Bombay High Court
Janmabhoomi Chambers vs Jatin C. Jhaveri on 19 October, 2010
Bench: V.C. Daga, R. M. Savant
1 FERA Appeal No.64 to 66 of 2006
mmj
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
FERA APPEAL NO.64 OF 2006
Union of India represented by the )
Director of Enforcement, New Delhi, )
having its office also at )
Janmabhoomi Chambers, 1st Floor, Walchand )
Hirachand Marg, Mumbai 400 001 )..Appellant
Vs.
Jatin C. Jhaveri )
92, Kamal Building, 69, Walkeshwar Road, )
Mumbai 400 006
ig )..Respondent
WITH
FERA APPEAL NO.65 OF 2006
Union of India represented by the )
Director of Enforcement, New Delhi, )
having its office also at )
Janmabhoomi Chambers, 1st Floor, Walchand )
Hirachand Marg, Mumbai 400 001 )..Appellant
Vs.
Jitendra K. Dodia )
13/3, Kripa Dham Co-op Society )
Kasturba Cross Road No.2, Borivali (East) )
Mumbai 400 066 )..Respondent
WITH
FERA APPEAL NO.66 OF 2006
Union of India represented by the )
Director of Enforcement, New Delhi, )
having its office also at )
Janmabhoomi Chambers, 1st Floor, Walchand )
Hirachand Marg, Mumbai 400 001 )..Appellant
Vs.
::: Downloaded on - 09/06/2013 16:33:09 :::
2 FERA Appeal No.64 to 66 of 2006
Ajit K. Dodia )
Kasturba Cross Road No.2, Chandra Sadan )
Borivali (East) Mumbai 400 066 )..Respondent
WITH
WRIT PETITION NO.2976 OF 2004
Mr. Jatin C. Jhaveri )
of Mumbai Indian Inhabitant )
having his address at 128/129, Panchratna )
Opera House, Mumbai 400 004 )..Petitioner
Versus
1) Union of India )
through Jt. Secretary, Ministry of Law and )
Bombay 400 020
Justice, Aayakar Bhavan, M.K.Road, )
)
2) Deputy Director, Enforcement Directorate )
having his office at Mittal Chambers, )
Nariman Point, Mumbai 400 021 )
3) Joint Commissioner of Customs )
AIU CSI Air Port, Sahar, Mumbai )..Respondents
Mr. Y.S. Bhate for the Appellant in FERA Appeal No.64/06, 65/06 and 66/06
and for Respondent in WP 2976 of 2004
Mrs. Manjula Rao for the Respondents in FERA Appeal No.64/06 and for
Petitioner in WP 2976 of 2004
Mr. M. M. Patel for the Respondent in FERA Appeal No.65/06 and 66/06
CORAM :- V.C.DAGA &
R.M.SAVANT,JJ.
JUDGMENT RESERVED ON: 24th September, 2010
JUDGMENT PRONOUNCED ON: 19th October, 2010
JUDGMENT (Per Shri R.M.Savant, J.)
1 The above FERA Appeals arise out of the common Judgment and
Order dated 10-3-2004 passed in the Appeals filed by each of the Respondents
abovenamed being Appeal Nos.454/99, 462/99 and 463/99. By the said
Order, the Appeals filed by the Respondents came to be allowed by the FERA
Tribunal and resultantly certain directions came to be issued in the matter of
confiscation of Foreign currency and imposition of penalty, in so far as, the
Respondents-Jatin C. Jhaveri and Ajit Dodia are concerned. Whereas, the
Respondent- Jitendra Dodia was exonerated of all the allegations leveled
against him for contravention of the provisions of the Foreign Exchange
Regulation Act, 1973 (for short FERA). It would be also be necessary to refer
to Civil Application No.24 of 2010. By the said Civil Application, the original
Appellant/ Applicant i.e. Directorate of Enforcement sought, to amend the
cause title by substituting the Directorate of Enforcement by the Union of
India. The said amendment sought, was strongly objected to on behalf of the
Respondent by relying upon the authoritative pronouncement of the Apex
Court in the case of Mohtesham Mohd. Ismail Vs. Spl. Director,
Enforcement Directorate & Anr. reported in 2007 AIR SCW 6348. This
Court by order dated 17-6-2010 allowed the said Civil Application in terms of
prayer clause (a), thereby permitting the amendment of substituting the
Original Appellant/Applicant with the Union of India, however the same was
allowed without prejudice to the rights and contentions of the parties in the
above Appeals. In terms of the Order of this Court dated 17-6-2010 the
Learned Counsel for the respective parties addressed us on the said issue also.
