IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 13TH DAY OF MARCH, 2019 BEFORE THE HON'BLE MR. JUSTICE JOHN MICHAEL CUNHA WRIT PETITION No.27611 OF 2016 [GM-RES] BETWEEN:
MR. IMTIAZ AHMED S/O. LATE SHAIK MOHAMMED, AGED ABOUT 52 YEARS, HOLDING INDIAN PASSPORT NO. Z1367986 ISSUED AT DUBAI, UAE, P.O. BOX 91748, DUBAI UAE, THROUGH HIS GENERAL POWER OF ATTORNEY HOLDER, SHRI. SHABIR AHMED, S/O. LATE SHAIKH MOHAMMED, AGED ABOUT 48 YEARS, R/AT SHAIKH MANZIL, V.P. NAGAR, 5TH CROSS, INDRALI, MANIPAL-576 102.
(By Sri./Smt : MANU KULKARNI) AND:
1. UNION OF INDIA THROUGH THE SECRETARY, MINISTRY OF FINANCE DEPARTMENT OF REVENUE, NORTH BLOCK, NEW DELHI 110 001.
... PETITIONER 2. COMMISSIONER OF CUSTOMS NEW CUSTOMS HOUSE, PANAMBUR, MANGALORE-575 010.
3. ASSISTANT COMMISSIONER OF CUSTOMS NEW CUSTOMS HOUSE, PANAMBUR, MANGALURU-575 010.
4. STATE OF KARNATAKA THROUGH DEPARTMENT OF HOME, VIDHANA SOUDHA, DR. AMBEDKAR VEEDHI, BANGALORE-560 001, KARNATAKA.
... RESPONDENTS (By Sri./Smt : C SHASHIKANTHA CGC FOR R1-R3) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA READ WITH SECTION 482 OF THE CODE OF CRIMINAL PROCEDURE, 1973, PRAYING TO CALL FOR THE RECORDS AND THEREAFTER QUASH AND SET ASIDE THE PROSECUTION AGAINST THE PETITIONER VIDE CRIMINAL COMPLAINT BEARING NO. C.C. 210/2014 (P.C.NO.13/2012) (ANNEXURE-A) PENDING BEFORE THE COURT OF PRINCIPAL SESSIONS JUDGE, (SPECIAL JUDGE) DAKSHINA KANNADA, MANGALURU WITH CONSEQUENTIAL RELIEFS.
THIS WRIT PETITION COMING ON FOR PRELIMINARY HEARING IN ‘B’ GROUP, THIS DAY, THE COURT MADE THE FOLLOWING:
O R D E R Petitioner is Accused No.2 in CC No.210/2014 pending on the file of Principal Sessions Judge, [Special Judge], Dakshina Kannada, Mangalore.
2. The facts leading to the prosecution of the petitioner are as follows:
Acting upon a specific intelligence that S.L.N. Overseas Traders [SLN] in Udupi District was involved in fraudulent export of garments to Dubai through New Mangalore Port and was availing ineligible duty-free import benefits under DFIA Scheme by exporting cheap quality ladies midi, made of assorted low grade textile materials, passing it off as ‘ladies midi made of cotton/polyester corduroy’ by mis-declaring GSM of the fabric for importing more quantity of input [corduroy fabric] duty free, than otherwise admissible under the DFIA Scheme, investigations were commenced. Live export consignments entered for exports vide three shipping bills were seized in June 2009 and it was noticed that SLN had exported under DFIA scrips, 21 shipments [vide 50 shipping bills] of garments with total declared FOB value of US$ 3,461,952 equivalent to Rs.16,07,44,035/- during the period from August 2007 to May 2009 through New Mangalore Port to Jebel Ali/Dubai. The fraudulently obtained scrips thus permitted duty free import of inputs [corduroy fabric] of total CIF value of US$ 2,969,769, equivalent to Rs.13,65,32,196/-.
