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TaxTMI 
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TaxTMI 
2014 (10) TMI 367
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.... Act, 1973 (hereinafter referred to as, the 1973 Act). Section 9(1)(b) aforementioned, is being extracted hereunder:- "9. Restrictions on payments - (1) Save as may be provided in, and in accordance with any general or special exemption from the provisions of this sub-section which may be granted conditionally or unconditionally by the Reserve Bank, no person in, or resident in, India shall - (a) xxx xxx xxx (b) receive, otherwise than through an authorized dealer, any payment by order or on behalf of any person resident outside India; Explanation - For the purposes of this clause, where any person in, or resident in, India receives any payment by order or on behalf of any person resident outside India through any other person (including an authorized dealer) without a corresponding inward remittance from any place outside India, then, such person shall be deemed to have received such payment otherwise than through an authorized dealer;" Based on the aforesaid statutory provision, and the factual position noticed hereinabove, the Enforcement Directorate initiated proceedings against the appellant under Section 50 of the 1973 Act. 3. Before adjudicating upon the merits of the c....
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....4,900/- as set out in the Mahazar. I wanted to establish a jewellery shop in Madras. I commenced a jewellery shop in the name and style of "M/s. Banu Jewellers" on 19.10.1989 at No. 12, Ranganathan Road, Nungambakkam, Madras-34. It is a partnership business wherein my wife T. Sahira Banu is a partner. For that I sold my wife's gold jewels and also taken hand loans from my friends. The said business was started with a capital of Rs. 2,20,000/- in my wife's name. The other partner Mr. S. Muthuswamy of No. 20, Indira Nagar, Adyar (I do not remember his address) has contributed to the capital a sum of Rs. 30,000/-. For expanding the said shop and for improving the business, I required about Rs. 9,00,000/-. My relatives are working in Singapore and Malaysia. One Abdul Hameed from my native place is carrying on business for the past 15 years at no. 24, Sarangoon Road, Singapore. He is dealing in clothes, VCRs etc. He came down to Madras about 2 months back. At that time, he met me at my residence. I told him that a jewellery business to be commenced and that I require about Rs. 9,00,000/- for the said business and to discharge certain small loans. Further I requested him to help me by pr....
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.... height. Since both of them left my house within a few minutes on delivering the said sums, I could not notice their identifiable marks. I was making arrangements to export readymade garments. In respect thereof, I required the place apart from my house to meet my customers. For that I have taken on rent room no. 402, in Ganpat Hotel, Nungambakkam High Road about 4- 5 months back from its owner one M.R. Prabhakaran. I am using the telephone no. 477409 in the said shop, A/C machine and fridge available in the said room. Since Export business did not suit me, I left it. The said room is in my possession." (emphasis is ours) (v) During the course of the raid conducted on 25.10.1989, the appellant - A. Tajudeen, was detained by the officers of the Enforcement Directorate. His statement was again recorded on 26.10.1989 by the Chief Enforcement Officer, whilst he was in custody. Relevant portion of his above mentioned statement is being extracted hereunder:- "I have earlier given statement before you on 25.10.1989. In that I have disclosed that by searching my house on 25.10.1989 your officers have seized a sum of Rs. 8,24,900/- which I received from unknown persons on 23.10.1989 and....
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....gned by T. Sahira Banu. In the above statement, T. Sahira Banu, the wife of A. Tajudeen admitted the recovery of Rs. 8,24,900/- by the officers of the Enforcement Directorate, from the residence of the appellant i.e., no. 6, Dr. Muniappa Road, Kilpauk, Madras. (vii) On 27.10.1989, A. Tajudeen and T. Sahira Banu retracted their earlier statement(s), alleging that the same had been recorded against their will and under the threat and compulsion of the officers of the Enforcement Directorate. 4. In response to the memorandum dated 12.3.1990, the appellant filed a reply (which is available on the record of the present case as Annexure P-9). In his reply, he denied having made any statement on 20.4.1989. He asserted, that a copy of the aforesaid statement dated 20.4.1989 had never been furnished to him, nor had been relied upon in the memorandum dated 12.3.1990. He also denied the factual contents of the statements dated 25.10.1989 and 26.10.1989. He denied having ever met Abdul Hameed. He also denied, that there was any occasion for him to ask for any loan from the said Abdul Hameed. He denied any acquaintanceship with the said Abdul Hameed. Insofar as the statements recorded on 25.1....
