IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 09/01/2003 CORAM THE HON'BLE MR.JUSTICE P.D.DINAKARAN Criminal Appeal No.23 of 1995 and Criminal Appeal Nos. 31, 32, 33 & 148 of 1995 The Assistant Director Enforcement Directorate Government of India Madras 600 006. .. Appellant in all C.As. -Vs- Khader Sulaiman .. Respondent in C.As.23, 31, 32, 33/95 P. Krishnasamy Respondents in J.Sampath Kumar .. C.A.No.148/95 PRAYER: Appeal against the common order dated 7.4.1994 made in C.C. No.673, 676, 674 & 675 of 1991 and the order dated 15.6.1994 made in C.C.No.333 of 1993, on the file of the learned Additional Chief Metropolitan Magistrate, Economic Offences I, Madras, and on the file of learned Additional Chief Metropolitan Magistrate, Economic Offences II, Madras, respectively. !For Appellant : Mr.K. Kumar, Spl.Counsel for Enforcement Directorate ^For Respondent in C.A.Nos. 23, 31, 32 & 33 of 1995 : Mr.M.M. Abdul Razack For Respondents in C.A.No. 148 of 1995 : Mr.P. Rajarathinam :J U D G M E N T 1.1. C.A.Nos.23, 31, 32 and 33 of 1995 are directed against a common judgment of 8acquittal dated 7.4.1994 made in C.C.Nos.673, 676 , 674 & 675 of 1991 on the file of the learned Additional Chief Metropolitan Magistrate, Economic Offences I, Madras and C.A.No.148 of 1995 is directed against the judgment of acquittal dated 15.6.1994 made in C. C.No.333 of 1993 on the file of learned Additional Chief Metropolitan Magistrate, Economic Offences II, Madras. 1.2. Even though the facts relating to each of these cases slightly differ from each other, the issues that arise for consideration in these appeals are identical and common, and hence, these appeals were heard together. 2. The interesting and substantial questions that arise for consideration in these appeals are: i.Whether the non-issuance of opportunity notice to the respondents/ accused as contemplated under Section 61(2)(ii) of the Foreign Exchange Regulation Act, 1973 (hereinafter referred to as "FERA, 1973 ") vitiates the case of the prosecution? ii.Whether the Courts below are right in acquitting the respondents/ accused, holding that the appellant/complainant has failed to prove the charges, beyond all reasonable doubts, against the respondents/ accused that they are guilty of the offences punishable under the provisions of the FERA, 1973? iii.Are the respondents/accused not entitled for the benefit of the enactment of the Foreign Exchange Management Act, 1999 (hereinafter referred to as "FEMA,1999") whereunder no provision is made for punishment, assuming that the respondents/accused are liable to be convicted for the offences punishable under Sections 9(1)(b) and 9(1)(d) of the FERA, 1973 in the respective criminal cases, and could they be punished for the said offences under the FERA,1973, which stands repealed by the enactment of the FEMA? 3.1.1. The case of the prosecution in C.C.Nos.673, 676, 674 and 675 of 1991 is as under. 3.1.2. One Khader Sulaiman is the accused in C.C.Nos.673, 676, 674 and 675 of 1991, which were tried jointly. 3.1.3. Equipped with a search warrant dated 8.11.1985 issued under Section 37 of the FERA, 1973 by the Director of Enforcement, the Enforcement Officer P.V.Balasubramanian (P.W.1) conducted a search in Khader Sulaiman's house on 9.11.1985 at No.27, Appu Maistry Street, Madras - 1 and seized certain incriminating documents, which are marked as Ex.P3 series, as well as Indian currency of Rs.30,000/- under a mahazar report (Ex.P2), and at the time of search Khader Sulaiman gave a statement to P.W.1 and the same was marked as Ex.P4. 3.1.4. In the said statement dated 9.11.1985 (Ex.P4), the accused Khader Sulaiman had explained the code word, namely "COLD FINGER" as well as the modus operandi operated by him in dealing with the foreign exchange which are punishable under Sections 9(1)(b), 9(1)(d) and 5 6(1)(i) of the FERA,1973, and also explained about the incriminating documents, viz., seven sheets (Ex.P3 series), seized during the search on 9.11.1985. 3.1.5. Thereafter, Khader Sulaiman made the following statements, viz., (i) statement dated 11.11.1985 (Ex.P8), and (ii) statement dated 24.2.1986 (Ex.P9), wherein he confirmed his dealings in foreign exchange. 