LENNART SCHUSSLER AND ANR. v. DIRECTOR OF ENFORCEMENT & ANR.

Citation: [1970] 2 S.C.R. 760; 1969 INSC 280

Court: Supreme Court of India

Bench: S.M. SIKRI , G.K. MITTER, K.S. HEGDE, A.N. RAY, P. JAGANMOHAN REDDY

Judgment date: 1969-10-14

Case summary

1969 INSC 280. Supreme Court of India judgment dated 1969-10-14. LENNART SCHUSSLER AND ANR. v. DIRECTOR OF ENFORCEMENT & ANR. Read the judgment and case...

Judgment text

76. 4 SUPREME COURT REPORTS (1970] 2 S. C. R LENNART SCHUSSLER AND ANR. v. DIRECTOR OF ENFORCEMENT & ANR. October 14, 1969 [S. M. S! KRI, G. K. MITTER, K. S. HEGDE, A. N. RAY AND P. JAGANMOHAN REDDY, JJ. ] Foreign Exchange Regulation Act (7 of 1947), ss. 4 and 21(1)-lndian Penal Code; s. 120-B-ll/egal acquisition of foreign exchanKe and retention in foreign bank-Agreen1ent to do so whether an offence under s. 21(1) of Act 7 of 1941-Whether applicability of s. 21(1) excludes applicability of s. 120-B I. P. C. -Rete. •tion of foreign exchange not an offence at the ti1ne when agreement entered int~Subsequently made an offence-Acts in pursuance of agree1nent after creation of offence ·whether to be treated as acts in pursuance of conspiracy. The Rayala Corporation (P) Ltd. manufactured Halda typewriters in India v. ith materials imported from Sweden. Initially it made purchases through a firm known as A. B. Atvidabergs (later known as Facit A. B. ).

In 1963 the Rayala Corporation decided to import certain materials through another firm called the Associated Swedish Steels A. B. , Sweden (ASSAB). Appellant No. 1 a Swedish nati"nal, was at the relevant time export manager of A. B. Atvidaberg:;; in 1966 he also became a director of Rayala Corporation. In November 1968 appellant no. 1 waa travelling by aircr~ft from Singapore to Karachi. The aircraft became grounded at Delhi. The Director of Enforcement, New Delhi, acting under the Foreign Exchange Regulation Act, 1947 took appellant no. 1 into custody and detained him. He was served with a notice of adjudication under the Act; the notice purported to be in continuation of one nlready given to Rayala Corporation under s. 23C of the Act. Appellant No. I challenged his detention by a petition under Art. 32 of the Constitution. In this Court a statement was made on behalf of the ·respondents that a complaint had already been filed against the appellants under s.

120-B of the Indian Penal Code read with certain sections elf the Foreign Exchange Regttlation Act. Jn the said complaint it was alleged that in 1963 when appellant no. 2 had gone to Sweden he told AppeJant no. I of the decision taken by the Rayala Corporation to buy certain materials from ASSAB. He further informed Appellant no. 1 that arrangements had been made with ASSAB to over invoice to the goods by 40%, and that the said ex. cess over the true value would be kept in a bank in the personal account of appellant no. 2. Appellant no. 1 agreed to help Appellant no. 2 in opening the said account and keeping it secret; he also agreed to keep a watch over the account and to bring copies of it whenever he visited India. This according to the complaint amounted to a conspiracy between Appellants nos. 1 and 2 within the meaning of s.

120-B of the Indian Penal Code for the purpose elf illegal acquisition of foreign e amc grounds; (ii) ihat when the alleged agreement was made in 1963 the objects of it were not illegal because they became so unly on the enactment of r. 132A of the Defence of India Rules in 1964 and the amendment of s. 4 of the Foreign Exchange Regulation Act in 1965. It was urged that whatever appellant no. 1. did or agreed to do after the passing of these Jaw. did not constitute any offence and therefore he could not be said to have taken part in a criminal conspiracy. HELD: Per Sikri. Ray and Reddy, JJ. -The appeals must be dismissed. ( i) The combined effect of the several provisions of s. 21 does not sul'P. "'t the view that sub-s. ( 1) covers a case of criminal conspiracy simtlar to s. 120-B.

