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Tuesday, December 30, 2014

Whether the Accused had violated Section 9(1)(b) of the Foreign Exchange Regulation Act, 1973 (hereinafter referred to as, the 1973 Act). Section 9(1)(b) aforementioned, is being extracted hereunder:- “9. Restrictions on payments – (1) Save as may be provided in, and in accordance with any general or special exemption from the provisions of this sub-section which may be granted conditionally or unconditionally by the Reserve Bank, no person in, or resident in, India shall – (a) xxx xxx xxx (b) receive, otherwise than through an authorized dealer, any payment by order or on behalf of any person resident outside India; Explanation – For the purposes of this clause, where any person in, or resident in, India receives any payment by order or on behalf of any person resident outside India through any other person (including an authorized dealer) without a corresponding inward remittance from any place outside India, then, such person shall be deemed to have received such payment otherwise than through an authorized dealer;” = “36. A person accused of commission of an offence is not expected to prove to the hilt that confession had been obtained from him by any inducement, threat or promise by a person in authority. The burden is on the prosecution to show that the confession is voluntary in nature and not obtained as an outcome of threat, etc. if the same is to be relied upon solely for the purpose of securing a conviction.we are satisfied that the 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. The newspaper sheets relied upon, would not establish that the amount recovered from the residence of the appellant – A. Tajudeen was dispatched by Abdul Hameed from Singapore, through a person who was not an authorized dealer. Based on the above determination, and the various conclusions recorded hereinabove, we are satisfied, that the impugned judgment passed by the High Court deserves to be set aside. =2014- Oct.Part.- S.C.- CIVIL APPEAL NO. 5773 OF 2009 A. Tajudeen …. Appellant versus Union of India …. Respondent

                                                                “REPORTABLE”

                        IN THE SUPREME COURT OF INDIA

                        CIVIL APPELLATE JURISDICTION

                        CIVIL APPEAL NO. 5773 OF 2009


A. Tajudeen                                        …. Appellant

                                   versus


Union of India                                     …. Respondent


                               J U D G M E N T

Jagdish Singh Khehar, J.

1.    Through memorandum dated 12.3.1990 it was alleged, that the  appellant
herein – A. Tajudeen, 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  the  behest  of  Abdul  Hameed,  a  person  resident   in
Singapore.  The first  installment  was  allegedly  received  on  23.10.1989
which comprised  of  Rs.4,00,000/-.   The  remaining  amount  was  allegedly
received in the second installment on 25.10.1989.   As  per  the  memorandum
the aforesaid amounts had been received from a local person, who was not  an
authorised dealer in foreign exchange.
2.    Based on the factual  position  noticed  hereinabove,  the  allegation
against the appellant was, that he  had  violated  Section  9(1)(b)  of  the
Foreign Exchange Regulation Act, 1973 (hereinafter referred to as, the  1973
Act).  Section 9(1)(b) aforementioned, is being extracted hereunder:-
“9.   Restrictions on payments – (1) Save as may  be  provided  in,  and  in
accordance with any general or special  exemption  from  the  provisions  of
this sub-section which may be granted conditionally  or  unconditionally  by
the Reserve Bank, no person in, or resident in, India shall –

      (a)   xxx        xxx        xxx
      (b)   receive,  otherwise  than  through  an  authorized  dealer,  any
payment by order or on behalf of any person resident outside India;
      Explanation – For the purposes of this clause, where  any  person  in,
or resident in, India receives any payment by order  or  on  behalf  of  any
person resident  outside  India  through  any  other  person  (including  an
authorized dealer) without a corresponding inward remittance from any  place
outside India, then, such person shall  be  deemed  to  have  received  such
payment otherwise than through an authorized dealer;”