3.1.6. During the course of investigation P.W.1 obtained a statement from one Saroja, wife of T.S. Balasubramanian, dated 4.3.19 86, (Ex. P10) wherein she had stated that her husband was working in DSA Ruwi Sultanate of Oman for the past three years and returned to India on 6 .2.1986 as he was dismissed from service on 5.2.1986 and that her husband himself would state with respect to the payment which she used to receive from him through a third party. 3.1.7. However, in Ex.P11, a telegram sent by Khader Sulaiman addressed to the Enforcement Officer, it was alleged that the statements, Exs.P4, P8 and P9, were obtained from him under force, threat and coercion; and therefore, they are not binding on him. 3.1.8. Based on the above statements of Khader Sulaiman (Exs.P4, P8 and P9), adjudication proceedings were initiated under Section 51 of the FERA, 1973 for the alleged contravention of Sections 9(1)(b) and 9(1)(d) r/w 56(1) & (2) of the FERA, 1973 a show cause notice ( Ex.P5), as contemplated under Section 56 of the FERA, 1973 was served on Khader Sulaiman, to which Khader Sulaiman submitted his explanation dated 16.8.1988, (Ex.P6). 3.1.9. In Ex.P6, Khader Sulaiman stated that he had already, by his letter dated 11.11.1985 (Ex.D1) and his telegram dated 24.2.1986 (Ex.P11), retracted the statements made on 9.11.1985 (Ex.P4) and 11.11.19 85 (Ex.P8) and hence they are not binding on him. It was also contended that the onus of proving the receipts and payments, in violation to the provisions of the FERA, 1973 lays on the appellant/ complainant. 3.1.10. After giving a personal hearing to the accused Khader Sulaiman and his counsel on 16.9.1989, the adjudication authority, viz. Additional Director of Enforcement, by proceedings dated 11.10.1989 (Ex.P7), held that Khader Sulaiman had contravened the provisions of Sections 9(1)(b) and 9(1)(d) of the FERA, 1973 and imposed a penalty of Rs.65,000/- and Rs.60,000/- for the said offences respectively, in addition to the confiscation of Rs.30,000/- under Section 63 of the FERA, 1973. 3.2. In the light of the evidence of PW1 and the documentary evidence Exs.P4, P8 and P9, the appellant contended that the accused Khader Sulaiman committed the offence punishable under Section 9(1)(d) r/w 56(1)(1) for distributing Rs.1,02,700/- in July 1985 and Rs.2,79.600/- during July and September 1985; under Section 9(1)(d) r/w 56 (1)(ii) for distributing Rs.20,000/- in November 1985; under Section 9(1)( b) r/w 56(1)(i) for receiving payment of Rs.1,03,000/- in May 1985 and Rs.1,17,000/- in August 1985; and under Section 9(1)(b) r/w 56(1)( ii) for receiving payment of Rs.96,500/- in July 1985, Rs.67,000/- in August 1985, and Rs.50,000/- in October 1985, as the accused failed to prove that he had requisite permission from the Reserve Bank of India for receiving the amount from a person resident outside India and disbursing the same to the person residing in India. 3.3.1. In defence, Khader Sulaiman marked a copy of the letter dated 11.11.1985 (Ex.D1) addressed to the Special Director of the Enforcement Directorate, complaining that he was tortured and forced by the officers of the Enforcement Directorate to give a statement (Ex.P4), and denied his complicity in the crime. 3.3.2. The accused Khader Sulaiman contended that: (a)the learned Magistrate ought not to have taken cognizance of the offences for want of opportunity notice contemplated under Section 61 (2)(ii) of the FERA, 1973; (b)the statements marked as Exs.P4, P8 and P9 cannot be relied upon, as the contents of the same were retracted by letter dated 11.11.1985 (Ex.D1), and by a telegram marked as Ex.P11, as well as in their respective bail applications; (c)the non-examination of S.K.Haja Mohideen, a person resident outside India, at whose instance the amounts were said to have been received and paid to the persons in India vitiates the case of the prosecution; (d)the non-examination of the recipients of the amount renders the case of the prosecution unbelievable and therefore, no reliance could be placed on the seven sheets (Ex.P3 series) said to have been seized from Khader Sulaiman; and (e)the failure to examine the bankers through whom the amounts were said to have been disbursed by demand drafts renders the prosecution case untrustworthy. 