FINAL ORDER

04.12.2024 These appeals have been filed under section 19 of Foreign Exchange Management Act, 1999 to challenge the order dated 29.11.2008 passed by the Special Director of Enforcement, New Delhi. The penalty of Rs. 80 lakhs has been imposed on each of appellants Manoj Kumar and Ashok Kumar.

2. A challenge to the order has been made mainly on the factual grounds. It is alleged that the appellants have contravened section 8(1) and 8(2) of FERA, 1973 and thus were liable for the action under section 50 of the FERA, 1973. The appellants were having US $ 3910, Pound 3185, Canadian Dollar 6175, UAE Dirhan 1000, Australian Dollar 1000, D.M. 750, Guilder 3185 & IMO for US Dollar 251 at the time of search.

3. They were found selling foreign exchange equivalent to Rs. 80 lakhs out of the foreign exchange without the previous general or special permission of Reserve Bank of India.

4. The learned counsel for the appellant submitted that recovery of the currency was not from the appellant’s residence, rather it was from the residence of his sister. Yet, they were made liable to account for the foreign currency to show special or general permission of RBI to sell and purchase foreign currency. They have been penalized by imposing heavy penalty of Rs. 80 lakhs though the worth of the foreign currency as on the date of the recovery was not more than 8 lakhs.

5. In the light of the aforesaid, even if the appellants are found in contravention of section 8 (1) and section 8 (2) of the FER Act of 1973, the penalty imposed on them is disproportionate and thus to be rationalized.

6. The learned counsel for the appellant did not raise any other argument though she was having opportunity to refer to any other arguments for which opportunity was given. The learned counsel for the appellants however closed the argument with the prayer to allow the appeal.

7. The appeal was vehemently contested by the learned counsel for the respondent. It is submitted that the different foreign currency was found with the appellants. It was not disputed by them rather they admitted it but as an afterthought subsequently stated that appellant Ashok Kumar was working with Sudhakar Verma and therefore he has not committed any contravention at his own but was at the instance of Sudhakar Verma.

8. The statement of the appellant Manoj Kumar was recorded on 04.12.1992 wherein he stated that the house from where the foreign currency was recovered was in the name of Madhu, w/o of his brother Ashok Kumar. It was further stated that seized foreign exchange was purchased by him 6 to 7 days back from a person who had come to their residence. They were knowing the person since long. He was engaged in sales and purchase of foreign exchange.

9. The documents seized from their house were containing details of their transaction in foreign exchange including the rates thereof.

10. The statement of Ashok Kumar was also recorded on 04.12.1992 where he admitted seizure of foreign exchange and Indian currency apart from documents from the premises.

He refused to make any other statement in that regard.

11. The authority below had given ample opportunity to both the appellants to file the reply and matter was adjourned from time to time before conclusion of the proceeding. It was in a period of eight years to provide a fair opportunity of hearing to the appellants. Initially, the appellants did not participate in personal hearing despite notice. However, when the notice was again served, they appeared for personal hearing and denied commission of the contravention at their own but was at the instance of Sudhakar Verma.

12. The statement of the appellants were sufficient to find contravention of section 8 (1) and 8 (2) of FERA Act, 1973. The penalty of Rs. 80 lakhs has been imposed on each appellant which may not be interfered by the Tribunal.

13. We have considered the rival submission raised by the counsel for the parties and perused the record carefully.

14. The counsel for the appellants