Based on  the  aforesaid  statutory  provision,  and  the  factual  position
noticed  hereinabove,  the  Enforcement  Directorate  initiated  proceedings
against the appellant under Section 50 of the 1973 Act.
3.    Before  adjudicating  upon  the  merits  of  the  controversy,  it  is
essential to narrate the factual position leading to  the  issuance  of  the
aforesaid memorandum dated 12.3.1990.  The facts as  they  emerge  from  the
pleadings, and the various orders leading to the  passing  of  the  impugned
judgment rendered by the High Court of  Judicature  at  Madras  (hereinafter
referred to as, the High Court)  on  28.9.2006,  are  being  chronologically
narrated hereunder:-
(i)   The appellant – A. Tajudeen is alleged to have  made  a  statement  to
the Enforcement Directorate on 20.4.1989, wherein he acknowledged,  that  he
had received a sum of Rs.1,40,000/- from Abdul Hameed.   Out  of  the  above
amount, he paid a sum of Rs.60,000/- through  his  shop  boy  –  Shahib,  to
Shahul Hameed (a  relative  of  Abdul  Hameed)  of  Village  Pudhumadam.   A
further amount of Rs.20,000/- was paid to some friends of  Abdul  Hameed  at
Keelakarai, and remaining amount was retained by appellant himself.  In  the
statement made on 20.4.1989, it was allegedly acknowledged by the  appellant
that Abdul Hameed was a resident  of  Singapore,  and  was  running  a  shop
located at Market Street, Singapore.
(ii)  On 25.10.1989, the officers of the Enforcement Directorate raided  the
residential premises of the appellant, namely, no.  6,  Dr.  Muniappa  Road,
Kilpauk, Madras.  At the time of the raid, which commenced at 1.00  pm,  his
wife T. Sahira Banu was at the residence.   The  appellant  -  A.  Tajudeen,
also  reached  his  residence  at  1.30  pm,  whilst  the  officers  of  the
Enforcement Directorate were still conducting the raid.  During  the  course
of the raid, a sum of Rs.8,24,900/- in Indian currency  was  recovered  from
under a mattress from a bedroom of the appellant’s residence.
(iii) A mahazar was prepared on 25.10.1989, depicting  the  details  of  the
currency recovered from the raid.  The said  mahazar  was  prepared  in  the
presence of two independent witnesses, namely, R.M.  Subramanian  and  Hayad
Basha.  The above independent witnesses also  affixed  their  signatures  on
the mahazar.
(iv)  At the time of the raid itself, the statement of the  appellant  -  A.
Tajudeen  was  recorded  (on  25.10.1989).   The  relevant  extract  of  the
aforesaid statement of the appellant  is  being  reproduced  hereunder.   It
needs to be expressly noticed, that the appellant  now  allegedly  disclosed
the address of Abdul Hameed, as no. 24, Sarangoon Road, Singapore.
“Today your officers searched  my  aforesaid  house  and  seized  a  sum  of
Rs.8,24,900/- as set out in the Mahazar.  I wanted to establish a  jewellery
shop in Madras.  I commenced a jewellery shop  in  the  name  and  style  of
“M/s.  Banu  Jewellers”  on  19.10.1989  at  No.   12,   Ranganathan   Road,
Nungambakkam, Madras-34.  It is a partnership business wherein  my  wife  T.
Sahira Banu is a partner.  For that I sold my wife’s gold  jewels  and  also
taken hand loans from my friends.  The said  business  was  started  with  a
capital of Rs.2,20,000/- in my  wife’s  name.   The  other  partner  Mr.  S.
Muthuswamy of No. 20, Indira Nagar, Adyar (I do not  remember  his  address)
has contributed to the capital a sum of Rs.30,000/-.
For expanding the said shop and  for  improving  the  business,  I  required
about Rs.9,00,000/-.  My relatives are working in  Singapore  and  Malaysia.
One Abdul Hameed from my native place is carrying on business for  the  past
15 years at no. 24, Sarangoon Road, Singapore.  He is  dealing  in  clothes,
VCRs etc.  He came down to Madras about 2 months back.   At  that  time,  he
met me at my residence.   I  told  him  that  a  jewellery  business  to  be
commenced and that I require about Rs.9,00,000/- for the said  business  and
to discharge certain small loans.  Further I requested him  to  help  me  by
providing the said money assuring to repay the same in 2 or  3  years’  time
with small interest during his visit to India.
He assured to contact me over phone, House telephone no. 666611 on  reaching
Singapore.  The said Abdul Hameed, about  2  months  back,  called  me  over
phone from Singapore and told me that as I requested to  him,  he  had  made
arrangements for sending the sum of Rs.9,00,000/- and that  he  will  inform
me about the mode of transmitting the same.  Thereafter during the 2nd  week
of this month, the said Abdul Hameed contacted me over phone.  At that  time
he told me that he  would  send  Rs.8,25,000/-  in  two  installments  being
Rs.4,00,000/- and Rs.4,25,000/- and that the said money would  be  delivered
at my house in the 3rd week or  4th  week  of  this  month  through  unknown
person.  Pursuant thereto, on 23.10.1989 around 9.00 pm  an  unknown  person
came to my house inquiring about me and gave me Rs.4,00,000/-  stating  that
he is delivering the same on the instruction of Abdul Hameed  of  Singapore.
Similarly another unknown person came to my house at 8.00 am  on  24.10.1989
and delivered to me Rs.4,25,000/- claiming to be on the instructions of  the
said Singapore Abdul Hameed.  I  was  keeping  the  said  Rs.4,00,000/-  and
Rs.4,25,000/-, totaling to Rs.8,25,000/-, in my house which was received  on
the instruction of Abdul Hameed.
The  Enforcement  Officer  who  searched  the  house  seized  the   sum   of
Rs.8,24,900/- which I got in the aforesaid manner.  The  said  Abdul  Hameed
who is residing at Singapore is my distant relative on  the  paternal  side.
He is living with his family at Singapore.  He  used  to  come  down  to  my
native lace, Pudhumadam Village, once in a year to visit his relatives.   He
is aged 45 years and of the height of about 5½  feet,  fair  complexion  and
medium built.
The person who delivered the sum of Rs.4,00,000/-  on  the  instructions  of
said Abdul Hameed did not disclose his name and address.  He  was  about  35
years old and with medium height and medium built.   He  was  wearing  pants
and  shirt.   He  left  within  few  minutes  on  delivering  the   sum   of
Rs.4,00,000/- to me and hence I could not notice other  identifiable  marks.
Similarly the other person who came on 24.10.1989 and delivered the  sum  of
Rs.4,25,000/- on  the  instructions  of  said  Abdul  Hameed  also  did  not
disclose his name and address.  He must be around 40 years old.  He is  also
medium built and also medium height.  Since  both  of  them  left  my  house
within a few minutes on delivering the said sums, I could not  notice  their
identifiable  marks.   I  was  making  arrangements  to   export   readymade
garments.  In respect thereof, I required the place apart from my  house  to
meet my customers.  For that I have taken on rent room no.  402,  in  Ganpat
Hotel, Nungambakkam High Road about 4-5 months back from its owner one  M.R.
Prabhakaran.  I am using the telephone no. 477409  in  the  said  shop,  A/C
machine and fridge available in the said room.  Since  Export  business  did
not suit me, I left it.  The said room is in my possession.”
                                                          (emphasis is ours)

