S.K. MITTAL Vs. DIRECTOR, ENFORCEMENT DIRECTORATE

JUDGEMENT

(1.) This appeal is directed against the order dated 24th December 2010 passed by the Appellate Tribunal for Foreign Exchange ('AT') in Appeal No.283 of 2009 confirming the adjudication order ('AO') dated 24th March 2004 finding the Appellant guilty of the offence under Sections 6(4), 6(5) 8(1), 9(1)(a) and 9(1)(f)(i) of Foreign Exchange Regulation Act, 1973 ('FERA') and imposing a penalty of Rs. 5,00,00,000 on him.

(2.) According to the Enforcement Directorate ('ED'), Mr. Subhash Sethi, a resident of 121, Oakdale Drive, Heald Green, Cheshire, SK 3 SN UK, was maintaining a Non Resident External ('NRE') Account No. 320169733 with the American Express Bank Ltd. ('AMEX Bank') at Connaught Place, New Delhi. The Mandatee to the said Account was Mr. Umesh Mendiratta. It appears that on 18th May 1995, the ED, in the course of its investigation, recorded the statement of Mr. Mendiratta under Section 40 FERA in which he stated that he was an accounts clerk in the chartered accountant firm of Suresh K. Mittal & Co. and drawing a salary of Rs. 3,000 per month. He stated that although he did not know Mr. Subhash Sethi, he had been instructed by his employer, Mr. S.K. Mittal, the Appellant herein, to become the Mandatee of the said account. He claimed to have signed the account opening form and the mandate card. He stated that he had to fill-up the vouchers and sign the cheques and issue slips for pay orders ('POs'), whenever instructed by the Appellant. He was asked to explain the deposit of Rs. 59,31,000 in the said account in the foreign currency. He stated that, after seeing the original deposit slips, some of the slips were in his handwriting and some were in the handwriting of the Appellant. When asked why the POs were issued to various persons, he explained that as certain persons wanted to get their black money converted into white, the Appellant used to sell the POs at a premium of 10% to 14%. The Appellant used to collect the Indian currency in advance and thereafter got the POs issued from the account of Mr. Sethi and hand over the same to the persons concerned.

(3.) The ED recorded the statement of the Appellant on 25th May 1995. He claimed to have met Mr. Sethi when he (Mr. Sethi) opened the NRE account with AMEX Bank. When asked specifically about operating the NRE Account for "depositing the cash foreign currency in the said account", he replied "I do not remember. This is very vague question." The Appellant was shown the original credit slips for the deposit of foreign currency but he denied that they were in his handwriting. He stated that he and his wife received the NRE gifts from Mr. Sethi. He could not, however, provide the details since the files had been seized by the ED. When asked to write certain names in capital letters, he declined to do so.