TMI Blog1983 (3) TMI 304X X X X Extracts X X X X X X X X Extracts X X X X ..... he baggage when the said packet containing U.S. Dollars to the tune of 3501 in currency notes lodged in the suit-case were recovered, for which no proper explanation could be given nor was its possession supported by any permission or authorisation from the Reserve Bank. Those, therefore, came to be seized under the panchanama and further enquiries commenced during which his statement was recorded by the Enforcement Officer, first on the very day and second on the 15th January. So also statement of Smt. Mehta was recorded on the said two dates. 3. Adjudication proceedings were initiated against both of them by the Enforcement Director when respondent 1 was visited with the personal penalty of ₹ 10,000/- while ₹ 5,000/- were imposed on Smt. Datta Mehta as personal penalty. In addition thereto the Customs Department was equally active when adjudication proceedings were initiated against both of them in which the currency of foreign exchange came to be confiscated to the State while respondent 1 was imposed a personal penalty of ₹ 8,000/-, which, however, is claimed to have been scaled down to ₹ 1,000/- by the appellate authority along with an option to rede ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustified on merits notwithstanding that he had pleaded guilty before the Director. It is this order dt. 31-3-1979 recorded by the learned Member of the Appellate Board that is placed under challenge by the State under S. 54 of the said Act. 6. Before embarking on the merits and the thrust of the rival contentions, it would be necessary at the threshold to consider the proceedings of Criminal Application No. 970 of 1979, under which the State has payed for condonation of delay, in which also rule was granted. No doubt, Shri Madhu Patel, the learned counsel for the respondents, has strenuously submitted that delay is not properly explained and, therefore, rule should be discharged, in which event it would not be necessary to consider the appeal on merits. Shri S. B. Patil, the learned Public Prosecutor for the State, however, submits to the contrary. According to him, the delay has been properly explained and the interest of justice would require a decision on merits of the appeal. It is true that it is incumbent on a litigant, who approached the Court after the statutory period prescribed therefore is over, to explain the delay in a satisfactory manner and if it is not so done, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as been rightly relied upon by Shri Madhu Patel, the learned counsel for the respondents, pertains to the finding of fact recorded by the Additional Directorate. To recapitulate, respondent 1 had come to India sometime in December 1976 to celebrate his own marriage. His sister-in-law Smt. Datta Mehta along with her infant child had also come down to India. The respondents made a consistent statement throughout about the circumstances in which he happened to be in possession of the foreign exchange. His stand has been fully supported by Smt. Datta. According to both of them, a certain amount of foreign exchange was brought in India by Smt. Mehta, which was given to her by her husband. She was supposed to go back to United States along with respondent 1, by which time she was also expected to consume the said foreign exchange, as she wanted to make certain purchases. However, she discarded the plan to purchase the property in India for the time being and, therefore, the said foreign exchange just remained with her idle. Respondent 1 got married in December 1976. Smt. Mehta delayed her scheduled return to United States. According to both of them, Smt. Mehta thought that the foreign ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... since it was nothing short of acquiring foreign exchange without permission from the Reserve Bank of India. It is on that premise that the proceeding was conducted and the finding was arrived at. On the appellate forum, the learned Member held that on the, accepted premises of the respondent being just a carrier, the basic element of mens rea is missing. It is predominantly on this short ground that the appeal came to be allowed. No doubt, there is hardly any elaborate discussion regarding the controversy in the context of relevant provisions of the Act and the appellate order no doubt contains that deficiency prominently. However, since the matter is agitated on the aspects involved in this controversy the same can well be explored. 9. As regards the plea of guilt, the appellate board held and, rightly so, that in the first instance, there is no provision under the Act as such to base the order exclusively on such a plea and secondly on the broader premise, if ex facie taking all the evidence as it stands, no contravention is made out, then notwithstanding such a plea the person concerned facing the charge can well be exonerated. This position is not seriously controverted on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so that the said resources could be put in for proper utilisation to achieve the aim being an interest of economic development of the country. This is the analysis of the preamble and which is self-contained unit. 12. Section 8(1) relates to the restriction on dealing in foreign exchange and reads as :- Except with the previous general or special permission of the Reserve