2015 (8) TMI 1358 - HC - Indian Laws

Case of Enforcement Directorate proved as against the appellant - Held that - Appellate Tribunal has committed a grave error in stating that the retracted statement of the appellant had been corroborated by relying upon the alleged seizure of Diary, which is not even shown to the appellant. The Appellate Tribunal has also not considered the following facts. (i) the diary was not a relied upon document in the memorandum of show cause notice issued. (ii) The contents of the diary have also not been communicated to the appellant at any point of time. (iii) Factually also if such a diary has been produced it would indeed have revealed there is no entry or even the names of the sender as well as the names of the recipients. Having been considered the visible and tangible discrepancies strewn everywhere in the case of Enforcement Directorate, we are of the considered view that it is unsafe to hold that the case of Enforcement Directorate has been proved as against the appellant. Hence, the first substantial question of law is answered in favour of the appellant. Whether the proceedings are vitiated by bias in as much as the then Deputy Director of Enforcement Directorate, Chennai, Mr.A.Subramani had participated in the investigation and later issued the show cause notice and adjudicated the case himself? - Held that - In order to avoid the embarassing position and to allow the prosecution to play fair in an unbiased manner, the process of adjudication should have been handed over to some other Officer. But in this case it is unfortunate to say that the Officer viz., Mr.S.Subramanian, who had an occasion to search the premises of the appellant and to issue the memorandum of show cause notice was entrusted with the task of adjudication of the show cause notice against the appellant and that is why it went on the wrong side and ended with the result as against the appellant. In this connection, we would like to place it on record that the Adjudicating Authority is required to take an independent decision as a quasijudicial authority and pass appropriate orders. We therefore, find that when the adjudication is to be done by an Independent Officer where no role was played by the Investigating Officer, no prejudice could be caused to the appellant and in that circumstance, we may safely presume that the scheme of the Act sufficiently safeguard the rights of the appellant. On coming to the instant case on hand, the Deputy Director of Enforcement Directorate Mr.S.Subramanian, ought not to have adjudicated the show cause notice for the reasons afore stated. Accordingly, the question of law No.2 is also answered in favour of the appellant. In the result, the appeal filed by the appellant is allowed and the order of the Appellate Tribunal dated 07.12.2007 as well as the Adjudicating Authority dated 20.09.2000 are set aside and the appellant is discharged from all charges levelled against him. The penalty of ₹ 4,50,000/- if paid shall be refunded to the appellant. Consequently, connected M.P. is closed. No costs.

Summary

Issues Involved:
1. Corroboration of the retracted statement.
2. Bias in the adjudication process due to the involvement of the same officer in investigation and adjudication.

Issue-wise Detailed Analysis:

1. Corroboration of the retracted statement:

The appellant was issued a show cause notice on 14.05.1999 by the Deputy Director of the Enforcement Directorate for contravening Sections 9(1)(b) and 9(1)(d) of the Foreign Exchange Regulation Act, 1973. The appellant refuted the allegations through a detailed reply and a retraction letter dated 18.09.1998, claiming that his statement was obtained under duress.

The Adjudicating Authority found the appellant guilty and imposed penalties. The appellant challenged this order before the Appellate Tribunal, which upheld the decision, stating that the Enforcement Directorate had proved the charges beyond reasonable doubt.

The High Court highlighted the principle that the burden of proof lies on the prosecution to prove guilt beyond reasonable doubt. The court referred to the Apex Court's decision in Vijayee Singh and Others Vs. State of Uttar Pradesh and Miller Vs. Minister of Pensions, emphasizing that the prosecution must establish a high degree of probability.

The appellant argued that the retracted statement was not corroborated by any oral or documentary evidence, and the diary allegedly seized was not mentioned in the show cause notice nor disclosed to the appellant. The High Court found that the retracted statement lacked corroboration and noted the inefficiency in the investigation, as the alleged recipients of the payments were not contacted, and their statements were not recorded.

The court referred to State of Karnataka Vs. A.B. Nagaraj and another and A. Tajudeen Vs. Union of India, reiterating that a retracted confession must be corroborated by trustworthy evidence and that the burden is on the prosecution to prove its voluntary nature.

The High Court concluded that the Appellate Tribunal erred in relying on the uncorroborated retracted statement and the diary, which was not shown to the appellant. The court ruled that it was unsafe to hold that the case against the appellant was proved, thus answering the first substantial question of law in favor of the appellant.

2. Bias in the adjudication process:

The second issue concerned the bias in the adjudication process, as the same officer, Mr. S. Subramanian, who participated in the investigation, issued the show cause notice, and adjudicated the case. The appellant argued that this was a violation of the principles of natural justice.

The High Court endorsed this argument, stating that an officer involved in the investigation should not adjudicate the case to avoid any chance of bias. The court emphasized that the adjudication should have been handed over to an independent officer to ensure fairness.

The court noted that the Adjudicating Authority, being a quasi-judicial authority, is required to take an independent decision. The involvement of the same officer in both investigation and adjudication compromised the fairness of the process.

The High Court concluded that the adjudication by Mr. S. Subramanian was inappropriate and prejudicial to the appellant, thus answering the second substantial question of law in favor of the appellant.

Judgment:

The appeal was allowed, and the orders of the Appellate Tribunal dated 07.12.2007 and the Adjudicating Authority dated 20.09.2000 were set aside. The appellant was discharged from all charges, and the penalty of Rs. 4,50,000/- was ordered to be refunded to the appellant.