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2009 (7) TMI 766 - HC - Companies Law


Issues Involved:
1. Contravention of Section 8(1) of the Foreign Exchange Regulation Act, 1973.
2. Validity of the appellant's defense based on the affidavit and declaration by Dr. Anand.
3. Presumption of culpable mental state under Section 59 of FERA.
4. Basis and legality of the findings by the adjudicating authority and Appellate Tribunal.

Issue-wise Detailed Analysis:

1. Contravention of Section 8(1) of the Foreign Exchange Regulation Act, 1973:
The appellant was penalized for violating Section 8(1) of the Foreign Exchange Regulation Act, 1973, which restricts dealing in foreign exchange without the Reserve Bank of India's permission. The appellant was found in possession of various foreign currencies, including US$ 64,015, Canadian Dollar 4789, Saudi Riyals 600, Italian Lira 5,00,000, and Indian currency of Rs. 43,800. The authorities alleged that the appellant had "otherwise acquired foreign exchange" without permission, leading to the confiscation of the currencies and a penalty of Rs. 5.00 lakh.

2. Validity of the appellant's defense based on the affidavit and declaration by Dr. Anand:
The appellant contended that the foreign currencies belonged to Dr. Anand of Doha, who had given them to him for safekeeping. Dr. Anand provided an affidavit and a currency declaration form supporting this claim. The affidavit stated that Dr. Anand had declared US$ 82,000 at the customs counter in 1991 and had left the money with the appellant for setting up a charitable hospital. The adjudicating authority and the Appellate Tribunal dismissed this defense, doubting the credibility of Dr. Anand's affidavit and the appellant's inability to provide Dr. Anand's address and phone number.

3. Presumption of culpable mental state under Section 59 of FERA:
Section 59 of FERA presumes a culpable mental state for offenses under the Act, but this presumption is rebuttable. The appellant argued that the authorities failed to prove his culpable mental state beyond a reasonable doubt. The appellant's defense relied on the affidavit and declaration by Dr. Anand, which the authorities dismissed based on assumptions rather than concrete evidence.

4. Basis and legality of the findings by the adjudicating authority and Appellate Tribunal:
The adjudicating authority and the Appellate Tribunal based their findings on the assumption that the appellant's inability to recall Dr. Anand's address and phone number indicated that the foreign currencies did not belong to Dr. Anand. They also doubted the appellant's claim of safekeeping the money for a charitable hospital due to the lack of concrete plans for the hospital. The High Court found these assumptions insufficient to prove the appellant's culpable mental state. The Court noted that the affidavit and declaration by Dr. Anand were not disproven and that the authorities' findings were based on presumptions without concrete evidence.

Conclusion:
The High Court concluded that the appellant successfully rebutted the presumption of a culpable mental state. The Court held that the authorities' findings were based on assumptions and lacked legal principles. Consequently, the Court set aside the adjudication order and the Appellate Tribunal's order, quashing the penalty and ordering the return of the seized foreign and Indian currencies to the appellant. The appeal was allowed, and the parties were directed to bear their own costs.

 

 

 

 

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