1. This appeal is against the order No. ADJ/102-103/2502 /B/DD/RAJ of 1993 dated 19-7-1993 whereby penalties of Rs. 9,000 and Rs. 45,000 were respectively imposed for contravening the provisions of section 9(1)(b) and section 14 of the Foreign Exchange Regulation Act, 1973 (âthe Act).
2. In his stay petition, the Appellant pleaded strong prima facie case
and on this ground, sought dispensation of pre-deposit of the amount of penalties. The appellant further stated in his Stay Petition that he would suffer great financial hardship if he is forced to pay penalty amount pending hearing of the Appeal and craved leave to refer to and rely upon the relevant documents to bring his financial position including his Income-tax return and wealth-tax return. When Shri Kumar, the Appellants counsel, was asked to show how pre-deposit would cause undue hardship, he submitted that the case is old one and on the facts of it, he is prepared to argue the case straightaway on merits with a view to have the appeal finally disposed of. I have given my careful consideration to this plea of the Appellants counsel and I consider it expedient to dispense with the penalty and take up the appeal for consideration on merit.
3. The departments case against the Appellant has been that the Appellant had agreed to participate in six programmes to be conducted in USA by Shri Dhimant Doshi in collaboration with Shri Krishan Lalwani and for each programme, the Appellant was to be paid a sum of rupees 30,000. Out of the agreed amount, Rs. 30,000 was paid to the Appellant in Bombay in August, 1989 and the balance of Rs. 1,50,000 was paid to him in US $ while the appellant was in USA. Based on these facts two show-cause notices were issued to the Appellant, one for contravening the provisions of section 9(1)(b) by accepting payment of Rs. 30,000 from Shri Dhimant Doshi, a person resident outside India and another for contravening the provisions of section 14 as the Appellant failed to surrender to an authorised dealer the American Dollars equivalent to Rs. 1,50,000 received from Krishan Lalwani of New York. In support of these allegations, the Respondents relied upon the statement of Shri Dhimant Doshi dated 26-2-1991 and 27-2-1991 statement of the Appellant dated 11-3-1991 and documents seized from Shri Dhimant Doshi. The Appellant neither filed his reply nor appeared before the Adjudicating Officer although, his case was fixed for hearing a number of times. On each occasion, the Appellant sought adjournment for one reason or another. In the circumstances, the learned adjudicating authority proceeded ex parte against the Appellant and found him guilty on both the counts and imposed the penalty of Rs. 9,000 for contravening the provisions of section 9(1)(b) and penalty of Rs. 45,000 for contravening the provisions of section 14 of the Act.
4. Shri Kumar, the learned counsel of the Appellant submitted that Rs. 30,000 was taken by the Appellant for the purpose of having costumes to be used in the programme by the Appellant and was not by way of remuneration. Shri Kumar thus contended that at best there could be a technical breach of section 9(1)(b) and on the facts and in the circumstances of the case, the appellant deserves a lenient view in the matter. As regards show-cause notice No. 2, Shri Kumar contended that no contravention has been proved as there is no evidence whatsoever of âholding or acquiring of foreign currency by the Appellant. In view of this, section 14 would not apply to the Appellant in support of this Shri Kumar referred to the case of Eastern Agencies v. UOI [1985] (6) ECE 50 (Bom.). Shri Kumar further referred to last para of page 3 of the adjudication order, where the adjudicating officer observed that since part of the statement of Shri Doshi has been accepted by the Appellant, there is no justification for rejecting the remaining part of the statement of Shri Doshi which is without any bias against the party. From his statement, it is clear that he had narrated the events in sequence as they happened. Shri Kumar contended that this finding is biased on conjuncture and not on any evidence. He further submitted that Shri Doshi being a co-accused, his statement cannot be relied on without corroboration. The charge has to be established before a penalty can be levied. In support of these contentions, Shri Kumar has placed reliance on State of Punjab v. Gian Chand [1985] ECR 2222 and Gian Mehtani v. State of Maharashtra [1999] (110) ELT 400 (SC) and Superintendent of Customs v. Bhanabhai Khalpabhai Patel [1995] (76) ELT 508 (SC).
5. In his statement dated 11-3-1981, the Appellant has, inter alia, stated that he has participated in number of such programmes for which he did not charge any money and submitted confirmation letters to the respondents. In respect of one such programme in Canada, he received 2000 Canadian Dollars, which were credited to his account. Shri Kumar was asked to state if he has furnished any confirmation letter either of Dhimant Doshi or Shri Krishan Lalwani to the effect that the Appellant was not paid any money in USA by any one of them for participation in the programmes. Shri Kumar sought 10 days time to ascertain the correct position in this regard and in case there has been any such confirmation letter, he would be filing the same. In his written submission dated 31-7-2001, Shri Kumar has stated that the Appellant does not have copies of a confirmatory letter referred to on page 4 of his statement at this point of time.
6. I have given my careful consideration to the submissions made by the learned counsel of the Appellant as well as the material available on record. By his own admission, the Appellant has admitted that he has taken Rs. 30,000 from Shri Doshi though, the same was claimed to be for the purpose of having the necessary costumes stitched. The offence under the FERA is complete as soon as the Appellant received that amount. The subsequent application of that fund by the Appellant is not relevant. I find support for this in the judgment of the Madras High Court in the case of M. Arunachalam v. Deputy Director, Enforcement Directorate [1987] (Vol. II) ECC 229. In that case it was held that in connection with an allegation that the Appellant received money from an unknown person on instructions of a person residing in Malaysia, the fact as to how that amount was spent after the receipt (i.e., pilgrimage and sisters wedding etc.) is not relevant and the authorities were not bound to prove application of the amount to receive. The offence is complete as soon as the amount is received. In view of this, I do not find any infirmity in the impugned order in so far as SCN-1 is concerned.
