TMI Blog2009 (7) TMI 766X X X X Extracts X X X X X X X X Extracts X X X X ..... by the petitioner and in the circumstances it has to be held that adjudication order is not sustainable nor is the order dated 30-9-2005 of the Appellate Board sustaining the same. Consequently the appeal of the appellant is allowed and the order of penalty amount awarded against the petitioner is also quashed. Consequently the petitioner shall be entitled for the refund of foreign currencies and Indian currency seized from him and refund of any amount deposited as penalty. - CRL. APPEAL NO. 37 OF 2006 - - - Dated:- 17-7-2009 - ANIL KUMAR, J. M. Venkataraman for the Appellant. Ms. Rajdipa Behura for the Respondent. JUDGMENT 1. This order shall dispose of the appellant s appeal under section 54 of Foreign Exchange Regulation Act, 1973 read with section 35 of the Foreign Exchange Management Act, 1999 against the order dated 30-9-2005 in Appeal No. 251 of 1997 dismissing the appeal of the appellant and upholding the Adjudication No. SDE(APK)/III/07/1997 dated 7-5-1997 passed by Special Director, Enforcement, imposing a penalty of Rs. 5.00 lakh against the appellant for the contravention of provisions of section 8(1) read with section 64(2) of the Foreign Exch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of recovery of foreign currencies of different countries from the appellant, the respondent had issued a memorandum by way of show-cause notice dated 10-8-1993, contending that the appellant had otherwise acquired foreign exchange without the permission of Reserve Bank of India in violation of section 8(1) of Foreign Exchange Regulation Act, 1973. It was also contended that the seized Indian currency was the sale proceeds of foreign currency and, therefore, he was asked to show cause as to why the foreign currency seized from him be not confiscated and why penalty should not be imposed on him. 7. The appellant replied to the show-cause notice. In his reply the appellant contended that he was not the owner of foreign currencies seized from him which was owned by Dr. Anand of Doha. It was also pleaded by him that the seized Indian currency was not the sale proceeds of foreign currencies. The adjudicating authority, however, passed an order dated 7-5-1997 holding the appellant guilty of contravention of section 8(1) of Foreign Exchange Regulation Act, 1973 and imposed a penalty of Rs. 5.00 lakh on him and ordered confiscation of seized foreign currencies. The Indian currency w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elied on Union of India v. Abdul Mohamed (2000) 10 SCC 169, where it was held that the pre-condition to attract section 4(1) of Foreign Exchange Regulation Act, 1947 would be to buy or otherwise acquire or borrow from or sell or otherwise transfer or lend to or exchange with any person not being an authorized dealer of any foreign exchange. The only provision which may possibly get attracted is that the person can be said to have "otherwise acquired" because the other expressions in sub-section 1 of section 4 are totally absent. The Supreme Court was of the view that the expression "otherwise acquire" must have a definite connotation and it must indicate something more than mere possession. The appellant also relied on a decision of Foreign Exchange Regulation Appellate Board O.P. Gulati v. Director of Enforcement [2000] 112 Taxman 137, holding that mere possession, even if a conscious possession, would not amount to acquisition of that currency and, therefore, the charge on otherwise acquiring foreign currency in violation of section 8(1) would not be proved by a mere fact of conscious possession. It was further held that in case there was an adequate justification for h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een no correspondence between the appellant and Dr. Anand regarding the foreign currencies. The respondent also relied on the statement of Capt. Manjeet Singh, elder brother of Dr. N.S. Anand, recorded on 17-4-1993 wherein he deposed that his brother, Dr. N.S. Anand, had been living in UAE since 1990 and he used to stay with him whenever he visited India. Capt. Manjeet Singh has also stated that his brother, Dr. N.S. Anand, never told him about his dealing with the appellant or his plan to set up a hospital in Delhi and whether his brother had left any foreign currency with anybody in India. Reliance was also placed by the respondent on the statement of Rishi Kumar Srivastava, brother of the appellant and Shri Ramesh Chand, proprietor of Hotel Prabha. In these circumstances, the respondent contended that Shri Lal Singh and appellant had illicitly acquired foreign currencies in contravention of the provisions of section 8(1) of FERA, 1973. The respondent also contended that in 9 out of 10 cases the possession shows acquisition and ownership of the article in whose possession it is found. The respondent also concluded that nobody has claimed the foreign currencies recovered from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be complied with the said person shall, within a period of thirty days from the date on which he comes to know that such foreign exchange cannot be so used or the conditions cannot be complied with, sell the foreign exchange to an authorized dealer or to a money-changer. (4) For the avoidance of doubt, it is hereby declared that where a person acquires foreign exchange for sending or bringing into India any goods but sends or brings no such goods or does not send or bring goods of a value representing the foreign exchange acquired, within a reasonable time or sends or brings any goods of a kind, quality or quantity different from that specified by him at the time of acquisition of the foreign exchange, such person shall unless the contrary is proved, be presumed not to have been able to use the foreign exchange for the purpose for which he acquired it or, as the case may be, to have used the foreign exchange so acquired otherwise than for the purposes for which it was acquired. (5) Nothing in this section shall be deemed to prevent a person from buying from any post office in accordance with any law or rules made thereunder for the time being in force, any foreign exchange ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to his wife and his daughter, Dollar 500 each was given for en route expenses to his wife and daughter. It was stated that the intention was that no further foreign exchange may be required for travel purposes for his wife and daughter. In these circumstances, it was held that mere possession, even if a conscious possession, would not amount to acquisition and the charge of "otherwise acquiring foreign exchange in violation of section 8(1) could not be proved by a mere fact of conscious possession. It was further held that since the foreign currency involved was not illicitly acquired there was no justification for confiscation of such foreign currency. 