(v)   During the course of the raid conducted on 25.10.1989,  the  appellant
- A. Tajudeen, was detained by the officers of the Enforcement  Directorate.
 His statement was again recorded on 26.10.1989  by  the  Chief  Enforcement
Officer, whilst he was in custody.  Relevant portion of his above  mentioned
statement is being extracted hereunder:-
“I have earlier given statement before you on 25.10.1989.  In  that  I  have
disclosed that by searching  my  house  on  25.10.1989  your  officers  have
seized a sum of Rs.8,24,900/- which  I  received  from  unknown  persons  on
23.10.1989 and 25.10.1989 on the instructions of Abdul Hameed of  Singapore.
 This is true.  On 25.10.1989, the  said  officers  searched  the  jewellery
shop “Banu Jewellers” in which my wife is a partner.  At  that  time  I  was
also there.  In the  said  search  no  documents  were  seized.   The  other
partner Mr. Muthusamy who is looking after the seized sum  of  Rs.8,24,900/-
is not related to the  said  business.   As  stated  by  him,  there  is  no
connection between the said business and the sums seized.
Today your officers searched my room at No. 402, Ganpat  Hotel,  Nungapakkam
High Road, Madras-34 which I have taken on rent.  I  was  there  during  the
search.  Since I have lost the  key  it  was  opened  by  a  lock  repairer.
Pursuant to the said search a  quotation  from  A.L.  Textiles  Mills  dated
15.4.1989 was seized.
Hereinbefore, in April last, I appeared  before  the  officers  and  gave  a
statement.  Today I was shown the statement which I have  given  before  the
officers on 20.4.1989.  I  have  stated  about  the  receipt  of  a  sum  of
Rs.1,40,000/- through my shop boy,  Shahib,  on  the  instructions  of  said
Abdul Hameed of Singapore and out of the same, I have disbursed  Rs.60,000/-
on the instructions of the said Abdul Hameed to Shahul Hameed at  Pudhumadam
and the payment of Rs.20,000/- to a friend in  Keelakarai  through  my  shop
manager, Hasan.  The said Shahul Hameed mentioned  in  the  statement  dated
20.4.1989 and Abdul Hameed disclosed in the statement  dated  25.10.1989  is
one and the same person.  In the said  statement  dated  24.10.1989  I  have
stated that Abdul Hameed is running  a  fancy  store  in  Market  Street  in
Singapore.  In the statement dated 25.10.1989,  I  have  stated  that  Abdul
Hameed is running a shop at Sarangoon Road, Singapore.  Few months back,  he
has shifted his business from the Market Street to Sarangoon Road.   In  the
statement dated 20.4.1989, I have stated that I am running  a  textile  shop
“Seemati Silks” at Periyakadai Veethi,  Ramanathapuram.   In  the  statement
dated 25.10.1989 I have stated that I am the proprietor of  “Seemati  Silks”
at Salai Street.  Periyakadai Veethi is used to be called as  Salai  Street.
All that I stated in this statement are true.”
                                                          (emphasis is ours)

(vi)  Whilst the  appellant  -  A.  Tajudeen  was  under  detention  of  the
Enforcement Directorate, the statement of his wife T. Sahira Banu  was  also
recorded on 26.10.1989.  The same  was  allegedly  scribed  by  M.J.  Jaffer
Sadiq, a  nephew,  and  then  signed  by  T.  Sahira  Banu.   In  the  above
statement, T. Sahira Banu, the wife of A. Tajudeen admitted the recovery  of
Rs.8,24,900/- by the officers  of  the  Enforcement  Directorate,  from  the
residence of the appellant i.e., no. 6, Dr. Muniappa Road, Kilpauk, Madras.
(vii) On 27.10.1989, A. Tajudeen and T. Sahira Banu retracted their  earlier
statement(s), alleging that the same had been recorded  against  their  will
and under the threat and compulsion  of  the  officers  of  the  Enforcement
Directorate.
4.    In response to the memorandum dated 12.3.1990, the appellant  filed  a
reply (which is available on the record of the present case as  Annexure  P-
9).  In his reply, he denied having made any  statement  on  20.4.1989.   He
asserted, that a copy of the aforesaid statement dated 20.4.1989  had  never
been furnished to him, nor had been relied  upon  in  the  memorandum  dated
12.3.1990.  He also denied the factual  contents  of  the  statements  dated
25.10.1989 and 26.10.1989.  He denied having  ever  met  Abdul  Hameed.   He
also denied, that there was any occasion for him to ask for  any  loan  from
the said Abdul Hameed.  He denied any acquaintanceship with the  said  Abdul
Hameed.  Insofar as the statements recorded  on  25.10.1989  and  26.10.1989
are concerned, his  specific  assertion  in  his  reply  was,  that  he  was
compelled to make the above statements at the dictation of the  officers  of
the Enforcement Directorate.  He also asserted,  that  the  said  statements
had been made under threat, coercion and undue  influence.   He  highlighted
the fact, that on the very day of  his  release  from  detention,  i.e.,  on
27.10.1989, he had  addressed  a  letter  to  the  Enforcement  Directorate,
repudiating the factual position indicated in the statements made by him  on
25.10.1989 and 26.10.1989.  He also  asserted,  that  a  similar  course  of
action had been adopted by his wife T. Sahira Banu,  inasmuch  as,  she  too
had repudiated the statement recorded by her on 26.10.1989 at the office  of
the  Enforcement  Directorate  through  a   separate   communication   dated
27.10.1989.  Insofar  as  the  currency  recovered  from  his  residence  is
concerned, his explanation was, that he had an  established  business  under
the trade name of Seemati Silks, which had an annual turnover  of  Rs.25  to
30 lacs.  He also asserted, that his wife T. Sahira Banu had  also  business
establishments including Seemati Matchings and Banu  Jewellers,  from  which
she was earning income.  Besides the aforesaid business  establishments,  it
was the contention of the appellant -  A.  Tajudeen,  that  he  had  several
other business projects, from which he was also earning independent  income.
 In addition to his financial status reflected hereinabove, it was also  the
case of the appellant, that he had taken hand loans.  The amount  which  was
recovered by the officers of the Enforcement Directorate from his  residence
on 25.10.1989, was comprised of all  the  above  sources.   He  clearly  and
expressly denied, having received the aforesaid  currency  (Rs.  8,24,900/-)
from a person resident in India, at the behest of a person not  resident  in
India.
5.     Having  examined  the  response  of  the  appellant,  the  Additional
Director  of  Enforcement,  Southern  Zone,  Madras,  by  an   order   dated
22.4.1991, arrived at the conclusion,  that  the  appellant  was  guilty  of
violating Section 9(1)(b) of the 1973 Act.  Having so concluded, the  seized
amount of Rs.8,24,900/- was ordered to be  confiscated.   In  addition,  the
appellant was imposed  a  penalty  of  Rs.1,00,000/-  for  contravening  the
provisions of Section 9(1)(b) of the 1973 Act.  Dissatisfied with the  order
dated 22.4.1991 passed by the Additional Director of  Enforcement,  Southern
Zone, Madras, the appellant preferred an appeal before the Foreign  Exchange
Regulation Appellate  Board  (hereinafter  referred  to  as,  the  Appellate
Board).  The aforesaid appeal bearing number 316 of 1991 was allowed  by  an
order dated 31.12.1993.  While allowing  the  appeal,  the  Appellate  Board
directed the refund of penalty of Rs.1,00,000/- imposed  on  the  appellant.
The  Appellate  board  also  quashed  the  direction   pertaining   to   the
confiscation of Rs.8,24,900/- seized from the residence of the appellant.
6.    Aggrieved by the order passed by the Appellate  Board,  the  Union  of
India through the Director of Enforcement preferred an appeal under  Section
54 of the 1973 Act, before the High  Court.   The  High  Court  allowed  the
above appeal being C.M.A. NPD no. 1282 of 1994 by an order dated  28.9.2006.
 While allowing the aforesaid appeal, the High Court placed reliance on  the
statement made by the appellant, before  the  officers  of  the  Enforcement
Directorate on 20.4.1989.  The  aforesaid  statement  was  referred  to,  as
having been voluntarily made by the appellant.   The  High  Court  expressed
the view, that the statements recorded by the appellant  on  25.10.1989  and
26.10.1989 were voluntarily made by him, and as such, the retraction of  the
said statements, was not accepted.  Likewise, the High  Court  accepted  the
statement  of  T.  Sahira  Banu  made  at  the  office  of  the  Enforcement
Directorate at Madras on 26.10.1989, as voluntary.  Her  retraction  of  the
said statement was also not accepted by the  High  Court.   The  High  Court
placed reliance on the fact, that the appellant  had  been  produced  before
the Additional Chief Metropolitan Magistrate, Madras, during the  course  of
his detention, but he  had  not  indicated  to  the  Magistrate  during  his
production,  that  he  and  his  wife  were  compelled  to  make  the  above
statements,  by the officers of the Enforcement Directorate.  This  was  the
primary reason for the High Court, in rejecting the retractions made by  the
appellant and his wife.
7.    Insofar as the veracity of  name  and  identity  of  Abdul  Hameed  is
concerned, the High Court expressed the view, that the name and identity  of
the person who had dispatched the money in question,  was  in  the  personal
knowledge of the appellant alone, and therefore, his  disclosure  about  the
name and identity of Abdul Hameed could not  be  doubted.   Insofar  as  the
different addresses of  Abdul  Hameed  indicated  in  the  statements  dated
20.4.1989 and 25.10.1989/26.10.1989 are concerned, the  High  Court  was  of
the view, that the appellant had himself disclosed the address of the  above
mentioned Abdul Hameed, and as such, he cannot be permitted to use the  said
statements to his own benefit.  The High Court was also of  the  view,  that
merely because the statements had been recorded at the time of the  raid  at
the residence of the appellant, and whilst he was under detention, it  could
not be inferred, that the same were not voluntary.
8.    During the course of hearing, the first  contention  advanced  at  the
hands of the learned counsel for the appellant was, that it was not open  to
the  Enforcement  Directorate  to  rely  on  the  alleged  statement   dated
20.4.1989, which the appellant is stated to have made  before  the  officers
of the Enforcement Directorate.   Insofar  as  the  instant  aspect  of  the
matter is concerned, it was the vehement contention of the  learned  counsel
for the appellant, that no reference was made to the above  statement  dated
20.4.1989 in the memorandum dated  12.3.1990.   It  was  further  submitted,
that a copy of the aforesaid statement dated 20.4.1989 was  never  furnished
to the appellant.  In fact it was the vehement  contention  of  the  learned
counsel for the appellant, that no such  statement  was  ever  made  by  the
appellant - A. Tajudeen, to the officers  of  the  Enforcement  Directorate.
Learned  counsel  for  the  appellant,  in  fact  emphatically  invited  our
attention to the fact, that the High  Court  in  para  16  of  the  impugned
judgment had inter alia, observed as under:-
“16.  …..  Referring to the explanation given by the officer that  they  had
no record of the statement made on 20.4.1989 at the time when the  statement
was made by Tajudeen on 26.10.1989…..”

