TaxTMI 
TaxTMI 
2019 (4) TMI 332
X X X X Extracts X X X X
X X X X Extracts X X X X
....n 3rd and 4th May, 1991 under FIR No. RC 5(S)/91- SIU(V) dated 20th April 1991. Besides, recovery of some Indian and foreign currencies, some documents were recovered. The documents included two spiral note books (marked MR 68/91 and MR 71/91), two small spiral pads (marked MR 69/91 and MR 70/91) and two files, each containing some loose sheets of papers (marked MR 72/91 and MR 73/91). MR-71/91 was considered to be the main 'mother' diary as far as the criminal proceedings were concerned. In the FERA proceedings MR 71/91 was marked as MR 209/93 and MR 77/91 was marked as MR 207/93. 2.1. The CBI registered FIR No. RC 1(A)/95 ACU (VI) on 4th March 1995 against Mr. S.K. Jain and Mr. J.K. Jain, the Appellants herein and certain others for the offence both under the Prevention of Corruption Act, 1988 ("PCA") as well as FERA. The FIR stated that the entries in the diaries revealed that payments to 119 persons through hawala channels "were partly explained by the accused S.K. Jain who is the master of the said documents and the employer of the accused J.K. Jain who had maintained the documents in his own handwriting in the coded words and figures." The total amount disbursed wa....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... fact that this Tribunal had earlier dismissed the connected appeal of the present Appellant qua SCN VIII pertaining to entry appearing under the date 9th Oct (Monday). The Appellant had approached the Hon‟ble High Court of Delhi in S.K Jain vs UOI, Criminal Appeal 340 of 2008, against the order dismissing the said appeal. 7. There is no denied on behalf of respondent that the above noted entries/diary (M-207/93) has been dealt with by the Hon‟ble High Court of Delhi at great length and by judgment dated 29.05.2014 passed by Hon‟ble High Court in Criminal Appeal No. 340 of 2008 (supra). Ultimately, it was held that the said diary is an inadmissible piece of evidence and cannot be relied upon and therefore, the appeal filed by appellant was allowed. 8. The following conclusions have emerged from the judgment dated 29.05.2014 passed by Hon‟ble Court in Crl. Appeal No. 340 of 2008: a) That Respondent no. 1 S.K. Jain was justified in taking recourse to the protection afforded by Article 20(3) of the Constitution; and no adverse inference may be presumed thereof; no presumed admission on behalf of SK Jain is implicit in the said statements under Section ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... The modus operandi of the Appellant (S.K. Jain) was that he would operate in India, receiving and transmitting Indian Rupees to various people. On instruction, his foreign counterparts (one Mohd. Ameer Deen Habib & one SSO Arif) would receive and/ or remit the foreign currency to the designated beneficiaries. 6.2. The Enforcement Directorate, having analysed these documents alongwith the S.40 - FERA statements given by numerous persons involved, has decoded these seized documents and has established that the Appellant has contravened the provisions of the FERA, 1973, and thus discharged its statutory duty as per the provisions of the FERA, 1973. 6.3. As per the scheme of the Act, 1973, statutory presumption is embedded against the Noticees, after a reading of Section 40, Section 59, Section 71 and Section 72 of the Act. The judgments of the Hon'ble Supreme Court in Samba Siva Rao and CBI Vs. State of Rajasthan and those of the Hon'ble Delhi High Court in Prem Singh Chawla and S.K. Jain (Justice Mukta Gupta). After the Enforcement Directorate presents its prima facie case, onus shifts onto the Noticees to establish their case. 6.4. In the present case, despite oppo....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... in the case of Union of India Vs. M. Samba Siva Rao (2000) 5 SCC 431, whilst analyzing Sections 40 and 56, as well as the entire scheme of the FERA, 1973 held: "3. Mr. R.K. Handoo, the learned counsel appearing for the accused- respondents in some of the appeals as well as Mr A.K. Ganguly, the learned Senior Counsel, appearing for the accused in some of the appeals however contended that the orders/directions, violation of which is punishable under Section 56 of the Act are those statutory orders or directions and the summons issued under Section 40 has no statutory character and, therefore, the said violation by the person summoned, cannot be made punishable under Section 56 of the Act. It was also further contended that the "offence" not being defined under the Act, one will have to examine the definition of "offence" in the General Clauses Act and on such an examination, it would appear that the impugned violation cannot be held to be an "offence" and, therefore, cannot be made punishable under Section 56 of the Act, and the High Court, therefore was fully justified in quashing the complaints filed. For better appreciation of the contentions raised, it would be necessa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....summoned shall be bound to attend either in person or by authorised agents, as such officer may direct; and all persons so summoned shall be bound to state the truth upon any subject respecting which they are examined or make statements and produce such documents as may be required: Provided that the exemption under section 132 of the Code of Civil Procedure, 1908 (5 of 1908), shall be applicable to any requisition for attendance under this section. (4) Every such investigation or proceeding as aforesaid shall be deemed to be a judicial proceeding within the meaning of sections 193 and 228 of the Indian Penal Code, 1860 (45 of 1860). 