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....Enforcement, Southern Zone, Madras, the appellant preferred an appeal before the Foreign Exchange Regulation Appellate Board (hereinafter referred to as, the Appellate Board). The aforesaid appeal bearing number 316 of 1991 was allowed by an order dated 31.12.1993. While allowing the appeal, the Appellate Board directed the refund of penalty of Rs. 1,00,000/- imposed on the appellant. The Appellate board also quashed the direction pertaining to the confiscation of Rs. 8,24,900/- seized from the residence of the appellant. 6. Aggrieved by the order passed by the Appellate Board, the Union of India through the Director of Enforcement preferred an appeal under Section 54 of the 1973 Act, before the High Court. The High Court allowed the above appeal being C.M.A. NPD no. 1282 of 1994 by an order dated 28.9.2006. While allowing the aforesaid appeal, the High Court placed reliance on the statement made by the appellant, before the officers of the Enforcement Directorate on 20.4.1989. The aforesaid statement was referred to, as having been voluntarily made by the appellant. The High Court expressed the view, that the statements recorded by the appellant on 25.10.1989 and 26.10.1989 were ....
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..... In fact it was the vehement contention of the learned counsel for the appellant, that no such statement was ever made by the appellant - A. Tajudeen, to the officers of the Enforcement Directorate. Learned counsel for the appellant, in fact emphatically invited our attention to the fact, that the High Court in para 16 of the impugned judgment had inter alia, observed as under:- "16. ..... Referring to the explanation given by the officer that they had no record of the statement made on 20.4.1989 at the time when the statement was made by Tajudeen on 26.10.1989....." It was also submitted, that if the appellant had made any such statement on 20.4.1989, as was now being relied upon by the Enforcement Directorate, he would have most definitely been proceeded against for violation of the provisions of Section 9(1)(b) of the 1973 Act. The very fact that he was not proceeded against, shows that no such earlier statement may have been recorded by the appellant on 20.4.1989. 9. We have given our thoughtful consideration to the first contention advanced at the hands of the learned counsel for the appellant. There is no doubt whatsoever, that no reliance has been placed on the alleged s....
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....ied upon by the Enforcement Directorate to establish the allegations levelled against the appellant through the memorandum dated 12.3.1990. And secondly, in the absence of having established through cogent evidence, that the appellant had made the above statement dated 20.4.1989, it was not open to the Enforcement Directorate to place reliance on the same, for establishing the charges levelled against the appellant in memorandum dated 12.3.1990. 10. With reference to the statement of the appellant dated 20.4.1989, it is also necessary to record, that we had an impression during the course of hearing, that the above statement would lead us to a clearer understanding of the truth of the matter. After the hearing concluded on 6.6.2014, we required the learned counsel for the respondent to hand over to us the record of the case. We had clearly indicated to learned counsel, that the purpose for this was, that we wished to examine the alleged statement of the appellant dated 20.4.1989, along with the record connected therewith. In compliance, the summoned record was presented at the residential office of one of us (J.S. Khehar, J.) on 7.6.2014. A perusal of the record revealed, that the....
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.... bundles of notes recovered from the residence of the appellant, were wrapped. Insofar as the Hindu newspaper sheets are concerned, they were of the Delhi and Bombay editions dated 19.2.1989, 14.4.1989, 23.7.1989 and 4.10.1989. The sheets of the Jansatha newspaper also pertain to its Delhi and Bombay editions of February, 1989 and 23.10.1989. 12. Insofar as the aforesaid remaining evidence is concerned, it was the vehement contention of the learned counsel for the appellant, that the same was not sufficient to discharge the onerous responsibility of the Enforcement Directorate, to establish the charge levelled against the appellant. It was the submission of the learned counsel for the appellant, that reliance could not be placed on the statements made by the appellant, as also, his wife (on 25.10.1989 and 26.10.1989). In this behalf, it was sought to be cautioned, that if this manner of establishing charges was affirmed, the officers of the Enforcement Directorate, could easily compel individuals through coercion, threat and undue influence, as they had allegedly done in this case, and then proceed to punish them, on the strength of their own statements. It was submitted, that in ....
