TMI Blog2013 (2) TMI 396X X X X Extracts X X X X X X X X Extracts X X X X ..... mission to produce these documents was filed by them before the Adjudicating Authority no matter they could have done so if they really indeed needed to place reliance on such documents. The hearing had been concluded by the Adjudicating Authority in keeping with the requirement of Section 51 and Rule 3 of the Adjudication Rules under FERA thus no irregularity causing prejudice proved. Bountiful Ltd. was a paper company and its financial control lay in their hands - clear violation of the provisions of FERA - Held that:- The Adjudicating Authority has noticed and relied upon incriminating circumstances like instructions issued by appellant Telestar to Bountiful to remit an amount of ₹ 4,74,033/- to M/s Aarnav Shipping Company towards repairs of MV Rizcun Trader, a ship owned by one of their principals M/s United Ship Management, Hongkong. Similarly a payment of US$ 12500/- made from Bountiful Account to Mustaq Ali Najumden is also evidenced and was made on the instructions of appellant-Shri Rajesh Desai, which the latter explained to be kickbacks paid to overseas shipping company for giving ticketing business to Telestar. Suffice it to say that there may be sufficient ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessed at ₹ 50,000/- in each appeal to be deposited within two months with the SCBA Lawyers’ Welfare Fund. - CIVIL APPEAL NOS. 1306-1309 OF 2013 - - - Dated:- 13-2-2013 - T.S. Thakur And M.Y. Eqbal, JJ. JUDGMENT T.S. THAKUR, J. 1. Leave granted. 2. These appeals arise out of a common judgment and order dated 14th March, 2008 passed by a Division Bench of the High Court of Judicature at Bombay whereby the High Court has partly allowed FERA Appeal Nos.8 to 11 of 2008 that assailed the common order dated 28th November, 2007 passed by the Appellate Tribunal for Foreign Exchange, New Delhi and reduced the penalty imposed upon the appellants for contravention of Sections 14 and 8(1) of the Foreign Exchange Regulation Act, 1973 by 50%. The factual matrix in which the adjudication order came to be passed by the Deputy Director, Directorate of Enforcement, Mumbai and the appellate order passed by the Tribunal for Foreign Exchange, New Delhi has been set out in the order passed by the Tribunal and the order passed by the High Court of Bombay mentioned earlier. It is, therefore, unnecessary to recount the facts over again except to the extent it is absolutely ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the course of investigation conducted under Section 37 of FERA unerringly revealed that Bountiful Ltd. was entirely a holding of the appellant-Telestar Pvt. Ltd. and entirely controlled in its operation and financial management by Mr. Arun N. Desai and his two sons Mr. Sujeet A. Desai and Mr. Rajesh A. Desai, appellants in these appeals. It was on the basis of the investigations conducted by the Directorate, the statements of the promoters of Telestar Pvt. Ltd. recorded during the course of such investigation and other material collected by the Directorate, a notice was issued by the Directorate calling upon them to show cause why the adjudication proceedings as contemplated under Section 51 of the FERA should not be filed against them for the contravention pointed out in the show cause notice. The show cause notice was followed by an addendum by which the Directorate sought to place reliance upon a report dated 15th January, 1997 received from the High Commission of India, at London and the revised list of documents enclosed and communicated to the appellants. The appellants filed their replies in which they denied the allegations that Bountiful Ltd. was a paper company or that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts also failed and were dismissed in limine by the High Court by order dated 14th March, 2008. Hence the present appeal. 5. Appearing for the appellants, Mr. Shyam Diwan, learned senior counsel, made a three-fold submission in support of the appeals. Firstly, he contended that the judgment and order passed by the Adjudicating Authority was ex parte hence liable to be set aside. Elaborating that submission Mr. Diwan argued that since the adjudication order had been passed by the authority concerned nearly 3 years after the matter was finally argued before it, the requirement of affording an opportunity of being heard to the appellants arising under Section 51 of FERA was not satisfied. It is submitted that the appellants had been prejudiced on account of delayed pronouncement of the adjudication order as the documents available with them could not be placed before the said authority after the hearing of the matter. He further contended that Rule 3 of the Adjudication Rules provided for a personal hearing which was no doubt provided on the date the matter was finally argued before the Adjudicating Authority but which hearing ought to have been repeated as the pronouncement of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fically dealt with the matter in issue. The Court at best put to caution requiring a careful and closer scrutiny of the order that was pronounced after undue delay but if upon such scrutiny also the order is not found to be wrong in any way it may decline to set aside the same. 7. We have in the instant case heard the matter at considerable length for a careful examination of the adjudication by the Authority and that of the Appellate Tribunal and the High Court to examine whether it suffers from any illegality or material irregularity causing prejudice to the appellants. We are of the view that no such illegality or irregularity has been demonstrated. That apart delayed pronouncement of the order by the Adjudicating Authority was not urged as a ground of challenge before the Tribunal or the High Court both of whom have remained silent on this aspect. Even on the question of prejudice we find the contention of Mr. Diwan to be more imaginary than real. The argument regarding prejudice is founded on the plea that the appellants could not place some of the documents which they have now placed before this Court for consideration. It is further admitted that no application for permi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an agreement with agents abroad; the mode of payments received ant eh commission/profit earned on the tickets booked by them through the overseas shipping companies and also how their commission was being remitted either by draft or telegraphic transfer into their account No.82886 in Bank of Baroda, Churchgate Branch etc. I thus find that the statemtns of the notice I contain such inner and minute details, which could have been given out of his personal knowledge and could not have been invented by the officers who recorded the said statements. Moreover, the statement of the notice No.1 have been confirmed