1999 (9) TMI 1014 - AT - FEMA

Court Upholds Violation of Foreign Exchange Regulation Act, 1973; Reduces Penalties to Rs. 55,000 for Appellant.

Akula Rajanna Versus Director of Enforcement

The court determined that the appellant violated section 9(1)(b) of the Foreign Exchange Regulation Act, 1973, concerning the possession of Rs. 13,29,000, ... - 1. ISSUES PRESENTED and CONSIDEREDThe core legal questions considered in this judgment include:Whether the appellant contravened sections 9(1)(b) and 9(1)(d) of the Foreign Exchange Regulation Act, 1973, by possessing and distributing foreign exchange without authorization.Whether the search and seizure conducted by the police and the Enforcement Directorate were legal and admissible.Whether the appellant's confession and the evidence presented were sufficient to support the charges.Whether the penalties and confiscation ordered were justified and proportionate to the alleged contraventions.2. ISSUE-WISE DETAILED ANALYSISIssue 1: Contravention of Sections 9(1)(b) and 9(1)(d)Relevant legal framework and precedents: Sections 9(1)(b) and 9(1)(d) of the Foreign Exchange Regulation Act, 1973, prohibit unauthorized possession and distribution of foreign exchange in India.Court's interpretation and reasoning: The court found that the appellant's possession of a large sum of Indian currency, allegedly received in contravention of the Act, was not adequately explained by the appellant's claims of acting as a sub-agent for visa applicants.Key evidence and findings: The appellant was apprehended with Rs. 13,29,000, and his statement indicated involvement in unauthorized transactions. The appellant's defense, including the list of passports and alleged visa fees, was deemed unconvincing.Application of law to facts: The court applied the provisions of the Act to the facts, determining that the appellant's explanations lacked credibility and did not rebut the evidence of contravention.Treatment of competing arguments: The appellant's arguments about the legality of the search, the admissibility of his confession, and the identity of alleged non-residents were considered but found lacking in merit.Conclusions: The court concluded that the appellant contravened section 9(1)(b) regarding the seized amount but limited the contravention of section 9(1)(d) to Rs. 10,000 based on available evidence.Issue 2: Legality of Search and SeizureRelevant legal framework and precedents: The legality of search and seizure is governed by procedural laws ensuring due process and protection against unlawful searches.Court's interpretation and reasoning: The court did not find the appellant's challenge to the search and seizure credible, noting that the appellant failed to provide evidence of any procedural violations.Key evidence and findings: The appellant's claim that the search was conducted at his residence rather than the bus stand was not supported by any concrete evidence.Application of law to facts: The court determined that the appellant's failure to raise timely objections or provide evidence of procedural impropriety undermined his claims.Treatment of competing arguments: The appellant's argument that the police acted at the behest of the Enforcement officers was dismissed as speculative and unsupported.Conclusions: The court upheld the legality of the search and seizure, finding no basis to question the actions of the police and Enforcement Directorate.Issue 3: Adequacy of Evidence and ConfessionRelevant legal framework and precedents: The admissibility and weight of confessions and evidence are assessed based on their voluntariness and corroborative support.Court's interpretation and reasoning: The court found the appellant's retraction of his confession unconvincing, as he failed to provide any alternative explanation or evidence to counter the charges.Key evidence and findings: The appellant's confession, corroborated by the seized currency and statements from other involved parties, was deemed sufficient to support the charges.Application of law to facts: The court applied principles of evidence law, finding the appellant's confession and the circumstances of the case indicative of contravention.Treatment of competing arguments: The appellant's claims of coercion and retraction were considered but found inadequate to discredit the confession.Conclusions: The court concluded that the evidence, including the appellant's confession, was adequate to support the findings of contravention under the Act.3. SIGNIFICANT HOLDINGSPreserve verbatim quotes of crucial legal reasoning: 'The appellant's story has no credibility. The entire story built up by the appellant is only a weak attempt to avoid the charge.'Core principles established: The judgment reinforces the principle that mere retraction of a confession is insufficient without credible alternative evidence. It also underscores the importance of timely objections to procedural issues.Final determinations on each issue: The court upheld the contravention of section 9(1)(b) concerning the seized amount of Rs. 13,29,000 but restricted the contravention of section 9(1)(d) to Rs. 10,000. The penalties were reduced accordingly, with the appellant ordered to pay Rs. 55,000 in penalties.