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Rohit JaIn Vs. Assistant Director, Enforcement Directorate - Court Judgment

LegalCrystal Citation
CourtAppellate Tribunal for foreign Exchange New Delhi
Decided On
Case NumberAPPEAL NO. 363 OF 1995
AppellantRohit Jain
RespondentAssistant Director, Enforcement Directorate
Advocates:B.B. Khare for the Appellant. A.C. Singh for the Respondent.
foreign exchange regulation act, 1973 - section 9 - comparative citation: 2001 (34) scl 308 (atffe - n. delhi) regulation act, 1973 (‘the act) for having received a cheque of rs. 2 lakhs from shri sumeer mahajan, a person resident outside india, purported to be by way of gift after paying a premium of rs. 24,000 for the same. 2. the brief facts of the case are: on 28-10-1991 a search was conducted under section 37 of the act at the residential premises of one shri sumeer mahajan, as a result of which, foreign currency and documents were recovered and seized. the seized documents included pass-book of various nre accounts of different persons reported to be settled outside india, blank gift forms and gift deeds. in his statement dated 28-10-1991. shri sumeer mahajan has, inter alia, stated that number of nre accounts with different banks in delhi were opened after the scheme of.....

1. This is an appeal against the Adjudication Order No. 183/ADJ/95-E.D. (RS) of 1978 dated 31-10-1995 whereunder a penalty of Rs. 15,000 has been imposed on the appellant for contravening provision of section 9(1)(a) of Foreign Exchange Regulation Act, 1973 (‘the Act) for having received a cheque of Rs. 2 lakhs from Shri Sumeer Mahajan, a person resident outside India, purported to be by way of gift after paying a premium of Rs. 24,000 for the same.

2. The brief facts of the case are: On 28-10-1991 a search was conducted under section 37 of the Act at the residential premises of one Shri Sumeer Mahajan, as a result of which, foreign currency and documents were recovered and seized. The seized documents included pass-book of various NRE accounts of different persons reported to be settled outside India, blank gift forms and gift deeds. In his statement dated 28-10-1991. Shri Sumeer Mahajan has, inter alia, stated that number of NRE accounts with different Banks in Delhi were opened after the scheme of gifts in

foreign exchange including that from NRE account was announced by the Government of India. From NRE accounts gift cheques were issued in different names in India and from those persons against the gift cheques given cash in Indian rupees were being received against a premium of 12 per cent i.e. if a gift cheque from NRE account was issued in favour of an Indian in India for Rs. 100, he was receiving Rs. 112 from him. Along with these cheques he was also issuing gift certificates as required under the scheme though these were not gifts in fact at all but were the cheques given to them against consideration. He has neither any business nor relationship with such persons to whom gift cheques from NRE accounts were issued. During the course of search of his house, blank gift forms/gift deeds were seized which he would fill in as per necessity though these were not gifts at all. The money invested in this way was used for purchase of properties in India in Delhi. In the records, it is found that Shri Sumeer Mahajan has extensively disbursed around Rs. 7 crores to various parties in India as gifts. The appellant, Shri Rohit Jain, is one of such recipients who has received gift cheques of Rs. 2 lakhs. Accordingly, the charge framed against Shri Rohit Jain is that during the year 1991, he has made a payment of Rs. 2,24,000 to Shri Sumeer Mahajan, a person resident outside India without any general or special exemption of the RBI in contravention of section 9(1)(a). Shri Jain denied the charge in reply to the show-cause notice vide his letter dated 20-5-1995 and submitted copies of gift deeds claiming that Shri Sumeer Mahajan has given gift of Rs. 2 laksh to Rohit Jain out of love and affection. In the adjudicating proceedings, Shri Rohit Jain did not appear and the case was decided against him by the Adjudicating Officer ex parte on the basis of the evidence available on record. Under the impugned order, a penalty of Rs. 15,000 has been imposed on Shri Rohit Jain for contravention of the provisions of section 9(1)(a) which is being challenged in this appeal.

3. Shri B.B. Khare, the learned counsel of the appellant, strongly contended that there is no evidence for compensatory payments alleged to have been made by the appellant. In the statement of Shri Sumeer Mahajan, there is no reference to Rohit Jain and gifts made to him. Shri Khare further contended that the appellants case is covered by the FERA Boards Order dated 30-6-1997 in a group of appeals including Appeal No. 12 of 1996 of Anandi Lal Sonal.

