Partly allowed

FPA-FE-02/JL/2009 of Shri Ashok Kumar @ Shoki v. The Special Director Directorate of Enforcement, Jalandhar

ATFP4 Dec 2024FPA-FE-02/JL/2009

Case brief

AI extract

What is this about?

The Appellate Tribunal examined appeals against penalties imposed under FERA 1973 for contravention of foreign exchange regulations. While upholding the contravention, the Tribunal reduced the penalty from Rs 80 lakhs to Rs 8 lakhs per appellant as the original was disproportionate to the sum involved.

What did the court decide?

The penalty of Rs 80 lakhs imposed on each appellant was reduced to Rs 8 lakhs per appellant.

FPA-FE-02/JL/2009 of Shri Ashok Kumar @ Shoki Vs. The Special… — Banking and Recovery | ATFP (2024)

¶1

APPELLATE TRIBUNAL UNDER SAFEMA AT NEW DELHI

¶2

(1) FPA-FE-02/JL/2009
Shri Ashok Kumar @ Shoki	…	Appellant
Versus
The Special Director Directorate of Enforcement, Jalandhar	…	Respondent
(2) FPA-FE-03/JL/2009
Shri Manoj Kumar @ Goga	…	Appellant
Versus
The Special Director Directorate of Enforcement, Jalandhar	…	Respondent

¶3

Advocates/Authorized Representatives who appeared

¶4

For the Appellant : Ms. Mrinalini Sharma, Advocate For the Respondent : Sh. Vivek Gurnani and Sh. Kanishk Maurya, Advocates

¶5

CORAM

¶6

JUSTICE MUNISHWAR NATH BHANDARI

: CHAIRMAN

FINAL ORDER

04.12.2024

These appeals have been filed under section 19 of Foreign

¶11

Exchange Management Act, 1999 to challenge the order dated

¶12

29.11.2008 passed by the Special Director of Enforcement,

¶13

New Delhi. The penalty of Rs. 80 lakhs has been imposed on

¶14

each of appellants Manoj Kumar and Ashok Kumar.

¶15

A challenge to the order has been made mainly on the

¶16

factual grounds. It is alleged that the appellants have

¶17

FPA-FE-02-03/JL/2009

¶18

Page 1 of 9

¶19

contravened section 8(1) and 8(2) of FERA, 1973 and thus

¶20

were liable for the action under section 50 of the FERA,

¶21

The appellants were having US $ 3910, Pound 3185, Canadian Dollar 6175, UAE Dirhan 1000, Australian Dollar

¶22

1000, D.M. 750, Guilder 3185 & IMO for US Dollar 251 at

¶23

the time of search.

¶24

They were found selling foreign exchange equivalent to

¶25

Rs. 80 lakhs out of the foreign exchange without the

¶26

previous general or special permission of Reserve Bank of India.

¶27

The learned counsel for the appellant submitted that

¶28

recovery of the currency was not from the appellant’s residence, rather it was from the residence of his sister. Yet,

¶29

they were made liable to account for the foreign currency to

¶30

show special or general permission of RBI to sell and

¶31

purchase foreign currency. They have been penalized by

¶32

imposing heavy penalty of Rs. 80 lakhs though the worth of

¶33

FPA-FE-02-03/JL/2009

¶34

Page 2 of 9

¶35

the foreign currency as on the date of the recovery was not

¶36

more than 8 lakhs.

¶37

In the light of the aforesaid, even if the appellants are

¶38

found in contravention of section 8 (1) and section 8 (2) of the

¶39

FER Act of 1973, the penalty imposed on them is

¶40

disproportionate and thus to be rationalized.

¶41

The learned counsel for the appellant did not raise any

¶42

other argument though she was having opportunity to refer

¶43

to any other arguments for which opportunity was given.

¶44

The learned counsel for the appellants however closed the

¶45

argument with the prayer to allow the appeal.

¶46

The appeal was vehemently contested by the learned

¶47

counsel for the respondent. It is submitted that the different foreign currency was found with the appellants. It was not

¶48

disputed by them rather they admitted it but as an

¶49

afterthought subsequently stated that appellant Ashok

¶50

Kumar was working with Sudhakar Verma and therefore he

¶51

FPA-FE-02-03/JL/2009

¶52

Page 3 of 9

¶53

has not committed any contravention at his own but was at

¶54

the instance of Sudhakar Verma.

¶55

The statement of the appellant Manoj Kumar was

¶56

recorded on 04.12.1992 wherein he stated that the house

¶57

from where the foreign currency was recovered was in the

¶58

name of Madhu, w/o of his brother Ashok Kumar. It was

¶59

further stated that seized foreign exchange was purchased by

¶60

him 6 to 7 days back from a person who had come to their

¶61

residence. They were knowing the person since long. He was

¶62

engaged in sales and purchase of foreign exchange.

¶63

The documents seized from their house were containing

¶64

details of their transaction in foreign exchange including the

¶65

rates thereof.

¶66

The statement of Ashok Kumar was also recorded on

¶67

04.12.1992 where he admitted seizure of foreign exchange

¶68

and Indian currency apart from documents from the premises.

