1999 (9) TMI 1009 - AT - FEMA

Summary

Issues Involved:
1. Violation of sections 9(1)(b) and 9(1)(d) of the Foreign Exchange Regulation Act, 1973.
2. Adequacy of inquiry and adherence to principles of natural justice in the adjudication process.
3. Admissibility and reliability of evidence, including statements and documents.
4. Requirement for joint adjudication proceedings.
5. Voluntariness and truthfulness of confessional statements.

Issue-wise Detailed Analysis:

1. Violation of sections 9(1)(b) and 9(1)(d) of the Foreign Exchange Regulation Act, 1973:
The appellants were charged with receiving and making payments in India under the instructions of a person resident outside India, contravening sections 9(1)(b) and 9(1)(d) of the Act. Imran Ahmed was penalized Rs. 10 lakhs, and Noor Alam Rs. 6 lakhs for these violations.

2. Adequacy of Inquiry and Adherence to Principles of Natural Justice:
The appellants contended that the adjudicating officer did not conduct a proper inquiry as mandated by section 51 of the Act and the Adjudication Proceedings and Appeal Rules, 1974. It was argued that the impugned order was made without giving cogent reasons and violated the principles of natural justice. Specifically, the reliance on Noor Alam's statement and evidence collected behind the back of the appellant without affording an opportunity for cross-examination was contested.

3. Admissibility and Reliability of Evidence:
The appellants challenged the admissibility of statements and documents. Imran Ahmed's counsel argued that the evidence against him, including his own confessional statements, was involuntary and not admissible. Noor Alam's counsel adopted similar arguments, stating that documents seized from Shamim Ahmed were not admissible and that the adjudication proceedings were vitiated as the documents were not made available to the appellant.

4. Requirement for Joint Adjudication Proceedings:
The judgment highlighted the necessity of joint adjudication proceedings against Shamim Ahmed and the appellants. The absence of joint proceedings meant that the presumption under section 72 regarding documents seized from Shamim Ahmed was not available to the department. The adjudicating authority was required to prove the documents and make Shamim Ahmed available for cross-examination.

5. Voluntariness and Truthfulness of Confessional Statements:
The adjudicating authority was tasked with determining whether the confessional statements were voluntary and true. If the statements were found to be involuntary or untrue, they were to be excluded from evidence. The authority was also to consider whether the remaining evidence could substantiate the charges.

Appeal No. 167/97 (Imran Ahmed):
The case was remanded for fresh adjudication due to procedural lapses and the need for joint proceedings with Shamim Ahmed. The adjudicating authority was instructed to exclude evidence from Shamim Ahmed if cross-examination was not feasible and to reassess the evidence, including Imran Ahmed's statements and documents seized from his premises.

Appeal No. 178/97 (Noor Alam):
The appeal was allowed, and the impugned order was set aside. The evidence, including Noor Alam's statement, was deemed insufficient to sustain the charges. The judgment noted that even if Shamim Ahmed's statement was considered, it did not prove that Noor Alam received or made payments on behalf of a non-resident.

Conclusion:
Both appeals were allowed, setting aside the impugned orders. Imran Ahmed's case was remanded for fresh adjudication, while Noor Alam's charges were dismissed. The judgment emphasized the need for proper procedural adherence, joint adjudication proceedings, and the careful evaluation of evidence.