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APPELLATE TRIBUNAL FOR FORFEITED PROPERTY
Balesh Kumar, Member, Rajesh Malhotra, Member
Shri Bharatlal Agarwala Shri Omendra Kumar Chowdhury v. The Joint Director Directorate of Enforcement Kolkata
FPA-FE-01/KOL/2019
(A) Foreign Exchange Management Act, 1999 - Sections 3(a), 3(d), and 39 - Presumption as to documents - Section 39 raises presumption that a document seized from custody or control of any person and in that person's handwriting is executed by that person and contents are true unless contrary proved - Appellants failed to rebut the presumption - Penalty for contravention of dealing in foreign exchange without permission. (Paras 11-16)
(B) Principles of Natural Justice - Right to cross-examine handwriting expert - Denial of cross-examination does not per se violate natural justice unless prejudice is proved - Flexible application of natural justice - Appellants failed to demonstrate how cross-examination would have changed outcome - Reliance on precedents distinguished - No prejudice caused. (Paras 18-24)
(C) Delay in adjudication - Show cause notice issued in 2009, adjudication completed in 2016 - Delay not inordinate in absence of prejudice - Precedents on delay distinguished as cases where proceedings were not concluded - No violation. (Paras 26-27)
Facts of the case:
Search conducted at premises of one appellant recovered a loose sheet containing numbers and names indicating foreign exchange transactions. Documents were forwarded to Government Examiner of Questioned Documents who confirmed handwriting of that appellant. Appellants denied recovery and failed to explain contents. Adjudicating Authority imposed penalty of Rs.5,00,000 each under FEMA sections 3(a) and 3(d). Appellants filed appeal.
Findings of Court:
Under Section 39 FEMA, presumption of truth of contents and execution of documents arises. Appellants failed to prove contrary. Denial of cross-examination of handwriting expert did not cause prejudice. Delay in adjudication not fatal. However, penalty reduced to Rs.2,50,000 each in interest of proportionality.
Issues: (1) Whether the presumption under Section 39 FEMA was correctly applied? (2) Whether denial of cross-examination of handwriting expert violated principles of natural justice? (3) Whether delay in adjudication vitiates the order?
Ratio Decidendi: The statutory presumption under Section 39 FEMA, coupled with the unchallenged expert opinion and the appellants' failure to provide an alternative explanation, supports the finding of contravention. The absence of cross-examination of the handwriting expert does not invalidate the proceeding where no prejudice is shown. Delay in adjudication must be assessed on case-specific basis.
Result: Appeals partly allowed. Penalty reduced to Rs.2,50,000 on each appellant. Pre-deposit adjusted accordingly. (Paras 27-28)
FINAL ORDER
25.03.2026
This Order disposes of the Appeals Nos. FPA-FE-01/KOL/2019 filed by Shri Bharatlal Agarwala and FPA-FE-05/KOL/2019 filed by Shri Omendra Kumar Chowdhury, against the Order No. 01/FEMA/ 2015-16/JD(SDC) dated 10.02.2016 (Impugned Order), passed by the Joint Director, Enforcement Directorate, Government of India, Kolkata. The Ld. Adjudicating Authority (AA) imposed the penalty of Rs. 5,00,000/- each on the Appellants Shri Bharatlal Agarwala and Shri Omendra Kumar Chowdhury, for contravention of Section 3 (a) and Section 3 (d) read with Section 39 of the Foreign Exchange Management Act, 1999 (FEMA), vide the Impugned Order. The Appellants were directed by this Tribunal on 19.12.2024 to make the pre-deposit of 50% of penalty amount i.e. a sum of Rs. 2,50,000/- each in the form of FDRs.
2. Ld. Counsel for the Appellants argued at length to contend that the Impugned Order is without merit. He stated that the impugned Adjudication Order No. 01/FEMA/2015-16/JD(SDC) dated 10.02.2016 and the related Show Cause Notice have no legal basis. The Appellants were wrongly found to be in contravention of the charges under Section 3(a) and 3(d) read with Section 39 of FEMA and accordingly the penalties of Rs 5,00,000/- (Rs. Five Lakhs Only) were wrongly imposed on each of the two Appellants herein.
3. Ld. Counsel for the Appellants stated that Shri Bharatlal Agarwala was engaged in running a STD Booth under the name and style of M/s. Biswa Lakshmi Communication. The Appellant was also carrying import-export business under the name and style of MDB Enterprise, wherein he was one of the partners of the said firm. The officers of the Respondent Directorate visited the Appellant's STD Booth on 17.05.2006 on receipt of information that the Appellants were engaged in unauthorized transactions in foreign exchange and transfer of funds outside India. The Respondent Directorate recovered from the premise, one loose sheet which contained a series of numbers and names. The officers also visited the premises of the Appellant Sh. Omendra Kumar Chowdhury, another partner of M/s. MDB Enterprise but nothing incriminating was found from his premises.
4. Ld. Counsel for the Appellants further stated that the recovered documents were subsequently forwarded to the Government Examiner of Questioned Documents, Directorate of Forensic Sciences, Ministry of Home Affairs, Govt. of India, Kolkata. The Govt. Examiner of Questioned Documents vide its letter/report dated 10.07.2006 confirmed that the author of the account sheets is one and the same and all these documents are in the handwriting of the Appellant Shri Bharatlal Agarwala.
5. Ld. Counsel for the Appellants argued that based on the facts and legal issues raised, the case is in favour of the Appellants. Ld. Counsel stated that the Appellants had denied the factum of recovery of the documents and had repeatedly expressed their inability to explain the documents to the Respondent Directorate. Apart from the report of the handwriting expert, there is no evidence that the Appellants herein have contravened the provisions of FEMA. Ld. Counsel stated that the Appellants dispute the correctness of the opinion of the Government Examiner of Questioned Documents. Ld. Counsel argued that the Appellants neither dealt with any transaction in foreign exchange with any person nor had they entered into a transaction in India with any unauthorized persons.
6. Ld. Counsel for the Appellants argued that the Impugned Order is not maintainable as it was in breach of the Principles of Natural Justice, as the Appellants were denied the opportunity to cross- examine the Government Examiner of Questioned Documents (handwriting expert). Ld. Counsel has placed reliance on Andaman Timber Industries versus Commissioner of Central Excise , 2015 (324) ELT 641 (SC); Commissioner of Central Excise versus Parmarth Irons Pvt. Ltd. , 2010 (260) ELT 514 (All); Royal Impex versus Commissioner of Customs, Mumbai , 2008 (221) ELT 114 (T
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