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O. Abdul Aziz and ors. Vs. Additional Director of Enforcement, Ministry of Law, Justice and Company Affairs, Government of India - Court Judgment

LegalCrystal Citation
SubjectFERA
CourtChennai High Court
Decided On
Reported in(1982)2MLJ359
AppellantO. Abdul Aziz and ors.
RespondentAdditional Director of Enforcement, Ministry of Law, Justice and Company Affairs, Government of Indi
Excerpt:
.....of their statements as well as the documents and other materials seized from the residence of abdul aziz. 31,600 to various parties in india, that as regards the charge under section 9(c) for non-surrender of foreign currency and foreign exchange, the evidence on record showed that he failed to surrender within one month the foreign exchange found in his residence and that, therefore, he has been rightly held guilty for violation of section 5(1)(aa), 5(1)(c) and section 9 of the act. 8. since the finding of the initial authority as well as the appellate board are based on the-statements made by the appellants themselves as also the records seized from the residence of abdul aziz, the initial authority as well as; though the learned counsel for the appellants refers to certain minor..........the orders passed by the appellate board.3. on 27th january, 1974, the residence of one abdul aziz, the appellant in c.m.a. no. 288 of 1980 and his wife, the appellant in c.m.a. no. 289 of 1980 were searched. during the search a few foreign letters, account sheets, a note book containing certain accounts and particulars, four pocket diaries, a cheque book relating to an account in the indian overseas bank, kumbakonam standing in the name of abdul azeez and foreign exchange valued at 295, us 4, brunei doller note valued 5 and ceylon rupees 20 had been recovered. in his statement recorded on that date, abdul aziz who is a malaysian citizen stated that he was running a restaurant in malaysia and a transport company in india jointly with his brother-in-law, muthalif and admitted.....
Judgment:

G. Ramanujam, J.

1. Since the points involved in all these cases are substantially the same and they arise from one and the same order passed by the Additional Director of Enforcement, they are dealt with together.

2. The appellant in C.M.A. No. 288 of 1980 and the appellant in C.M.A. No. 289 of 1980 are husband and wife and they have been found guilty for the contravention of Sections 5(1)(aa) and 5(1)(c) of the Foreign. Exchange Regulation Act, 1947, hereinafter referred to as the Act, both by the initial authority as well as by the Foreign Exchange Regulation Appellate Board, hereinafter referred to as the Appellate Board and in these appeals they are challenging the orders passed by the Appellate Board.

3. On 27th January, 1974, the residence of one Abdul Aziz, the appellant in C.M.A. No. 288 of 1980 and his wife, the appellant in C.M.A. No. 289 of 1980 were searched. During the search a few foreign letters, account sheets, a note book containing certain accounts and particulars, four pocket diaries, a cheque book relating to an account in the Indian Overseas Bank, Kumbakonam standing in the name of Abdul Azeez and foreign exchange valued at 295, US 4, Brunei Doller Note valued 5 and Ceylon rupees 20 had been recovered. In his statement recorded on that date, Abdul Aziz who is a Malaysian citizen stated that he was running a restaurant in Malaysia and a transport company in India jointly with his brother-in-law, Muthalif and admitted having received Rs. 5,000 otherwise than through authorised dealer in foreign exchange by order or on behalf of a person resident outside India and having made 20 payments amounting to Rs. 31,600 to various parties in India on behalf of his brother-in-law, Muthalif of Malaysia. He had further admitted that he was having in his possession the foreign exchange which was seized from his house, which is the, balance of the foreign exchange which he brought from Malaysia in March, 1973. His wife Havva Beevi also admitted in her statement, dated 27th January, 1974, that she had received 8 payments amounting to Rs. 1,26,700 as arranged for her by her husband, Abdul Aziz otherwise than through authorised dealers in foreign exchange under instructions from her husband Abdul Aziz. One Basheer, the appellant in C.M.A. No. 290 of 1980, had also given a statement on 29th October, 1974, to the effect that as per instructions of Abdul Aziz he reserved a sum of Rs. 40,000 from an unknown person and handed over the same to Hawa Beevi. Based on the recovery of the various documents from the residence of Abdul Aziz and his wife and also the statements given by both as also by the said Basheer, show cause notices were issued to them to show cause why they should not be proceeded against for violation of the provisions of the Act. All the three persons filed objections to the show cause notices and after considering their objections, the Additional Director found the appellants guilty of the charges levelled against them in the show cause notices and on the basis of their statements as well as the documents and other materials seized from the residence of Abdul Aziz. All the three filed appeals before the Appellate Board. Before the Appellate Board it was contended that the transactions referred to in the show cause notices did not involve foreign exchange and, therefore, there was no violation of any of the provisions of the Act. However, the Appellate Board found that Abdul Aziz had admitted in his statement dated 27th January, 1974, receipt of Rs. 5,000 through illegal channel in November, 1973, under instructions from Muthalif from Malaysia in connection with the purchase of property for Muthalif, that ha has also admitted having made payments totalling Rs. 31,600 to various parties in India, that as regards the charge under Section 9(c) for non-surrender of foreign currency and foreign exchange, the evidence on record showed that he failed to surrender within one month the foreign exchange found in his residence and that, therefore, he has been rightly held guilty for violation of Section 5(1)(aa), 5(1)(c) and Section 9 of the Act.

