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For twenty-three years, two foreign-exchange prosecutions remained stuck at the stage of summons. The underlying transaction was more than three decades old, the alleged pre-prosecution notice had never been produced, and the Enforcement Directorate could not even identify when it had been issued.
That was the record before the Supreme Court in Standard Chartered Bank v. Enforcement Officer, Ministry of Home Affairs1, decided on 21 July 2026. The Court, through a Division Bench comprising Justice J.B. Pardiwala and Justice Manoj Misra, quashed the complaints after holding that the opportunity required before instituting a prosecution under FERA was a mandatory statutory condition. A bare assertion that notice had been served could not substitute for the notice itself, proof of service or the Magistrate’s satisfaction that the condition had been fulfilled.
The Court also held that the availability of revision under Section 397 of the Code of Criminal Procedure, 1973 (“CrPC”) did not bar the High Court from exercising its inherent jurisdiction under Section 482, and that allowing the prosecution to continue after decades of unexplained inactivity would offend the right to a speedy trial under Article 21 of the Constitution.
The judgment therefore raises a question that extends beyond a repealed foreign-exchange statute: when the law prescribes a step that must precede prosecution, can the State proceed to the merits without first proving that the threshold was crossed?
Factual Matrix
The dispute arose from remittances of ₹30 lakh handled in 1991-92 through a Vostro account maintained by Standard Chartered Bank’s Mumbai branch for its London office. According to the prosecution, banker’s cheques and drafts purchased in India through proxy purchasers were forwarded for collection and credited for the benefit of a person resident outside India.
The bank later reversed the credit entries, blocked the amount in its books and surrendered it to the authorities in January 1993. The Enforcement Directorate nevertheless alleged that the transaction involved an unauthorised credit punishable under Section 56 of the Foreign Exchange Regulation Act, 1973 (“FERA”).Two criminal complaints invoking Sections 56(1) and 73(3) were filed on 30 May 2002.
The Supreme Court first examined whether the prosecution had acquired the legal authority to place that question before a criminal court. The proviso to Section 61(2) of FERA. stated that where an alleged contravention consisted of doing an act without permission, no complaint could be made unless the proposed accused had been given an opportunity to show that the requisite permission existed.
The object of the provision becomes clear from the allegation itself. Before prosecuting a person for acting without regulatory permission, the authority must allow that person to demonstrate that permission had, in fact, been granted. The opportunity could reveal a Reserve Bank approval, exemption or regulatory arrangement that removed the foundation of the proposed prosecution.
Section 61(2), therefore, did not merely prescribe another notice within the investigation. It imposed a condition upon the institution of the complaint.
The Supreme Court traced a consistent line of decisions on this requirement. In Devashis Bhattacharya v. Union of India2 the complaint was filed before the time granted under the opportunity notice had expired. The Delhi High Court held that the opportunity had to be meaningful and adequate, particularly because prosecution under FERA carried penal consequences.
In Sanjay Malviya v. R.K. Rawal3, the complaint did not disclose when the notice was served, and no proof of service accompanied it. The Court held that the Magistrate had a statutory duty to verify compliance with Section 61(2) before taking cognizance.
The same principle was applied in United India Airways Ltd. v. Chief Enforcement Officer, Enforcement Directorate4, and Shilpi Modes v. Directorate of Enforcement5. Where the mandatory opportunity was not served or could not be established, the resulting prosecution could not continue.
The Supreme Court consolidated these decisions into three requirements.
First, the opportunity notice must be issued and served before the complaint is filed. Second, the prosecution bears the burden of demonstrating compliance. Third, the Magistrate must satisfy himself, before taking cognizance, that the opportunity was actually provided.
The complaints against Standard Chartered satisfied none of them.
The Enforcement Directorate stated that an opportunity notice had been served but did not identify its date. No copy was annexed to the complaints. No acknowledgement, service report or supporting record was produced. Even after the Supreme Court permitted the parties to place additional documents on record, the notice remained unavailable.
