2024 (6) TMI 558 - AT - FEMA

Contravention of section 9 (1) (f) (i) of FERA 1973 - Appellant argued lack of material and violation of natural justice, citing the need for cross-examination - appellant denied the allegations made against him and prayed for cross-examination of Sudhir Kapadia which was not acceded to - HELD THAT - No part of the order pertains to the appellant to show his involvement for the contravention of the provision of the Act of 1973. In the statement recorded on 31.07.1996, Sudhir Kapadia stated about the details of the account at New York sent by Baghubhai to him. The payment of U.S. 38,000 is said to have been made on the instruction of the appellant who approached him on 16th or 17th July 1996. He required an amount of U.S. 38,000 outside India. He then contacted Baghubhai in London who asked him to hand over an amount of 14,82,000/- to Mahendrabhai which was collected from Amit Shah on 18th July. The order does not contain a reference of statement of Mahendrabhai or anyone other than Sudhir Kapadia said to have retracted his statement. The fax message does not make a reference of the appellant. Thus, we do not find any material to show involvement of the appellant other than the statement of Sudhir Kapadia. When Sudhir Kapadia had retracted his statement and the appellant was denied an opportunity of cross-examination of the person whose statement was relied against him, it was not proper to draw conclusions against the appellant without any other evidence to prove his involvement. The order does not discuss any material against the appellant other than a reference of the statement of Sudhir Kapadia despite retraction. We find reasons to cause interference in the impugned order qua the appellant which is set aside.

Summary

Issues:
1. Appeal against order dated 10th January, 2003 based on show cause notices.
2. Allegation of contravention of section 9 (1) (f) (i) of FERA 1973.
3. Denial of allegations by the appellant and imposition of a penalty.
4. Lack of material against the appellant to prove involvement.
5. Violation of principles of natural justice and denial of cross-examination.
6. Reliance on retracted statement of Sudhir Kapadia without corroborative evidence.
7. Reference to judgments supporting the denial of cross-examination.
8. Discrepancies in documentary evidence and lack of incriminating material against the appellant.
9. Prayer to set aside the order based on lack of evidence against the appellant.

Analysis:
The judgment before the Appellate Tribunal for SAFEMA at New Delhi involves an appeal against an order issued in reference to show cause notices, particularly concerning the contravention of section 9 (1) (f) (i) of FERA 1973. The appellant, in this case, was issued a show cause notice regarding a payment of Rs. 14,82,000 allegedly made in contravention of the mentioned section. The appellant denied the allegations and requested cross-examination of Sudhir Kapadia, whose statement was crucial in the case. However, the appellant was not given the opportunity for cross-examination, leading to a violation of principles of natural justice.

The judgment highlights the lack of material against the appellant to prove his involvement, with the penalty of Rs. 3 lakh imposed solely based on the retracted statement of Sudhir Kapadia. The appellant argued that without corroborative evidence, relying on a retracted statement was insufficient to draw conclusions against him. The appellant also pointed out discrepancies in the documentary evidence and the reliance on oral statements that did not align with the available material. The appellant's counsel referenced relevant judgments to support the argument that denial of cross-examination could cause prejudice to the accused.

The Tribunal considered the submissions of both parties and scrutinized the facts of the case. It was noted that the order lacked substantial evidence against the appellant other than the statement of Sudhir Kapadia, who had retracted his statement. The Tribunal found no basis to prove the appellant's involvement without additional evidence and concluded that the principles of natural justice were violated. Consequently, the Tribunal set aside the impugned order against the appellant, allowing the appeal in favor of the appellant.