Dismissed

Minesh Devendra Shah@Manish Shah v. State of Punjab and Ors.

Punjab & Haryana HC10 Aug 2010CRM-M/6012/2009

Case brief

AI extract

What is this about?

Petitioner sought quashing of FIR alleging cheating and forgery. Petitioner argued immunity from prosecution under Customs Act rendered FIR a misused process of law. Court held immunity was limited to Customs Act and did not bar IPC prosecution, so FIR dismissed.

What did the court decide?

Petition for quashing dismissed; interim protection granted for apparatus under Section 438 Cr.P.C to file for bail if application filed within 15 days.

Minesh Devendra Shah@Manish Shah Vs State of… — Cheque Dishonour | Punjab & Haryana HC (2010)

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Crl. Misc. No.M-6012 of 2009

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IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH.

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Crl. Misc. No.M-6012 of 2009

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Date of Decision: 10.08.2010

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Minesh Devendra Shah @ Manish Shah

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....Petitioner

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Versus

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State of Punjab and others

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...Respondents

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CORAM : Hon'ble Ms. Justice Nirmaljit Kaur

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Present:Mr. Vikram Chaudhri, Advocate for the petitioner.

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Mr. K.S. Pannu, D.A.G., Punjab for the respondent-State.

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Mr. Anmol Rattan Sidhu, Sr. Advocate with Mr. Rajesh Narang, Advocate for the respondent-complainant.

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Whether Reporters of Local Newspapers may be allowed to see the judgment ?

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To be referred to the Reporters or not ?

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Whether the judgment should be reported in the Digest ?

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NIRMALJIT KAUR, J.

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This is a petition under Section 482 Cr.P.C for quashing of FIR No.256 dated 28.12.2007 registered under Sections 420, 406, 467, 471 and 120-B IPC at Police Station City Batala and all other consequential proceedings arising therefrom.

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Brief facts of the case are that the petitioner is a director of M/s Deluxe Kaaran Imports Pvt. Ltd, Mumbai. The company of the

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petitioner is engaged, inter alia, in the business of imports of Plastic Raw Material (Plastic Granules) used in the manufacture of plastic bags etc. Further, the petitioner is also a director of M/s Esskay-Bee International Pvt. Ltd., inter alia, engaged in the same business.

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Intelligence report was gathered by the officers of the Directorate of Revenue Intelligence (DRI), Mumbai indicating misuse of Target Plus Scheme (TPS) by M/s Deluxe Kaaran Imports Pvt. Ltd., Mumbai. The intelligence indicated that M/s Deluxe Kaaran Imports Pvt. Ltd, Mumbai and the petitioner as its director, in association with certain Delhi and Mumbai based DGFT Licence brokers had arranged imports of various plastic raw materials under claim for exemption from customs duty against Target Plus Licences (TPL) instead to North India based rice exporters viz., (1) M/s H.M. Overseas, Shaharanpur, U.P (2) M/s New Bharat Rice Mills, Batala, Punjab (complainant in the FIR registered against the petitioner) 3. M/s R.P. Basmati Rice Ltd., Karnal, Haryana (4) M/s Goel Overseas, Karnal, Haryana (5) M/s Puran Chand Rice Mills, Karnal, Haryana and (6) M/s Tilak Exports, Delhi. The duty free imported goods i.e. plastic raw materials were subsequently allegedly diverted to local market by the petitioner in contravention of “Actual User” conditions of the licences resulting in evasion of customs duties to the extent of Rs.5 crores.

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Detailed investigation was carried out by the DRI in respect of different licence holders. With regard to the firm of the complainant Ms/ New Bharat Rice Mills, Batala, Punjab, it was alleged that they had obtained three TPS licences during August 2006 totally valued at Rs.1,70,71,114/-. Utilizing the said licences partly, 1006.5 MT of plastic materials involving customs duty of Rs.1,46,75,646/- was found imported in its name without payment of duty. The original importers of these goods were found to be DKIPL and EBIPL who had sold them to M/s New Bharat

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Rice Mills on High Seas Sale basis.

