2019 (8) TMI 683 - AT - FEMA

Tribunal sets aside order in hawala transaction appeal, emphasizes need for evidence under FEMA. Denial, coercion, lack of corroboration reviewed. Investigation deficiencies noted.

Pulikuth Hamzath Abdusalam Versus The Special Director, Directorate of Enforcement, Chennai

The tribunal set aside the impugned order in an appeal involving alleged hawala transactions, emphasizing the need for evidence of transactions with ... Hawala transactions - Contravention of provisions of Section 3(b) and Section 3(c) of FEMA, 1999 - allegation based on statement of various persons - submission of the appellant was that the appellant has been wrongly implicated in the case and nothing was seized or recovered from his possession - HELD THAT:- The impugned order has alleged that he received money (Indian currencies) from some other people some of whose name are Poonam, Getha, Raja Ram, Devidoss, Jaloor etc. who in turn has arranged this money from people from abroad. Thus, it appears that the impugned order has not established the appellant receiving the money directly from abroad. Moreover, there is no restriction on circulation of Indian money within the country, at least under FEMA - the department has not investigated those people who are Indians and who have delivered the money to him in India although the details of some of them like their mobile numbers etc. was available to the investigating authority. Moreover, the analysis of phone calls has also not been done in a complete manner as it does not show the details of the conversations. It is appropriate to remand the case back to the original authority to do a thorough investigation both on the issues raised above as well as any other issues which they may like to investigate and pass a speaking order establishing the link as required under Section 3(b) and 3(c) of FEMA, 1999 - appeal allowed by way of remand. Issues:Appeal against contravention of FEMA provisions - Alleged involvement in hawala transactions - Lack of direct evidence - Admissibility of statements from others - Coercion in statement recording - Previous cases against the appellant - Culpability based on seized items and statements - Interpretation of Section 3(b) and 3(c) of FEMA - Necessity of RBI authorization for transactions - Presence of corroborative evidence - Offence in hawala cases - Presumption of guilt - Analysis of phone call details - Circulation of Indian money within the country - Need for thorough investigation.Analysis:The appellant filed an appeal challenging the accusation of involvement in hawala transactions, contravening Section 3(b) and 3(c) of FEMA, 1999, based on statements of others. The appellant denied the allegations, emphasizing the lack of direct evidence and the illegality of relying solely on statements. The appellant argued that his statement was coerced and lacked corroboration regarding payments to or from persons outside India, as required by FEMA provisions. The respondent contended that the appellant's history as a habitual offender, seized items, and statements of co-accused indicated guilt. The respondent highlighted the broad scope of transactions under FEMA and the presumption of guilt in hawala cases.Upon examination, the tribunal focused on the requirement under Section 3(b) and 3(c) of FEMA, emphasizing the need for evidence of payments to or from persons outside India. The impugned order alleged the appellant received hawala payments from individuals in India, not directly from abroad. The tribunal noted the lack of investigation into the Indian individuals involved in delivering money to the appellant, despite available details. The analysis found shortcomings in phone call details and the absence of a direct link to foreign transactions.Consequently, the tribunal set aside the impugned order and remanded the case for a thorough investigation to establish the necessary links under FEMA provisions. The decision underscored the importance of proper evidence collection and a comprehensive inquiry into all relevant aspects of the case. The ruling allowed the appeal by way of remand, emphasizing the requirement for a detailed examination to determine compliance with FEMA regulations.