¶69

He refused to make any other statement in that regard.

¶70

FPA-FE-02-03/JL/2009

¶71

Page 4 of 9

¶72

The authority below had given ample opportunity to both

¶73

the appellants to file the reply and matter was adjourned from

¶74

time to time before conclusion of the proceeding. It was in a

¶75

period of eight years to provide a fair opportunity of hearing to

¶76

the appellants. Initially, the appellants did not participate in

¶77

personal hearing despite notice. However, when the notice

¶78

was again served, they appeared for personal hearing and

¶79

denied commission of the contravention at their own but was

¶80

at the instance of Sudhakar Verma.

¶81

The statement of the appellants were sufficient to find contravention of section 8 (1) and 8 (2) of FERA Act, 1973.

¶82

The penalty of Rs. 80 lakhs has been imposed on each

¶83

appellant which may not be interfered by the Tribunal.

¶84

We have considered the rival submission raised by the

¶85

counsel for the parties and perused the record carefully.

¶86

The counsel for the appellants has denied possession of the foreign currency with Ashok Kumar and even Manoj

¶87

FPA-FE-02-03/JL/2009

¶88

Page 5 of 9

¶89

Kumar (two brothers). The foreign currency said to have been

¶90

recovered from their sister’s house and therefore the appellant

¶91

could not have been made responsible for alleged

¶92

contravention of section 8 (1) and 8 (2) of the Act of 1973.

¶93

We find no such argument by the appellant before the

¶94

Special Director, Enforcement rather in the statements made

¶95

by the appellants, they literally admitted possession of the

¶96

foreign currency. It was later on qualified to be at the

¶97

instance of Sudhakar Verma. The careful reading of their

¶98

statement would however reveal that the foreign currency was

¶99

recovered from the house in the name of Mrs. Madhu who is

¶100

none else but the wife of appellant Ashok Kumar. The

¶101

appellant Manoj Kumar in his statement admitted that seized

¶102

foreign currency was purchased by them 6 to 7 days prior to

¶103

the seizure from a person who deals in it. The other appellant

¶104

Ashok Kumar also admitted that the foreign currency was

¶105

FPA-FE-02-03/JL/2009

¶106

Page 6 of 9

¶107

seized from his own premises, but refused to make further

¶108

statement.

¶109

In the light of the material available on the record, the

¶110

Special Director found violation of section 8(1)and 8 (2) by the appellants and accordingly imposed penalty of Rs. 80 lakhs

¶111

on each appellant under section 50 of the FERA, 1973.

¶112

If we go further deep into the matter, the documents

¶113

seized from the appellants shows their involvement in the

¶114

sale and purchase of the foreign currency without special or

¶115

general permission of the RBI.

¶116

In view of the above, we do not find any error in the impugned order for recording contravention of section 8 (1)

¶117

and 8 (2) of the Act of 1973 at the instance of the appellants.

¶118

The argument now remains in regard to the penalty imposed on each appellant said to be excessive. It was urged

¶119

that as against the foreign currency worth of Rs. 8 lakhs,

¶120

penalty of Rs. 80 lacs has been imposed. We find that value

¶121

FPA-FE-02-03/JL/2009

¶122

Page 7 of 9

¶123

of foreign currency was not Rs. 80 lakh at the relevant time.

¶124

It was even admitted by both the counsels, if it is taken at

¶125

the rate prevalent on the date of seizure.

¶126

In the light of the aforesaid, we find penalty of Rs. 80

¶127

lakhs to be excessive. It is even after taking into

¶128

consideration the documents recovered from the appellant showing their involvement in dealing with the foreign

¶129

currency without prior or special permission of the Reserve

¶130

Bank of India.

¶131

In the light of the aforesaid, we are inclined to reduce

¶132

the amount of penalty from 80 lacs to 8 lakhs on each

¶133

appellant to rationalize the quantum of penalty.

¶134

We find that the amount aforesaid has already been

¶135

deposited by the appellants to satisfy the condition of pre

¶136

deposit in pursuance to the order passed by the High Court

¶137

where the appellants were directed to deposit 10% of the

¶138

penalty amount and accordingly each of the appellant has

¶139

FPA-FE-02-03/JL/2009

¶140

Page 8 of 9

¶141

deposited the amount, as stated. Accordingly, the

¶142

interference in the impugned order is caused only to reduce

¶143

the penalty amount.

¶144

The penalty of Rs. 80 lakhs imposed on each appellant

¶145

is substituted with 8 lakhs on each appellant and with the

¶146

aforesaid modification, the appeal is disposed of.

¶147

(Justice Munishwar Nath Bhandari) Chairman

¶148

New Delhi,

¶149

4^th December, 2024

¶150

¶151

FPA-FE-02-03/JL/2009

¶152

Page 9 of 9

FPA-FE-02/JL/2009 of Shri Ashok Kumar @ Shoki v. The Special Director Directorate of Enforcement, Jalandhar

Case brief

What is this about?

What did the court decide?

FPA-FE-02/JL/2009 of Shri Ashok Kumar @ Shoki v. The Special Director Directorate of Enforcement, Jalandhar

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

Coram

Case details

All orders in this case

Similar cases