Bank, no person other than an authorised dealer shall in India, and no person resident in India other than an authorised dealer shall outside India, purchase or otherwise acquire or borrow from, or sell, or otherwise transfer or lend to or exchange with, any person not being an authorised dealer, any foreign exchange : Provided that nothing in this sub-section shall apply to any purchase or sale of foreign currency effected in India between any person and a money-changer. On proper analysis it would be clear that the absence of permission, either general or special, from the Reserve Bank is the foundation of the contravention indicated therein. The further restrictions are put on any person resident of India except the authorised dealer while a more generalised category is carved out which would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aborate the concept of lending , as it is made clear that such deposit would amount of lending. The mode 'deposit' is also in consonance thereof inasmuch as it indicates the opening of an account may be even with a Banker or depositing with some other person. The concept of lending in this sense is integrated with the process of depositing inasmuch as the other person viz., being the Banker or even otherwise can really use those amounts after observing further formalities, though for a temporary duration and a transaction of lending and borrowing thereby is complete creating unity of interest between the parties. The person depositing, whose mode would amount to lending may temporarily lose control where correspondingly the other person equally temporarily gets control over the same under which he can well utilise the said currency notes. The user of the term as lending or borrowing in the substantive clause has its own implications. The explanation thus read in the context of the substantive clause makes the concept of depositing quite clear. Therefore, it is not permissible to accept the interpretation, as suggested by the learned Public Prosecutor that by the merely han ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n does not relate to the acquiring as such. However, while acquiring such foreign exchange in a contingency the condition is annexed to suggest the mode and precise purpose of its user, then the person cannot travel beyond that by utilising it for different purpose and if he does, then he contravenes that provision. It is in that context that the said presumption and shifting of burden in sub-cl. (2) of S. 71 appears to have been introduced, indicating that in such a case it would be for that person to show that the user of the said foreign exchange which was admittedly lawfully acquired by him is for the same purpose for which permission was granted. In other words, he has to show that after the acquisition its user was also in consonance with the conditions annexed thereto. This, however, does not by itself support the State's contention that basically possession, bare and naked in the form, is tantamount to acquiring the same within the meaning of S. 8(1). Thus, the contention of the State in that behalf is only partially correct and this would be brought on the surface when a reference to sub-cl. (3) of S. 71 can be made. It reads as :- If any person is found or is pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... borrowing or lending. This again no doubt would be a further indication about the real concept of acquiring which may be in contradistinction with the concept of bare physical possession. Such a concept of acquiring as per connotation given in dictionary no doubt indicates that in addition to physical possession, it is accompanied with the more elements such as an interest or control in some capacity over the article so that the person in possession would be a free agent on his own to deal with or utilise the same as he likes, the counterpart of which would be that he would not be obliged merely to retain the physical possession till the other person demands it back. An harmonious blending will have to be made between the three items viz., the object, substantive clause of S. 8(1) and presumption as to burden of proof under S. 71(3) of the Act, as the legislative intent is manifestly reflected through all these provisions. A line of distinction, though thin but still real, has been chalked out by the legislature distinguishing the concept of acquiring from the concept of bare physical possession, though in many cases both can and do overlap. By reason of presumption under S. 71(3) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therein. Negatively speaking, he may have to show that he has not purchased, borrowed or exchanged nor has there been any transaction of selling, lending or transferring of the said foreign exchange in contravention as contemplated thereunder. He may equally be required to show further that it was also not otherwise acquired in contravention of those provisions. Any penal consequence in respect of these aspects can be erased if he can successfully establish the authorised and permissible nature of the transaction. However, even otherwise, in some cases, an additional course would be open to him when he would be free to establish, as being the matter of his personal and exclusive knowledge, that he is in possession not under any of those items, but only in the capacity as possessor simpliciter, though the act of the other source