4. Shri Singh on behalf of the respondent referred to Shri Sumeer Mahajans statement which, he said, is true and voluntary in nature. He has gone to the extent of saying that the conviction can be made even on a retracted confession if the retracted confession is voluntary or there is otherwise sufficient corroboration. He referred to the question at page 7 of the said statement where Sumeer Mahajan refused to answer the question put to him as to how he could debit the accounts in August 1991 as the same were claimed to have been opened by Sumeer Mahajan in September, 1991. The fact that he refused to answer the question stating ‘ I am sorry. I am not able to answer this question indicate the voluntary nature of the statement. Furthermore, his statement is duly recorded in the course of judicial proceedings and the statement is true and genuine. Shri Singh relied on Supreme Courts judgment in the case of Naresh J. Sukhavani v. Union of India 1995 Suppl. (4) SCC 663, wherein it was held that the statements made before custom officials is a material piece of evidence and where such statement made by a person inculpates not only himself but also another person, it was held that it can be used as substantive evidence against that another person. Shri Singh further contended that the case of the appellant is not covered by the FERA Boards order referred to for the reason that the date on which gifts were made to the appellant by Sumeer Mahajan did not fall within the commencement of Act 41 of 1991 and the specified date i.e. 1-12-1991. Shri Singh, therefore, maintained that the impugned order is perfectly legal and is in order and this appeal is devoid of substance and should be dismissed as such.

5. I have given my careful consideration to the submissions made by both the parties as well as the material available on record. At the very outset, it is noted that the Remittances of Foreign Exchange and Investment in Foreign Exchange Bonds (Immunities and Exemptions) Act, 1991 is applicable to remittances made after the date of the commencement of the said Act but before the specified date. The said Act commenced on 18-9-1991. The ‘specified date, according to section 2(b) of the said Act, is first day of December, 1991 or such other later date which Central Government may, by notification in the Official Gazette, specify in this behalf. Admittedly gift in the present appeal had been made before the commencement of the said Act of 1991 and, therefore, not entitled to immunities provided thereunder. The learned counsel of the appellant has placed reliance on the FERA Boards Order or in Appeal No. 12/96 referred to above in support of his plea that a gift can validly be given even to an unknown person and it is not necessary under the Gift-tax Act, 1958 that the donee should be related to the donor. Correctness of this proposition, in law, cannot be disputed. Equally true is the proposition that in law, a gift can never be a subject matter of purchase. If consideration is passed from the donee to the donor for making a gift, such a purported gift would be a sham. But if no such consideration is there, a gift otherwise valid does not cease to be so merely because the donee is a stranger or not related to the donor. The statement of Shri Sumeer Mahajan changed the whole complexion of the case. The FERA Board too had merely stated that the provisions of gift-tax should be given due consideration since the subject matter of gift by non-resident to resident Indian is specifically provided for under that Act and there are not specific provisions under the Act to regulate such gifts and, therefore, it is not desirable to ignore those provisions of the Gift-tax Act. This is not of much help to the appellants for admittedly Shri Sumeer Mahajan has stated that he has given gift cheques against a consideration of 12 per cent. It may be relevant to note in this regard that at page 19 of the loose sheet bunch(G) seized from Sumeer Mahajans residence, there is remark ‘white money against the transaction with Shri M.L. Gupte for Rs. 50,000. Shri Mahajan explained that by ‘white money he meant that the cheque was given without premium. There is nothing on record to indicate that Sumeer Mahajan had not taken any money from the appellant and the gift made to Shri Rohit Jain was a genuine gift. Even the FERA Board has stated in its Order referred to above that here there is no evidence of alleged transaction except the statement of the individual and the statement of the person who made the payment as also the person who received the payment, will be relevant. If no consideration had been paid by the appellant in the instant case, as claimed by him, he could have proved the same by the testimony of Shri Sumeer Mahajan, who himself was a co-noticee in the present case but had chosen to abstain himself in the adjudication proceedings and the penalty on Sumeer Mahajan too has been levied, which is not the subject matter of the present appeal. It may be relevant to observe in this regard that the adjudicating proceedings are quasi-judicial in nature to which provisions of the Indian Evidence Act, 1872 do not apply. Accordingly, any finding in such proceeding must be based on some evidence. The statement made by Shri Sumeer Mahajan in this case was the evidence on record and the finding recorded in the impugned order was based on this evidence. Reference in this regard may be made to the case of Syed Nuri Shah v. Director of Enforcement 1986 Cr.L.J. 677 (AP).

6. In the facts and circumstances and for the reasons stated above, I do not find any illegality or infirmity in the impugned order. I, therefore, find this appeal as devoid of substance and merit and dismiss the same as such.

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