TMI Blog2014 (5) TMI 863X X X X Extracts X X X X X X X X Extracts X X X X ..... o have been fabricated by the officials of the ED. There is nothing credible brought on record by Mr. Saluja to persuade the Court to conclude Mr. Saluja was under threat, duress or any form of coercion that at the time when he made the statement and that he did not make it voluntarily. The entries/notings in the loose sheets recovered from his residence as explained by Mr. Saluja in his statement under Section 40 FERA fully substantiated the case of the ED that he had involved himself in transactions in violation of the FERA. Further corroboration was from the details of the STD calls exchanged between Mr. Saluja, Mr. Kedia and Mr. Shah. The fact that the foreign exchange may not have been recovered from the residence of Mr. Saluja does not weaken the case of the ED. According to the ED, the Indian currency paid to Mr. Saluja was for delivery of foreign exchange abroad. As noted in the AO, the details of the foreign bank accounts were available in the documents seized from the residence of Mr. Saluja. The telephone number of Mr. Gopalani was found in the loose sheets recovered from the residence of Mr. Saluja. One of these loose sheets at page 19 contained instructions in wr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the pocket of the shirt of Mr. A.S. Saluja. During the search, Mr. Arvind Shah @ Subhash Ganatra was found present in the premises. His search led to the seizure of 6 pages of loose sheets. It is stated that from the seized documents, as well as a telephone index diary surrendered by Mr. A.S. Saluja on 16th August 1997, it was revealed that Mr. Saluja was a British national holding a British passport and residing in India continuously since 1970 and had been indulging in acquisition and transfer of foreign exchange as well as receiving and making payments in India on instructions from abroad. 5. A confessional statement of Mr. A.S. Saluja was recorded under Section 40 FERA on 16th August 1997. According to the ED, in the said statement, Mr. A.S. Saluja stated that in August 1997 his brother Dr. Rajinder Singh Saluja, a resident of London, UK informed him about a deal of Pound Sterling ('GBP') 1,85,000 and asked Mr. A.S. Saluja if he could arrange Indian currency for the same. Mr.A.S. Saluja then contacted Mr. R.K. Kedia of Calcutta who agreed to purchase the said GBP and desired that it should be deposited in the account of M/s. Hilco Corporation with the Swiss Banki ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... checked in to Hotel Centre Point, Kasturba Gandhi Marg, New Delhi under the assumed name of Arvind Shah as advised by Mr. Amar Nath. He then telephoned Mr. Saluja who later visited him in the hotel room. On 15th August 1997, at about 4 pm, Mr. Shah received a call from Mr. Saluja asking him to reach Mr. Saluja's residence. After receiving the Indian currency in the value of Rs.1.18 crores, Mr. Shah handed over the Rs. 50 currency note to Mr. Saluja. 9. The ED officials searched the premises of Mr. R.K. Kedia in Calcutta on 18th and 19th August 1997 and seized certain documents. The statement of Mr. Kedia under Section 40 FERA was recorded on four dates. Mr. Kedia confirmed that his telephone numbers were mentioned in page 31 of the telephone diary surrendered by Mr. Saluja. However, he denied knowing Mr. Saluja or having any business relations or having spoken to him either from his office or residence. Mr. Kedia further denied having spoken to either Mr. JP or Mr. Mohan over the telephone. 10. As a follow up action, the residential premises of Mr. Rajiv Gopalani as well as his business premises were searched by the ED officials on 20th August 1997 and documents were rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n for paying Rs.2 lakhs on 24th July 1997 to Mr. Saluja on the instructions of Dr. Lal of Australia without any general or special exemption from the RBI in contravention of the provisions of Section 9 (1) (d) FERA. 13. SCN-IV was issued on 14th August 1998 to Mr. Saluja for making payment of Rs.3,35,000 as consideration for receipt of foreign exchange in the sum of USD 10,700 without general or special exemption of the RBI thus contravening provisions of Section 9 (1) (f) (i) FERA. 14. SCN-V was issued on 8th May 2001 to Mr. A.S. Saluja for receiving the payment totalling to Rs.1.18 crores on behalf of person resident outside India without any general or special exemption from RBI in contravention of the provisions of Section 9 (1) (b) FERA. Mr. Saluja and Mr. Shah were also asked to show cause as to why Indian currency in the value of Rs.1.18 crores seized from the residence of Mr. A.S. Saluja should not be confiscated by the Central Government account in terms of Section 63 FERA. SCN-I to Mr. Shah was received undelivered from postal authorities with the remarks 'out of India'. Adjudication Order of the Special Director 15. In the impugned AO, the SD has disc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd family members who resided with him. Mr. Kedia denied any connection with Mr. Saluja. 