A show cause notice bearing DRIF No.S/IV/06/2009 dated 20.11.2009 was issued to the petitioner, amongst others, alleging infraction of the Customs Act, 1962 [‘Act’, for short] in respect of goods exported under three shipping bills, proposing penal action, inter alia, against the petitioner. Petitioner submitted a reply and on adjudication, penalty of Rs.13,00,000/- was imposed on the petitioner under section 114[iii] of the Act. In the same investigation, another show cause notice bearing F. No.DRI/S/IV/14/2009 [MRU]/1640/10 dated 2.11.2010 was issued to the petitioner in respect of goods exported under 50 shipping bills. In the show cause notice, it was alleged that the petitioner arranged for seeking money illegally from Dubai to India under the cover of subject exports of SLN by way of inward remittances from certain Dubai based parties, who are actually not the consignees/buyers of the subject goods. It was alleged that money sent by petitioner was collected by one Feroz Khan, a relative of petitioner and proprietor of East West Tourist Corporation. Therefore, penalty was proposed on the petitioner under section 114[iii] of the Act.
Aggrieved by the adjudication order dated 27.10.2010, the petitioner preferred a statutory appeal bearing No.C/273/2011 under section 129A of the Act before the Hon’ble Tribunal, Bengaluru, assailing the order dated 27.10.2010. In the meanwhile, Respondent No.2 issued sanction to prosecute the petitioner. Consequent to said sanction, Respondent No.3 filed impugned criminal complaint bearing CC No.210/2014 seeking action against the petitioner and other accused persons under section 135 of the Act read with Section 34 of Indian Penal Code.
In an appeal filed by petitioner in respect of alleged exports involving 50 shipping bills, the petitioner was exonerated by the Hon’ble Tribunal vide Final Order No.20056/2016 dated 11.01.2016 in Appeal No.C/20334/2015-DB. In respect of the alleged exports involving three shipping bills, petitioner was exonerated by the Tribunal vide Final Order No.20199/2016 dated 19.02.2016 in Appeal No.C/273/2011-DB.
Contending that the petitioner having been exonerated on findings of fact by the Hon’ble Tribunal, continuation of criminal proceedings against the petitioner on same charges and on same set of facts, is an abuse of the process of the court, petitioner has preferred the instant petition seeking to quash and set aside the prosecution initiated against the petitioner in CC No.210/2014 presently pending on the file of the Principal Sessions Judge [Special Judge], Dakshina Kannada, Mangalore.
3. Learned counsel for the petitioner has mainly relied on the decision of the Hon’ble Supreme Court in ‘RADHESHYAM KEJRIWAL v. STATE OF WEST BENGAL’ reported in 2011 [266] E.L.T. 294 [S.C.], and has emphasized that the petitioner having been exonerated on merits in the adjudication proceedings conducted by the competent authority under the Act and the allegations found to be not sustainable, criminal prosecution on same set of facts and circumstances cannot be allowed to continue, the underlying principle being ‘higher standard of proof’ in criminal cases. Further, placing reliance on the decision of the Constitution Bench in ‘HARICHARAN KURMI v. STATE OF BIHAR’ reported in AIR 1964 SC 1184, learned counsel would contend that even on merits, prosecution of the petitioner is sought to be substantiated solely on the basis of confession of the co-accused. Courts have consistently held that confession of co-accused cannot be considered as offence of substantive nature against co- accused person. It is the submission of the learned counsel that, barring the alleged confession statement of Accused No.1, no other material is available to substantiate the charges levelled against the petitioner and moreover, petitioner having been prosecuted on the allegations which are already adjudicated by the competent authority and having been found false and baseless, prosecution of the petitioner is wholly illegal and amounts to abuse of process of court. In support of this submission, learned counsel for the petitioner has referred to the factual findings noted by the CESTAT and has sought for quashing of the proceedings initiated against the petitioner.