by the statements of the other two notices S/Shri Rajesh and Sujeet Desai, in their respective statements given before the Enforcement Officers. Even otherwise there is nothing on record that might cast the slightest doubt on the voluntariness of the statements in question. I am, therefore, of the view that the statements in question were given by the respective three notices voluntarily in explanation of the plethora of documents seized from the business/residential premises of the notices and contain those details which they wished to state. The retraction subsequently filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d been obtained from him by an inducement, threat or promise by a person in authority. The burden is on the authority/prosecution to show that the statement sought to be relied upon was voluntary and that the Court while examining the voluntariness of the statement is required to consider the attending circumstances and all other relevant facts. The decision does not hold that even when a statement is founded upon consideration of the relevant facts and circumstances and also found to be voluntary, it cannot be relied upon because the same was retracted. We may usefully refer to the legal position stated in the following paragraph by this Court in K.T.M.S. Mohd. Anr. (supra): 34. We think it is not necessary to recapitulate and recite all the decisions on this legal aspect. But suffice to say that the core of all the decisions of this Court is to the effect that the voluntary nature of any statement made either before the Custom Authorities or the officers of Enforcement under the relevant provisions of the respective Acts is a sine quo non to act on it for any purpose and if the statement appears to have been obtained by any inducement, threat, coercion or by any improper mea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing into consideration the statements made by the appellants as also the documents that were recovered from their premises. All these documents and incriminatory circumstances have been discussed in the following passage by the Adjudicating Authority: ...A perusal of the records indicate that various incriminating documents together with the Indian currencies were seized from the office premises of M/s Telstar Travels and also from the residence of Shri Arun Desai, the Managing Director of the said company. All the three noticees S/Shri Arun Desai and his two sons Rajesh and Sujeet Desai, have given their statements before the Enforcement Officer, in explanation of the said seized documents. It is also noticed that the seizure of documents and currencies had not been disputed by the notices at any point of time. Shri Rajesh Desai, son of the said Shri Arun N. Desai and one of the noticees in the impugned SCN, while explaining page No.18 of the bunch of documents marked G , had clearly admitted that it was the message from Shri Sirish Shah from London informing that US $ 33884 has been credited on 14.11.94 to the account of Bountiful. Similarly page Nos.30 34 of file marked I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ani Travel Co- ordinator of M/s. Denklau Marine Services, Mumbai, which contain directions of M/s Telstar to credit the amount of the bill to the A/c No.10975 of M/s Bountiful Ltd, at Geneva. A scrutiny of the bills produced by the said Miss Anita Chotrani, given by Telstar, it was found that several air tickets of Air India booked by Telstar were also billed in these Bountiful invoices and payment of these Air India tickets have been directed to the Geneva Account. Moreover the bills do not bear any signatures nor the identity of the person allegedly managing the billing on behalf of Bountiful Ltd. 14. The Adjudicating Authority has also noticed and relied upon incriminating circumstances like instructions issued by appellant Telestar to Bountiful to remit an amount of Rs.4,74,033/- to M/s Aarnav Shipping Company towards repairs of MV Rizcun Trader, a ship owned by one of their principals M/s United Ship Management, Hongkong. Similarly a payment of US$ 12500/- made from Bountiful Account to Mustaq Ali Najumden is also evidenced and was made on the instructions of appellant-Shri Rajesh Desai, which the latter explained to be kickbacks paid to overseas shipping company for givi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision of this Court in Surjeet Singh Chhabra v. Union of India and Ors. (1997) 1 SCC 508 to argue that cross-examination was unnecessary in certain circumstances such as the one at hand where all material facts were admitted by appellants in their statements before the concerned authority. 18. There is, in our opinion, no merit even in that submission of the learned counsel. It is evident from Rule 3 of the Adjudication Rules framed under Section 79 of the FERA that the rules of procedure do not apply to adjudicating proceedings. That does not, however, mean that in a given situation, cross examination may not be permitted to test the veracity of a deposition sought to be issued against a party against whom action is proposed to be taken. It is only when a deposition goes through the fire of cross-examination that a Court or Statutory Authority may be able to determine and assess its probative value. Using a deposition that is not so tested, may therefore amount to using evidence, which the party concerned has had no opportunity to question. Such refusal may in turn amount to violation of the rule of a fair hearing and opportunity implicit in any adjudicatory process, affecting t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... make were confiscated. When asked to show cause against the seizure of these wrist watches, the appellants produced vouchers to prove that the watches had been lawfully purchased by them between 1956 and 1957. However, upon certain enquiries, the Customs Authorities found the vouchers produced to be false and fictitious. The results of these enquiries were made known to the appellant, after which they were given a personal hearing before the adjudicating officer, the Additional Collector of Customs. Citing that the appellant made no attempt in the personal hearing to substantiate their claim of lawful importation, the Additional Collector passed an order confiscating the watches under Section 167(8), Sea Customs Act, read with Section 3(2) of the Imports and Exports (Control) Act, 1947. The writ petition filed by the appellant to set aside the said order was allowed by a Single Judge of the High Court on the ground that the burden of proof on the Customs Authorities had not been discharged by them. The Division Bench of the High Court reversed this order on appeal stating that the burden of proving lawful importation had shifted upon the firm after the Customs Authorities had info ..... 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