2 Since the issue regarding the confiscation of the foreign currency
in question, is pending since the year 1993, the parties had requested that the
Appeals be heard at the admission stage itself. Accepting the request of the
Learned Counsel for the respective parties, we proceeded to hear the Appeals
finally at the admission stage.
In so far as Writ Petition No.2976 of 2004 is concerned, the same
is filed by Jatin C. Jhaveri and the relief sought therein is intrinsically
connected with the issue in the above Appeals. The said Writ Petition was,
therefore, kept along with the above Appeals.
3 The allegations against the Respondents concerned are for
violation of the provisions of the FERA. In so far as the Respondents in Appeal
No.64 and 66 of 2006 i.e. Jatin C. Jhaveri and Ajit Dodia are concerned, the
contravention as alleged is of Section 8(1) of the FERA Act and in so far as the
Respondent in Appeal No.65 of 2006 i.e. Jitendra Dodia is concerned, the
contravention as alleged is of Section 8(1) read with Section 64(2) of the
FERA Act.
THE FACTS
4 The facts giving rise to the said allegations can be stated as
under:
The Respondent in Appeal No.66 of 2006 Ajit Dodia was
travelling to Hong Kong by Swiss air flight S.R. No.170 on 27/28-9-1993. His
two checked in baggages viz one suit case and one brief case came to be
randomly checked by the Customs Staff at the departure counter, which led to
the recovery of foreign currency worth Rs.1.24 cores. The said currency was in
the form of U.S.dollars amounting to 4,03,550. The statement of the said Ajit
Dodia was recorded by the customs wherein he inter alia stated that his visit to
Hong Kong was planned and financed by one Jatin Jhaveri (Respondent in
Appeal No.64 of 2006) who is a diamond dealer having office at Panchratna
Building, Opera House, Mumbai and that those two bags were received by him
at the office of Jatin Jhaveri where his younger brother Jitendra Dodia was
working as an Assorter. The packing of the said bag was done by Jatin Jhaveri
assisted by Jitendra Dodia and that Jitendra also instructed him about the said
foreign currency, that he should hand over the same to the brother of Jatin i.e.
Pankaj Jhaveri in Hong Kong. Pursuant to the said seizure, the residences of
both Ajit Dodia and Jitendra Dodia were searched on 28-7-1993 as also the
residence of Jatin Jhaveri, but there was nil recovery. Thereafter, the Dodia
brothers were produced before the Metropolitan Magistrate. The Learned
Metropolitan Magistrate was pleased to free Jitendra Dodia on bail on the
same day, but Ajit Dodia was remanded to judicial custody till 17-8-1993. Both
the Dodia brothers filed their retracted statements which were replied to by
the Assistant Collector Air Intelligence Unit. Whilst the Dodia brothers were
arrested. Jatin Jhaveri could not be arrested till much later as he was
apparently evading arrest. However, on his arrest, he made a statement that
part of the foreign currency i.e to the extent of 2,89, 250 U.S.$ belongs to him
and the rest of the amount i.e. 1,14,300 U.S.$ did not belong to him. The said
Jatin Jhaveri produced copies of currency declaration forms dated 25-6-1993
and 28-6-1993 at the time of bringing / importing the said US$, while
returning to India. The said amount according to him was received by him as
an advance for business transaction from his business associates in the USA,
when he was on a foreign tour to America. He also relied upon the Affidavits of
the persons who had purportedly given him the said foreign currency amount
of 2,89,250 U.D.$. It is required to be noted that all the three Appellants were
issued show cause notices under the Customs Act. In so far as the Appellants
excluding Jatin are concerned, their statements were recorded on 28-7-1993
under Section 108 of the Customs Act on 13-9-1996 and under Section 40 of
the FERA. In so far as Jatin Jhaveri was concerned, his statements were
recorded on 12-10-1993 under Section 108 of the Customs Act and on
13-9-1996, 16-9-1996, 27-9-1996, 4-10-1996 and 7-10-1996 under Section 40
of the FERA.
