Partly allowed

FPA-FE-17/MUM/2009 of Shri Satpal Singh Vig @Pali v. The Joint Director, Directorate of Enforcement, Mumbai

ATFP7 May 2024FPA-FE-17/MUM/2009

Case brief

AI extract

What is this about?

Tribunal reduced penalties imposed for betting contraventions under FEMA 1999, considering evidence validity and proportionate punishment.

What did the court decide?

Original penalty of Rs. 26 lakhs reduced to Rs. 10 lakhs; penalty of Rs. 98 lakhs reduced to Rs. 40 lakhs. Total penalty fixed at Rs. 50 lakhs.

What the court decided

FPA-FE-17/MUM/2009 of Shri Satpal Singh Vig @Pali Vs. The Joint… — Property and Title | ATFP (2024)

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APPELLATE TRIBUNAL UNDER SAFEMA AT NEW DELHI

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MP-FE-105/MUM/2023 (Misc.) FPA-FE-17/MUM/2009

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Shri Satpal Singh Vig @Pali

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… Appellant Versus

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The Joint Director, Directorate of Enforcement, Mumbai … Respondent

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Advocates/Authorized Representatives who appeared

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For the Appellant : Shri Suryanarayan Singh Shri Varun Lal, Advocates For the Respondent : Shri ShoumenduMukherji Ms. Akanksha Gupta Ms. Megha Sharma, Advocates

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CORAM:

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JUSTICE MUNISHWAR NATH BHANDARI : CHAIRMAN SHRI BALESH KUMAR : MEMBER

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FINAL ORDER 07.05.2024

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FPA-FE-17/MUM/2009

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This order would dispose of the appeal preferred by the appellant against the Adjudication Order passed by the Special Director on 31.12.2008. A penalty of Rs.26 lakhs was imposed for the contravention of Section 4 of the Foreign Exchange Management Act, 1999 (for short `the Act of 1999) and a sum of Rs.98 lakhs for the contravention of Section 3(d) of the Act of 1999.

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The brief facts of the case are that the respondent received a specific information that the appellant and one Jaspal Singh Saluja were receiving and accepting bets on scores and outcome of cricket

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FPA-FE-17/MUM/2009

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matches and other sporting events on behalf of their clients and bookies based locally, nationally and internationally. Their business premises was Flat No. 7, 2^nd Floor, Suraj Apartments, Behind ICICI Bank, Ram Maruti Road, Naupada Thane. A search was conducted on 02.08.2004 where documents of incriminating nature in terms of the mobile phones, computers, TV, recording systems, laptop, audio cassettes, etc. were found apart from Indian currency of Rs.80,000/. It was seized under the Panchnama. At the time of search, appellant Satpal Singh Vig was not present but one Jaspal Singh Saluja and some other persons were available. The statement of Jaspal Singh Saluja was recorded during the course of search on 02.08.2004 and thereafter his statements were recorded on 03.08.2004, 08.09.2004 and 11.10.2004. The statement of appellant was also recorded on 03.08.2004, 04.08.2004 and 06.08.2004. It emerged from the record that 75 pages of printouts of data were retrieved from personal computer unit marked `P’ on 11.10.2004.

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The appellant was served with the show cause notice and after providing a proper opportunity of hearing, the penalty was imposed by the Special Director vide order dated 31.12.2008 which has been assailed in this appeal.

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The learned counsel for the appellant submitted that the premises raided by the respondent on 02.08.2004 had no connection with the appellant. In view of the above, if any material was retrieved at the time of search, it cannot be used to connect the

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FPA-FE-17/MUM/2009

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appellant for the violation and contravention of any provisions of the Act of 1999. The appellant was not involved in any illegal activity taking place at the premises. The statements of Jaspal Singh Saluja could not have been used against the appellant for imposition of penalty. The respondent grossly erred in relying on the statementsof Jaspal Singh Saluja. He had retracted his statements, thus reliance on it could not have been placed otherwise also. The appellant also retracted and resiled from his statementsthus without any corroborating evidence, it could not have been relied by the respondent in passing the impugned order. He has relied upon the judgment of the Apex Court in Vinok Solanki Vs. Union of India (2008) 16 SCC 537.

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The learned counsel further submitted that the respondents were under an obligation to prove that the statements recorded by them have been obtained without any inducement, threat or harassment. The respondents have relied on the retracted statements of Jaspal Singh Saluja to pass the impugned order not substantiated by any other evidence.

