2019 (4) TMI 332 - AT - FEMA

Tribunal quashes order, allows appeal, emphasizes binding court judgments, rejects diaries as evidence.

The tribunal set aside the impugned order and quashed the show cause notice dated 06.11.1996. The appeal was allowed, and no costs were imposed. The ... Guilty pf provisions of section 8 and section 40 of FERA - diaries relied upon by the prosecution as an evidence - HELD THAT:- The present proceedings are an offshoot of the 'Jain Hawala Diaries‟ case [2013 (8) TMI 400 - DELHI HIGH COURT] which ended in quashing of the criminal proceedings as a result of the judgment of the Hon‟ble High Court in L.K. Advani vs. CBI [1997 (4) TMI 524 - DELHI HIGH COURT] wherein, it was held that the diaries relied upon by the prosecution are inadmissible in evidence and cannot be called books of accounts. On the basis of the entries of the dairy M-207/93 two criminal complaints bearing CC No. 61/1/91 and 107/1/96 were filed before the ACMM. After the recording of the pre-charge evidence the Trial Court has discharged the present Appellant and the same has been upheld by the appellate court on the ground that the said entries are inadmissible in evidence as no case is made out based on the same. The same was decided on merit. The said order of discharge has not been set-aside as of today. It is a settled law that the rulings of the Supreme Court are binding under Article 141 of the Constitution of India, wherein a higher court has rendered a particular decision, said decision must be followed by a subordinate or a lower court unless it is distinguished or over-ruled or set aside. Issues Involved:1. Whether the appellant contravened the provisions of Section 8 and Section 40 of FERA.2. Validity and admissibility of the evidence, specifically the diaries marked as M-207/93 and M-209/93.3. Applicability of the judgments from higher courts, including the Delhi High Court and the Supreme Court, to the present case.4. Burden of proof and statutory presumptions under FERA.5. Relevance and impact of previous judgments and proceedings on the current appeal.Detailed Analysis:1. Contravention of Section 8 and Section 40 of FERA:The appellant was penalized for contravening Section 8 and Section 40 of FERA, with a total penalty of Rs. 2,50,00,000/-. The contravention was based on entries in the diaries seized during CBI searches in 1991 and subsequent FIRs registered in 1995. The diaries allegedly revealed payments through hawala channels, which constituted an offence under Section 56 read with Section 8(1) of FERA.2. Validity and Admissibility of Evidence:The key evidence in question were entries in diaries marked as M-207/93 and M-209/93. The Delhi High Court, in its judgment dated 29.05.2014, held that these diaries were inadmissible as evidence. The court concluded that the entries in the diaries, by themselves, were not sufficient to prove any acquisition of foreign exchange and could at best serve as corroborative evidence, not substantive evidence of violation of Section 8(1) of FERA.3. Applicability of Higher Court Judgments:The Delhi High Court's judgment, which was upheld by the Supreme Court, declared the diaries inadmissible. This judgment was binding on the present case. The respondent's argument that the findings of the High Court were not binding was rejected. The tribunal emphasized that the final judgment from the higher courts must be followed unless distinguished or overruled.4. Burden of Proof and Statutory Presumptions:The Enforcement Directorate argued that under FERA, the burden of proof shifts to the accused once a prima facie case is established. The appellant failed to rebut the statutory presumptions under Sections 40, 59, 71, and 72 of FERA. The tribunal noted that the FERA imposes a strict liability, and once the Enforcement Directorate presents its case, the onus shifts to the accused to establish their innocence.5. Relevance of Previous Judgments:The tribunal acknowledged that the present proceedings were an offshoot of the 'Jain Hawala Diaries' case, which ended in quashing of the criminal proceedings based on the inadmissibility of the diaries as evidence. The Supreme Court's dismissal of the SLP against the High Court's judgment further solidified the binding nature of the previous rulings. The tribunal concluded that the facts and legal issues in the present appeal were the same as those in the earlier connected appeal, thus the final order in the earlier appeal must be followed.Conclusion:The tribunal set aside the impugned order and quashed the show cause notice dated 06.11.1996. The appeal was allowed, and no costs were imposed. The tribunal emphasized the binding nature of the higher court judgments and the inadmissibility of the diaries as evidence, leading to the conclusion that the appellant could not be held guilty based on the evidence presented.