5 It is required to be noted that the proceedings under the
Customs Act were also initiated against the Appellants above named in
relation to the said seizure of 403550 US$. The said Appellants were asked to
show cause by the Customs Authorities as to why the said seized currency
should not be confiscated under the provisions of Section 113(d), (e) and (i)
of the Customs Act, 1962 read with Section 3(2) of the Imports and Exports
Control Act, 1947. The said show cause notice was adjudicated upon by the
Commissioner of Customs, Sahar International Air port and by his order dated
30-8-1995 directed absolute confiscation of foreign currency of US$ 4,03,550
equivalent to Rs.1,24,49,517/- under the provisions of Section 113(d), (e) &
(i) of the Customs Act, 1962 read with Section 13(2) of the FERA 1973. By the
said order penalty of Rs.10 lacs was also imposed on Jatin Jhaveri, penalty of
Rs.3 lacs on Ajit Dodia and penalty of Rs.2 lacs on Jitendra Dodia under
Section 114 of the Customs Act for their role in the smuggling of foreign
currency to the extent of 4,03,550 US$ out of India.
6 Aggrieved by the said order dated 30-8-1995, the Appellants
filed an Appeal before the CEGAT. The CEGAT allowed the Appeal filed on
behalf of the Appellant Jatin Jhaveri being Appeal No.C-577/95 and partly
allowed the Appeals filed by Ajit Dodia and Jitendra Dodia being Appeal Nos.
C-537-95 and 576/95.
7 In so far as the amount of 2,89,250 US$ is concerned, to which a
claim was laid by Jatin Jhaveri, the CEGAT held that the said amount was
legally imported into India since it was declared on arrival to the Customs
Department and, therefore, the CEGAT permitted the said amount to be
reexported subject to the permission of the RBI or to be disposed of in
accordance with banks directions on payment of fine of Rs.9 lacs.
The CEGAT reduced the penalty amount imposed on Jitendra
Dodia from RS.10 lacs to Rs.7 lacs and also reduced the penalty imposed on
Ajit Dodia from Rs.2 lacs to Rs.1 lac.
8 We were informed at the bar during the course of the hearing of
the above Appeals that the said Order of the CEGAT has become final and
binding as the Revenue has not chosen to carry the matter further.
It would also be relevant to note that in the proceedings under
the Income Tax Act, for the Assessment Year 1994-1995, the Assessing Officer
had made an addition of Rs.1,24,49,517/- to the income of Jatin Jhaveri on
account of the foreign Currency to the extent of 4,03,550 US$ seized as
undisclosed income. Against the order of the assessing officer, the said Jatin
Jhaveri carried the matter in Appeal to the Income Tax Appellate Tribunal
(ITAT) who set aside the said addition to the extent of US$ 1,14,300 on the
ground that the said amount did not belong to Jatin Jhaveri and, therefore,
there was no justification for its addition in the hands of Jatin Jhaveri. The
ITAT accepted the stand of Jatin Jhaveri that the source of acquisition of the
amount of US$ 2,89,250 was the receipt of advance payments against supply
of diamonds from two over seas buyers.
9 In so far as the FERA is concerned, the Show Cause Notice came
to be issued to the Appellants on 21-11-1007 for contravention of Section 8(1)
read with Section 64(2) of the said Act. The foundation of the said show cause
notice was the seizure of foreign currency amounting to 4,03,550 US$ from
Ajit Dodia, as indicated herein above. In so far as, Jatin Jhaveri and Ajit Dodia
are concerned, the allegations in the show cause notice was the contravention
of Section 8(1) of the said Act. Whereas, in so far as the Jitendra Dodia is
concerned, the contravention alleged was of Section 8(1) read with Section
64(2) of the said Act. All the Appellants replied to the said show cause notice.
