Foreigners Doing Business In India Need To Be Made Accountable Under Indian Law: Allahabad HC

It is entirely in order that while seeking accountability, the Allahabad High Court in a most learned, laudable, landmark, logical and latest judgment titled Ryen @ Ren Chao vs State of UP in Criminal Misc. Bail Application No.-59258 of 2022 and cited in Neutral Citation No.: 2024:AHC:122307 that was pronounced most recently on July 31, 2024 has been most direct in holding that foreign nationals engaged in businesses in India need to be made accountable under the Indian laws and those facing criminal trial must submit themselves to the jurisdiction of Indian courts. It was also made clear by the High Court that failure to do so will encourage foreigners to act with impunity in disregard of Indian laws. While sounding alarm bell, we see that the Single Judge Bench comprising of Hon’ble Mr Justice Ajay Bhanot clearly stated warning that, "Perception of foreign nationals about their immunity from Indian courts will encourage them [to] act with impunity against Indian laws. Such state of affairs will undermine the Indian Constitution and laws and have grave consequences for national sovereignty."

It must be noted that the Allahabad High Court made the damning observations while dealing with the bail plea of a Chinese national in a case pertaining to unlawful export of chips to a neighbouring country by HTZN which is a company allegedly with no legal documentation in India. Further, the applicant named Ryan @ Ren Chao is also accused of staying in India even after expiry of his visa. The prosecution pointed out that HTZN was a front to carry unlawful activities and was linked to other sham companies which allegedly operated illegal gaming apps and laundered money to foreign countries in form of bitcoins.

In the fitness of things, while denying bail to Chao, the Allahabad High Court observed that no credible legal framework or efficacious system exists to secure the presence of Chinese nationals, who while facing criminal trials, may escape the territory of India. It may be recalled that the Allahabad High Court in March 2024 in Zong Hao Zhe @ Jon vs State of UP had asked the Union government to consider initiating a process towards creation of a treaty at the international level to address the issues being faced in prosecution of foreign nationals. Hon’ble Mr Justice Bhanot reiterated firmly that there was a need for an international framework of laws to deal with issues of criminal trials of foreign nationals in a fair, transparent and just manner.

More to the point, the Bench noted that, "For the moment this issue is not within the ken of this Court. However, it is a problem which the Government of India and other members of the comity of nations will have to address." This cannot be left hanging fire by the Centre any longer. It must be tackled on a war footing as it directly concerns the national sovereignty which cannot be compromised on one pretext or the other under any circumstances. No denying it!

At the very outset, this brief, brilliant, bold and balanced judgment authored by the Single Judge Bench comprising of Hon’ble Mr Justice Ajay Bhanot sets the ball in motion by first and foremost putting forth in para 2 that, "The accused in the instant case is a Chinese national who is facing trial in Case Crime No. 408 of 2022 at Police Station Beta-2, District- Gautam Buddha Nagar under Sections 419, 420, 467, 468, 471, 120B, 201 IPC and Section 14(A), 14(B), 14(C), 14 of Foreigners Act and Section 66D IT Act. The applicant is in jail since 09.07.2022."

As we see, the Bench discloses in para 3 stating that, "This is the first bail application filed by the aforesaid Chinese national before this Court. The bail application of the applicant was rejected by the trial court on 07.11.2022."

To put things in perspective, the Bench envisages in para 4 that, "The gravamen of the prosecution case as set out in the FIR is that reports of tampering of E-FRRO reports and fraudulent Visa extensions came to the notice of police authorities. Raids conducted at Taj Hotel led to recovery of various items including a BMW car, Aadhar Cards, ATM Cards, laptops, mobile phones and passports. Subsequent raids during the investigations at a flat in J.P. Greens yielded incriminating articles namely fake Aadhar Cards and Passports. A Chinese national by the name of XUE-FEI @ Koei was arrested and questioned. XUE-FEI @ Koei had forged his identity papers with the collaboration of his business associate Ravi Kumar Natwarlal Thakkar. Police interrogation of Pete Khrienuo @ Pette disclosed that she had assisted XUE-FEI @ Koei and two other Chinese nationals to illegally obtain false IDs’ like voter card, Aadhar card from Nagaland. She had facilitated the illegal entry of two Chinese nationals into the country and also travelled with them and Xue-Fei @ Koei to various places in India. She had purchased Indian sim cards on her ID."

Do note, the Bench notes in para 6 that, "The applicant was not named in the FIR. However during the course of investigations, the police authorities unearthed several incriminatory evidences against the applicant which according to them establish the culpability of the applicant in various offences."