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On account of the allegations of violation of the actual user conditions of the TPS licences, the petitioner, as well as, the complainant along with others approached the Settlement Commission, Additional Bench, Customs and Central Excise, Mumbai, Utpad Shulk Bhavan, Bandra Kurla Complex, Bandra (EAST), Mumbai. Vide a comprehensive order dated 27.06.2008, the Settlement Commission arrived at a conclusion that both the petitioner, as well as, the complainant and other TPS licence holders with intention to defraud the revenue, had violated the provisions governing import of goods under the TPS licences by illegally diverting the duty free imported goods to local market. However, while imposing penalty on the petitioner, as well as, the complainant and other TPS Licence holders, the Settlement Commission granted complete immunity to the petitioner, as well as, the complainant from prosecution under the Customs Act. The customs duty imposed upon M/s New Bharat Rice Mills, Batala, Punjab i.e. the respondent-complainant was Rs.1,46,75,646/-, on which, Rs.3,26,400/- was levied as interest with further penalty of Rs.25,00,000/-, whereas, Rs. 25,00,000/- was imposed upon the present petitioner as penalty by the Settlement Commission. Thereafter, vide same order, immunity from the prosecution was granted under Section 127H of the Customs Act. The complainant challenged the said order of the Settlement Commission vide Civil Writ Petition No.12873 of 2008, which was dismissed in limine vide a detailed order.

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In view of the above facts, learned counsel for the petitioner contended that the registration of the case bearing FIR No.256 dated 28.12.2007 under Sections 420, 406, 467, 471 and 120-B IPC at Police Station City Batala is, therefore, the misuse of process of law.

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While praying for quashing of the FIR, learned counsel for the

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Crl. Misc. No.M-6012 of 2009

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petitioner made the following submissions :-

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(a) that Since the Settlement Commission has settled the matter, no dispute relating to the subject matter can be raked in any other forum. After the settlement of the matter, when the Settlement Commission grants immunity to a person under Section 127H of the Customs Act, 1962, the Settlement Commission regularizes the act of the person which was supposed to be violative of the provisions of the law, meaning thereby that whatever was alleged to have been committed by the said person becomes non-est, as if he has not committed any breach of law, the person becomes a person who has not at all committed any act or omission in respect of the goods.

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(b) that it is clear from perusal of the admitted statements recorded in the adjudication of the proceedings before the DRI, as well as, additional facts and circumstances that the FIR is a gross abuse of the process of law. During the course of investigation by the Directorate of Revenue Intelligence, the statement of Sanjeev Ghosla, the authorized signatory of M/s New Bharat Rice Mills and the son of the complainant was recorded and the said Sanjeev Ghosla had admitted in his statement that the agreement was signed only for name sake and the terms of the agreement were not required to be implemented. Thus, it is evident from the statement of the son of the complainant that the transaction was a

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Crl. Misc. No.M-6012 of 2009

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sham transaction and nothing was due from the present petitioner.

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Learned counsel for the respondent, however, vehemently opposed the prayer made by learned counsel for the petitioner and contended that the immunity granted to the petitioner is under the Customs Act and not under the Indian Penal Code and that prior to the amendment i.e. before 01.06.2007, there was a provision for granting immunity under the Indian Penal Code, whereas, as per the Amendment Act, no such immunity can be granted under the Indian Penal Code. Moreover, the statement was not made by the complainant but by the son of the complainant. Even the said statement is being misread by the petitioner to mislead the Court and that the order of the Settlement Commission is qua the dispute under the Customs Act and not inter-se between the parties i.e. the petitioner and the respondent.

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Learned counsel for the parties were heard at length.

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The first question that arises is as to whether the allegation in the FIR covers the dispute settled by the Settlement Commission vide its Order dated 27.06.2008 or not.

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As stated before this Court, the Ministry of Commerce, Government of India in order to encourage exports and with a view to provide benefits to exporters from time to time announces various incentives schemes and the same are offered to the exporters as recognition for their efforts in earning foreign exchange for the country. In view of that, the Director General of Foreign Trade issued Target Plus License to eligible exporters on achieving incremental growth during a financial year as compared to their exports during the previous financial year. Such licenses are non transferable and are issued with actual user conditions allowing the exporters to import duty free goods.

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The respondent-complainant was issued three licenses being

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eligible. In May, 2007, the answering respondent entered into a transaction with the petitioner for the purchase of plastic granules on high seas sale basis, whereupon, the petitioner cleared the said goods on behalf of the answering respondent from the custom authorities against the said Target Plus Scheme Licenses (TPS). However, after clearing the goods, the said Minesh Shah instead of delivering the goods to the answering respondent sold the same in the open market in gross violation of the Target Plus Scheme.