The said show cause notice was adjudicated upon by the Special Director of
Enforcement, Sahar International Airport, Mumbai and by his order dated
4-10-1999 the said show cause notice was confirmed and the adjudicating
authority was pleased to impose penalty of Rs.30 lacs each on Jatin Jhaveri
and Ajit Dodia and Rs.7,50,000/- on Jitendra Dodia. The adjudicating
authority relied upon the Panchnama dated 26-7-1993 and the statements of
the Appellants - Ajit Dodia and Jitendra Dodia. The adjudicating authority did
not accept the case of Jatin Jhaveri as regards his claim to 2,89,250 US$ based
on the customs declaration forms, as also his alibi regarding the balance of the
amount of 1,14,300 US$, that the said amount belonged to one Chandrasen
Jhaveri. According to the adjudicating authority, the claim of the said Jatin
Jhaveri in respect of the two amounts was not cogent and credible. The
adjudicating authority was of the view that the said case of Jatin Jhaveri could
not be countenanced, in view of his original statement dated 12-10-1993. The
adjudicating authority was of the view that though the case of the said Jatin
Jhaveri in respect of the said amount 2,89,250 US$ was accepted by the
Central Excise Gold Appellate Tribunal (CEGAT). The order of the CEGAT
would not be binding on the authorities under the FERA.
10 Aggrieved by the said order dated 4-10-1999 passed by the
adjudicating authority, the Appellants filed Appeals before the Appellate
Tribunal for Foreign Exchange. The two Appeals filed by Jatin Jhaveri and
Jitendra Dodia being Appeal No.454/99 and Appeal No.462/99 came to be
allowed and thereby the penalty imposed upon Jatin Jhaveri and Jitendra
Dodia came to be set aside, as also the confiscation of the amount of 2,89,250
US$ was also quashed and set aside. In so far as Ajit Dodia is concerned, his
Appeal No.463/99 came to be partly allowed and whereas the finding of guilt
was affirmed as also the confiscation of 1,14,300 US$ was confirmed.
However, the amount of penalty was reduced from Rs.30 lacs to Rs. 1 lac.
The gist of the reasoning of the Tribunal was that Jatin Jhaveri
had explained the circumstances on account of which in his first statement
dated 12-10-1993, he had not mentioned about his calim of 2,89,250 US$.
According to the Tribunal, the adjudicating authority had failed to take into
consideration the subsequent statement dated 7-10-1996 of the said Jatin
Jhaveri. The Tribunal was of the view that in so far as the amount of 2,89,250
US$ is concerned, there were three factors in favour of the said Jatin Jhaveri
namely :
(i) Two currency declaration forms whereby the amount of 2,89,250 US$ is
covered. The correctness of the said currency declaration forms is neither
confirmed nor denied by the Customs.
(ii) Affidavits of some U.S. residents who have purportedly given the said
foreign currency as advance.
(iii) The photocopy of the passport of the said Jatin Jhaveri to prove his visit
to USA and the Affidavit of one Mr. P.N.Shenoy who was the Bank Manager of
ABN Amro Bank.
11 In so far as the order of the CEGAT is concerned, on which
reliance was placed by the Appellants though the Tribunal concurred with the
view of the adjudicating authority that per-se the order of CEGAT would have
no bearing on the proceedings under FERA. The Tribunal embarked upon the
exercise of appreciating the findings of the adjudicating authority de hors the
order of the CEGAT and on such exercise being carried out, came to a
conclusion that the story put forth by the Appellant-Jatin Jhaveri does not
appear to be a concocted one, especially having regard to the currency
declaration forms which were of earlier dates. The Tribunal was of the view
that the denial of having any connection with the seized foreign currency in his
initial statement dated 12-10-1993 and the absence of any reference to the
currency declaration forms in his said statement as also not claiming the
foreign currency before the Customs and DRT officials, according to the
Tribunal has been adequately explained by the said Jatin in his
statement dated 7-10-1996. The Tribunal was also of the view that the
gap between the two currency declaration forms was also adequately
explained in view of the fact that the baggage of the Appellant
Jatin was mis handled by the concerned air line. The tribunal also went into
aspect of the efficacy of the confessional statement of the Appellants recorded
in the course of investigation and on the touch stone of the law enunciated by
this Court, as well as by the Apex Court, was of the view that the said
statements required some corroboration so as to bring home the charge
against the charged persons. The Tribunal resultantly by its order dated
10-3-2004 allowed the Appeals and has granted the reliefs which have been
mentioned herein above.
We have heard Shri Y.S. Bhate the Learned Counsel for the
Appellants and Smt. Manjula Rao the Learned Counsel for the Respondent in
Appeal No.64 of 2006 and Shri Patel the learned Counsel for the Respondents
in Appeal Nos.65 and 66 of 2006. The submissions of the respective parties can
be culled out as under:
SUBMISSIONS ON BEHALF OF THE APPELLANTS
(i) That the Appellate Tribunal erred in exonerating the Respondents of the
charges on the basis of the order of the CEGAT dated 27-11-1998 as also
on the basis of the order of the ITAT. It is submitted that the scope of the
proceedings under the Customs Act are entirely different from the
proceedings under the FERA Act.
