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REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOS. 1306-1309 OF 2013
(Arising out of S.L.P. (C) Nos.15546-15549 of 2008)
M/s Telestar Travels Pvt. Ltd. & Ors. …Appellants
Versus
Special Director of Enforcement …Respondent
J U D G M E N T
T.S. THAKUR, J.
1. Leave granted.
2. These appeals arise out of a common judgment and order
dated 14
th
March, 2008 passed by a Division Bench of the High Court
of Judicature at Bombay whereby the High Court has partly allowed
FERA Appeal Nos.8 to 11 of 2008 that assailed the common order
dated 28
th
November, 2007 passed by the Appellate Tribunal for
Foreign Exchange, New Delhi and reduced the penalty imposed upon
the appellants for contravention of Sections 14 and 8(1) of the
Foreign Exchange Regulation Act, 1973 by 50%. The factual matrix in
which the adjudication order came to be passed by the DeputyPage 2
Director, Directorate of Enforcement, Mumbai and the appellate order
passed by the Tribunal for Foreign Exchange, New Delhi has been set
out in the order passed by the Tribunal and the order passed by the
High Court of Bombay mentioned earlier.
It is, therefore,
unnecessary to recount the facts over again except to the extent it is
absolutely necessary for disposal of these appeals.
3. Appellant-Telestar Travels Private Ltd. carries on a travel
agency and specialises in booking of tickets for crew members
working on ships.
Most of the shipping companies are based abroad
with their representatives located in Mumbai who would issue
instructions to the appellant-company to arrange air passage for the
crew from Bombay and other places in India to particular ports
abroad.
The company would then take steps to have tickets issued on
the basis of such instructions for different destinations.
The
appellant’s case is that the travel agents in U.K. had of late started
offering cheap fares for seaman/crew travelling to join the ships.
In
order to benefit from such low fare tickets the shipping companies are
said to have desired that the benefit of such low fare tickets be
organized for them by the appellant.
In order to make that possible
the appellant-company claims to have approached M/s Clyde Travels
Ltd. (CTL) in Glasgow (U.K.) for getting such cheap seaman tickets.
According to this arrangement, the CTL would send a Pre-paid Ticket
Page 3
Advice (PTA) to the appellant in India based on which the appellant
would secure a ticket from the airline concerned.
The money for the
tickets would then be credited into the Swiss bank account of
Bountiful Ltd., a company registered in British Virgin Islands.
Bountiful Ltd. would out of money so received transfer funds to CTL
towards the price of the tickets apart from realising 3% of the ticket
price towards commission payable to the appellant-company.
The
appellant-company claims that the process of purchase of tickets as
aforementioned was a commercial arrangement that was legally
permissible and did not involve any violation of FERA.
The Directorate
of Enforcement, Mumbai, did not, however, think so.
According to
the Directorate, Bountiful Ltd. was a paper company that held Swiss
bank account which was in turn operated by a person named Mr.
Shirish Shah, a Chartered Accountant, operating from London on the
instructions of Mr. Rajesh Desai, appellant in SLP (C) No.15549 of
2008 who was none other than the son of Mr. Arun Desai, Managing
Director of Telestar Travels Pvt. Ltd. appellant in SLP (C) No.15547 of
2008.
The further case of the Directorate was that documentary
evidence seized from the office of M/s Telestar and the residence
premises of the Managing Director in the course of investigation
conducted under Section 37 of FERA unerringly revealed that
Bountiful Ltd. was entirely a holding of the appellant-Telestar Pvt. Ltd.Page 4
and entirely controlled in its operation and financial management by
Mr. Arun N. Desai and his two sons Mr. Sujeet A. Desai and Mr.
Rajesh A. Desai, appellants in these appeals.
It was on the basis of
the investigations conducted by the Directorate, the statements of
the promoters of Telestar Pvt. Ltd. recorded during the course of such
investigation and other material collected by the Directorate, a notice
was issued by the Directorate calling upon them to show cause why
the adjudication proceedings as contemplated under Section 51 of the
FERA should not be filed against them for the contravention pointed
out in the show cause notice.
The show cause notice was followed by
an addendum by which the Directorate sought to place reliance upon
a report dated 15th January, 1997 received from the High Commission
of India, at London and the revised list of documents enclosed and
communicated to the appellants.
