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IN THE HIGH COURT OF JUDICATURE AT MADRAS
G. JAYACHANDRAN, J.
Union of India, Rep. by its Enforcement Officer, Chennai - Appellant
Versus
M/s. New Line Finance Ltd., Rep. by A2 and A3, Chennai & Others - Respondent
Crl. A. No. 678 of 2010
Decided On : 23-06-2022
Criminal Appeal - Enforcement Directorate - Foreign Exchange Regulations Act, 1973 (FERA) - Section 7, 6(4), 6(5), 8(1), 49 - Summary of Acts and Sections: The court discussed the provisions of FERA, including sections 7, 6(4), 6(5), 8(1), and 49, and their interpretations. The court highlighted the burden of proof on the accused, the admissibility of statements recorded during investigation, and the presumption of culpable mental state under Section 59 and 71 of FERA.
Fact of the Case:
The Enforcement Directorate filed a complaint against M/s.New Line Finance Limited and its officials for violating FERA by selling foreign exchange unauthorisedly. The trial court acquitted the accused, citing lack of substantive evidence and corroboration of statements.
Finding of the Court:
The trial court's reasoning for acquittal was based on the lack of substantive evidence and corroboration of statements. The court held that the statements recorded during investigation are admissible but require corroboration. The court also emphasized the burden of proof on the accused under Section 59 and 71 of FERA.
Issues: The issues revolved around the admissibility and evidentiary value of statements recorded during investigation, the burden of proof on the accused, and the lack of corroboration of evidence.
Ratio Decidendi: The court held that statements recorded during investigation are admissible but require corroboration. The court emphasized the burden of proof on the accused under Section 59 and 71 of FERA. The court also highlighted the need for substantive evidence and the lack of corroboration of statements.
Final Decision: The Criminal Appeal was dismissed, upholding the trial court's acquittal of the accused.
JUDGMENT
(Prayer: Criminal Appeal is filed under Section 378 of Criminal Procedure Code, against the order passed in E.O.C.C.No.447 of 2002 dated 09.03.2010 on the file of Additional Chief Metropolitan Magistrate, E.O.I., Egmore, Chennai.)
1.This Criminal Appeal is preferred by the Enforcement Directorate/complainant on being aggrieved by the order of acquittal passed by the Additional Chief Metropolitan Magistrate (Economic Offences Court–I), Egmore, in E.O.C.C No.447/2002, dated 09/03/2010, holding that the complainant failed to prove the charges against the accused beyond doubt.
2. The Brief facts:
M/s.New Line Finance Limited is an authorised Full-Fledged Money Changer (hereinafter referred as 'FFMC'), holding license issued by The Reserve Bank of India (hereinafter referred as 'RBI'), to deal with Foreign Exchange. It had its offices at Chennai and Trichy. At the relevant point of time, Thiru.A.Muthusamy was the Managing Director and Thiru.P.V.Krishnamani was its Vice President of the said FFMC. Tmt.Rita Rajamani was the Manager, administering the affairs of M/s.New Line Finance Limited at it's Trichy Office.
3. Based on specific information that at the Trichy office of M/s.New Line Finance Limited, foreign exchange sold unauthorisedly, the Officials of Enforcement Directorate conducted search of the company premises at Trichy on 09/04/2006. The Enforcement Directorate Officials seized a file containing applications made for release of foreign currency/cheque under ‘Basic Travel Quota’ (BTQ) by the travellers (12 in numbers) who were proposed to travel abroad. As follow up, the Chennai office of M/s.New Line Finance Ltd was also searched.
4. Based on the documents seized, statement of accused and the statements of witnesses recorded in the course of investigation, the complaint against 1).M/s.New Line Finance Limited, 2). Thiru.A.Muthusamy and 3).Thiru.P.V.Krishnamani was filed for offences under section 7 read with section 6(4), 6(5), 8(1), 49 of Foreign Exchange Regulations Act, 1973 (FERA) read with clause 11 of FLM Memorandum issued under Section 73(3) of FERA, punishable under section 56(1)(i) of the FERA read with sub-section (3) and (4) of section 49 of Foreign Exchange Management Act, (FEMA) 1999.
5. The case of the Enforcement Directorate pegged on the premise that, on 13.02.1996 US $ 1300 each was sold to 12 persons under Basic Travel Quota by Rita Rajamani at Trichy, based on Malaysian Airlines Tickets. The license condition mandates the transaction connected with foreign exchange must only be by pay order from the proposed travellers. Whereas, Thiru.A.Muthusamy had admitted to have received a sum of Rs.27 lakhs by cash from G.Ravichandran of M/s.Trichy Air Shine Tours and Travels Pvt. Ltd. Further, on verification of the air tickets, except one, rest of the tickets pertaining to travel prior to 13/02/1996. Further, verification with the Malaysian Airlines, the tickets found to be fictitious. Also the investigation revealed, 11 out of 12 purchasers have gone abroad not as tourist but on employment. BTQ is restricted only to tourist and not for others. Mr.S.Balasubramanian, Proprietor of M/s.SBS International, in his statement has stated that these 11 persons were recruited and sent to Singapore by him for foreign employment.
6. The complaint alleged that the first accused company M/s.New Line Finance Limited failed to comply the conditions of license granted to them by RBI. The accused forged/fabricated the documents to show as if foreign exchange was released under Basic Travel Quota (BTQ) scheme to passengers going abroad, but sold in bulk to third parties/agents.
7. Contrary to the license conditions/guidelines/instructions issued by RBI, the 1st accused/New Line Finance Limited through the 2nd and 3rd accused, who were responsible for the conduct of the business of the Company had sold foreign exchange of U.S $ 30,00,000/- at Chennai and U.S $2,23,600/- at Trichy, thereby committed offences punishable under Sections
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Section 52(4) of FERA and Section 19(6) of FEMA contemplates a revision, scope of such proceeding is limited to examine legality, propriety and correctness of an order made by Adjudicating Authority.
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