It was also submitted, that if the appellant had made any such statement  on
20.4.1989, as was now being relied upon by the Enforcement  Directorate,  he
would have most definitely been  proceeded  against  for  violation  of  the
provisions of Section 9(1)(b) of the 1973 Act.  The very fact  that  he  was
not proceeded against, shows that no such earlier statement  may  have  been
recorded by the appellant on 20.4.1989.
9.    We have given our thoughtful consideration  to  the  first  contention
advanced at the hands of the learned counsel for the  appellant.   There  is
no doubt whatsoever, that  no  reliance  has  been  placed  on  the  alleged
statement made by the appellant on 20.4.1989  before  the  officers  of  the
Enforcement  Directorate,  in  the  memorandum  dated  12.3.1990.   Per  se,
therefore, it was not open to the  authorities  to  place  reliance  on  the
aforesaid statement, while proceeding  to  take  penal  action  against  the
appellant, in furtherance  of  the  aforesaid  memorandum  dated  12.3.1990.
Additionally, it is apparent from the reply (Annexure P-9) furnished by  the
appellant to the memorandum dated 12.3.1990, that the appellant clearly  and
expressly refuted having executed  any  statement  on  20.4.1989.   It  was,
therefore, imperative for the Enforcement Directorate, to establish  through
cogent evidence, that the appellant had indeed  made  such  a  statement  on
20.4.1989.  It also cannot be  overlooked,  that  no  action  was  initiated
against the  appellant  on  the  basis  of  the  aforesaid  statement  dated
20.4.1989.  A perusal of the  aforesaid  statement,  in  the  terms  as  are
apparent from the pleadings of the case, leaves no room for any doubt,  that
if the appellant had made any such statement, he would have  been  proceeded
against under Section 9(1)(b) of the 1973 Act.  The mere fact  that  he  was
not proceeded against, prima  facie  establishes,  in  the  absence  of  any
evidence to the contrary, that the assertion made by the  appellant  to  the
effect that he never made  such  statement,  had  remained  unrefuted.   The
reason depicted in the paragraph 16 of the impugned judgment passed  by  the
High Court extracted in the foregoing paragraph is clearly  a  lame  excuse.
Even though the aforesaid excuse may have  been  valid,  if  the  allegation
was, that the record of the statement made on 20.4.1989, was  not  available
with the officers of Enforcement Department at  the  time  of  the  raid  on
25.10.1989, yet to state that the aforesaid record was  not  available  when
the  second  statement  was  made  on  26.10.1989  at  the  office  of   the
Enforcement Directorate, is quite  ununderstandable.   It  is  pertinent  to
mention, that the second statement was recorded  by  the  Chief  Enforcement
Officer when the appellant – A. Tajudeen was in custody of  the  Enforcement
Directorate.  At that juncture if the record, as alleged, was not  available
with the authorities, it must lead to the  inevitable  inference,  that  the
record was not available at all.  For the reasons recorded  hereinabove,  we
are satisfied in holding, firstly, that the statement dated 20.4.1989  could
not  be  relied  upon  by  the  Enforcement  Directorate  to  establish  the
allegations levelled against the  appellant  through  the  memorandum  dated
12.3.1990.  And secondly, in  the  absence  of  having  established  through
cogent evidence, that the appellant  had  made  the  above  statement  dated
20.4.1989, it was not open to the Enforcement Directorate to place  reliance
on the same, for establishing the charges levelled against the appellant  in
 memorandum dated 12.3.1990.
10.   With reference to the statement of the appellant dated  20.4.1989,  it
is also necessary to record, that we had an impression during the course  of
hearing, that the above statement would lead us to a  clearer  understanding
of the truth of the matter.  After the hearing  concluded  on  6.6.2014,  we
required the learned counsel for the respondent  to  hand  over  to  us  the
record of the case.  We had clearly indicated to learned counsel,  that  the
purpose for this was, that we wished to examine  the  alleged  statement  of
the appellant dated 20.4.1989, along with the  record  connected  therewith.
In compliance, the summoned record was presented at the  residential  office
of one of us (J.S. Khehar,  J.)  on  7.6.2014.   A  perusal  of  the  record
revealed, that  the  same  did  not  comprise  of  the  appellant’s  alleged
statement dated 20.4.1989, or the  record  connected  therewith.   The  said
record was therefore returned forthwith (on 7.6.2014 itself), by making  the
following remarks:
“Mr. A.B.  Ravvi,  Assistant  Legal  Advisor,  Directorate  of  Enforcement,
Ministry of Finance, Government of India, Chennai office, alongwith  Mr.  B.
Naveen  Kumar,  Assistant  Legal  Advisor,  Directorate   of    Enforcement,
Ministry of Finance, Government of India, Headquarters at  New  Delhi,  have
visited the Residential office of Hon’ble Mr. Justice Jagdish Singh  Khehar,
Judge, Supreme Court of India, 6, Moti Lal Nehru Marg, New Delhi  –  110011,
today on           7th June, 2014  at  about  1.30  pm  to  deliver  a  file
containing original papers in the matter – Civil Appeal  no.  5773  of  2009
(A. Tajudden vs. Union of India).  Since the file does not contain  document
dated 20.4.1989 (statement of the appellant in the matter),  for  which  the
same was  summoned,  the  file  is  being  returned  herewith,  as  per  the
directions of the Hon’ble Judge.
                                                                        Sd/-
                                                            (Deepak Guglani)
                                                                Court Master
                                                                    7.6.2014
File received by:-
Sd/-
[Mr. A.B. Ravvi]”

