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TMI Blog2009 (4) TMI 464X X X X Extracts X X X X X X X X Extracts X X X X ..... m for any purpose in view of the retraction at the earliest point of time?" 3. For the purpose of the answering the question of law framed, it is necessary to consider the facts of the case and the relevant facts are stated as hereunder :- Shri P.K. Bhanu, the appellant was issued a show-cause notice dated 6-7-1981 by the respondent herein calling upon him to show cause as to why adjudication proceedings as contemplated in section 51 of the Foreign Exchange Regulation Act, 1973, (hereinafter referred to 'FERA'), should not be held against him for acquiring foreign exchange from person other than an authorized dealer without the permission of the Reserve Bank of India which is in contravention of section 8(1) of FERA, and as to why the foreign currency of US$ 40,000 seized from the appellant on 2-3-1981 should be confiscated to the Central Government under section 63 of the Act. 4. The show-cause notice stated that, reliance is placed on the following statements and documents : (a)Statements of Shri P.K. Bhanu, L.A. Verma and K.V. Chandran on 3-2-1981 and 3-3-1981. (b)Statements of Shri Subramanian given on 2-3-1981. (c)Statement of Shri S. Hassan Bai given on 22-5-1981. (d)D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Currency of US$ 40,000 found in possession on 2-3-1981 was acquired by him and was lawfully brought by him from abroad. The Adjudicating Authority held that the statement dated 2-3-1981 given by P.K. Bhanu stating that he had acquired Foreign Exchange from Hassan and others in India cannot be ignored, as it is supported by the statements of L.A. Verma and Hassan and also the notings in the documents seized from L.A. Verma and P.K. Bhanu. The Adjudicating Authority held that P.K. Bhanu had contravened to the provisions of section 8(1) of FERA and proceeded to impose a penalty of Rs. 3,00,000 on P.K. Bhanu under section 50 of FERA. The US$ 40,000 was directed to be confiscated under section 63 of FERA. In respect of the alleged violation of section 9(1)(d) of the Act, the Adjudicating Authority found that the evidence available was inadequate to find P.K. Bhanu guilty of contravention of section 9(1)(d) and dropped the said charge. 9. The appellant being aggrieved by the order of the Adjudicating Autho-rity filed an appeal under section 52 of FERA to the Appellate Board. In the Memorandum of appeal, it was stated that that the alleged confession recorded on 2-3-1981, retracted by l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0,000 and the seized 40,000 are balance of the US$ 80,000 which he brought in India as per the Currency Declaration Form, the adjudicating authority asked the appellant's counsel to produce evidence of the encashment of US$ 40,000 as claimed by the appellant. In spite of opportunities, the appellant did not produce the requisite evidence of encashment of US$ 40,000 by the appellant as claimed by him. 11. The Appellate Tribunal after considering the various issues raised by an order dated 4-9-2001 dismissed the Appeal holding that the appellant failed to discharge his onus under section 71(3) of FERA. It is against this order, the above appeal has been preferred by Mr. P.K. Bhanu. During the pendency of the appeal, P.K. Bhanu died and his legal representatives have been brought on record vide order of this Court dated 17-11-2008 made in CMP No. 20240 of 2008. 12. The learned counsel appearing for the appellant strenuously contended that the impugned orders suffers from manifest error and that the Tribunal lost sight of vital facts and the order is liable to be set aside. Principally the learned counsel for the appellant submitted that the alleged confessional statement dated 3-2-1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f FERA can be used for proceedings under the Act. The learned Standing Counsel for the respondent further submitted that the Adjudicating proceedings are covered by Adjudicating Proceedings and Appeals Rules, 1974 and the Adjudication in the present case was conducted strictly in accordance with the 1974 Rules. The learned counsel for the respondent relied upon the following judgments in support of the contentions raised by him : (1)J. Ibrahim v. Special Director, Enforcement Directorate 2001 Crl. L.J. 1132. (2)Arcot Exports v. Director of Enforcement, Enforcement Directorate 2001 (4) CTC 609. (3)P.S. Barkat Ali v. Director of Enforcement [1983] 54 Comp. Cas. 46 (Ker.). (4)Deputy Director, Enforcement Directorate v. P. Mansoor Mohamed Ali Jinnah CFC (Mad.) 301. 