Case Law Details
Nitya Majumdar Vs Joint Director (Appellate Tribunal Under SAFEMA Delhi)
The Appellate Tribunal under SAFEMA partly allowed the appeal of Shri Nitya Majumdar in a long-pending FERA case involving alleged hawala transactions and unauthorized foreign exchange dealings. The case related to a complex scheme where export over-invoicing proceeds were allegedly routed through intermediaries, converted into Bangladesh currency, and ultimately transferred to Singapore without RBI approval.
The Tribunal upheld the finding of contravention under Sections 8(1), 8(2), and 9(1)(b) of FERA, noting that:
- Documentary evidence (telephone index and seized papers) and statements of co-accused established the modus operandi.
- The appellant’s role in converting Indian currency into foreign currency through informal channels was corroborated by multiple statements.
- The appellant failed to produce any evidence to rebut these findings.
The Tribunal rejected arguments based on delay and lack of documents, observing that part of the delay was attributable to the appellant and that proceedings were validly continued.
However, considering the prolonged delay in adjudication (over two decades) and overall circumstances, the Tribunal reduced the penalty from ₹2 lakh to ₹50,000, partly allowing the appeal on quantum while sustaining the violation.
FULL TEXT OF THE JUDGMENT APPELLATE TRIBUNAL UNDER SAFEMA AT NEW DELHI
This Order disposes of the Appeal No. FPA-FE-55/KOL/2015 filed by Shri Nitya Majumdar, against the Order No. 04/FERA/2015/JD(HKL) dated 25.03.2015 (Impugned Order), passed by the Joint Director, Enforcement Directorate, Government of India, Kolkata. The Ld. Adjudicating Authority (AA) imposed the penalty of Rs. 2,00,000/- on the Appellant for the contraventions of Sections 8 (1), 8 (2) and 9 (1) (b) of the Foreign Exchange Regulation Act, 1973 (FERA), vide the Impugned Order. This Tribunal vide the Order dated 18.02.2019 dispensed completely the pre-deposit of the penalty amount, in view of the penalty having been imposed after 21 years of the initiation of the case vide Memorandum No. T-4/24-C/95(SCN-I) dated 15.09.1995.
2. Ld. Counsel for the Appellant submitted that the Appellant Shri Nitya Majumdar is the son of Late Shri Anil Majumdar residing at HA-267, Salt Lake, Kolkata is a citizen of India. The Appellant came to India in the year 1965 from Bangladesh. In 1971, when Bangladesh became independent, the Appellant went back to Bangladesh but with the deteriorated situation in Bangladesh, the Appellant came back to India in 1982 and was staying in a rented premises. Thereafter, he started transport business and out of the profit of such transport business, the Appellant had purchased a land in Jangra in his name. Thereafter in 1992, he started living after completion of the premises in Plot No. HA 224. The Appellant planned to start a business under the name and style of “Majumdar Traders at Burrabazar, 52/A, Eastern Road, Kolkata”. But commencement of business from the said premises did not materialize and the business was running from the house of the Appellant at Salt Lake. The Appellant was having two employees. One of the employees was Shri Deepak Debnath. Only on the basis of apprehension, Shri Debnath was also arrested and some documents were also recovered from his Scooter and thereafter, search was conducted in the premises of M/s. Tea Packs Speciality and M/s. Anup India Ltd., as well as at the residence of one Shri Vijay Kumar Agarwal and Shri Anup Kumar Agarwal, which resulted in the seizure of two items of documents viz. Telephone Index and some loose papers consisting of export documents. The statements of Shri Vijay Kumar Agarwal and Shri Anup Kumar Agarwal were recorded on 04.10.1994 and subsequently on different occasions, their statements were recorded. Smt. Madhu Agarwal, W/o Shri Vijay Kumar Agarwal was the partner of the said firm viz. M/s. Tea Packs Speciality. Shri Lalit Dhanuka, brother of Smt. Madhu Agarwal was also the partner of the said firm. Their statements were also recorded by the Officers of the Department on 10.11.1994 and 31.10.1994. No statement was recorded from the Appellant. From the statements, the Officers of the Department were of the view that the abovementioned persons are involved in the receiving and making of payments and also dealing of foreign exchange. Apart from the statements, there is nothing on record to show the involvement of the aforesaid persons in any manner in violation of the Foreign Exchange Regulation Act, 1973. This is apart from the question of voluntariness of the statement. The Appellant was issued with a Show Cause Notice (SCN) bearing No. T-4/24-C/95(SCN-1) dated 15.09.1995. By the said SCN, the Appellant had been directed to show as to why the proceeding under Section 50 of the Foreign Exchange Regulation Act, 1973 should not be initiated against the Appellant for the alleged contravention of the provisions of Section 9 (1) (b), Sections 8 (1) and 8 (2) of the Foreign Exchange Regulation Act, 1973 for receiving payment totaling to Rs. 2.50 crores by order or on behalf of the person resident outside India without any general or special exemption from Reserve Bank of India (RBI) and also converting the said Indian currency into equivalent Bangladesh currency through his agent at Indo-Bangladesh border in an unauthorized manner other than the prevailing rate as prescribed by the Reserve Bank of India and transferring the said fund in foreign exchange to Singapore enroute Bangladesh. This is totally based on the involuntary statement in respect of seizure made prior to the date of the seizure dated 04.10.1994 in respect of which the instant SCN had been issued.