4. Learned counsel for the petitioner has also taken up a plea that apart from lack of tangible evidence in proof of above charges, even the trial court lacked territorial jurisdiction to try the alleged offences in view of admitted position that petitioner was all throughout residing in Dubai and therefore in the light of section 1[2] of the Act, prosecution of petitioner is legally not tenable. In support of his arguments, learned counsel has referred to the observations of the CESTAT in its Final Order No.20056/2016 dated 11.01.2016 in Appeal No.C/20334/2015-DB at paragraph-9 wherein relying on the decision in ‘C.K. KUNHAMMED v. CCE reported in 1992 [62] ELT 146, it was held as under:
“I have carefully considered the submissions made before me. So far as appellant C.K. Kunhammed is concerned, admittedly he was abroad not only at the alleged time of commission of offence but also continued to be there even later to the commission of offence and till date. Assuming for the purpose of argument that appellant C.K. Kunhammed had entrusted the gold biscuits in a foreign country, Doha that would not be an offence coming within the mischief of the Customs Act, 1962. The provisions of the Act extend only to the whole of India and not beyond India. Apart from it, the Collector of Customs & Central Excise, Cochin also has no jurisdiction under law to try a person in respect of something which was committed beyond India and in a foreign country which will not come within the mischief of the provisions of the Customs Act, 1962…”
5. Refuting the above submissions, learned counsel appearing for respondents 1 to 3, at the outset, would submit that petitioner having remained absconding from the inception of commission of offence, he is not entitled for any discretionary relief under section 482 of Code of Criminal Procedure. In support of his submission, learned counsel has referred to the following decisions:
[a] ‘ABDUL JABBAR @ SHAFI v. THE STATE OF KARNATAKA AND ANOTHER’ reported in 2016 SCC Online Kar 496 [b] ‘BALAJI S.N. v. STATE OF KARNATAKA’ in Criminal Petition No.2194/2018 [DD – 27.06.2018] [c] ‘GURDEV SINGH KALER v. STATE’ reported in ILR [2007] I DELHI 659 [d] ‘T. MOOSA AND ETC., v. SUB-INSPECTOR OF POLICE, VADAKARA POLICE STATION, ERNAKULAM AND ETC. reported in 2006 CRI. L.J. 1922.
6. Further, placing reliance on the decision of the Hon’ble Supreme Court in ‘PARBATBHAI AAHIR ALIAS PARBATBHAI BHIMSINHBHAI KARMUR AND OTHERS v. STATE OF GUJARAT AND ANOTHER’ reported in AIR 2017 SC 4843, learned counsel has emphasized that petitioner is involved in commission of criminal offences affecting the financial and economic well being of the State. Implications of the act of the petitioner lie beyond the domain of mere dispute between private disputants and hence this Court would not be justified in quashing the proceedings where the acts committed by the petitioner amount to financial or economic fraud or misdemeanor. With regard to the evidentiary value of the statement of co- accused, learned counsel has referred to the decision of the Hon’ble Supreme Court in ‘NARESH J. SUKHAWANI v. UNION OF INDIA’ reported in 1995 Supp [4] SCC 663 and with reference to paragraph-4 thereof has reiterated that statement recorded by Customs officials stands on a different footing. A statement made before the Customs officials is not a statement recorded under section 161 of Cr.P.C; it is a material piece of evidence collected by the officials under section 108 of the Act. Therefore, the said material can certainly be used to connect the petitioner to the offences alleged against him and therefore substantive evidence having been available in proof of the involvement of petitioner in the contravention of the provisions of the Act, prosecution of the petitioner is well justified and cannot be quashed.
7. In the light of the above contentions, three questions arise for consideration, viz.,:
[i] Whether on account of exoneration of the petitioner by the adjudicating authority, criminal prosecution launched against petitioner on the same set of facts and circumstances can be allowed to continue?
[ii] Whether respondent has made out sufficient grounds for prosecution of the petitioner for the alleged offence?
[iii] Whether petitioner is entitled for the relief under section 482 of Cr.PC?