Needless to mention, that despite the above remarks no  further  record  was
ever brought to our notice.  This is  a  seriously  unfortunate  attitudinal
display, leaving us with no other option but to conclude, that  the  alleged
statement made by the appellant on  20.4.1989,  may  well  be  a  fictitious
creation of the Enforcement Directorate.  In  such  circumstances,  reliance
on the appellant’s alleged statement dated 20.4.1989, just does not arise.
11.   Having arrived at the aforesaid conclusion, we shall now  examine  the
veracity  of  the  remaining  evidence  available   with   the   Enforcement
Directorate, for substantiating the charges levelled against  the  appellant
through memorandum dated 12.3.1990.  Having discarded  the  statement  dated
20.4.1989, what remains is, the statements of the appellant  -  A.  Tajudeen
recorded on 25.10.1989 and 26.10.1989, as also, the statement  of  his  wife
T. Sahira Banu recorded on 26.10.1989.  Besides  the  aforesaid  statements,
the remaining evidence  against  the  appellant  is,  in  the  nature  of  a
“mahazar” prepared on  25.10.1989,  which  was  signed  by  two  independent
witnesses, namely, R.M. Subramanian and Hayad Basha.   In  addition  to  the
above, the Enforcement Directorate also relied upon the newspaper sheets  of
the Hindu and Jansatha, in which the bundles of  notes  recovered  from  the
residence of the appellant, were wrapped.  Insofar as  the  Hindu  newspaper
sheets are concerned, they were of  the  Delhi  and  Bombay  editions  dated
19.2.1989, 14.4.1989, 23.7.1989 and 4.10.1989.  The sheets of  the  Jansatha
newspaper also pertain to its Delhi and Bombay editions  of  February,  1989
and 23.10.1989.
12.   Insofar as the aforesaid remaining evidence is concerned, it  was  the
vehement contention of the learned counsel for the appellant, that the  same
was  not  sufficient  to  discharge  the  onerous  responsibility   of   the
Enforcement Directorate,  to  establish  the  charge  levelled  against  the
appellant.  It was the submission of the learned counsel for the  appellant,
that reliance could not be placed on the statements made by  the  appellant,
as also, his wife (on 25.10.1989 and 26.10.1989).  In this  behalf,  it  was
sought to be cautioned, that if this  manner  of  establishing  charges  was
affirmed, the officers of the Enforcement Directorate, could  easily  compel
individuals through coercion,  threat  and  undue  influence,  as  they  had
allegedly done in this case,  and  then  proceed  to  punish  them,  on  the
strength of their own statements.  It was submitted, that in the  facts  and
circumstances of this case, there was ample opportunity available  with  the
Enforcement Directorate, to establish the veracity of  the  statements  made
by the appellant - A. Tajudeen and his wife T. Sahira Banu.  In this  behalf
it was pointed out, that the appellant has allegedly indicated,  that  Abdul
Hameed, the dispatcher  of  the  funds,  was  originally  from  his  Village
Pudhumadam in District Ramanathapuram.  He also stated, that the said  Abdul
Hameed was related to him from his paternal side.  In the statements  relied
upon by the  Enforcement  Directorate,  the  appellant  had  allegedly  also
disclosed, that Abdul Hameed had  contacted  him  over  the  telephone  from
Singapore.  It was submitted, that all the above facts were verifiable.   It
was submitted,  that  it  could  not  be  believed,  that  officers  of  the
Enforcement Directorate did not  verify  the  authenticity  of  the  factual
position in respect of Abdul Hameed.  It was  further  submitted,  that  the
appellant  in  the  statement  dated  20.4.1989  had  mentioned,  that   the
appellant, on the instructions of Abdul Hameed of  Singapore,  dispatched  a
sum of Rs. 60,000/- (out of  total  amount  of  Rs.  1,40,000/-)  to  Shahul
Hameed at Pudhumadam through his  shop  boy  -  Shahib.   According  to  the
learned counsel,  the  Enforcement  Directorate  could  have  confirmed  the
aforesaid factual position through Shahib.  It  is  apparent,  according  to
learned counsel, that  the  aforesaid  factual  position  was  found  to  be
incorrect, and  therefore,  no  further  statements  were  recorded  by  the
Enforcement Directorate, in connection therewith.  It  was  also  submitted,
that  the  appellant  had  produced  before  the   Assistant   Director   of
Enforcement, a communication  from  the  Revenue  Department  of  Singapore,
dated 2.9.1990 stating that, there was no such address at no. 24,  Sarangoon
Road, Singapore, and as such, the very foundational basis of the  statements
made  by  the  appellant  on  25.10.1989  and   26.10.1989   were   rendered
meaningless.  It was also submitted, that an Advocate had  enclosed  a  copy
of the certificate issued by the  Controller  of  Property  Tax,  Singapore,
depicting that no such address was there at Sarangoon Road, where  the  said
Abdul Hameed was alleged to be running his business.
13.   In order to contend that the statements made by  the  appellant  –  A.
Tajudeen and his wife T. Sahira Banu  could  not  be  relied  upon  in  law,
learned counsel for the appellant, placed  reliance  on  K.T.M.S.  Mohd.  v.
Union of  India,  (1992)  3  SCC  178  and  invited  our  attention  to  the
observations made in paragraph 34.  The same is extracted hereunder:
34.   We think it is not  necessary  to  recapitulate  and  recite  all  the
decisions on this legal aspect. But suffice to say that the core of all  the
decisions of this Court is to the effect that the voluntary  nature  of  any
statement made either before the  Custom  Authorities  or  the  officers  of
Enforcement under the relevant provisions of the respective Acts is  a  sine
quo non to act on it for any purpose and if the statement  appears  to  have
been obtained by any inducement, threat, coercion or by any  improper  means
that statement must be rejected brevi manu. At the same time, it  is  to  be
noted that merely because a statement is retracted, it  cannot  be  recorded
as involuntary or unlawfully obtained. It is  only  for  the  maker  of  the
statement who alleges inducement, threat, promise  etc.  to  establish  that
such improper means has been adopted. However, even  if  the  maker  of  the
statement fails to establish his  allegations  of  inducement,  threat  etc.
against the officer who recorded the statement, the authority  while  acting
on the inculpatory statement of the maker is not completely relieved of  his
obligations in at least subjectively applying its  mind  to  the  subsequent
retraction to hold that the inculpatory statement was not extorted. It  thus
boils down that the authority  or  any  Court  intending  to  act  upon  the
inculpatory statement as a voluntary  one  should  apply  its  mind  to  the
retraction and reject the same in writing. It is only on this  principle  of
law, this Court in several decisions  has  ruled  that  even  in  passing  a
detention order on the basis of an inculpatory statement  of  a  detenu  who
has violated the provisions  of  the  FERA  or  the  Customs  Act  etc.  the
detaining authority should consider the  subsequent  retraction  and  record
its opinion before accepting the inculpatory statement lest the  order  will
be vitiated. Reference may be made to a decision of the full  Bench  of  the
Madras High Court in Roshan Beevi v. Joint Secretary to the Govt.  of  T.N.,
Public Deptt., [1983] LW (Crl.)  289,  to  which  one  of  us  (S.  Ratnavel
Pandian, J.) was a party.
                                                          (emphasis is ours)

