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K.K. Kuda v. Chief Enforcement Officer, Enforcement Directorate & Anr.

Criminal Appeal · Neutral citation not assigned (Criminal Appeal No. 14 of 2015)Decided 6 Jan 2015
Criminal Appeal No. 14 of 2015
Justice V. Gopala Gowda · Justice C. Nagappan

Background

A show-cause notice was issued in 1994 against ANZ Grindlays Bank and some of its officials (including the appellant) for allegedly crediting foreign funds into a non-resident account in violation of FERA, with the charges based on "consent," "connivance," and "negligence." In 2001, the Enforcement Directorate itself dropped the "consent" and "connivance" charges against the appellant. Despite this, when it filed a formal criminal complaint in 2002 (just before FERA proceedings would lapse under a "sunset clause"), the complaint still included all three original allegations and omitted to mention the appellant's reply to an earlier notice. The Delhi High Court declined to fully quash the complaint, ruling that prosecution could continue on the negligence charge alone.

Decision Breakdown

The Supreme Court allowed the appeal and quashed the criminal proceedings against the appellant entirely. It found that the Enforcement Directorate had suppressed material facts, having already dropped the consent/connivance charges, yet still levelled all three allegations in the complaint, and had failed to disclose the appellant's reply or attach a single original document to support the complaint. This raised serious doubt about whether the magistrate had any proper material before him when taking cognizance. Given this suppression and lack of supporting material, the Court held that continuing the prosecution, even limited to the negligence allegation, was not legally tenable.

Lesson Learnt

A prosecuting authority cannot pursue criminal charges it has already formally abandoned, or file a complaint while concealing material facts and without producing supporting documents: courts will quash such proceedings as an abuse of process.

Official source (sci.gov.in)View Judgment (PDF)

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