3. Ld. Counsel for the Appellant contended that this is a very old case vide Memorandum No. T-4/24-C/95(SCN-I) dated 15.09.1995, based on search and seizure made on 04.10.1994 as is appearing from the Memorandum. From the records so far available with the Appellant, it appears that Personal Hearing Notice was given on 08.09.2004, fixing the date of Personal Hearing on 29.09.2004. The Appellant vide his letter dated 22.09.2004, contended that copies of none of the documents relied on were supplied to him and in the absence of those documents, the Appellant could not submit the reply to the Show Cause Memo. The Appellant stated that though adjournment was prayed for, the Appellant’s Advocate appeared before the Authority on 29.09.2004 and requested for supply of relied upon documents as mentioned in (c) of Annexure “A” and also indicated the preliminary objection about the maintainability of the proceeding.
4. Ld. Counsel for the Appellant further contended that the Appellant did not receive any response from the Department for a long time. After about twenty years from the date of SCN dated 15.09.1995, the Appellant was intimated vide letter dated 13.02.2015 fixing the date of Personal Hearing on 26.02.2015. The Appellant submitted that this is a matter of the year 1995, and longtime has already lapsed. The Appellant was not in a position to remember anything about the case. He was also not in a position to make effective submission in the absence of the documents relating to this case since his Advocate had also become very aged and it required searching of documents in his place. The Appellant prayed for a set of documents to be supplied to him for making effective submission in the matter and also requested for adjourning the hearing fixed on 26.02.2015. The Appellant was surprisingly served with an Order (Original) No.04/FERA/ 2015/JD(HKL) dated 25.03.2015 passed by Joint Director, Directorate of Enforcement, Kolkata Regional Office. By the said Order, the Ld. Adjudicating Authority imposed a penalty of Rs. 2,00,000/- on the Appellant.
5. Ld. Counsel for the Appellant prayed for setting aside the Impugned Order since it was issued ex-parte. Ld. Counsel contended that there was no basis to proceed against the Appellant on relying upon the statement of one Shri Umashankar Karrel tendered in another proceeding. Moreover, the statements of co-accused cannot be relied upon. Ld. Counsel also contended that since the Order dated 18.02.2019 of this Tribunal waived off the pre-deposit of penalty on the grounds of delay in adjudication, the penalty imposed in the Impugned Order cannot be sustained. Ld. Counsel prayed to allow the Appeal.
6. Ld. Counsel for the Respondent Directorate stated that On the basis of specific information, the office of M/s. Tea Packs Speciality and M/s. Anup India Ltd. situated at 2 floor, 3, Wood Street, Kolkata as well as the residence of S/Shri Bijay Kumar Agarwal and Anup Kumar Agarwal situated at 6th floor, 3, Wood Street, Kolkata were searched by the officers of Enforcement Directorate, Special Unit, Kolkata on 04.10.1994 and as a result of search, two items of incriminating documents namely one Telephone Index Book Marked ‘A’ and one bunch of loose papers consisting of export documents etc. of pages 1-16 and marked ‘B’ were seized from the office along with Indian Rs. 25,000/- from the said residence. Shri Bijay Kr. Karel in his statements made before the officer of Enforcement Directorate on different dates explaining his antecedents, activities, business link with M/s. Tea Pack Speciality and also explained the seized documents. Shri Anup Agarwal in his statements dated 05.10.1994, 10.10.1994, 17.01.1995 and 01.02.1995 stating his antecedents, activities and business link with the said Shri Bijay Kr. Agarwal, his elder brother and M/s. Tea Packs Speciality.