4. The learned Additional Chief Metropolitan Magistrate (E.O.I), by a common judgment dated 7.4.1994, accepted the contentions of the accused-Khader Sulaiman and acquitted him of all the four charges, holding that: (a) the statements of the accused Khader Sulaiman were obtained by force and coercion; (b) the statement (Ex.P4) obtained from the accused Khader Sulaiman while he was under illegal custody could not be relied upon; (c) the prosecution failed to prove the charges against the accusedKhader Sulaiman by independent witness, satisfactorily; and (d) Ex.P3 series could not be relied upon for want of Mahazar witnesses to the same; Hence, C.A.Nos.23, 31, 32 and 33 of 1995. 5.1.1. The Criminal Appeal No.148 of 1995 is directed against the judgment of acquittal dated 15.6.1994 in C.C.No.333 of 1993 of the learned Additional Chief Metropolitan Magistrate (E.O.II), Chennai. 5.1.2. The case of the prosecution in C.C.No.333 of 1993, in brief, is stated as follows: 5.1.3. P.Krishnasamy and J.Sampath Kumar are the first and second accused respectively in C.C.No.333 of 1993. 5.1.4. P.W.1, equipped with a search warrant (Ex.P1) dated 9.7.1991 issued under Section 37 of the FERA, 1973 by the Assistant Director of Enforcement, conducted a search in the business premises of Krishnasamy, viz., Raja Traders at No.58, Thana Street, Purasawalkam, Madras 600 007 on 9.7.1991 and seized certain incriminating documents, viz. telephone file containing telephone bills and other documents (Ex.P3 series) and a diary (Ex.P4), under a mahazar report dated 9.7.1991 (Ex.P2). Krishnasamy gave a statement (Ex.P5) to PW1 at the time of search on 9.7.1991. 5.1.5. In Ex.P5, a confession statement dated 9.7.1991, the first accused-Krishnasamy had narrated the manner in which he was dealing in foreign exchange as per the instructions of Srinivasagam of Colombo. He had also explained that the documents seized from his residence on 9.7.1991, under Ex.P3 series, are related to the telephone bills relating to the telephone No.661577; the telephone book containing telephone numbers of the second accused-Sampath Kumar and other relatives and friends and his connection with them in the dealings of foreign exchange. 5.1.6. Thereafter, Krishnasamy appeared before P.W.1 on 10.7.1991, in response to the summon marked as Ex.P6 and again gave a statement dated 10.7.1991 (Ex.P7), in his own handwriting, wherein, the first accused-Krishnasamy confessed that he disbursed most of the money to Basheer and some to Roshan, Murugesh of Mayura Textiles and Murugesh of Nathan Avenue, Harrington Road, and gave the details relating to the said disbursement of funds. 5.1.7. On the same day, namely 10.7.1991, after identifying one Roshan of Madras, first accused-Krishnasamy gave another statement ( Ex.P8), clarifying that he delivered Rs.20,000/- to one Roshan, as stated in Ex.P5. 5.1.8. P.W.1. also obtained a statement from one Perumal, who is a partner of Raja Traders, Madras, on 16.7.1991, and the same was marked as Ex.P10. 5.1.9. The second accused Sampath Kumar, appeared before P.W.1 on 29.7.1991, and gave a statement (Ex.P9), in his own handwriting, confirming that he was a partner of SRK Bankers along with his brother, sister, sister's husband-Srinivasagam, at whose instance, the amounts were received and paid through Muthuraman. 5.1.10. Simultaneously, the Enforcement Officer P.Ganesan, (P.W.2), executed the warrant dated 9.7.1991 issued under Section 37 of the FERA, 1973 by the Assistant Director of Enforcement, and conducted a search on 10.7.1991, in the place of SRK Bankers (Office cum house) at No.12B, Shastri Road, Thillai Nagar, Trichy, in the presence of two independent witnesses and one Muthuraman, Managing Partner of SRK Bankers. During the search, some incriminating documents, viz., five sheets and Rs.40,000/- were seized under mahazar report (Ex.P11). Two incriminating documents were seized from Muthuraman and they were marked as Ex.P12 series. Muthuraman gave a statement (Ex.P13) during the search on 10.7.1991, confirming his connection in the dealings of foreign exchange along with the second accused-Sampath Kumar, as per the instructions of Srinivasagam of Colombo. 