Delhi HC refuses to quash FIR solely on basis of delayed investigation, as matter deals with country wide export ban on pulses and manipulation of letters of credit involving huge sum of money

Read Judgment: M/s KRBL LTD vs. CBI & Anr.

Pankaj Bajpai

New Delhi, February 25, 2022:  Noticing that a conscious decision was taken to ban export of pulses to ensure that there is no dearth of the same in the local market and India is not forced to import pulses at a high cost, the Delhi High Court has observed that it is the duty of the CBI who has received information regarding the manipulation of the Letters of credit (LCs) to investigate into the crime which has a serious effect on the economy of the country. 

Therefore, finding that the present matter deals with a country wide export ban and the issuance of LC’s involving a huge sum of money and the balance tilts towards having a fair investigation even if it is facing considerable time, the Single Judge Subramonium Prasad refused to quash the FIR registered against KRBL (Petitioner) for manipulating LCs’ to get out of the ambit of the export ban. 

Going by the background of the case, the Petitioner was engaged in business of export of food related commodities. In 2021, for the Petitioner to export pulses during period July 2006-March 2007 to Pan Global Trading LLC, Dubai, three irrevocable LCs were issued by WSBC Bank to Karnataka Bank Ltd. In 2006, the Ministry of Commerce and Industry through the Director General of Foreign Trade (DGFT) issued Notification No. 15 (RE-2006)/2004-2009 which prohibited the export of pulses, amongst other commodities, with immediate effect for a period of 6 months. Thereafter, another notification was issued bearing number 19 (RE-2006)/2004-2009 which clarified that the benefit of the Foreign Trade Policy, 2006, which protected the irrevocable LC’s established before the date of imposition of such restriction, will not be applicable for export of pulses against irrevocable LC’s opened on or after June 22, 2006.

Accordingly, the Special Intelligence and Investigation Branch of Exports, JLN Custom House, issued Summons calling upon the petitioner company to give details and present documents pertaining to the exports made by it to Pan Global LLC. Later, the second respondent addressed a complaint against the petitioner alleging that it had circumvented the export ban by backdating and forging the LC’s. Accordingly, the CBI (first respondent) registered an FIR against the petitioner u/s 120B, 420, 468 & 471 IPC. Thereafter, raid was conducted at the premise of the petitioner and various documents were seized. The DGFT then issued SCN for cancellation/suspension of the Importer Exporter Code Number and imposition of penalty u/s 13 of the Foreign Trade Act. The CBI then instructed Karnataka Bank not to part with the payments received against the bills submitted under LC’s. Hence, present petitions preferred for quashing of complaint for offences u/s 420, 468, 471 r/w/s 120B of IPC, registered by the CBI. 

After considering the submissions, Justice Prasad found that the CBI has filed a detailed list of dates from 2007 when the case was registered showing the steps taken by them collecting the material from New Zealand. 

Considerable time has been spent by CBI in pursuing LOR issued by Courts to New Zealand for collecting material and the list of dates also indicates that the GoI is entering into an agreement at various levels in consultation with INTERPOL and Ministry of Home Affairs for speedy exchange of information, added the Single Judge. 

Justice Prasad highlighted that it is well settled that unreasonably long delay in investigation and trial violates the rights of the accused under Article 21 of the Constitution of India, but the Courts should look at the matter with a realistic and practical approach having regard to the facts of the case. 

Each case has to be considered on its own facts and circumstances with respect to being mechanically persuaded by the Courts merely because delay was occasioned during investigation, added the Single Judge.

The High Court clarified that the stance of the petitioner that it is only a beneficiary who does not have the duty to check the authenticity of the LC’s cannot preclude the CBI from interrogating him regarding the export made by the company and asking for the relevant documents in furtherance of the investigation. 

The further allegation that the bank advising the exporter and the bank advising the importer which have opened the LC and the importer have no quarrel with the LC and, therefore, no case is made out at all cannot be accepted, added the Court. 

Justice Prasad observed that the allegation is that the LCs have been fabricated and back-dated in order to circumvent the Government’s notification banning exports, and obviously, no one else will have a grievance over the transaction. 

Accordingly, the High Court refused to quash the FIR on basis of delay in investigation.