The appellants filed their replies in
which they denied the allegations that Bountiful Ltd. was a paper
company or that the same was being controlled from India by the
appellants. By their letter dated 23rd September, 1997 the appellants
sought to cross-examine Mr. Livingstone of CLD and the Indian High
Commission officials in London who had met him. He also sought to
cross-examine Miss Anita Chotrani and Mr. Deepak Raut upon whose
depositions Directorate of Enforcement sought to place reliance in
support of its case. The Adjudicating Authority eventually passed anPage 5
order on 29
th
March, 2001 holding the appellants guilty of violation of
provisions of Sections 8 and 14 of FERA inasmuch the appellants had
received payments from various persons on account of tickets booked
by them for US $ 846116.14 and GB Pounds 156943.16 which were
credited to the account No.10975 at Geneva and which they failed to
surrender to an authorised dealer in foreign exchange in India within
three months of becoming the owner or holder thereof without the
general permission of the RBI as required under Section 14 of FERA.
The Adjudicating Authority has further held the appellants guilty of
transferring foreign exchange of GB Pounds 138671.40 and US $
672131.85 from the said Geneva Account No.10975 of M/s Bountiful
Ltd. to various persons during the period of November, 1994 to July,
1995 without the previous general or special permission of the RBI,
thereby contravening Section 8(1) of FERA, 1973. The Adjudicating
Authority on that basis levied a penalty of Rs.90,00,000/- for
contravening Section 14 and Rs.85,00,000/- for contravention of
Section 8(1) upon M/s Telestar Pvt. Ltd., Mumbai. The Authority
further levied a consolidated penalty of Rs.20,00,000/- each upon the
remaining appellants Mr. Arun N. Desai, Managing Director, Mr.
Rajesh Desai and Mr. Sujeet Desai, his sons.
4. Aggrieved by the order passed by the Adjudicating Authority,
the appellants appealed to the Appellate Tribunal for ForeignPage 6
Exchange, New Delhi. The Tribunal, as already mentioned, allowed
the said appeals but only in part and to the limited extent of reducing
the penalty imposed by the Adjudicating Authority by 50%. The
Tribunal, upon reappraisal of the entire material on record, affirmed
the findings recorded by the Adjudicating Authority that the
appellants had indeed committed violation of Sections 8 and 14 of the
FERA 1973 as noticed earlier. The further appeals before the High
Court of Judicature at Bombay by the appellants also failed and were
dismissed in limine by the High Court by order dated 14
th
March,
2008. Hence the present appeal.
5. Appearing for the appellants, Mr. Shyam Diwan, learned senior
counsel, made a three-fold submission in support of the appeals.
Firstly, he contended that the judgment and order passed by the
Adjudicating Authority was ex parte hence liable to be set aside.
Elaborating that submission Mr. Diwan argued that since the
adjudication order had been passed by the authority concerned
nearly 3½ years after the matter was finally argued before it, the
requirement of affording an opportunity of being heard to the
appellants arising under Section 51 of FERA was not satisfied. It is
submitted that the appellants had been prejudiced on account of
delayed pronouncement of the adjudication order as the documents
available with them could not be placed before the said authority
Page 7
after the hearing of the matter. He further contended that Rule 3 of
the Adjudication Rules provided for a personal hearing which was no
doubt provided on the date the matter was finally argued before the
Adjudicating Authority but which hearing ought to have been
repeated as the pronouncement of the order by the Authority had
been delayed. Reliance in support of the submission was placed by
Mr. Diwan upon the decisions of this Court in Bhagwandas
Fatechand Daswani and Ors. v. HPA International and Ors.
(2000) 2 SCC 13, Kanhaiyalal and Ors. v. Anupkumar and Ors.
(2003) 1 SCC 430 and Anil Rai v. State of Bihar (2001) 7 SCC
318.
