Dismissed

FPA-FE-718/DLI/2005 of Shri Vikram Singh v. The Special Director, Directorate of Enforcement, Delhi

ATFP2 Jul 2024FPA-FE-718/DLI/2005

Case brief

AI extract

What is this about?

Special Directors, Delhi disposed of an appeal against a penalty order under FERA 1973. The Tribunal rejected arguments regarding non-supply of evidence and denial of cross-examination rights, finding the penalty of Rs. 20 Lakhs upheld was based on sufficient documentary evidence.

What did the court decide?

Appeal dismissed; no further direction to refund penalty as it was already satisfied.

FPA-FE-718/DLI/2005 of Shri Vikram Singh Vs. The Special… — Company and Corporate | ATFP (2024)

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APPELLATE TRIBUNAL UNDER SAFEMA AT NEW DELHI

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FPA-FE-718/DLI/2005 Shri Vikram Singh … Appellant

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Versus

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The Special Director, Directorate of Enforcement, Delhi … Respondent

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Advocates/Authorized Representatives who appeared

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For the Appellant : Ms. Suman Mishra, Mr. Santosh Chauriha, Advocates For the Respondent : Mr. Varun Mishra, Ms. Aranya Sahay, Advocates

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CORAM JUSTICE MUNISHWAR NATH BHANDARI : CHAIRMAN SHRI BALESH KUMAR : MEMBER

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FINAL ORDER

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02.07.2024

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FPA-FE-718/DLI/2005

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The appeal has been preferred under section 19 of Foreign Exchange Management Act, 1999 (in short) the Act of 1999 against the order dated 10.11.2003 passed by the Special Director, Enforcement Directorate.

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FPA-FE-718/DLI/2005

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Page 1 of 16

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By the impugned order, penalty of Rs. 20,00,000/- was

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imposed on the appellant for the violation of section 9 (1) (a) of Foreign Exchange Regulation Act of 1973.

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Brief facts of the case

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The facts on the record shows that on 01.11.1996, search

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was conducted by the Income Tax Department, New Delhi on M/s Vishwa Dharmayatan Trust, New Delhi. Sh. Nemi Chand Jain and Vikram Singh were residing therein. However, on the day of search, Nemi Chand Jain @ Chandraswami was in judicial custody at Tihar Jail, New Delhi. The search resulted in seizure of documents apart from the currency notes and a blue coloured Executive Diary having receipt of money by Sh. Annura Fernando of Colombo, Sri Lanka

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Based on the search, the documents were analyzed by the respondents followed by the examination of Vikram Singh on 02.01.1997 and 31.01.1997 and lastly on 18.02.1997. The

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FPA-FE-718/DLI/2005

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Page 2 of 16

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statements were recorded under section 40 of the Act of 1973.

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The appellant Vikram Singh had admitted his relation with one

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Sh. Annura Fernando of Colombo, Sri Lanka since 1994. It

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was admitted that he met him in Madras in a party and thereupon in New Delhi when he called him in Hotel Hayat. It was also stated by him that Annura Fernando came to their Ashram but he did not meet him. Sh. Annura Fernando was doing some business in Sri Lanka.

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The reference of Annura Fernando has been given for the reason that a sum of Rs. 10,00,000/- was given to Sh. Annura Fernando of Sri Lanka by the appellant in respect of the business transaction.

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The fact otherwise shows that appellant Vikram Singh was

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one of the Director of M/s Ambassador Construction, New Delhi and was dealing in Real Estate. The position of Neptune Private Limited is similar rather both the companies were

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dealing in Real Estate. An allegation of contravention of

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FPA-FE-718/DLI/2005

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Page 3 of 16

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section 9 (1) (a) of the Act of 1973 was made against the

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appellant and for that purpose even a show cause notice was given. After considering the reply, the Adjudicating Authority imposed penalty of Rs. 20,00,000/- finding a case of contravention of section 9 (1) (a) of the FERA, 1973.

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The learned counsel for the appellant has challenged the order on factual as well as on legal grounds. At the outset, it was submitted that the Adjudicating Authority or the Directorate of Enforcement failed to supply relied upon documents and thus appellant was denied a fair opportunity of defense. There was an obligation on the part of the respondents to furnish relied upon documents to the appellant so that he may file reply after going through the material on which reliance is passed by the Directorate. In absence of service of relied upon documents despite prayed before the Adjudicating Authority, the appellant could not defend his case properly and on the aforesaid ground itself, the impugned order deserves to be set aside.

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FPA-FE-718/DLI/2005

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Page 4 of 16

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The learned counsel further alleged violation of the

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principle of natural justice as an opportunity of cross examination of Annura Fernando was denied though statement of Annura Fernando was relied to impose penalty of Rs. 20,00,000/-. The request to allow cross examination of Annura Fernando has not even been dealt with the reasoning. Thus, on the aforesaid ground also, the impugned order deserves to be set aside.

