FAO No.4450 of 2007 (O&M) -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH FAO No.4450 of 2007 (O&M) Date of Decision: 21.5.2010 Jagir Singh ..Appellant. Vs. Appellate Tribunal for Foreign Exchange and another ..Respondents. CORAM: HON'BLE MR.JUSTICE RAKESH KUMAR JAIN Present: Mr.R.S.Bajaj, Advocate for the appellant. Mr.D.D.Sharma, Advocate for respondent No.2. RAKESH KUMAR JAIN, J. Three persons, namely, Jagir Singh, Rajinder Singh and Darshan Singh were held guilty for contravening the provisions of Section 8 (1) and 8(2) read with Section 5D of the Foreign Exchange Regulation Act, 1973 (for short `FERA Act') read with Sections 49(3) and (4) of the Foreign Exchange Management Act, 1999 (for short `FEMA Act') and were penalised to the tune of Rs.2 lacs each by the Deputy Director, Enforcement Directorate, Jalandhar City, Jalandhar (for short the `Deputy Director') vide its order dated 30.9.2003 and were directed to deposit penalty amount in his office by cash or bank draft within 45 days from the date of receipt of the order. Out of the aforesaid three persons, only Jagir Singh and Darshan Singh challenged the order of the Deputy Director by way of an FAO No.4450 of 2007 (O&M) -2- appeal before the Appellate Tribunal for Foreign Exchange (for short 'the Tribunal'). Jagir Singh preferred Appeal No.642 of 2003 whereas Darshan Singh preferred Appeal No.647 of 2003. Both the appeals were consolidated by the Tribunal and were dismissed vide its order dated 17.5.2007. The appellants were directed to deposit the whole amount of penalty from the date of receipt of copy of the order failing which the respondents were given liberty to recover the same in accordance with law and seized amount of Indian currency of Rs.10,500/- was also ordered to be appropriated towards penalty in respect of the appellant Jagir Singh. Aggrieved against the order dated 30.9.2003 passed by Deputy Director and 17.5.2007 passed by the Tribunal, two appeals have been preferred before this Court, namely, FAO No.4450 of 2007 titled as Jagir Singh Vs. Appellate Tribunal for Foreign Exchange and another arising out of Appeal No.642 of 2003 and FAO No.4451 of 2007 titled as Darshan Singh Vs. Appellate Tribunal for Foreign Exchange and another arising out of Appeal No.647 of 2003. Since common questions of facts and law are involved in both these appeals., therefore, the same arguments have been addressed by the learned counsel for the parties and as such, both the appeals are being disposed of by this common order. In brief, the facts emanating from the impugned orders are that residential premises of Jagir Singh and Rajinder Singh were searched by the officials of Enforcement Directorate on 22.12.1994 having a tip of that they are dealing in foreign currency in contravention of the provisions of Sections 8(1) and 8(2) of the FERA Act. At the time of search, both Jagir Singh and Rajinder Singh were not present. However, certain incriminating FAO No.4450 of 2007 (O&M) -3- documents were seized. On 20.12.1994 one Satpal, employee of Jagir Singh and Rajinder Singh was examined who deposed that he was employee of Jagir Singh and Rajinder Singh on a monthly salary of Rs.1,000/-, both were dealing in sale and purchase of foreign exchange and he used to carry the foreign exchange to their respective residential premises on their directions. He disclosed the names of various persons, who used to sell foreign exchange to his employers. One such person Darshan Singh @ Pappu was examined on 22.12.1994 and his residential as well as business premises were also search resulting into seizure of certain incriminating documents. Darshan Singh, in his statement deposed that he was selling foreign exchange to Jagir Singh and Rajinder Singh. He had sold foreign exchange equivalent to Rs.10,70,000/-to them during three months starting from October to December 1994. Rajinder Singh confessed the charges against himself and incriminated Jagir Singh as well but Jagir Singh denied the charges in his statement. The Deputy Director relied upon the following documents: 1. Statement dated 23.1.1995, 25.1.1995, 24.1.1995, 27.1.1995, 30.1.1995 and 31.1.1995 of Sh.Jagir Singh. 2. Statement dated 2.1.1995 of Sh.Rajinder Singh @ Bawa son of Sh.Raghubir Singh, 88 Pawan Nagar, Amritsar. 3. Statement dated 22.12.1994 of Sh.Darshan Singh s/o Amrik Singh, Gali No.9, Tagore Nagar, Jalandhar. 4. Statement dated 20.12.1994 of Sh.Sat Pal s/o Sh.Dharampal r/o 100-Pawan Nagar, Amritsar. 5. Documents recovered and seized from the residential premises of Sh.Jagir Singh on 20.12.1994. 