4. As regards his wife, Hawa Beevi who stands charged for violation of Section 5(1)(aa) for receiving 8 payments amounting to Rs. 1,26,700 under instructions from her husband Abdul Aziz who was then residing in Malaysia and for violation of Section 5(1)(c) for having made 16 payments amounting to Rs. 6,900 to various parties in-, India, the Appellate Board found that since these trans actions have been admitted by her in her statement, dated 27th January, 1974, and also in hen husband's statement given on the same day, she is guilty of contravention of Sections 5(1)(aa) and 5(1)(c) of the Act. However, on the question of penalty the Appellate Board found that a substantial portion of the amount received by her from her husband from Malaysia was mainly for family expenses and there fore the penalty amount of Rs. 45,000 levied under Section 5(1)(aa) by the Director of Enforcement should be reduced to Rs. 30,000. The Appellate Board, however, sustained the penalty of Rs. 3,000 awarded for contravention of Section 5(1)(c).

5. Basheer, the appellant in C.M.A. No. 290 of 1980, is found to have contravened; Sections 5 (1)(aa) and 5(1)(c) in respect of Rs. 40,000. Out of the said sum of Rs. 40,000, he has delivered a sum of Rs. 20,000 to Hawa Beevi, wife of Abdul Aziz and kept the balance of Rs. 20,000 with him. The said sum of Rs. 20,000 received by Hawa Beevi forms part of the sum of Rs. 1,26,000, which is the subject-matter of the charge as against Hawa Beevi. Since Basheer has admitted in his statement the receipt of Rs. 40,000 and its later distribution on the instructions of Abdul Aziz, who was then residing in Malaysia, the Additional Director found the charge proved and levied a penalty of Rs. 5,000. The conviction and the penalty have been sustained by the Appellate Court.

6. In all these three appeals a legal plea has been raised by the learned Counsel for the appellants. According to him the raid was conducted by the Enforcement Directorate on 27th January, 1974 and the show cause notices have been issued thereafter under the provisions of the Foreign Exchange Regulation Act, 1947, when that Act stood repealed by the enactment of the Foreign Exchange Regulation Act, 1973. This contention of the learned Counsel is that on the facts of this case show cause notices can be issued only under the 1973 Act and not under the 1947 Act, and that even if the 1947 Act is applied, the statements recorded from the appellants cannot be acted upon as the statements have not been taken by the Director of Enforcement as contemplated by Section 19(E) of the said Act. The learned Counsel in support of his submission, that on the facts of this case the 1947 Act is not applicable and that action could be, taken only under the 1973 Act, refers to Section 81 of the 1973 Act, which is the repealing and saving Section. Section 81(1) repeals the Foreign Exchange Regulation Act, 1947. Section 81(2) says that notwithstanding such repeal anything done or any action taken or purported to have been done or taken under the repealed Act in so far as it is not inconsistent with the provisions of the Act, should be deemed to have been done or taken under the corresponding provisions of the Act. The submission of the learned Counsel for the appellants is that if anything has been done or action taken under the 1947 Act in respect of the foreign exchange violation by the appellants, that could be saved and that in this case everything including the raid has been done after the new Act came into force, and therefore, Section 81 will not come to the aid of the department. However, the learned Counsel, in our view, has overlooked the provisions in Section 81(3), which makes the provision of Section 6 of the General Clauses Act, 1897, with regard to the effect of repeal, applicable. Section 6 of the General Clauses Act specifically preserves the previous operation of any enactment repealed or any liability incurred under the repealed enactment. In this case, admittedly the Foreign Exchange violation has taken place before the new Act came into force and when the old Act was in force. Though the show cause notices were issued after the new Act came into force, they were in relation to an offence which had been committed when the old Act was in force. Since the offence had been committed when the old Act was in force, the appellants should be taken to have incurred a liability under the old Act for the offences committed while that Act was in operation. In such cases, on the basis of Section 6 of the General Clauses Act, the liability incurred can be enforced as if the 1973 Act had not been passed. Thus for the offence committed or the liability incurred under the old Act the provisions of the old Act can be invoked treating the new Act as not having been passed. Therefore, it should be held that the 1947 Act has rightly been invoked in this case.