15. We have carefully considered the submissions made on either side and have gone through the records and documents placed before us. As mentioned above, a question of law has bean framed by order dated 19-1-2004, when the appeal was admitted. Undoubtedly the question regarding the evidentiary value of a statement recorded by an officer under section 40 of FERA and the question whether the retracted confessional statem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arch. According to him, except the letter of authority given by Mr. P.K. Bhanu for recruitment of persons for job outside India. He has no other business connection with the appellant. He was also searched. Some documents were recovered from him. He signed the Mahazar because he was asked to sign. The search and seizure ended in 13 hours on 2-3-1981. Thereafter, he was brought to the directorate. According to him, the writing of the statement started in the early hours of 3-3-1981. He has denied that he was left free at 5:00 p.m. on 2-3-1981. 17. The next person whose statement was recorded was L.A. Verma. He has also stated that except for the details about himself, name, address, etc., the other factors are not true. He denied that he knows Hassan Bai or any Subramaniam. According to him, everything was recorded as per dictation of the officers. His statement is almost similar to that of K.V. Chandran. He has admitted that the photocopy of the letter dated 10-7-1979 from Bhanu Corporation to ELCEE Commercial Corporation was given to him by K.V. Chandran with a request to him to find persons for jobs outside India. He has stated that afterwards nothing had happened. 18. Next per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stated that the accused did not send the petition on 6-3-1981 in which he had retracted the statement on 2-3-1981. According to him, no such petition was received from the accused through jail. He had stated that the declaration form had to be produced if he wanted to take the foreign currency covered in the declaration form outside India. Then a question is asked as, "Did you check up with the Airport Customs authorities whether the accused when leaving India on 13-2-1981 produced this currency declaration form?" This question is asked in the cross-examination. He has denied that the 40,000 US$ form part of 80,000 US$ that were seized. 21. Avanashi was also examined before the Additional Chief Metropolitan Magistrate, Egmore. He again represented that P.K. Bhanu gave a letter in which he had retracted the statement. In the statement made on 2-3-1981 which was subsequently retracted, P.K. Bhanu had said that he was recruiting persons from India for employment for a contract in Jeddah. He had referred to the seizure of 40,000 US$. He has also referred to the seizure of the currency declaration form. He had stated that this sum of 80,000 US$ was also taken by him when he leave for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s necessary if the confession is retracted. We will see if there is corroboration in this case. In P. Mansoor Mohamed Ali Jinnah's case (supra), a writ of mandamus was filed to forbear the officers of the Directorate from proceeding further under the Foreign Exchange Regulation Act (FERA). The writ petition was allowed. Against that an appeal was filed. The respondent's claim that they were forced and statements ware obtained from them. It was held that confessional statement made under section 40 of the FERA can be used for proceeding under the Act and the respondents are not "accused" persons. The officers of the FERA and Customs Act are not police officers and on facts in that case, it was found that the confessional statements of the respondents were not got by any inducement, threat or promise and there the Division Bench suggested that "it would be better if the authorities under the Customs Act and FERA take the statements of the person in his own hands there may not be any complaints subsequently that the authorities have not recorded the statement properly". The statement of P.K. Bhanu recorded on 2-3-1981 was in his writing and it states in brief that he was recruiting pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statement dated 2-3-1981, he had stated that the appellant had fixed Rs. 11,500 per candidate and that this amount should be paid in US$. In the appellant's retracted statement, he had stated that "Mr. Hassan Bai gave me foreign currency on 1-3-1981 morning at the rate of Rs. 11,500 per person". 26. Next we take up the statement of L.A. Verma. He has also stated that this statement was retracted but that retraction was not received by the Directorate. In his statement dated 2-3-1981 had stated that K.V. Chandran his family friend had introduced the appellant. It is P.K. Bhanu who wanted to recruit candidates and that for recruitment of candidates that one should pay Rs. 11,500 per person and that it should be paid to him in US $ and that one person (Bai) had paid the foreign currency to P.K. Bhanu at the rate of Rs. 8.50 per US$. In the retracted statement of P.K. Bhanu, he had stated that the exchange rate at which he received the US$ were at the rate of Rs. 8.50 per US$. L.A. Verma had also said that twelve persons whose names are found in sheets 2 and 3 seized from him were given by the said Bai to him and apart from these twelve persons, 10 more persons were interviewed by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the currency declaration form. It was contended that the appellant had a flourishing business in India, he had a theatre in Kerala and he need not explain where he sent the balance 40,000 US$. Further it was submitted by the learned counsel for the appellant that it is only in the retracted statement that we find that the appellant went to Singapore. If the statement is eschewed then the appellant's possession of 80,000 US$ is explained by the customs declaration form. Further the learned counsel submitted that it is impossible to believe that the customs officers would have allowed the appellant to board the plane at Chennai to Singapore that the 80,000 US$ in his pocket. 