FINAL ORER

19.08.2025

The appellant preferred an appeal under Section 19 of the Foreign Exchange Management Act, 1999 (in short `the Act of 1999’) to challenge the order dated 02.03.2005 passed by the Adjudicating Authority imposing the penalty of Rs.20 lakhs. The appeal was decided by this Tribunal vide its order dated 11.06.2007. Aggrieved by the order of the Tribunal, the appellant preferred an appeal before the Hon’ble High Court by maintaining Appeal No. GA 2721/2007. The High Court set aside the order passed by this Tribunal vide its order dated 15.02.2010. The matter was remanded back to the Tribunal for afresh hearing in terms of the observations made by the court and accordingly the matter was taken up for afresh hearing. The learned counsel for the appellant made a reference of the order of the High Court dated 15.02.2010 and subsequent order of acquittal passed by the Trial Court and upheld by the High Court in C.R.A 46 OF 2021 vide its order dated 09.02.2022. It was to impress upon that once the appellant has been acquitted for contravention under the regime of FERA, this Tribunal should set aside the order passed by the Adjudicating Authority dated 02.03.2005. We would address the issue aforesaid also but before that we may give reference of the facts involved in the case.

Brief facts of the case:

2. It is a case where the investigation in the matter was initiated on the basis of specific information. The search of residence/shop/office premises of the appellant was made on 24.04.1996. It resulted in seizure of cash of Rs.21.80 lakhs and discovery of incriminating documents. The statement of the appellant was recorded in Bengali under Section 40 of Foreign Exchange Regulation Act (FERA), 1973 (in short `the Act of 1973’). It transpired that the appellant is an Indian National having Indian Passport. Apart from his engagement as broker, he was also engaged in receiving payments locally in India and making payments to various persons under the instructions and order of three Bangladeshi Nationals, namely, Osman Ali, Chand Ali Sheikh and Nirmal Kumar Saha. The entries of the seized documents were written in the code words which was clarified by the appellant in his statement. The appellant disclosed the names and telephone numbers of the co-noticees and on the basis of the information made available, enquiries were caused by the Enforcement Directorate. The statements of four co-noticees were also recorded under Section 40 of the Act of 1973.

3. A show cause notice was then issued on 15.04.1997 to the appellant and co-noticees asking to explain why the adjudication proceedings should not be held against them. The reliance was placed on the documents and seizure of currency notes of Rs.21.80 Lakhs. It was also in reference to the statement recorded under Section 40 of the Act of 1973. No reply to the show cause notice was filed by the appellant within the prescribed period. However, during the adjudication proceedings, notes of arguments were submitted on 15.12.2004. The respondents finding a case of Hawala transaction in contravention of the provisions of the Act of 1973 imposed a penalty of Rs.20 lakhs on the appellant and different penalties on the co-noticees. The contravention was alleged to be of Section 9(1)(b) and 9(1)(d) of the Act of 1973.

Arguments of counsel for the appellant:

4. The learned counsel for the appellant submitted that the impugned orders have been passed on surmises and conjectures without referring to the facts available on record. The appellant had disclosed the source of the money yet ignoring the aforesaid, finding has been recorded showing involvement of the appellant in Hawala transaction and thereby violation of Section 9(1)(b) and 9(1)(d) of the Act of 1973. It was with further statement that sole basis for passing the impugned order by the Adjudicating Authority is in reference to the confessional statement of the appellant, which was not corroborated by any other evidence, rather the confe