2025 (3) TMI 336 - AT - FEMA

SAFEMA Tribunal upholds denial of cross-examination requests finding no reasonable grounds or prejudice shown by appellants

The Appellate Tribunal under SAFEMA dismissed appeals challenging denial of cross-examination requests. Appellants sought to cross-examine officers who ... Breach of the principles of natural justice - denial of request to seek the cross-examination of Officer who recorded the statement of the Appellant under the provisions of Customs Act, 1962 and Officer who recorded the statement of co-noticees under the provisions of FERA. HELD THAT:- We observe that the tool of cross-examination is used so as to establish the truth, on the basis of certain reasonable grounds available with the petitioners. It does appear far-fetched that coercion while recording the statement can be established through such tool in the absence of any other reasonable ground to make a such assertion. It is unlikely that the Departmental Officers would have admitted that the statements were recorded under coercion, duress or inducement. In any case, the Appellants have failed to specify either before the Ld. Special Director or in the Appeals before us as to how exactly the prejudice is being caused to their respective interest by denial of cross-examination other than the ground mentioned in the Appeal. We find support from the three Judge Bench judgment of the Hon’ble Supreme Court in State of U.P. v. Sudhir Kumar Singh [2020 (10) TMI 746 - SUPREME COURT] We also note that the list of relied upon documents to the Show Cause Notice dated 17.05.2002 has 61 serialised items which comprise of statements, retractions, letters, Bank Account opening forms, directives, postal covers, copies of invoices, summons, agreement and copies of Shipping Bills. It is on record that the Ld. Special Director issued directions to furnish the copies of relied upon documents to the Appellants. Appellants have not even examined the merit of the documents which have been relied upon in the Show Cause Notice dated 17.05.2002 and have raised the issue of cross- examination without demonstrating the necessity for it. Thus, we find that the two interlocutory orders cannot be intervened with. We therefore, dismiss the Appeals. ISSUES PRESENTED and CONSIDEREDThe core legal questions considered in this judgment revolve around the denial of cross-examination requests made by the appellants under the Foreign Exchange Regulation Act, 1973 (FERA). The issues include:Whether the denial of cross-examination of officers who recorded statements under the Customs Act, 1962, and FERA violates the principles of natural justice.Whether the denial of cross-examination of certain individuals and bank managers, as requested by the appellants, is justified.The applicability of principles of natural justice in quasi-judicial proceedings under FERA, particularly concerning the right to cross-examine witnesses.ISSUE-WISE DETAILED ANALYSISRelevant legal framework and precedents:The legal framework involves the application of FERA and the principles of natural justice, particularly the right to cross-examine witnesses. The appellants relied on various judgments from the Supreme Court and High Courts, emphasizing the importance of cross-examination as part of natural justice. Key cases cited include Ajay Saraogi vs. Union of India, Shahid Balwa vs. The Directorate of Enforcement, Ayaaubkhan Noorkhan Pathan v. State of Maharashtra, and Andaman Timber Industries v. Commissioner of Central Excise.Court's interpretation and reasoning:The Tribunal considered the arguments and precedents presented by both parties. It noted that while the principles of natural justice are essential, their application is not rigid and must consider the facts and circumstances of each case. The Tribunal emphasized that cross-examination is not an absolute right in every quasi-judicial proceeding, particularly when no prejudice is demonstrated.Key evidence and findings:The Tribunal found that the appellants failed to demonstrate how the denial of cross-examination caused them prejudice. The requests for cross-examination were primarily based on the assertion that statements were recorded under coercion, but no substantial evidence or reasonable grounds were provided to support this claim.Application of law to facts:The Tribunal applied the principles of natural justice flexibly, considering the procedural context of FERA proceedings. It concluded that the appellants did not establish a compelling need for cross-examination, as the statements in question were corroborated by other evidence, including the appellants' own admissions.Treatment of competing arguments:The Tribunal acknowledged the appellants' reliance on precedents supporting the right to cross-examine. However, it also considered the respondent's arguments and precedents, which highlighted that cross-examination is not always necessary and that procedural fairness does not mandate it in every case. The Tribunal found the respondent's position more persuasive given the lack of demonstrated prejudice.Conclusions:The Tribunal concluded that the denial of cross-examination did not violate the principles of natural justice in this context. It upheld the interlocutory orders, finding no compelling reason to intervene.SIGNIFICANT HOLDINGSPreserve verbatim quotes of crucial legal reasoning:The Tribunal noted, 'The tool of cross-examination is used so as to establish the truth, on the basis of certain reasonable grounds available with the petitioners. It does appear far-fetched that coercion while recording the statement can be established through such tool in the absence of any other reasonable ground to make such an assertion.'Core principles established:Natural justice is a flexible tool, and its application depends on the facts and circumstances of each case.The right to cross-examine is not absolute and must be justified by demonstrating actual prejudice or necessity.Procedural fairness does not require cross-examination in every quasi-judicial proceeding, particularly when corroborative evidence exists.Final determinations on each issue:The Tribunal dismissed the appeals, affirming the interlocutory orders that denied the requests for cross-examination. It found that the appellants did not demonstrate prejudice or necessity for cross-examination, and the proceedings complied with the principles of natural justice.