Section 21 does not in terms deal with an agreement to commit an offence or a legal act in an illegal way but merely provides that an agreement or contract by itself ought not to evade or avoid the provisions of the Ac:t. The agreement entered into between ASSAD and appellant no. 2 would, if proved, come within the mischief of s. 21 (1) but the agreement such ns the one alleged to have been entered into be· tween appellant no. I and appellant no. 2 does not itself evade or avoid any of the provisiont of the Act, rules, or directions. The words directly or indirectly do not take in any agreement to be illegal acts . in future. (769 H·770 BJ (ii) For the oft'ence of COMpiracy as deftned in s. 120-A of the In· dian Penal Code there muat be a meeting of minds in the doing of an illegal act or the doing of a legal act by illegal means.

If in the further· ance of the conspiracy certain person& are induced to do an unlawful act without the knowledge of the conspiracy or the plot they cannot be held to be conspirators, though they may be guilty of an offence pertaining to the specific unlawful act. The offence of conspiracy is complete when two or more conspirators have agreed to do or cause to be done an act which it itself an offence, in which ca'° no overt act need be established. An agreement to do an illegal act which amounts to a conspiracy will continue as Ion~ as the members of the conspiracy remain in agreement and as long as they are acting in accord and in furtherance df the object p for which they entered into the agreement. [770 D·FJ The contenti0n that the acts of appellant no. l in watching the bank account in Sweden on behalf of apoellant no: 2 and keening him informed about it did not cQnstitute any offence and therefore he was not guilty of the offence of conspiracy, could not be accepted.

The several acts which constiture a conspiracy cannot be split up into parts and the liability of apnellant no. l could not be jud!! ed by the part that he played. The entire aveement mu him in acquiring foreign excban~e illegally and appellant no. J agreed to help him. Thk agreement though initially may not have bee~ an offence was none the Jess an offence subsequently, but appellant no. l did not withdraw from it and was said to have continued to carry out the agreement. The help of appellant no. l was necessary to the desil:ll of appollant no. 2 bec8me ot~se be would not know whether ASSAB was In fact crediting bis '*aunt in the bank with the · amount ,of over 7c2 SUPREMJ:t° COURT REPORTS ( 1970] 2 S. C. R. in\oice. Appdlani no. 1 kept appellant no. 2 supplied with necessary in· f1:il·n1ation "from time to time and agreed while in Madra6 in 1965 to con• tlnue, to help appellant Ol). 2 The several acts of appe! Jant no. 1 were rill acts Jn.

~onsequence of the agreement which had its origin in Sweden. Appe_~lant no. 2 also in pursuance of the conspiracy acquired foreign ex· change in· Sweden. Therefore on the aJ'~gations contained in the com .. plaint appellant no. I an ) cannot be launched before the Director of Enforcement has taken up the adjudication proceedings and made some inquiry in these proceedings and formed the opinion that it was necessary to have resort to the more drastic provisions of conviction hy a court n:t. envisaged by s. 23 ( 1){b). fn the present case no proceedings had heen started either agairu;t appellant no. 1 or appellant no. 2 in pursuance of the notices o'f adjudication issued against them. Therefore in respect of the substantive offences for contravention of the different sections of the Act the Director of Enforcement could not make a complaint before first having followed the procedure laid down in s. 23D of the Act. It would be absurd to allow him to file a complaint for violation of s.

21 ( 1) bv making a charge under s. 1;10-B 1. P. C. when the overt acts alle~ed were contraventions of different provisions of the Act punishable only under s. 23 (1 )(b) by following the procedure indicated in s. 23D. To allow the pro ndents (in both the appeals). The Judgment of S! KRI, RAY and ]AGAN MOHAN REDDY, JJ. was delivered by REDDY J. MITTER and HEGDE, JJ. delivered dissenting Opinions. Jaganmohan Reddy, J. The Director of Enforcement, New Delhi, filed a complaint on February 16, 1969 before the Chief Presidency Magistrate, Madras against Lennart Schussler, accused I, and M. R. Pratap, accused 2, Managing Director, The Rayala Corporation Ltd, hereinafter referred to as A. I and A. 2 res-pectively, under section 120-B I. P. C. and ss. 4(3), 5(1) (e) and 9 of the Foreign Exchange Regulation Act (VII) of 1947 (hereinafter called the Act). Two Crin1ina! Miscellaneous Petitions, one filed by A. I being No 469 of I 969 and the other filed by A. 2 being No. 62I of 1969 for quas!