16. This cannot be disputed that in the statement given on the spot by the appellant, he had disclosed that the foreign currency was given to him by his friend Dr. Anand, resident of Doha. He had also disclosed that he had come in December, 1991. This has not been disputed that the appellant deals in properties. He had also stated in the statement recorded on spot that in 1988 Dr. Anand had come and thereafter he met him 2-3 times for purchasing a property. 17. Dr. N.S. Anand of P.O. Box 2315, Ajman, UAE, and Passport No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng passport No. H 904780 issued to me by Pool Singh, Vice Consul, Consulate General of India, Dubai authorities, Dubai, U.A.E. 2.That I had been visiting India in the past to meet my friends and relatives in India. 3.That I visited New Delhi, India on 17-11-1991. 4.That I, on my aforesaid visit, brought into India a sum of US$ 82,000 (US Dollar Eighty Two Thousand only) in cash for which I made a declaration at the custom counter of Delhi Airport vide currency Declaration Form No. 006290 under Foreign Exchange Regulation Act, 1973. A photocopy of the Currency Declaration form is enclosed as Annexure "A". 5.That while bringing the abovestated US$ amount into India, I had noble intentions of setting up a Charitable Hospital in India to serve the population of India with special skills and training I have achieved abroad. 6.That I wanted to keep some amount of foreign currency separately in India in safe custody of some close friend until the finalization of my plans to set up the Charitable Hospital. 7.That I was also in possession of various types of foreign currencies the details of which are given in Annexure "B" which I had brought into India on later occasions but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stated to be proved only when Courts believe it to exist beyond reasonable doubt and not merely when its existence is established by preponderance of probability. Sub-section 3 of section 59 further adds that the presumption of section 59 shall, so far as may be, apply in relation to any proceedings before an adjudicating authority also as they apply in relation to any prosecution for an offence under the Act. This makes it clear that existence of culpable mental state in prosecution or proceedings in relation to any offence under the Act can be presumed, however, such a presumption is rebuttable and an accused can rebut this presumption by proving that he had no such culpable mental state. A heavy burden is cast upon the accused for rebutting the presumption but an accused is not to prove his defense only by defense evidence, he may also prove his defense through the facts and circumstances brought on record by the prosecution, for rebutting of presumption against him. 21. The Special Director has inferred the culpable mental state of the petitioner of "otherwise acquisition" by disbelieving the version of the appellant. The version of the appellant has been disbelieved on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... road lives with his brother, then he will disclose all his facts about his finances and future plans to his brother. In the present facts the culpable mental state of the petitioner has been inferred on the basis of presumptions which do not arise in law and in the present facts and circumstances. The assumptions which have been considered by the respondents that if a person is very friendly with another person then he would remember his phone number and address orally; unless there are plans or concrete proposals for construction of Charitable Hospitals, idea or desire of a person to construct a Charitable Hospital cannot be inferred; a person will disclose all his affairs and future plans to his brother in preference to a person who has been dealing with the properties and who is alleged to be not so well known to such person than his brother: if Dr. Anand had to leave foreign exchange with petitioner he will not leave small amounts of different denominations of different currencies but will rather put US Dollars in the safe custody with the petitioner. 23. Such presumptions do not arise in law nor there are any facts established by the respondent to draw the inference as has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the Special Director. The High Court in appeal had held that concurrent finding of fact were not to be gone into in that case and that burden of proof was on the accused who was in possession of foreign currency to show as to how he had acquired it and in the circumstances, it was also held possession was acquisition as he had failed to disclose as to how he had come in possession. Section 85 of the Gold Control Act, 1968 and section 112 of the Customs Act, 1962 makes the possession itself a distinct offence in contradistinction to Foreign Exchange Regulation Act which does not prohibit mere possession as distinct from acquisition of foreign exchange. If the intention of the Legislature was to make possession of foreign exchange an offence, it would have incorporated mere possession also as an offence which has not been done. 25. In the present case, the affidavit and the currency declaration by Dr. N.S. Anand cannot be rejected as has been done by the respondent. If that be so it will be difficult to hold that the petitioner had acquired the foreign exchange in contravention of section 8(1) of Foreign Exchange Regulation Act. Even giving the widest connotation to the te ..... X X X X Extracts X X X X X X X X Extracts X X X X
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