6.6.4. Thus, from the statements recorded u/s 40 of the FERA, along with the seized Diaries, the contents of the Show Cause Notice is established, and the Noticee has to disprove the same. 6.7. The FERA, specifically envisages the difficulties that the Enforcement experiences in investigation and hence, presumes guilt on the part of the accused, when there is reasonable preponderance that the accused has been engaging in the unauthorized conversion of foreign exchange. The Defense, on their side, has not led any evidence to show that the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ement of J.K. Jain shows that he admits recovery of the foreign exchange from his possession and also confesses about his writings in the diary. He only states that the foreign currency, Indian currency and Indira Vikas Patra were owned by the Petitioner. Thus, it is a confession, which is not exculpatory in nature. Since the statement inculpates the maker i.e. J.K. Jain also, the same is admissible against the Petitioner under Section 30 of the Evidence Act as both of them are being tried together for the same offences. Besides the confession of the co-accused, there are other pieces of evidence in the form of recovery of the foreign exchange and the seizure memo. This being not the only evidence, prima facie there is sufficient evidence at this stage to raise a strong suspicion against the Petitioner of having committed the offence and the veracity of the evidence and whether a conviction can be based thereon would be decided during the trial. Further, Section 71(3) FER A casts a burden on the Petitioner to prove that the possession by the co-accused on behalf of the Petitioner was lawful. Further in terms of Section 106 of the Evidence Act also since the facts are in the special....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Petitioner, the same is duly admissible under Section 30, Evidence Act. However, the evidentiary value that can be attached to a statement of the co-accused is only that it can be taken into consideration to lend assurance as held by the Constitution Bench in Haricharan Kurmi (supra). This can certainly not be treated as substantive evidence and can be pressed into service when the Court is inclined to accept other evidence and feels the necessity of seeking for an assurance in support of its conclusion deducible from the said evidence." 6.8.4. A comprehensive reading of the entire statement of Mr. J.K. Jain shows that he admits recovery of the foreign exchange from his possession and also admits to being the author of the entries / transactions found in the seized Diaries. 6.8.5. The Appellant has admitted that Mr. IK. Jain is his employee and thus, the inference that Mr. J.K. Jain was holding the foreign currency and the documents for and on behalf of the Appellant, can be drawn. 6.8.6. Section 71(3) of the FERA, 1973, casts a burden on the Appellant to prove that the possession of the currencies and documents by Mr. J.K. Jain on behalf of the Appellant, was lawful. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the recent (unexplained) possession of stolen property", though the latter is only a presumption of fact. Thus the burden on the prosecution or the Department may be considerably lightened even by such presumptions of fact arising in their favour. However, this does not mean that the special or peculiar knowledge of the person proceeded against will relieve the prosecution or the Department altogether of the burden of producing some evidence in respect of that fact in issue. It will only alleviate that burden, to discharge which, very slight evidence may suffice." 6.8.9. Similarly, the Hon'ble Delhi High Court in Prem Singh Chawla vs Director of Enforcement (1987 Cri 1579) had occasion to deal with entries in seized books of accounts, and came to hold: "7. Learned counsel then contended that the bare entries in the books of accounts without proof cannot be treated or considered as an evidence in the case. Reliance was placed on Section 34 of the Evidence Act. In order to apply this provision, learned counsel submits, it would be essential to establish that the account books were regularly kept in the ordinary course of business. The entries made in such acc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eceipt of Rs. 3,68,000.00 in nine Installments, the Department not only placed reliance on the admission of the appellant but also found corroboration from the account books as well as the letters of the non-residents. The crux of the matter is that the appellant has not been able to furnish any valid explanation to the receipt of this amount and its disbursement to 48 persons. Admittedly he had no authority or permission from the competent quarters to accept the amounts from a non-resident Indian, and on his instructions to distribute the same to various persons. The appellant has failed to discharge the heavy onus and the courts below in my opinion, were justified in raising the presumption against the appellant. No interference in this finding is called for." 6.8.10. Thus, by denying to tender a statement in response to the questions posed by the Enforcement, the narration put forth by the Enforcement Directorate (which has been supported by the seized diaries and the S. 40 Statements) becomes unrebutted, and thus, there is a statutory presumption operating against the Appellant. 6.9. Submission D: As per Section 72, the contents of truth of the documents will have to be p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion for any offence under this Act which requires a culpable mental state on the part of the accused, the court shall presume the existence of such mental state but it shall be a defence for the accused to prove the fact that he had no such mental state with respect to the act charged as an offence in that prosecution. Explanation.-In this section, "culpable mental state" includes intention, motive, knowledge of a fact and belief in, or reason to believe, a fact. (2) For the purposes of this section, a fact is said to be proved only when the court believes it to exist beyond reasonable doubt and not merely when its existence is established by a preponderance of probability. (3) The provisions of this section shall, so far as may be, apply in relation to any proceeding before an adjudicating officer as they apply in relation to any prosecution for an offence under this Act. 6.11. The Defense has not led any cogent evidence to disprove that the Diary notings are not of foreign exchange conversions. The FERA, 1973 contemplates a reversal of roles, whereby the prosecution will lead evidence in respect to the probability of conversion of contravention of the provisi....