5.1.11. On the direction of the Assistant Director of Enforcement ( Ex.P14), the Enforcement Officer, K.Dhandayuthapani (P.W.3), conducted a search in the house of Krishnasamy at No.6, Diwan Bahadur Shanmugam Salai, Chennai- 600010 on 9.7.1991 and one Bommamani, wife of Krishnasamy, alone was present at the time of search. During the search, some documents, 100 US dollars as travellers cheque and 24 US dollars were seized, under mahazar report (Ex.P15). The documents and US dollars seized were 12 in number, marked as Ex.P16 series. On the same day, viz., 9.7.1991, the second accused Sampath Kumar appeared before P.W.3 and gave a statement marked as Ex.P17. 5.1.12. While interrogating one Jakbar Nissar on 8.4.1991 in connection with some other case against him, the Chief Enforcement Officer, R.Chakrapani, P.W.4, seized certain documents from him which contained the telephone number of the first accused, viz. 661577, and slips containing code words, viz., THIRU MECKA. Based on the said information, the first accused-Krishnasamy was questioned on 30.7.199 1 and a statement was obtained from him, which was marked as Ex.P18, wherein the code word 'THIRU MECKA' was explained as follows: T H I R U M E C K A 1 2 3 4 5 6 7 8 9 0 In Ex.P18, the first accused Krishnasamy, also explained the modus operandi adopted in receiving the amount from one Srinivasagam and disbursing the same to one Nissar. 5.2.1. On 19.7.1991, Krishnasamy and Sampath Kumar, by letters dated 19.7.1991 (Exs.P19 and P21 respectively) retracted their earlier confessional statements stating that the same were obtained by threat and coercion. 5.2.2. Based on the above statements, a show cause notice dated 21.2 .1992 (Ex.P23) was issued as to why adjudication proceedings as contemplated under Section 51 of the Act should not be held against them for the alleged contravention of Sections 9(1)(b) and 9(1)(d) r/w 56(1 )(i) of FERA, 1973. 5.2.3. Pursuant to the above show cause notice (Ex.P23), the first and second accused were heard in person by the Adjudication Officer, who by an adjudication order dated 22.1.1993 (Ex.P26) held that first and second accused contravened Sections 9(1)(b) and 9(1)(d) of the FERA, 1973 imposed the following penalties, viz., the first accused Krishnaswamy should pay a fine of Rs.2,50,000/- for contravention of Section 9(1)(b) of the FERA,1973 and pay a further fine of Rs.2,50,00 0 /- for contravention of Section 9(1)(d) of the FERA, 1973 and that the second accused-J.Sampath Kumar should pay a fine of Rs.2,00,000/- for contravention of Section 9(1)(b) of the FERA,1973 and pay a further fine of Rs.2,00,000/- for contravention of Section 9(1)(d) of the FERA, 1973, apart from confiscating Indian currency of Rs.40,000.00, and releasing US dollars 124/- to first accused with a direction that the same should be surrendered to an authorized dealer in Foreign Exchange as required under Section 8(3) of the FERA,1973 within 15 days of the release and submit proof thereof to the Enforcement Officer. 5.2.4. Based on the above investigation and the evidence collected, a criminal case was lodged against the first accused and second accused in C.C.No.333 of 1993 on the file of the learned Additional Chief Metropolitan Magistrate (E.O.), wherein the first accused and second accused were tried for the following charges: (i) That they, during the period starting from January, 1991 to July, on the directions of Srinivasakam of Ceylon, received Rs.1,15,26,000 /- in India from person who were unauthorized to deal in foreign exchange thereby committed an act contrary to Section 9(1)(b) of the FERA,1973 and punishable under Section 56(1)(i) of the above said Act; (ii) That first accused, who was unauthorized to deal with foreign exchange, on the directions of Srinivasakam of Ceylon, delivered Rs.1 ,1 5,26,000/- to various persons in India thereby committed an act contrary to Section 9(1)(d) of the FERA, 1973 punishable