6. Documents recovered and seized from the residential premises of Sh.Rajinder Singh @ Bawa on 20.12.1994. FAO No.4450 of 2007 (O&M) -4- 7. Letter No.CX-50/95/93 dated 17.4.1995 of Govt. Examiner of Questioned Documents, Shimla along with report dated 31.3.1995 8. Documents recovered and seized from the residential premises of Sh.Darshan Singh @ Pappu M/s Preet STD PCO, Dayal Nagar, Jalandhar In appeal before the Tribunal, Jagir Singh had stated that he had not received any notice of hearing and the impugned order has been passed against him ex parte. He also stated that statements of Rajinder Singh and Darshan Singh could not be relied upon against him as they were co- accused and their statements were not corroborated by independent evidence. The other appellant Darshan Singh urged that he retracted his confessional statement subsequently vide letter dated 30.12.1994 as his statement was recorded under duress and threat, which cannot be made the basis without there being any corroborate piece of evidence. The learned Tribunal extensively dealt with the arguments raised by the appellants. It was found that statement of Darshan Singh was recorded on 22.12.1994 who had admitted in unequivocal terms that he has been selling foreign exchange to Jagir Singh and Rajinder Singh. He had sold foreign exchange worth Rs.4 lacs during the month of October 1994, Rs.3.7 lacs during the month of November 1994 and Rs.3 lacs during the month of December 1994. Seized documents were explained by him where he decoded the foreign exchange transactions. Statement of Rajinder Singh was recorded on 2.1.1995 who admitted his partnership with Jagir Singh and stated that for the last one year and two months, Jagir Singh was sitting at his shop from where he was conducting the sale and purchase of foreign exchange for which money was provided by Jagir Singh. Seven documents were seized FAO No.4450 of 2007 (O&M) -5- from his premises where documents No.1,4,5, and 6 were stated to be written by Jagir Singh, dealing in the transactions of sale and purchase of foreign exchange. Statement of Satpal, employee of Rajinder Singh and Darshan Singh was also recorded who had stated that both were partners. They have been selling imported goods as well as conducted business of sale and purchase of foreign currency. Jagir Singh denied any acquaintance with Darshan Singh but admitted with Rajinder Singh stating that he was his tenant and is having relationship of the landlord and tenant with him. Incriminating documents were recovered from the premises of Jagir Singh during the search and were sent to Government Examiner on 23.3.1995, who had reported on 31.3.1995 confirming the charges and the writing of Jagir Singh on the incriminating documents. The statement of Rajinder Singh is inculpatory but statement of Jagir Singh is ex-culpatory, however, Darshan Singh and Rajinder Singh have implicated Jagir Singh in their confessional statements. Rajinder Singh has specifically admitted that he has purchased foreign currency. Darshan Singh stated that he has sold foreign exchange to Jagir Singh and Rajinder Singh. However, the said Darshan Singh had retracted from his confessional statement but the learned Tribunal had found that such a retraction without any piece of evidence is of no use. Insofar as the question of opportunity to Jagir Singh is concerned, the Tribunal has found that counsel appearing on his behalf had sought several extensions for filing written statements and subsequently for hearing on three dates from January to September 2003 but he failed to appear on the last date of hearing i.e. on 17.9.2003 therefore, the case has been rightly decided by the Adjudicating Authority on the basis of evidence available on FAO No.4450 of 2007 (O&M) -6- record. It was also found that though Jagir Singh had not admitted the charge in his statement but he did not deny his acquaintance with Rajinder Singh, Darshan Singh and Satpal and also could not explain as to why they would unnecessarily implicate him in their statements about his indulgence in purchasing and selling foreign exchange in contravention of the provisions of the FERA Act. On these premises, both the appeals were dismissed by the Tribunal. Opening his arguments, counsel for the appellant has submitted that statement of co-accused is a very weak piece of evidence and cannot be relied upon in order to hold Jagir Singh as guilty. In respect of Darshan Singh it is submitted that since he has retracted from his confessional statement, which was recorded under duress and undue influence, the same cannot be relied upon against him. On the contrary, learned counsel for the respondent has argued that unlike the statement made under Section 161 of the Code of Criminal Procedure, 1973 (for short `Cr.PC'), the statement made under Section 40 of the FERA Act is a statement made during the judicial proceedings, therefore, if a statement by a person inculpating not only himself but also another person it can be used as substantive piece of evidence against that another person. In this regard, he relied upon a decision of the Supreme Court in Naresh J.Sukhawani Vs. Union of India 1995 Suppl(4) SCC 663. He also relied upon decision of the Supreme Court in the case of K.I.Pavunny Vs. Assisant Collector, Central Excise Collectorate, Cochin 1997(3) RCR (Criminal) 71. It is submitted that Darshan Singh should have led some evidence to wriggle out of the confessional statement FAO No.4450 of 2007 (O&M) -7- made by him before the Investigating Officer that he has been tortured or had promised to make him approver. In the absence of any evidence or statement like the same, the statement already made can not be treated to be involuntary. I have heard both the learned counsel for the parties and have perused the record with their able assistance. Before adverting to the merits of the case, some relevant provisions of the FERA Act are required to be noticed: Section 8 “Restrictions on dealing in