29. We do not think we can decide this matter by presuming how the customs officers would have behaved or by presuming that the appellant had stored the 40,000 US$ anywhere in this country. Foreign exchange cannot be parted with so easily and that too a huge amount of 40,000 US$. Purchase and sale of foreign exchange is subject to regulation and it can be done only by an authorised person. Therefore, the appellant was bound to explain what happened to the 40,000 US$. It is true that the initial burden of proof ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ollows :- "If any person is found or is proved to have been in possession of any foreign exchange exceeding in value fifteen thousand rupees, the burden of proving that the foreign exchange came into his possession lawfully shall be on him." 30. By the mere production of the currency declaration form, the appellant cannot claim that he had discharged the burden of proof. The entries in the books recovered from his possession clearly proved that he had been recruiting persons for his contract in Jeddah and the statement recorded from the witnesses showed how he come into possession of the 40,000 US$ and, therefore, the respondents had discharged their duty in proving the contravention. Even before the Board, the counsel for the appellant was asked whether it is possible for the appellant to produce the requisite evidence of encashment of the balance 40,000 US$. He could not do it. It is not the possession of just 40,000 US$, he had with him but 195 Singapore dollars also. So, the respondents have satisfactorily proved that gone to Singapore on 13-2-1981, he had not handed over the currency declaration form and that the seized foreign exchange was acquired by him from Hassan Bai an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice personnel. The Court has to be satisfied in such cases, that any inculpatory statement made by an accused person to a gazetted officer must also pass the tests prescribed in section 24 of the Evidence Act. If such a statement is impaired by any of the vitiating premises enumerated in section 24 that statement becomes useless in any criminal proceedings.'" 33. In P.S. Barkat Ali's case (supra), the Kerala High Court held,- "11. Section 24 of the Evidence Act states that a confession made by an accused person is irrelevant in a criminal proceeding if it appears to the Court that the confession was obtained under circumstances mentioned in the section. This section will also apply only to a confession made by a person who was at that time an accused person. On September 27, 1972, the appellant was not an accused parson. Adjudication proceedings are not criminal proceedings, though they may be quasi-criminal in nature. Hence, the applicability of section 24 of the Evidence Act also has to be negatived. 12. Therefore, the principles governing the admissibility of a confession of an accused person and the manner in which a retracted confession is to be dealt with by a Court of law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... suspicion, because there is always room for criticism that such a confession might have been obtained from extorted maltreatment or induced by improper means. As pointed out by the Supreme Court in Nathu v. State of Uttar Pradesh AIR 1956 SC 56, the prolonged custody may stamp the confessional statement so obtained as involuntary one and the intrinsic value of such a statement may be vitiated.' Of course, this observation could be adopted in an enquiry made under the provisions of the FERA also. . . . 20. to 23. ** ** ** The ratio of this decision is that though a Customs Officer may, in order to enable him to discharge his duties efficiently, be invested with some powers, which may have similarity with those of Police Officers yet since the primary purpose of investing of such powers in him is not for the purpose of maintaining law and order but for a specific purpose such as safeguarding, the revenues of the State or its economy, he will not fall within the expression "police officer" and the statement recorded by him would not be hit by section 25 of the Evidence Act." Therefore, the fact that these are adjudication proceedings does not mean that evidence and statements ob ..... X X X X Extracts X X X X X X X X Extracts X X X X
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