JUDGMENT
Raju, J.
1. The above appeal has been filed against the order of the learned single Judge, dated 30.8.1993 in W.P. No. 16175 of 1993, whereunder the learned single Judge has issued directions as hereunder, while finally disposing of the main writ petition, even at the stage of hearing for admission, on hearing the counsel for the 1st respondent herein/writ petitioner:
After hearing the learned Counsel for the petitioner and after perusing the affidavit filed herein, without going into the merits of the case, I think it suffice to direct the 1st respondent to dispose of the petitioner’s petition filed under Section 52 of the Act for dispensing with the pre-deposit of the penalty amount, on merits and in accordance with law, within eight weeks from the date of receipt of a copy this order, if the same has not been disposed of already, till such time, the further proceedings before the Additional Chief Metropolitan Magistrate’s Court in S.O.C.C. No. 309 of 1993 shall stand stayed. However, it is open to the said Magistrate to proceed further, if the respondents are able to establish that the petitioner’s application for dispensing with the pre-deposit of the penalty has given a disposal. Ordered accordingly. No costs.
2. The relevant facts necessary to appreciate the issue raised before us are that, for the alleged contravention of certain provisions of the Foreign Exchange Regulation Act, 1973, herein after referred to as ‘The Act’ the respondent was proceeded against and apart from ordering the confiscation of the seized Indian currency of Rs. 50,000apenalty of Rs. 5,00,000 (Five lakhs) came to be imposed by the Special Director, Enforcement Directorate (Foreign Exchange Regulation) Act, New Delhi by his order dated 7.8.1990. As per the said order, the penalty imposed should be paid at the office of the Enforcement Directorate by means of a Demand Draft in favour of the Additional Director, Enforcement Directorate, Madras-6 within 45 days of receipt of the order. There is no controversy over the position that the said order of adjudication was duly served on the respondent and he also further filed an appeal to the Foreign Exchange Regulation Appellate Board on 3.9.1990, stated to have been registered also as Appeal FERA.B/683-1990 – as per communication dated 25.6.1992 from the Assistant Registrar of the Board and the appeal is still pending. According to the respondent, along with the said appeal he also filed an application to dispense with the pre-deposit of the penalty under Section 52 of the Act and the Appellate Board has not passed any orders on the said petition also. In the meantime, after giving a notice dated 27.9.1990, calling upon the respondent to remit the penalty within 10 days, on threat of action under Section 57 of the Act, which was acknowledged by the respondent on 10.10.1990. The Assistant Director, Enforcement Directorate, Madras also filed a complaint under Section 57 of the Act before the court of the Additional Chief Metropolitan Magistrate, Economic offences, Egmore, Madras-8 and the respondent was served with summons, dated 14.7.1993 in the said proceedings in E.O.C.C. No. 309 of 1993.
3. It was at that stage the respondent filed W.P. No. 16178 of 1993 and the learned Judge gave directions as noticed supra. The Department has filed that above appeal contending among other things, that the learned single judge ought to have seen that the pendency of proceedings by way of appeal under Section 52 of the Act Would not in any manner debar the prosecution under Section 57 of the Act and the officers of the Department are obliged to and are enjoined by law to act as it has been done in this case. It is also contended that there is no interaction between the proceedings under Section 52 and Section 57 nor could it be stated that action under Section 57 of the Act is interdependent on Section 52. Notice has been ordered to the respondents and the respondent who has been served also is represented by counsel before us. We have heard the learned Counsel appearing on either side.