6. On behalf of respondent, it was per contra argued by Mr. P.P.
Malhotra, learned Additional Solicitor General, that the order passed
by the Adjudicating Authority was fully compliant with the provisions
of Section 51 read with Section 30 of the Rules under FERA and could
not be treated as an ex parte order by any stretch of reasoning. He
also contended that mere delay in the pronouncement of adjudication
order was not enough to justify setting aside of the order if the same
was otherwise found to be legally valid and unacceptable. No
prejudice was, at any rate, caused to the appellants by the delay,
according to Mr. Malhotra, who placed reliance on the decision of this
Court in Ram Bali v. State of U.P. (2004) 10 SCC 598 to arguePage 8
that delay in the pronouncement was not itself sufficient to declare
the order to be bad in law. This Court has, according to Mr. Diwan,
deprecated the practice of Courts and Authorities delaying the
pronouncement of orders and matters that have been heard and
reserved for such pronouncements. There is no gainsaying that any
Court or Authority hearing the matter must within a reasonable time
frame pronounce the orders especially when any misgiving arising out
of inordinate delay which gave rise to unnecessary apprehensions in
the minds of litigants especially in the minds of a party that has lost
the matter at the hand of such long delay. We can only express our
respectful agreement with the observations made by this Court in the
decisions relied upon by Mr. Diwan that have issued guidelines and
set out time frame considered reasonable for pronouncement of order
by Courts and Authorities. Even so, the question remains whether
delay by itself should constitute a ground for setting aside the order
that may otherwise be found legally valid and justified. Our answer
to that question is in the negative. The decision of this Court in Ram
Bali v. State of U.P. (2004) 10 SCC 598 is one such case where
the Court repelled a similar argument and declared that delay was
not a ground by itself that otherwise specifically dealt with the matter
in issue. The Court at best put to caution requiring a careful and
closer scrutiny of the order that was pronounced after undue delayPage 9
but if upon such scrutiny also the order is not found to be wrong in
any way it may decline to set aside the same.
7. We have in the instant case heard the matter at considerable
length for a careful examination of the adjudication by the Authority
and that of the Appellate Tribunal and the High Court to examine
whether it suffers from any illegality or material irregularity causing
prejudice to the appellants. We are of the view that no such illegality
or irregularity has been demonstrated. That apart delayed
pronouncement of the order by the Adjudicating Authority was not
urged as a ground of challenge before the Tribunal or the High Court
both of whom have remained silent on this aspect. Even on the
question of prejudice we find the contention of Mr. Diwan to be more
imaginary than real. The argument regarding prejudice is founded on
the plea that the appellants could not place some of the documents
which they have now placed before this Court for consideration. It is
further admitted that no application for permission to produce these
documents was filed by them before the Adjudicating Authority no
matter they could have done so if they really indeed needed to place
reliance on such documents. Mr. Malhotra was, in our view, justified
in contending that the hearing had been concluded by the
Adjudicating Authority in keeping with the requirement of Section 51
and Rule 3 of the Adjudication Rules under FERA. The first limb of thePage 10
contention urged by Mr. Diwan, therefore, fails and is hereby
rejected.
8. It was next argued by Mr. Diwan, that the Adjudicating
Authority had placed reliance upon the retracted statements of the
appellants while holding that Bountiful Ltd. was a paper company and
that its financial control lay in their hands, so that receipt and
appropriation of the foreign exchange by that device was a clear
violation of the provisions of FERA.
9. A reading of the order passed by the Adjudicating Authority
would show that the appellants had in their responses to the show
cause notice and the addendum to the same specifically raised a
contention that the statements made by them were not voluntary and
could not, therefore, be relied upon. That contention was not only
noticed by the Adjudicating Authority but specifically dealt with and
rejected holding that the statement was voluntary in nature and that
the subsequent retraction is a mere after thought with a view to
escaping the consequences of the violations committed by them. The
Adjudicating Authority, we are more than satisfied, was aware of the
requirement of examining the voluntary nature of the statements
being relied upon by it. It has accordingly examined that aspect and
given cogent reasons for holding that the statements were indeed
voluntary and incriminating both. The Adjudicating Authority hasPage 11
observed:
“On going through the records of the case, I find that the
statements dated 24.8.95, 25.8.95 and 6.2.96 of Shri Arun N.
Desai, the Noticee No.1 and the statements dated 24/25.8.95
of Rajesh N. Desai and Sujeet Desai, the Noticee Nos. 2 & 3
were all given by the respective notices in their own
handwriting and in the language known to them. Shri Arun
Desai, in his statements, had explained in detail the
functioning of M/s Telestar Travels, the Travel Agency, mainly
engaged in booking of domestic and international air tickets
for crew members joining foreign ships; the need for entering
into an agreement with agents abroad; the mode of payments
received ant eh commission/profit earned on the tickets
booked by them through the overseas shipping companies and
also how their commission was being remitted either by draft
or telegraphic transfer into their account No.82886 in Bank of
Baroda, Churchgate Branch etc. I thus find that the statemtns
of the notice I contain such inner and minute details, which
could have been given out of his personal knowledge and
could not have been invented by the officers who recorded the
said statements. Moreover, the statement of the notice No.1
have been confirmed by the statements of the other two
notices S/Shri Rajesh and Sujeet Desai, in their respective
statements given before the Enforcement Officers. Even
otherwise there is nothing on record that might cast the
slightest doubt on the voluntariness of the statements in
question. I am, therefore, of the view that the statements in
question were given by the respective three notices
voluntarily in explanation of the plethora of documents seized
from the business/residential premises of the notices and
contain those details which they wished to state. The
retraction subsequently filed by the notices S/Shri Rajesh
Desai and Sujeet Desai are merely an afterthought to escape
from the clutches of law and I reject them in toto.”