(ii) That the genuineness of the currency declaration forms was itself
doubtful in view of the inconsistency between the statement of Jatin
Jhaveri as made on 12-10-1993 and his statement made on 7-10-1996.
The case of the Jatin Jhaveri, therefore, that he had declared the foreign
currency on arrival, could not be accepted.
(iii)That the Tribunal failed to take into consideration that the original pass
port was not produced by Jatin Jhaveri for verifying the authenticity of
its relevant pages as regard his visit to USA.
(iv)That the Tribunal failed to appreciate that there was no RBI permission
either general or specific for the transfer of the foreign currency which
would exonerate the Respondents of the contravention of Section 8(1)
and 64(2) of the FERA.
(v) That the Tribunal failed to appreciate that the efficacy of the
confessional statement made by the Respondents under Section 108 of
the Customs Act, 1962 and Section 40 of the FERA Act of 1973, which
statements were given by the said Respondents voluntarily and in terms
of the law laid down by the Apex Court can be said to inculpate the
persons who have made it against the one against whom it is made.
(vi)That the Tribunal failed to appreciate that the Respondents have taken
inconsistent stand before the DRI and the Customs officials and that the
deposition is full of inconsistency and conjecture.
(vii)Lastly, that the Tribunal failed to appreciate that the facts as disclosed
clearly make out a contravention of Section 8(1) and 64(2) of the
FERA, by the Respondents, as the Respondent Jatin Jhaveri acquired
foreign currency to the extent of 4,03,550 US$ from persons other than
authorised dealers in foreign exchange in India.
SUBMISSIONS ON BEHALF OF THE RESPONDENTS
(i) That the Appeals as filed are not maintainable as the same have not
been filed by the Union of India but by the Director of Enforcement
without any authority delegated to him by the Union of India. There is
also no authority delegated to file the Civil Applications either for
condonation of delay or for substitution of the Appellant on behalf of
the Union of India. The Respondents relied upon the Judgment of the
Apex Court in Mohte Sham Mohammed Ismail (Supra)
(ii) That the Notification dated 6-3-2009 on which reliance is sought to be
placed by the Appellant cannot come to the aid of the Appellant as the
instant proceedings are filed in the year 2004 and, therefore, no
reliance can be placed on the Notification which is dated 6-3-2009.
(iii)That there has been inordinate delay in filing the Appeal and the same
is filed after more than 6 years and the substitution of the Director of
Enforcement by the Union of India also suffers from delay and laches.
(iv)That no question of law is involved in the present Appeal and,
therefore, in terms of Section 54 of FERA, Appeal is not maintainable.
(v) That the CEGAT having recorded a finding that the currency in question
to the extent of US$ 2,89,250 has been brought into India legally which
finding is recorded on the basis of the same set of facts, would be a
determinative piece of evidence, in so far as the acquisition of the said
currency is concerned, whilst adjudicating the proceedings under the
FERA.
(vi)That since a finding of fact has been recorded by the CEGAT, it is not
open for the Appellant to question the said finding of fact as the said
finding has been accepted by the concerned department of the
Appellant, since the matter has not been carried further by the said
department.
(vii)That the provisions of Section 8(1) and 64(2) of FERA are not at all
attracted.
(viii)That there has been no inconsistency in the statement of the
Respondents and that on the basis of the said statement, it cannot be
proved that there is any contravention of the provisions of the FERA.
(ix)That three authorities have adjudicated upon the matter on the same
set of facts and all the authorities after considering the material and
documents on record have recorded a finding in favour of the
Respondents above named as regards legal importation of the foreign
currency.
CONSIDERATION
13 Having heard the Learned Counsel for the parties, we have given
our anxious consideration to the rival contentions. Since it is the contention of
the Learned counsel appearing for the Respondents that in view of the
adjudication by the CEGAT wherein the CEGAT has recorded a finding that
Appellant-Jatin Jhaveri had legally imported the currency amounting to
2,89,250 US$ by virtue of the two customs declaration forms dated 25-6-1993
AND 28-6-1993, the said finding would be binding on the authorities under
FEMA, we propose to deal with the said submission at the out set.
