K.S. Bawa vs Director Of Enforcement
1990 Latest Caselaw 34 Del

JUDGMENT

P.K. Bhari, J.

(1) This appeal has been brought under Section 23EE of the Foreign Exchange Regulation Act, 1947 (hereinafter referred to as 'the Act') against the order of the Appellate Board made under Section 23 E of the Act by which the Appellate Board had reduced the penalty from Rs. 42,900 to. Rs. 42,100. Under Section 23D of the Act. the Director of Enforcement after giving show cause notices to the appellant and after holding inquiry in the prescribed manner had imposed the penalties on the appellant as the appellant had stated to have violated the provisions of Section 5(1)(a) and fur and Section 12 of the Act. Section 5(1)(a) and (aa) of the Act lays flown that save as otherwise provided in accordance with any general or special exemption, no person shall make any payment to or for the credit of any person resident outside India and receive otherwise than through an authorised dealer any payment by order or on behalf of any person resident outside India.

(2) The case of the Department against the appellant was that the appellant had received certain payments in India at the instance of one Mr. Paul Telco, non-resident Indian and had passed on those payments to certain other persons in India. It was also pleaded against the appellant that the appellant had exported certain goods to said Paul Telco, non-resident and had given inflated invoice and had received less amount. through normal banking chancel than indicated and had received the balance amounts in India at the instance of Mr. Telco in contravention of Section 12 of the Act.

(3) One of the pleas raised before the Appellate Board was that no evidence has been collected to show that Mr Telco was resident outside India. The Appellate Board has limned the finding of fact arrived at by the Directed of Enforcement based on admission of appellant himself that Mr. Telco was a person residing abroad who used to visit India occasionally for the purposes of his business and that Mr. Telco had seized to he Director of Indian company much earlier in May 1963 and was running a business in London. This finding of fact has not been assailed before me by the learned counsel for the appallant. It is evident that the Director of Enforcement and the Appellate Board had brought home the contraventions of the said Section 5 and Section 12 of the Act to the Appellant on the basis of appellant's statement made to the officers of the Directorate of Entremets based on certain documents seized from the appellant himself. A contention was raised before the first Appellate Board that the enforcement officers should be treated as police officers and any statements recorded by them are hit by the provisions of Section 25 of the Indian Evidence Act. This contention was negatived by the first Appellate Board by relying on the ratio laid down by the Supreme Court in the case of Illias v. Collector of .Customs, Madras, Another contention raised before the first Appellate Board was that the statements recorded by the said enforcement officers also are hit by the provisions of Article 20(3) of the Constitution of India as the appellant should be deemed to be an accused, person and he has been compelled to be a witness against himself by making confessional statements. This contention was negatived by the first Appellate Board placing reliance on the pronouncement of the Supreme Court in Ramesh Chandra Mehta v. State of West Bengal, . The learned counsel for the appellant has not been able to show how the ratio laid down by the Supreme Court in the aforesaid two cases does not clinch the issue on both the point against the appellant. Hence, I endorse the order of the Appellate Board in this connection.

(4) The learned counsel for the appellant has also contended that the Director of Enforcement in his impugned order had placed reliance on certain statements made by Mr. Telco while no opportunity had been given to the appellant to cross-examine Mr. Telco. Even if the the statements made by Mr. Telco are not taken into consideration, the contraventions of Sections 5&12 of the Act could be well established from the confessional statement of the appellant himself. So, nothing turns on this contention of the learned counsel for the appellant.

(5) The appellant has admitted in his statements that he had received payments at the behest of Mr. Telco. It is not necessary to refer to the details of the payments received by the appellant in contravention of Section 5 of the Act inasmuch as those details stand furnished .in the order of the Director of Enforcement and those details are not being, disputed before me by the learned counsel for the appellant. It is evident that appeal to the High Court under the provisions of the said Act lies only en the question of law. The learned counsel for the appelant has vehmently argued that the appellant was merely a conduit pipe transferring the payments received at the instance of Mr. Telco and disbursing to other persons in India on the instructions of Mr. Telco and thus. Telco and thus. it cannot be held that the appellant had made any payment to or for the credit of any person resident outside India or had received any such payment by order or on behalf of any person resident outside India. He would like this Court to interpret the words "any payment" appearing in Section 5(a) & (aa) of the Act to mean payment made to a person who is entitled to receive the said payment on his own account.

(6) It is evident that the appellant knew that the payments being received by the appellant were at the behest of Mr. Telco for being passed on to other persons to whom Mr. Telco owed certain amounts. It is not a fact that the appellant was receiving these payments innocently and in ignorance of the material fact that these payments are being received at the behest of non-resident Indian. In 'The Law Relating to Foreign Exchange' by Vakil 4th Edition, the meaning of the word "payment" has been culled out from different dictionaries as follows : 1.The action, or an act, of paying the remuneration of person with money or its equivalent; the giving of money, etc. in return for something or in discharge of a debt. 2. A sum of money (or other thing) paid; pay wages; price. 3. The action, or anact, of rendering to a, person anything due, deserved, or befitting, or, of discharging an obligation; the infliction of punishment or retribution, the giving of reward or satisfaction a yield in return for labour, etc. the thing so rendered or given. (Murray's Dictionary). 4. Act of paying; what is given for service done; reward. (Blackie's Standard Dictionary). 5. The act of paying; the discharge of a debt the thing given in discharge of a debt; recompense: requital; rendered or given (Murray's Dictionary)'.; 6. The act of paying or the state of being paid, as to demand prompt payment. The amount paid as monthly payments ; recompense ; rewards , punishment. (The Advanced Learner's Dictionary). 7.. Paying amount paid recompense. (The Concise Oxford Dicitionary). 8. The act of paying discharge of a debt, recompense; punishment. (Collins New English Dictionary). 9. The act of paying; the discharge of a debt by money or its equivalent in value; that which is paid; recompense; reward; punishment. (Chambers Twentieth Century Dictionary). 10. Act of paying, or giving compensation; the discharge of a debt or an obligation; as a prompt payment. That which is paid; the thing given to discharge a debt or an obligation, or in fulfillment of a promise; pay; recompense; requital; return; as to receive monthly payment; punishment; chastisement. (Webster's New International Dictionary).

(7) A bare perusal of the definition of the word "payment" given in various dictionaries also includes the act of paying. It cannot be said that when appellant received the amounts the act of paying was not performed. The appellant was not a mere innocent carrier of the amounts without knowing that these amounts were meant to be paid at the behest of a non-resident person. So, I agree with the view expressed by the lower authorities that the appellant received these amounts and the same can be termed as payments in contravention of Section 5 of the said Act.

(8) It was contended before the first Appellate Board and so also before me that the appellant had not drawn any benefit by showing different amounts in the invoice in respect of the goods exported by the appellant to Mr. Telco and it is Mr. Paul Telco who might have obtained some benefit on the basis of the inflated amounts mentioned in the invoice. There is no merit in this contention because the evidence relied upon by the Appellate Board in returning the finding against the appellant on this point is the confessional statements of the appellant himself. The appellant has admitted that he had received later on the difference in amounts at the behest of Mr. Paul Telco in India in Indian currency. So, it is evident that the appellant received certain price of the goods exported by him in contravention of the provisions of Section 12 of the Act.

(9) I, hence, endorse the judgment of the first Appellate Board on all points and find no merit in this appeal which I, hereby, dismiss. The appellant is given one month's time to deposit the balance amount of the penalties.