In order to supplement the legal position expressed in the  above  extracted
judgment, learned counsel for the appellant also placed  reliance  on  Vinod
Solanki v. Union of India, (2008) 16 SCC 537, by inviting our  attention  to
the following conclusion recorded therein:-
“36. A person accused of commission of an offence is not expected  to  prove
to the hilt that confession had been obtained from him  by  any  inducement,
threat  or  promise  by  a  person  in  authority.  The  burden  is  on  the
prosecution to show that the confession  is  voluntary  in  nature  and  not
obtained as an outcome of threat, etc. if the same  is  to  be  relied  upon
solely for the purpose of securing a conviction.

37.   With a view to arrive at a finding as regards the voluntary nature  of
statement or otherwise of a confession which has since been  retracted,  the
court must bear in mind the attending circumstances which would include  the
time of retraction, the nature thereof, the manner in which such  retraction
has been made and other relevant factors. Law does not say that the  accused
has to prove that retraction of  confession  made  by  him  was  because  of
threat, coercion, etc. but the requirement is that  it  may  appear  to  the
court as such.

38. In  the  instant  case,  the  investigating  officers  did  not  examine
themselves. The authorities under the Act  as  also  the  Tribunal  did  not
arrive at a finding upon application of their mind  to  the  retraction  and
rejected the same  upon  assigning  cogent  and  valid  reasons  18herefore.
Whereas mere retraction of a confession may not be sufficient  to  make  the
confessional statement irrelevant for the  purpose  of  a  proceeding  in  a
criminal case or a quasi  criminal  case  but  there  cannot  be  any  doubt
whatsoever that the court is obligated to take into consideration  the  pros
and cons of both the confession and retraction made by the  accused.  It  is
one thing to say that a retracted confession  is  used  as  a  corroborative
piece of evidence to record a finding of guilt but it is  another  thing  to
say that such a finding is arrived at only on the basis of  such  confession
although retracted at a later stage.

