Supreme Court quashes 2002 FERA complaint against Standard Chartered Bank over missing opportunity notice

A Bench of Justices J.B. Pardiwala and Manoj Misra held that non-compliance with the Section 61(2) opportunity notice and 23 years of prosecution delay vitiated the FERA complaint.

The Supreme Court has quashed a criminal complaint filed in 2002 against Standard Chartered Bank and one of its officers under the Foreign Exchange Regulation Act, 1973 (FERA), finding that the prosecution never proved service of the mandatory opportunity notice required before cognizance could be taken.

A Bench of Justice J.B. Pardiwala and Justice Manoj Misra allowed the appeals arising from a Bombay High Court order dated 22 March 2012, which had declined to quash the complaint. The Court held that the notice under the proviso to Section 61(2) of FERA is a mandatory pre-condition, that its absence made the summoning order unsustainable, and that a 23-year prosecution stalled at the stage of service of summons violated the appellants’ right to a speedy trial under Article 21. The complaint bearing Criminal Case Nos. 1503-1504 of 2002 and the summoning order dated 30 May 2002 were quashed as against the appellants.

How the dispute reached the Court

Standard Chartered Bank is a banking company and an authorised dealer in foreign exchange. The second appellant, Ms. B. Mchugh, of the Bills Department, Manchester, was in charge of the bank’s business. The complaints alleged that the appellants contravened FERA in handling remittances routed through the Vostro Account of Standard Chartered Bank, London, maintained with the Mumbai branch.

The prosecution’s case was that a chain of banker’s cheques and drafts, procured in India through proxy purchasers fronting for a UK-based beneficiary, were forwarded by the appellants’ Manchester and New Delhi offices and credited by the Mumbai office for the onward benefit of Indo International Corporation Ltd., a person resident outside India. According to the complainant, the bank later realised the remittances did not conform to Exchange Control Regulations, reversed the credit entries, and blocked Rs. 30,00,000, which was surrendered to the authorities through Pay Order No. 279893 dated 6 January 1993 under a directive under Section 33(2) of FERA. The conduct was alleged to be an offence under Section 56(1).

Senior counsel Mr. Shyam Divan, for the appellants, argued that the complaint was instituted on 30 May 2002 for a 1992 transaction, so as to fall within the sunset period under FEMA ending 1 June 2002. He challenged the High Court’s view that a petition under Section 482 was not maintainable because a revision under Section 397 was available, and pressed non-compliance with Section 61(2) and violation of the speedy-trial right. Senior counsel Ms. Ruchi Kohli, for the respondents, submitted that the High Court had in fact considered the Section 482 petition and rejected it on merits, and that any delay was attributable to the appellants avoiding trial.

Section 482 not barred by availability of revision

The Court first held that the High Court erred in treating the availability of a revision under Section 397 as the threshold for maintainability of a petition under Section 482. Relying on Dhariwal Tobacco Products Ltd. v. State of Maharashtra, (2009) 2 SCC 370, the Court reiterated that mere availability of a revisional remedy does not by itself bar an application under Section 482, and that issuance of summons is not an interlocutory order for the purposes of Section 397.

The Court referred to Prabhu Chawla v. State of Rajasthan, (2016) 16 SCC 30, where a three-Judge Bench held that nothing in the CrPC, including Section 397, limits the inherent power under Section 482, the only restraint being one of self-restraint. It also cited Akanksha Arora v. Tanay Maben, 2024 SCC OnLine SC 3688, for the proposition that the nomenclature of a petition is immaterial and a High Court may treat a Section 482 petition as one under Section 397 and vice versa.

The Court rejected the respondents’ argument that the High Court dismissed the petitions purely on merits. The impugned order framed the common thread across all ten applications as invoking Section 482 “without first exhausting the remedy of seeking revision”, making maintainability the organising premise. The finding at paragraph 98, that the delay, though “indeed deplorable”, would not by itself justify quashing, was rendered in continuation of that view, not in substitution for it.