Jng the complaint were dismissed by the Madras High Court by a common judgment against which these iwo appeals by certificate have been filed. The ·complaint which is in respect of the acquisition of 88913. 09 Swiss Kronars in contravention of the Act states that on reliable information received by the Assistant Director of Enforcement, Madras that A 2 was utilising his position as Managing Director of' the Rayala Corporation Ltd. in acquiring foreign exchange illicitly; on December 20, 1966; a ~~arch was ·conduct-ed of the premises of the ssid company in the presenoe of A-2, A Jag~ Rao and the legal adviso~ of the company one Sita Ram. Durmg the search certain documenls were recovered and seized, one of which was a Jetter dated the 25th March· 1965 in Swedish language from the Associated Swedish Steels A. B. Sweden, known as ASSAB to A 1 with the enclosures. The Rayala Corporation Private Ltd.

was a concern manufacturing Halda· typewriters for which purpose certain materials were being imported from II Sweden. The firm with which initia! ly t11e transactions were being entered into was known as A. B. Atvidabergs, later known as Facit AB, of which A l, a Swedish national, has been the export manager. It is alleged that in August 1963, A 2 Jaga Rao and A 1 met together at Stockholm and ag,eed to a plan regarding purchase of certain raw materials, namely, steel alloy sheets c directly from ASSAB instead of purchasing them from Atvidabergs. At that meeting A 2 informed A 1 that henceforth he would buy material on behalf of his company from ASSAB instead of M/s Atvidabergs. A 2 further infonned A 1 that the arrangP.

ment made between him and the ASSAB was to over-invoice the value of goods by 40 per cent of the true value and that he should be paid the difference of 40 per cent on account of D the aforesaid over-invoicing by crediting it to his personal account and that since under the laws of India this acquisition by him was unlawful and had to be kept secret, it should not be mentioned in the official correspondence of Messrs Rayala Corporation with the Swedish firm. He requested the first accused to help him in opening the account in ~wenska Handles Banken, E Sweden, in order not only to transfer the money lying to his credit in Atvidabergs but also to have further deposiis to his personal account from ASSAB on account of the difference between the actual value and the over-invoiced value. A 1 agreed to act as requested by A 2.

A 2 made arrangement wiih ASSAB to intimate to A 1 the various amounts credited to A 2's account and F asked A 1 to keep a watch over the correctness of the account and io further intimate to him the account position from time to time throu11h unofficial channels and whenever A 1 came to India. A 1 is said to have agreed to comply with this request. Subsequently in November 1965 A 1 came to frlia when he is said to have brought the incriminating letier dated the 25th March 1965 which was seized. He is said to have also agreed at that G time with A 2 to continue to help him to accumulate foreign exchan. Qe illegally in the same mannbr. In September 1966 also A 1 arrived at Madras where he stayed for a month and at that time also he brou$i further details of the account.

Tue gravamen of the charge is set out in paragraph 9 of the complaint as follows :- "Thus it is clear that A 1 and A 2 agreed to commit illegal acts, H namely, acquisition by A 2 of foreign exchange illicitly and retaining the same abroad without surrendering the same to the Government of India and also to defraud_ the Government of SCHUSSLER v. DIR. ENFORCEMENT (Reddy, ] . ) 7 6 5 India of foreign exchange thereby contravening Sections 4(3), 5 ( 1) ( e) and 9 of the Foreign Exchange Regulation Act and Rule 13,2A of the Defence of India (Amendment) Rules, 1964 anct further that between August 1963 and 1966 A l and A 2 in pursuance of the said agreement did commit acts in contraventfon of sections 4 ( 3), 5 (I) ( e) and 9 of the Foreign Exchange Regu-laticm Act and Rule 132 A of the Defence of India (Amendment) Rules, 1964 and thereby commitied offence punishable under sec. 120 B of the Indian Penal Code, read with St)Ctions 4(3), 5(1) (e) and 9 of the F. E. R.

Act and Rule 132 A of the Defence of India (Amendment) Rules. 1964". The complaint also refers to the fact that C. C. No. 8736 of 1968 had already been filed against the Rayala Corporation fri-vate Ltd. In view of this reference it is necessary, for a ~tter appreciation of the issues involved in this petition, to give a brief account of the earlier proceedings taken by ihe Directorate of Enforcement in this regard. It appears that the earlier notice sent by the Enforcement fiirectorate daied the 25th August 1967 was [) for the contravention of the Act in respect of 244,713. 70 Swiss Kronars alleged to have been deposited in A 2's bank account, which amount included 88,913. 09 Swiss Kronm. This notice was followed by a further show cause,notice under ~. 23(3) of the Act dated the 4th Novemb. ~r 1967 to A 2 as to why he should not be prosecuted in respect of 88,913. 09 Swiss Kronars.

