Dismissed

Mohamed Asif Ibrahim Kapadia v. the Director Enforcement Directorate

Bombay HC2 Jul 2009FERA/31/2009

Case brief

AI extract

What is this about?

The court dismissed the FERA appeal challenging penalty for alleged foreign exchange violations. Upholding the lower authorities' conclusion, the court held that seized cash and corroborative evidence validated the appellant's confession despite its retraction, rejecting claims of coercion.

What did the court decide?

The appeal filed by the appellant challenging penalty orders was dismissed. The impugned order was affirmed.

Mohamed Asif Ibrahim Kapadia Vs the Director Enforcement Directorate — Bombay HC (2009) — LawSathi Research

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IN HE HIGH COURT OF JUDICATURE AT BOMBAY

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CIVIL APPELLATE JURISDICTION

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FERA APPEAL NO. 31 OF 2009

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MOHAMED ASIF IBRAHIM KAPADIA )

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residing at Room No.7, 2^nd Floor, )

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67, Maulana Azad Road, Mumbai 400 011. ).. Appellant

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Versus

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The Director, Enforcement ) Directorate. ) 2. Union of India )..Respondents

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Mr. Uday P.Warunjikar, Advocate, for the appellant.

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Mrs. S.V.Bharucha with Mr. N.R.Prajapati, Advocates, for the respondents

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CORAM: F.I.REBELLO AND J.H.BHATIA, JJ. DATE : 2^nd July, 2009.

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JUDGMENT:(PER J.H.BHATIA,J.)

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The appellant has challenged the imposition of penalty for alleged violation of Section 9(1)(b) and section 9(1)(d) read with section 64(2) of the Foreign Exchange Regulation Act, 1973 (FERA) by the Adjudicating Officer and the dismissal of his appeal by the appellate Tribunal, Foreign Exchange.

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To state in brief, according to the Enforcement Directorate, the present appellant, as per instructions received from one Salim, resident of Dubai, used to receive certain amounts from different persons and used to distribute to different persons. On 5.7.1997, one Mohamed Shafi Mohamed Adenwala was intercepted by the officers of the Enforcement Directorate at around 6.30 p.m. at Elco Market, Bandra. At that time, amount of Rs.20.65 lakh in Indian currency ,along with a chit bearing some number, was found with him. The amount and the chit were seized from him under a panchnama. His statement came to be recorded and he disclosed that the amount was given to him by the present appellant for handing over the same to Rangeelabhai at the Elco Market on production of a currency Note of Rs.50/- bearing the number which was noted on that chit. In view of the information given by him, the residential premises of the appellant came to be searched on 5.7.1997 itself and the amount of Rs.

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22.50 lakh was found from his house. That amount was also seized

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under a panchnama. During the investigation, statements of the present appellant and some other persons, including Javed S.Ridnani and Shabbir Abdul Latif were recorded. As per those statements, it was revealed that the present appellant was regularly receiving certain amounts from unknown persons and he used to make payments to different persons as per the instructions received from one Salim from Dubai. Some of the recipients were Padmakar Soni, Mirza Mohamed Ali Asgar, Mohamed Maharajani and Mohamed Gous Shaikh. Statements of these persons were recorded and they admitted that they had received the payments in Indian currency. It was revealed that Mohamed Shafi Umer Adenwala, Javed Ridnani and Shabbir Abdul Latif were employed by the present appellant for distribution of the amounts. It was found that the total amount involved was Rs.1,48,63,000/-, while the amount of Rs. 1,04,84,500/- was actually distributed and the amount of rs.20,65,000/was found when it was dispatched for remittance to Rangeelabhai.All these four persons, including the appellant retracted the statements later on. After the investigation, a show cause notice was issued to the present appellant and his 3 employees for contravention of Section 9(1)(b) and

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9(1)(d) of FERA. In the reply by the appellant, he denied all the

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allegations. However, according to him, whole of the amount of Rs. 43,15,000/- belonged to him and he intended to declare that amount under Voluntary Declaration of Income Scheme (VDIS) under the Income-tax Act. However, before he could make that declaration, the Enforcement Directorate had seized that amount. Being not satisfied with the reply and the stand taken by the present appellant, the Special Director of Enforcement passed the order-in-original on 21.3.2003 holding the present appellant and his three employees guilty of violation of the said provisions and imposed different penalties on each of them. The present appellant was imposed penalty of Rs.15 lakh under section 9(1)(d), penalty of Rs.10 lakh under Section 9(1)(d) and penalty of Rs.2 lakh under Section 9(1)(d) read with Section 64(2). For the same contraventions, employees were imposed lesser penalties.

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Appeal No.142 of 2003 filed by the appellant came to be dismissed by the appellate Tribunal.

