UNION OF INDIA Vs. PREM KHANNA

JUDGEMENT

(1.) This appeal under Section 54 of the Foreign Exchange Regulation Act, 1973 (in short 'FERA') read with Section 35 of the Foreign Exchange Management Act, 1999 (for short 'FEMA') is directed against the order of the Appellate Tribunal for Foreign Exchange dated 19.5.2003 thereby dismissing a revision petition filed by the Enforcement Directorate against the order of Special Director of Enforcement (Adjudicating Authority) dated 27.3.2001 by which the Adjudicating Authority exonerated the respondent/noticee Prem Khanna of the charges under Section 8(1) of FERA and dropped the charges/proceedings against him.

(2.) Briefly, the relevant facts leading to the present appeal are that a show-cause notice No.T-4/60- B/SDE/PKA/99 dated 17th June, 1999 was issued to the respondent-Prem Khanna with the allegations that during the period 1993-1995 he had unlawfully acquired Sterling Ponds 4,22,515.00 in India in violation of Section 8(1) of FERA read with Rule 4 of Non-resident (External) Accounts Rules, 1970 read with Foreign Exchange Manual, 1993. The allegation against the respondent was that he is a Non-resident Indian having business concerns in United Kingdom. That during the period 1993-95 he visited India on several occasions and brought certain amount of foreign exchange in Sterling Ponds which he disclosed in the Currency Declaration Forms (CDFs) before the Air Custom Authorities. However, pursuant to the said CDFs, the respondent deposited the foreign exchange in Sterling Ponds in the Oriental Bank of Commerce, Bombay which was in far excess to the tune of Sterling Pond 4,22,515.00 of the amount of foreign exchange declared by him in CDFs. On inquiries undertaken by the Enforcement Department, it was revealed that the respondent had forged 8 CDFs by interpolating certain figures and words in the amount of foreign exchange. According to the Enforcement Directorate, the respondent has committed an offence under Section 8(1) of FERA by acquiring the foreign exchange in India in an unauthorised manner without the previous general or special permission of the RBI. The show cause notice also proposed to confiscate the amount of Sterling Ponds 4,22,515.00. Respondent contested the show cause notice by denying the allegations of having acquired foreign currency in India otherwise than in accordance with law or having forged the CDFs so as to inflate the figures of the foreign exchange which was actually brought by him from U.K. It was pleaded by the respondent that the foreign exchange deposited by him in the Oriental Bank of Commerce was brought by him from U.K. out of his earnings and receipts from M/s Bryan Investment Corporation, U.K. and other sources, he being engaged in the business of different kinds in United Kingdom. After a semblance of protracted hearings (word 'semblance' is used deliberately because that is precisely the question required to be considered in this appeal), the Adjudicating Authority discharged the notice and exonerated the respondent of the charge under Section 8(1) of FERA and dropped the proceedings against him primarily relying and acting on the stand of the respondent that the total amount of foreign exchange deposited by him in the Oriental Bank of Commerce was lawfully acquired foreign exchange in U.K. and brought to India and, therefore, it did not violate any of the provisions of FERA or of the Non-resident (External) Accounts Rules, 1970 or Exchange Control Manual, simultaneously holding that the material brought on record at most created some suspicion about the manner in which the huge amount of foreign exchange was brought in India and deposited in the bank.

(3.) Aggrieved by the order of the Adjudicating Authority, the Enforcement Directorate preferred a revision under Section 52(4) of FERA and Section 19(6) of FEMA before the Appellate Tribunal for Foreign Exchange for setting aside the order of Adjudicating Authority, but without any success. The Appellate Tribunal for Foreign Exchange dismissed the revision petition and upheld the order of the Adjudicating Authority holding thereby that the order passed by the Adjudicating Authority did not suffer from any error of fact or law. Aggrieved by the said decision, the Enforcement Directorate has come up in the present appeal.