A 2 in his reply of November 13, 1967 to the show cause notice of the 25th August 1967 denied the allegations. The Enforecment Director further issued another show cause notice dated the 15th 1 November 1967 to the other directors of the Corporation and its General Manager, Jaga Rao in coniinuation of the notice date. cl the 25th AUl! USt asking them to show cause why adjudication proceedings should not be instituted. On November 29, 1967, A 2 replied to the notice of the 4th November 1967 denying the allegations. Thereafter on January 20, 1968 the Director of Enforcement issued a notice to the Rayala Corporation to show cause whv it should not be orosecuted for violation in respect of 88,913. 09 Swiss Kronars. Two months later, namely, on March 16, 1968, a revised show cause notice was issued to the Corpora· tion and A 2 supersedimr the notice of 25th Auj!

Ust 1967 and intimatine: to them tha• thev were prosecuting the Corporation and A 2 for the contravention of the Foreign Exchange Ree:ula-tion Act in respect of ~8. 913. 09 Swiss Kronars. Four davs there· after the Direcior of Enforcement filed a comolaint aj! ainst the Cornoration ·and A 2 under r. 132-A of the Defence of India Rules and ss. 4(1), 4(3). and 5(1 )(e) of the)\ct. Both the Corooration and A 2 . filed Criminal Misc. P~titions, beinl! respec-tivelv Nos. 978 and 980 of 1968. for quashing the complaint but the· Hfah Court of Madras dismissed these petitions in October 1968. Two appeals by certificate preferred against that order, A. being Criminal Apneals Nos. 18 and 19 of 1969, were allowed by this Court on July 23. 1969, setting aside the order of the High Coun rejecting the applications under s. 56 l A of the Cude of Criminal PrnccJure for quashing the proceedings against the appcJlants therein.

While the above proceedings were pending, A 1 who happened to be a passenger travelling by an aircraft from Singapore to Karachi via Palam was detained on November 2 7. 1968 bv the officers of the Office of the Enforcement Directorate when ihe aircraft' which had landed at Palam on November 26, 1968 for refuelling had to be temporarily grounded due to engine trouble. On November 30, 1968, the Enforcement Directorate served a notice for adjudication on A 1 in his capacity as a director of the Rayala Corporation which was purported to be in continuation of the previous adjudication notice dated August 25, I 967 issued to the company under s. 23 C of the Act. These allegations were also denied by A I on the 30th January I 969 and on 5th February 1969 A 1 filed a writ petition in this Court for the issue of a writ of habeas corpus.

It is however unneces-sary to mrrate the various stages of this and the subsequent petitions for directing A 1's release and for according him permission to leave this country for Sweden. The subsequent writ petition filed by him after the withdrawal of the first one fifed on 5th February 1969, came up for hearing along with these criminal appeals and this Court on the I 0th September 1969 while allowing the writ petition to be withdrawn pas~ed a consent order permitting A 1 to depart from India provided he furnishes ban guarantee in the foreign exchange equivalent of Rs. 1,50,000/- in Swedish Kronars and on his undertaking to appear before the Chief Presidency Magistrate, Madras or any other Magistrate to ·. •nom the complaini case might be transferred at the time of the disposal thereof. The main question in these appeals is whether A 1 can be charged in respect of acts alleged against him in the complaint with an offence under s. 120B I. P. C.

or with offences under the several provisions of the Act and r. 132 A of the Defence of India Rules, read with s. 120B I. P. C. Before considerinJ! this question it is necessary to mention that at the time of the alleged agreement between A I and A 2 at Stockholm neither the Defence of India Rules nor the Foreign Exchange Regulation Act contained any provision specifically m:iking it an offence for a person resident in India to acquire foreign exchange abroad. Rule 132 A of the Defence of India Rules was added on 21st January 1964 by Defence of India (Amendment) Rules 1964 by which dealings in foreign exchange by persons other than an authorised person were prohibited. The SCHUSSLER V. DIK. ENFORCEMENT (Reddy, l. ) 767 provision remained in force till 3 l st March 1965 when it was repeaJcc!. :section 4 of the Foreign Exchange Regulauon Act was also amendec! as from !