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The Directorate of Revenue Intelligence (DRI) came to know that TRS license holders, having connivance with Minesh Shah-petitioner forged the provisions governing import of goods under the TRS licenses. Thus, it was held that the respondent-complainant allowed the petitioner to utilize the license for financial gains as themselves could not utilize the license in accordance with target + scheme. It was in these circumstances that the respondent had to pay the customs duty for the import of goods by the petitioner, whereas, the allegation in the FIR is that the respondentcomplainant was made to pay to the Customs Department, an amount of Rs.1,50,02.046/- for the imported goods which were not received by the complainant. Rather, the petitioner had misappropriated the imported goods in order to cheat the complainant and to cause loss to the complainant and gain to himself by selling them directly in the market instead of giving to the complainant. The said allegation in the FIR reads as under :-

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“ That the custom department demanded the custom on the purchase of the above mentioned goods and the complainant had deposited the sum of Rs.1,50,02.046/- to customs department vide seven bank drafts as per licences. Till date, the complainant had not received the above said imported goods and the accused along with broker Rajeev Kandhar had misappropriated the imported goods either that plastic

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Crl. Misc. No.M-6012 of 2009

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granules in order to cheat the complainant with dishonest intention to cause wrongful loss to the complainant and gain to themselves after making alterations or destruction of the valuable security or delivery of property and accused were not entitled to transfer any valuable security or receive any money on behalf of the complainant, thus, committed forgery of the valuable security in a duly deal rooted in criminal.”

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With respect to the statement made by the son of the complainant on which heavy reliance is placed by the petitioner to show that the agreement was admittedly signed for the name sake and so far the terms of agreement were not required to be implemented and no goods were imported requires to be read in toto. The same reads as under :-

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“ ...Now you have asked whether we have made payments to High Sea Sellers towards high sea sale of the goods, here I have to reply that so far I have not paid any amount to them. Now you have asked me what were the terms of payment in the High Sea Sale Agreement. Here I have to say that as per agreement M/s New Bharat Rice Mills was to make payments to M/s Deluxe Kaaran Imports Pv. Ltd. and M/s Eskay Bee International Pvt. Ltd. on presentation of the sellers invoice bill together with the usual shipping documents. Though I have relieved the said documents I have not made any payment to the High Sea Sellers, M/s Deluxe Kaaran Imports Pvt. Ltd. and M/s Eskay Bee International Pvt. Ltd. Here I admit that these agreements were signed for namesake and so far the terms of the agreement were not been implemented. I can now say that Shri Minesh Shah has signed/arranged these High Sea Sale Agreements only to get clear the goods under our licenses without payment of duty.”

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The part of the statement, which reads “ I can now say that

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Shri Minesh Shah has signed/arranged these High Sea Sale Agreements

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Crl. Misc. No.M-6012 of 2009

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only to get clear the goods under our licenses without payment of duty.” does not indicate, in any way, that goods had not been actually imported. Thus, the allegation that the said goods were not given to the respondentcomplainant but were given to the local market and whether it was a paper transaction as stated by the petitioner will require investigation and amounts to dispute inter-se between the petitioner and the complainant who was made to pay the customs duty etc. in the either of the situation i.e. either for the goods sold in the local market or even if it was a paper transaction. The allegations in the FIR also seems to find support from the findings of the Settlement Commission, which reads as under :-

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“ It was also evident that the entire activities related to clearance and also transportation of duty free material was managed by Shri Shah either directly or through his staff. The second stage of the fraud was related to diversion of duty free imported material without any processing in the local market. The entire scheme related to diversion and fabrication of documents to mislead the agencies was masterminded and executed by Shri Shah. The most important aspect of the case was related to illegal sale of the duty free imported goods cleared under TPS licences of various licence holders. Investigations revealed that the goods cleared under the said licences were sold in the market either at Mumbai or Delhi by Shri Minesh Shah in cash and without any document. Shri Shah appeared to be the main beneficiary of the fraud which had been perpetuated under these TPS licenses. He was responsible for illegal diversion and sale of material imported without payment of duty, in the local market.”

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Although, the Settlement Commission found the respondentcomplainant being the TPS license holder violating the provisions governing the import of goods under the TPS license by illegally allowing

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the imported goods to local market and allowed themselves to be used by Minesh Shah for obvious financial gains does not mean that the inter-se dispute between the petitioner and the complainant is settled by the same order.

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The argument of learned counsel for the petitioner that no goods were imported and it was a sham transaction rather makes it even more necessary that the investigation should be conducted and truth established.