7. Ld. Counsel for the Respondent further submitted that Shri Uma Shankar Karel, S/o Begrajji Karel of 13, Hanspukuria 1 Lane, 1 floor, Kolkata 700 007 in his statement dated 31.10.94 stated the facts and modus operandi regarding unauthorized transfer of funds from India to abroad, quantum, etc. made by Shri Bijay Kr. Agarwal in association with Shri Karel and others under secret arrangements with persons resident outside India. Shri Lalit Dhanuka of 26, P.K. Tagore Street, Kolkata, one of the partners of M/s. Tea Packs Speciality in his statement dated 10.11.1994 in presence of his Advocate stated the activities of M/s. Tea Pack Speciality, S/Shri Bijay Kr. Agarwal, Anup Kumar Agarwal and the modus operandi of their unauthorized transfer of funds from India to abroad etc. which clearly corroborated the statement made by the said Shri Uma Shankar Karel. M/s. Tea Packs Speciality were engaged both in exports and imports of tea which were looked after and controlled by Shri Bijay Kr. Agarwal with the active assistance of his younger brother Shri Anup Kumar Agarwal since its inception in 1992 although the official partners of the said firm are Smt. Madhu Agarwal, W/o Shri Bijay Kumar Agarwal and Shri Lalit Dhanuka, the brother of Smt. Madhu Agarwal.
8. Ld. Counsel for the Respondent stated that Shri Bijay Kr. Agarwal, a person resident in India who was looking after and controlling the whole business affairs of M/s. Tea Packs Speciality, was involved in over-invoicing of export price of tea in respect of exports made by M/s. Tea Packs Speciality (hereinafter referred to as TPS) under secret arrangements/understanding with their buyer M/s. Ambee International Pte. Ltd., Singapore which was mainly controlled by one Shri Dibya Ranjan Banerjee and another by Shri Santanu Das both Directors of the said company and persons resident outside India and that the said Shri Bijay Kr. Agarwal used to transfer the difference of such over-invoiced amounts to Singapore through hawala channel by order or on behalf of one Shri Narayan Shah of Singapore, a person resident outside India, without any general or special exemption from the Reserve Bank of India. Shri Bijay Kr. Agarwal, as a modus operandi of the said transactions, used to make payments in Indian currency to the said Shri Uma Shanker Karel through his (Agarwal) local agent Shri Mahesh Bajaj, who used to hand over the amount to Shri Karel. Shri Karel used to hand over those sums to Shri Nitya Mazumdar under instruction of Shri Debashis Mazumdar of Bangladesh, a person resident outside India and that the said Shri Nitya Mazumdar got the Indian currency converted into Bangladesh currency through his agents at Indo-Bangladesh Border in an unauthorized manner and sent to the account of the said Debashish Mazumder, brother of Shri Nitya Mazumdar, from where it was again remitted to Singapore by way of T.T., by order of Shri Narayan Saha of Singapore, a person resident outside India.
9. Ld. Counsel for the Respondent submitted that during the period from July and August, 1994, the said Shri Bijay Kr. Agarwal had made payments in India currency for total sum of Rs. 2.50 crores in cash to the said Shri Uma Shankar Karel @ Uma Shankar Soni through his (Agarwal) said agent Shri Mahesh Bajaj towards the difference of over-invoiced amounts of tea exported by M/s. TPS to transfer to Singapore and that the aid Shri Karel had paid the said amount to Shri Nitya Mazumdar who in turn had got converted the Indian currency into equivalent amount of Bangladesh currency and transferred the funds to Singapore en-route Bangladesh, by order or on behalf of the aid Shri Narayan Saha of Singapore, a person resident outside India other than an authorized dealer and under arrangements made with the said Shri Debashis Mazumdar of Dhaka, Bangladesh, a person resident outside India which have also been clearly admitted by Shri Karel in his statements dated 30.05.1994 and 31.10.1994 duly corroborated by the statement dated 10.11.1994 made by Shri Lalit Dhanuka, partner of M/s. TPS, without any general or special exemption from the Reserve Bank of India.