10. In the appeal filed by the appellants before the FERA Appellate
Tribunal also a contention as to the voluntary nature of the
statements made by the appellants was urged on their behalf but
rejected by the Tribunal in the following words:
“It is argued that the statements given by Shri Arun Desai,
Rajesh Desai and Sujeet Desai were not the voluntary ones
which were dictated by the Enforcement Officers and were
obtained under threats and coercion which were subsequently
retracted and that there was no corroborative material toPage 12
support them. But we find no force in these arguments
because the appellants, in their statements, had explained in
detail the functioning of M/s. Telstar Travels, which was
engaged in booking of domestic and international air tickets
for crew members joining foreign ships, the need for entering
into an agreement with agents abroad, the mode of payments
received and the commission earned on the tickets booked by
them through the Over Shipping Companies and how their
commission was remitted through Banking channel.
Moreover, they were written in their own handwriting and in
the language known to them. The statements contained such
inner and minute details which could have been given out of
their personal knowledge and could not have been invented by
the officers of the Department.”
11. The Tribunal has relying upon the decision of this Court in
K.T.M.S. Mohd. v. Union of India (1992) 3 SCC 178, K.I.
Pavunny v. Assistant Collector (HQ), Central Excise
Collectorate, Cochin (1997) 3 SCC 721 held that retracted
statements could furnish a sound basis for recording a finding against
the party making the statement. There is, in that view, no gainsaying
that the Adjudicating Authority and the Appellate Tribunal have both
correctly appreciated the legal position and applied the same to the
case at hand, while holding that the statements were voluntary and,
therefore, binding upon the appellants. Decision of this Court in
Vinod Solanki v. Union of India & Anr. (2008) 16 SCC 537
relied upon by Mr. Diwan does not lend any help to the appellants.
The decision is an authority for the proposition that a person accused
of commission of an offence is not expected to prove to the hilt that
confession had been obtained from him by an inducement, threat orPage 13
promise by a person in authority. The burden is on the
authority/prosecution to show that the statement sought to be relied
upon was voluntary and that the Court while examining the
voluntariness of the statement is required to consider the attending
circumstances and all other relevant facts. The decision does not hold
that even when a statement is founded upon consideration of the
relevant facts and circumstances and also found to be voluntary, it
cannot be relied upon because the same was retracted. We may
usefully refer to the legal position stated in the following paragraph
by this Court in K.T.M.S. Mohd. & Anr. (supra):
“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 thePage 14
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...”
(emphasis supplied)
12. That brings us to the submission of Mr. Diwan that the
arrangement arrived at between the Appellant Company, on the one
hand, and Clyde Travels Ltd. and Bountiful Ltd., on the other, was
commercial in nature which the Adjudicating Authority and the
Tribunal had failed to appreciate in its true and correct perspective.
There was, according to Mr. Diwan, no real basis for the Adjudicating
Authority and the Tribunal to hold that Bountiful was a paper
company and that it was being controlled by the Desais from India.