st April 1965 so as to prohibit the buying or otherwise acquiring or borrowing or selling or otherwise transferring or lenc! inv, to any person other than an autho-nsed c! ealer any foreign excllange without the previous general or 'pcc1al permission of the Reserve Bank. It is therefore apparent that at the time when the alleged agreement between A I, A 2 and Jaga Rao is said to have taken place in Stockholm in August 1963 it was neither an otfence under the Defence of India Rules nor under the Act to acquire foreign exchange in a forei5. 1 country. But it is contended by the learned Solicitor General that pursuant to that agreement A 1 continued to heir and agreed to help even after it became an offence unc! er the Defence of ! ndia Rules or under the Act and consequently no exception can be taken to the complaint against A 1. At any rate, s. 21 ( 1) of the Act would cover such agreements which are offences and consequently the accused can be charged with s. 120B I. P. C.

On the other hand, learned counsel for the appellants Shri Asoke Sen submits that firstly, there was no mention of any allegation against A 1 in the several show cause notices issued either to the Rayala Corporation or to the director•; of that Corporation or to A 2 but it is an after thought brought about by the mechanisation of Jagga Rao who was hostile and inimical to A 2; secondly, as it appears 011 the enquiry made by A 2 at the instance of the Enforcement Directorate from Swenska Handel~: Banken, Stockholm, that in fact there is no account as alleged either in the name of the Rayala Corporation or in the name of the Managing . Director of the Rayala Corporation, that is, A 2. there would be no basis for th URT REPORTS [1970) 2 S. C. R. in an illegal way but merely provides that an,.. agreement or con· tract by 1tselt ought not to evade or avoid the prov1S1ons o! the Act. fhe agreement entered into between ASSAB and A 2 ! 'ratap would, ii proved, come within the mischief of s.

21 (1) but thi;. agreement such as the one alleged to have been entered into between A 1 and A 2 does not itself evade or avoid any of the provis10ns of the Act, rules or directions. The words directly or indirectly do not take in any agreement to do illegal acts in future. It now remains to be seen whether the alleged agreement which A 1 and A 2 arrived at in Stockholm in 1963 and again in Madras in 1~65, would, if established, amount to a criminal conspiracy. The first of the offences defined in s. 120A Penal Code which is itself punishable as a substantive offence is the very agreement between two or more persons to do or cause to be done an illegal act or a legal act by illegal means subject however to the proviso that where the agreement is i:. :it an agreement to commit an offence the agreement does not amount to a conspiracy unless it is followed up by an overt act done by one or more D persons in pursuance of such au agreement.

There must be a meeting of minds in the doing of the illegal act or the doing of a legal act by illegal means. If in the furtherance of the conspiracy certain persons are induced to do an unlawful act without the knowledge of the conspiracy or the plot they cannot be held to be conspirators. though they may be guilty of an offence per- & taining to the specific unlav. ful act. The offence of conspiracy is complete when two or more conspirators have agreed to do or cause to be done an act which is itself an o! 'euce, in which ca&e no overt act need be established. It is also clear that an agree· ment to do an illegal act which amounts to a conspiracy will con· tinue as Jon/;! as the members of the conspiracy remain in agreement and as long as they are acting in accord and in furtherance F ' of the object for which they entered into the agreement.

As has been noticed earlier at tire time A I and A 2 entered into an agreement though A 2 thought it was an offence to acquirl:' foreign exchange by the method he was employing it was nor in fact an offence. It is none the Jess alleged that A 1 agreed to help in t11e belief that what he is doing would be to assist A 2 to acquire foreign exchange illegally. This agreenmt continued and A I was assisting A 2 even after the acquisition of foreign exchange became illegal and is said to have agreed even after ne came to Madras in 1965 to continue to help in acquiring the foreign exchange. It is however contended that the agreement of A I with A 2 docs not am&unt to a criminal conspiracy because all that A 1 has agreed to do was to help A 2 to open an account in the Swedish Bank. haYe the amounts ! yin~ t'o the credit of A " SCHUSSLER V, DIR. ENFORCEMENT (Reddy, J,) 771 with. Atvidabergs to that account and to help A 2 by keeping a watch over the account. It is true that none of these acts .

