IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE A.K.BASHEER & THE HONOURABLE MR. JUSTICE P.Q.BARKATH ALI WEDNESDAY, THE 17TH MARCH 2010 / 26TH PHALGUNA 1931 MFA.No. 141 of 2004() --------------------- APPEAL NO.38/2002 DT.8.3.2004 of APPELETTE TRIBUNAL FOR FOREIGN EXCHANGE, NEW DELHI .................... APPELLANT/ RESPONDENT: ------------------------- DIRECTOR OF ENFORCEMENT, DIRECTORATE OF ENFORCEMENT, NEW DELHI. BY ADV. SRI.S.KRISHNAMOORTHY, CGC RESPONDENT/ APPELLANT: ------------------------- T.T.MOHAMMED SHANAVAS @ SHANU, S/O. LATE HAMZA, THONNANTHODI HOUSE, PATTAMBI ROAD PERINTHALMANNA, MALAPPURAM DISTRICT. ADV. SRI.SUNNY MATHEW FOR R1 THIS MISC. FIRST APPEAL HAVING COME UP FOR ADMISSION ON 17/03/2010, ALONG WITH MFA NO. 144 OF 2004, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: A.K.BASHEER & P.Q.BARKATH ALI, JJ. --------------------------- M.F.A.Nos.141 & 144 OF 2004 --------------------------- Dated this the 17th day of March, 2010 J U D G M E N T ~~~~~~~~~~~ Basheer, J. These two appeals are being disposed of by this common judgment, since they arise from a common order passed by the Appellate Tribunal for Foreign Exchange, New Delhi. 2. By the impugned order, the Tribunal has allowed the appeals preferred by the respondents in part reducing the quantum of penalty from Rs.35,00,000/- each to Rs.2,00,000/- each for the offences punishable under Section 9(1)(b) and (d) of the Foreign Exchange Regulations Act, 1973 (hereinafter referred to as 'the Act'). 3. The common appellant in these two cases, the Director of Enforcement, impugns the order of the Tribunal contending inter alia that having regard to the gravity of the offences the Tribunal ought not to have reduced the quantum of penalty. M.F.A.No.141&144/2004 2 4. The short question that arises for consideration is whether any interference is warranted with the order passed by the Tribunal. 5. Adjudication proceedings were initiated against the respondents by the Directorate of Enforcement under the Government of India in New Delhi for alleged contravention of the provisions of the Act. The allegation against the respondent in M.F.A.No.141/2004 was that he had received a sum of Rs.1,92,94,000/- by unlawful means and distributed a sum of Rs.1,91,94,000/- among various persons in contravention of Section 9(1)(b) and Section 9(1)(d) of the Act. Similarly, the allegation against the respondent in MFA.No.144/2004 was that he had received a sum of Rs.1,89,35,000/- for payment among several other persons and infact made payment of a sum of Rs.1,89,19,500/-in contravention of the provisions referred to above. M.F.A.No.141&144/2004 3 6. The case of the department in a nutshell was that on February, 3, 1997 officials of the Central Excise Headquarters Preventive Division, Kochi, had conducted a search at the residential premises of the respondent in M.F.A.No.141/2004. The search at the above premises did not result in discovery of any incriminating materials. But, while the search was going on in that premises, the respondent in the other appeal, namely, Mohammed Haneefa, came to the place of search in a white Maruti car bearing Reg.No.KL/10-D 8228. Search of the body of Mr. Haneefa and the car resulted in recovery/seizure of some incriminating documents and Indian Currency of Rs.15,500/-. The search at the premises of yet another person, namely, P.T.Nurudeen @ Biju also resulted in recovery of certain incriminating documents. Further enquiry by the officers led to discovery of several other incriminating materials with regard to receipt and disbursement of huge sums of unaccounted money to various persons. 7. The adjudicating authority, after considering the materials available on record, came to the conclusion that the M.F.A.No.141&144/2004 4 respondents in these two appeals were guilty of contravention of the provisions of the Act referred to above. It was thus that the adjudicating authority imposed penalty of Rs.35,00,000/- each on the two respondents. Simultaneously, a penalty of Rs. 7,00,000/- was imposed on P.T.Nurudeen @ Biju mentioned above. The Indian Currency totaling to Rs.15,500/- recovered from Mr.Mohamed Haneefa was ordered to be confiscated. 8. The above order passed by the adjudicating authority was challenged by the respondents in two separate appeals before the appellate tribunal which, after re-evaluation of the entire materials, came to the conclusion that the penalty imposed on the respondents was disproportionate to the nature and gravity of the offence. Accordingly, the quantum of penalty was modified and reduced as indicated above. 9. Sri.Krishnamoorthy, learned Additional Central Government Standing Counsel, submits that the Tribunal was not justified in interfering with the quantum of penalty, especially, after finding that the respondents were guilty of the M.F.A.No.141&144/2004 5 charges levelled against them. It is further contended by him that the respondents having found to have committed the offences which have wide ramification as far as the financial stability and internal security of the nation is concerned, the Tribunal ought not to have viewed the matter light heartedly. According to the learned counsel, the respondents deserved stringent punishment, which the adjudicating authority had rightly imposed on them. 10. Per contra, it is contended by Sri. Sunny Mathew, learned counsel for the respondents, that the finding of guilty by the adjudicating authority by itself was totally unwarranted in the absence of any cogent or clinching materials on record. He points out that no incriminating documents were admittedly recovered from the respondents though ofcourse three paper slips/receipts were allegedly recovered from the respondent in M.F.A.No.144/2004. 11. We have carefully perused the orders passed by the two statutory authorities, apart from other materials made M.F.A.No.141&144/2004 6 available for our perusal. As rightly noticed by the Tribunal, the search at the residential premises of the respondent in M.F.A.No.141/2004 did not result in recovery of any incriminating object or material. According to the departmental officials, the respondent in M.F.A.No.144/2004 (Haneefa) came to the residence of the other respondent while search was going on. On search of the body of Mr.Haneefa, Indian Currency worth Rs.15,500/- was recovered and three paper slips were also recovered from his car. In other words, the Department did not have a case that any incriminating material was recovered either from the body or the residence of Mr.Shanavas (appellant in M.F.A.No.141/2004). Ofcourse, three paper slips/receipts recovered from Mr.Haneefa led to discovery of certain other incriminating evidence and materials which conclusively established that huge sums of unaccounted money had been received and distributed by these two respondents to several people. The departmental officials had questioned all those recipients who candidly admitted that the respondents had paid money to them as instructed by some other source. In short, there was enough material to show that respondents were M.F.A.No.141&144/2004 7 engaged in unaccounted money transactions. However, as rightly noticed by the Tribunal, there was no document or material to show that these two respondents were the kingpins of the racket, though they were put in charge of distribution of specified sums of money to certain named persons. 12. Having carefully perused the impugned order, we are satisfied that the above conclusion made by the Tribunal cannot be faulted in the facts and circumstances of the case. We are also of the view that the order passed by the Tribunal modifying and reducing the quantum of penalty is reasonable. The said order does not warrant any interference at the hands of this Court, in the absence of any compelling reasons. Therefore, the appeals fail and they are accordingly dismissed. (A.K.BASHEER, JUDGE) (P.Q.BARKATH ALI, JUDGE) ps