The Supreme Court on Fritoday stayed the criminal proceedings initiated against Standard Chartered Bank for allegedly violating foreign exchange regulations in 1991-92.
A bench headed by Justice B N Agarwal stayed the proceedings initiated by the Enforcement Directorate for violations to the tune of 8,87,216 pounds (about Rs 7 crore at current exchange rates).
Bank's counsel Mahesh Agarwal contended that the special leave petition would become infructuous if the proceedings were not stayed.
Earlier, the court had sought response from the Central government and K Nageshwar Rao, Special Director, ED, on the bank's petition seeking quashing of the Bombay high court order that refused to stay the proceedings.
While seeking quashing of the show cause notice, Standard Chartered Bank said the high court failed to appreciate that the alleged acts of contravention of Foreign Exchange Regulations Act 1973 were stale and took place in 1991-92 and the proceedings under Fera were totally misconceived as there was no economic
All the employees have resigned, died or left since the date of violations and with the passage of time the situation cannot be cured, it added.
After receiving a communication from RBI for alleged violations to the tune of 8,87,216 British pound, the bank stated that it had rectified these violations by remitting the entire quantum of funds that had been wrongly remitted externally.
"On such remittances into India (and) of all the amount wrongly remitted outside India there was no foreign exchange loss to the Indian exchequer," the petition stated, adding that the alleged forex loss had been restored prior to the serving of impugned notices in 1994.
According to the bank, the high court had failed to take into account that the transactions could not be treated in isolation unless the charges against the main accused was complete and the employees were made parties in the petition.
It further said the ED had no jurisdiction to regulate and prosecute banks and only RBI was authorised to do so.