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It is further submitted that the Special Director was under an obligation to see the factum of retraction of the confessional statement even of the appellant and otherwise confession of a coaccused cannot be treated as substantive evidence to press into service in passing the order. The Special Director has relied on the statement made by the appellant though it could not have been taken as a piece of evidence to book the appellant and otherwise the

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statement of co-accused could not have been taken to be a substantive evidence especially when it is not supported by other corroborating evidence.

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It is also submitted that the documents alleged to have been recovered during the course of raid were written by Anik Shah but he was not compelled to appear before the authority thus, documents could not have been relied. The respondents failed to make endeavour to record the statement of Anik Shah who is said to be the author of the documents seized by the respondents. The reference of the judgment of the Apex Court in the case of TakhajiHiraji Vs. ThakoreKubersingChamansing reported in (2001)6 SCC 145 has been given. In absence of the statement of Anik Shah, the documents recovered at the time of raid could not have been pressed into service. However, the Special Director ignored the aforesaid while relying on the documents against the appellant.

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It is further submitted that the appellant was not acquainted with English language yet his statement and the statement of Jaspal Singh Saluja were recorded in a language unfamiliar to the appellant thus the statements aforesaid could not have been relied on as a piece of evidence to establish the contravention.

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An argument has been raised that as per the computer printouts, indeed the amount said to have been received to/from non-residents of India but there was no evidence indicating that those entries were acted upon in absence of any other evidence to substantiate receipt of the amount.

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The learned counsel further submitted that there were discrepancies regarding the receipt of alleged amount of Rs.98,37,900/- but it was ignored by the Special Director. The reference of the complaint dated 16.08.2005 was also given to show the receipt of amount of Rs.51,13,900/- by Shri Satpal Singh Vig i.e. the appellant from various persons whose names have been mentioned. Those transactions were pertaining to the period from 20.05.2004 to 01.08.2004. The identity of the persons from whom the said amount was received has been mentioned either by giving only initials or with the first name of the person concerned such as Arjun, Charlie, Shambhu, Krishna, Moti, Munni, etc. The respondents did not make efforts to find out the details of those persons such as telephone numbers, full names, their addresses in or outside India. Thus, allegation against the appellant remains out of presumption. It is further submitted that the cell phone numbers recorded in the documents seized, against the names of some of the said persons would not be a cogent evidence to prove the case. Jaspal Singh Saluja may have stated about the clients from Dubai, Pakistan, Nepal and London but no effort was made to find out whether those clients were non-residents of India.

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Coming to the facts of the case again, it is submitted that a sum of Rs.47,24,000/- was documented as payable or paid between 15.06.2004 and 01.08.2004. Specific details regarding the identity of the individuals to whom these amounts were either payable or

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FPA-FE-17/MUM/2009

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paid were not given. Thus, for all the reasons, the impugned order deserves to be set aside.

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The appeal has been contested by the respondents. It is submitted that it is not only the statement of Jaspal Singh Saluja but the statement of the appellant himself were considered along with the material to prove the contravention of the provisions of the Act of 1999 by the appellant. During the course of search, the various mobile phones, computers, TV, recording systems, laptop, audio cassettes and Indian currency were recovered and seized under Panchnama. It was in the presence of the employee Jaspal Singh Saluja. The retraction of the statement was not immediate but after a lapse of considerable period which could not have been accepted and in absence of retraction, the Department could prove the statement to have been taken under freewill of the appellant and others. In the statement, Jaspal Singh Saluja explained the activities carried out by the appellant in cricket betting and he also vividly explained the documents seized from the premises of the appellant.

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The premises was taken on rent by the appellant and the work was looked after by Jaspal Singh Saluja apart from the appellant. It is not that only the statements of the appellant and Jaspal Singh Saluja have been relied but the material seized during the course of search was also relied and it was sufficient to substantiate the allegation against the appellant. It is further submitted that the FPA-FE-17/MUM/2009 Page 6 of 14