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The learned counsel coming on the facts of the case submitted that no material was available with the respondents to show contravention of section 9 (1) (a) of the Act of 1999.

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They have relied upon blue diary, a copy of which was not given to the appellant. There was no other material to show exchange of Rs. 10,00,000/- other than writing in the blue diary. It was also stated that no one was produced to prove the blue diary containing the receipt of Rs. 10,00,000/- by a person residing out of India. Thus, the respondent utterly

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FPA-FE-718/DLI/2005

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Page 5 of 16

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failed to prove the case against the appellant yet penalty of Rs.

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20,00,000/- has been imposed.

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The learned counsel for the appellant however admitted

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that the penalty of Rs. 20,00,000/- has already been satisfied on account of dismissal of the application for waiver of predeposit. The order of the Tribunal has been upheld up to the Hon’ble Supreme Court. Thus, the appellant was left with no option but to deposit the amount of penalty to pursue the appeal.

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The prayer was however made to allow the appeal with a direction to refund the amount of Rs. 20,00,000/- deposited by the appellant.

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The counsel for the respondent has opposed the appeal on all the grounds raised for its challenge. It is submitted that a

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case of contravention of section 9 (1) (a) of the Act of 1973 was found against the appellant. It was when a search was

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FPA-FE-718/DLI/2005

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Page 6 of 16

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conducted at the Ashram where not only a blue diary but

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other material was received to show receipt of Rs. 10,00,000/-

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by a person residing out of India. The business relationship of appellant with Annura Fernando was established rather the appellant was knowing Fernando even as per his own statement. Though the transaction of Rs. 10,00,000/- was denied but the fact remain that the exchange of amount aforesaid got proved in view of the availability of receipt of amount by Annura Fernando and remain available in the blue diary.

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In the light of the aforesaid, the appellant was served with the show cause notice along with relied upon documents. The finding to this fact exist in the impugned order and has not been assailed by the appellant. In absence of challenge to the finding to this effect, it becomes final against the appellant.

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In view of the above, the allegation of non-supply of relied upon documents has been raised for the sake of it.

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FPA-FE-718/DLI/2005

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Page 7 of 16

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Coming to the issue of cross-examination, it was

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submitted that the statement of Annura Fernando has not been recorded because he was not available in the country. In

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absence of the statement of a witness, he could not have been put for the cross examination. In fact, cross-examination pre-

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supposes the statement which may be statement in chief. In absence of the statement of Annura Fernando, prayer to allow

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his cross-examination could not have been allowed. Rather, in

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summary proceedings before the quasi-judicial Authorities, the

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cross examination of witness cannot be sought as a course.

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In view of the above, it is not that cross-examination of the witness has been denied rather in absence of the statement of

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the witness, he could not have been put for cross-examination. It is apart from the fact that Fernando is not a resident of India

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but is of Sri Lanka, thus could not have been summoned and

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the statements could not be recorded for the reason.

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FPA-FE-718/DLI/2005

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Page 8 of 16

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In view of the above even the second ground raised by the

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appellant is not made out.

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The learned counsel for the respondent further submitted that blue diary was containing a receipt of Rs. 10,00,000/- by Annura Fernando of Sri Lanka. The receipt was recovered and copy of relied upon document was given to the appellant. Since the documents were sufficient to prove the allegation and appellant did not produce any evidence to counter the allegation or to prove his innocence.

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In view of the above, no case is made out to cause interference in the impugned order.

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The learned counsel for the respondent had further referred to the order passed by the Adjudicating Authority to show that the respondent produced the material to prove the allegation for transfer of money to a resident out of India in violation of section 9 (1) (a) of the Act of 1973

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FPA-FE-718/DLI/2005

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Page 9 of 16

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The appellant in his statement under section 40 of the Act

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of 1973 has admitted about his relation with Annura Fernando

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who had visited him even in India. The statement aforesaid

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has been relied coupled with the documents seized during the

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course of search and thereby sufficient material was available

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and produced to prove the case against the appellant. The

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prayer is accordingly made to dismiss the appeal.

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We have considered the rival submission and perused the

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record carefully. The allegation against the appellant is for contravention of section 9 (1) (a) of the Act of 1973. For ready

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reference, provision aforesaid is quoted:-

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Section 9. Restrictions on payment-

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(1) Save as may be provided in, and in accordance with, any general or special exemption from the provisions of this sub-section which may be granted conditionally or unconditionally by the Reserve Bank, no person in, or resident in, India shall-

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(a)make any payment to or for the credit of any person resident outside India

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The allegation against the appellant is for transfer of

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money to a resident of other country in violation to the provision quoted above.