4. Mr. C.A. Sundaram, learned Counsel appearing for the appellant invited our attention to certain other decisions connecting the very issue before us and stated that the matter requires proper consideration and clarification to set right the anomalies and ensure uniformity of the principles and norms to be applied in a matter like this. In an unreported decision in Crl.M.P. No. 9087 of 1986 dated 8.10.1990. Arunachalam, J. dealt with a petition filed under Section 482 of the Code of Criminal Procedure, seeking to quash the proceedings in C.C. No. 1007 of 1986 on the file of the Additional Chief Metropolitan Magistrate, Madras, in almost similar circumstances. That was a case where, when the appeal was filed before the Appellate Board with a petition for dispensing with the deposit of the penalty imposed. The Board merely granted time within which the amount has to be deposited. But yet the prosecution under Section 57 has been launched and that was challenged before the court in the Criminal O.P. The learned judge held that at the time when the prosecution was launched it suffered no infirmity and that at any rate it was for the petitioner before the learned judge to urge all the grounds and defend the proceedings. In P. Chidamabaram v. The Assistant Director, Directorate of Enforcement, Crl.M.P. Nos. 6362 and 9176 of 1986, dated 17.7.1990, Arunachalam, J. held that it is settled law that the pendency of an appeal before the Foreign Exchange Appellate Board does not ipso facto bar a prosecution. Noticing the fact that in that case, the Appellate Board has also subsequently dismissed the appeal filed by the petitioners therein, the petitions filed under Section 482 of the Code of Criminal procedure came to be dismissed. In K.M. Mohamed Yousuf Sulaika Ummal v. The Assistant Director , Janarthanam, J. held that the fact that the appeal had been entertained by the Appellate Board by assigning a specific number is not by itself sufficient to indicate even by way of implication that the deposit of the penalty amount had been dispensed with and the appeal had been taken on file and that in the absence of arty specific order dispensing With the deposit of the penalty amount by the Board, the contravention amounting to an offence under Section 56 of the Act; gets fruitioned by the elapse of 45 days from the date of receipt of the adjudication order, Which in feet happened in that case, the petitioner before the learned Judge in that case had to undergo the ordeal of trial before the court below. In an unreported decision in L. Kamal Batchd v. the Deputy Director of Enforcement, Madras-6 and Anr. W.P. No. 14431 Of 1993 dated 3.8.1993, Bakthavatsalam, J. held as hereunder:
I do not find any illegality or infirmity in the notice issued by the 1st respondent to the petitioner calling upon the petitioner to pay the penalty amount, in so far as the petitioner has not yet obtained any orders before the appellate authority in the appeal and in the application, as required under Section 52 of the Act…when no order has been passed by the appellate authority, I am of the view that the 1st respondent is right in demanding the petitioner to pay the penalty amount within a particular time. I am also of the view that the action taken by the 1st respondent is only a prosecution and if any orders have been obtained by the petitioner from the appellate authority, he can very well produce that order before the criminal court to defend his rights. As I do not propose to exercise my discretionary power under Article 226 of the Constitution of India in favour of the petitioner, this writ petition is dismissed.
5. The learned Counsel for the respondent relied upon the decision reported in Estes Hubs and Drivers Private Limited v. The Assistant Commissioner(C.T.), Zone VII, Madras-6 and Anr. 1987 T.L.N.J. 230, wherein a Division Bench of this Court dealt with a grievance made by an assessee under the T.N.G.S.T. Act for coercive action taken under Section 22 of the Tamil Nadu Revenue Recovery Act, to attach and bring certain properties of the assessee to sale for recovering the arrears of tax during the pendency of a revision filed before the Deputy Commissioner of Commercial Taxes, who was not prepared to dispose of the same in spite of a direction to do so by the sales tax appellate tribunal. The Division Bench held that it was wholly improper for the Deputy Commissioner to decline to hear and dispose of the revision and that it was equally improper for the Department to initiate revenue recovery proceedings in respect of the liability which is the subject-matter of the revision petition. Relying upon the same, it is contended for the 1st respondent that the delay or lapse in the disposal of the appeal or the petition for dispensing with the pre-deposit of the penalty by passing appropriate prders cannot be a ground for penalising the respondent further and that the Appellate Board being a statutory entity over which the respondent has no control or say, the interests of the respondent ought not to be allowed to be jeopardised in any manner by the lapse of such a Body and that the Department also cannot take undue advantage of the inordinate delay in the disposal of the petitions filed for dispensing with the pre-deposit of penalty by the Appellate Board.