foreign exchange – (i) 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. Explanation- For the purposes of this sub-section, a person, who deposits foreign exchange with another person or opens an account in foreign exchange with another person, shall be deemed to lend foreign exchange to such other person. (2)Except with the previous general or special permission of the Reserve Bank, no person, whether an authorised dealer or a money-changer or otherwise, shall enter into any transaction which provides for the conversion of India currency into foreign currency or foreign currency into Indian currency at rates of exchange other than the rates for the time being authorised by the Reserve Bank. FAO No.4450 of 2007 (O&M) -8- (3)Where any foreign exchange is acquired by any person, other than an authorised dealer or a money-changer for any particular purpose, or where any person has been permitted conditionally to acquire foreign exchange, the said person shall not use the foreign exchange so acquired otherwise than for that purpose or, as the case may be, fail to comply with any condition to which the permission granted to him is subject, and where any foreign exchange so acquired cannot be so used or the conditions cannot be complied with the said person shall, within a period of thirty days from the date on which he comes to know that such foreign exchange cannot be so used or the conditions cannot be complied with, sell the foreign exchange to an authorised dealer or to a money- changer. (4)For the avoidance of doubt, it is hereby declared that where a person acquires foreign exchange for sending or bringing into India any goods but sends or brings no such goods or does not send or bring goods of a value representing the foreign exchange acquired, within a reasonable time or sends or brings any goods of a kind, quality or quantity different from that specified by him at the time of acquisition of the foreign exchange, such person shall,unless the contrary is proved, be presumed not to have been able to use the foreign exchange for the purpose for which he acquired it or, as the case may be, to have used the foreign exchange so acquired otherwise than for the purposes for which it was acquired. (5)Nothing in this section shall be deemed to prevent a person from buying from any post office, in accordance with any law or rules made thereunder for the time being in force, any foreign exchange in the form of postal orders or money orders. Section 40 Power to summon person to give evidence and produce documents - FAO No.4450 of 2007 (O&M) -9- (1)Any gazetted officer of Enforcement shall have power to summon any person whose attendance he considers necessary either to give evidence or to produce a document during the course of any investigation or proceeding under this Act. (2)A summon to produce documents may be for the production of certain specified documents or for the production of all documents of a certain description in the possession or under the control of the person summoned. (3)All persons so summoned shall be bound to attend either in person or by authorised agents, as such officer may direct; and all persons so summoned shall be bound to state the truth upon any subject respecting which they are examined or make statements and produce such documents as may be required: Provided that the exemption under section 132 of the Code of Civil Procedure, 1908 (5 of 1908), shall be applicable to any requisition for attendance under this section. (4) Every such investigation or proceeding as aforesaid shall be deemed to be a judicial proceeding within the meaning of sections 193 and 228 of the Indian Penal Code, 1860 (45 of 1860).” According to the aforesaid provisions of the FERA Act, Sections 8(1) and (2) provides that except with the previous general or special permission of the Reserve Bank, no person, whether an authorised dealer or a money-changer or otherwise, shall enter into any transaction which provides for the conversion of Indian currency into foreign currency or foreign currency into Indian currency at rates of exchange other than the rates for the time being authorised by the Reserve Bank nor could adventure any such trade without permission. Section 40 of the FERA Act provides that any gazetted officer of Enforcement shall have power to summon any FAO No.4450 of 2007 (O&M) -10- person whose attendance he considers necessary either to give evidence or to produce a document during the course of any investigation or proceeding under this Act. A summon to produce documents may be for the production of certain specified documents or for the production of all documents of a certain description in the possession or under the control of the person summoned. All persons so summoned shall be bound to attend either in person or by authorised agents, as such officer may direct; and all persons so summoned shall be bound to state the truth upon any subject respecting which they are examined or make statements and produce such documents as may be required. Every such investigation or proceeding as aforesaid shall be deemed to be a judicial proceeding within the meaning of sections 193 and 228 of the Indian Penal Code, 1860 (45 of 1860). During the search of the premises of Jagir Singh and Rajinder