2024 (6) TMI 560 - AT - FEMA

Contravention of Section 8(1) of FERA, 1973 - Denial of cross-examination of witnesses - violation of the principles of natural justice - whether a case of contravention of Section 8(1) of FERA, 1973 would be made out even if the appellants admitted receipt of the money from an NRE account because it was received by them in Indian currency? - HELD THAT - The statement of deposits and withdrawals from the NRE account shows that foreign exchange came in the account of AkbarVeerji on its deposit and it was transferred to the account of the appellants, may be the Indian currency. It is not that NRE account was opened with deposit of Indian currency and transferred it in favour of the appellants so as to exclude from the purview of Section 8(1) of FERA, 1973. The ingredients of Section 8(1) are satisfied in this case on transfer of the amount from NRE account where Foreign Exchange was deposited, thus the first legal argument raised by the appellant cannot be accepted. If the argument of the appellant is accepted, it would hit sub-section (2) of Section 8 of FERA, 1973. Though the appellants have not alleged for contravention of the aforesaid provision but reference of the said provision has been given to show the argument of the appellant, if accepted, then would offend other provisions of FERA, 1973. Thus, first ground raised by the appellant cannot be accepted. Proceedings before the Adjudicating Authority are of quasi-judicial and otherwise summary in nature. Cross-examination in such proceedings cannot be claimed as a rule. It may be required in Courts dealing civil or criminal cases. This is apart from the fact that cross-examination can be allowed when statement is recorded. In this case, statement could not be recorded in absence of presence of Akbar Veerji. The cross-examination cannot be sought of a person who never deposed statement before the Court or the authority. It is a fact that AkbarVeerji could not be produced before the Adjudicating Authority and thereby there was no question of recording of his statement. He was, in fact, a non-resident Indian and despite the efforts of the respondents, they could not secure him rather received a reply to the letter. In those circumstances, when the witness was not available and otherwise could not be produced in the proceedings and his statement was not recorded even during the course of investigation, the question of cross-examination would not arise. The letter replied by him is nothing but reiteration of the documents collected by the respondents from the Banks to prove their case. The respondents have given details of the account opened by AkbarVeerji coupled with the accounts of the appellants to show deposits and withdrawals of the amount and it is coupled with the fact that the account of AkbarVeerji was an NRE account. In such a case where the allegations are proved by the documents, the cross-examination of witness in summary proceedings cannot be claimed as a right when the person has not even been examined. Denial of cross-examination has not affected the appellants otherwise because the respondents could prove their case based on the documents collected during the course of investigation. Thus, we do not find that denial of cross-examination in this case is fatal. Thus, the second ground raised by the appellant is also not sustainable. Impact of Acquittal by the ACMM Court - The appellants argued that their acquittal by the ACMM Court should lead to the setting aside of the impugned order - ACMM Court has, however, recorded a finding that there is no material to prove transfer of an amount from NRE account whereas the respondents before us have submitted complete material to show and prove that an NRE account was opened by Akbar Veerji. The documents and the information received from Canara Bank produced before the authority was sufficient to prove transfer of Foreign Exchange in NRE account. The documents of two other Banks proved transfer of money in the account of the appellants. They even admitted it in their statement recorded under Section 40 of the Act and can be relied being judicial statement. The transfer of money in the account of the appellants was out of Foreign Exchange. Thus, the conclusion drawn by the ACMM Court cannot be made binding when the respondents have sufficiently proved their case before us. It has been held that in all circumstances, it would not be necessary for the court to accept the finding recorded by the Adjudicating Authority and it would be vice-versa. It would all depend on the facts of the case and, therefore, rigidly it cannot be held that as and when prosecution case fails necessarily the adjudication case should also fail. It is when the standard of proof in two proceedings are different.

Summary

Issues Involved:
1. Contravention of Section 8(1) of FERA, 1973.
2. Denial of cross-examination.
3. Impact of ACMM Court's acquittal on the Tribunal's decision.

Summary:

Issue 1: Contravention of Section 8(1) of FERA, 1973
The appellants challenged the penalty imposed by the Adjudicating Authority for receiving amounts from an NRE account in contravention of Section 8(1) of the Foreign Exchange Regulation Act, 1973 (FERA, 1973). The appellants argued that the receipt of a cheque in Indian currency from an NRE account does not constitute acquisition of foreign exchange. The Tribunal rejected this argument, stating that the transfer of money from an NRE account, where foreign exchange was deposited, satisfies the ingredients of Section 8(1) of FERA, 1973. The Tribunal emphasized that the restriction on dealing in foreign exchange without prior permission from the Reserve Bank of India applies even if the amount is received in Indian currency from an NRE account.

Issue 2: Denial of Cross-Examination
The appellants contended that the Adjudicating Authority violated the principles of natural justice by denying them the right to cross-examine Akbar Veerji, whose statements were relied upon in the impugned order. The Tribunal held that cross-examination in quasi-judicial and summary proceedings cannot be claimed as a right, especially when the witness was not available and his statement was not recorded before the authority. The Tribunal found that the respondents had made sufficient efforts to secure Akbar Veerji's presence and had relied on documentary evidence to substantiate their case. Therefore, the denial of cross-examination did not vitiate the impugned order.

Issue 3: Impact of ACMM Court's Acquittal
The appellants argued that their acquittal by the ACMM Court should lead to the setting aside of the impugned order. The Tribunal noted that the standard of proof in adjudication proceedings is different from that in criminal prosecution. The Tribunal referred to the judgment of the Apex Court in Radheshyam Kejriwal vs. State of West Bengal, which established that findings in adjudication proceedings are not binding on criminal prosecution and vice versa. The Tribunal found that the respondents had sufficiently proved their case with documentary evidence, and the acquittal by the ACMM Court did not bind the Tribunal. Therefore, the Tribunal dismissed the appeals.

Conclusion:
The Tribunal dismissed the appeals, upholding the penalties imposed for contravention of Section 8(1) of FERA, 1973, and found no merit in the arguments regarding denial of cross-examination and the impact of the ACMM Court's acquittal. The penalties had already been satisfied by the appellants.