6. The learned Counsel for the appellant also relied upon a decision of the Supreme Court reported in P. Jayappan v. S.K. Perumal . For the assessment year 1977-78, the petitioner appears to have filed a return disclosing certain income and the same was accepted. Thereafter, in a search conducted at the residence of the petitioner under Section 132 of the Income-Tax Act, resulting in the seizure of several documents and account books which revealed suppression of purchases, existence of several bank accounts, fixed deposits, etc. On the view that the petitioner therein has filed deliberately false returns, complaints were filed against him for offences under Sections 276-C and 277 of the Act and Sections 193 and 196 of the I.P.C. The petitioner filed petitions under Section 482 of the Criminal Procedure Code, before the High Court to quash the same contending that the launching of prosecution was premature on the ground that the re-assessment proceedings are pending and have not been completed. This High Court dismissed the petitions. The matter was pursued before the Supreme Court of India by means of Special Leave Petitions. The Apex Court held in such circumstances as hereunder:
6. It may be that in an appropriate case the criminal court may adjourn or postpone the hearing of a criminal case in exercise of its discretionary power under Section 309 of the Code of Criminal Procedure if the disposal of any proceeding under the Act which has a bearing on the proceedings before it is imminent so that it may take also into consideration the order to be passed therein. Ever here, the discretion should be exercised judicially and in such a way as not to frustrate the object of the criminal proceedings. There is no rigid rule which makes it necessary for a criminal court to adjourn or postpone the hearing of a case before it indenitely or for an unduly long period only because some proceeding which may have some hearing on it is pending elsewhere. But this, however, has no relevance to the question of maintainability of the prosecution. The prosecution in those circumstances cannot be quashed on the ground that it is a premature one;
7. On a careful consideration of the relevant provisions of the Act, we are of the view that the pendency of the re-assessment proceedings cannot act as a bar to the institution of the criminal prosecution for offences punishable under Section 276-C or Section 277 of the Act. The institution of the criminal proceedings cannot in the circumstances also amount to an abuse of the process of the court. The High Court was, therefore, right in refusing to quash the prosecution proceedings in the four cases instituted against the petitioner under Section 482 of the Code of Criminal Procedure.
7. We have carefully considered the scheme underlying the provisions contained in Sections 52, 56 and 57 of the Act in the light of the various decisions placed before us for our consideration. In our view, the ratio of the decision of the Supreme Court reported in P. Jayappan v. S.K. Perumal would squarely apply to the case on hand and the decision of the learned single Judges referred to supra are quite in conformity with the principles and ratio laid down by the Apex Court. Whatever may be the course that might be adopted by the criminal court on entertaining a complaint under Section 57 of the Act in exercise of its discretionary powers to await or postpone the proceedings before it pending disposal of the Appeal Proceedings under the Act which may have a bearing on the proceedings before the criminal court, the pendency of such proceedings under Section 52 of the Act does not affect in any manner the maintainability of the prosecution and the prosecution launched cannot be interfered with either on merit or on the ground that it is a pre-mature move. As a matter of fact, even the very learned Judge (Bakthavatsalam, J.), in the. earlier decision, has taken such a view and it is only in the case now under challenge in this appeal has adopted a different approach. The discretion to proceed further in the matter by the criminal court on the prosecution launched under Section 57 of the Act has to be left to the said court itself and it is not for this Court exercising jurisdiction under Article 226 of the Constitution of India to interfere with or impede the course of such proceedings.
8. However, it is necessary to point out as held by the Supreme Court in Uttam Chand v. Income Tax Officer, Central Circle, Amritsar (1982) 1331 .T.R. 909 (S.C.), that the prosecution once instituted may be quashed in the light of the finding recorded by an authority favourable to the assessee under the Income Tax Act subsequently in respect of the relevant assessment proceeding. Similarly, in a case like the one on hand, if in the appeal preferred under Section 52 of the Act the order of adjudication is set aside it will have a bearing on the prosecution launched under Section 57 of the Act and the criminal court cannot ignore such a finding and in an appropriate case it may even drop the proceedings in the light of the order passed in the appeal preferred under Section 52 of the Act against the order of adjudication on the basis of which the prosecution is launched. This proposition is also found in para 5 of the aforesaid judgment of the Supreme Court in P. Jayappan’s case .