7. As regards SCN-2 the learned counsel of the Appellant contended that there is no averment in the show-cause notice or the impugned order that Shri Asrani owned or held foreign exchange at the relevant point of time. Hence, Shri Kumar contended, there could be no infringement of section 14 by him. Shri Kumar referred to the judgment of the Bombay High Court in the case of Eastern Agencies (supra). This is not borne out by the records of the case. Para 3 of the show-cause notice states that Shri G.K. Asrani received the balance amount of Rs. 1,50,000 in USA from Shri Krishan Lalwani in equivalent American Dollars. Similarly at page 4 of the impugned order, the learned adjudicating authority has observed : âI am of the opinion that the statement of Shri Doshi are reliable about the payment of Rs. 1.5 lacs by Shri Lalwani to the party in USA. So I reject the contention of the party that he did not receive any payment in USA. Thus, there is no force in Shri Kumars contention that there is no averment in the show-cause notice or the impugned order that Shri Asrani owned or held foreign exchange at the relevant point of time. Shri Kumar has not stated as to how the judgment of the Bombay High Court relied on by him would help him. That case of the Eastern Agencies (supra) relates to credit entries in the books of account of the foreign manufacturers based on which the petitioners there were issued credit notes, which were no more than right to receive money in foreign currency. But the petitioner did not have any title or control over the money in foreign exchange mentioned in credit notes. Upon receipt of the credit notes, the petitioners were only made aware that issuers thereof had placed in their books of account amounts mentioned in the credit notes to the credit of the petitioners. The present case is not of merely accrual of right to receive but of actual receipts and as such is distinguishable from the Bombay case of Eastern Agencies (supra). Even otherwise, the legal ratio of that case squarely applies to the present case. The Bombay High Court in that case held that âa person who âowns foreign exchange for the purpose of section 9 of the Foreign Exchange Regulation Act, 1947, must be one who has title to and control over the moneys and foreign currencies so as to be able to offer or cause them to be offered for sale to the Reserve Bank of India, and the person who âholds foreign exchange for the purpose of section 9 must be one who has control over the moneys and foreign currency so as to be able to offer or cause them to be offered for sale to the Reserve Bank of Indiaâ. The Appellant herein having received foreign currency in his own right for having performed in the six programmes, cannot say that he did not own or hold foreign exchange for the purpose of section 14 of the Act.
8. The Appellant has denied having received any amount in USA from Shri Lalwani. The main thrust of this argument has been that there is no evidence of such payment. It will be relevant to note in this regard that Shri Doshi has stated in his statement that the Appellant was engaged for participating in six programmes in USA, details of which was given by him in his statement. He further stated that for each programme, the Appellant was to be paid at the rate of Rs. 30,000. A sum of Rs. 30,000 was paid by Shri Doshi to the Appellant as a part payment, which has been admitted by the Appellant. The Appellant has gone to USA and participated in all the six programmes. If there has been agreement specifying the rate of payment and the agreement has been duly performed by the Appellant, the chain of events is, thus, complete, and, in all probabilities, the Appellant must have been paid in terms of the agreement unless contrary is shown. It is relevant to note in this regard that the Appellant has by his own admission admitted having received part-payment. The Appellant has filed confirmation letters in similar other cases where he was not paid for his performance. The Appellant has not filed any such confirmation letter in the present case. Besides, there is substantive evidence against the Appellant in the form of statement made by Shri Doshi regarding the payment made to the Appellant. Reference in this regard may be made in the case of Naresh J. Sukhwani v. UOI [1994] Supp. (4) SCC 663 wherein the Honble Supreme Court has held that where any statement made by a person to customs officials under section 108, the maker of the statement inculpates not only himself but also another person, such statement can be used as substantive evidence against that another person. Such a statement will be considered as material piece of evidence as the adjudication proceedings are in the nature quasi-judicial enquiry. Accordingly, the adjudication order must be based on some evidence. Strict rules of evidence may not apply to such proceedings. Reference in this regard may be made to the case of Syed Nuri Shah v. Director of Enforcement [1986] CLJ 677 where the Appellant received a registered cover containing draft and was asked by the Enforcement Directorate to disclose the source from which he received the draft. He disclaimed the cover which was seized. The sender of the registered cover stated that amount sent emanated from a foreign source though did not remember from what source received or to whom sent. In view of the fact, that the registered cover was admittedly addressed to the Appellant and the evidence of the sender to the effect that the source was a foreign source, the Andhra Pradesh High Court held that the finding of contravention under section 9(1)(b) and (d) was established based on evidence. Accordingly, I find that the finding made against the Appellant in the impugned order cannot be said to be based on no evidence as contended by the Appellant.
9. Similarly, the cases of State of Punjab v. Gian Chand (supra) and Gian Mehtani (supra) as relied on by the Appellants counsel in support of his submission that finding of guilt should not be based on suspicion and has to be substantiated by independent evidence, are distinguishable on facts. There is no dispute as to the legal consequence as enunciated in these cases but the same are not applicable to the present case for the reason that the finding here is not based on suspicion but on substantive evidence as referred to above. It cannot be said that the finding against the Appellant is based on no evidence.
10. The learned counsel of the Appellant has also relied on the case of Bhanabhai Khalpabhai (supra) in support of his submission the statement of co-accused should termed to be corroborative piece of evidence. The case is distinguishable on two counts (i) that the present case is of adjudicating proceedings and not of prosecution and another that Shri Doshis statement which has been objected to is not that of a co-accused in the present case.
11. In the facts and circumstances and for the reasons stated above, I do not find any infirmity in the impugned order and, accordingly, the present Appeal thereagainst is dismissed.