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appellant had shown difficulty to understand the statements of Jaspal Singh Saluja recorded in English language. He was allowed to take assistance to understand the statements in his own language and accordingly one Rahul Vallabhdas Thakkar was provided to take hisassistance. The statement of the appellant was read over and explained to him in Hindi by the said Rahul Vallabhdas Thakkar and the relevant endorsement to this effect is available on the statement. It was further stated that the statement of appellant was written in Hindi on 4.8.2004 and it was in his own handwriting when he was even explained the documents contained in the file. The other statement was also recorded in Hindi. It was admitted by the appellant that his statement dated 06.08.2004 has been written by his employee Jaspal Singh Saluja. Thus, it is incorrect to submit that the statements recorded by the respondents were in the language unfamiliar to the appellant. The material collected by the respondents were sufficient to show that the premises was taken on lease apart from telephone lines where Jaspal Singh Saluja was found working. The appellant has used the name of Jaspal Singh Saluja for taking the telephone and even for other purposes. It was stated by Shri Saluja in his statement dated 02.08.2004 that some of their clients are from Pakistan, Dubai, Nepal and London.

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The argument in reference to non-production of Anik Shah is erroneous. The Department and the authority below sent summons to him but despite several and repeated summons, he did not appear. Thus, it is not a case where the respondents did not make

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efforts to call for Anik Shah as the writing on the documents recovered was said to be of Anik Shah and accordingly he was summoned. The appellant has taken an excuse of non-production of Anik Shah despite availability whereas the record shows that the summons were sent to him time and again but despite that he did not appear. Counsel for the respondents had given further details of the fact to show involvement of the appellant in the betting on scores and outcome of cricket matches which would be considered while dealing with the rival submissions.

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We have considered the rival submissions and scanned the record carefully. The brief facts of the case have been given which are not required to be repeated other than that on 02.08.2004, a search was conducted by the respondents in Flat No. 7, 2^nd Floor, Suraj Apartments, Behind ICICI Bank, Ram Maruti Road, Naupada Thane on the specific information about the involvement of the appellant regarding the receipt of amount on the scores and outcome of the cricket matches for their clients and bookies which are nationally and internationally working. The statement of the person engaged by the appellant i.e. Jaspal Singh Saluja was recorded on 02.08.2004 itself followed by his statements on03.08.2004, 08.09.2004 and 11.10.2004. The statement of the appellant was recorded on 03.08.2004, 04.08.2004 and 06.08.2004.

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The Special Director has not recorded finding solely based on the statements of appellant and Jaspal Singh Saluja who is said to be co-accused but also based on the documents recovered from the

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premises. The record further shows that summons were sent to Anik Shah to seek his presence but despite repeated efforts of the respondents, he did not appear. Thus, it is not a case where the respondents failed to produce the relevant witness deliberately rather they made all the efforts for his production. It may be that the Special Director has made an observation that the appellant could have produced Anik Shah but even if the observation aforesaid is ignored, the fact remains that Anik Shah was summoned but did not appear in evidence. The aforesaid is one part otherwise the respondents found contravention of Section 3(d) and 4 of the Act of 1999. The detailed finding of it has been recorded by the Special Director. It is after recording a finding that the statements were read over to the appellant if it was in English language and that too by giving assistance of the employee. The further statements of the appellant and others were recorded in Hindi thus it is not that the appellant was not made aware about the statement or the contents thereof by presenting it in Hindi language familiar to the appellant.

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The statements of Shri Saluja and the appellant were recorded without any torture, threat or harassment otherwise the appellant would have retracted from his statement immediately but there is nothing on record to show retraction without delay. The delayed retraction cannot be accepted unless justified by the reasons which does not exist in this case. The Department thus remains successful to show that the statements were recorded without inducement, pressure or by giving threat. The aforesaid is proved from the fact

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that the statement of Shri Saluja was recorded in continuity from the date of search i.e. 02.08.2004. His statement was recorded even on 03.08.2004, 8.09.2004 and 11.10.2004 in a period of three months but he did not state about the harassment or refused to give his statement for the aforesaid reasons in a small period of three months. He had not retracted from his statement immediately and, therefore, it cannot be taken that the statements were recorded with inducement. The position of the appellant is similar. His statements were recorded on 03.08.2004, 04.08.2004 and 06.08.2004. It was again in continuity and he did not raise any objection to record his statement in a period of four days by calling him and there was no retraction of his statement immediately thereupon. Thus, it was rightly relied upon by the respondents and otherwise also the allegations were substantiated by other material collected during the course of search and kept under a Panchnama signed by Shri Saluja. Shri Saluja had specifically stated that the premises was on rent and that their clients are from Pakistan, Dubai, Nepal and London.