10. Ld. Counsel for the Respondent stated that it is clear from the Impugned Order that despite a number of opportunities the Appellant failed to participate in the Adjudication proceedings, as well as failed to file reply to the SCN. Ld. Counsel read the para in the Impugned Order relating to the same:
“The Noticees requested for inspection and photo copies of all the relied upon documents in respect of the above Memorandum and the same was given to Shri Anup Kr. Agarwal, authorized representative of M/s. Tea Packs Speciality. Shri Bijay Kr. Agarwal, and Smt. Madhu Agarwal vide acknowledgement dated 26.02.1996.
S/Shri Bijay Kr. Agarwal and Anup Kumar Agarwal vide their interim replies both dated 31.1.2005 filed by their Advocate Shri S.C. Ghosh stated that the allegations made against the Noticees are totally incorrect, baseless and false.
Since no reply was received from the Noticees, the case was fixed for personal hearing on different dates when Shri S.C. Ghosh, Advocate appeared and requested for cross-examination of the Noticees. The cross-examination was allowed to Shri Ghosh, Advocate on 13.04.2005 by Shri G. C. Mandal, the then Chief Enforcement Officer.
The case was previously fixed for personal hearing and the Noticees taken plea to adjourn the hearing.
Finally, the case was again fixed for personal hearing on 26.02.2015 when Shri Nitya Mazumder, Chanda Devi Dhanuka, M/o Shri Lalit Dhanuka and Shri Abdul Hamid, Advocate on behalf of Shri Uma Shanker Karel requested for adjournment of the hearing. Other noticees did not respond to the said call notice.
Further, the case was fixed personal hearing on 25.03.2015 vide this call notice dated 17.03.2015. All the notices were returned undelivered by the postal authority with the remark “addressee moved”, “no such person in this address”, “refused”, etc.
Shri Abdul Hamid, Advocate vide his letter dated 24.03.2015 also requested for adjournment the hearing on behalf of his client Shri Uma Shankar Karel.
After considering the causes shown, it was decided that the adjudication proceedings as contemplated u/s 51 of the FERA, 1973 should be held against the Noticees and accordingly, I pass the order ex-parte on the basis of evidence available on record.
11. Ld. Counsel for the Respondent pointed out that the following finding has been made in the Impugned Order against the Appellant:
“Shri Nitya Mazumdar received the said payment totaling to Rs. 2.50 crores by order or on behalf of the persons resident outside India and converted the said Indian currency through his agents at Indo-Bangladeshborder in an unauthorized manner and transferring the funds in foreign exchange to Singapore en-route Bangladesh, without any prior general or special permission of the RBI, had contravened the provisions of Sections 8(1), 8(2) and 9(1)(b) of the Act, therefore, the charge framed against him is established and I find him guilty of the charge.”
He therefore pleaded to dismiss the Appeal.
12. We have considered the rival submissions and the material on record. We find that part of the delay in adjudicating the matter is attributable to the Appellant and other Noticees, who are co-accused in the said matter. We also note that in the Tribunal Order dated 18.02.2019, it is the pre-deposit of the penalty amount, which has been dispensed with on the grounds of the delay in adjudication. However, the said Order has not allowed the Appeal at that stage and dropped the proceedings.
13. We also find from the record that the document comprising of Telephone Index Book marked A and bunch of Paper marked B were seized from the office of M/s. Tea Packs Speciality Ltd. The statements made by S/Shri Bijay Kumar Agarwal, Lalit Dhanuka and Uma Shankar Karel explained the modus operandi bringing out the role of the Appellant, and the enquiries made with the concerned branch of the Central Bank of India revealed that to make payment for over invoiced consignments of Tea exported to Singapore, Indian Currency of Rs. 2.5 Crores was transferred from Shri Agarwal. To make the said transfer the services of Shri Mahesh Bajaj and Shri Uma Shankar Karel were used. The Appellant got the said currency converted into Bangladesh Currency for transfer to Shri Debashish Mazumdar in Dhaka. These have been corroborated by the statements of Shri Karel and Shri Lalit Dhanuka. The Appellant has failed to produce any evidence to the contrary. We also observe that the Ld. AA has taken into account the delay in adjudication as a mitigating factor for imposition of penalty of Rs. 2,00,000/- on the Appellant.
14. In the present facts and circumstances of the case, the ends of justice shall be met with reduction of penalty on the Appellant to Rs. 50,000/- only.
15. In view of the aforementioned discussions and analysis, Appeal No. FPA-FE-55/KOL/2015 filed by Shri Nitya Majumdar is partly allowed. Applications pending, if any, are disposed of accordingly.
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