Singh, certain incriminating documents were recovered. Rajinder Singh made an inculpatory statement. Satpal employee of both Jagir Singh and Rajinder Singh, namely, Darshan Singh who also made an inculpatory statement admitting to have sold foreign currency to the tune of Rs.10,70,000/- to Jagir Singh and Rajinder Singn. However, later on tried to retract from his statement on the ground that it was recorded under duress and threat but he could not name any person who put him under duress or threat. Jagir Singh though made exculpatory statement but he did not deny his relations or acquaintance with Rajinder Singh, Darshan Singh and Satpal. They are all parts of the same transactions or chain. They could not deny to have violated the provisions of Sections 8(1) and (2) of the FERA Act. The only way to wriggle out of this penalty was made by the FAO No.4450 of 2007 (O&M) -11- appellants, namely, Jagir Singh by contending that he cannot be penalised for the statement made by the co-accused againt him and Darshan Singh by retracting it in his confessional statement. Insofar as the case of Jagir Singh is concerned in the case of Naresh J.Sukhawani Vs. Union of India (supra), the facts of the case were that custom officials at Sahar International Airport, Bombay apprehended one Sukhawani Solanki when he was attempting to export foreign exchange out of India valuing Rs.13,27,212/-. His statement was recorded under Section 108 of the Customs Act, 1962 wherein he had stated that one Subhash Dudani had given him the currency to hand over to Mr.Kenny at Hong Kong. The Customs Officials apprehended Subhash Dudani, who in his statement recorded under Section 108 stated that foreign exchange given to Solanki was received from Rajesh Sukhawani. Thereafter, the custom officials traced the petitioner and searched his premises but nothing incriminating was recovered. Customs Officials initiated proceedings for confiscation of foreign exchange and used the statement of Dudani against the petitioner. The Additional Collector confiscated the foreign currency and imposed a penalty of Rs.1 lac. The confiscation was challenged in appeal which was set aside by the Collector but on suo motu revision, the Government reversed the order of the Additional Collector which was affirmed by the High Court. It was argued before the Supreme Court that statement of co- accused could be used only to corroborate other evidence as one of the circumstances under Section 30 of the Evidence Act but it cannot be used as substantive evidence without corroboration from other independent evidence. Except the statement of Dudani, there is no other independent FAO No.4450 of 2007 (O&M) -12- evidence and the same cannot be pressed into service to arrive at the conclusion that the petitioner (Naresh J.Sukhawani) was involved in the passing of foreign currency. In this regard, the Supreme Court has held that statement made before the Custom officials is not a statement recorded under Section 161 of the Criminal Procedure Code, 1973, therefore, it is a material piece of evidence collected by Custom officials under Section 108 of the Customs Act, 1962. The material incriminates the petitioner inculpating him in the contravention of the provisions of the Customs Act. The material can certainly be used to connect the petitioner in the contravention inasmuch as the statement of Dudani clearly inculpates not only himself but also the petitioner. Therefore, it can be used as substantive evidence connecting the petitioner with the contravention by exporting foreign currency. The law laid down in the aforesaid case of Naresh J.Sukhawani (supra) answers the objection raised by the learned counsel for Jagir Singh because under Section 40 of the FERA Act the proceedings before the official of the Directorate is a judicial proceeding unlike the statement made before the police official under Section 25 of the Indian Evidence Act as held by the Supreme Court in the case of K.I.Pavunny Vs. Assistant Collector, Central Excise Collectorate, Cochin (supra). Insofar as the case of Darshan Singh is concerned, he failed to lead any evidence to the effect that while retracting from his confessional statement that it was involuntary as he was physically tortured or was put under duress etc. A bald statement has been made in order to wriggle out from his confessional statement which has rightly not been believed by the learned Tribunal. There is one more aspect of the matter which needs to be FAO No.4450 of 2007 (O&M) -13- noticed i.e. acquaintance of Jagir Singh with Rajinder Singh, Darshan Singh and Satpal and the fact that he could not explain as to why they would illegally and unnecessarily implicate him in this case specially when a statement has been made by Rajinder Singh that he was dealing in the foreign exchange with the money provided by Jagir Singh. Insofar as opportunity of hearing is concerned, the finding recorded by learned Tribunal in para 16 of the impugned judgment, clearly answers the objection raised by learned counsel for the appellant which need not be dilated any further. In view of the above, I do not find any merit in the aforesaid appeals and as such, the same are dismissed, however, without any order as to costs. (Rakesh Kumar Jain) 21.5.2010 Judge Meenu