8. Reg. point No.[i]: Insofar as the first contention urged by the petitioner is concerned, there is no dispute that prior to the initiation of criminal prosecution, adjudication proceedings were initiated against the petitioner and penalty was imposed on him under section 114[iii] of the Act. In the said proceedings, he was charged for fraudulent exports by SLN and misdeclaring the value of goods and other particulars. Petitioner challenged the imposition of penalty before CESTAT and in the Final Order dated 11.01.2016 [Final Order No.20056/2016], it was held that the charge laid against the petitioner was baseless. In the said order, it was observed that petitioner herein was neither a partner nor a shareholder of any of the entities to whom the goods were consigned. There was no documentary evidence on record to establish that the goods exported by SLN were cleared directly or indirectly by the petitioner at foreign destination. On the contrary, paragraph 8.3.2 of the show cause notice clearly referred to a documentary evidence in the form of an email originating on 21.02.2009 recovered from Sri. Suresh Prabhu in which said Sri. Suresh Prabhu wrote to his shipping agent Blue Axis Shipping & Freight LLC in Dubai asking for a Company’s name to raise Bill of Lading for shipment of garments. The name of the petitioner was not mentioned in any of the documentary evidence to establish connection of the petitioner with said Blue Axis Shipping & Freight LLC, Dubai. After discussing the evidence produced by the respondent, the Tribunal held that no material was available against the present appellant in proof of the charges leveled against him. Insofar as confessional statement relied on by the prosecution in support of the accusations leveled against the petitioner, the Tribunal has observed in paragraph-5 of the aforesaid order that a specific query was raised from the Bench as to whether barring the confessions of co-accused Sri. Suresh Prabhu and Sri. Feroze Khan, was there any documentary evidence or any other independent evidence against the petitioner to establish any link of the petitioner to the entities to establish his role of abetting in fraudulent exports by SLN and the learned Departmental Representative could not show from records any such evidence.
9. Thus, the Tribunal was of the opinion that there was absolute lack of material tangible evidence against the petitioner and whatever documentary evidence collected by the Department did not conclusively link the petitioner to the alleged offence. The Tribunal was of the opinion that solely on the basis of uncorroborated confession of the co- accused, petitioner cannot be found guilty of the alleged offences and consequently the Tribunal set aside the penalty imposed on the petitioner. It is borne on record that as against the order of the Tribunal, the Commissioner of Customs preferred an appeal before this Court in CSTA No.8/2016. The said appeal was dismissed as withdrawn. As a result, findings recorded by the adjudicating authority has attained finality.
10. In the light of the above findings, the question as to whether exoneration of the accused on merits in adjudication proceedings where allegations are found to be not sustainable at all and the person concerned is held innocent, criminal prosecution on the same set of facts and circumstances can be allowed to be continued, came up for consideration of the Hon’ble Supreme Court in the case of RADHESHYAM KEJRIWAL supra. Reviewing the various authorities on the subject, the Hon’ble Supreme Court in paragraph-38 of the Judgment has culled out ratio of the decision and has broadly stated as follows:
“(i) Adjudication proceeding and criminal prosecution can be launched simultaneously;
(ii) Decision in adjudication proceeding is not necessary before initiating criminal prosecution;
(iii) Adjudication proceeding and criminal proceeding are independent in nature to each other;
(iv) The finding against the person facing prosecution in the adjudication proceeding is not binding on the proceeding for criminal prosecution;
(v) Adjudication proceeding by the Enforcement Directorate is not prosecution by a competent court of law to attract the provisions of Article 20 (2) of the Constitution or Section 300 of the Code of Criminal Procedure;
(vi) The finding in the adjudication proceeding in favour of the person facing trial for identical violation will depend upon the nature of finding. If the exoneration in adjudication proceeding is on technical ground and not on merit, prosecution may continue; and (vii) In case of exoneration, however, on merits where allegation is found to be not sustainable at all and person held innocent, criminal prosecution on the same set of facts and circumstances cannot be allowed to continue underlying principle being the higher standard of proof in criminal cases.”
In the said decision, it is held that the yardstick would be to judge as to whether allegation in the adjudication proceeding as well as proceeding for prosecution is identical and the exoneration of the person concerned in the adjudication proceeding is on merits. As discussed above, adjudication proceedings were initiated against petitioner on the same set of facts and circumstances as alleged in the complaint leading to prosecution of the petitioner. The said allegations are sought to be substantiated on the very same set of material and evidence. Even before the adjudicating authority as well as in the prosecution launched against the petitioner, respondent has mainly relied on confession of co- accused as a material and substantive piece of evidence, to substantiate the charges framed against petitioner. All other material produced by the respondents do not connect the petitioner to the alleged offence. Under the above circumstances, adjudicating authority having recorded clear findings based on merits, in my view, the principles laid down in the above case can be squarely applied to facts of the present case. Since the petitioner is exonerated on merits on the very same set of facts and is held innocent by the adjudicating authority, in my view, criminal prosecution on the same set of facts and circumstances, cannot be allowed to be continued, on the underlying principle of ‘higher standard of proof’ in criminal cases. Therefore, solely on this ground, the proceedings initiated against petitioner are liable to be quashed. Point No.1 is accordingly answered in favour of the petitioner.