18. The nexus between the noticees Mr. Saluja and Mr. Shah was evident from the further call details. There was also a nexus between the telephone of Mr. Kedia and the telephone of Mr. JP and the calling pattern confirmed that intense activity took place between Mr. Kedia, Mr. JP and Mr. Saluja. As regards the submission of Mr. Saluja that his statement had been recorded under coercion and threat, the SD observed as under: The Investigating officers would not like to create evidence against themselves in case they intended to coerce or torture Shri Saluja because evidence of the son who is 18 years of age would go against them. Moreover, 18 years son is not a child on whose cries Shri Saluja would have given a statement favourable to the Department. Eighteen yeas individual is an adult, a young man with statement. There is no allegation against the Investigating Officers that they tortured the son of Shri Saluja to take a confession from noticee No.1. Moreover, there is no evidence on record to prove that Mr. Saluja was either hit or coerced . 19. On behalf of the ED, Mr. K.C.Abraham, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing on page 19 of the loose sheet was that of Mr. Gopalani. No queries were raised on the report of the hand writing expert. The noticee also did not ask for the expert to be cross-examined. The SD proceeded to impose the penalty of Rs.10 lakhs on Mr. Saluja as regards the SCNs-I and V, Rs.10 lakhs as regards SCN-II, Rs.50,000 as regards SCN-III and Rs.25,000 as regards SCN-IV. The SD dropped the proceedings against Mr. Kedia under SCN-I. A penalty of Rs.50,000 was imposed on Mr. Shah and Rs.1 lakh on Mr. Gopalani. A penalty of Rs.10,000 was imposed on Mr. R.P.Chauhan. The confiscation of Rs.1,15,90,000 out of the seized amount of Rs.1.18 crores was ordered. Order of the Appellate Tribunal 23. The AT first examined whether the statement of Mr. A.S. Saluja under Section 40 FERA could be said to be voluntary. It was held that it was difficult to believe a bald assertion of threat and coercion without any evidence being produced in that behalf. A substantial sum of Rs.1.18 crores had been recovered and the burden of explaining the origin and possession thereof was on the Appellant. The mere fact that he had disclosed this under the VDIS did not mean that the contravention of pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aluja under Section 40 FERA. 26. Appearing on behalf of Mr. Rajiv Gopalani, Mr. Anindya Malhotra, learned counsel, submitted that the entire case against Mr. Gopalani hinged upon the so-called confessional statement of Mr. Saluja under Section 40 FERA. As far as Mr. Gopalani himself was concerned, he had made no statement incriminating himself when examined by the ED. He submitted that in the hand written portion at page 19, there was no mention of any foreign exchange. Nothing was recovered from Mr. Gopalani himself. Whatever statements he had made on 21st August 1997 under Section 40 FERA was retracted by him on the very next date i.e. 22nd August 1997. The Court had, in fact, ordered an enquiry into his complaint of being subject to custodial violence. The medical report confirmed that he had suffered injuries. As far as the report of the hand writing expert is concerned, Mr. Malhotra submitted that there was no enquiry made from the bank concerned in order to corroborate the version of the ED and it was unsafe to rely on the said hand writing expert's report in the absence of such corroboration. 27. Appearing for the ED, Mr. Subhash Bansal, learned counsel relied on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as for valid reasons? In his cross-examination Mr. K.C. Abraham of the ED detailed the manner in which the ED elicited information from Mr. Saluja during interrogation. Mr. Abraham stated: After going through the documents I went to the room where Shri Saluja was sitting. I introduced myself and he also told me who he is. Then I started examining him and also started recording the statement. It took about half an hour for me to interrogate him before recording his statement. The interrogation was in respect of general things and also about the seized documents. I did not remember how many documents were there but I asked him questions in respect of most of the matters for enquiry. There were many calculations and many names written. There was a paper showing account with credits and debit entries. There were some papers showing bank accounts abroad with hand written amount and the like. I met another person also who had also come to office. I do not know who had brought or summoned him to the office. He had initially told his name as Rajan Shah. Then I asked him his real name and he stated that his name was Subhash Ganatra. I recorded his statement also. After recording some pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s interrogated all night