TMI Blog2014 (6) TMI 577X X X X Extracts X X X X X X X X Extracts X X X X ..... r. J.K. Jain were initially recorded, i.e., in April 1995 no proceedings under FERA had commenced. The second factor to be noted is that it is only at the stage of filing of the charge sheets by CBI on 16th and 23rd January 1996 that it became clear that the cases filed by the CBI did not govern the violations of FERA. Therefore, till that date the two noticees, Mr. J.K. Jain and Mr. S.K. Jain were justifiably advised that they could invoke their right under Article 20 (3) of the Constitution so as to not incriminate themselves while making their statements under Section 40 FERA. For the purpose of FERA, the noticee can, to the extent that he is required by the ED officers to give answers that might tend to incriminate him in the criminal proceedings under FERA, decline to do so. The resultant position as far as the present case is concerned is that on the dates of their examination in April 1995 the Appellant and Mr. J.K. Jain were 'accused' in terms of the FIR registered by the CBI and this continued till the filing of chargesheets by the CBI in January 1996. Therefore, the two noticees were entitled to invoke their right against self-incrimination under the Article 20 (3) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... result of the judgment of the High Court upheld by the Supreme Court in Central Bureau of Investigation v. V.C. Shukla (1998) 3 SCC 410 [hereinafter referred to the V.C. Shukla case]. 2. The present proceedings which emanated under FERA are stated to stand on a different footing, not affected by the closure of the criminal proceedings since FERA is a complete code in itself. The Background 3. The background to the present appeal is that the Central Bureau of Investigation ('CBI') searched the residential and office premises of Mr. J.K. Jain on 3rd and 4th May 1991 under FIR No. RC 5(S)/91-SIU(V) dated 20th April 1991. Besides, recovery of some Indian and foreign currencies, some documents were recovered. The documents included two spiral note books (marked MR 68/91 and MR 71/91), two small spiral pads (marked MR 69/91 and MR 70/91) and two files, each containing some loose sheets of papers (marked MR 72/91 and MR 73/91). MR-71/91 was considered to be the main 'mother' diary as far as the criminal proceedings were concerned. In the FERA proceedings MR 71/91 was marked as MR 209/93 and MR 77/91 was marked as MR 207/93. 4. The CBI registered FIR No. RC 1(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing reply: I am accused already. Hence it is incriminating to me. I further state that I had been interrogated in CBI and whatever I was knowing about these documents. I have explained the same in my statements before CBI even when I was in police remand after 4th March 1995. I have already been made accused by CBI vide their FIR dated 4th March 1995 and now have the protection of Article 20 (3) of the Constitution. I will not make any statement which incriminates me. 7. Mr. S.K.Jain was then asked a specific question that page 1 in the reverse side of diary marked M-209/93 seized by the CBI on 3rd May 1991 contained the details regarding conversion of foreign exchange into Indian rupees at hawala rates. He replied: I am already an accused and I have the protection of Article 20 (3). Since this question incriminates me I will not answer the question. 8. Mr. S.K. Jain stated that Mr. J.K. Jain was still his employee and that he had never cheated or misappropriated the funds. On 20th and 25th April 1995 Mr. S.K. Jain declined to make any statement invoking the protection under Article 20 (3) of the Constitution. 9. Chargesheet No. 4 was filed by the CBI in the crimina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction under Article 20 (3) of the Constitution. 13. He maintained the above stand on 20th April 1995 and 21st November 1995 as well as on 8th January 1996. On 10th July 1996 when he was shown the photocopy of the planner diary and his attention was drawn to the entry under 9th October and certain calculations written under the name V.K. Beri, Credit Susse Rue Versonnex 11 1211 Geneva-3 A/c No. 105116-92-1 and asked to explain he stated as under: I have seen photocopy of the aforesaid page of my diary of 1989 and have put my dated signatures today on the same in token of having seen the same. These are written in my hand. At present I do not recollect in what context the said calculations were written by me since I used to write many things in the diary as per instructions of my employer (Mr. S.K. Jain). 14. Mr. J.K. Jain stated that he could not confirm whether it was the same Mr. V.K. Beri whose name appeared allegedly in the diary who was his landlord but he confirmed that the said house was purchased by him and his wife from one Mr. V.K. Beri in the year 1992-93. When asked about the entries thereunder, he stated that he himself wrote as per the instruction of the emp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er in foreign exchange. It was further alleged that the transactions involved conversion of Indian rupees into foreign exchange at rates of exchange other than the rates for the time being authorized by RBI. The aforesaid amounts of foreign exchange, to wit US$ 29,268.29 + 5082.35 + 6545 totalling US$ 40,895.64 (equivalent to Rs. 7,58,400) were paid to Shri V.K. Beri r/o 33 - Chamber Crescent, Harrow Middlesex, U.K., a person resident outside India. 