2011 (1) TMI 1239 - AT - FEMA

Violation of Section 9(1)(b), 9(1)(c) and 9(1)(d) of FERA - Imposition of penalty - Confiscation of seized money - Admissibility of evidence - Held that - Adjudicating Authority has recorded statement of Smt. Gurmej Kaur who in her statement admitted that her husband is staying at Dubai and the documents (loose sheets and diary) is written in the handwriting of her husband who alone can explain the same regarding recovery of Rs. 65,000/- seized from her resident - Smt. Gurmej Kaur did not retract with her statement. Apart from that statement of Narinder Singh are also on record in which he has admitted that he has paid a sum of Rs. 2,30,000/- to Smt. Gurmej Kaur. Thus, her statements are corroborated by the statement of Narinder Singh to that extent and thus, receipt of Rs. 3,30,000/- is proved. Apart from that statement of Gulzar Singh, Kuldip Kaur, Surinder Kaur, Harmesh Lal, Gurdev Singh Fauji, Piara Lal, Rattan Singh, Pushapawati of Ludhiana are on record. These persons shows that the appellant has paid a sum of Rs. 8,37,000/- to these persons at different time in different amount. Thus, there is ample evidence on record to show that Harbhajan Singh was involved in selling of foreign exchange without permission of Reserve Bank of India (RBI) and he sold foreign exchange to the tune of Rs. 8,57,000/-. However, there is no evidence on record to show that the appellant has disbursed a sum of Rs. 1,35,28,275/-. As the loose papers recovered from his house, appellant does not fall with Section 34 of the Evidence Act which provides that entries in a Book of Account recovery kept in the course of business are admissible in evidence. The entries in the diary and the loose sheets cannot be said to be account kept in regular course of business and, therefore they are not admissible in evidence - Penalty reduced - But confiscation sustained - Decided partly in favour of Appellant.

Summary

Issues:
Violation of FERA provisions - Sections 9(1)(b), 9(1)(c), and 9(1)(d)
Adjudicating Authority's decision on penalties and confiscation
Evidence admissibility and burden of proof
Opportunity for cross-examination and principles of natural justice

Violation of FERA provisions - Sections 9(1)(b), 9(1)(c), and 9(1)(d):
The appeal was filed challenging the order passed by the Special Director, Enforcement Directorate, New Delhi, regarding the violation of FERA provisions. The Adjudicating Authority found the appellants guilty of contravening Sections 9(1)(b) & 9(1)(d) of FERA. The penalties imposed were Rs. 25,000 on Smt. Gurmej Kaur and Rs. 7,00,000 on Harbhajan Singh, along with confiscation of seized amounts. The appellant contended that there was no evidence against Harbhajan Singh for acquiring and distributing a specific amount, and absence during summons should not lead to adverse inferences under FERA. The appellant also argued about the lack of opportunity for cross-examination and the admissibility of evidence based on recovered documents. The Adjudicating Authority's decision was challenged on various legal grounds regarding the alleged violations of FERA provisions.

Adjudicating Authority's decision on penalties and confiscation:
The Adjudicating Authority issued Show Cause Notices to the appellants based on the seized documents and witness statements. After examining witnesses, the Authority found the appellants guilty and imposed penalties and confiscation orders. The appellant argued against the penalties imposed, citing lack of evidence, absence of steps for Harbhajan Singh's presence, and the need for proper cross-examination. The respondent supported the Authority's decision, emphasizing procedural rules and the lack of specific requests for cross-examination. The Tribunal reviewed the penalties and confiscation orders in light of the arguments presented by both parties and the legal principles governing such cases.

Evidence admissibility and burden of proof:
The case involved the admissibility of evidence, particularly statements and documents seized during the investigation. Smt. Gurmej Kaur's statements, supported by other witnesses, indicated transactions involving significant amounts. However, the appellant contested the admissibility of certain evidence, citing legal precedents and rules regarding the burden of proof in FERA cases. The Tribunal evaluated the evidence presented, including the statements and documents, to determine the extent of the appellant's involvement in the alleged violations. The decision considered the legal standards for admissible evidence and the burden of proof on the enforcement authorities.

Opportunity for cross-examination and principles of natural justice:
The appellant raised concerns about the lack of opportunity for cross-examination, arguing a violation of natural justice principles. The respondent countered, highlighting procedural rules and court judgments supporting their position. The Tribunal examined the procedural aspects of the case, including the appellant's right to cross-examine witnesses and the implications of not exercising that right. The decision addressed the balance between procedural requirements and the principles of natural justice in adjudicating cases involving alleged violations of FERA provisions.