Most damningly, the Bench most decisively holds in para 22 that, "The HTZN company in which the applicant was depicted as the employee was only a front to carry on unlawful activities and commit offences against Indian laws. The HTZN company was connected with other sham companies in an intricate web of an organized international crime network in India. Fake companies were set up only to disguise their activities and give an impression of lawful businesses. The aforesaid companies were essentially one entity and working with the common object of engaging in various criminal activities in the country. HTZN unlawfully exported chips to China. The proceeds of the aforesaid exports were not received in India. The said companies also operated illegal gaming apps, laundered money to foreign countries in form of bitcoins. The game apps were used to dupe many small Indian investors of their money. Financial transactions of HTZN with other front companies like Sudden Fix Pvt. Ltd., TD Max and Tiashang Renjion Co. Ltd. have been demonstrated from the bank account details. The well structured crime machinery included persons who facilitated illegal entry of Chinese nationals in India, aided their unlawful exit from India and also created fake identity documents for them."

It also cannot be lightly dismissed that the Bench points out in para 39 that, "Material discussed above the evidences against the applicant disclosed commission of economic offences and fraud. Furthermore, the applicant appears to be part of a well organized international crime network of Chinese nationals and local accomplices in India."

It is worth noting that the Bench notes in para 40 that, "Economic offences particularly those committed by well organized international crime networks have severe consequences on social cohesion. Economic offences of this nature create a parallel economy and threaten the national economic stability."

Be it noted, the Bench notes in para 41 that, "International criminal networks which are managed by Chinese nationals with Indian accomplices as in the instant case significantly impact the national security. Such international crime syndicates create fifth columnists in the host countries. What aggravates the crime further is that many beneficiaries of the crime proceeds are foreigners living abroad who are not even amenable to Indian law and whose identities are effectively concealed."

To be sure, the Bench points out in para 45 that, "Determination of the fact as to whether the bail applicant is a flight risk is of fundamental importance in the criminal justice system. The possibility of an accused fleeing from justice after being enlarged on bail is a real and persisting one. The menace is grave enough to put the credibility of the criminal justice system and the foundations of law in the society at risk. The legislature and the courts have created measures to prevent accused persons escaping justice after being enlarged on bail."

It is a matter of grave concern pointed out effectively by Bench in para 61 that, "Limitations of the sureties system become particularly severe when it comes to foreign nationals being prosecuted in Indian Courts. If such a foreign accused escapes from the territory of India the surety system becomes irrelevant. In fact the fugitive foreigner effectively goes beyond the reach of coercive jurisdiction of Indian courts. The criminal justice process would come to a dead end. This Court had asked the Government of India to produce the international instruments or the legal framework within which warrants and other coercive measures issued by the learned trial courts in India would be executed against foreign nationals who flee India to avoid criminal trial."

It cannot be lost sight of that the Bench stipulates in para 71 holding that, "There is another aspect which needs consideration insofar as grant of bail to foreign nationals is concerned. The visa of the applicant was only valid for 90 days and has long expired. Even if the applicant is enlarged on bail, he will not enjoy full liberty associated with Article 21 of the Constitution of India. The applicant will remain an illegal entrant in the country. If the applicant were to be granted bail he was required to be kept in detention centres as per law."

Most significantly, the Bench then encapsulates in para 76 what constitutes the cornerstone of this notable judgment postulating succinctly that, "The twin non negotiable requirements for the courts in all circumstances are to uphold the Indian Constitution and protect the rule of law in this country. To achieve these goals foreign nationals who are engaged in businesses in India need to be accountable to Indian laws; and foreign nationals who face criminal trials in India have to submit to the jurisdiction of Indian courts. Perception of foreign nationals about their immunity from Indian courts will encourage them act with impunity against Indian laws. Such state of affairs will undermine the Indian Constitution and laws and have grave consequences for national sovereignty."

Adding more to it, the Bench while expressing its apprehensions hastens to add in para 77 noting that, "The memories of foreign entities acting against Indian interests without fear of Indian law are too vivid to be recalled. The exactions of foreign interests working without scruples of international law are too severe to be reprised."

As a corollary, the Bench then directs in para 78 holding that, "In wake of the preceding discussion the bail application of the applicant is liable to be dismissed and is accordingly dismissed."

Finally and far most significantly, the Bench on a parting note concludes with clear message to the Government of India by observing in para 81 that, "Before parting, this Court would like to make some observations. The presence of foreign nationals in India as travellers or traders or otherwise is an extant reality. It is true for other countries as well. Legal issues like criminal trials of foreign nationals though arising in the domestic jurisdiction of one country have international ramifications. Criminal trial proceedings in the domestic courts of one country can get linked to the legal system and the Government of another country. There is a need for an international framework of laws which is created by consensus among the comity of nations in order to deal with such issues in a fair, transparent and just manner. For the moment this issue is not within the ken of this Court. However, it is a problem which the Government of India and other members of the comity of nations will have to address."

In sum, it is high time now and Centre must fully, firmly and finally abide by what the Allahabad High Court has directed in this leading case as it directly concerns our national security which comes first always. It has been very rightly held by the Allahabad High Court that foreigners doing business in India needs to be made strictly accountable under the Indian law. It merits no reiteration that Centre definitely needs to address the worries of the Court that no credible legal framework of efficacious system exists to secure the presence of Chinese nationals, who while facing criminal trials may escape the territory of India. It certainly brooks no more delay any more!