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Mr. Warunjikar, the learned Counsel for the appellant vehemently contended that even though the amount of Rs.20.65 lakh was seized from Mohamed Umer Adenwala and amount of Rs.22.50 lakh was seized from the

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house of the present appellant whole of the amount was in Indian currency. According to him, except the retracted confession, there was no material to establish that the present appellant had received the amounts from unknown persons and was in the business of distribution of the same as per instructions from one Salim, resident of Dubai. He contended that neither the entity of said Salim had been established nor there is any evidence to show that Salim was actually resident of Dubai. He contended that the burden lies on the Enforcement Directorate to prove that the confession made by the appellant was made voluntarily and that it was true. In support of this, he placed reliance upon Vinod Solanki versus Union of India 2009 (233) ELT 157 (S.C. ). He also contended that whole of the amount was unaccounted income of the present appellant and that he intended to declare the same before the Income-tax Authorities under the VDIS, but before he could do so, the Enforcement Directorate had seized that amount.

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It is true that in Vinod Solanki , Their Lordships of the Supreme Court held that the initial burden to prove that the confessional statement recorded under FERA was voluntary and it was free from threat, inducement or force and that the law does not say that accused has to prove that the retracted confession was made by him under threat, coercion, etc. Their Lordships

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observed in paras 34 and 35 as under :-

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“34. A person accused of commission of an offense is not expected to prove to the hilt that confession had been obtained from him by any inducement, threat or promise by a person in authority. The burden is on the prosecution to show that the confession is voluntary in nature and not obtained as an outcome of threat, etc. if the same is to be relied upon solely for the purpose of securing a conviction. With a view to arrive at a finding as regards the voluntary nature of statement or otherwise of a confession which has since been retracted, the Court must bear in mind the attending circumstances which would include the time of retraction, the nature thereof, the manner in which such retraction has been made and other relevant factors. Law does not say that the accused has to prove that retraction of confession made by him was because of threat, coercion, etc. but the requirement is that it may appear to the court as such.

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35. In the instant case, the Investigating Officers did not examine themselves. The authorities under the Act as also the Tribunal did not arrive at a finding upon application of their mind to the retraction and

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rejected the same upon assigning cogent and valid reasons therefor. Whereas mere retraction of a confession may not be sufficient to make the confessional statement irrelevant for the purpose of a proceeding in a criminal case or a quasi criminal case but there cannot be any doubt whatsoever that the court is obliged to take into consideration the pros and cons of both the confession and retraction made by the accused. It is one thing to say that a retracted confession is used as a corroborative piece of evidence to record a finding of guilt but it is another thing to say that such a finding is arrived at only on the basis of such confession although retracted at a later stage.”

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In view of these observations, it would appear that in a criminal or quasi criminal proceedings, a person accused of commission of offence under FERA has not proved to the hilt that confession has been obtained from him by inducement or threat by the person in authority. However, when confession had been retracted, the Court must bear in mind the attending circumstances and other relevant factors to come to conclusion whether the confession was voluntary and was not obtained by any inducement, threat or force. At the same time, mere retraction of the confession may not be sufficient to make confessional statement irrelevant for the purpose of quasi criminal proceedings and the Court is obligated to take into consideration the pros and cons of

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confession and retraction made by the accused.

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In K.I.Pavunny vs. Asstt. Collector (HQ), C. Ex. Collectorate,

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Cochin 1997 (90) ELT 241 (S.C.) , Three Judge Bench of the Supreme Court observed as follows in para 20 :-

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“20..... It is the duty of the prosecution to prove the case beyond

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reasonable doubt. The evidence may consist of direct evidence, confession or circumstantial evidence. In a criminal trial punishable under the provisions of the IPC, it is now well settled legal position that confession can form the sole basis for conviction. If it is retracted, it must first be tested whether confession is voluntary and truthful inculpating the accused in the commission of the crime. Confession is one of the species of admission dealt with under Sections 24 to 30 of the Evidence Act and Section 164 of the Code. It is an admission against the maker of it, unless its admissibility is excluded by some of those provisions. If a confession is proved by unimpeachable evidence and if it is of voluntary nature, it when retracted, is entitled to high degree of value as its maker is likely to face the consequences of confession by a statement affecting his life, liberty or property. Burden is on the accused

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to prove that the statement was obtained by threat, duress or promise like

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any other person as was held in Bhagwan Singh v. State of Punjab – AIR 1952 SC 214, Para 30. If it is established from the record or circumstances that the confession is shrouded with suspicious features, then it falls in the realm of doubt. The burden of proof on the accused is not as high as on the prosecution. If the accused is able to prove the facts creating reasonable doubt that the confession was not voluntary or it was obtained by threat, coercion or inducement etc., the burden would be on the prosecution to prove that the confession was voluntary and believes it to be true, then there is no legal bar on the Court for ordering conviction. However,rule of prudence and practice does require that the Court seeks corroboration of the retracted confession from other evidence. The confession must be one inculpating the accused in the crime. It is not necessary that each fact or circumstance contained in the confessions separately or independently corroborated. It is enough if it receives general corroboration. The burden is not as high as in the case of an approver or an accomplice in which case corroboration is required on material particulars of the prosecution case. Each case would, therefore, require to be examined in the light of the facts and circumstances in which the confession came to be made and whether or not it was

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voluntary and true. These require to be tested in the light of given set of facts. The high degree of proof and probative value is insisted in capital offences.”