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There is no merit in the argument raised by learned counsel for the petitioner that they are granted immunity from the prosecution under Section 127J of the Customs Act, 1962 and, therefore, the FIR is the misuse of process of law. The petitioner is wrongly relying on the old Section 127H, which has since been amended. The amended provisions of Section 127H introduced by way of amendment w.e.f. 01.06.2007 reads as under :-

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“127H. Power of Settlement Commission to grant immunity from prosecution and penalty.-(1) The Settlement Commission may, if it is satisfied that any person who made the application for settlement under Section 127B has co-operated with the Settlement Commission in the proceedings before it and has made a full and true disclosure of his duty liability, grant to such person, subject to such conditions as it may think fit to impose, immunity from prosecution for any offence under this Act (and also either wholly or in part from the imposition of any penalty and fine) under this Act, with respect to the case covered by the settlement.”

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While granting the immunity, the Settlement Commission, in its Order dated 27.06.2008 had clarified that the said immunity was under

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the Customs Act, 1962. The said order reads thus :-

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“ Prosecution : We grant immunity to all the applicants from prosecution under the Customs Act, 1962 in so far as this case is concerned, subject to the conditions that the penalties are paid within 30 days of this Order.

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The above immunities are granted under sub-Section (1) of Section 127 H of the Act. Attention is also invited to the provisions under sub section (2) and (3) of the Section 127 H ibid.”

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Thus, the immunity from prosecution is only under the Customs Act and the same does not grant immunity under the Indian Penal Code.

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Moreover, the order of the Settlement Commission does not come to the rescue of the petitioner qua the dispute between the petitioner and the respondent-complainant as the same has resolved the dispute qua the petitioner and the customs department only.

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Moreover, the matter is still under investigation. This Court, in the case of Manjula Sinha vs. State of U.P. reported in 2007(3) R.C.R. (Criminal) 778, held in para 9 as under :-

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“ 9. As noted above, the powers possessed by the High Court under Section 482 of the Code are very wide and the very plenitude of the power requires great caution in its exercise. The court must be careful to see that its decision in exercise of this power is based on sound principles. The inherent power should not be exercised to stifle a legitimate prosecution. The High Court being the highest court of a State should normally refrain from giving a prima facie decision in a case, where the entire facts are incomplete and hazy, more so when the evidence has not been collected and produced before the Court and the issues involved, whether factual or legal, are of magnitude and cannot be seen in their true perspective without sufficient

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material. Of course, no hard-and-fast rule can be laid down in regard to cases in which the High Court will exercise its extraordinary jurisdiction of quashing the proceeding at any stage.”

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There are specific allegations in the FIR and even the stand of the petitioner himself that the receipt of goods is only a paper transaction is a disputed question which requires to be proved and truth established. In the facts of the present case, it would not be fair to hurriedly end the legitimate litigation.

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The petition is, accordingly, dismissed.

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Learned counsel for the petitioner, however, pleaded that admittedly, he was earlier granted interim bail by this Court vide Order dated 14.08.2008, which was subsequently modified with a direction to the Investigation Agency to take the petitioner into custody. However, liberty to apply afresh and obtain orders from any other Court or the Court under Section 438 Cr.P.C was granted with liberty as under :-

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“ However, this direction is certainly subject to

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the legal rights of Minesh Devendra Shah or subject to any order obtained by him u/s 438 Cr.P.C from any other court or from this court.”

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The petitioner did not file the said application under Section

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438 Cr.P.C as meanwhile, the appearance of the petitioner before the trial Court was exempted till the filing of the challan. It is also not denied that the petitioner was even arrested at Mumbai on the warrants of arrest issued by the Court at Batala on 11.08.2008 and released on 14.08.2010. Thus, taking into account the totality of facts of the present case as already narrated in detail, I deem it proper to grant interim protection to the petitioner to enable him to appear before the trial Court and file his application for bail under Section 438 Cr.P.C. However, in case, the same is filed within 15 days from the receipt of a copy of this Order, he shall be

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enlarged on bail on his furnishing bail bonds to the satisfaction of the trial Court as well as on such other terms as imposed by it, including the condition that he shall join investigation as and when called by the Investigating Agency with liberty to the prosecution to move for cancellation of the bail, in case, the petitioner does not join the investigation.

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10.08.2010 gurpreet

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(NIRMALJIT KAUR) JUDGE

Minesh Devendra Shah@Manish Shah v. State of Punjab and Ors.

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Minesh Devendra Shah@Manish Shah v. State of Punjab and Ors.

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