14 The said submission was also canvassed before the Tribunal by
the Respondents. The Tribunal had, whilst agreeing with the view of the
adjudication officer that per-se the order of the CEGAT is not binding on the
Enforcement Authorities under the FERA; in view of the fact that the
proceedings under the Customs Act are different from the proceedings under
FERA. Whilst accepting the said view of the adjudication officer, the Tribunal
embarked upon an exercise of appreciating the findings of the adjudication
officer viz-a-viz the material on record de hors the order of the CEGAT. The
Tribunal on such consideration came to a conclusion that the adjudication
officer had whilst relying upon the statement of Jatin Jhaveri dated
12-10-1993, wherein, he had not whispered a single word about the seized
foreign currency and that the same was brought from USA representing the
advance payment for exports and also taking into consideration that he had
not claimed foreign currency before the Customs and DRI officials, had erred
in not taking into consideration the statement dated 7-10-1996 which
according to the Tribunal had escaped the attention of the adjudication officer.
The Tribunal was also of the view that the explanation given by Jatin Jhaveri
that he did not disclose about the currency declaration forms, in his statement
dated 12-10-1993 for the reasons that the said currency declaration forms
were not with him at the said time, but were with Shri Chandrasen and since
he was afraid that the said Chandrasen would destroy the said forms and,
therefore, for no reason, the whole thing would come on his head, inspite of
him having the currency declaration forms, found favour with the Tribunal.
The Tribunal also accepted the justification of Jatin Jhaveri that he did not
mention about Chandrasen on 12-10-1993 on account of the fact that the said
Chandrasen had given him help by arranging for a Doctor, arranging a lawyer
and arranging for his bail. Hence, considering the aforesaid material on record,
the Tribunal was of the view that the story put forth by Jatin Jhaveri cannot be
said to be a concocted one especially in the light of the currency declaration
forms which were of earlier dates. The Tribunal was also of the view that the
gap between the two currency forms of three days, was adequately explained
by Jatin Jhaveri by stating that the baggage was mis handled by the airline
and, therefore, one bag containing part of the currency, was received after
three days. Therefore, as can be seen, from the order of the Tribunal which is
impugned in the present Appeals, the Tribunal has considered the aspect of the
acquisition of the currency amounting to 2,89,250 US$ threadbare and on the
basis of material that was before it, concurred with the finding of the CEGAT
that the currency was legally imported into India by Jatin Jhaveri.
15 In so far as the findings of the CEGAT are concerned, to the effect
that the said currency was legally imported into India by Jatin Jhaveri. The
said findings can be deciphered from paragraphs 5, 6, 7, 8 & 16 of the Order of
the CEGAT, which paragraphs are reproduced herein under:
"5. We shall first consider the confiscation of
currency. None of the appellant has claimed ownership of US
$ 1,14,300/- found in the black brief case. It is not disputed
that it was sought to be exported. We therefore confirm its
confiscation under clause 9(d) and (i) of section 113 for the
reason that it was not declared.
6 Jatin Jhaveri has produced before the
Commissioner copies of the two currency declaration forms
one dated 25.6.1994 for US $ 2,54,000/- and other dated
28.6.93 for US $ 35,250/-. These indicate the same to have
been issued on these dates to him for the amounts in
question. The Commissioner in his order does not deny that
these two forms had been issued. On the contrary, he refers
to these documents produced before him at the hearing and
mentions what seems to be changes in the dated from
26.6.93 to 25.6.93 and some discrepancy in the passport
number. He however does not find that this discrepancy
leads to the view that the currency declaration forms were
not issued. He emphasizes the suspicions behaviour of Jatin
Jhaveri and his flight from the investigation, his disowning
the currency in his statement of 12.10.1993 and the fact that
the currency in any case is liable to confiscation for being
attempted to be exported in contravention of the provisions
of the Foreign Exchange Regulation Act.
7 Jatin Jhaveri in his statement referred to has
clearly disowned the currency which was seized. This
however does not mean that he has for ever forfeited the
ownership of it. He has a right in law to make a claim which
he did later, and that claim has to be considered. There is no
other claimant for the currency. The Department does not
dispute the issue of the currency declaration forms. The
major discrepancy in the for does not have the effect of
nullifying the fact that the currency was brought in by Jatin
Jhaveri.