under Section 56(1)(i) of the above Act; (iii) That second accused, who was not empowered to deal with foreign exchange, on the directions of Srinivasakam of Ceylon received Rs.97 ,40,000/- from persons who are not empowered to deal with Foreign Exchange committed an act contrary to Section 9(1)(b) of the FERA, 19 73 punishable under Section 56(1)(i) of the above said Act; (iv) That second accused, who was not empowered to deal with foreign exchange, on the directions of Srinivasakam of Ceylon delivered Rs.97 ,00,000/- to various persons thereby committed an act contrary to Section 9(1)(d) of the FERA, 1973 punishable under Section 56(1)(i) of the above said Act. 5.2.5. On behalf of the accused it was contended before the learned Additional Chief Metropolitan Magistrate (E.O.), Chennai that: a. the statements of the respondents/accused cannot be relied upon in view of their respective retraction letters (Exs.P19 and P21); b. non-examination of Srinivasagam as well as the persons who paid or received the amount on the instructions of Srinivasagam, vitiates the prosecution case; and c. the appellant/complainant had not proved the charges against the accused beyond reasonable doubt. 5.2.6. The learned Additional Chief Metropolitan Magistrate, by judgment dated 15.6.1994 accepting the contentions made on behalf of the accused, held that the accused had not contravened Sections 9(1)(b) and 9(1)(d) of the FERA, 1973 and hence they are not guilty under Section 56(1)(d) of the FERA, 1973 and released the accused under Section 248(1) Crl.P.C. Hence, Criminal Appeal No.148 of 1995. 6. Mr.K.Kumar, learned counsel appearing on behalf of the appellants contends that: (a) The statements of the accused/respondents in respective cases ( Exs.P4, P8 and P9 in Crl.A.Nos.23, 31, 32, and 33 of 1995 and Exs.P5, P7, P8, and P9 in Crl.A.No. 148 of 1995) which are made to the Enforcement Officers, who are not Police Officers within the meaning of Section 24 of the Indian Evidence Act are admissible in evidence and are binding on the accused, and, moreover, the same corroborate with the evidence of the Investigating Officers and other documentary evidence that are seized at the time of search in the respective cases. (b) If the amounts were received and disbursed of in the course of normal transactions, argued that, there would not be any necessity for any secretive description or codes used for disbursement of the amounts; (c) The retraction letter (Ex.D1) and the retraction telegram (Ex.P11 ) in Crl.A.Nos.23, 31, 32, and 33 of 1995 and the retraction letters (Exs.P19 and P21) in Crl.A.No.148 of 1995, much less the statements made in the bail application that the statements were obtained by the Enforcement Officers by using force and coercion are liable to be rejected as untrustworthy, as the respondents/ accused did not complain anything about such force and coercion to the Magistrates, when they were produced for remand; (d) Since the accused were arrested and produced before the Magistrates concerned within 24 hours in the respective cases, the statements made before the respective Enforcement Officers could not be said to have been obtained during the illegal custody; (e) The non examination of the persons who either paid or received the money on the instructions of the persons resident outside India, or the bank through which the amounts were disbursed, in the respective cases, is not fatal to the case of the prosecution; (f) Placing reliance on RAMESH CHANDRA MEHTA Vs. STATE OF WEST BENGAL reported in AIR 1970 SC 940, ISSA YACUB BICHARA Vs. STATE OF MYSORE reported in AIR 1971 MYSORE 7, and AIR 1981 KERALA 7, it was contended that the statements of the respondents/accused since corroborates with: i. the material and documentary evidence in the respective cases; ii. the recoveries of currency - both Indian Rupees and U.S. Dollars, as the case may be; and iii. is supported with the evidence of the Investigation Officers in the respective case, the accused are held to be guilty for the contraventions and are therefore, liable to be convicted for the respective charges; (g) The notice issued for adjudication is a