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....reliance on K.T.M.S. Mohd. v. Union of India, (1992) 3 SCC 178 and invited our attention to the observations made in paragraph 34. The same is extracted hereunder: 34. We think it is not necessary to recapitulate and recite all the decisions on this legal aspect. But suffice to say that the core of all the decisions of this Court is to the effect that the voluntary nature of any statement made either before the Custom Authorities or the officers of Enforcement under the relevant provisions of the respective Acts is a sine quo non to act on it for any purpose and if the statement appears to have been obtained by any inducement, threat, coercion or by any improper means that statement must be rejected brevi manu. At the same time, it is to be noted that merely because a statement is retracted, it cannot be recorded as involuntary or unlawfully obtained. It is only for the maker of the statement who alleges inducement, threat, promise etc. to establish that such improper means has been adopted. However, even if the maker of the statement fails to establish his allegations of inducement, threat etc. against the officer who recorded the statement, the authority while acting on the incu....
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....t arrive at a finding upon application of their mind to the retraction and rejected the same upon assigning cogent and valid reasons 18herefore. Whereas mere retraction of a confession may not be sufficient to make the confessional statement irrelevant for the purpose of a proceeding in a criminal case or a quasi criminal case but there cannot be any doubt whatsoever that the court is obligated to take into consideration the pros and cons of both the confession and retraction made by the accused. It is one thing to say that a retracted confession is used as a corroborative piece of evidence to record a finding of guilt but it is another thing to say that such a finding is arrived at only on the basis of such confession although retracted at a later stage. 39. The appellant is said to have been arrested on 27.10.1994; he was produced before the learned Chief Metropolitan Magistrate on 28.10.1994. He retracted his confession and categorically stated the manner in which such confession was purported to have been obtained. According to him, he had no connection with any alleged import transactions, opening of bank accounts, or floating of company by name of M/s Sun Enterprises, export....
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.... Therefore, for the case in hand, the above statements are not to be referred to as corroborative pieces of evidence, but as primary evidence to establish the guilt of the appellant. It is in this background, that we shall endeavour to apply the legal position declared by this Court, to determine the veracity and reliability to the statements, which later came to be retracted by the appellant and also by his wife. Insofar as the above statements are concerned, there is no doubt whatsoever, that they were all made either at the time of the raid, which was carried out by the officers of the Enforcement Directorate at the residence of the appellant, or whilst the appellant was in custody of the Enforcement Directorate. Immediately after the appellant was released on bail by the Additional Chief Metropolitan Magistrate, Madras on 27.10.1989, on the same day itself, both the appellant - A. Tajudeen and his wife T. Sahira Banu addressed communications to the Director, Enforcement Directorate, New Delhi resiling from the above statements, by clearly asserting that they were recorded under coercion and undue influence, and would not be binding on them. 16. Having given our thoughtful cons....
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.... telephone from Singapore, to inform him about the delivery of the amount recovered from his residence on 25.10.1989. Additionally, the Enforcement Directorate could have led evidence to establish that the aforesaid Abdul Hameed with reference to whom the appellant made statements on 20.4.1989, 25.10.1989 and 26.10.1989, was actually resident of Singapore, and was running businesses there, at the location(s) indicated by the appellant. Still further, the officers of the Enforcement Directorate could have ascertained the truthfulness of the factual position from Shahib, the shop boy of the appellant - A. Tajudeen, whom he allegedly sent to hand over a sum of Rs. 60,000/- to Shahul Hameed (a relative of Abdul Hameed) of Village Pudhumadam. Had the statements of the appellant and his wife been corroborated by independent evidence of the nature indicated hereinabove, there could have been room for accepting the veracity of the statements made by the appellant - A. Tajudeen and his wife T. Sahira Banu to the officers of the Enforcement Directorate. Unfortunately, no effort was made by the Enforcement Directorate to gather any independent evidence to establish the veracity of the allegat....