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TMI Blog2019 (4) TMI 332X X X X Extracts X X X X X X X X Extracts X X X X ..... ulings of the Supreme Court are binding under Article 141 of the Constitution of India, wherein a higher court has rendered a particular decision, said decision must be followed by a subordinate or a lower court unless it is distinguished or over-ruled or set aside. - FPA-FE-455/DLI/2005 - - - Dated:- 28-3-2019 - Justice Manmohan Singh Chairman For the Appellant : Shri H.S. Bhullar, Advocate, Ms. Bhawani Gupta and Sangeeta Singh, Advocates For the Respondent : Shri A.K. Panda, Sr. Advocate, Shri Aniruddha Purushottam, Shri Manoranjan Panikaray Shri N.K. Matta, Advocates JUDGEMENT FPA-FE-455/DLI/2005 1. The present appeal under section 19(1) of FEMA, 1999 read with rule 10 of FEMA rules 2000 and under section 49(5) (a) has been filed against the order dated 31/3/2015 whereby the appellant was held guilty of contravened the provisions of section 8 and section 40 of FERA. Total penalty of ₹ 2,50,00,000/- was imposed upon the appellant. 2. The facts already recorded in number of decisions passed from time to time by the courts. It is a litigation of 27 years old. The facts already recorded by the Hon‟ble High Court of Delhi which are that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... N No. IX dated 19th February 1996 which pertained to the mother diary, i.e. M-209 of 1993. Preceding the issuance of the SCNs the statements of both Mr. J.K. Jain and Mr. S.K. Jain were recorded by the ED under Section 40 of FERA. Mr. S.K. Jain was questioned on 14th, 20th, 25th April 1995 and 4th October 1996 and Mr. J.K. Jain was questioned on 17th, 20th April 1995, 21st November 1995, 8th January 1996, 17th June 1996 and 10th July 1996. 3. As already mentioned, two Show Cause Notices‟ were issued i.e. SCN IX dated 14.02.1996 and SCN VIII dated 06.11.1996 against the present Appellant based on two separate entries in the seized diary marked as M-207/93. 4. The SCN IX pertains to entry appearing under the date 6th Nov (Monday) in the diary marked as M-207/93 as follows: 168 20.30 8,27,586,20 200 20.50 9,75,609.20 18,03,195.95 Say 1.86 million 250.00 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a corroborative piece of evidence and not substantive evidence of violation of Section 8(1) of FERA (para 44). 9. The department thereafter had challenged the above judgment dated 29.05.2014 of the Hon‟ble High Court of Delhi in Criminal Appeal No. 340 of 2008 in the Hon‟ble Supreme Court of India by filing a SLP No. 19702/2015. The Hon‟ble Supreme Court of India has dismissed the said SLP by order dated 23.11.2015. A copy of the order dated 23.11.2015 is already filed. 10. The present case pertains to entry appearing under the date 6th Nov (Monday) in the diary marked as M-207/93 . Wherein, it is pertinent to note that the entry reflected on the page dated 9 October Monday in diary M-207/93 has been dealt with by the Hon‟ble High Court. Since the above-mentioned entry relating to V.K. Beri has been broadly dealt with by the Hon‟ble High Court in Crl. Appeal No. 340 of 2008 (supra); similarly the entry appearing under the date 6th Nov (Monday) which is reflected in the same diary. It is submitted on behalf of appellant that the same observations and principles shall apply. The said final judgement would be binding upon and covered in the prese ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irectly affecting foreign exchange and the import and export of currency and bullion, for the conservation of foreign exchange resources of the country and the proper utilization thereof in the interest of development of the country. 6.5.3. That, to fulfill the object of the legislation and securing punishment of the offenders, special rules of evidence have been incorporated in the Act. These are different from normal and conventional rules of evidence in criminal jurisprudence. Specific mention in this regard may be made to Section 18 (3), 59,71,72 FERA, 1973. The presumption has to be rebutted by proof and not by a bare explanation which is nearly plausible. It is pertinent to mention here that the presumption cannot be rebutted by way of explanation, but it requires the proof. The presumption has to be rebutted by proof and not by a bare explanation which is nearly plausible. The provisions of the FERA, 1973 impose a strict liability, and once the Enforcement Directorate presents a prima facie case establishing the contraventions, the onus shifts onto the Noticee to establish his innocence. 6.6. Submission B: Section 40 Statements inculpate the Appellant and pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e a fair construction without doing any violence to the language employed by the legislature. The provisions of Section 40 itself, which confers power on the officer of the Enforcement Directorate, to summon any person whose attendance he considers necessary during the course of any investigation, makes it binding as provided under sub-section (3) of Section 40, and the investigation or the proceeding in the. course of which such summons are issued have been deemed to be a judicial proceeding by virtue of sub-section (4) of Section 40. These principles should be borne in mind, while interpreting the provisions of Section 40 and its effect, if a person violates or disobeys the directions issued under Section 40. Before embarking upon an in-depth inquiry into the provisions of the Act for the purpose of interpretation of Section 40 and Section 56, it would be appropriate to notice some of the decisions given by different High Courts on the subject. 6.6.3. Section 40 of the FERA, 1973 reads: Section 40. Power to summon persons to give evidence and produce documents. - (1) Any gazetted officer of Enforcement shall have power to summon any person whose attendance he cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an act without permission, the burden of proving that he had the requisite permission shall be on him. ( 2 ) Where any person is prosecuted or proceeded against for contravening the provisions of sub-section (3) of section 8, the burden of proving that the foreign exchange acquired by such person has been used for the purpose for which the permission to acquire it was granted shall be on him. (3) If any person is found or is proved to have been in possession of any foreign exchange exceeding in value 1 [fifteen thousand rupees], the burden of proving that the foreign exchange came info his possession lawfully shall be on him. 6.8.2. The Hon'ble High Court in S.K. Jain Vs. M.G. Attri (passed by Hon'ble Ms. Justice Mukta Gupta in Crl. Rev. P. 518 of 2007)^ whilst dealing with the present Jain Hawala transactions on the criminal side, recorded the Respondent's submissions as under: 3. Learned counsel for the Respondent on the other hand contends that in terms of Section 71 (1) (2) (3) of the FERA, the burden of proof of the acquisition is on the person from whose possession it is recovered. Further when a person is prosecuted for the contravention of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing that the foreign currency belonged to him is not admissible in evidence and cannot override the statement recorded by the Respondent under Section 40 of the FER A. Hence, there is no infirmity in the impugned order and the petition be dismissed. 