1987 (11) TMI 406 - AT - FEMA

Penalties Deemed Disproportionate: Appeal Allowed, Others Dismissed or Partly Allowed for Fresh Adjudication.

Gopal Chandra Saha Versus Director of Enforcement.

The judgment concluded that the penalties imposed were disproportionate and unsustainable. Appeal No. 219 of 1986 was allowed, setting aside the penalty. ... - Issues Involved:1. Contravention of Section 9(1)(b) and 9(1)(d) of the Foreign Exchange Regulation Act, 1973.2. Separate adjudications for the same set of circumstances.3. Evidentiary value of the appellant's statements and seized documents.4. Justification for penalties imposed.Issue-wise Detailed Analysis:1. Contravention of Section 9(1)(b) and 9(1)(d) of the Foreign Exchange Regulation Act, 1973:The appellant, Shri Gopal Chandra Saha, was charged with contravening Section 9(1)(b) and 9(1)(d) of the Foreign Exchange Regulation Act, 1973. The enforcement authorities alleged that he received and made payments in Indian currency on instructions from his non-resident brother, Shri Kanu Saha, without the permission of the Reserve Bank of India. The adjudicating officer initially found that only two payments totaling Rs. 16,000 were proven, resulting in a penalty of Rs. 5,000. However, the Director of Enforcement contended that the contraventions involved a much larger amount of Rs. 18,93,991, warranting a more severe penalty.2. Separate adjudications for the same set of circumstances:The judgment criticized the conduct of two separate adjudications based on the same investigation and evidence. The first adjudication dealt with a small amount of Rs. 27,400, while the second dealt with larger amounts. This separation led to conflicting and unsustainable conclusions, weakening the foundation of the charges. The judgment emphasized the lack of justification for holding two separate adjudications for the same set of circumstances against the same person.3. Evidentiary value of the appellant's statements and seized documents:The appellant's statement recorded on 16-6-1982, where he admitted to making and receiving payments on behalf of his brother, was retracted on 18-6-1982. The retraction raised questions about the reliability of the initial statement. The adjudicating officer's decision was based on the appellant's initial statement and seized documents, but the judgment highlighted inconsistencies and the lack of concrete evidence linking the appellant to the alleged transactions. The judgment noted that the appellant's subsequent statement on 3-5-1984 did not provide sufficient clarity on the transactions.4. Justification for penalties imposed:The judgment found the penalties imposed to be disproportionate and excessive. The penalty of Rs. 20,000 for an alleged contravention involving Rs. 27,400 was deemed far too excessive. The judgment emphasized that the enforcement authorities failed to prove the connection between the seized amount and the alleged contraventions. The possession of Indian currency by an Indian resident is not an offense unless it is proven to be received on instructions from a non-resident, which was not adequately demonstrated.Conclusion:The judgment concluded that both orders under appeal could not be sustained. Appeal No. 219 of 1986 was allowed, setting aside the penalty imposed. Appeal No. 195 of 1985 filed by Shri Gopal Chandra Saha was dismissed, while Appeal No. 190 of 1985 filed by the Director of Enforcement was partly allowed. The matter was referred back for fresh adjudication in consolidated proceedings, with the confiscated amount retained for final adjustment.