Mr. Diwan made a strenuous attempt to persuade us to reverse the
findings of fact recorded by the Adjudicating Authority and the
Tribunal on this aspect. We regret our inability to do so. Whether or
not Bountiful Ltd. is a paper Company and whether or not it was
controlled and operated by the appellants is essentially a question of
fact to be determined on the basis of the material collected in the
course of the investigation. The Adjudicating Authority and Tribunal
have answered that question in the affirmative taking into
consideration the statements made by the appellants as also the
documents that were recovered from their premises. All these
documents and incriminatory circumstances have been discussed inPage 15
the following passage by the Adjudicating Authority:
“...A perusal of the records indicate that various incriminating
documents together with the Indian currencies were seized
from the office premises of M/s Telstar Travels and also from
the residence of Shri Arun Desai, the Managing Director of the
said company. All the three noticees S/Shri Arun Desai and his
two sons Rajesh and Sujeet Desai, have given their
statements before the Enforcement Officer, in explanation of
the said seized documents. It is also noticed that the seizure
of documents and currencies had not been disputed by the
notices at any point of time. Shri Rajesh Desai, son of the
said Shri Arun N. Desai and one of the noticees in the
impugned SCN, while explaining page No.18 of the bunch of
documents marked ‘G’, had clearly admitted that it was the
message from Shri Sirish Shah from London informing that US
$ 33884 has been credited on 14.11.94 to the account of
Bountiful. Similarly page Nos.30 & 34 of file marked ‘I’,
contain instructions to transfer certain amounts to the account
of Clyde Travels Ltd. Glasgow. When Shri Rajesh Desai was
questioned as to how could issue such instructions in respect
of the account of Bountiful Ltd., he clearly explained in his
statement dated 24.8.95 that the account No.10975 of
Bountiful at Geneva was an account of a paper company held
by him for the sole purpose of receiving and making payments
in respect of seamen airline tickets which were obtained at the
very cheap rates from M/s Clyde Travels, Glasgow, with whom
M/s Telstar had a tie up since August 1994; that Shri Sirish
Shah was a Chartered Accountant in London, who was known
to both M/s. Clyde Travels and Telstar; that the said Shri
Sirish Shah was used by him for giving instructions to the
bank for operating the account of Bountiful Ltd. At Switzerland
that the last balance for the said account of Bountiful was US$
98761.70. Shri Rajesh Desai further explained the page Nos.
at 111 to 125 of file marked ‘E’ seized from the office of M/s.
Telstar Travels. P. Ltd., in his statement dated 24.8.95,
admitting the same to be the statement of account of
Bountiful Ltd. with Banque De Financement, Geneva, which
showed credits of amounts remitted by various overseas
shipping companies against PTA tickets purchased for their
crew; that the said credits represented amounts transferred
from the bank accounts of their overseas shipping companies;
that the debits represented the amounts transferred to the
Bank of Scotland Glasgow which is the account of M/s. Clyde
Travels Ltd. in Glasgow; that he was the person giving
instructions to Shri Sirish Shah, Chartered Accountant of
P.S.J. Alexandar & Co, London to transfer funds from the
account in Geneva of M/s. Bountiful to various places which
included transfer of funds to M/s Clyde Travels Ltd, Glasgow
which forms a major portion of transfer for PTA tickets.”Page 16
13. Dealing with the invoices issued by Bountiful Ltd. to M/s.
Ocean Air Ltd. and M/s Scot Travel Ltd., Hong Kong, the Adjudicating
Authority held that appellant Telestar Pvt. Ltd. had issued directions
that the amount payable be deposited to the credit of M/s Bountiful
Ltd. The Adjudicating Authority observed:
“… I also find from the records, certain invoices of Bountiful
ltd. Drawn on M/s. Ocean Air Ltd. and on M/s. Scot Travel Ltd,
Hong Kong, which were produced by Miss Anita Chotrani
Travel Co-ordinator of M/s. Denklau Marine Services, Mumbai,
which contain directions of M/s Telstar to credit the amount of
the bill to the A/c No.10975 of M/s Bountiful Ltd, at Geneva.
A scrutiny of the bills produced by the said Miss Anita
Chotrani, given by Telstar, it was found that several air tickets
of Air India booked by Telstar were also billed in these
Bountiful invoices and payment of these Air India tickets have
been directed to the Geneva Account. Moreover the bills do
not bear any signatures nor the identity of the person
allegedly managing the billing on behalf of Bountiful Ltd.”
14. The Adjudicating Authority has also noticed and relied upon
incriminating circumstances like instructions issued by appellant
Telestar to Bountiful to remit an amount of Rs.4,74,033/- to M/s
Aarnav Shipping Company towards repairs of MV Rizcun Trader, a
ship owned by one of their principals M/s United Ship Management,
Hongkong. Similarly a payment of US$ 12500/- made from Bountiful
Account to Mustaq Ali Najumden is also evidenced and was made on
the instructions of appellant-Shri Rajesh Desai, which the latter
explained to be kickbacks paid to overseas shipping company for
giving ticketing business to Telestar.Page 17
15. Suffice it to say that there may be sufficient evidence on
record for the Adjudicating Authority and the Tribunal to hold that the
appellants were indeed guilty of violating the provisions of FERA that
called for imposition of suitable penalty against them. It was not the
case of the appellants that the findings were unsupported by any
evidence nor was it their case that the statements made by the
appellants were un-corroborated by any independent evidence
documentary or otherwise. In the circumstances, therefore, we see
no reason to interfere with the concurrent findings of fact on the
question whether Bountiful was or was not a paper company
controlled by the appellants from India.