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In view of this, it is clear that if the confessional statement is retracted, the Court is required to examine whether it was obtained by threat,duress or promise and also whether the confession is truthful. If it is found to be voluntary and truthful inculpatory portion of the retraced confession can be acted and even conviction can be based upon the same. However, prudence and practice require that in case of retracted confession Court should seek assurance by way of corroboration from other evidence adduced. A general corroboration is sufficient. In the light of this legal position, the facts of the present case are required to be examined.

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The statement of the appellant was recorded on 13.8.1997 by the Enforcement Officer and in that statement he confessed that he was acting for and on instructions of one Salim from Dubai and he had disbursed total amount of Rs.1,04,84,500/- to different person and for that he had received commission. He also admitted that amount seized from Adenwala as well as from his own residence on 5.7.1997 formed part of the total amount received by him. He also

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admitted that on 5.7.1997, Adenwala was given that amount by him to pay to one Kamil Shaikh Kheemawala alias Rangeelabhai. He had also given the mobile number of the said Rangeelabhai as well as the number of 50 Rupee Note to Adenwala so that Adenwala could contact Rangeelabhai on that mobile number and only on Rangeelabhai showing the 50 Rupee Note with the particular number Adenwala was to hand over the amount to him. In his statement, he had given minute details about the payments made to different persons through his 3 employees from time to time. It is true that on 14.8.1997, when he was produced before the Addl.C.M.M. 4th Court Esplanade, Mumbai, he retracted that statement in writing. In he application, he contented that he had presented himself before the concerned officer of the Enforcement Directorate on 13.8.1997. From 13.8.1997, for the whole night, he was in illegal detention and during that period the alleged statement was already recorded by force, threat and coercion. Except this statement,there is no material to show that the statement was recorded under force, threat,coercion or by any inducement. This aspect has been considered by the Adjudicating Authority as well as by the appellate Tribunal and rejected the contention that confessional statement was recorded by force, threat, coercion or any kind of inducement. On perusal of the whole record, we find that on 13.8.1997, when he was confronted with several facts, including the seizure of amount and several documents from

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his own residence and from Adenwala and the statements of his other employees, it was impossible for him to deny and, therefore, he voluntarily made the confessional statement admitting all the facts. There is no denial by the appellant that the amount of Rs.22.50 lakh was recovered from his residence and the amount of Rs.20.65 lakh was seized from Adenwala at the Elco Market. Admittedly, he claimed that both these amounts belonged to him. He tried to contend that he wanted to make declaration of that amount as income under the VDIS before the Income-tax Authorities, but before he could do so, the amount was seized by the Enforcement Directorate. Except his bare statement,, there is no material to support this contention. After these amounts were seized along with several documents and confessional statements of other people were recorded, he appears to have concocted this plea as an after-thought. Therefore, we are unable to give any importance to such after-thought story. Besides this, he has not come forward with any explanation as to how such huge amount had come to him, particularly when he had admitted that his earning was hardly Rs. 5,000/- per month and therefore, Salim of Dubai had lured him in this job of distribution of money to different persons as per instructions from Salim. He has not submitted any explanation as to why he had given amount of Rs.20.65 lakh to Adenwala to pay to Rangeelabhai at Elco Market. The seizure of such huge amount from his own residence and from his employee Adenwala

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provides strong corroboration to the contentions of the Enforcement Directorate. Besides this, the concerned officer had recorded statements of several persons, who had allegedly received that amount from the present appellant through his different employees. Their admissions that the confessional statements of the 3 employees of the appellant as well as the documents which were seized provide strong corroboration to the confessional statement of the appellant.

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It is vehemently contended that entity of Salim is not proved nor it is established that he is the resident of Dubai and in view of this, no contravention of the provisions of section 9(1)(b) and 9(1)(d) of the FERA has been proved. We are not impressed with the contention of the appellant. The record reveals that the appellant had not only given all the details of his dealing with Salim, but also had given his telephone number. Merely because Salim could not be traced, it cannot be said that said Salim is not existent. As pointed out earlier, the appellant has not given any plausible explanation about the amounts found with him and his employees nor there is any plausible explanation as to what was is business and under what circumstances he had paid huge amounts to so many persons. In view of this, the confessional statement of the appellant and his employees could be taken into consideration

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and be safely held that he was acting as per instructions of Salim,resident of Dubai.

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Taking into consideration the material on record, we are satisfied that both the Authorities below had minutely considered the said material and had rightly came to conclusions against the appellant. Therefore, we do not find any substance to interfere in the concurrent findings of fact in the present Appeal.

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In the result, the Appeal stand dismissed.

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(J.H.BHATIA,J.)

Mohamed Asif Ibrahim Kapadia v. the Director Enforcement Directorate

Case brief

What is this about?

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Mohamed Asif Ibrahim Kapadia v. the Director Enforcement Directorate

Case brief

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