putting him in such a possession may or may not be a matter of investigation or enquiry against him, and further he may have no control, right, title or interest or even an option of using the same and thus the said possession would not carry any incident or characteristic of acquisition. In S. 71(3) the user of the term possession merely is sufficient, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resumption being raised by virtue of mere possession of the person having been established. In that event, if he discharges the burden successfully then the chapter is closed in his favour, and if not, then factum of physical possession, which is the basic aspect and which is responsible for raising presumption, and which is equally impliedly in existence as the foundation in items prescribed in S. 8(1), is obviously converted into his otherwise acquiring the foreign exchange without permission of the Reserve Bank which amounts to contravention under S. 8(1). It thus unmistakably becomes possession by acquisition. The user of the term otherwise acquired should be thus construed. 21. It would thus be clear that though the word possession is used in the said provision relating to presumption and burden of proof, it does not necessarily mean that in that case basically possession by itself is a contravention nor does it necessarily mean that physical possession has been ipso facto equated with the concept of acquiring. It further indicates that under the circumstances when there is inability to discharge the burden, even a physical possession by itself would be enough to make ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uisition. In other words, this would not be possession simpliciter, but this was on account of otherwise having acquired the currency. It is in that context and in such case that the acquisition can be one of the modes of being in possession of the same. It is this harmonious blending that would be in consonance with the object and the scheme of the Act. 22. It is in that behalf worth referring to some of the observations enunciated more or less on the same lines in the ratio of Boormal v. Asst. Collector of Central Excise recorded by Madras High Court in Criminal Appeal No. 302 of 1967, a copy of which has been placed for perusal. It was no doubt a contravention under the Gold Control Act with the Defence of India Rules, wherein the controversy regarding the concept of acquiring or being in possession was placed under discussion and this was resolved also with the aid of a similar presumption available under R. 126(1)(ii) wherein the learned Judge observed :- A careful reading of the above provisions clearly indicates that what is controlled and regulated is the ownership of gold or acquisition, possession or control of any quantity of gold. Mere possession of gold under a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the person has purchased the property or has taken it by way of mortgage or by way of similar kind of transfer as contemplated by law relating to transfer of property and mere possession cannot be equivalent to acquisition and distinction between the two, according to the learned Judge, is well settled. It was further observed that to get into mere possession of any property cannot be said to be an act resulting into acquisition of the same. On this basis it was held that even the person in possession of the room cannot necessarily be said to have acquired the foreign currency. This was the first point posed by the learned Judge and answered in favour of the appellant. The other two points about the exclusive possession and the possibility of one out of the three occupants being responsible for the possession of currency notes were also answered in favour of the appellant. As regards these latter two counts, it was certainly a matter of fact and it was open for the Court to hold that even the possession of the appellant to the exclusion of others was not established. However, even the first count is answered against the department and the plain reading of those observations may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecutor, that in other Acts distinction has been made in the concept of acquisition and possession. It would thus be manifest that on the finding of fact as accepted by the two authorities below, the respondent was only a carrier of the said foreign currency and as such despite his having been found in possession thereof he has discharged the burden, which does not convert his possession into acquisition or any other mode and it remains only as the possession of a carrier, and as such it is not liable under S. 8(1) of the Act. 27. In this view of the matter, the decision of the appellate Board exonerating the respondent though being confirmed, it is entirely on different process of reasoning. Nontheless, the result is the same and the State's appeal cannot succeed. 28. In the result, Rule in Criminal Application No. 970 of 1979 is made absolute. The delay in filing the appeal is condoned. 29. Criminal Appeal No. 741 of 1983 filed by the State fails and is dismissed. The amount of penalty of ₹ 10,000/- as imposed by the Additional Director of Enforcement, Foreign Exchange Regulation Act, be refunded to the respondent as directed by the Appellate Board. 30. Order ..... X X X X Extracts X X X X X X X X Extracts X X X X
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