1992 (6) TMI 192 - AT - FEMA

Appeal Dismissed: Court Upholds Order on Foreign Exchange Violations; Confiscation of Rs. 99,800 Justified.

S. Parameswaran Versus Director of Enforcement

The appeals were dismissed by the court, affirming the adjudication order, including penalties and confiscation. It was upheld that Associated Travel ... - Issues Involved:1. Contravention of Section 9(1)(a) of the Foreign Exchange Regulation Act, 1973.2. Contravention of Section 9(1)(b) of the Foreign Exchange Regulation Act, 1973.3. Confiscation of Rs. 99,800 under Section 63 of the Act.4. Validity of the adjudication process and evidentiary support.Issue-wise Detailed Analysis:1. Contravention of Section 9(1)(a):The charge against Shri Parameswaran was that he paid Rs. 1 lakh to Shri Kader of Singapore, a person resident outside India, without the general or special permission of the RBI. Shri Parameswaran admitted in multiple statements that he had paid Rs. 1 lakh to Shri Kader as a loan against the mortgage of property. The main contention was whether Shri Kader was a person resident outside India at the relevant time. The evidence, including a visiting card indicating that Shri Kader was the Managing Partner of a firm in Singapore, supported the conclusion that Shri Kader was residing in Singapore. The appellant's reliance on documents like an affidavit, power of attorney, and marriage card was dismissed as these could be easily procured and did not outweigh the evidence indicating that Shri Kader was a resident of Singapore.2. Contravention of Section 9(1)(b):The Associated Travel Agency (P.) Ltd. was accused of receiving Rs. 1 lakh from a local person other than an authorized dealer in foreign exchange by order or on behalf of Shri Kader of Singapore. The evidence, including statements from employees and the appellant, supported that the money was received under the instructions of Shri Kader. The appellant's argument that the money was received under the instructions of Shri Parameswaran, who was not a person resident outside India, was rejected. The court held that if a person residing in India is instructed by a person resident outside India to make a payment to any person in India, the recipient would be violating Section 9(1)(b).3. Confiscation of Rs. 99,800 under Section 63:The Adjudicating Officer found that the sum of Rs. 99,800 was involved in the contravention and justified its confiscation to the Central Government. The reasoning was that by receiving Rs. 1 lakh in an unauthorized manner, the country lost foreign exchange equivalent to that amount. The adjudicating order indicated that the confiscated amount was involved in business activities both in India and abroad, thus legally justifying the confiscation.4. Validity of the Adjudication Process and Evidentiary Support:The appellants contended that the inquiry under Rule 3(3) of the Adjudicating Proceeding and Appeal Rules, 1974, was not held. However, the records showed that personal hearings were conducted, and the Adjudicating Officer had applied the principles laid down by the Madras High Court. The statements from involved parties were found to be voluntarily made and credible. The court confirmed the findings of the Adjudicating Officer, stating that there was sufficient evidence to support the charges.Conclusion:The appeals were dismissed, and the adjudication order, including the penalties and confiscation, was confirmed. The findings that Associated Travel Agency (P.) Ltd. and Shri Parameswaran had contravened Sections 9(1)(b) and 9(1)(a) respectively were upheld. The confiscation of Rs. 99,800 was also deemed legally in order.