ENFORCEMENT DIRECTORATE AND ANR. versus M. SAMBA SIVA RAO AND ORS.

Citation: [2000] SUPP. 1 S.C.R. 51 · Decided: 09-05-2000 · Supreme Court of India · Bench: G.B. PATTANAIK · Disposal: Appeal(s) allowed

Judgment (excerpt)

ENFORCEMENT DIRECTORATE AND ANR. 
A 
v. 
M. SAMBA SIVA RAO AND ORS. 
MAY 9, 2000 
[G.B. PATTANAIK, DORAISWAMY RAJU AND S.N. VARIAVA, JJ.] 
B 
Foreign Exchange Regulation Act, 1973: 
Sections 40 and 56 Summons-Issue of-Refusal to comply with 
directions under-Held: Amounts to contravention of the provisions of the C 
Act. Hence, S.56 is attracted and punishable thereunder S.56 cannot be 
restricted only to violations in respect of the money value involved. 
Provisions-Are a complete Code in themselves. 
Words and phrases: 
"Jn any other case" Meaning of-Jn the context of S. 56(J)(ii) of the 
Foreign Exchange Regulation Act, 1973. 
The appellant Directorate summoned the respondents under Section 40 
D 
of the Foreign Exchange Regulation Act, 1973 but they refused to comply E 
with the direction under the summons. High Court dismissed the complaint 
filed by the appellant holding that Section 56 of the Act was not attracted for 
violation of Section 40 of the Act Hence this appeal. 
The following question arose before this Court :-
Whether refusal on the part ofa person, who is summoned under Section 
40 of the Foreign Exchange Regulation Act, 1973 to comply with the directions 
under the summons, would attract the provisions of Section 56 of the Act? 
Allowing the appeal, this Court 
HELD: 1.1. The Foreign Exchange Regulation Act, 1973 was enacted 
F 
G 
by the Parliament bash:ally for the conservation of the foreign exchange 
resources of the country and the proper utilisation thereof in the interest of 
economic development of the country. The Act having been enacted in the 
interest of national economy, the provisions thereof should be construed so H 
51 
52 
SUPREME COURT REPORTS [2000] SUPP. I S.C.R. 
A as to make it workable and the provisions should receive a fair construction 
without doing any violence to the language employed by the Legislature. The 
provisions of Section 40 itself which confers power on the officer of 
Enforcement Directorate, to summon a"ny person whose attendance, he: 
considers necessary during the cours1~ of any investigation, makes it binding 
B as provided under Section 40(3). These principles should be borne in mind, 
while interpreting the provisions of Section 40 and its effect, if a person 
violates or disobeys the directions issued under Section 40. [57-8-C) 
1.2. Sections 56(1) (i) and (ii) are material for deciding the quantum of 
punishment and there is no reason why the expression in any other case' in 
C Section 56(1 )(ii) should be given any restrictive meaning to the effect that it 
must be in relation to the money value involved. The summons issued under 
Section 40, if not obeyed, must be held to be a contravention of the provisions 
of the Act and at :any rate, a contravention of a direction issued under the Act, 
and, therefore, such contravention would squarely come within the ambit of 
Section 56 of the Act. (57-G-H; 58-A) 
D 
2.1. The view of the High Court that Section 56 would bring within its 
sweep only such violation or contravention which under different provisions of 
the Act have been deemed to be a contravention under the Act like Section 43(4), 
Section 8(1) read with Section 45(1). Section 49 and so on is not acceptable 
since such an interpretation would malke the power to summons under Section 
E 40 meaningless and the provisions ofSection 40(3) making it a bounden duty 
for the persons summoned to attend purposeless. [58-H; 59-A) 
2.2. Therefore, the ultimate c:onclusion of the High Court in the 
impugned judgment that the Union of India can prosecute the accused for 
F offences under the provisions of Section 174 or any other relevant provision 
under Chapter 10 of the Penal Code, 1860 relating to contempt of the lawful 
authority of public servants, is not su:1tainable in law. [59-G) 
2.3. Bearing in mind the purpose for which an officer of the Enforcement 
Directorate has been empowered to summon persons, either to give evidence 
G or to produce a document and the provisions of the Act, making the persons 
summoned, bound to state the truth and further the investigation in question 
having been made to be judicial proceeding within the meaning of Sections 
193 and 228 of the IPC, on a plain literal meaning being given to the language 
used in Section 56 of the Act, it has to be held that the directions given under 
the summons under Section 40 would come within the purview of Section 56 
H and, therefore, would be punishabl.e thereunder. [59-H; 60-A-

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