11. Reg. point No.[ii]: Insofar as the contention urged by petitioner regarding the prima facie material in proof of accusations leveled against petitioner is concerned, records indicate that barring the confessional statement of co-accused, no other material is available in support of the accusations levelled against petitioner. Regarding the evidentiary value of confessional statement, endeavour is made by learned counsel for respondents 1 to 3 to impress upon the Court that confession recorded by the Customs authorities stand on a different footing, and therefore the said material alone is sufficient to connect the petitioner to the contraventions alleged against him. In support of this argument, learned counsel has placed reliance on the decision of the Hon’ble Supreme Court in NARESH J. SUKHAWANI’s case supra.
12. I have gone through the said decision. In the said proceedings, Customs officials initiated confiscation of foreign exchange and used the statement of Mr. Dudani against the petitioner. The petitioner therein challenged the confiscation proceedings in appeal. The Collector allowed the appeal. On suo motu revision, the Government reversed the order of the Collector and restored the order of the Additional Collector which was affirmed by the High Court. The Joint Secretary to the Government, the revisional authority, relied on confessional statement of the co-accused and concluded that statement of co-accused incriminated the petitioner and accordingly held that contravention was established. In the said context, the Hon’ble Supreme Court held that admission made before the Customs officials is not a statement recorded under section 161 of Cr.P.C; it is a material piece of evidence collected by Customs officials under section 108 of the Act. In that context it was held that the said material can certainly be used to connect petitioner in proof of the contravention, inasmuch as Mr. Dudani’s statement clearly inculpated not only himself but also the petitioner. The Hon’ble Supreme Court has held that statement can be used as substantive evidence connecting petitioner with contravention of exporting foreign currency out of India.
13. As against the said decision, learned counsel for petitioner has placed reliance on the Constitution Bench decision of the Hon’ble Supreme Court in HARICHARAN KURMI’s case [supra]. In the said case, the question about the part which a confession made by a co-accused person can play in a criminal trial came up for consideration of Full Court in the light of Section 30 of Indian Evidence Act, 1872. Section 30 provides that when more persons than one are being tried jointly for the same offence, and a confession made by one of such persons affecting himself and some other of such persons is proved, the Court may take into consideration such confession as against such other person as well as against the person who makes such confession. In paragraph-12 of the said Judgment, the Hon’ble Supreme Court has observed as under:
“As we have already indicated. this question has been considered on several occasions by judicial decisions and it has been consistently held that a confession cannot be treated as evidence which is substantive evidence against a co-accused person. In dealing with a criminal case where the prosecution relies upon the confession of one accused person against another accused person, the proper approach to adopt is to consider the other evidence against such an accused person, and if the said evidence appears to be satisfactory and the court is inclined to hold that the said evidence may sustain the charge framed against the said accused person, the court turns to the confession with a view to assure itself that the conclusion which it is inclined to draw from the other evidence is right. As was observed by Sir Lawrence Jenkins in Emperor v. Lalit Mohan Chockerburtv ILR 38 Cal 559 at p. 588 a confession can only be used to "lend assurance to other evidence against a co-accused". In Periyaswami Moopan v. Emperor ILR 54 Mad 75 at P.77; [AIR 1931 Mad 177 at p. 178] Reilly J. observed that the provision of s. 30 goes not further than this : "where there is evidence against the co-accused sufficient, if,. believed, to support his conviction, then the kind of confession described in s. 30 may be thrown into the scale as an additional reason for believing that evidence." In Bhuboni Sahu v. The King, 76 Ind Appellant. 147 at p.155: [AIR 1949 Police Constable 257 at p.260] the Privy Council has expressed the same view. Sir. John Beaumont who spoke for the Board observed that “a confession of a co-accused is obviously evidence of a very weak type. It does not indeed come within the definition of "evidence" contained in s. 3 of the Evidence Act. It is not required to be given on oath, nor in the presence of the accused, and it cannot be tested by cross-examination. It is a much weaker type of evidence than the evidence of an approver, which is not subject to any of those infirmities. Section 30, however, provides that the Court may take the confession into consideration and thereby, no doubt, makes it evidence on which the court may act; but the section does not say that the confession is to amount to proof. Clearly there must be other evidence. The confession is only one element in the consideration of all the facts proved in the case, it can be put into the scale and weighed with the other evidence."
