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2013 (2) TMI 396 - SC - FEMAViolation of FERA - Whether process of purchase of tickets of appellant was a commercial arrangement that was legally permissible? - Appellant carries on a travel agency and specialises in booking of tickets for crew members working on ships - assessee contested for suffering from any illegality or material irregularity causing prejudice - Held that - No such illegality or irregularity has been demonstrated. That apart delayed pronouncement of the order by the Adjudicating Authority was not urged as a ground of challenge before the Tribunal or the High Court both of whom have remained silent on this aspect. Even on the question of prejudice it is find that the contention of assessee appeleant to be more imaginary than real. The argument regarding prejudice is founded on the plea that the appellants could not place some of the documents which they have now placed before this Court for consideration. It is further admitted that no application for permission to produce these documents was filed by them before the Adjudicating Authority no matter they could have done so if they really indeed needed to place reliance on such documents. The hearing had been concluded by the Adjudicating Authority in keeping with the requirement of Section 51 and Rule 3 of the Adjudication Rules under FERA thus no irregularity causing prejudice proved. Bountiful Ltd. was a paper company and its financial control lay in their hands - clear violation of the provisions of FERA - Held that - The Adjudicating Authority has noticed and relied upon incriminating circumstances like instructions issued by appellant Telestar to Bountiful to remit an amount of ₹ 4,74,033/- to M/s Aarnav Shipping Company towards repairs of MV Rizcun Trader, a ship owned by one of their principals M/s United Ship Management, Hongkong. Similarly a payment of US 12500/- made from Bountiful Account to Mustaq Ali Najumden is also evidenced and was made on the instructions of appellant-Shri Rajesh Desai, which the latter explained to be kickbacks paid to overseas shipping company for giving ticketing business to Telestar. Suffice it to say that there may be sufficient evidence on record for the Adjudicating Authority and the Tribunal to hold that the appellants were indeed guilty of violating the provisions of FERA that called for imposition of suitable penalty against them. It was not the case of the appellants that the findings were unsupported by any evidence nor was it their case that the statements made by the appellants were un-corroborated by any independent evidence documentary or otherwise. In the circumstances, therefore, no reason to interfere with the concurrent findings of fact on the question whether Bountiful was or was not a paper company controlled by the appellants from India. Non granting of opportunity to cross examine the witness - violating the principles of natural justice - Held that - Adjudicating Authority has mainly relied upon the statements of the appellants and the documents seized in the course of the search of their premises. But, there is no dispute that apart from what was seized from the business premises of the appellants the Adjudicating Authority also placed reliance upon documents produced by Miss Anita Chotrani and Mr. Raut. These documents were, it is admitted disclosed to the appellants who were permitted to inspect the same. The production of the documents duly confronted to the appellants was in the nature of production in terms of Section 139 of the Evidence Act, where the witness producing the documents is not subjected to cross examination. Such being the case, the refusal of the Adjudicating Authority to permit cross examination of the witnesses producing the documents cannot even on the principles of Evidence Act be found fault with. At any rate, the disclosure of the documents to the appellants and the opportunity given to them to rebut and explain the same was a substantial compliance with the principles of natural justice. That being so, there was and could be no prejudice to the appellants nor was any demonstrated by the appellants before us or before the Courts below. The third limb of the case of the appellants also in that view fails and is rejected. The Adjudicating Authority had imposed a higher penalty & the Tribunal has already given relief by reducing the same by 50%. Keeping in view the nature of the violations and the means adopted by the respondent to do that, no room for any further leniency. These appeals fail and are, hereby, dismissed with costs assessed at ₹ 50,000/- in each appeal to be deposited within two months with the SCBA Lawyers Welfare Fund.
Issues Involved:
1. Ex parte adjudication order and delay in pronouncement. 2. Voluntariness and reliance on retracted statements. 3. Determination of Bountiful Ltd. as a paper company. 4. Denial of cross-examination and principles of natural justice. 5. Quantum of penalty imposed. Detailed Analysis: 1. Ex parte Adjudication Order and Delay in Pronouncement: The appellants contended that the adjudication order was ex parte and delayed, thereby prejudicing their case. They argued that the delay violated the requirement of a fair hearing under Section 51 of FERA. The Supreme Court, however, held that mere delay in pronouncement does not invalidate an otherwise legally valid order. The Court emphasized that the appellants did not raise this issue before the Tribunal or the High Court, and no real prejudice was demonstrated. The Court cited Ram Bali v. State of U.P. (2004) 10 SCC 598 to support the view that delay alone is insufficient to set aside an order. 2. Voluntariness and Reliance on Retracted Statements: The appellants argued that their statements were not voluntary and were obtained under coercion. The Adjudicating Authority and the Tribunal both found the statements to be voluntary and incriminating. The Supreme Court upheld these findings, noting that the statements contained detailed information that could only come from personal knowledge. The Court referenced K.T.M.S. Mohd. v. Union of India (1992) 3 SCC 178 and K.I. Pavunny v. Assistant Collector (1997) 3 SCC 721 to affirm that retracted statements can form a valid basis for findings if deemed voluntary. 3. Determination of Bountiful Ltd. as a Paper Company: The appellants challenged the finding that Bountiful Ltd. was a paper company controlled from India. The Adjudicating Authority and the Tribunal found sufficient evidence, including statements and documents, to support this conclusion. The Supreme Court refused to overturn these factual findings, emphasizing that such determinations are based on the material collected during the investigation. The Court highlighted incriminating documents and statements that linked the appellants to the control of Bountiful Ltd. 4. Denial of Cross-Examination and Principles of Natural Justice: The appellants argued that the denial of cross-examination of certain witnesses violated natural justice. The Supreme Court noted that while the rules of procedure do not apply to FERA adjudications, cross-examination might be necessary to test the veracity of evidence in certain situations. However, in this case, the Court found no prejudice from the denial of cross-examination, as the main reliance was on the appellants' statements and documents seized from their premises. The Court referenced Surjeet Singh Chhabra v. Union of India (1997) 1 SCC 508 to support the view that cross-examination is not always necessary. 5. Quantum of Penalty Imposed: The appellants contended that the penalty was disproportionate. The Supreme Court found no reason to interfere with the penalty, noting that the Tribunal had already reduced it by 50%. The Court held that the nature of the violations and the means adopted justified the penalty imposed. Conclusion: The Supreme Court dismissed the appeals, upholding the findings of the Adjudicating Authority and the Tribunal. The Court found no illegality or material irregularity in the adjudication process and ruled that the penalties imposed were appropriate given the violations. The appeals were dismissed with costs assessed at Rs. 50,000/- in each appeal, to be deposited within two months with the SCBA Lawyers' Welfare Fund.
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