Vinod Solanki vs Union Of India & Anr

3. On or about 25.10.1994, the office premises of the appellant was searched. Recovery of Indian currency amounting to Rs. 2,65,000/- was made. He was thereafter detained. On the next two succeeding dates, i.e., on 26.10.1994 and 27.10.1994, he allegedly made two statements before the Authorities under the Act, disclosing that all the transactions in the name of M/s Sun Enterprises, Ahmedabad and M/s Suraj Enterprises, Bombay relating to import of goods had been made by him and no import of goods had taken place in the name of the said firms. He is stated to have confessed that he was responsible for remittance of the foreign exchange worth US Dollars 11,400 and US Dollars 22,830. In view of the said purported confession, he was arrested for alleged violation of the provisions of Section 8(3) and Section 9(1)(a) of the Act. We are not concerned with the rest of the statements.

7. By reason of an order dated 19.3.1996, the appropriate authority, inter alia, relying on or on the basis of the confession made by him imposed a consolidated penalty of Rs. 10 lakhs, stating:

8. Appellant preferred an appeal thereagainst before the Foreign Exchange Regulation and Appellate Board which on repeal of FERA stood transferred to the Appellate Tribunal for Foreign Exchange (for short, "the Tribunal") under the provisions of Foreign Exchange Management Act, 1999. The Tribunal despite noticing the contentions raised on behalf of the appellant that no enquiry had been made by the Department (1) from the bank in which the transactions in question had taken place; (2) as regards the date on which the application was signed and by whom the foreign exchange had been acquired; (3) whether the appellant had acquired the said foreign exchange from authorized dealer on the basis of any forged import documents; (4) whether the alleged documents were not produced by him before any authorized dealer; and (5) whether the impugned order was based on the confessional statement which was retracted on first available opportunity when he was produced before the Chief Metropolitan Magistrate, Mumbai for remand on 28.10.1994, dismissed the appeal, stating:

10. Aggrieved by and dissatisfied therewith, the appellant preferred an appeal before the High Court. Concurring with the judgment of the Tribunal, the High Court, opined:

14. As indicated heretobefore, the courts below proceeded on the premise that a confession was made by appellant, although retracted later, that he had acquired foreign exchange during the period 1993-94 on the basis of forged import documents whereafter he got the same transferred 11 to his bank account Nos. 564-000-4888-5 and No. 96300-1254-9 in Standard Chartered Bank, Asian House VI Branch and American E. Bank, Central Branch, at Hongkong and misutilized the said foreign exchange and failed to import any rough diamonds for which purpose the same was acquired.

(emphasis supplied) 20

The finding that he was the brain behind and not involved in the actual transaction, therefore, does not meet the requirements of law. 27

41. For the reasons aforementioned, the order of the Tribunal and consequently the impugned judgment and order cannot be sustained. They are set aside accordingly. This appeal is allowed. The amount of Rs. 2,65,000/- which is with the Department shall be refunded to the appellant within four weeks from date. In the facts and circumstances of the case, there shall be no order as to costs.

December 18, 2008