18. On the basis of the above allegations, it was alleged that both Mr. J.K. Jain and Mr. S.K. Jain had contravened Section 8 (1), 8 (2) and 9 (1) (a) of FERA. The relied upon documents included the statements recorded under Section 40 FERA of both Mr. S.K. Jain and Mr. J.K. Jain. The V.C. Shukla Case 19.1 An important development that took place even while the adjudication on the above SCNs were pending, was that on 8th April 1997 the Delhi High Court reversed the order of the trial Court which held that a prima facie case had been made against the accused in the two charge sheets after holding that documents relied upon by the prosecution were admissible in evidence under Section 34 of the Indian Evidence Act, 1872 ('IEA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Needless to say, what will be facts in issue or relevant facts in a criminal trial will depend upon, and will be delineated by, the nature of accusations made or charges levelled against the person indicted. The Adjudication Order 20. By the common adjudication order ('AO') dated 7th November 2001 the Special Director ('SD'), ED disposed of both SCNs IX and XVIII. The findings in the AO could be summarized as under: (a) Diary, M207/93 was maintained by Mr. J.K. Jain as per the instruction of the employer, Mr. S.K. Jain and therefore, the diary related to both of them. The entries were not deliberately explained by Mr. J.K. Jain. If one looked into the diary, there remains no doubt that this diary contained details of monetary transactions. (b) Since neither Mr. J.K. Jain nor Mr. S.K. Jain could be considered legally as being accused of the offences mentioned in FERA as at the relevant time the ED had not filed any complaint under Section 56 of FERA, neither of them were entitled to the protection under Article 20 (3) of the Constitution. The mere erroneous judgment of the CBI in mentioning the FERA proceedings in the FIR would not entitle Mr. S. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the mother diary M209/93, the AT held as under: The recovered diary describes the amount of Rs. 1,90,000 with a further figure of foreign currency by abbreviation when this description is not explained in any other different manner then this Tribunal is not explained in any other different manner then this Tribunal does not feel it otherwise than to accept it as unauthorized acquisition of foreign currency in lieu of India money. Submissions of counsel 23. Mr. H.S. Bhullar, learned counsel appearing for the Appellant submitted that the Appellant had validly invoked the protection against self -incrimination under Article 20 (3) of the Constitution while refusing to answer the question put to him regarding the entries in the diaries on a date when charge sheet had not been filed by the CBI. Mr. Bhullar pointed out to the SCN in which a specific reference was made to the FERA provisions in respect of which proceedings were not started by the ED at the time of registration of the FIR. 24. Mr. Bhullar pointed out that as far as SCN IX was concerned, it was confined to a single entry in the column of the first page of the mother dairy. He took the Court through the relevan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mr. L.K. Advani. As far as the Jains were concerned, the Supreme Court had clearly held that the entries could be taken to be admissions, provided that they related to any fact in issue. He further submitted that the entries at Serial No. 5 in the mother diary should be read along with other entries and in particular entries on page 9 which even the Supreme Court understood to be one pertaining to the Jains. 28. Referring to the decision in K.T.M.S. Mohd. v. Union of India 1992 (3) SCC 178, Mr. Panda submitted that FERA was a complete code in itself. Mr. Panda also referred to the decision of the Supreme Court in Central Bureau of Investigation v. State of Rajasthan 1996 (9) SCC 735 to emphasize that the CBI had no jurisdiction as far as FERA was concerned. He submitted that Section 40 read with Section 39 FERA mandated that the noticee spoke the truth. He submitted that there were several occasions for the noticee to do so. The first was when statements were recorded under Section 40 FERA. The next was in reply to the SCN. The third occasion was the adjudication proceedings in terms of Rule 3 of the Adjudication Proceedings and Appeal Rules, 1974. Referring to the decision in D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clear that at the time when the statements of Mr. S.K. Jain and Mr. J.K. Jain were initially recorded, i.e., in April 1995 no proceedings under FERA had commenced. 