FERA prosecution against resident Indian sustained where offshore corporate form did not defeat prima facie attribution of transactions.

The FERA prosecution against a resident Indian was found sustainable where the materials disclosed a prima facie case and the corporate structure of offshore companies did not by itself defeat attribution of the transactions to him. The Court noted that FERA extended to Indian citizens outside India and that documents received from abroad, along with statements recorded in investigation, could be relied on at the charge stage even if their truth was disputed. Presumptions under the Act relating to documents and culpable mental state also supported proceeding against the respondent. On that basis, the discharge order was held unsustainable and trial under the FERA provisions was permitted to proceed.

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Issues: Whether the order discharging the respondent from the FERA prosecution was sustainable when the record disclosed a prima facie case, and whether the Act applied to a resident Indian and to transactions routed through companies incorporated outside India.

Analysis: The prosecution was founded on alleged contraventions of the Foreign Exchange Regulation Act, 1973, including restrictions on acquisition, transfer and payment of foreign exchange, and the statutory scheme also included presumptions as to documents and culpable mental state. The Court noted that the Act extended to citizens of India outside India and that incorporation of companies outside India did not by itself protect the respondent where the evidence indicated that the funds and transactions were attributable to him. The Court further held that the materials collected by the Enforcement authorities, including documents received from abroad and the statements recorded in investigation, were sufficient at the stage of charge and could not be discarded merely because their truthfulness was disputed. The earlier appellate findings relied upon by the Court supported the view that the respondent could be proceeded against notwithstanding the corporate form used in the transactions.

Conclusion: The discharge order was held unsustainable and the respondent was liable to face trial under the FERA provisions.

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