UNION OF INDIA Vs. ABDUL MOHAMED

JUDGEMENT

(1.) Union of India is in appeal against the order of the Kerala High Court confirming the decision of the Foreign Exchange Regulations Appellate board, Southern Zone, Madras (for short "the Board"). In a case arising out of a penalty proceeding under Section 23 of the Foreign Exchange regulation Act, 1947 (for short "the Act") for violation of Section 4 (1) of the act. The respondent was the owner of a car and on 18-8-1971, when the said car was intercepted by the Customs Authorities, a packet was found containing foreign exchange both US dollars and pounds sterling amounting to Rs 1,55,000. A show-cause notice was issued and the respondent appears to have given a reply that the packet was handed over to him by some person at Bombay telling that some people from a pharmaceutical firm in Kasaragod in Kerala will take it from him. But, before the said person could arrive, the customs Authorities had intercepted. The Enforcement Directorate was not satisfied with the said explanation and, in the proceedings, came to the conclusion that the respondent has violated the provisions of Section 4 (1) of the Act and, accordingly, he was levied penalty to the tune of Rs 50,000 and the entire amount was confiscated. The respondent then carried the matter in appeal to the Board. The learned Member of the Board came to the conclusion that mere recovery of a packet from the car owned by the respondent would not constitute the ingredients of offence under Section 4 (1) of the Act and, accordingly, set aside the order of penalty, though the order a directing confiscation of the foreign exchange was affirmed. The matter was then carried in appeal to the High Court under Section 54 of the Act. The high Court by the impugned judgment, affirmed the decision of the Member of the Board and came to hold that, on the facts and circumstances, it is not possible to come to the conclusion that the prosecution has been able to establish the ingredients of Section 4 (1) of the Act and as such the respondent cannot be said to have violated the provisions of Section 4 (1) of the Act, making him liable for penalty under Section 23.

(2.) Mr Nambiar, learned Senior Counsel appearing for the Union of India contended that while coming to a conclusion that the ingredients of Section 4 (1) of the Act have not been satisfied, the High Court has not taken into consideration the provisions of Section 19-J of the Act as well as Section 110 of the Evidence Act and, therefore, the said conclusion is unsustainable. The learned counsel also further urged that the very fact that the respondent had taken two different pleas would indicate the culpability of the respondent in the matter being in possession of foreign exchange in contravention of the act and, therefore, the Board as well as the High Court were not justified in interfering with the order of penalty imposed by the original authority.

(3.) Section 4 (1) of the Act reads thus: