TMI Blog2017 (2) TMI 518X X X X Extracts X X X X X X X X Extracts X X X X ..... hat there is no incriminating materials available in this case in prima facie for framing charges under Section 8(1) of FERA 9(1)(a) of FERA. Hence, the impugned order passed by the trial court is liable to set aside and accordingly, the same is set aside. - G. Chockalingam, J. For the Petitioner : Mr.G.Rajagopalan, for Mr.M.Dhandapani For the Respondent : Mr. B. Kumar ORDER This revision is directed against the order passed in Crl.M.P.No.379 of 2014 in E.O.C.C.No.27 of 1996 on the file of the Additional Chief Metropolitan Magistrate (Economic Offences Court No.II), Egmore, Chennai, dated 18.05.2015 discharging the respondent from the case. 2. The facts leading to the case are as follows:- The petitioner/complainant preferred a complaint under Sections 8(1), 9(1)(a) and 14 of the Foreign Exchange Regulation Act, 1973, punishable under Section 56(1)(i) of the said Act before the Additional Chief Metropolitan Magistrate (E.O.II), Egmore, Madras-8 stating that the accused had acquired foreign exchange without previous general or special permission from the Reserve Bank of India during the year 1994/95 from persons not being authorised dealers in foreign ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s available in India on the above dates and that the learned Magistrate failed to note that from the documents received in the ACMM EO(II) Court, in response to a Letter Regatory, there was a letter dated 29.07.1994, of Barclays Bank, Jersey to Barclays Bank, Sutton returning bank drafts in the name of M/s.Banyan Tree Enterprises Ltd, M/s.Dipper Investments Ltd and M/s.Turnkey Industries Ltd. 5. It is further submitted that the learned Magistrate failed to note that the transcripts of the Bank account No.7047-2689 of M/s.West Back Ltd duly authenticated by Ms.Valerie Jane Blean and duly certified by the High Commissioner of India, London, shows a receipt of #1,00,000/- and #90,000/- from M/s.Dipper Investments Ltd on 14.07.1994 and 17.08.1984 indicating acquisition and transfers of the said amounts by the accused through M/s.Dipper Investments Ltd and that the learned Magistrate failed to note that in the Income tax returns filed by the respondent/accused for assessment year 1993-94, 1994-95, he has declared himself as a person resident in India and that learned Magistrate failed to note that the accused is a citizen of India and a person resident in India and had transferred an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... committed an offence triable under this Caper, which such Magistrate is competent to try and which, in his opinion, could be adequately punished by him, he shall frame in writing a charge against the accused. The Code contemplates discharge of the accused by the Court of Sessions under Section 227 in a case triable by it cases instituted upon a police report are covered by Section 239 and cases instituted otherwise than on police report are dealt with in Section 245. The three sections contain somewhat different provisions in regard to discharge of the accused. Under Section 227, the Trial Judge is required to discharge the accused if he considers that there is not sufficient ground for proceeding against the accused Obligation to discharge the accused under Section 239 arises when the magistrate considers the charge against the accused to be groundless. The power discharge is exercisable under Section 245(1) when the magistrate considers, for reasons to be recorded, that no case against the accused has been made out which, if unrubutted would warrant his conviction . It is a fact that Section 227 and 239 provide for discharge being ordered before the recording of evidence a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... holding that some evidence cannot be believed in the absence of corroborative evidence. The Magistrate has no right to conclude, especially in the absence of cross-examination that there was no whisper of any telephone call either by P.W.3 or P.W.1 and to hold that absolutely there is no proof to say that the accused made any such promise; such a conclusion can be arrived at only after cross-examining the witness or examining the defence witnesses; that is by way of rebuttal evidence. Therefore, before adducing rebuttal evidence, the Court has to take the evidence on record as a whole. It cannot doubt the statement made in evidence. Therefore, applying the test laid down by the Supreme Court in Antulay's case, the power of the Magistrate under Section 245(1) is only to see whether a prima facie case has been made out. For that, he has to take the evidence as it is and arrive at a conclusion. Applying this test, the order passed by the Magistrate does not appear to be within the scope of Section 245(1) Cr.P.C. Therefore, the order of the Magistrate is liable to be set aside as it is not warranted for the Magistrate to weigh or assess the evidence. Therefore, the order of discha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce before charge. It is after all this, evidence is taken, then the Magistrate4 has to consider under Section 245(1) CrPC, whether any case against the accused is made out, which, if unrebutted, would warrant his conviction, and if the Magistrate comes to the conclusion that there is no such case made out against the accused, the Magistrate proceeds to discharge him. On the other hand, if he is satisfied about the prima face case against accused, the Magistrate would frame a charge under Section 246(1) CrPC. The complainant then gets the second opportunity to lead evidence in support of the charge unlike a warrant trial on police report,where there is only one opportunity. 6.(2001)3 SCC 1 [ Bipin Shantilal Panchal vs. State of Gujarat], wherein it has been held as follows:- 13. It is an archaic practice that during the evidence collecting stage, whenever any objection is raised regarding admissibility of any material in evidence the Court does not proceed further without passing order on such objection. But the fall out of the above practice is this : Suppose the trial Court, in a case, upholds a particular objection and excludes the material from being admitted in evide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt again for fresh disposal. We may also point out that this measure would not cause any prejudice to the parties to the litigation and would not add to their misery of expenses. 16. We, therefore make the above as a procedure to be followed by the trial Courts whenever an objection is raised regarding the admissibility of any material of any item of oral evidence. 7.1967 SCC Online Cal 19 [In re, K.K.Ray (Private) Ltd., wherein it has been held as follows: 31.The position in made abundantly clear by Section 3 of the DIPLOMATIC AND CONCSULAR OFFICER (Oath and Fees) Act, 1948, which this Court's office missed and which provides inter alia as follows: (1) Every diplomatic or consular officer may, in any foreign country or place where he is exercising his functions administer any oath and take any affidavit and also do any notarial act which any notary public may do within a State; and every oath, affidavit and notarial act administered, sworn or done by or before any such person shall be effectual as if duly administered, sworn or done by or before any lawful authority in a State. (2)Any document purporting to have affixed, impressed or subscribed thereo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the commencement of this Act shall be construed as a reference to this coming into force of that provision. On seeing the said provision, the Act having jurisdiction all over India and also every citizens of India outside India and to branches and agencies outside India of companies or bodies corporate, registered or incorporated in India. As per Section 1(3) of FERA, 1973, it seems that FERA, 1973 not applicable to Companies or bodies corporate, registered or incorporated outside India. Sec.8 of FERA, 1973 deals with Restrictions on dealing in foreign exchange Section 8:- Restrictions on dealing in foreign exchange. (1)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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions on payments: (1)Save as may be provided in and in accordance with any general or special exemption from the provisions of this sub section which may be granted conditionally or unconditionally by the Reserve Bank, no person in, or resident in, India shall- a)make any payment to or for the credit of any person resident outside India: b)receive, otherwise than through an authorised dealer, any payment by order or on behalf of any person resident outside India. Explanation: For the purposes of this clause, where any person in or resident in India receives any payment by order or on behalf of any person resident outside India through any other person (including an authorised dealer) without a corresponding inward remittance from any place outside India, then, such person shall be deemed to have received such payment otherwise than through an authorised dealer. c)draw, issue or negotiate any bill of exchange or promissory note or acknowledge any debt, so that a right (whether actually or contingent) to receive a payment is created or transferred in favour of any person resident outside India: d)make any payment to or for the credit of any person by or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prejudice to any award of penalty by the adjudicating officer under this Act, if any person contravenes any of the provisions of this Act other than section 13, clause (a) of sub-section (1) of Section 18, section 18A, clause (a) of sub-section (1) of section 19, sub-section (2)of section 44 and sections 57 and 58, or of any rule, direction or order made thereunder he shall, upon conviction by a court, be punishable-- (i)in the case of an offence the amount or value involved in which exceeds one lakh of rupees, with imprisonment for a term which shall not be less than six months, but which may extend to seven years and with fine; Provided that the court may, for any adequate and special reasons to be mentioned in the judgment, imposed a sentence of imprisonment for a term of less than six months; (ii)in any other case, with imprisonment for a term which may extend to three years with fine or with both . Sec.59 of FERA, 1973, deals with Presumption of culpable mental state Sec.59 of FERA, 1973, (1)In any prosecution of any offence under this Act which requires a culpable mental state on the part of the accused, the court shall presume the existence of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e unless the person accused of the offence has been given an opportunity of showing that he had such permission. Section 68 of FERA, 1973, deals with Offences by Companies - 1)Where a person committing a contravention of any of the provisions of this Act or of any rule, direction or order made thereunder is a company, every person who, at the time of contravention was committed, was in charge of, any was responsible to, the company for the conduct of business of the company as well as the company, shall be deemed to be guilty of the contravention and shall be liable to be proceeded against and punished accordingly. Provided that nothing contained in this sub section shall render any such person liable to punishment, if he proves that the contravention took place without his knowledge or that he exercise all due diligence to prevent such contraventions. 2)Notwithstanding anything contained in sub section 1), where a contravention of any of the provisions of this Act or of any rule, direction or order made thereunder has been committed by a company and it is proved that the contravention has taken place with the consent or connivance of, or is attributable to any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6.01.2017, the Hon'ble 1st Division Bench of this Court has passed order, which reads as follows:- 6. When this appeal came up before this Court on 29.06.2016, this Court framed the following questions of law: (a) Whether the Appellate Tribunal was right in relying upon the judgment made in HCP No. 240/1996 to conclude that the appellant was a resident within India and whether the Appellate Tribunal ought to have decided the legal status of the appellant independently before charging him under Sections 8(1) and 9 of the FERA Act? (b) Whether the Appellate Tribunal having found that on evidence, the charges held not proved, can exercise the suo motu powers under Section 52 and reframe the charges sitting in appeal and whether new evidence can be accepted by the Tribunal? (c) Whether the order of the adjudicating authority is vitiated on account of bias, violations of principles of natural justice and fair play as he was a part of the investigating team and a witness in the criminal case initiated by the Department? (d) Whether Section 3(1) of the Companies Act, which confers a separate legal entity to the company, absolutely dissolves the liability of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of bias, it has to be seen whether there is substantial possibility of bias animating the mind of the Judge against the aggrieved party, and such reasonable apprehension must be based on cogent materials and must be in consonance with thinking of a reasonable man and the said principle cannot be attracted in vacuum. 10. The learned senior counsel for the appellant has also contended that the adjudicating authority had materially erred in stating that the judgment of the High Court having been brought to its attention, has to be relied upon, and that the judgment of this Court has not decided any question as to whether the detenu was a non-resident Indian at the relevant time, or not. In this respect, it is also his submission that the appellate authority had failed to see that the judgment given in the habeas corpus proceedings could never ever be relied upon in an adjudication proceedings which requires decision on objective standards and on evaluation of the evidence before it. Thus, according to the learned senior counsel appearing for the appellant, the order passed in a habeas corpus proceedings will not form part of the case on hand, and that with regard to preventive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aterial on record and therefore bad in law. (c) Judgment of the Hon'ble Supreme Court in Ram Parkash v. Union of India and others, reported in 2014 SCC OnLine P H 860 and the unreported judgment of a Division Bench of this Court in R. Suresh v. Deputy Director, Enforcement Directorate, Chennai, made in C.M.A. No. 614 of 2008 dated 06.08.2015, to state that a witness cannot be the adjudicator and that the domestic enquiry must be held by an unbiased person who is unconnected with the incident so that he can be impartial and objective in deciding the subject matters of enquiry. He also relied on the judgment of the Hon'ble Supreme Court in Asia Tobacco Co. Ltd. v. Union of India and another, reported in MANU/TN/0049/1987 : 1988 (33) ELT 279 Mad, in support of his contention that the proceedings initiated by the authorities is purely a bias and it violates the principles of natural justice, since the person who was the investigating