Dismissed

FPA-FE-459/KOL/2005 of Sh Liakat Ali v. The Special Director Directorate of Enforcement, Kolkata

ATFP13 Aug 2024FPA-FE-459/KOL/2005

Case brief

AI extract

What is this about?

The Appellate Tribunal dismissed appeals filed by three individuals challenging penalties under the Foreign Exchange Regulation Act. The Tribunal held that the Adjudicating Authority correctly relied on seized documents and explanatory statements which were corroborating, even though the appellants retracted statements alleging coercion. The denial of cross-examination did not cause prejudice.

What did the court decide?

Appeals filed by the three appellants were dismissed, upholding the penalty orders imposed by the Adjudicating Authority.

FPA-FE-459/KOL/2005 of Sh Liakat Ali Vs. The Special Director… — Cheque Dishonour | ATFP (2024)

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APPELLATE TRIBUNAL UNDER SAFEMA AT NEW DELHI

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1. FPA-FE-290/KOL/2005 Sh Nand Lal Sarawogi … Appellant 2. FPA-FE-82/KOL/2005 Sh. Jnan Bikash Banik … Appellant 3. FPA-FE-459/KOL/2005 Sh Liakat Ali … Appellant

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Versus

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The Special Director Directorate of Enforcement, Kolkata … Respondent

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Advocates/Authorized Representatives who appeared

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For the Appellant Sl. No. 1 : Mr. R. K Sinha, Adv. For the Appellant Sl. No. 2-3 : Mr. Nirmal Kumar Chowdhury,Adv For the Respondent Sl. No. 1 : Mr. Surender Kumar, Adv. For the Respondent Sl. No. 3 : Mr. Pranav Kumar, Adv.

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CORAM

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JUSTICE MUNISHWAR NATH BHANDARI: CHAIRMAN SHRI BALESH KUMAR : MEMBER

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FINAL ORDER 13.08.2024

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This Order disposes of Appeals No. FPA-FE290/KOL/2005, FPA-FE-82/KOL/2005 and FPA-FE-

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459/KOL/2005 filed by Sh. Nand Lal Sarawogi, Sh. Jnan Bikash Banik and Sh. Liakat Ali respectively against the Order No. SDE(SKP) II/56/2004 dated 13.12.2004 passed by the Special Director, Enforcement Directorate, New Delhi. The

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FPA-FE-290,82,459/KOL/2005 Page 1 of 13

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impugned Order disposed of Show Cause Notice (SCN) dated 05.12.1994, charging the Appellants Sh. Nand Lal Sarawogi and Sh. Jnan Bikash Banik for receiving and making payments of Rs. 5,81,57,510/- and Rs. 2,51,00,000/- respectively in contravention of Sections 9(1) (b) and 9 (1) (d) of the Foreign Exchange Regulation Act 1973( FERA). The SCN also charged Mohd. Liakat Ali for receiving payments of Rs. 7,06,03,510/- in contravention of Section 9 (1) (b) of FERA. Ld. Adjudicating Authority imposed penalty of Rs. 50 Lakhs, Rs. 25 Lakhs and Rs. 70 Lakhs on the Appellants Sh. Nand Lal Sarawogi, Sh. Jnan Bikash Banik and Sh. Liakat Ali respectively.

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From the record it appears that the Tribunal noted on 29.01.2009 the Order dated 25.10.2005 relating to the waiver of pre-deposit of the penalty, had been challenged by a few of the Appellants before the Hon’ble Calcutta High Court. It seems that the three Appellants herein were required to pay 10% of their respective penalties. The Writ Petition was dismissed for nonprosecution in February, 2016. On 22.02.2018 the Appeals were dismissed for non-payment of the pre-deposit of the penalties with respect to the two Appellants Sh. Banik and Sh. Ali, which however were restored on 17.01.2019 after payment of the predeposit of 10% of the penalties. On 22.02.2018 the Appeal of Sh. Sarawogi was dismissed for non-payment of the pre-deposit of the penalty. On 20.09.2018 the Tribunal restored the Appeals

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FPA-FE-290,82,459/KOL/2005

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Page 2 of 13

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subsequent to the payment of the pre-deposit of 10% of the penalty.