The bank consistently maintained that it had never received such notice. The Directorate did not answer that assertion by producing the document or specific proof of service. Yet the Magistrate took cognizance and issued summons on the same day that the complaints were filed, without recording satisfaction that Section 61(2) had been complied with.
The deficiency was not cured by the seriousness of the allegation. A court cannot presume compliance with a statutory condition merely because the complainant is an enforcement authority. Where the legislature restricts the filing of a complaint until a specified safeguard is observed, proof of that safeguard forms part of the legal foundation of cognizance.
The bank had sought to challenge that foundation through Section 482 CrPC. The Bombay High Court, however, treated the availability of revision under Section 397 as a threshold obstacle to the exercise of inherent jurisdiction.
The Supreme Court found that approach inconsistent with settled law.
In Dhariwal Tobacco Products Ltd. v. State of Maharashtra6, the Court held that the availability of criminal revision does not, by itself, bar an application under Section 482. Prabhu Chawla v. State of Rajasthan7 reaffirmed that inherent jurisdiction remains available where an abuse of process or an extraordinary situation requires intervention. More recently, Akanksha Arora v. Tanay Maben8 held that a High Court should not defeat substantive justice on the basis of procedural nomenclature and may, where appropriate, treat a petition under Section 482 as a revision, or vice versa.
Revision and inherent jurisdiction perform different functions. Revision allows scrutiny of the legality or correctness of an order. Section 482 preserves the High Court’s authority to prevent abuse of court process and secure the ends of justice. The existence of the former may call for restraint in exercising the latter, but it does not extinguish it.
The missing notice was followed by an equally serious failure to pursue the prosecution.
The complaints were filed in May 2002 for transactions dating back to 1991-92. The complainant did not collect the first summons for almost two years. Between 2004 and 2012, summons repeatedly remained unserved while the complainant failed to take effective steps and remained absent on several dates.
Even after the Bombay High Court directed that the trial be completed within one month, the complainant declined to collect fresh notices for service. The Magistrate was compelled to seek an extension. The proceedings still did not move beyond the stage of summons.
In Abdul Rehman Antulay v. R.S. Nayak9, the Constitution Bench held that the right to a speedy trial forms part of the fair, just and reasonable procedure guaranteed by Article 21.[3] The right extends across investigation, inquiry, trial, appeal and revision. Whether delay violates Article 21 depends upon a balancing exercise that includes its length, cause and resulting prejudice.
The seven-judge Bench in P. Ramachandra Rao v. State of Karnataka10 affirmed that approach and declined to prescribe a rigid limitation period for every criminal proceeding. Delay alone does not automatically terminate a prosecution. Responsibility for the delay and the surrounding circumstances remain decisive.
In Kailash Chandra Kapri v. State of Uttar Pradesh11 however, the Supreme Court quashed proceedings that had remained dormant for thirty-five years, observing that an accused could not be kept indefinitely in a state of suspended animation.
In Standard Chartered’s case, the Court found that the delay was attributable substantially to the complainant. It was not explained by the complexity of evidence, the number of accused or a lengthy trial. The case had not reached trial at all.
The combination was decisive: the prosecution could not prove the mandatory notice that permitted the complaint to be filed, and then failed for more than two decades to move that complaint beyond summons.
The Supreme Court did not determine whether the disputed remittance ultimately violated FERA. It held that the prosecution could not reach that question without first establishing compliance with the statutory condition that authorised the complaint. That distinction is important.
Procedural safeguards in white-collar enforcement are sometimes treated as obstacles to a decision on the merits. Standard Chartered Bank demonstrates that where Parliament places a safeguard before prosecution, compliance with it is part of the legal process by which the merits become triable.
The judgment also reinforces that economic-offence proceedings are not insulated from the right to a speedy trial. Regulatory complexity may explain a reasonable period of investigation or adjudication. It cannot justify a prosecution that remains at the stage of summons for twenty-three years because the prosecuting authority repeatedly fails to act. When the first statutory step cannot be demonstrated, the seriousness of the allegation cannot supply what the law required before prosecution began.
Citations
Expositor(s): Adv. Jahnobi Paul