amounts to an offence, because the opening of the account in the Bank and having the amounts transferred from Atvidabergs was not an offence in August 1963, and there is nothing to show that A 1 had not completed that part of the agreement reiating to Atvidabergs and the opening of the account with the bank before January 1%4 or that he had rendered the assistance after that date. if this part of the agreement does not amount to a conspiracy to do an unlawful act, then it is submitted that the subsequent watching over the account and sending pr bringing a statement of the account of A 2 relating to the acquisition of the foreign exchange does not amount to an offence. The agreement which constitutes an offence, it is said is the one between A 2 and ASSAB. The subsequent act of A 1 was neither necessary to acquire nor does it further the acquisition of th. ~ foreign exchange in contravention of the provisions of the Act and is therefore not an offence under s. 120B of the Penal Code.

This argument would postulate that the several acts which constitute it can be split up in parts and the criminal liability of A 1 must only be judged by the part he has played. It appears to us that this is not a justifiable contention, because what has to be seen is whether the agreement between A 1 and A 2 is a conspiracy to do or continue to do something which is iilegal and if it is, it is immaterial whether the agreement to do any of the acts in furtherance of the C()lfllllission of the offence do not strictly amount to an offence. The entire agreement must be viewed as a whole and it has to be ascer risonment for a term which may extend to two years, or with fine, or with both. (lA)If any person contravenes any of the provisions of this Act or of any rule, direction or order made thereunder. for the contravention of which no penalty is ex1>resslv provided, he shall. uoon conviction by a H court.

be 1>unishabte with imprisonment for a term which may extend to two years, or with fine, or with botQ. SCHUSSLER v. DIR. ENFORCEMENT (Mitter, !. ) 779 ( 3) No court shall take cognizance-- (a) of any offence punishable under sub-section ( 1) except upon a ctJmplaint in writing made by the Director of Enforcement, or (aa) (b) of any offence punishable under sub-section (lA) of this section or section 23F, except upon complaint in writing made by the Director of Enforcement or any officer authorised in this behalf by the Central Government or the Reserve Bank by a general or special order : Provided that where any such offence is the contravention of any of the provisions of this Act or any rule, direction or order made thereunder which prohibits the doing of an act wiihout permission, no such complaint shall be made unless the person accused of the offence has been given an opportunity of showing that he had such permission. 23C.

( 1) If the person committing a contravention is a company, every person who, at the time the contravention was committed, was in-charge of, and was res-ponsible to, the company for the conduct of the business of the company as well as the company, shall be deemed to be guilty of the contravention and shall be liable to be proceeded against and punished accordingly : Provided that . nothing contained in this sub-section shall render any such person liable to punishment if he proves that the contravention took place without his F knowledge or that he exercised all due diligence to prevent such contravention. 23D.

( 1) For the purpose of adjudicating under clause (a) of sub-section (1) of section 23 whether any person has committed a contravention, the Director of Enforcement shall hold an inquiry in the prescribed manner after giving that person a reasonable opportunity of being heard and if, on such inquiry, he is satisfied that the person has committed the contravention, he may impose such penalty as he thinks fit in accordance with the provisions of the said section 23 : Provided that if, at any stage of the inquiry, the Director of Enforcement is of opinion that having regard to the circumstances of the case, the penalty which he is empowered to impose would not be adequate, he shall, instead of imposing any penalty himself. make a complaint in wriring to the court.

( 2) While holding an inquiry under this section, the Director of Enforcement shall have power to summon and enforce the attendance of any person to give evidence or to produce a doct:ment or any other thing which, in the opinion of the Director of Enforcement, may be useful for. or relevant to, the subject-matter of the inquiry. " Of the two agreements mentioned in the complaint the one arrived at in August 1963 was not unlawful. S. 4(1) of the Act did not make it unlawful for anyone to acquire foreign exchange abroad. Any foreign exchange acquired by Pratap after January 21, 1964 when Rule 132-A of the Defence of India Rules was promulgated would be an· unlawful acquisition but there could be no conspiracy under s. 120-A in respect of the agreement arrived I) at in August J 963. In paragraph 7 of the complaint it was only Pratap who was charged with contravention of s. 9 of the Act in respect of 88,9 J 3--09 Sw. Krs. bur the agreement of November J 965 stands on a different footing.

