2013 (3) TMI 483 - HC - FEMA

Section 8(1) of the Foreign Exchange Regulation Act,1973 (FERA) - Section 56(1)(i) - During search foreign currencies were seized - Petitioner in his statement U/s 40 of the Foreign Exchange Regulation Action 1973 (FERA) had admitted that he visited Seethalakshmi Nagaraj and requested for foreign exchange as he wanted to deposit the same into the NRE account of his brother in law as such person was in need of the same. Held that - Without going into the merits, even if it be accepted that the foreign exchange did belong to Seethalakshmi Nagaraj, the prosecution would still have a case of borrowing prohibited under section 8(1) FERA1973, if it establishes its contention in this regard. It would be for the petitioner to establish in the course of trial that he had received the foreign exchange from Seethalakshmi Nagaraj at her instance. This is more so because section 71 FERA 1973 places the burden of proving lawful possession of foreign exchange in excess of value of upon him. The revision shall stand dismissed.

Summary

Issues:
Challenge to order of Additional Chief Metropolitan Magistrate regarding prosecution under FERA for possession of foreign currencies without authorization.

Analysis:
The revision challenged an order regarding prosecution under FERA for possession of foreign currencies without authorization. The petitioner was found in possession of US$ 5014 during a search, allegedly acquired from unauthorized sources. The petitioner claimed the currency was to be deposited into his brother-in-law's NRE account at the instance of another individual. The prosecution argued that even if the currency belonged to the other individual, it would still constitute borrowing prohibited under FERA. The burden of proving lawful possession of foreign exchange exceeding Rs 15,000 was placed on the petitioner by section 71 of FERA.

The Court clarified that a petition seeking discharge was maintainable even after evidence recording under section 244 Cr.P.C. However, they upheld the lower court's decision not to interfere with the prosecution order. The petitioner's claim of receiving the currency from another individual for depositing into an NRE account did not absolve him of potential FERA violations. The prosecution could still establish a case of borrowing prohibited under FERA, and the burden of proving lawful possession of the foreign exchange exceeding Rs 15,000 rested with the petitioner. Consequently, the revision was dismissed, and the connected miscellaneous petition was closed.