CENTRAL GOVERNMENT Vs. ABDUL MOHAMMED

JUDGEMENT

(1.) This is an appeal under S.54 of the Foreign Exchange Regulations Act, 1973. The Union of India represented by the Director of Enforcement Directorate, Foreign Ex-change Regulation Act, is the appellant. The Director of Enforcement, FERA, took proceedings against the respondent herein, namely Abdul Mohamed, hereinafter referred to as the respondent under S.4(1) of the FERA, 1947. On 18th August, 1971 a car driven by the respondent was intercepted by officers of the Customs Preventive Unit, Kasaragod at Adakathvayal near Kasaragod and seized foreign exchange, namely drafts, travellers cheques and currencies in U.S. $ and pound sterling of the value of U.S. $ 1,040.08 and ' 4,000.3 along with some letters and foreign goods. These documents and currencies were taken into custody and a list was prepared. The respondent was taken into custody by the Customs Officers and was produced before the Judicial First Class Magistrate, Kanhangad. Subsequently he was handed over to the officers of the Enforcement Directorate for investigation. On 18th August, 1971 the respondent had given a statement before the Superintendent of Central Excise Customs preventive. He stated that he was a car driver and the seized car was owned by him. He used to take passengers from Kasaragod to Bombay and back by the car. His last visit to Bombay was on 12th August 1971 and on his return trip on 16th August 1971 at 8 a.m. an unknown person handed over to him a bundle containing the documents and foreign goods and foreign exchange which were seized by the Customs Officers to be given to a person at Modern Pharmacy, Kasaragod. He also stated that the seized goods and foreign exchange did not belong to him and that he does not know the owner or the contents of package. The Customs Preventive Officers had made enquiries and found out that there was no person at Modern Pharmacy, Kasaragod to receive these documents and goods and foreign exchange. It was thereupon that the respondent was handed over to the Enforcement Directorate. A notice was issued to him on 1st August 1972 to show cause why adjudication proceedings under S.23D of the FERA should not be held against him. In his reply, dated 18th August 1972 the respondent denied the allegations against him and stated that on his way from Bombay he carried 5 persons on hire in his car and they got down near Kasaragod Railway Station. When he reached his house he found a small package left behind. So he proceeded to the Railway Station to hand over the package to the passengers. It was at that time that his car was stopped and checked by the Customs Authorities. He also stated that he has no objection in confiscating the seized goods, since they did not belong to him. Subsequently adjudication proceedings were taken against the respondent and in those proceedings it was held that the respondent acquired the foreign currency of $ and ' shown in the list, dated 18th August 1971 without the permission of the Reserve Bank and so he contravened the provisions of S.4(1) of the FERA, 1947. Therefore under S.23(1)(a) of FERA, 1947 a penalty of Rs. 50,000 was imposed on him. The seized goods were also confiscated under S.23(IB) of the said Act. In the appeal filed by the respondent before the Foreign Exchange Regulation Appellate Board this order was set aside. The order of the Appellate Board is being challenged in this appeal.

(2.) Learned Senior Central Government Standing Counsel, Sri P. V. Madhavan Nambiar, submitted that under S.10(j) it was for the respondent to explain the circumstances under which he came into possession of the foreign exchange. Therefore it was contended that the respondent having failed to explain the circumstances, the order imposing penalty on the respondent ought to have been confirmed. It was further contended that since there is no evidence as to the alleged person who handed over the documents and foreign exchange to the respondent and as to the alleged person 10 whom these articles were to be delivered by the respondent, the Appellate Board ought to have held that the respondent 'bought or otherwise acquired' the foreign exchange without the permission of the Reserve Bank and thus violated S.4(1) of the Act. Alternatively it was contended that even assuming that the respondent was only a carrier the transaction constituted a case of bailment and the respondent was in possession of the foreign exchange as a bailee and that amounts to acquisition or possession or an interest in the foreign exchange attracting S.4(1) of the Act. According to learned Central Government Pleader the Appellate Board erred in holding that the acquisition or possession of foreign exchange by the respondent does not fall within the expression 'otherwise acquired' occurring in S.4(1) of the Act. According to learned counsel the Board misconstrued S.4(1) of the Act and also misapplied the decision reported in Kuppuswami Chettiar v. State AIR 1969 Mad. 233 .

(3.) However, learned counsel for the respondent, Sri S. A. Nagendran, submitted that the words acquire and otherwise acquire" have been considered correctly in Kuppuswami Chettiar v. State AIR 1969 Mad. 233 and P. K. Renguntawar v. Dy, Director of Enforcement 51 company cases 163. As per the latter decision the words "otherwise acquired imply positive possession and capacity for appropriation with regard to the item of property." According to learned counsel, the only evidence in these proceedings is the statement of the respondent dated 18th August 1971. Therein he only stated that the goods were handed over to him by strangers, to be handed over to some person at Modern Pharmacy at Kasaragod. He further stated that he did not examine the packages and did not know what they contained. His only obligation was to carry the goods and he was definite that the goods did not belong to him.