The Supreme Court on Friday allowed the prosecution of directors and top executives of Standard Chartered Bank, who were alleged to have been involved in FERA violations as part of the securities scam, leading to a revenue loss of $80 million.
Earlier, the court had conditionally stayed their prosecution. Officers of Grindlays Bank, which has closed down its operations in the country, are also involved in the case.
The Enforcement Directorate had invoked Section 68 of the Foreign Exchange Regulations Act against a number of top executives of the banks.
According to the provision, every person who was in charge of, or was responsible to the company at the time of commission of the offence, shall be deemed to be guilty.
But such a person can get away by proving that the offence was committed without his knowledge or he had exercised all due diligence to prevent it.
When the officers and banks moved the Bombay High Court against their prosecution, their writ petitions were dismissed. The banks and the government too were dissatisfied with the judgment and therefore all of them moved the Supreme Court raising various questions.
The executives argued before a bench headed by Chief Justice Y K Sabharwal that they had not been given an opportunity of hearing under Section 61 of the FERA.
Therefore, they could not be prosecuted without complying with the statutory requirements. They were being charged vicariously for the wrong-doing of others because technically they were at the helm of affairs.
Most of them had either retired or were employed in other banks. If they were prosecuted now, they would suffer humiliation, they had argued, which affected their fundamental right to life and equality, they had argued.