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Ld. Counsels for the Appellants challenged the impugned Order on the grounds of the violation of principles of natural justice. Their prayer for cross-examination was not granted. The Ld. Adjudicating Authority failed to consider the opinion of the handwriting expert with respect to the matter written on the diaries and certain loose sheets recovered during the search. The statements which were recorded by the Appellants were retracted as during the custody they were tortured and beaten. Ld. Adjudicating Authority did not consider the medical reports furnished in this regard. In fact, reports of injury of Sh. Nand Lal Sarwogi, Sh. Banik and Late Sh. Uttam Sarwogi had not been considered by the Ld. Adjudicating Authority. No enquires had been made as to establish the identity of Sh. Samsul Huda under whose instructions the alleged illegal payments and receipts had been indulged in by the Appellants. The counsels contended that the Advisory Board did not find sufficient cause for the detention of Sh. Nand Lal Sarwogi, and Late Sh. Uttam Sarwogi under COFEPOSA. This Tribunal also allowed the Appeal No. 180/1995 of Sh. Nand Lal Sarwaogi vide its order dated 16.01.2003 in another matter.

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FPA-FE-290,82,459/KOL/2005

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Page 3 of 13

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Ld. Counsels for the Appellants also argued that the impugned Order is ex-parte since they were not given effective hearing before the issuing of the Order. Ten years time was taken for holding the hearings without supplying the relied upon documents along with the SCN. With respect to the Appellant Sh. Liakat Ali, the learned counsel contended that the identity of his agent Bobhen Ali was not established. He further argued that the Appellant was Liakat Ali of Alipur when in fact the person against whom allegations have been made was Liakat Ali of Kaliachowk. He also submitted certain judgments in support of his arguments. Ld. Counsels prayed for allowing the Appeals.

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Ld. Counsels for the respondents contended that the Appellants have been unable to substantiate their claims. In fact, they have been delaying the matters before the ld. Adjudicating Authority. Searches and seizures were conducted in accordance with law and procedures. The allegation of coercion was denied and hence the retractions cannot be relied upon. The statements of the Appellant were taken on different dates. The statements have explained each and every document recovered during the search. Hence the statements which were recorded under Section 40 of FERA have been relied upon. The submissions for the Appellants with respect to the Tribunal Order dated 16.01.2003 and the COFEPOSA Orders are extraneous to the present proceedings. Their conduct can also

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FPA-FE-290,82,459/KOL/2005

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Page 4 of 13

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be made out from the delay which they have caused in effective participation in the present Appeal proceedings. They prayed for dismissal of the Appeals.

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We have carefully considered the rival submissions and the material on record. On perusal of the impugned Order, we find that many of the pleadings made by the Appellants have been reiterated from the contentions made by them before the Ld. Adjudicating Authority, who has painstakingly disposed of the same. We therefore reproduce the relevant portions of the impugned Order:

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“40. It is observed from the records that the noticees had a tendency to request for adjournment of the hearings on one pretext or the other without giving any valid or convincing reasons. This attitude of the noticees continued from the period during which the noticees were required to furnish replies in respect of the charges against them. The SCN is issued on 5.12.1994 and proceedings are going on for the last 10 years without reaching any finality. In the circumstances and having given sufficient opportunities, I am inclined to decide the case on the basis of materials/submissions on record.

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41. During the course of the proceedings, the noticees requested for cross-examination of the co-noticees and the reasons given for such demand were that the statements were recorded by use of threat, coercion etc. and such statements were retracted by the said persons who made the statements. The noticees also questioned FPA-FE-290,82,459/KOL/2005 Page 5 of 13

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the search and seizure operations stating that the documents were fabricated in the office of the Enforcement Directorate and incriminating materials were incorporated in the said documents with motive of implicating the noticees. On examining the said contentions adduced by the noticees, I find that the averments of the noticees are without any documentary and material backings. It is, but natural on the part of any person accused of an offence to raise such unreasonable and baseless allegations when they are faced with the legal proceedings. To accept and consider such submissions, the noticees should furnish evidences to prove such allegations. In this case except leveling such wild and bald allegations, the noticees did not furnish any materials. Hence, I do not find any substance in the allegations. It is a usual practice adopted by persons who make admissible statements before any authority to retract from the said statements at a later stage. There are set precedents laid down in various judicial decisions that retracted confessional statements can be held as admissible evidences in judicial proceedings as well as quasi-judicial proceedings. The only pre-condition is that such statements should be corroborated by independent material evidences and should not be from hearsay. In the instant case, it is seen that the statements were recorded from the noticees on different dates wherein the noticees had explained the documents seized from the residential premises of Sh. Nandlal Saraogi/Uttam Saraogi оn 30.12.1993. The noticees contention is that the seized documents were fabricated and incriminating materials were incorporated to implicate the noticees. This contention cannot be taken at its face value as it is observed that the search and seizure had taken place in FPA-FE-290,82,459/KOL/2005 Page 6 of 13

