1991 (3) TMI 406 - AT - FEMA

Tribunal Upholds Penalties for Foreign Exchange Violations, Reduces One Penalty; Emphasizes Broad Interpretation of Key Terms.

B.N. Dhawan Versus Director of Enforcement

The Tribunal dismissed Dr. N. Dhawan's appeal, confirming the penalty and confiscation of foreign exchange, while partially allowing Shri B.N. Dhawan's ... - Issues Involved:1. Contravention of Section 8(1) and Section 8(2) read with Section 64(2) of the Foreign Exchange Regulation Act, 1913.2. Confiscation of foreign exchange.3. Validity of statements given under duress.4. Definition and implications of 'transfer' and 'acquisition'.5. Imposition of penalties.6. Violation of principles of natural justice.Issue-wise Detailed Analysis:1. Contravention of Section 8(1) and Section 8(2) read with Section 64(2) of the Foreign Exchange Regulation Act, 1913:The appellants, Shri B.N. Dhawan and Dr. N. Dhawan, were charged with contravening Section 8(1) and Section 8(2) read with Section 64(2) of the Act. The Adjudicating Officer found that Dr. N. Dhawan had transferred foreign exchange to his father, Shri B.N. Dhawan, without the permission of the Reserve Bank of India, and Shri B.N. Dhawan had acquired and attempted to sell the said foreign exchange. The Tribunal upheld these findings, noting that the statements given by the appellants corroborated the charges of transfer and acquisition of foreign exchange.2. Confiscation of Foreign Exchange:The Adjudicating Officer confiscated foreign exchange amounting to UK pounds sterling 20,800. The Tribunal confirmed the confiscation, stating that the foreign exchange in question was involved in the contravention and thus subject to confiscation under Section 63 of the Act. The Tribunal found no merit in the contention that the confiscation order was made without proper application of mind or in violation of natural justice.3. Validity of Statements Given Under Duress:The appellants claimed that their statements were recorded under duress and coercion. The Tribunal, however, found that the retraction of statements was an afterthought and not credible. The Tribunal emphasized that the statements were detailed and given voluntarily, as evidenced by the lack of immediate retraction and the detailed explanations provided in the statements.4. Definition and Implications of 'Transfer' and 'Acquisition':The Tribunal interpreted the terms 'transfer' and 'acquisition' in a broad sense. It relied on the Calcutta High Court's interpretation that 'acquire' means 'to receive or to come into possession of,' and extended this interpretation to the term 'transfer'. The Tribunal concluded that Dr. N. Dhawan's act of leaving foreign exchange with his father with the authority to use it constituted a 'transfer', and Shri B.N. Dhawan's possession and intended use of the foreign exchange constituted 'acquisition'.5. Imposition of Penalties:The Adjudicating Officer imposed penalties of Rs. 75,000 on Shri B.N. Dhawan and Rs. 25,000 on Dr. N. Dhawan. The Tribunal upheld the penalty on Dr. N. Dhawan but reduced the penalty on Shri B.N. Dhawan to Rs. 25,000, finding that only the charge of acquisition was established against him, while the charges of attempting to sell and convert the foreign exchange were not substantiated.6. Violation of Principles of Natural Justice:Smt. Shobha Dhawan's application contended that the confiscation order violated principles of natural justice, as she was not given an opportunity to present her case regarding her claim to part of the confiscated foreign exchange. The Tribunal dismissed this contention, stating that the proceedings for confiscation are proceedings in rem and that the Adjudicating Officer's findings were based on the evidence presented, which established that the foreign exchange belonged to Dr. N. Dhawan and was transferred to Shri B.N. Dhawan.Conclusion:The Tribunal dismissed the appeal of Dr. N. Dhawan and partly allowed the appeal of Shri B.N. Dhawan by reducing his penalty. The Tribunal also dismissed the application of Smt. Shobha Dhawan, confirming the confiscation of the foreign exchange. The Tribunal's decision emphasized the broad interpretation of 'transfer' and 'acquisition' under the Act and upheld the findings of the Adjudicating Officer based on the evidence and statements provided.