MEGHRAJ S JAIN Vs. UNION OF INDIA

JUDGEMENT

(1.) By Order-in-original dated 9.7.1996, the Special Director, Enforcement held the present appellant guilty of contravention of the provisions of Section 8(1), 8(2) and 9(1)(b) of Foreign Exchange Regulation Act, 1973 (FERA) for purchase and sale of foreign exchange unauthorisedly and imposed a penalty of Rs. 10 lakh and Rs. 75,000/- respectively. The appellant challenged that order in Appeal No. 95 of 1999 before the appellate Tribunal for Foreign Exchange. The appeal also came to be dismissed. Therefore, he has preferred this appeal before the High Court.

(2.) To State in brief, it is the contention of the Enforcement Directorate that on the basis of certain information, residential premises of one Narendra Mirani came to be searched on 11.4.1989 under Section 37 of FERA and during the search, besides the Indian currency, different foreign currencies valued at about Rs. 6 lakh were recovered. Some loose sheets were also seized from his house. Premises of certain other persons were also searched during the same investigation. Narendra Mirani stated that whenever he used to come to Bombay, he used to purchase foreign currency from M/s. Mangal Jewellers. As a result of this, the shop premises of M/s. Mangal Jewellers as well as the residence of the present appellant were searched on 11.4.1989. However, during the search no incriminating article was found. Statement of the present appellant also came to be recorded wherein he confessed that he was helping his uncle Udaylal Jain owner of M/s. Mangal Jewellers in running business in gold and silver. He was acquainted with Narendra Mirani and he also admitted that Narendra Mirani used to come to M/s. Mangal Jewellers whenever he visited Bombay and he used to purchase foreign currency worth Rs. 4 to 5 lakh on each occasion. The present appellant confessed that he himself used to purchase foreign currency from different persons and used to sell the same to Narendra Mirani. Thus, he had sold foreign currency to Narendra Mirani on 8 to 9 occasions and that the foreign currency thus sold by him to Narendra Mirani was worth Rs. 30 to 40 lakh. He also admitted that during last 10 to 12 days prior to the date of search, he had sold foreign exchange worth Rs. 5 lakh to Narendra Mirani and he also received about of Rs. 3 lakh by hawala from one Manoj. The premises of Kapoor Jewellers owned by Manoj Jain were searched but nothing was found. Manoj Jain himself was not available at the premises searched nor he made himself available afterwards. As per the confessional statement of Narendra Mirani, the foreign exchange seized from him during the search was purchased by him from the present appellant. He also stated at what rates he had purchased different currencies from the present appellant. It appears that Narendra Mirani was regularly purchasing foreign currency during his visits to India and he used to take the same abroad without any authority or permission from the Reserve Bank of India.

(3.) The learned Counsel for the appellant vehemently contended that except the retracted confessional statement of the present appellant and Narendra Mirani, there was no material to establish the charges against the present appellant. He also pointed out that the present appellant was arrested on 12.4.1989 and on 14.4.1989 he had submitted an application before the Metropolitan Magistrate retracting the alleged confessional statement. According to him, the appellant had stated in that application that the confessional statement was false and was recorded under force and coercion. Learned Counsel contended that when the confessional statement was retracted by the present appellant as well as by Narendra Mirani and when there was no recovery from the business or residential premises of the present appellant, those statement could not be acted upon.