sufficient compliance of opportunity notice contemplated under Section 61(2)(ii) of the FERA, 1973. In this regard, reliance was placed on the following decisions: (a) JOTHIMANI NADAR A.S.O., Vs. THE DEPUTY DIRECTOR, ETC. reported in 1989 LW (Crl) 43; (b) ISMAIL Vs. ASSISTANT DIRECTOR, ENFORCEMENT, MADRAS reported in 1990 LW (Crl) 376; and (c) NEW INDIA CORPORATION Vs. GOVERNMENT OF INDIA reported in 1970 Crl.L.J.295 (DB); and (h) Since the statement of co-accused could be relied upon as held in MORARJI GOCULDAS B&w CO. LTD. Vs. UNION OF INDIA reported in 1996 (8 3) ELT 258, the statement of the accused in C.C.No.333 of 1998 stands proved as the same corroborates with the evidence of coaccused and that of the co-partner of the second accused, viz., Sampath Kumar. 7.1. Mr.M.M.Abdul Razack, learned counsel for the respondent/accused in Crl.A.Nos.23, 31, 32, and 33 of 1995 and Mr.P.Rajarathinam, learned counsel appearing for the respondents/accused in Crl.A.No.148 of 19 95, took me through both the oral and documentary evidence on record, that are referred to above, in detail and reiterated the contentions that are raised on behalf of the respondents/ accused before the respective trial Courts. 7.2. Placing reliance on the decision in ASSISTANT COLLECTOR OF CENTRAL EXCISE, RAJAMUNDRY Vs. DUNCAN AGRO INDUSTRIES LTD., reported in 2 000 Crl.L.J. 4035, the learned counsel for the respondents/accused contend that even though the statements were made before the customs authorities, who are non-police personnel, the Court is duty bound to see whether such statements are admissible in law, satisfying the test contemplated under Section 24 of the Indian Evidence Act, and therefore, the statements made by the accused are liable to be scrutinized by the Court in the same manner as confession made by an accused person to any non-police personnel and the Court has to be satisfied in such cases, that any inculpatory statement made by the accused person to the Gazetted Officer must also pass the test prescribed in Section 24 of the Indian Evidence Act. 7.3. Both the learned counsel for the respondents contend that assuming the respondents/accused could be convicted based on the evidence on record for the respective charges, no punishment can be imposed on them in view of the repeal of the FERA, 1973 and enactment of FEMA, 1999, where there is no provision for punishment. In this regard reliance was placed on the decision in STATE Vs. GHAN SINGH reported in 1990 SCC (Crl.) 1512 and T.BARAI Vs. HENRY AH HOE reported in AIR 198 3 SC 150. 7.4. Mr.M.Abdul Razack, learned counsel for the respondents in Crl.A.Nos.23, 31, 32, and 33 of 1995 emphatically contends that the charge framed in C.C.No.676 of 1991 is not sustainable in law as the said charge is with reference to the payments made in the month of November, 1985, with reference to which there is no evidence available on record, and on the other hand, the evidence is related to the payments said to be made in October, 1985. 8.1. In reply, Mr.K.Kumar, learned counsel for the appellant contends that assuming the charge in C.C.No.676 of 1991 is not based on material evidence, since there are sufficient evidence on record to prove that the accused has committed contravention of Section 9(1)(d) r/ w 56(1)(ii) of the FERA,1973 for the amount paid in the month of October, 1985, he cannot be acquitted for such contravention, as at the best the judgment of acquittal in C.C.No.676 of 1991 has to be set aside and the matter has to be directed to the trail Court to direct a new trial on the charges framed, in whatever manner he seems fit as provided under Section 464 (2) Cr.P.C. 8.2. Mr.K.Kumar, learned counsel for the appellant also contends that in view of the saving clause in the FEMA, 1999, namely Section 4 9(4 ) of the FEMA, 1999, the offence said to have been committed under the FERA, 1973 should be dealt with under the provisions of the repealed Act, namely the FERA, 1973 itself, notwithstanding the repeal, as the Supreme Court has time and again held that the offence committed under the FERA, 1973 are serious in nature. 9. I have bestowed my careful consideration to the