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the presence of two independent witnesses as well as in the presence of the noticee Sh. Uttam Saraogi and all the concerned persons had signed the seizure memo as well as the seized documents for identification and confirmation of recovery and seizure. In the circumstances and considering the material on record, I find that there is no necessity to grant the opportunity of cross-examination of witnesses as sought by the noticees. Further, I hold that the search and seizure of documents was conducted in strict compliance of the procedures laid down and as such questioning the same was without any basis and as such, unacceptable. Similarly, the statements of the noticees were recorded by the officers as per the provisions of Section 40 of the FERA, 1973 and were in the nature of elaborations and explanations of the documents which were seized on 30.12.1993 from the business premises of Sh. Uttam Saraogi. Mere retractions of the statements do not affect the admissibility of those statements. Accordingly, I hold that the statements of the noticees, though stood retracted, are fully admissible evidences in the proceedings.

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42. Another contention of the noticees is that the Adjudicating Authority may furnish the computation of the amounts of contravention attributed to the noticees alongwith name and addresses of the persons from whom payments were received, amounts received, dates of receipts, names and addresses of the recipients. In this regard, I find that the amounts involved in the violations of Section 9(1)(b) and 9(1)(d) of the FERA, 1973 had been derived from the documents seized from the business premises of M/s Ritika Enterprises at 1, Singhee Dutta Lane, Kolkata on 30.12.1993. The seized FPA-FE-290,82,459/KOL/2005 Page 7 of 13

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documents marked A, B & C contained the accounts of receipts and payments made by the noticees namely, S/Shri Uttam Saraogi and Nandlal Saraogi and the said documents were explained by them in their statements recorded in terms of Section 40 of the FERA, 1973. These seized documents as well as the statements recorded from the noticees were relied upon in the SCN. Further statement of Sh. Jnan Bikash Banik who was implicated by the said noticees was also recorded on 11.1.1994 in which he admitted the transactions. The noticees had taken inspection of the original relied upon documents and copies of the same were furnished to them. In the circumstances the noticees contentions that the Adjudicating Authority should provide the aforesaid details became irrelevant as all the materials had been furnished to the noticees.

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43. As regards Sh. Pranab Roy @ Ashish Roy and Md. Liakat Ali, noticee nos.4 & 5, the said noticees did not co-operate with the department during the course of the investigations and it is observed that even during adjudication proceedings, the said noticees were not earnest in providing any materials with which they could claim exoneration from charges. In the circumstances, the reasoning which would follow is that the said noticees have no materials with them to prove their innocence or to rebut the charges in the SCN

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44. It was also contended that the noticees had retracted the statements on the ground that the same were recorded by use of threat, coercion etc. However, it is an established rule of law that retracted statements are admissible evidences in quasi-judicial proceedings if the same are corroborated by independent documentary FPA-FE-290,82,459/KOL/2005 Page 8 of 13

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evidences. In this case the facts revealed by the noticees in their statements were explanations offered by them in respect of the documents seized by the department on 30.12.1993 in terms of Section 37 of the FERA, 1973 in the presence of independent witnesses as well as in the presence of Sh. Uttam Saraogi. The corroboration of the statements with the seized documents make the allegations baseless. The noticees were provided with copies of the statements as well as seized documents. In the circumstances, the retraction of the statements by the noticees as such do not vitiate the proceedings or the admissibility of the same.

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45. The noticees submitted that the illegality of the seizure of the documents and the matter of recording of the statements by use of force, threat, coercion etc. were agitated before the Ld. Chief Metropolitan Magistrate as well as before the Director of Enforcement and these facts were not considered by the Special Director who had issued the SCN. The noticees, during the course of personal hearings also submitted that the same are vital facts to be considered by the Adjudicating Authority. I have carefully examined the said submissions and the relevant records. It is observed that these contentions were taken up by the noticees during the course of investigations and the same had been suitably answered by the department at the relevant point of time and as such, it is felt that the issues were settled at that time itself and therefore, the said contentions had no relevance at this stage.”

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FPA-FE-290,82,459/KOL/2005

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Page 9 of 13

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From the afore cited paragraphs of the impugned Order we find that the contentions which have been reiterated during the present proceedings had been meticulously dealt with by the Ld. Adjudicating Authority. The relied upon documents were provided to the Appellants. It does not appear to be convincing that merely because hearing was not held just before the passing of the impugned Order, in-spite of a number of opportunities given to the Appellants earlier that the impugned Order is vitiated by the violation of the principles of natural justice. The retractions have been dealt with by the Respondent Directorate from time to time as mentioned in the afore cited paragraphs. Since, the statements were explanatory in nature, providing explanation of the documents recovered during the search, the denial of cross-examination does not cause prejudice to the interest of the Appellants. It is to be noted that since Sh. Samsul Huda was resident of Dhaka, the demand to cross-examine him was ab initio infructuous. The Appellant Sh. Liakat Ali failed to cooperate during the investigation and the adjudication proceedings. His belated participation through his Appeal at this stage cannot come to his rescue as to deny his involvement by raising the bogey of the alleged person being someone else other than him, without any corroboration.