8 However, the fact remains that its having been
brought into India does not result in its not being liable to
confiscation for attempted unauthorized exportation.
Advocate for the appellant was not able to show before us
any notification of the Reserve Bank of India permitting
taking out currency by a resident which he had brought in.
On the contrary notification 10/73RBI dated 1.1.1994 of the
Reserve Bank which the Commissioner cites provides that
Reserve Bank's permission to take out currency brought in
would apply only to a person in India but not a resident
thereof. The currency brought in by Jatin Jhaveri is
therefore liable to confiscation.
16 We have held the currency of US $ 2,89,250 is
liable to confiscation for being attempted to be exported
without permission. However, having regard to the fact that
the currency was legally imported and declared on arrival to
the Customs department be permitted to be reexported
subject to the permission of the Reserve Bank of India, or
otherwise disposed of in accordance with that bank's
disposed of in accordance with that bank's directions on
payment of fine of Rs.9.00 lacs."
16 It is also an undisputed position that in the Income tax
proceedings, the ITAT in the Appeal filed by the said Jatin Jhaveri against the
order passed by the Assessing officer, has brought down the addition to income
of the said Jatin Jhaveri for the Assessment Year 1994-1995 from 4,03,550 US
$ to 2,89,250 US$. Hence, the Income Tax Authorities have also accepted the
fact that the said amount of foreign currency was the income of the Jatin
Jhaveri in the said Assessment year. It is relevant to note that both the orders
of the CEGAT as well as ITAT have become final and binding as the revenue in
both the matters has not chosen to carry the matter further.
We find considerable merit in the submission of the learned
Counsel for the Respondents that in the light of the two authorities under the
Customs Act and Income Tax Act, having found the amount of 2,89,250 US$ to
be legally brought into India and in the instant proceedings also the Tribunal
having concurred with the view of the CEGAT, this Court should not interfere
in the above Appeals. Though it is true that the proceedings under the Customs
Act defer from the proceedings under the FERA, one cannot loose sight of the
fact that the adjudication under the Customs Act was also on the basis of the
same set of facts. The Customs Act, can be said to be a cognate law, in so far as
the FERA is concerned, and, therefore, though the findings recorded in the
Customs proceedings, may not be binding on the FERA proceedings. They
cannot be said to be having no evidentiary value whilst deciding the
proceedings under the FERA. As can be seen from the impugned order, the
Tribunal has considered the aspect of the importation of US$ 2,89,250 by Jatin
Jhaveri, threadbare on the basis of the material which was on record and as on
such consideration concurred with the view of the CEGAT on the aspect of the
legal importation of the said currency by Jatin Jhaveri. In the light of the said
finding of the CEGAT, as also the findings which have been reaffirmed by the
FERA Tribunal as also the Order passed by the ITAT, we are afraid, it is not
possible for us to take a different view than the view taken by the Tribunal in
the impugned order. We, therefore, do not feel it necessary to go into various
contentions raised by the parties whilst challenging or defending the impugned
order. We are, therefore, of the view that no substantial question of law is
involved in the above Appeals and the Appeals are required to be dismissed on
the said ground.
17 In our view, the Appeals are also not maintainable in view of the
Judgment of the Apex Court in the case of Mohtesham Mohd. Ismail Vs. Spl.
Director, Enforcement Directorate & Anr. reported in 2007 AIR SCW 6348.
The Apex Court, in the said Judgment has held that the Appeal filed by the
Special Director in his official capacity as adjudicating officer and not as a
delegatee of the Central Government, which was not even impleaded as party
to the above Appeals, and in the absence of any Notification empowering the
Special Director to prefer an Appeal on behalf of the Central Government.
Such an Appeal is not tenable. Paragraph 12 and 13 of the said Judgment are
reproduced herein under:
"12 From the notification dated 22.09.1989,
whereupon reliance has been placed by Mr.Bhan, it
would appear that the officer authorized by the
Central Government for the purpose of enforcing the
provisions of the Act was specifically empowered to
adjudicate upon the dispute. The said notification
itself is a pointer to the fact that for the purpose of
exercising the functions of the Central Government
under one provision or the other, the officer concerned
must be specifically empowered in that behalf. A
general empowerment would, however, be
permissible. Before the High Court, no notification
was filed to show that the authority concerned was
empowered to prefer an appeal on behalf of the
Central Government. The Central Government was not
even impleaded as a party to the appeal. First
Respondent did not file the appeal on behalf of or
representing the Central Government. It was filed in
its official capacity as the adjudicating authority and
not as a delegate of the Central Government.