39. The appellant is said to  have  been  arrested  on  27.10.1994;  he  was
produced before the learned Chief Metropolitan Magistrate on 28.10.1994.  He
retracted his confession and categorically stated the manner in  which  such
confession was purported to have been obtained. According to him, he had  no
connection with any alleged import transactions, opening of  bank  accounts,
or floating of company by name of M/s Sun Enterprises, export control,  bill
of entry  and  other  documents  or  alleged  remittances.  He  stated  that
confessions were not only untrue but also involuntary.

40. The allegation that  he  was  detained  in  the  Office  of  Enforcement
Department for two days and two nights had not been refuted. No attempt  has
been made to controvert the statements made by appellant in his  application
filed on  28.10.1994  before  the  learned  Chief  Metropolitan  Magistrate.
Furthermore, the Tribunal as also the authorities misdirected themselves  in
law insofar as they failed to pose unto themselves a correct  question.  The
Tribunal proceeded on the basis that issuance and services of  a  show-cause
notice subserves the requirements of law only because by reason  thereof  an
opportunity was afforded to the proceedee to  submit  its  explanation.  The
Tribunal  ought  to  have  based  its  decision  on  applying  the   correct
principles of law.

41.    The  statement  made  by  the  appellant  before  the  learned  Chief
Metropolitan Magistrate was not a bald statement. The inference that  burden
of proof that he had made those statements under  threat  and  coercion  was
solely on the proceedee does not rest on any legal principle.  The  question
of the appellant’s failure to discharge the burden  would  arise  only  when
the burden was on him. If the burden was on the Revenue, it was  for  it  to
prove the said fact. The Tribunal on  its  independent  examination  of  the
factual matrix placed before it did not  arrive  at  any  finding  that  the
confession being free  from  any  threat,  inducement  or  force  could  not
attract the provisions of Section 24 of the Indian Evidence Act.”
                                                          (emphasis is ours)

