1996 (4) TMI 326 - HC - FEMA

Issues Involved:
1. Contravention of Section 9(1)(c) of the Foreign Exchange Regulation Act (FERA) by the respondent.
2. Contravention of Section 9(1)(a) of FERA by the respondent.
3. Contravention of Section 9(1)(d) of FERA by the respondent.
4. Evaluation of evidence and burden of proof under Sections 59, 71, and 72 of FERA.
5. Applicability of Supreme Court judgments in the context of FERA.
6. Consideration of long lapse of time in sentencing.

Issue-wise Detailed Analysis:

1. Contravention of Section 9(1)(c) of FERA:
The respondent was accused of acknowledging a debt to Anthony, a person resident outside India, without the necessary permissions from the Reserve Bank of India, thereby violating Section 9(1)(c) of FERA. The prosecution presented evidence including a letter (Ex. P3) from Anthony and a statement (Ex. P5) from the respondent admitting the debt. However, the trial court acquitted the respondent, noting that the prosecution failed to independently prove that Anthony was a resident outside India.

2. Contravention of Section 9(1)(a) of FERA:
The respondent was accused of making payments to Anthony and his wife, residents outside India, without the required permissions, violating Section 9(1)(a) of FERA. The evidence included the respondent's statement (Ex. P5) and the letter (Ex. P3). The trial court found that the prosecution did not prove Anthony's residency status outside India independently, leading to the respondent's acquittal.

3. Contravention of Section 9(1)(d) of FERA:
The respondent was accused of making payments to various individuals on behalf of Anthony, a resident outside India, without the required permissions, violating Section 9(1)(d) of FERA. The evidence included the respondent's statement (Ex. P5) and the letter (Ex. P3). The trial court acquitted the respondent on the grounds that the prosecution did not independently prove Anthony's residency status outside India.

4. Evaluation of Evidence and Burden of Proof:
The trial court initially acknowledged that under Section 72 of FERA, the contents of documents seized from the respondent's custody should be presumed true unless disproved by the respondent. However, it concluded that the prosecution needed to independently prove Anthony's residency status outside India. The appellate court disagreed, emphasizing that under Sections 59 and 71 of FERA, the burden of proof to disprove the presumption of culpable mental state and to show requisite permissions lies on the accused, not the prosecution. The appellate court found that the trial court failed to apply these sections correctly, leading to a wrongful acquittal.

5. Applicability of Supreme Court Judgments:
The trial court relied on Supreme Court judgments related to Section 494 IPC, which require the prosecution to independently prove certain facts. The appellate court clarified that these judgments are not applicable to FERA cases due to the specific provisions of Sections 59 and 71 of FERA, which shift the burden of proof to the accused.

6. Consideration of Long Lapse of Time in Sentencing:
The respondent's counsel argued that due to the long lapse of time, the respondent should not be punished, and pointing out the illegality should suffice. The appellate court rejected this argument, citing the Supreme Court's stance that economic offences, which jeopardize the country's economy, should not be treated lightly. The appellate court emphasized the need for justice for the community and the state, not just the accused.

Conclusion:
The appellate court set aside the trial court's judgments of acquittal, finding the respondent guilty of violating Sections 9(1)(c), 9(1)(a), and 9(1)(d) of FERA, punishable under Section 56 of the Act. The respondent was convicted and fined Rs. 500/- in each case, with a default sentence of one month's rigorous imprisonment. The appeals were allowed, and the respondent was given four weeks to pay the fine.

← Previous Next →