The Section 61(2) opportunity notice is mandatory

The Court held that service of an opportunity notice under the proviso to Section 61(2) of FERA is a mandatory requirement, without which no complaint under Sections 56 or 57 can validly be instituted and no Magistrate can validly take cognizance. Under Section 61, cognizance can be taken only on a written complaint by the Director of Enforcement, the Central Government, the RBI, or an authorised officer; and where the alleged contravention is doing an act without permission, no complaint can be made unless the accused was first given an opportunity to show that he had such permission.

The Court surveyed Delhi High Court decisions applying this rule. In Devashis Bhattacharya v. Union of India, 2009 SCC OnLine Del 1018, the opportunity was held to require a meaningful, not notional, hearing, and the proceedings were quashed where the complaint was filed before the reply period lapsed. In Sanjay Malviya v. R.K. Rawal, 2015 SCC OnLine Del 7686, the Court quashed a complaint where no date of service was disclosed and no proof of service was filed. The same principle was applied in United India Airways Ltd. v. Chief Enforcement Officer, 2018 SCC OnLine Del 8233, and Shilpi Modes v. Directorate of Enforcement, 2023 SCC OnLine Del 6816.

Applying these principles, the Court found that the respondents had merely stated that an opportunity notice under Section 61(2) was served, without stating its date or placing a copy on record. Despite an order dated 24 March 2015 permitting both parties to file additional documents, the respondents did not produce the alleged notice or prove its service. The Magistrate took cognizance without recording satisfaction of compliance, and the High Court ignored the issue. The Court held the mandatory pre-condition was not met, giving rise to a violation of natural justice, so the cognizance and summoning order could not be sustained.

The speedy-trial breach under Article 21

Though its conclusions on the first two issues were sufficient, the Court examined the speedy-trial question to do complete justice. It relied on the Constitution Bench in Abdul Rehman Antulay v. R.S. Nayak, (1992) 1 SCC 225, which held that the right to speedy trial is implicit in Article 21 and extends to every stage of proceedings, and that the first question in any complaint of infringement is who is responsible for the delay. It noted P. Ramachandra Rao v. State of Karnataka, (2002) 4 SCC 578, where a seven-Judge Bench reaffirmed those guidelines, and Kailash Chandra Kapri v. State of Uttar Pradesh, 2026 SCC OnLine SC 858, on prosecutions kept in “suspended animation”.

On the facts, the Court found the delay lay with the prosecution. The complaint was instituted on 30 May 2002 for a 1991-1992 transaction, unaccompanied by any supporting document, with cognizance and summons on the same date. The summons were not even collected for service for almost two years, until 2004. From 2004 to 2012, the summons could not be served, except that counsel for Standard Chartered Bank appeared on 16 August 2005. The court record of 12 August 2005 shows the complainant took no step, such as seeking a non-bailable warrant, a course adopted only on 28 May 2012.

The High Court, describing the delay as “highly deplorable”, directed conclusion of the trial within one month. The record of 30 May 2012 shows the complainant declined to collect fresh notices despite having the accused’s updated addresses; notices were handed over on 28 May 2012 and served on 5 June 2012. When the one-month period lapsed without trial, the Magistrate sought an extension on 8 June 2012, granted on 29 June 2012 extending the limit to six months, yet the complainant remained absent up to the filing of the appeals. The Court held this reflected a want of diligence and an unwillingness to prosecute, and could not be excused as systemic delay.

Order

The Court held this a fit case for exercising inherent powers to end the proceedings, noting the complaint rested on an alleged Section 61(2) notice the respondents had never produced or dated, that 23 years had elapsed since the complaint and over three decades since the transaction, and that the trial had not progressed beyond service of summons.

The complaint bearing Criminal Case Nos. 1503-1504 of 2002 and the summoning order dated 30 May 2002 were quashed as against the appellants. The appeals were allowed and the High Court’s judgment set aside. Pending applications were disposed of. The Registry was directed to circulate a copy of the judgment to all High Courts.