13 An adjudicating authority exercises a
quasi-judicial power and discharges judicial functions.
When its order had been set aside by the Board,
ordinarily in absence of any power to prefer an appeal,
it could not do so. The reasonings of the High Court
that he had general power, in our opinion, is
fallacioous. For the purpose of exercising the functions
of the Central Government, the officer concerned must
be specifically authorized. Only when an officer is so
specifically authorized, he can act on behalf of the
Central Government and not otherwise. Only because
an officer has been appointed for the purpose of acting
in terms of the provisions of the Act, the same would
not by itself entitle to an officer to discharge all or any
of the functions of the Central Government. Even
ordinarily a quasi-judicial authority cannot prefer an
appeal being aggrieved by and dissatisfied with the
judgment of the appellate authority whereby and
whereunder its judgment has been set aside. An
adjudicating authority, although an officer of the
Central Government, should act as an impartial
Tribunal. An adjudicating authority, therefore, in
absence of any power conferred upon it in this behalf
by the Central Government, could not prefer any
appeal against the order passed by the Appellate
Board."
18 In the instant Appeals, it is an undisputed position that no such
authority was given to the Director of Enforcement to prefer the above
Appeals. Confronted with the said Judgment, the Learned Counsel for the
Appellant sought to rely upon the Notification dated 6-3-2009 by which
Notification the Central Government has empowered the Director of
Enforcement to file proceedings. In our view, the said Notification can be of no
avail in the instant matter as the instant proceedings were originally filed in
the year 2005 as Writ petitions, when the said Notification was not even in
existence. The said Writ petitions were thereafter converted to Appeals in the
year 2006 and were numbered as above. It is pertinent to note that the
application for amendment for substitution of the Enforcement Directorate
with the Union of India was made in the year 2010 i.e. almost after a period of
5 years of the filing of the proceedings. The said issue as to whether the
Director of Enforcement could file an Appeal and whether could be substituted
by the Union of India, was explicitly kept open for consideration at the final
hearing by order dated 17-6-2010 passed in Civil Application No.24 of 2010 in
FERA Appeal No.64 of 2006. In our view, the objection of the Respondents to
the maintainability of the Appeals would have to be sustained on the
application of Mohte Sham's Case (Supra) and resultantly, the Appeals would
have to be dismissed on the ground that the Director of Enforcement who was
the adjudicating authority had no authority to file the Appeals. The Appeals,
therefore, to stand dismissed on the said ground also.
In so far as Writ Petition No.2976 of 2004 is concerned, the
principal relief sought is that of the release of the currency amount of US$
2,89,250 along with interest thereon @ 18% from date of seizure until release
thereof to the Petitioner.
In so far as said relief is concerned, since we have dismissed the
Appeals filed by the Appellant above named, the above Petition would have to
be allowed in terms of prayer clause (a). However, the Petitioner would have
to deal with the said amount in terms of the order of the CEGAT as also the
Order impugned in the above Appeals i.e. re-export the said amount with the
permission of the RBI. Since, the Respondents have retained the amount on
account of the pending proceedings, we are of the view that the Petitioner i.e.
Jatin Jhaveri in Appeal No.64 of 2006 would not be entitled to any interest.
Rule is, therefore, made absolute in terms of prayer clause (a) by
clarifying that the Petitioner would not be entitled to interest on the said
amount of 2,89,250 US$.
(R.M.SAVANT,J.) (V.C.DAGA,J.)
FURTHER ORDER
DATE: 19th OCTOBER, 2010
At this stage, the Learned Counsel for the Revenue prays that the
amount of 2,89,250 US$ which is lying confiscated since the year 1993 and
which continues to lie with the Department, should not be released to the
Petitioner - Jatin Jhaveri for a period of 8 weeks. In the facts and
circumstances of the case, we find the said request to be reasonable. The said
amount, therefore, not to be returned to the Petitioner-Jatin Jhaveri for a
period of 8 weeks from date.
(R.M.SAVANT,J.) (V.C.DAGA,J.)
