Remanded

FPA-FE-21/CHN/2018 of Pulikuth Hamzath Abdusalam v/s The Special Director, Directorate of Enforcement, Chennai

ATFP9 Aug 2019FPA-FE-21/CHN/2018

Case brief

AI extract

What is this about?

The Appellate Tribunal permitted an appeal against orders imposing penalty for hawala transactions. The tribunal found the investigation insufficient to establish a direct link to foreign payments under FEMA and remanded the case for a thorough investigation.

What did the court decide?

The impugned order was set aside, and the case was remanded to the original authority for a thorough investigation.

FPA-FE-21/CHN/2018 of Pulikuth Hamzath Abdusalam v/s The… — Banking and Recovery | ATFP (2019)

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APPELLATE TRIBUNAL FOR SAFEMA, FEMA, PMLA, NDPS, PBPT ACT AT NEW DELHI

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DATE OF DECISION: 09.08.2019

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FPA-FE-21/CHN/2018

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Pulikuth Hamzath Abdusalam … Appellant

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Versus

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The Special Director, Directorate of Enforcement, Chennai

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… Respondent

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Advocates/Authorized Representatives who appeared

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For the Appellant	:	Shri Mohammed Zahir, Advocate
For the Respondent	:	Mrs. Aagam Kaur, Legal Consultant
CORAM
SMT. ANANYA RAY	:	MEMBER
JUDGMENT

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FPA-FE-21/CHN/2018

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The above appeal has been filed by the appellant who was one of the noticees/parties in the impugned order No. T-4/01-CHN/2012 dated 26.02.2018. Briefly, the case is that the appellant was involved in hawala transactions and had therefore contravened the provisions of Section 3(b) and Section 3(c) of FEMA, 1999. The submission of the appellant was that the appellant has been wrongly implicated in the case and nothing was seized or recovered from his possession. The whole case is based on the statements of some other people who have stated that the appellant was disbursing Indian currencies to various people in the country both

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FPA-FE-21/CHN/2018

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Page 1 of 5

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receiving and paying and also purchasing gold out of the said money and transporting it to Kerala. The appellant has stated that since nothing was recovered from him, merely basing the entire case on statements of others, some purported mobile numbers of other people is blatantly illegal.

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Both the parties were heard at length. The following submissions were further made during the hearing by the learned counsel for the appellant;

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i. He reiterated the submission that statements of other people without any evidence against the appellant cannot be held against him,

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ii. That the statement given by him was under threat and harassment as he was confined in the ED’s office,

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iii. That although Section 3(b) and 3(c) of FEMA has been invoked to penalize him there is no corroborative evidence or link to show as to how he had received or made any payment to or by any person resident outside India which is the basic requirement under Section 3(b) and Section 3(c) of the FEMA.

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In reply, the learned counsel for the respondent stated:

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a. That both Section 3(b) and 3(c) of FEMA stipulates receipt or make any payment to or on behalf of any person resident outside India, ‘ in any manner’. This covers any type of transactions which is not authorized by the RBI.

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FPA-FE-21/CHN/2018

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Page 2 of 5

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b. That the appellant has been a habitual offender and earlier also cases have been booked against him.

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c. Both his own statement as well as the statements of co-accused from whom huge quantities of gold, Indian currency and documents were seized clearly proves his culpability. Hence, adverse presumption can be logically drawn.

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d. The appellant did not retract his statement for more than two years even after his being released from detention under COFEPOSA. Hence, his plea of retraction and the earlier statement being taken under coercion is only an afterthought.

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e. In hawala cases, the offence is in the mind of the offender and it is not necessary that the offence has to be proved till the last link in the chain. She reiterated paras 5.14 and 5.15 of the impugned order wherein the panchnama drawn at H.H. Mansion shows the signature of the appellant, which proves his presence there. Moreover, the CDR analysis of three mobile numbers recovered from the mansion, in his presence, shows that he has been making and receiving phone calls very frequently from abroad.

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All the above prove that the appellant has been indulging in the contravention of provisions of FEMA and the appeal should be dismissed, she pleaded.

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FPA-FE-21/CHN/2018

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Page 3 of 5

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I have carefully examined the case and also heard the parties at length. The moot point is whether there has been any contravention of Section 3(b) and Section 3(c) of FEMA, 1999. The provisions are reproduced below:

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Section 3 states, ‘save as otherwise provided in this Act, rules or regulations made thereunder, or with the general or special permission of the Reserve Bank no person shall………

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(b) make any payment to or for the credit of any person resident outside India in any manner;

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(c) receive otherwise through an authorised person, any payment by order or on behalf of any person resident outside India in any manner’

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The above therefore makes those offences as contravening the provisions where a person either makes any payment to a person resident outside India or receives any payment by order or on behalf of any person resident outside India. In the present case, the impugned order states that the appellant has received hawala payment of Rs. 19.18 crores from persons in India which includes Rs. 1.55 crores attempted to be transported to Kerala and seized on 29.04.2010. The impugned order has alleged that he received money (Indian currencies) from some other people some of whose name are Poonam, Getha, Raja Ram, Devidoss, Jaloor etc. who in turn has arranged this money from people from abroad. Thus, it appears that the impugned order has not established the appellant receiving the money directly from abroad. Moreover, there is no restriction on circulation of Indian money within the country, at least under FEMA. I

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FPA-FE-21/CHN/2018

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Page 4 of 5

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find that the department has not investigated those people who are Indians and who have delivered the money to him in India although the details of some of them like their mobile numbers etc. was available to the investigating authority. Moreover, the analysis of phone calls has also not been done in a complete manner as it does not show the details of the conversations.

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In the light of above, I find it appropriate to remand the case back to the original authority to do a thorough investigation both on the issues raised above as well as any other issues which they may like to investigate and pass a speaking order establishing the link as required under Section 3(b) and 3(c) of FEMA, 1999.

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The impugned order is accordingly set aside. The appeal is allowed by way of remand.

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(Ananya Ray) Member

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New Delhi, 9^th August, 2019 ‘A’

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FPA-FE-21/CHN/2018

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FPA-FE-21/CHN/2018 of Pulikuth Hamzath Abdusalam v/s The Special Director, Directorate of Enforcement, Chennai

Case brief

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FPA-FE-21/CHN/2018 of Pulikuth Hamzath Abdusalam v/s The Special Director, Directorate of Enforcement, Chennai

Case brief

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