Case: A.Tajudeen Vs. Union Of India

3. Before adjudicating upon the merits of the controversy, it is essential to narrate the factual position leading to the issuance of the aforesaid memorandum dated 12.3.1990. The facts as they emerge from the pleadings, and the various orders leading to the passing of the impugned judgment rendered by the High Court of Judicature at Madras (hereinafter referred to as, the High Court) on 28.9.2006, are being chronologically narratedThe appellant – A. Tajudeen is alleged to have made a statement to the Enforcement Directorate on 20.4.1989, wherein he acknowledged, that he had received a sum of Rs.1,40,000/- from Abdul Hameed. Out of the above amount, he paid a sum of Rs.60,000/- through his shop boy – Shahib, to Shahul Hameed (a relative of Abdul Hameed) of Village Pudhumadam. A further amount of Rs.20,000/- was paid to some friends of Abdul Hameed at Keelakarai, and remaining amount was retained by appellant himself. In the statement made on 20.4.1989, it was allegedly acknowledged by the appellant that Abdul Hameed was a resident of Singapore, and was running a shop located at Market Street, Singapore.(ii) On 25.10.1989, the officers of the Enforcement Directorate raided the residential premises of the appellant, namely, no. 6, Dr. Muniappa Road, Kilpauk, Madras. At the time of the raid, which commenced at 1.00 pm, his wife T. Sahira Banu was at the residence. The appellant - A. Tajudeen, also reached his residence at 1.30 pm, whilst the officers of the Enforcement Directorate were still conducting the raid. During the course of the raid, a sum of Rs.8,24,900/- in Indian currency was recovered from under a mattress from a bedroom of theresidence.(iii) A mahazar was prepared on 25.10.1989, depicting the details of the currency recovered from the raid. The said mahazar was prepared in the presence of two independent witnesses, namely, R.M. Subramanian and Hayad Basha. The above independent witnesses also affixed their signatures on the mahazar.(iv) At the time of the raid itself, the statement of the appellant - A. Tajudeen was recorded (on 25.10.1989). The relevant extract of the aforesaid statement of the appellant is being reproduced hereunder. It needs to be expressly noticed, that the appellant now allegedly disclosed the address of Abdul Hameed, as no. 24, Sarangoon Road,your officers searched my aforesaid house and seized a sum of Rs.8,24,900/- as set out in the Mahazar. I wanted to establish a jewellery shop in Madras. I commenced a jewellery shop in the name and style ofon 19.10.1989 at No. 12, Ranganathan Road, Nungambakkam, Madras-34. It is a partnership business wherein my wife T. Sahira Banu is a partner. For that I sold mygold jewels and also taken hand loans from my friends. The said business was started with a capital of Rs.2,20,000/- in myname. The other partner Mr. S. Muthuswamy of No. 20, Indira Nagar, Adyar (I do not remember his address) has contributed to the capital a sum of Rs.30,000/-.For expanding the said shop and for improving the business, I required about Rs.9,00,000/-. My relatives are working in Singapore and Malaysia.One Abdul Hameed from my native place is carrying on business for the past 15 years at no. 24, Sarangoon Road, Singapore. He is dealing in clothes, VCRs etc. He came down to Madras about 2 months back. At that time, he met me at my residence. I told him that a jewellery business to be commenced and that I require about Rs.9,00,000/- for the said business and to discharge certain small loans. Further I requested him to help me by providing the said money assuring to repay the same in 2 or 3time with small interest during his visit to India.He assured to contact me over phone, House telephone no. 666611 on reaching Singapore. The said Abdul Hameed, about 2 months back, called me over phone from Singapore and told me that as I requested to him, he had made arrangements for sending the sum of Rs.9,00,000/- and that he will inform me about the mode of transmitting the same. Thereafter during the 2nd week of this month, the said Abdul Hameed contacted me over phone. At that time he told me that he would send Rs.8,25,000/- in two installments being Rs.4,00,000/- and Rs.4,25,000/- and that the said money would be delivered at my house in the 3rd week or 4th week of this month through unknown person. Pursuant thereto, on 23.10.1989 around 9.00 pm an unknown person came to my house inquiring about me and gave me Rs.4,00,000/- stating that he is delivering the same on the instruction of Abdul Hameed of Singapore.Similarly another unknown person came to my house at 8.00 am on 24.10.1989 and delivered to me Rs.4,25,000/- claiming to be on the instructions of the said Singapore Abdul Hameed. I was keeping the said Rs.4,00,000/- and Rs.4,25,000/-, totaling to Rs.8,25,000/-, in my house which was received on the instruction of Abdul Hameed.The Enforcement Officer who searched the house seized the sum of Rs.8,24,900/- which I got in the aforesaid manner. The said Abdul Hameed who is residing at Singapore is my distant relative on the paternal side.He is living with his family at Singapore. He used to come down to my native lace, Pudhumadam Village, once in a year to visit his relatives. He is aged 45 years and of the height of about 5½ feet, fair complexion and medium built.The person who delivered the sum of Rs.4,00,000/- on the instructions of said Abdul Hameed did not disclose his name and address. He was about 35 years old and with medium height and medium built. He was wearing pants and shirt. He left within few minutes on delivering the sum of Rs.4,00,000/- to me and hence I could not notice other identifiable marks.Similarly the other person who came on 24.10.1989 and delivered the sum of Rs.4,25,000/- on the instructions of said Abdul Hameed also did not disclose his name and address. He must be around 40 years old. He is also medium built and also medium height. Since both of them left my house within a few minutes on delivering the said sums, I could not notice their identifiable marks. I was making arrangements to export readymade garments. In respect thereof, I required the place apart from my house to meet my customers. For that I have taken on rent room no. 402, in Ganpat Hotel, Nungambakkam High Road about 4-5 months back from its owner one M.R. Prabhakaran. I am using the telephone no. 477409 in the said shop, A/C machine and fridge available in the said room. Since Export business did not suit me, I left it. The said room is in myis ours)(v) During the course of the raid conducted on 25.10.1989, the appellant - A. Tajudeen, was detained by the officers of the Enforcement Directorate.His statement was again recorded on 26.10.1989 by the Chief Enforcement Officer, whilst he was in custody. Relevant portion of his above mentioned statement is being extractedhave earlier given statement before you on 25.10.1989. In that I have disclosed that by searching my house on 25.10.1989 your officers have seized a sum of Rs.8,24,900/- which I received from unknown persons on 23.10.1989 and 25.10.1989 on the instructions of Abdul Hameed of Singapore.This is true. On 25.10.1989, the said officers searched the jewellery shopin which my wife is a partner. At that time I was also there. In the said search no documents were seized. The other partner Mr. Muthusamy who is looking after the seized sum of Rs.8,24,900/- is not related to the said business. As stated by him, there is no connection between the said business and the sums seized.Today your officers searched my room at No. 402, Ganpat Hotel, Nungapakkam High Road, Madras-34 which I have taken on rent. I was there during the search. Since I have lost the key it was opened by a lock repairer.Pursuant to the said search a quotation from A.L. Textiles Mills dated 15.4.1989 was seized.Hereinbefore, in April last, I appeared before the officers and gave a statement. Today I was shown the statement which I have given before the officers on 20.4.1989. I have stated about the receipt of a sum of Rs.1,40,000/- through my shop boy, Shahib, on the instructions of said Abdul Hameed of Singapore and out of the same, I have disbursed Rs.60,000/- on the instructions of the said Abdul Hameed to Shahul Hameed at Pudhumadam and the payment of Rs.20,000/- to a friend in Keelakarai through my shop manager, Hasan. The said Shahul Hameed mentioned in the statement dated 20.4.1989 and Abdul Hameed disclosed in the statement dated 25.10.1989 is one and the same person. In the said statement dated 24.10.1989 I have stated that Abdul Hameed is running a fancy store in Market Street in Singapore. In the statement dated 25.10.1989, I have stated that Abdul Hameed is running a shop at Sarangoon Road, Singapore. Few months back, he has shifted his business from the Market Street to Sarangoon Road. In the statement dated 20.4.1989, I have stated that I am running a textile shopat Periyakadai Veethi, Ramanathapuram. In the statement dated 25.10.1989 I have stated that I am the proprietor ofat Salai Street. Periyakadai Veethi is used to be called as Salai Street. All that I stated in this statement areis ours)(vi) Whilst the appellant - A. Tajudeen was under detention of the Enforcement Directorate, the statement of his wife T. Sahira Banu was also recorded on 26.10.1989. The same was allegedly scribed by M.J. Jaffer Sadiq, a nephew, and then signed by T. Sahira Banu. In the above statement, T. Sahira Banu, the wife of A. Tajudeen admitted the recovery of Rs.8,24,900/- by the officers of the Enforcement Directorate, from the residence of the appellant i.e., no. 6, Dr. Muniappa Road, Kilpauk, Madras.(vii) On 27.10.1989, A. Tajudeen and T. Sahira Banu retracted their earlier statement(s), alleging that the same had been recorded against their will and under the threat and compulsion of the officers of the Enforcement Directorate.In response to the memorandum dated 12.3.1990, the appellant filed a reply (which is available on the record of the present case as Annexure P-9). In his reply, he denied having made any statement on 20.4.1989. He asserted, that a copy of the aforesaid statement dated 20.4.1989 had never been furnished to him, nor had been relied upon in the memorandum dated 12.3.1990. He also denied the factual contents of the statements dated 25.10.1989 and 26.10.1989. He denied having ever met Abdul Hameed. He also denied, that there was any occasion for him to ask for any loan from the said Abdul Hameed. He denied any acquaintanceship with the said Abdul Hameed. Insofar as the statements recorded on 25.10.1989 and 26.10.1989 are concerned, his specific assertion in his reply was, that he was compelled to make the above statements at the dictation of the officers of the Enforcement Directorate. He also asserted, that the said statements had been made under threat, coercion and undue influence. He highlighted the fact, that on the very day of his release from detention, i.e., on 27.10.1989, he had addressed a letter to the Enforcement Directorate, repudiating the factual position indicated in the statements made by him on 25.10.1989 and 26.10.1989. He also asserted, that a similar course of action had been adopted by his wife T. Sahira Banu, inasmuch as, she too had repudiated the statement recorded by her on 26.10.1989 at the office of the Enforcement Directorate through a separate communication dated 27.10.1989. Insofar as the currency recovered from his residence is concerned, his explanation was, that he had an established business under the trade name of Seemati Silks, which had an annual turnover of Rs.25 to 30 lacs. He also asserted, that his wife T. Sahira Banu had also business establishments including Seemati Matchings and Banu Jewellers, from which she was earning income. Besides the aforesaid business establishments, it was the contention of the appellant - A. Tajudeen, that he had several other business projects, from which he was also earning independent income.In addition to his financial status reflected hereinabove, it was also the case of the appellant, that he had taken hand loans. The amount which was recovered by the officers of the Enforcement Directorate from his residence on 25.10.1989, was comprised of all the above sources. He clearly and expressly denied, having received the aforesaid currency (Rs. 8,24,900/-) from a person resident in India, at the behest of a person not resident in India.5. Having examined the response of the appellant, the Additional Director of Enforcement, Southern Zone, Madras, by an order dated 22.4.1991, arrived at the conclusion, that the appellant was guilty of violating Section 9(1)(b) of the 1973 Act. Having so concluded, the seized amount of Rs.8,24,900/- was ordered to be confiscated. In addition, the appellant was imposed a penalty of Rs.1,00,000/- for contravening the provisions of Section 9(1)(b) of the 1973 Act. Dissatisfied with the order dated 22.4.1991 passed by the Additional Director of Enforcement, Southern Zone, Madras, the appellant preferred an appeal before the Foreign Exchange Regulation Appellate Board (hereinafter referred to as, the Appellate Board). The aforesaid appeal bearing number 316 of 1991 was allowed by an order dated 31.12.1993. While allowing the appeal, the Appellate Board directed the refund of penalty of Rs.1,00,000/- imposed on the appellant. The Appellate board also quashed the direction pertaining to the confiscation of Rs.8,24,900/- seized from the residence of the appellant.6. Aggrieved by the order passed by the Appellate Board, the Union of India through the Director of Enforcement preferred an appeal under Section 54 of the 1973 Act, before the High Court. The High Court allowed the above appeal being C.M.A. NPD no. 1282 of 1994 by an order dated 28.9.2006.While allowing the aforesaid appeal, the High Court placed reliance on the statement made by the appellant, before the officers of the Enforcement Directorate on 20.4.1989. The aforesaid statement was referred to, as having been voluntarily made by the appellant. The High Court expressed the view, that the statements recorded by the appellant on 25.10.1989 and 26.10.1989 were voluntarily made by him, and as such, the retraction of the said statements, was not accepted. Likewise, the High Court accepted the statement of T. Sahira Banu made at the office of the Enforcement Directorate at Madras on 26.10.1989, as voluntary. Her retraction of the said statement was also not accepted by the High Court. The High Court placed reliance on the fact, that the appellant had been produced before the Additional Chief Metropolitan Magistrate, Madras, during the course of his detention, but he had not indicated to the Magistrate during his production, that he and his wife were compelled to make the above statements, by the officers of the Enforcement Directorate. This was the primary reason for the High Court, in rejecting the retractions made by the appellant and his wife.

Reasoning:
we are of the view that the statements dated 25.10.1989 and 26.10.1989 can under no circumstances constitute the sole basis for recording the finding of guilt against the appellant. If findings could be returned by exclusively relying on such oral statements, such statements could easily be thrust upon the persons who were being proceeded against on account of their actions in conflict with the provisions of the 1973 Act. Such statements ought not to be readily believable, unless there is independent corroboration of certain material aspects of the said statements, through independent sources. The nature of the corroboration required, would depend on the facts of each case. In the present case, it is apparent that the appellant – A. Tajudeen and his wife T. Sahira Banu at the first opportunity resiled from the statements which are now sought to be relied upon by the Enforcement Directorate, to substantiate the charges leveled against the appellant. We shall now endeavour to examine whether there is any independent corroborative evidence to support the above statements.17. According to the learned counsel representing the appellant, there was an effective opportunity to the officers of the Enforcement Directorate to produce evidence with reference to a number of important facts, disclosed by the appellant while making the aforesaid statements, yet the officers of the Enforcement Directorate chose not to substantiate the same through independent evidence. He cited a few instances where such evidence could have been easily gathered by the officers of the Enforcement Directorate. In the absence of any corroboration whatsoever, it was submitted, that retracted statements made by the appellant – A. Tajudeen and his wife T. Sahira Banu, could not be used to record findings against the appellant.18. We have no doubt, that evidence could be gathered to substantiate that Abdul Hameed, the person who is alleged to have dispatched the money from Singapore, was a resident of Village Pudhumadam in District Ramanathapuram, to which the appellant also belongs. Material could also have been gathered to show, whether he was related to the appellant from his paternal side. Furthermore, the Enforcement Directorate could have easily substantiated whether or not, as asserted by the appellant, the aforesaid Abdul Hameed had contacted him over telephone from Singapore, to inform him about the delivery of the amount recovered from his residence on 25.10.1989. Additionally, the Enforcement Directorate could have led evidence to establish that the aforesaid Abdul Hameed with reference to whom the appellant made statements on 20.4.1989, 25.10.1989 and 26.10.1989, was actually resident of Singapore, and was running businesses there, at the location(s) indicated by the appellant. Still further, the officers of the Enforcement Directorate could have ascertained the truthfulness of the factual position from Shahib, the shop boy of the appellant – A. Tajudeen, whom he allegedly sent to hand over a sum of Rs. 60,000/- to Shahul Hameed (a relative of Abdul Hameed) of Village Pudhumadam. Had the statements of the appellant and his wife been corroborated by independent evidence of the nature indicated hereinabove, there could have been room for accepting the veracity of the statements made by the appellant – A. Tajudeen and his wife T. Sahira Banu to the officers of the Enforcement Directorate. Unfortunately, no effort was made by the Enforcement Directorate to gather any independent evidence to establish the veracity of the allegations levelled against the appellant, through the memorandum dated 12.3.1990. We are of the considered view, that the officers of the Enforcement Directorate were seriously negligent in gathering independent evidence of a corroborative nature. We have therefore no hesitation in concluding that the retracted statements made by the appellant and his wife could not constitute the exclusive basis to determine the culpability of the appellant.19. We shall now deal with the other independent evidence which was sought to be relied upon by the Enforcement Directorate to establish the charges levelled against the appellant. And based thereon, we shall determine whether the same is sufficient on its own, or in conjunction to the retracted statements referred to above, in deciding the present controversy, one way or the other. First and foremost, reliance was placed onexecuted (at the time of the recovery, from the residence of the appellant) on 25.10.1989. It would be pertinent to mention, that the appellant in his response to the memorandum dated 12.3.1990 had expressly refuted the authenticity of theexecuted on 25.10.1989. Merely because thewas attested by two independent witnesses, namely, R.M. Subramanian and Hayad Basha, would not led credibility to the same. Such credibility would attach to theonly if the said two independent witnesses were produced as witnesses, and the appellant was afforded an opportunity to cross-examine them. The aforesaid procedure was unfortunately not adopted in this case. But then, would the preparation of theand the factum of recovery of a sum of Rs. 8,24,900/- establish the guilt of the appellant, insofar as the violation of Section 9(1)(b) of the 1973 Act is concerned? In our considered view, even if theis accepted as valid and genuine, the same is wholly insufficient to establish, that the amount recovered from the residence of the appellant was dispatched by Abdul Hameed, a resident of Singapore, through a person who is not an authorised dealer in foreign exchange. Even, in response to the memorandum dated 12.3.1990, the appellant had acknowledged the recovery of Rs. 8,24,900/- from his residence, but that acknowledgment would not establish the violation of Section 9(1)(b) of the 1973 Act. In the above view of the matter, we are of the opinion that the execution of theon 25.10.1989, is inconsequential for the determination of the guilt of the appellant in this case.20. The only other independent evidence relied upon by the Enforcement Directorate is of pages from the Hindu and the Jansatha newspapers, in which the bundles of money were wrapped, when the recovery was effected on 25.10.1989. In view of the position expressed in the foregoing paragraph, we are satisfied that the charge against the appellant under Section 9(1)(b) of the 1973 Act, cannot be established on the basis of newspaper sheets, in which the money was wrapped. The newspaper sheets relied upon, would not establish that the amount recovered from the residence of the appellant – A. Tajudeen was dispatched by Abdul Hameed from Singapore, through a person who was not an authorized dealer.21. Based on the above determination, and the various conclusions recorded hereinabove, we are satisfied, that the impugned judgment passed by the High Court deserves to be set aside. The same is accordingly hereby set aside. Resultantly, the entire action taken by the Enforcement Directorate against the appellant in furtherance of the memorandum dated 12.3.1990, is also set aside. As a consequence of the above, the Enforcement Directorate is directed to forthwith refund the confiscated sum of Rs.8,24,900/-, to the appellant, as also, to return the amount of Rs.1,00,000/-, which was deposited by the appellant as penalty.