16. That brings us to the third limb of attack mounted by the
appellants against the impugned orders. It was argued by Mr. Diwan
that while holding that Bountiful Ltd. was a paper Company and was
being controlled and operated from India by the appellants through
Shri Sirish Shah, the Adjudicating Authority had relied upon the
statements of Miss Anita Chotrani and Mr. Deepak Raut, and a
communication received from the Indian High Commission in London.
These statements and the report were, according to Mr. Diwan,
inadmissible in evidence as the appellant’s request for an opportunity
to cross examine these witness had been unfairly declined, thereby
violating the principles of natural justice that must be complied withPage 18
no matter the strict rules of Evidence Act had been excluded from its
application. Inasmuch as evidence that was inadmissible had been
relied upon, the order passed by the Adjudicating Authority and the
Tribunal were vitiated. Reliance in support was placed by Mr. Diwan
upon the decisions of this Court in New India Assurance Company
Ltd. v. Nusli Neville Wadia and Anr. (2008) 3 SCC 279, S.C.
Girotra v. United 1995 Supp. (3) SCC 212, Lakshman Exports
Ltd. v. Collector of Central Excise (2005) 10 SCC 634, and M/s
Bareilly Electricity Supply Co. Ltd. v. The Workmen and Ors.
(1971) 2 SCC 617.
17. Mr. Malhotra, on the other hand, argued that the right of
cross-examination was available to a party under the Evidence Act
which had no application to adjudication proceedings under FERA. He
relied upon the provisions of Section 51 of the Act and Adjudication
Rules framed thereunder in this regard. He also placed reliance upon
a decision of this Court in Surjeet Singh Chhabra v. Union of
India and Ors. (1997) 1 SCC 508 to argue that cross-examination
was unnecessary in certain circumstances such as the one at hand
where all material facts were admitted by appellants in their
statements before the concerned authority.
18. There is, in our opinion, no merit even in that submission of
the learned counsel. It is evident from Rule 3 of the AdjudicationPage 19
Rules framed under Section 79 of the FERA that the rules of
procedure do not apply to adjudicating proceedings. That does not,
however, mean that in a given situation, cross examination may not
be permitted to test the veracity of a deposition sought to be issued
against a party against whom action is proposed to be taken. It is
only when a deposition goes through the fire of cross-examination
that a Court or Statutory Authority may be able to determine and
assess its probative value. Using a deposition that is not so tested,
may therefore amount to using evidence, which the party concerned
has had no opportunity to question. Such refusal may in turn amount
to violation of the rule of a fair hearing and opportunity implicit in any
adjudicatory process, affecting the right of the citizen. The question,
however, is whether failure to permit the party to cross examine has
resulted in any prejudice so as to call for reversal of the orders and a
de novo enquiry into the matter. The answer to that question would
depend upon the facts and circumstances of each case. For instance,
a similar plea raised in Surjeet Singh Chhabra v. Union of India
and Ors. (1997) 1 SCC 508 before this Court did not cut much ice,
as this Court felt that cross examination of the witness would make
no material difference in the facts and circumstances of that case.
The Court observed:Page 20
“3. It is true that the petitioner had confessed that he
purchased the gold and had brought it. He admitted that he
purchased the gold and converted it as a kara. In this
situation, bringing the gold without permission of the authority
is in contravention of the Customs Duty Act and also FERA.
When the petitioner seeks for cross-examination of the
witnesses who have said that the recovery was made from the
petitioner, necessarily an opportunity requires to be given for
the cross-examination of the witnesses as regards the place at
which recovery was made. Since the dispute concerns the
confiscation of the jewellery, whether at conveyor belt or at
the green channel, perhaps the witnesses were required to be
called. But in view of confession made by him, it binds him
and, therefore, in the facts and circumstances of this case the
failure to give him the opportunity to cross-examine the
witnesses is not violative of principle of natural justice. It is
contended that the petitioner had retracted within six days
from the confession. Therefore, he is entitled to crossexamine the panch witnesses before the authority takes a
decision on proof of the offence. We find no force in this
contention. The customs officials are not police officers. The
confession, though retracted, is an admission and binds the
petitioner. So there is no need to call panch witnesses for
examination and cross-examination by the petitioner.”