6.8.3. The Hon'ble High Court in S.K. Jain Vs. M.G. Attri came to hold that: 10. Thus, the statement of the co-accused being admissible in evidence and duly exhibited, it is now to be seen whether there is any other evidence on record against the Petitioner or in the absence of any other evidence on record whether charge can be framed merely on the statement of the co- accused. The statement of J.K. Jain recorded under Section 40 of the FERA admits seizure of incriminating documents Indian currency, Indira Vikas Patra and foreign currency from his house. J.K. Jain also admits that the seized documents were written in his handwriting. It is a detailed statement wherein he admits number of other transactions including the ledger and the seized files to be in his hand-writing. To see whether a statement is inculpatory or not, the entire statement will have to be looked into. Merely because the co-accused J.K. Jain in his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is designed to meet certain exceptional cases in which it would be impossible, or at any rate disproportionately difficult, for the prosecution to establish facts which are 'especially' within the knowledge of the accused and which he could prove without difficulty or inconvenience. The word especially‟ stresses that. It means facts that are pre-eminently or exceptionally within his knowledge. 6.8.8. The Hon'ble Supreme Court in Collector of Customs v. D. Bhoormall, (1974) 2 SCC 544 held : 32. Smuggling is calendestine conveying of goods to avoid legal duties. Secrecy and stealth being its covering guards, it is impossible for the Preventive Department to unravel every link of the process. Many facts relating to this illicit business remain in the special or peculiar knowledge of the persons concerned in it. On the principle underlying Section 106 of the of the Evidence Act, the burden to establish those facts is cast on the person concerned; and, if he fails to establish or explain those facts, an adverse inference, of fact may arise against him, which coupled with the presumptive evidence adduced by the prosecution or the Department would rebut the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions of this Act or any rule, direction or order made there under, which prohibits him from doing an act without permission, the burden of proving that he had the requisite permission shall be on him. Similarly, presumption of correctness, to the documents recovered/seized from the custody or control of any person, can also be raised. Heavy onus lay on the accused to prove the contrary. In this case, no attempt has been made by the learned counsel for the petitioner to show as to how the department was under an obligation to abide by the strict rules of evidence or for that matter an adverse presumption can be raised against the department. If a fact, the statement of the accused coupled with the entries in the account books and other related documents, recovered from his possession clearly proves the borrowing and lending of foreign exchange/monies to different persons and at different times. In such like cases, it is just not possible for the department nor they are required under law to examine each and every witness, who allegedly received the amount as otherwise they themselves would be liable for prosecution. In spite of this difficulty the department did summon and ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der any other law, or (ii) has been received from any place outside India (duly authenticated by such authority or person and in such manner as may be prescribed) in the course of investigation of any offence under this Act alleged to have been committed by any person, and such document is tendered in any proceedings under this Act in evidence against him, or against him and any other person who is proceeded against jointly with him, the court or the adjudicating officer, as the case may be, shall- (a) presume, unless the contrary is proved, that the signature and every other part of such document which purports to be in the handwriting of any particular person or which the court may reasonably assume to have been signed by, or to be in the handwriting of, any particular person, is in that person's handwriting, and in the case of a document executed or attested, that it was executed or attested by the person by whom it purports to have been so executed or attested; (b) admit the document in evidence notwithstanding that it is not duly stamped, if such document is otherwise admissible in evidence; (c) in a case falling under clause (i), also presume, unless the contr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on record that the the present proceedings are an offshoot of the Jain Hawala Diaries‟ case which ended in quashing of the criminal proceedings as a result of the judgment of the Hon‟ble High Court in L.K. Advani vs. CBI (1997) CrI.LJ 2559 wherein, it was held that the diaries relied upon by the prosecution are inadmissible in evidence and cannot be called books of accounts. Further CBI approached the Hon‟ble Supreme Court by filing a SLP against the said judgment. But, the Supreme Court upheld the order of the High Court in the matter of CBI v. V.C Shukla ors (1998)3 SCC 410, whereafter all the accused persons were discharged. 15. On the basis of the entries of the dairy M-207/93 two criminal complaints bearing CC No. 61/1/91 and 107/1/96 were filed before the ACMM. After the recording of the pre-charge evidence the Trial Court has discharged the present Appellant and the same has been upheld by the appellate court on the ground that the said entries are inadmissible in evidence as no case is made out based on the same. The same was decided on merit. The said order of discharge has not been set-aside as of today. 16. It is a settled law that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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