2018 (7) TMI 1224 - AT - FEMA

Allegation against the appellant Jaswinder Singh as contravened Sections 9 (1) (d) of FERA - payments of ₹ 2.85 Crore to persons in India on behalf of persons residing outside India - Held that - In any event, the case of the department is improbable on the face of it as the allegation of the department that the appellant indulged in hawala business is falsified from the fact that the said diary allegedly contains the details of the payment made by the appellant Jaswinder Singh for the period of January 1998 onwards to various persons named therein while he was not in India. There was no recovery from the appellant. Counsel for the appellant says that due to long passing of time and harassment, the appellant has compounded his offence and he was accordingly discharge by imposing costs and the same was deposited. With regard to Disclosure statement of the appellant Jaswinder Singh before Police. The statement of appellant and the co-accused before police is not admissible in evidence and as such no reliance can be placed on this inadmissible piece of evidence. The other important issue is that dispute contravention facts which are contrary to the evidence available on record such as pass-port entries as well as entries made in diary with one pen, he was also denied permission to cross examine witnesses notwithstanding a specific request in writing in this regard. It is submitted that the statements made by the co-accused or the officers of the ED cannot be taken as corroboration. The statements should be corroborated from the independent facts and statements are not reliable till their veracity and genuineness is not tested by cross examination. Therefore, under the established principles of natural justice, the appellant requested before the Adjudication Authority for permission to cross examine the witnesses so as to enable them to establish his innocence and to state and/or explain his case. The cross examination of the officers who recorded his statement dated 08.09.1998 (in jail) and that of the IO is imperative in order to arrive at the truth of the matter, it was a perfect case where the crossexamined should have been allowed. Thus ED has failed to prove its case even by way of preponderance of probability and the allegations made by the ED are improbable that no prudent person can ever reach a just conclusion that there is sufficient ground for proceeding against the appellant. The finding of the Adjudicating Authority was wholly perversed, contrary and those suffer many infirmities.

Summary

Issues Involved:
1. Contravention of Section 9(1)(d) of FERA by the appellant.
2. Admissibility and reliability of evidence, including diary entries and statements.
3. Denial of cross-examination of witnesses.
4. Violation of principles of natural justice.

Issue-Wise Detailed Analysis:

1. Contravention of Section 9(1)(d) of FERA by the appellant:
The appellant was accused of making payments amounting to ?2.85 Crore to persons in India on behalf of individuals residing outside India, thereby contravening Section 9(1)(d) of FERA. The appellant argued that he was a respectable businessman involved in the export of hosiery and woolen goods from India to Afghanistan and had no involvement in any illegal transactions. The appellant claimed innocence and stated that he was falsely implicated.

2. Admissibility and reliability of evidence, including diary entries and statements:
The respondent relied on diary entries, co-accused statements, and the appellant's confessional statement to support the impugned order. The appellant contended that the diary was fabricated, as it contained entries for periods when he was not in India. The Additional Sessions Judge had previously discharged the appellant, stating, "there is no prima facie evidence on record to show that the entries mentioned in the pocket diaries... represent honest and real transactions." The appellant also argued that the statement recorded on 8.9.1998 was tampered with and not attested by the Jail Superintendent, making it inadmissible.

3. Denial of cross-examination of witnesses:
The appellant was denied the opportunity to cross-examine witnesses, including the hand-writing expert and officials who recorded his statement. The respondent argued that strict rules of evidence or cross-examination are not required in adjudication proceedings. However, the appellant contended that cross-examination was necessary to establish his innocence and that the denial violated principles of natural justice.

4. Violation of principles of natural justice:
The appellant argued that the denial of cross-examination and the reliance on inadmissible evidence violated principles of natural justice. The Supreme Court in "Andaman Timber Industries Vs. Commissioner of C.Ex., Kolkata-II" observed that not allowing cross-examination of witnesses whose statements formed the basis of the impugned order amounted to a violation of natural justice, making the order nullity.

Conclusion:
The appeal was allowed, and the impugned order was set aside. The tribunal found that the Enforcement Directorate (ED) failed to prove its case even by a preponderance of probability. The allegations were deemed improbable, and the findings of the Adjudicating Authority were considered perverse and infirm. The tribunal emphasized the importance of adherence to principles of natural justice, including the right to cross-examine witnesses.