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The documents showing material to substantiate the allegation against the appellant said to have been written by Anik Shah who was summoned by the respondents but did not appear. There is no illegality, if the documents written by Anik Shah have been relied, which were otherwise recovered at the time of search and seized under the Panchnama signed by Shri Saluja. The documents contained even in the nature of fax messages out of which few were

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not legible but others were legible. The fax transmission cover sheet sent to M. Abhishek on 27.06.2004 enclosing therewithbankwise details and giving details regarding the previous balance amount received from Manojbhai and total balance was 1,64,181.00 Dhs. The fax addressed to Palibhai by Abhishek was again in reference to 55,165 Dhs.Transferred to Abhishek account in UK leaving the balance of 24835 Dhs. There were such similar material referred by the Special Director in his order. It is further alleged that the statements of Manojbhai and Abhishek of Dubai have not been recorded but they were not available in country.

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Regarding his contention that the Complaint contains terms received/receivable’ and paid/payable’ which cover amounts of Rs.51,13,900/- and Rs.17,24,000/- respectively and that the same should have been distinguished separately as the amounts which are paid/payable and received/receivable otherwise there should be a presumption of guilt’ on the part of the Department in this regard, it is stated that as per the facts and the circumstances of the case as recorded in the Complaint, it is seen that the noticee was indulging in accepting and placing bets on cricket matches on behalf of his clients that the investigations made revealed that the noticee Shri Satpal Singh Vig had 19 clients who were based overseas out of which accounts of 11 were retrieved from the seized computer which are annexed as relied upon documents’. The net amount outstanding at the end of series of bets accepted/placed by a particular overseas client is arrived at in a manner explained in

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detail in the second para of page 7 of the Complaint. It was seen that there were 25 outstanding accounts bifurcated into two groups of 15 and 10 being received/receivable’ and paid/payable’ respectively. It is also mentioned in the Complaint that one Shri Manojbhai based in Dubai is handling these accounts i.e. the dealings with overseas clients on behalf of Shri Satpal Singh Vig@Pali. Therefore section 3(d) of FEMA 1999 is invoked in respect of these amounts and it is appropriate given the nature of transactions involved. These amounts are bets accepted/placed and there is/can be a time difference between acceptance/placement of a bet and realisation of the same. However, as stated in the said section `…..creation or transfer of a right to acquire any asset outside India by any person’ in this case is established the moment Shri Manojbhai accepts/places a bet on behalf of the noticee. The terms in question here in fact do not in any way affect the contravention committed by the noticee and appear to have been used to encompass the transactions which could have been at different stages of completion merely on account of time factor or physical delivery of amounts.

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In totality of the facts, we find that apart from the statements of the appellant and Shri Saluja, the material produced was sufficient to substantiate the allegation against the appellant. This is to show that on instructions, Manojbhai from the account available was paid Dhirams 80,000/- on 27.6.2004 and Dhirams 1,39,346/- on

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02.07.2004. Such other payments have been referred by the Special Director apart from the other material.

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The case in hand is not such where the respondents could not prove the case by adducing the evidence otherwise if we enter into other facts and the evidence, it would be sufficient to show that substantial evidence was led by the respondents to prove the case, however, what has been referred by us would also be sufficient to find out the case against the appellant. Thus, we do not find any error in the findings recorded by the Special Director.

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The issue now remains about the penalty. A penalty of Rs. 26 lakhshas been imposed for the contravention of Section 4 and Rs.98 lakhs for Section 3(d) of the Act of 1999. We find the penalty amount to be in excess to the contravention of the amount involved therein. The appellant has already deposited Rs.50 lakhs towards the pre-deposit pursuant to the order of Bombay High Court though the Tribunal passed an order to deposit 60% of the amount to satisfy the condition of pre-deposit. In any case, to make the penalty amount proportionate to the contravention, we reduce it and accordingly for contravention of Section 4 of the Act of 1999, penalty of Rs.10 lakhs is imposed and thereby Rs.26 lakhs is substituted by Rs.10 lakhs and in the same manner penalty of Rs.98 lakhs is reduced to Rs.40 lakhs and is substituted accordingly. The total penalty of Rs.50 lakhs is imposed upon the respondents and with the aforesaid, appeal is partly allowed.

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(JUSTICE MUNISHWAR NATH BHANDARI) CHAIRMAN

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(BALESH KUMAR) MEMBER

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New Delhi 7^th May, 2024 ‘SRD’

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FPA-FE-17/MUM/2009