authority, later turned to be the person adjudicating the issue on hand. (d) Judgment of the Hon'ble Supreme Court in State of U.P. v. Mohammad Nooh, reported in MANU/SC/0125/1957 : AIR 1958 SC 86, in support of his contention that tw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icating authority and therefore the argument of bias is without any substance. In this regard, on the question whether the adjudicating authority investigating the case had participated in the investigation, it is submitted that the adjudicating authority has recorded in its order that it has not issued any summons nor recorded any statement nor participated in any searches. Thus, submitting that he only generally monitored the investigation and carried out correspondence, it is contended that the participation of the adjudicating authority in the investigation, cannot be termed as bias. Added further that even assuming that the adjudicating authority had participated in the investigation, considering the nature of the powers conferred on the Authority under Foreign Exchange Regulation Act and the manner it has been done, the same does not require any interference. 15. In respect of the issue as to whether the appellant is an Indian citizen or not, it is submitted by the learned senior counsel for the respondent that the appellate authority had correctly relied upon the judgment of the Division Bench of this Court in HCP No. 240 of 1996, wherein it was held that the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adjudication proceedings on the charges contained in the show-cause notice had already been initiated. Even though it was decided in the judgment passed in the Habeas Corpus Petition that the appellant was not a person residing outside India, there is no whisper about the said judgment or finding in the order passed by the adjudicating authority, but the adjudicating authority also came to the conclusion that the appellant was not a person residing outside India. It is only a question of fact. Even though the appellate authority had stated that it relies upon the judgment made by this Court in the Habeas Corpus Petition, the finding given by the adjudicating authority as well as by this Court in the Habeas Corpus Petition, remains one and the same, that too when the judgment passed in the Habeas Corpus Petition has not been taken into account by the adjudicating authority. It is also seen from the records that the appellant claimed not a citizen before the Division Bench of this Court in the Habeas Corpus Petition. In the election petition filed by him, he claimed as an Indian citizen. But before the Foreign Exchange Regulation authorities, he claimed as if he is a non-resident In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellate authority to consider the evidence before it. Unlike the powers of the High Court under Section 54 where the scope of the appeal is restricted to questions of law, the appellate authority is entitled to evaluate the facts and the evidence under Section 52(3) and (4). Obviously, the appellate authority has to proceed only on the basis of the evidence collected by the adjudicating authority, unless it relies upon a new evidence, of which the party was put on notice. In the present case, the appellate authority has rightly considered only the evidence that was considered by the adjudicating authority and no new material was placed or considered. It is also not the case of the appellant that the appellate authority has based its findings on some evidence, alien to the adjudication proceedings, without granting any opportunity. In the case on hand, the appellate authority had to proceed with the examination of the evidence in accordance with Section 52, as the findings and conclusions arrived at by the adjudicating authority did not logically follow. The appellate authority has also held that the primary burden of the findings rendered by the adjudicating authority would appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judicator and the enquiry must be held by an unbiased person who is unconnected with the incident so that he can be impartial and objective in the enquiry. There is also no dispute in the law laid down by the Hon'ble Supreme Court in its judgment in Asia Tobacco Co. Ltd. v. Union of India and another (stated supra), which has been relied on by the learned counsel for the appellant in support of his contention that the person who was the investigating authority should not adjudicate the issue on hand, and if it is otherwise, it would violate the principles of natural justice. If a man is authorized to prosecute as well as to judge, prejudice would be caused. In such a case, the action would be hit by the cardinal principle enunciated in the latin maxim Nemo judex in cause sua . But in the present case, Mr. A.P. Kala, who was the adjudicating officer, had not issued any summons nor recorded any statement or participated in any searches. He only monitored the investigation and exchanged correspondences, as is evident from the records. It also cannot be said that the adjudicating authority had some vested interest against the interest of the appellant so as to divert himself from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 011 : (2012) 1 SCC 476)]. 