2014 Supreme(SC) 733

SUPREME COURT OF INDIA
Jagdish Singh Khehar, C. Nagappan, JJ.
A. Tajudeen - Appellant
Versus
Union of India - Respondent
CIVIL APPEAL NO. 5773 OF 2009
Decided on: 10-10-2014

IMPORTANT POINT
FERA violations—Conviction cannot be based on retracted statements of accused.

Headnote:(A) Foreign Exchange Regulation Act, 1973—Section 9(1)(b)—FERA violations—Seizure of Indian currency and imposition of penalty—Retracted statement—High Court disbelieved story of compulsion by officers while rejecting retractions made by appellant and his wife—If appellant had made any such statement, he would have been proceeded against under Section 9(1)(b) of 1973 Act—Mere fact that he was not proceeded against, prima facie establishes, in absence of any evidence to the contrary, that assertion made by appellant to the effect that he never made such statement, had remained unrefuted—If record as alleged, was not available with authorities, it must lead to inevitable inference that record was not available at all—Retracted statement could not be relied upon by Enforcement Directorate to establish allegations levelled against appellant. (Para 9)

       (B) Foreign Exchange Regulation Act, 1973—Section 9(1)(b)—FERA violations—Seizure of Indian currency and imposition of penalty—Retracted statement—Innocence or guilt of appellant will have to be determined on the basis of statements made by appellant and his wife to officers of Enforcement Directorate—Statements in question can under no circumstances constitute sole basis for recording finding of guilt against appellant—If findings could be returned by exclusively relying on such oral statements, such statements could easily be thrust upon persons who were being proceeded against on account of their actions in conflict with provisions of 1973 Act—Such statements ought not to be readily believable unless there is independent corroboration of certain material aspects of said statements, through independent sources—Nature of corroboration required would depend on facts of each case—Officers of Enforcement Directorate were seriously negligent in gathering independent evidence of a corroborative nature—Retracted statements made by appellant and his wife could not constitute exclusive basis to determine culpability of appellant. (Paras 15, 16 and 18)

       (1992) 3 SCC 178—Referred.

       (C) Foreign Exchange Regulation Act, 1973—Section 9(1)(b)—FERA violations—Seizure of Indian currency and imposition of penalty—Credibility would attach to Spot Mahazar only if independent witnesses were produced as witnesses and appellant was afforded opportunity to cross-examine them—Such procedure was not adopted in this case—Even if Mahazar is accepted as valid and genuine, same is wholly insufficient to establish that amount recovered from residence of appellant was dispatched by a resident of Singapore through a person who is not an authorised dealer in foreign exchange—Charge against appellant under Section 9(1)(b) of 1973 Act, cannot be established on the basis of newspaper sheets in which money was wrapped—Impugned judgment set aside. (Paras 19 to 22)

       Facts of Case—

       Through memorandum dated 12.3.1990 it was alleged that appellant without any general or special exemption from the Reserve Bank of India, had received an amount of Rs.8,24,900/-in two installments, at behest of a person resident in Singapore. First installment was allegedly received on 23.10.1989 which comprised of Rs.4,00,000/-. Remaining amount was allegedly received in the second installment on 25.10.1989. As per memorandum the aforesaid amounts had been received from a local person who was not an authorised dealer in foreign exchange.

       Findings of Court—

       In view of position expressed in the foregoing paragraph, we are satisfied that charge against the appellant under Section 9(1)(b) of the 1973 Act, cannot be established on the basis of newspaper sheets, in which the money was wrapped. Newspaper sheets relied upon, would not establish that the amount recovered from the residence of the appellant was dispatched by the person from Singapore, through a person who was not an authorized dealer. Enforcement Directorate is directed to forthwith refund the confiscated sum of Rs.8,24,900/-, to the appellant, as also, to return the amount of Rs.1,00,000/-, which was deposited by appellant as penalty.