According to paragraph 8 of the complaint, Schussler agreed with Pratap at Madras in November 1965 to help him to accumulate foreign exchange as before by getting the same credited to his account in :he bank. This agreement would be one in violation of s. 4(1) and 9 of the Act. However any violation of s. 4(1) ors. 9 ,.. - s. 4"(3) and s. 5 ( 1) ( e )-the last two provisions being hardly applicable to the facts of the case-would be offences under the Act, in respect whereof the Director of Enforcr. ment was competent to levy penalty under s. 23 (1 )(a) of the Act after following the proce· dure for adjudication prescribed in s. 23D of the Act or alter-natively by making a complaint in court under s. 23 (1 )(b). . The recent judgment of this Court in M /s. Raya/a Corf/Ora-tion ( P) Ltd. & another v. The Di:ector of Enforcement, Nell' Delhi(') arising out of the complaint in Case No. 8736 ,)f 1968 has laid down that before a coinplaint can be filed under s. 23 (!

)( b) the Director of Enforcement must not only initiate proceedings under s. 23 (1 )(a) but proceed with the inquiry under s. 23-D(l) and form £n opinion in course thereof that having regard to the circumstances of the case. the penalty which he was empowered to impose under s. 23(1 J(a) would nnt be adequate and that it was necessary to make a comolaint in writing to the court instead of levying a penalty himself, , ------- ··---·------ (I) [1970] l S. C. R. 639. SCHUSSLER v. DIR. ENFORCEMENT (Mitter, J. ) 781 Mr. Sen arguing the appeal of Schussler contended that the Act was a· complete Code containing provisions not only for punishment of violation of different sections of the Act but also a conspiracy to commit acts prohibited under the Act which might otherwise have been amenable to·the jurisdiction under s. 120-4 and 120-B of tlie Indian Penal Code. In this connection, he refer::ed to the provisions in s. 21 ( 1 ) of the Act. Under s.

21 ( 1) any agreement which could directly or indirectly evade in any way the operation of the provisions of the Act or any rule direction or order made thereon was forbidden. The contravention of s. 21 ( 1 I does not find a place in s. 23 ( 1) of the Act but it would be an offence covered by s. 23 ( 1A) and any contravention of s. 21 ( 1) would be punishable upon conviction by a coun with imprisonment for a term which may extend to two years or with fine or with both. The punishment is the same as the one prescribed under s. 23 ( 1 )(b) and is greater than that laid do. wn in s. 120-B(2) of the Indian Penal Code. The learned Solicitor-General arguing the case of the respondents contended that s. 21 ( 1) did not touch a criminal conspiracy which is covered by s. 120-A of the Penal Code. I find myself unable to accept this argument. An agreement which can form the basis of a criminal conspiracy under s. 120-A mav.

inter a/ia be one to do or cause to be done an illegal act or ac offence. Under s. 21 ( 1) of the Act any agreement which directly or indirectly evades in any way the operation of the Act etc. is forbidden. An agreement by two persons whereby one agrees to help the other by facilitating transfer of foreign exchange from a foreign exponer into the banking account of that other is an agreement the object whereof is not only the acquisition of foreign exchange but the retention of it abroad. This is clearly an agreement to evade tht A-2's account and asked A-1 to keep a watch over -the correctness· of the account, which A-1 agreed to do so. · A-2 also asked A-1 to intimate to him the account position from time to time through unofficial channels or whenever A-1 comes to India periodically. In fact A-1 was coming to India periodically once in six months, since he was also a Director of a company called Facit Asia Ltd. , in Madras.

In pursuance of this conspiracy between the two accused the 2nd accused arranged with ASSAB to have the difference between the over-invoiced price and the actual price credited to the personal account of the second accused in Ovenska Handels Banken and the statement of account sent to A-1 ''. A These allegations merely make out that Schussler was an accessory after the fact and not that he was a conspirator. If a person agreed with a robber to receive the . stol1in property and arrange for its safe keeping, he does not become a co-conspirator with the robber in the commission of the offence of robbery. On the facts alleged it is clear that Schussler had nothing to do either with the ac. quisition of foreign exchange by Pratap or in the B matter of Pratap's failure to repatriate the same to this country. The accusation against him is that he provided facility for its retention in Sweden. In ! he result I allow these appeals and acquit the appellant.

c ORDER In accordance with the opinion of the majority, these appeals are dismissed. G. C.

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