in the morning I had heart/chest pain for nearly 2 hours I kept on asking for doctor no one came. I was on the table lying down for all that time. The statements were taken under threat and I was even hit twice on the 16th afternoon with a threat that they would bring my wife and my son who is barely 18 years was brought saying if you want to see your father come to the office and when he came they kept him till 1 am on 17th morning. Only then he was allowed to go home. I was even hit and told to write as they say. Hence I had to agree and write what they said. 34. It is seen from the above that it was not the case of Mr. Saluja that the ED officials had threatened to falsely implicate his son if he did not make a statement. Also, apart from the bare allegation of torture, Mr. Saluja was unable to show that he was in fact subject to any coercion or duress by the ED officials. The decision in the Telstar case 35.1 The question whether a retracted confession can be acted upon in the context of Section 40 FERA was examined in detail by the Supreme Court in Telstar Travels Private Limited v. Enforcement Directorate (2013) 9 SCC 549. The facts of that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... obtained by any inducement, threat, coercion or by any improper means that statement must be rejected brevi manu. At the same time, it is to be noted that merely because a statement is retracted, it cannot be recorded as involuntary or unlawfully obtained. It is only for the maker of the statement who alleges inducement, threat, promise, etc. to establish that such improper means has been adopted. However, even if the maker of the statement fails to establish his allegations of inducement, threat etc. against the officer who recorded the statement, the authority while acting on the inculpatory statement of the maker is not completely relieved of his obligations in at least subjectivity applying its mind to the subsequent retraction to hold that the inculpatory statement was not extorted. It thus boils down that the authority or any court intending to act upon the inculpatory statement as a voluntary one should apply its mind to the retraction and reject the same in writing. It is only on this principle of law, this Court in several decisions has ruled that even in passing a detention order on the basis of an inculpatory statement of a detenu who has violated the provisions of the F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whether the statement could be said to have been made voluntarily. 38. In the present case, the statement made by Mr. Saluja contains a wealth of details on the transactions undertaken by him at the behest of either his brother Dr. R.S Saluja or others. He has explained in minute detail the entries in the loose sheets. The details on every page of the loose sheets could not have been explained by anyone other than one fully conversant with the transactions. It is impossible for such details to have been fabricated by the officials of the ED. There is nothing credible brought on record by Mr. Saluja to persuade the Court to conclude Mr. Saluja was under threat, duress or any form of coercion that at the time when he made the statement and that he did not make it voluntarily. 39. There was an obligation on Mr. Saluja to explain how he came into possession of Rs.1.18 crores. His plea that he had declared it under the VDIS is belied by the fact that there was no mention of any such application having been made in his bail application filed before the learned MM. As noted by the learned ACMM, there were two bail applications filed. In the first application filed on 17th August 199 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Turning to the appeal of Mr. Rajiv Gopalani, as noticed in the AO, all incriminating evidence was put to Mr. Gopalani and he declined to make a statement. When asked why he had not explained the transactions, he stated that he was not replying as anything said by him may be used against him. 45. The telephone number of Mr. Gopalani was found in the loose sheets recovered from the residence of Mr. Saluja. One of these loose sheets at page 19 contained instructions in writing by Mr. Gopalani. This was confirmed by the report of the hand writing expert. Mr. Gopalani did not challenge the report of the handwriting expert. He did not seek to cross-examine the expert. The report, therefore, corroborated the retracted statement of Mr. Saluja that he had received instructions from Mr. Gopalani to pay USD 50,000 to Geeta Soni. The aforementioned evidence was sufficient to conclude that Mr. Gopalani had contravened Section 9 (1) (f) (i) FERA. 46. As regards the penalty amount of Rs. 1 lakh imposed on Mr. Gopalani, it can hardly be said to be excessive given the amount involved in the violation. Consequently, even as regards the appeal of Mr. Gopalani, the Court is not persuaded to in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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