Madras High Court
S. Parameshwaran, Associated Travels ... vs Deputy Director Of Enforcement on 11 April, 1997
Equivalent citations: [1998]94COMPCAS118(MAD)
Author: Doraiswamy Raju
Bench: Doraiswamy Raju
JUDGMENT
Raju J.
1. The above appeals may be dealt with together for the reason that they have been dealt with by the authorities below likewise and on account of the fact that they involve the same parties arising out of one and the same transaction. The authorities below, Deputy Director of Enforcement, Southern Zone, Sastri Bhavan, Madras, in his order dated June 23, 1996, as also the Foreign Exchange Regulation Appellate Board in its order dated June 26, 1992, have dealt with the factual details and it is unnecessary for us to advert to all those details having regard to the narrow controversy raised before us and involved in these appeals.
2. Under the impugned orders, a penalty of Rs. 5,000 was imposed on Associated Travels (P.) Ltd., the appellant in C.M.A. No. 1211 of 1993, for the alleged contravention of section 9(1)(b) of the Foreign Exchange Regulation Act, 1973 (hereinafter referred to as "the Act"), and the levy of penalty of Rs. 5,000 was imposed under section 9(1)(a) of the Foreign Exchange Regulation Act, 1973, on S. Parameshwaran, the appellant in C.M.A. No. 1210 of 1993, and the confiscation of Rs. 99,800 under section 63 of the Foreign Exchange Regulation Act, 1973. The sum and substance as also the gravamen of the charges, which gave rise to the adjudication proceedings as also the appeal and the order of the Appellate Board are that when the premises of Associated Travel Agency (P.) Ltd. were searched on August 13, 1984, pursuant to information that the company has received a payment of Rs. 1,00,000 under the instructions of a person resident outside India, Indian currency of Rs. 99,800 and certain other documents were seized and the materials gathered and the statements obtained disclosed that one Hameed Abdul Kader of Singapore mortgaged his property when he was in Madras for a sum of Rs. 1,00,000 and Parameshwaran paid him the sum of Rs. 1,00,000 on July 27, 1983, and the said amount was repaid by Hameed Abdul Kader from Singapore on August 13, 1984. This constituted violation alleged under section 9(1)(a) and (b) of the Foreign Exchange Regulation Act, 1973. The case of the appellants that there had been no contravention as alleged came to be rejected on the sole ground and material that the visiting card of Hameed Abdul Kader, which disclosed that he was running a business in Singapore and having regard to the information contained in such visiting card which was considered sufficient to treat Hameed Abdul Kader as a person resident outside India. The claim of the appellants to the contra that the said Hameed Abdul Kader was not a non-resident and the facts urged by the appellants in respect of such plea did not have the approval or acceptance of the authorities below including the Appellate Board. Hence, the above appeals.
3. Though several grounds have been raised in the memoranda of appeals, Mr. K. Asokan, learned senior counsel appearing for the appellants, projected in the forefront of the plea that the materials on record are not enough to treat the said Hameed Abdul Kader as a person resident outside India and therefore, the alleged violation of section 9(1)(a) or 9(1)(b) of the Foreign Exchange Regulation Act has not been made out and consequently, the impugned proceedings are liable to be set aside. In elaborating this aspect of the matter, learned senior counsel for the appellants contended that except the visiting card, there is no clinching material and, that, if the authorities had the information about the person who is said to be a non-resident, by name Hameed Abdul Kader, nothing precluded the Department from issuing notice to him or getting his statement or to ascertain the correct facts and in the absence of any such attempts to gather materials involving directly Hameed Abdul Kader, which could go to show that he was a person resident outside India, the exercise undertaken by the Department is without the authority of law and the appellants could not have been condemned for the alleged violation of the provisions of the Act.
4. Per contra, Mr. S. Veeraraghavan, learned Additional Central Government standing counsel, appearing for the respondent-Department adopted the reasons assigned concurrently by both the authorities below and contended that the visiting card sufficiently disclosed the required basis and relevant material to safely treat Hameed Abdul Kader as a person resident outside India, though he may be an Indian citizen and that, therefore, no exception could be taken to the concurrent findings recorded by both the authorities below and the orders of the authorities below including the Appellate Board do not call for any interference in out hands.
5. We have carefully considered the submissions of learned counsel appearing on either side. Section 9(1)(a) and 9(1)(b) of the Foreign Exchange Regulation Act, 1973, read as follows :
"Save as may be provided in and in accordance with any general or special exemption from the provisions of this sub-section on which may be granted conditionally or unconditionally by the Reserve Bank, no person, in, or resident in India, shall . . . . .