19. We may also refer to the decision of this Court in M/s
Kanungo & Company v. Collector of Customs and Ors. (1973)
2 SCC 438. The appellant in that case was carrying on business as a
dealer, importer and repairer of watches in Calcutta. In the course of
a search conducted by Customs Authorities on the appellant's
premises, 280 wrist watches of foreign make were confiscated. When
asked to show cause against the seizure of these wrist watches, the
appellants produced vouchers to prove that the watches had been
lawfully purchased by them between 1956 and 1957. However, upon
certain enquiries, the Customs Authorities found the vouchersPage 21
produced to be false and fictitious. The results of these enquiries
were made known to the appellant, after which they were given a
personal hearing before the adjudicating officer, the Additional
Collector of Customs. Citing that the appellant made no attempt in
the personal hearing to substantiate their claim of lawful importation,
the Additional Collector passed an order confiscating the watches
under Section 167(8), Sea Customs Act, read with Section 3(2) of the
Imports and Exports (Control) Act, 1947. The writ petition filed by the
appellant to set aside the said order was allowed by a Single Judge of
the High Court on the ground that the burden of proof on the
Customs Authorities had not been discharged by them. The Division
Bench of the High Court reversed this order on appeal stating that
the burden of proving lawful importation had shifted upon the firm
after the Customs Authorities had informed them of the results of
their enquiries. In appeal before this Court, one of the four
arguments advanced on behalf of the appellant was that the
adjudicating officer had breached the principles of natural justice by
denying them the opportunity to cross-examine the persons from
whom enquiries were made by the Customs Authorities. The Supreme
Court rejected this argument stating as follows:
“12. We may first deal with the question of breach of natural
justice. On the material on record, in our opinion, there hasPage 22
been no such breach. In the show-cause notice issued on
August 21, 1961, all the material on which the Customs
Authorities have relied was set out and it was then for the
appellant to give a suitable explanation. The complaint of the
appellant now is that all the persons from whom enquiries
were alleged to have been made by the authorities should
have been produced to enable it to cross-examine them. In
our-opinion, the principles of natural justice do not require
that in matters like this the persons who have given
information should be examined in the presence of the
appellant or should be allowed to be cross-examined by them
on the statements made before the Customs Authorities.
Accordingly we hold that there is no force in the third
contention of the appellant.”
20. Coming to the case at hand, the Adjudicating Authority has
mainly relied upon the statements of the appellants and the
documents seized in the course of the search of their premises. But,
there is no dispute that apart from what was seized from the business
premises of the appellants the Adjudicating Authority also placed
reliance upon documents produced by Miss Anita Chotrani and Mr.
Raut. These documents were, it is admitted disclosed to the
appellants who were permitted to inspect the same. The production of
the documents duly confronted to the appellants was in the nature of
production in terms of Section 139 of the Evidence Act, where the
witness producing the documents is not subjected to cross
examination. Such being the case, the refusal of the Adjudicating
Authority to permit cross examination of the witnesses producing the
documents cannot even on the principles of Evidence Act be found
fault with. At any rate, the disclosure of the documents to thePage 23
appellants and the opportunity given to them to rebut and explain the
same was a substantial compliance with the principles of natural
justice. That being so, there was and could be no prejudice to the
appellants nor was any demonstrated by the appellants before us or
before the Courts below. The third limb of the case of the appellants
also in that view fails and is rejected.
21. Mr. Diwan lastly argued that the penalty imposed was
disproportionate to the nature of the violation and that this Court
could at least, interfere to that extent. We do not see any reason
much less a compelling one to interfere with the quantum of penalty
imposed upon the appellants by the Tribunal. The Adjudicating
Authority had, as noticed earlier, imposed a higher penalty. The
Tribunal has already given relief by reducing the same by 50%.
Keeping in view the nature of the violations and the means adopted
by the respondent to do that, we see no room for any further
leniency.
22. In the result, these appeals fail and are, hereby, dismissed
with costs assessed at Rs.50,000/- in each appeal. Cost to be
deposited within two months with the SCBA Lawyers’ Welfare Fund.
……..………….……….
…..…J.
(T.S. Thakur)Page 24
…………………………..…..…J.
(M.Y. Eqbal)
New Delhi,
February 13, 2013