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FPA-FE-718/DLI/2005

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Page 10 of 16

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The allegation aforesaid is based on the document

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recovered during the course of search at Vishwa Dharma Trust. A blue diary was found available and seized. The receipt of Rs. 10,00,000/- by Annura Fernando of Sri Lanka was found available in the diary and based on the aforesaid and other material, the show cause notice was served on the appellant.

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The learned counsel for the appellant has challenged the order on many grounds and amongst them, the first ground is for denial of fair opportunity to defend the case. It is alleged that relied upon documents were not served on the appellant. To analyze the arguments aforesaid, we have gone through the

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impugned order and find a specific finding of the Adjudicating Authority to the effect that relied upon documents were supplied on 15.10.2003 when Shri Santosh Kumar Chaurihaa, Advocate appeared for the noticee and requested for copies of relied upon documents which were provided to him. The case

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was adjourned to 28.10.2003 when Shri Santosh Kumar

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FPA-FE-718/DLI/2005

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Page 11 of 16

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Chaurihaa appeared and prayed for submission of written

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arguments by 06.11.2003. The reference of written arguments has been given but the question raised herein was not an issue

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taken up before the Adjudicating Authority. In any case, we

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find that relied upon documents were provided to the appellant

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and the impugned order record this fact but has not been questioned by challenge to the order rather he has reiterated as a plea for non-supply of relied upon documents. It is not stated that the finding for supply of relied upon documents is based

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on surmises and conjectures. The specific case of the respondent is that all the relied upon documents were supplied

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and order records this fact. Thus, we do not find a case where

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the appellant was not given fair opportunity of hearing.

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Thus, first argument raised by the appellant is rejected summarily.

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The impugned order has been assailed even for alleged

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violation of the principles of natural justice. It is stated that

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FPA-FE-718/DLI/2005

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Page 12 of 16

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opportunity of cross examination of witness was not given. The

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counsel for the appellant has admitted that the statement of Fernando was not recorded being a resident of Sri Lanka. In absence of any statement, the cross examinations could not have been given. The cross examination pre-supposes the statement of the witness for cross examination. It is otherwise settled law of the land that cross-examination cannot be claimed as a right before a Quasi-Judicial Authority. In the summary proceedings, prayer for cross examination can be denied if the facts are otherwise proved. In the instant case there was no question of cross examination when the statement of witness was not recorded.

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The view aforesaid is supported by the judgement of the Apex Court in the case of Telestar Travels Private Ltd V/s Enforcement Directorate (2013) 9 SCC 549 and Kanungo and

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Co. Vs. Collector of Customs (1973) 2 SCC 438.

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FPA-FE-718/DLI/2005

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Page 13 of 16

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Therein the similar prayer and challenge to the order on

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the aforesaid ground was not accepted by the Apex Court.

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Thus, even the second ground to challenge the order is not made out.

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At this stage, it is necessary to clarify that Fernando may

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be relevant person to prove the case but was not a resident of India rather residing in Sri Lanka. The respondent could not have enforced his presence as a coerce to record his statement unless he remained available in India. Thus, allegation that

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the statement of Fernando has not been recorded remains without realizing his nationality.

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The last argument is on facts. It is alleged that no material was available with the respondents to prove transfer of

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Rs. 10 lakhs to a resident outside India. It is a case where

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blue diary and other material was recovered from the Ashram

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controlled by the appellant. In the blue diary receipt of the amount by Fernando was found and based on the aforesaid a

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FPA-FE-718/DLI/2005

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Page 14 of 16

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case for violation of section 9 (1) (a) of 1973 was made out. The

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respondent have referred to many documents which includes a letter dated 03.02.1997 sent to the Director, Ministry of External Affairs, New Delhi by the Special Director, Directorate of Enforcement. In fact, Respondent Department made enquiries regarding the antecedents of Annura Fernando through its sources. In response to it, letter dated 03.02.1997 was sent by the Ministry of External Affairs confirming that the appellant was involved in business dealing with Annura Fernando and transfer of money to a resident out of India

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was without the permission of RBI.

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In the light of the aforesaid, we do not find any reason to cause interference in the impugned order. It cannot be only on the ground that the witness was not produced to endorse the document in blue diary. The statement of the appellant under section 40 of the Act of 1973 was recorded. Annura Fernando is a resident of Sri Lanka, thus was not available to

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FPA-FE-718/DLI/2005

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Page 15 of 16

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record his statement. As a conclusion thereof, we find no

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merit in the appeal and is accordingly dismissed.

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The amount of penalty of Rs. 20,00,000/- has already been satisfied by the appellant on dismissal of the application for waiver of pre–deposit. Thus, confirmation of the order of

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the Adjudicating Authority may not give room to the respondents

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to take further action for recovery.

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(Justice Munishwar Nath Bhandari) Chairman

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(Balesh Kumar)

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Member

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New Delhi,