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It is useful to cite the following two judgments which have also been relied upon by the Appellants. The Hon’ble Supreme

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Page 10 of 13

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Court in the case of Vinod Solanki Vs Union of India [(2008) 16 SCC 537] has held that in certain situations retracted statement of the noticee can be relied upon. In the Judgement (Supra) following has been observed in paragraph 23:

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“23. It is trite law that evidence brought on record by way of confession which stood retracted must be substantially corroborated by other independent and cogent evidence, which would lend adequate assurance to the court that it may seek to rely thereupon. We are not oblivious of some decisions of this Court wherein reliance has been placed for supporting such contention but we must also notice that in some of the cases retracted confession has been used as a piece of corroborative evidence and not as the evidence on the basis whereof alone a judgment of conviction and sentence has been recorded.”

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In K.T.M.S Mohamed Vs. Union of India [(1992) 3

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SCC 178] the Hon’ble Supreme Court held that merely because statement is retracted, it cannot be regarded as involuntary or unlawfully obtained. In this regard, following observations were made in paragraph 34:

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“34. … But suffice it 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 the Enforcement under the relevant provisions of the respective Acts is a sine qua 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 then 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

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FPA-FE-290,82,459/KOL/2005 Page 11 of 13

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establish his allegations of inducement, threat, etc. against the officer who recorded the statement, the authority while acting on the inculpatory statement of the maker is not completely relieved of its obligations in at least subjectively applying its mind to the subsequent retraction to hold that the inculpatory statement was not extorted. It thus boils down that the authority or any court intending to act upon the inculpatory statement as a voluntary one should apply its mind to the retraction and reject the same in writing. It is only on this principle of law, this Court in several decisions has ruled that even in passing a detention order on the basis of an inculpatory statement of a detenu who has violated the provisions of the FERA or the Customs Act, etc. the detaining authority should consider the subsequent retraction and record its opinion before accepting the inculpatory statement lest the order will be vitiated.”

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We find that the ld. Adjudicating Authority has duly considered the subsequent retraction and recorded its opinion before accepting the inculpative statement. We also find that this confessional statement have been corroborated by other independent and cogent evidence as have been brought out in the paragraphs from the impugned Order which have been cited afore.

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After having served the SCN and having furnished the relied upon documents, even so during the proceedings of adjudication, there does not appear to be any prejudice caused to the interest of the Appellants by the denial of cross examination, which in any case may not have been necessary in the present proceedings. A number of hearings were given to the Appellants during the course of the Adjudication proceedings. In this regard, the Hon’ble Supreme Court has made the following observations in paragraph 28 of the judgment Telstar Travels

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FPA-FE-290,82,459/KOL/2005 Page 12 of 13

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Private Limited & Ors. V. Enforcement Directorate, (2013) 9

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SCC 549. :

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“ 28. Coming to the case at hand, the adjudicating authority has mainly relied upon the statements of the appellants, and the documents seized in the course of the search of their premises. But, there is no dispute that apart from what was seized from the business premises of the appellants, the adjudicating authority also placed reliance upon the documents produced by Miss Anita Chotrani and Mr Raut. These documents were, it is admitted disclosed to the appellants who were permitted to inspect the same. The production of the documents is not subjected to cross-examination. Such being the case, the refusal of the adjudicating authority to permit cross-examination of the witnesses producing the documents cannot even on the principles of the Evidence Act be found fault with. At any rate, the disclosure of the documents to the appellants and the opportunity given to them to rebut and explain the same was a substantial compliance with the principles of natural justice. That being so there was and could be no prejudice to the appellants nor was any demonstrated by the appellants before us or before the courts below. The third limb of the case of the appellants also in that view fails and is rejected.”

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In view of the aforementioned discussions, we do not find any reason to cause intervention in the impugned Order. We accordingly dismiss the Appeals.

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(Justice Munishwar Nath Bhandari) Chairman

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(Balesh Kumar) Member New Delhi, 13^th August, 2024 ‘J’

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FPA-FE-290,82,459/KOL/2005

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FPA-FE-459/KOL/2005 of Sh Liakat Ali v. The Special Director Directorate of Enforcement, Kolkata

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FPA-FE-459/KOL/2005 of Sh Liakat Ali v. The Special Director Directorate of Enforcement, Kolkata

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