9. We consider it necessary to point out that the right of appeal provided under Section 52 of the Act and the right of launching a prosecution under Section 57 of the Act have to be harmoniously construed so as to ensure that neither the right of appeal under Section 52 of the Act against an order of adjudication and the right to seek an order from the appellant authority to dispense with the pre-deposit of the penalty imposed are rendered illusory nor the right of the authorities under Section 57 of the Act to launch prosecution against the party who fails to deposit the penalty as per the order of adjudication is affected. For instance, as in the case before us, the respondent who has been indicated by the adjudication officer by imposing a penalty for alleged violation of the provisions of the Act, has chosen to avail of the remedy of appeal provided under Section 52 of the Act and also further invoked the jurisdiction of the Appellate Board under the second proviso to Section 52 of the Act to dispense with the pre-deposit of the penalty imposed, and the Appellate Board is obliged to consider the relief claimed and pass orders thereon, apart from the disposal of the appeal itself, either rejecting the prayer of the respondent or grant the same either unconditionally or subject to such conditions as the Appellate Board may deem fit without undue delay. This is a substantial right conferred upon the person condemned of having committed the contravention and this right is part of the right of appeal, separately and distinctly recognised by means of a specific provision in the form of a proviso to the main provision itself. We are not concerned with or dealing with case where the person against whom an order imposing penalty has been passed has not chosen to file an appeal in time and/or in addition there to a petition availing of the remedy under the second proviso to Section 52 of the Act. Whatever may be the considerations in such cases, atleast in a case where the appeal has been presented within the period of limitation and with a further application under the second proviso to Section 52 of the Act praying for dispensing with the deposit of the penalty levied, the Appellate Board is obliged to dispose of the claim made and that too within a reasonable period. In this regard it is useful to note that the statutory provision even enjoins on the Appellate Board, of its own direction also to pass orders dispensing with the deposit of the penalty provided that the appellate Board is of the opinion that the deposit to be made will cause undue hardship to the appellant. Thus it becomes even mandatory for the Appellate Board to apply its mind to the relief sought for invoking the second proviso to Section 52 of the Act and pass orders thereon, expeditiously or within a reasonable time either way, in terms of the statutory provisions, and the Appellate Board cannot afford to be either indifferent or delay or postpone matters indefinitely in this regard.
10. There is no serious controversy about the fact that the Appellate Board is an independent Judicial Body at any rate not part and parcel of the administrative hierarchy of the Enforcement Directorate and therefore, neither the Appellant can be said to have any hold or control over the functioning of the Appellate Board nor could the respondent who has filed the appeal have any role in it, particularly because the Tribunal is situated at New Delhi and it will be left to the discretion of the Appellate Board as to when it chose to pass orders. If that be the position, the respondent, a citizen alone cannot be put to a disadvantage or prejudice on account of the mode of functioning of the Appellate Board, particularly when it was for no fault of the respondent who is the appellant before the Board. Having regard to this peculiar situation arising only on account of the mode of functioning of the Appellate Board, it becomes necessary for this Court to balance fairly, equally and equitably too the rights of a citizen and the right of the Department by adopting a reasonable and harmonious construction of the provisions contained in Section 57 of the Act so as to make the provisions contained in the second Proviso to Section 52 of the Act and Section 57 of the Act more purposeful and effective so that substantial justice can be secured to both parties and smooth and harmonious working of the Act can be ensured. In order to achieve this, We are of the view that it will be necessary to declare that wherever the competent authority is apprised of the position about the filing of an appeal well within the time stipulated under Section 52 with a further application invoking the powers of the Appellate Board under the second proviso to Section 52 of the Act, it is open to the concerned authorities to consider the question as to whether they should await the orders of the Appellate Board either way on the application made for dispensing with the deposit of the penalty imposed under the order of adjudication and proceed further under Section 57 of the Act, thereafter and in accordance with any such orders. We are also of the view that the Appellate Board must so devise its procedure in such a way as to dispose of such petitions atleast for dispensing with the deposit of the penalty within a reasonable and specified time-limit so that there will be no harsh or arbitrary enforcement of the powers under Section 57 of the Act. Any other construction of the relative operation and role of Secs.52 and 57 would render the second proviso in Section 52 of the Act totally nugatory or otiose and courts have to take care to see that such a situation is not created resulting in grave injustice to the party to the proceedings of the nature in question.
11. Consequently, we set aside the order of the learned single Judge, allow the appeal and order the dismissal of the writ petition. We make it clear that the criminal court shall be, within its rights, to judicially deal with the situation as pointed out by the Apex Court in P. Jayappan’s case and the observations made in this judgment. The Appellate Board entertaining appeal under Section 52 of the Act shall act in accordance with the observations made herein above. No costs.