It would be noticed that as a result of the provisions contained in s. 30, the confession has no doubt to be regarded as amounting to evidence in a general way, because whatever is considered by the court is evidence; circumstances which are considered by the court as well as probabilities do amount to evidence in that generic sense. Thus, though confession may be regarded as evidence in that generic sense because of the provisions of s. 30, the fact remains that it is not evidence as defined by s. 3 of the Act. The result, therefore, is that in dealing with a case against an accused person, the court cannot start with the confession of a co-accused person; it must begin with other evidence adduced by the prosecution and after it has formed its opinion with regard to the quality and effect of the said evidence, then it is permissible to turn to the confession in order to receive assurance to the conclusion of guilt which the judicial mind is about to reach on the said other evidence. That, briefly stated, is the effect of the provisions contained in s. 30. The same view has been expressed by this Court in Kashmira Singh v. State of Madhya Pradesh 1952 SCR 526: [AIR 1952 SC 159] where the decision of the Privy Council in Bhuboni Sahu's Case, 76 Ind. Appellant 147 [AIR 1949 Police Constable 257] case has been cited with approval.”
14. In the light of the authoritative pronouncement of the Hon’ble Supreme Court in the above decision, I need not strain the judgment with any other authority on the issue of the evidentiary value of the confession of a co- accused. In a criminal trial, no doubt, Court is entitled to take into consideration confession of a co-accused, but unlike in a confiscation proceedings, in a criminal trial, Court cannot start with the confession of a co-accused as the foundational fact to record conviction of the accused. On the other hand, as held in the above decision, the proper approach is to consider the other evidence against such an accused person, and if the evidence appears to be satisfactory and the Court is inclined to hold that the said evidence may sustain the charge framed against the accused persons, the Court may rely on the confession with a view to assure itself that the conclusion drawn by it from the other evidence is just and proper. In the case in hand, except the confession of the co-accused, the prosecution has not rested its case on any other piece of evidence to bring home the guilt of the accused. Under the said circumstances, the prosecution of the accused person solely on the basis of the statement of the co-accused that too in the backdrop of exoneration of the petitioner in the adjudication proceedings, in my view, the material produced by the prosecution is not sufficient to proceed against the petitioner for the alleged offence. As a result, point No.[ii] framed above is also answered in favour of the petitioner.
15. Reg. point No.[iii]: The contention urged by the learned counsel for the respondents that on account of the abscondence of the petitioner he is not entitled for any discretionary relief under Section 482 of Cr.P.C. also cannot be accepted. Even though, learned counsel for the respondents have placed reliance on large number of authorities referred above, in all the said cases, the accused therein was declared as a proclaimed offender and in that context it was held that the inherent powers of the Court cannot be exercised in favour of such a proclaimed offender.
But, in the instant case, the records disclose that right from the inception the petitioner was stationed in Dubai. The case of the prosecution is that the petitioner committed the above offence in Dubai. There is nothing on record to show that any proclamation has been issued by the trial Court seeking coercive action against the petitioner. No doubt, the records indicate that the warrant issued against the petitioner has remained unexecuted. Having regard to the overall facts and circumstances of the case, in my view, it is not proper to deny the relief to the petitioner solely on the ground that he has failed to surrender himself before the criminal Court. As I have come to the conclusion that the material collected by the investigating agency prima facie are not sufficient to make out a ground for prosecution of the petitioner for the offences charged against him, in my view, the petitioner cannot be denied the relief under Section 482 of Cr.P.C. Hence, negating the argument advanced by the learned counsel for the respondents, I hold that the prosecution initiated against the petitioner deserves to be quashed.
16. For the above reasons, petition is allowed.
Proceedings pending in C.C.No.210/2014 (P.C.No.13/2012) on the file of the Principal Sessions Judge, (Special Judge), Dakshina Kannada, Mangalore, are hereby quashed only insofar as petitioner [accused No.2] is concerned.
Sd/- JUDGE AN/-