(a) make any payment to or for the credit of any person resident outside India;
(b) receive, otherwise than through an authorised dealer, any payment by order or on behalf of any person resident outside India . . . . . ."
"Person resident outside India" is defined in section 2(q) as meaning a person who is not resident in India and 'person resident in India' is defined in section 2(p) and so far as it is relevant for our purpose is as follows :
"(1) a citizen of India, who has, at any time after the 25th day of March, 1947, been staying in India but does not include a citizen of India who has gone out of, or stays outside India, in either case . . .
(a) for or on taking up employment outside India, or
(b) for carrying on outside India a business or vocation outside India, or
(c) for any other purpose, in such circumstances as would indicate his intention to stay outside India for an uncertain period . . . . . ."
6. From the above, it could be seen that a person resident in India cannot be, at the same time, a person, resident outside India and "person outside India" has been defined in a negative and exclusionary manner as one who is not a person resident in India. A citizen of India is one who is at any time after March 25, 1947, been staying in India, but it does not include a citizen of India, who has gone out of, or stays outside India, in either case for or on taking up employment outside India, or for carrying on outside India, a business or vocation outside India, or for any other purpose, in such circumstances as would indicate his intention to stay outside India for an uncertain period.
7. Consequently, if Hameed Abdul Kader, who is said to be a citizen of India, unless shown or proved to have gone out or to be staying outside India for or on taking up employment outside India, or for carrying on outside India, a business or vocation outside India, or for any other purpose, in such circumstances as would indicate his intention to stay outside India for an uncertain period, he cannot be dubbed as a person resident outside India. The question, though is a question of law, would depend very much on the proof of necessary facts which go as inevitable ingredients to prove the status of a person before he could be attributed with the status of being a person resident outside India, particularly in a case, where he is indisputably a citizen of India.
8. Learned counsel appearing on either side invited our attention elaborately to the relevant findings and the manner of consideration adopted by the authority below as also the Appellate Board, and placed strong reliance on the materials adverted thereto, of which, as noticed earlier, strong reliance has been placed on the information contained in the visiting card of Hameed Abdul Kader to be sufficient to prove that the said person is carrying on business or vocation outside India. We have bestowed our careful consideration to the materials on record. In traversing the claim on behalf of learned counsel for the appellants by learned senior counsel that nothing precluded the authorities exercising powers under the Act to examine the said Hameed Abdul Kader or to examine such person to give evidence or produce documents and this not having been done in this case, the authorities below could not have adjudicated on the status of such person so as to condemn as a consequence thereof the appellants.
9. Learned Additional Central Government standing counsel contended that the said person being a resident outside India, the authorities could not have such powers. We are afraid, we cannot countenance such plea. Even if the authorities could not directly exercise such powers, nothing precludes the authorities in availing of the assistance of the other Departments, or if need be the competent court to ensure the presence of such person, or to interrogate and investigate into the matter by ascertaining the real facts regarding the said Hameed Abdul Kader and in the absence of any such effort, the authorities cannot absolve themselves of their liability to prove properly the fact, that a person who is otherwise a citizen of India having his activities in this country also, has ceased to be a person resident in India in terms of the definition contained in section 2(p) of the Foreign Exchange Regulation Act and thereby became a person outside India as defined in section 2(q) of the Foreign Exchange Regulation Act. Since the proof of the charges against the appellants and the order of adjudication involve serious consequences, the necessary ingredients on the basis of which the appellants could be condemned, namely, that the person to whom the amount of Rs. 1,00,000 was paid and the person who repaid the said amount, is a person resident outside India, the charge against the appellants could not be claimed to have been proved by any legally acceptable evidence. In the absence of any concrete materials or legally acceptable evidence, to prove the basic and essential fact that Hameed Abdul Kader was at the relevant point of time, a resident outside India, there was no scope for condemning the appellants as being guilty of the violations alleged. In the light of our conclusion, that the visiting card by itself is no sufficient proof to decide the status of the said Hameed Abdul Kader to be resident outside India at the relevant point of time, we have to come to the only conclusion that the charges of alleged violation of sections 9(1)(a) and 9(1)(b) of the Foreign Exchange Regulation Act have not been substantiated against the appellants. The orders of the authorities below, therefore, suffer from serious infirmity in law and are liable to be and are hereby set aside. The appeals are allowed. There will be no order as to costs.