2009 (5) TMI 1024 - AT - FEMA

Summary

Issues Involved:
1. Validity of the appellant's admissional statements.
2. Involvement of the appellant in the hawala transactions.
3. Allegations of coercion and ill-treatment by the Enforcement Officers.
4. Denial of cross-examination of witnesses.
5. Proof of abetment by the appellant.
6. Requirement of proving mens rea (guilty mind) for the contravention.

Issue-wise Detailed Analysis:

1. Validity of the appellant's admissional statements:
The Tribunal examined whether the admissional statements made by the appellant were voluntary and truthful. It was established that the statements were made in an atmosphere free from fear and duress. The Tribunal referred to the Supreme Court's ruling in Kanhaiyalal v. Union of India, which held that statements recorded by enforcement officers are admissible if made voluntarily. The Tribunal concluded that the appellant's statements were voluntary and corroborated by other evidence, including the statement of co-noticee Punjabhai Shah.

2. Involvement of the appellant in the hawala transactions:
The Tribunal found that the appellant, Jayanti P. Shah, was closely associated with Punjabhai H. Shah in the hawala transactions. The appellant admitted in his statement that he assisted Punjabhai H. Shah in receiving and making payments on instructions from persons resident outside India. The recovery of a note pad from the appellant's residence and the corroboration of his statements by Punjabhai Shah's statements further established his involvement.

3. Allegations of coercion and ill-treatment by the Enforcement Officers:
The appellant alleged that his statements were obtained under coercion and threat. However, the Tribunal found no evidence to support these allegations. The remand order of the Magistrate did not indicate any injuries or force used by the Enforcement Officers. The Tribunal concluded that the allegations of coercion were bald assertions without any supporting evidence.

4. Denial of cross-examination of witnesses:
The appellant argued that the adjudication order was passed without giving him an opportunity to cross-examine the witnesses. The Tribunal held that cross-examination cannot be permitted merely on demand without establishing certain reasons and circumstances. The refusal of cross-examination was not considered a violation of natural justice, as the appellant failed to provide sufficient reasons for the same.

5. Proof of abetment by the appellant:
The Tribunal examined whether the appellant abetted Punjabhai H. Shah in the hawala transactions. It referred to the definition of abetment under Section 107 of the Indian Penal Code, which includes instigation, conspiracy, and intentional aiding. The Tribunal found that the appellant's close association with Punjabhai H. Shah and his active complicity in the transactions established the charge of abetment. The appellant's actions facilitated the commission of the contraventions, proving his role as an abettor.

6. Requirement of proving mens rea for the contravention:
The appellant argued that the prosecution failed to prove the culpable mental state (mens rea) required for the contravention. The Tribunal referred to the Supreme Court's ruling in The Chairman, SEBI v. Shriram Mutual Fund, which held that the intention of the parties committing the violation is irrelevant once the contravention is established. The Tribunal concluded that the appellant's contravention of the statutory obligations under FERA was established, and the penalty was justified irrespective of the presence of mens rea.

Conclusion:
The Tribunal dismissed the appeal, upholding the penalty imposed on the appellant for contravention of Section 9(1)(b) and 9(1)(d) read with Section 64(2) of the Foreign Exchange Regulation Act, 1973. The Tribunal directed the appellant to deposit the balance amount of the penalty within 15 days, failing which the amount may be recovered by the respondent in accordance with the law.