criminal proceedings under FERA after ED clean chit: SC

The ruling was passed by a majority decision of a three-judge bench with one of the dissenting judges taking a contrary view that criminal proceedings can go on irrespective of the clean chit by the adjudicating officer.



New Delhi: In a significant verdict, the Supreme Court has ruled that a person cannot be subjected to criminal prosecution for violation of foreign exchange law if the adjudicating authority in the Enforcement Directorate had already given him a clean chit.

The ruling was passed by a majority decision of a three-judge bench with one of the dissenting judges taking a contrary view that criminal proceedings can go on irrespective of the clean chit by the adjudicating officer.

The bench passed the ruling upholding the appeal filed by a Kolkota-based businessman Radheshyam Kejriwal challenging the proceedings initiated by the ED under the Foreign Exchange Regulation Act-FERA (now replaced by FEMA).

The trial court and later the Calcutta High Court had dismissed his plea following which he moved the apex court.

The majority view was that it would be an abuse of the process of court if ED is allowed to pursue the criminal case after he has been exonerated in departmental proceedings.

"In the face of the finding by the Enforcement Directorate in adjudication proceeding that there is no contravention of any of the provisions of the Act, it would be unjust and an abuse of the process of the court to permit it
to continue with the criminal prosecution," justices HS Bedi and CK Prasad said.

The third judge of the bench, Justice P Sathasivam, however, differed and said findings of the departmental proceedings is not binding on the court.

"Legislature intended to treat the two proceedings as independent of each other. There is nothing in the present Act to indicate that a finding in adjudication is binding on the court in a prosecution," Justice Sathasivam said adding that the two proceedings are independent.

Kejriwal pleaded he cannot be prosecuted after the adjudication officer of the department came to the conclusion that the allegation made against him of violating FERA rules cannot be sustained.

He said ED on the same allegation, which was the subject matter of adjudication proceedings, filed a complaint against the appellant for prosecution under the Act before the Metropolitan Magistrate.

Granting relief to Kejriwal, the apex court said, "The appeal is allowed, the impugned judgment of the Metropolitan Magistrate and the order affirming the same by the High Court are set aside and his prosecution is quashed."

PTI

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