32. The second factor to be noted is that it is only at the stage of filing of the charge sheets by CBI on 16th and 23rd January 1996 that it became clear that the cases filed by the CBI did not govern the violations of FERA. Therefore, till that date the two noticees, Mr. J.K. Jain and Mr. S.K. Jain were justifiably advised that they could invoke their right under Article 20 (3) of the Constitution so as to not incriminate themselves while making their statements under Section 40 FERA. 33. The situation obviously changed once the chargesheets were filed by the CBI. After the filing of the chargesheets Mr. J.K. Jain stated that he was unable to recall what the entries were about. He merely stated that he had written many entries on the instructions of Mr. S.K. Jain. As regards Mr. S.K. Jain, he maintained that he would not be able to explain entries since they were not made by him. 34. There are two strands of litigation that emanate under FERA. One is the adjudicatory proceedings and the other the criminal pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om the foregoing discussion, it is clear that the word 'accused' or 'accused person' is used only in a generic sense in Section 167(1) and (2) denoting the person whose liberty is actually restrained on his arrest by a competent authority on well-founded information or formal accusation or indictment. Therefore, the word 'accused' limited to the scope of Section 167(1) and (2) - particularly in the light of Explanation to Section 273 of the Code includes 'any person arrested'. The inevitable consequence that follows is that 'any person is arrested' occurring in the first limb of Section 167(1) of the Code takes within its ambit 'every person arrested' under Section 35 of FERA or Section 104 of the Customs Act also as the case may be and the 'person arrested' can be detained by the Magistrate in exercise of his power under Section 167(2) of the Code. In other words, the 'person arrested' under FERA or Customs Act is assimilated with the characteristics of an 'accused' within the range of Section 167(1) and as such liable to be detained under Section 167(2) by a Magistrate when produced before him. 38. Whil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 1 x 19.75 2 x 19.50 58.75 July 89 7 2 x 20.00 40.00 July 89 8 10 x 20.50 205.00 Oct 9 30 x 20 10 x 20 10 x 20 600.00 200.00 200.00 Nov 10 5 x 20.30 101.50 Dec 11 10 x 19.75 197.50 Jan 90 12 4 x 20.15 80.60 Feb 90 13 5 x 20.10 100.50 Feb 90 14 5 x 20.10 100.50 Mar 90 15 3 x 20.10 60.30 April 90 16 10 x 20.15 200.50 May 90 17 15 x 20.85 312.00 June 90 18 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... column of receipts the source is indicated in abbreviated form on the left of the figure representing the sum received. On the right side of the said figures a number is mentioned which co-relates with the serial number of the account of receivers recorded on pages 1 and 1(o) of the diary for the period subsequent to 31.1.1988. So far as the names of the payees are concerned the same have also been recorded in abbreviated form, alphabets or words. The entries, however, do not give any indication of any sale, purchase or trading and show only receipts of money from a set of persons and entities on one side and payments to another set of persons and entities on the other, both reckoned and kept monthly. As regards the actual amounts received and disbursed we notice that the figures which have been mentioned briefly against the respective names are not suffixed with any symbol, volume or unit so as to specifically indicate whether they are in lakhs, thousands or any other denomination. It is noticed that in most of the entries the figures against transactions extend to 2 places after decimal which seem to suggest that the figures in money column may be in thousands, but then in some o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er which did not help the ED since he claimed that had no knowledge of the entries in the diaries. Mr. Panda sought to contend that the said answers should be construed as either false or misleading or both. The Appellant said that he was unable to explain the entries because they were not written by him. The latter part of the answer was a fact since the entries were admittedly made by Mr. J.K. Jain. While Mr. J.K. Jain claimed that he did so on the instructions of Mr. S.K. Jain, the AO itself noted that there was no evidence whatsoever to show involvement of Mr. J.K. Jain in the transactions of foreign exchange. The Supreme Court has in the V.C. Shukla case held that the so- called 'admissions' in relation to the entries by Mr. J.K. Jain in his statement under Section 40 FERA cannot be used against Mr. L.K. Advani or Mr. V.C. Shukla. It was, however, clarified that they could be proved against the Jains as admissions under Section 18 read with Section 21 IEA provided they relate to 'any fact in issue or relevant fact.' The initial burden of proving that the entries related to 'any fact in issue or relevant fact' was on the ED. This it could have discharged ..... X X X X Extracts X X X X X X X X Extracts X X X X
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