2009 (8) TMI 1300 - AT - FEMA

Summary

Issues Involved:
1. Contravention of provisions of Section 3(b) and 3(c) of the Foreign Exchange Management Act, 1999.
2. Legality of the confessional statements and their retraction.
3. Seizure of Indian Currency and documents.
4. Admissibility of confessional statements as evidence.
5. Opportunity of cross-examination of witnesses.
6. Standard of proof required in quasi-criminal proceedings.

Issue-wise Detailed Analysis:

1. Contravention of Provisions of Section 3(b) and 3(c) of FEMA, 1999:
The appellant was penalized for contravention of Section 3(b) and 3(c) of the Foreign Exchange Management Act, 1999. The investigation revealed that the appellant made payments totaling Rs. 51 lakhs to various bookies for the credit of persons resident outside India without RBI's permission, thus violating Section 3(d) of FEMA, 1999. Additionally, the appellant received Rs. 2,50,000/- from Ashok Kamdar on behalf of a Pakistani national, contravening Section 3(c).

2. Legality of the Confessional Statements and Their Retraction:
The appellant argued that the confessional statements were forcibly recorded and retracted them immediately. The Tribunal, however, found the retraction to be an afterthought, unsupported by evidence of coercion. The Tribunal emphasized that the voluntary nature of any statement is critical, referencing the Supreme Court's ruling in Vinod Solanki v. Union of India, which mandates that confessional statements must be corroborated by independent evidence.

3. Seizure of Indian Currency and Documents:
The Enforcement Directorate seized Rs. 2,50,000/- from the appellant's residence and Rs. 4,00,000/- from his business premises. The Tribunal noted that the seized currency and documents corroborated the appellant's involvement in hawala transactions. The appellant's failure to explain the large sums involved led to an adverse inference against him.

4. Admissibility of Confessional Statements as Evidence:
The Tribunal held that statements recorded by Enforcement Directorate officers are substantive pieces of evidence. The Supreme Court's judgment in Kanhaiyalal v. Union of India was cited, affirming that such statements are admissible if made voluntarily. The Tribunal found the appellant's statements to be voluntary and corroborated by other evidence, thus admissible.

5. Opportunity of Cross-Examination of Witnesses:
The appellant contended that the impugned order was passed without allowing cross-examination of witnesses. The Tribunal dismissed this argument, referencing the Supreme Court's ruling in Surjit Singh Chhabra v. UOI, which states that cross-examination is not a right and can be denied if not justified by specific reasons or circumstances.

6. Standard of Proof Required in Quasi-Criminal Proceedings:
The Tribunal emphasized that the standard of proof in quasi-criminal proceedings like this one does not require mathematical precision but a degree of probability that a prudent person would believe. The Tribunal cited the Supreme Court's judgment in Collector of Customs, Madras v. D. Bhoormull, which allows for an inference of guilt based on the probability of the case and the inability of the accused to explain incriminating facts within their knowledge.

Conclusion:
The Tribunal upheld the Adjudicating Officer's order, finding the appellant guilty of violating Sections 3(b) and 3(c) of FEMA, 1999. The penalty imposed was deemed commensurate with the violations, and the appeal was dismissed. The appellant was directed to deposit the balance penalty amount within 15 days, failing which recovery would proceed as per law.