44. Even in Escorts case [MANU/SC/0015/1985 : (1986) 1 SCC 264)], this Court has taken the view that it is neither necessary nor desirable to enumerate the classes of cases where lifting the veil is permissible, since that must necessarily depend on the relevant statutory or other provisions, the object sought to be achieved, the impugned conduct, the involvement of the element of the public interest, the effect on parties who may be affected, etc. In Escorts case, this Court held as follows: 90.... Generally and broadly speaking, we may say that the corporate veil may be lifted where a statute itself contemplates lifting the veil, or fraud or improper conduct is intended to be prevented, or a taxing statute or a beneficent statute is sought to be evaded or where associated companies are inextricably connected as to be, in reality, part of one concern. 45. In Vodafone International Holdings BV v. Union of India [MANU/SC/0051/2012 : (2012) 6 SCC 613)], this Court has taken the view that: 277.... Once the transaction is shown to be fraudulent, sham, circuitous or a device designed to defeat the interests of the shareholders, investors, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of the documentary evidence, and the view that the Department has taken on that evidence is reflected in the charges made against the appellant and their proposal to proceed against the appellant on those charges. Even though the show-cause notice does not spell out as to how the charges can be made out on the basis of the evidence as narrated, that has been done in the inquiry during the adjudication proceedings. In view of the clear finding given by the appellate authority that the various acts done in the name of the company could not be attributed to the company and that there is no evidence that these were done in the course of company's business, it is clear that the appellant is legally liable for those acts. Accordingly, the fourth and final question of law is answered against the appellant. 25. In the result, all the questions of law are answered against the appellant and in favour of the revenue. The impugned order passed by the Foreign Exchange Regulation Appellate Board in Appeal No. 51/98 dated 05.05.2000 is confirmed and the Civil Miscellaneous Appeal stands dismissed. No costs. 10. From the perusal of the above judgment, the Hon'ble 1st Division B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , by general or special order, may, during the course of any investigation or proceeding under this Act, (a) require any person to produce or deliver any document relevant to the investigation or proceeding; (b) examine any person acquainted with the facts and circumstances of the case. 71.Burden of proof in certain cases. (1) Where any person is prosecuted or proceeded against for contravening any of the provisions of this Act or of any rule, direction or order made thereunder which prohibits him from doing an act without permission, the burden of proving that he had the requisite permission shall be on him. (2) Where any person is prosecuted or proceeded against for contravening the provisions of sub-section (3) of section 8, the burden of proving that the foreign exchange acquired by such person has been used for the purpose for which the permission to acquire it was granted shall be on him. (3) If any person is found or is proved to have been in possession of any foreign exchange exceeding in value 1[fifteen thousand rupees], the burden of proving that the foreign exchange came into his possession lawfully shall be on him. 14. The learned Seni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1996 settlement of dispute and revocation of the detention order. ***** The detention order has been passed against me on the ground that by my activity I have caused prejudice to the augmentation of foreign exchange resources of the country. It is my claim that I am a non-resident Indian having obtained that status and complied with all the formalities under Foreign Exchange Regulation Act and made necessary declaration to the Reserve Bank of India. I had also intended to migrate to Singapore and obtained permanent residency status. The dispute in my case devolves around a bank account in U.K. With Barclaya Bank. It is my contention that monies in the bank belong to the clients of a Solicitor in London. By operation of the account on his behalf I have not violated the provisions of FERA since I happened to be a non-resident Indian. A show cause notice had been issued in respect of this occurrence in the adjudication proceedings and I had replied to the same and explained my stand. I have suffered deeply on account of detention under COFEPOSA. Unable to stand the mental strain caused by there detention proceedings against he, my wife who was then in the adv ..... X X X X Extracts X X X X X X X X Extracts X X X X
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