7. The other contention of the learned Counsel is that if the 1947 Act is to be applicable, then under Section 19(E) it is only the Director of Enforcement who could take a statement but in this case the statements have been taken by Officers other than the Director of Enforcement and, therefore, the statements given by the appellants cannot be relied on as having any evidentiary value. But a perusal of Section 19(E) shows that the said Section constitutes the Director of Enforcement as an authority to conduct adjudication proceedings and to conduct an enquiry in connection with any violation. In this case the enquiry and the adjudication have actually been conducted by the Additional Director of Enforcement and, therefore, there is no violation of Section 19(E). Taking of a statement at the stage of the preliminary investigation preceding the adjudication proceedings cannot attract Section 19(E). Therefore, even though the statements, have been taken from the appellants; by the Officers subordinate to the Director of Enforcement that will not violate Section 19(E), as alleged by the appellants' learned Counsel. In this view of the matter, the proceedings for adjudication initiated under the old Act cannot be said to be invalid.

8. Since the finding of the initial authority as well as the Appellate Board are based on the-statements made by the appellants themselves as also the records seized from the residence of Abdul Aziz, the initial authority as well as; the Appellate Board have rightly come to the conclusion that the charges levelled against the-appellants in the show cause notices had been proved. Though the learned Counsel for the appellants refers to certain minor discrepancies in the statements of the charges as also the statements given by the appellants we do not think that there is any justification for interfering with the finding of the initial authority as well as the Appellate Board that the appellants have contravened the various provisions-of the Act referred to in the show cause notices as against them.

9. Then the further question that is canvassed before us is as to whether the penalty awarded against each of the appellants could' tie justified as reasonable and proper. As regards Abdul Aziz, the initial authority has levied an aggregate penalty of Rs. 13,300 and the Appellate Board has sustained the quantum of penalty as being reasonable. As regards Hawa Beevi, the initial authority has levied an aggregate penalty of Rs. 48,000, which has 'been reduced by the Board to Rs. 33,000. As regards Basheer the aggregate penalty levied was Rs. 10,000 and this was sustained by the Appellate Board. The learned Counsel for the appellant in C.M.A. No. 289 of 1980 contends that the levy of even the reduced penalty of Rs. 30,000 is excessive having regard to the fact that she being the wife of Abdul Aziz had no other go except to act as per his instructions, that as the wife she cannot refuse to receive the amount sent by the husband for the benefit of the family and, that though there is technical violation by her by the receipt of the amount through persons resident in India on instructions from her husband who is residing outside India, her conduct in receiving the amount should be viewed leniently. On the ground that a substantial portion of the amount received by her was utilised for the benefit of the family, the Appellate Board has already reduced the penalty from Rs. 45,000 to Rs. 30,000. We are inclined to take the view that Hawa Beevi being the wife of Abdul Aziz, she is bound to obey and carry out the instructions of her husband. Any disobedience of the instructions on her part will either result in her estrangement with the husband or the money sent by the husband being lost to the family. Therefore the said circumstance should be taken into account in determining the question whether the penalty levied is reasonable. Taking note of the said circumstance we are inclined to reduce the penalty of Rs. 30,000 as awarded by the Appellate Board to Rs. 20,000. The penalty of Rs. 10,000 levied against Basheer does not call for any interference as there are no extenuating circumstances.

10. In the result, Civil Miscellaneous: Appeal Nos. 288 and 290 of 1980 are dismissed and Civil Miscellaneous Appeal No. 289 of 1980 is partly allowed and the aggregate penalty levied on the appellant therein is reduced to Rs. 23,000. There will be no orders as to costs in any of these appeals.

11. These appeals coming on this day for being mentioned1 in the presence of Mr. M. Ravindran, advocate for the appellant in all the appeals and of Mr. K. Swamidurai, Additional Central Government Standing Counsel on behalf of the respondent in all the appeals, the Court made the following order:

12. This matter has come up for being mentioned today. The appellant in C.M.A. No. 289 of 1980 states that he may be granted some time for payment of the penalty amount. He is granted two months' time from this date for payment of penalty levied.


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