14.   The aforesaid submissions were sought to be  refuted  by  the  learned
counsel representing  the  Union  of  India,  by  placing  reliance  on  the
findings recorded by the High Court, in the impugned judgment.
15.   First and foremost, we shall endeavour to examine the veracity of  the
statements made by the appellant – A. Tajudeen and his wife T.  Sahira  Banu
on  25.10.1989  and  26.10.1989  to  the   officers   of   the   Enforcement
Directorate.   Before  proceeding  with  the  factual  controversy,  it   is
essential to record, that from the  view  we  have  taken  in  the  ultimate
analysis,  the  innocence  or  guilt  of  the  appellant  will  have  to  be
determined on the basis of the statements made  by  the  appellant  and  his
wife (on 25.10.1989 and 26.10.1989)  to  the  officers  of  the  Enforcement
Directorate.  Therefore, for the case in hand, the above statements are  not
to be referred to as  corroborative  pieces  of  evidence,  but  as  primary
evidence  to  establish  the  guilt  of  the  appellant.   It  is  in   this
background, that we shall endeavour to apply the legal position declared  by
this Court, to determine the veracity and  reliability  to  the  statements,
which later came to be retracted by the appellant  and  also  by  his  wife.
Insofar  as  the  above  statements  are  concerned,  there  is   no   doubt
whatsoever, that they were all made either at the time of  the  raid,  which
was carried out by the  officers  of  the  Enforcement  Directorate  at  the
residence of the appellant, or whilst the appellant was in  custody  of  the
Enforcement Directorate.  Immediately after the appellant  was  released  on
bail by the Additional Chief Metropolitan Magistrate, Madras on  27.10.1989,
on the same day itself, both the appellant – A. Tajudeen  and  his  wife  T.
Sahira  Banu  addressed  communications   to   the   Director,   Enforcement
Directorate, New Delhi  resiling  from  the  above  statements,  by  clearly
asserting that they were recorded under coercion and  undue  influence,  and
would not be binding on them.
16.   Having given our thoughtful consideration to the aforesaid  issue,  we
are of the view that the statements  dated  25.10.1989  and  26.10.1989  can
under no circumstances constitute the sole basis for recording  the  finding
of  guilt  against  the  appellant.   If  findings  could  be  returned   by
exclusively relying on such oral statements, such  statements  could  easily
be thrust upon the persons who were being proceeded against  on  account  of
their actions in conflict  with  the  provisions  of  the  1973  Act.   Such
statements ought not to be readily believable, unless there  is  independent
 corroboration of certain material aspects of the said  statements,  through
independent sources.   The  nature  of  the  corroboration  required,  would
depend on the facts of each case.  In the present case, it is apparent  that
the appellant – A. Tajudeen and  his  wife  T.  Sahira  Banu  at  the  first
opportunity resiled from the statements which are now sought  to  be  relied
upon by the Enforcement Directorate, to substantiate  the  charges  levelled
against the appellant.  We shall now endeavour to examine whether  there  is
any independent corroborative evidence to support the above statements.
17.   According to the learned counsel  representing  the  appellant,  there
was an effective opportunity to the officers of the Enforcement  Directorate
to  produce  evidence  with  reference  to  a  number  of  important  facts,
disclosed by the appellant while making the aforesaid  statements,  yet  the
officers of the Enforcement Directorate chose not to substantiate  the  same
through independent evidence.  He cited a few instances where such  evidence
could  have  been  easily  gathered  by  the  officers  of  the  Enforcement
Directorate.  In  the  absence  of  any  corroboration  whatsoever,  it  was
submitted, that retracted statements made by the  appellant  –  A.  Tajudeen
and his wife T. Sahira Banu, could not be used to  record  findings  against
the appellant.
18.   We have no doubt, that evidence  could  be  gathered  to  substantiate
that Abdul Hameed, the person who is alleged to have  dispatched  the  money
from  Singapore,  was  a  resident  of  Village   Pudhumadam   in   District
Ramanathapuram, to which the appellant also  belongs.  Material  could  also
have been gathered to show, whether he was related  to  the  appellant  from
his paternal side.  Furthermore,  the  Enforcement  Directorate  could  have
easily substantiated whether or not,  as  asserted  by  the  appellant,  the
aforesaid Abdul Hameed had contacted him over telephone from  Singapore,  to
inform him about the delivery of the amount recovered from his residence  on
25.10.1989.   Additionally,  the  Enforcement  Directorate  could  have  led
evidence to establish that the aforesaid  Abdul  Hameed  with  reference  to
whom the appellant made statements on 20.4.1989, 25.10.1989 and  26.10.1989,
was actually resident of Singapore, and was  running  businesses  there,  at
the location(s) indicated by the appellant.  Still further, the officers  of
the Enforcement Directorate could have ascertained the truthfulness  of  the
factual position from Shahib, the shop boy of the appellant –  A.  Tajudeen,
whom he allegedly sent to hand over a sum of Rs. 60,000/- to  Shahul  Hameed
(a relative of Abdul Hameed) of Village Pudhumadam.  Had the  statements  of
the appellant and his wife been corroborated by independent evidence of  the
nature indicated hereinabove, there could have been room for  accepting  the
veracity of the statements made by the appellant – A. Tajudeen and his  wife
T.  Sahira  Banu  to  the   officers   of   the   Enforcement   Directorate.
Unfortunately, no effort was made by the Enforcement Directorate  to  gather
any independent evidence  to  establish  the  veracity  of  the  allegations
levelled against the appellant, through the memorandum dated 12.3.1990.   We
are  of  the  considered  view,  that  the  officers  of   the   Enforcement
Directorate were seriously negligent in gathering independent evidence of  a
corroborative nature.  We have therefore no hesitation  in  concluding  that
the retracted statements made by  the  appellant  and  his  wife  could  not
constitute  the  exclusive  basis  to  determine  the  culpability  of   the
appellant.
19.   We shall now deal  with  the  other  independent  evidence  which  was
sought to be relied upon by the Enforcement  Directorate  to  establish  the
charges levelled  against  the  appellant.   And  based  thereon,  we  shall
determine whether the same is sufficient on its own, or  in  conjunction  to
the  retracted  statements  referred  to  above,  in  deciding  the  present
controversy, one way or the other.  First and foremost, reliance was  placed
on “mahazar” executed (at the time of the recovery, from  the  residence  of
the appellant) on 25.10.1989.  It would be pertinent to  mention,  that  the
appellant in his response to the memorandum dated  12.3.1990  had  expressly
refuted the authenticity of the “mahazar” executed  on  25.10.1989.   Merely
because the “mahazar” was attested by  two  independent  witnesses,  namely,
R.M. Subramanian and Hayad Basha, would not led  credibility  to  the  same.
Such credibility would  attach  to  the  “mahazar”  only  if  the  said  two
independent witnesses were produced as  witnesses,  and  the  appellant  was
afforded an opportunity to cross-examine them.  The aforesaid procedure  was
unfortunately not adopted in this case.  But then, would the preparation  of
the “mahazar” and the  factum  of  recovery  of  a  sum  of  Rs.  8,24,900/-
establish the guilt of the appellant, insofar as the  violation  of  Section
9(1)(b) of the 1973 Act is concerned?  In our considered view, even  if  the
“mahazar” is accepted as valid and genuine, the same is wholly  insufficient
to establish, that the amount recovered from the residence of the  appellant
was dispatched by Abdul Hameed, a resident of Singapore,  through  a  person
who is not an authorised dealer in foreign exchange.  Even, in  response  to
the memorandum dated 12.3.1990, the appellant had acknowledged the  recovery
of Rs. 8,24,900/- from his residence,  but  that  acknowledgment  would  not
establish the violation of Section 9(1)(b) of the 1973 Act.   In  the  above
view of the matter, we  are  of  the  opinion  that  the  execution  of  the
“mahazar” on 25.10.1989, is inconsequential for  the  determination  of  the
guilt of the appellant in this case.
20.   The only other independent evidence relied  upon  by  the  Enforcement
Directorate is of pages from the  Hindu  and  the  Jansatha  newspapers,  in
which the bundles of money were wrapped, when the recovery was  effected  on
25.10.1989.  In view of the position expressed in the  foregoing  paragraph,
we are satisfied  that  the  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.  The newspaper sheets  relied  upon,
would not establish that the amount recovered  from  the  residence  of  the
appellant – A. Tajudeen was  dispatched  by  Abdul  Hameed  from  Singapore,
through a person who was not an authorized dealer.
21.    Based  on  the  above  determination,  and  the  various  conclusions
recorded hereinabove, we are satisfied, that the  impugned  judgment  passed
by the High Court deserves to be set aside.  The same is accordingly  hereby
set  aside.   Resultantly,  the  entire  action  taken  by  the  Enforcement
Directorate against the appellant in furtherance  of  the  memorandum  dated
12.3.1990,  is  also  set  aside.   As  a  consequence  of  the  above,  the
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 the appellant as penalty.
22.   The instant appeal is, accordingly, allowed in the abovesaid terms.

 …………………………….J.
(Jagdish Singh Khehar)

…………………………….J.
                                        (C. Nagappan)
New Delhi;
October 10, 2014.



ITEM NO.1B             COURT NO.6               SECTION XII

               S U P R E M E  C O U R T  O F  I N D I A
                       RECORD OF PROCEEDINGS

Civil Appeal  No(s).  5773/2009

A.TAJUDEEN                                     Appellant(s)

                                VERSUS

UNION OF INDIA                                 Respondent(s)

[HEARD BY HON'BLE JAGDISH SINGH KHEHAR AND HON'BLE C. NAGAPPAN, JJ.]

Date : 10/10/2014 This appeal was called on for judgment
 today.

For Appellant(s) Mr. R. Nedumaran,Adv.


For Respondent(s)      Mr. B. V. Balaram Das,Adv.(Not present)


             Hon'ble  Mr.  Justice  Jagdish  Singh  Khehar  pronounced   the
judgment of the Bench comprising His Lordship and  Hon'ble  Mr.  Justice  C.
Nagappan.
            For the reasons recorded in the Reportable  judgment,  which  is
placed  on  the  file,  the  appeal  is  allowed.  As  a  consequence,   the
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 the appellant as penalty.

(Parveen Kr. Chawla)              (Phoolan Wati Arora)
  Court Master                           Assistant Registrar
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