Case Law Details
Satya @ Subendy Majumdar Vs Special Director (Appellate Tribunal Under SAFEMA Delhi)
SAFEMA Tribunal: FERA Penalty Cannot Be Sustained Without Evidence Of Role In Hawala Transaction
The Appellate Tribunal under SAFEMA allowed the appeal filed by Satya @ Subendy Majumdar and set aside the penalty imposed under the Foreign Exchange Regulation Act (FERA), 1973.
The case arose from investigations into a hawala network linked to cross-border transactions between India, Bangladesh, and Singapore, where funds generated through alleged over-invoicing of tea exports were transferred abroad through informal channels. During the investigation, authorities alleged that the appellant had received ₹2.5 lakh from his brother Nitya Majumdar and passed it to another person as part of the hawala transaction, thereby aiding and abetting violations of Sections 9(1)(b) and 9(1)(d) read with Section 64(ii) of FERA.
The appellant challenged the penalty on several grounds, including:
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Statements relied upon by authorities had been retracted.
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The relied-upon documents were not supplied during proceedings.
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The findings were based on presumptions and statements of co-accused without corroborative evidence.
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No opportunity of cross-examination was provided.
After examining the record, the Tribunal observed that the impugned order contained only a brief allegation against the appellant but lacked any detailed discussion of evidence establishing his involvement in the alleged hawala transactions.
Result:
Holding that the penalty could not be sustained without proper evaluation of evidence, the Tribunal allowed the appeal and set aside the penalty imposed on the appellant.
FULL TEXT OF THE JUDGMENT APPELLATE TRIBUNAL UNDER SAFEMA AT NEW DELHI
This Order disposes of the Appeal No. FPA-FE-23/KOL/2016 filed by Shri Satya @ Subendy Majumdar, against the Order No.SDE(ER)/YG/02/FERA/2016-17/2466 dated 16.09.2016 (Impugned Order), passed by the Special Director, Enforcement Directorate, Government of India, Kolkata Zonal Office. The Ld. Adjudicating Authority (AA) imposed the penalty of Rs. 1,00,000/-on the Appellant for the contraventions of Sections 9 (1) (b) & 9 (1) (d) read with Section 64 (ii) of the Foreign Exchange Regulation Act, 1973 (FERA), vide the Impugned Order.
2. Ld. Counsel for the Appellant stated that the Appellant had filed the reply to the Show Cause Notice (SCN) on 30.07.2004 with the handicap of not having been supplied the relied upon documents. He pleaded that the Appellant retracted the statements even while in judicial custody. Ld. Counsel stated that there was no evidence that the Appellant had received payment of Rs. 2,50,000/- from his brother Shri Nitya Majumdar under the instruction of his another brother Shri Debashis Majumdar resident of Bangladesh. Ld. Counsel stated that the penalty of Rs. 1,00,000/- on the Appellant was for his involvement in aiding and abetting the transaction of Shri Nitya Majumdar.
3. Ld. Counsel pleaded that the Ld. AA has drawn conclusions on the basis of exemption and presumption. He said that even other co-accused have retracted the statements. In any case the statement of the co-accused cannot be relied upon. He also submitted that no cross examination was granted. He cited a number of Judgments to emphasis his points. He therefore prayed for allowing the Appeal.
4. Ld. Counsel for the Respondent Directorate contended that the Impugned Order is well reasoned and speaking. Ld. Counsel read the following findings in the Impugned Order:
“I find that upon search of the person of noticee no. 1 (Deepak Debnath) and the premises of noticee no. 2, 3 and 7, on 01.05.1994, certain documents and currencies were recovered and seized. The seized documents contaired certain accounts written in code with address and telephone numbers of some persons. During the course of investigation the noticee no. 1, 2, 3, 7 and others were examined with reference to the contents of the documents seized and their statements were recorded under section 40 of FERA, 1973. I find that the noticee no. 2 in his statements recorded on 01.05.94 and 02.05.94 admitted that the noticee no.1 Deepak Debnath from whose possession the documents were seized which contained certain accounts with codes, while he was riding the scooter No. WB-01-F-1338, was his paid employee and the said scooter, owned by him, was used by his employee Deepak Debnath. Shri Nitya Majumdar (noticee No. 2) also admitted that his employee Deepak Debnath used to maintain his account books relating to hawala transactions and that the documents seized from the person of Deepak Debnath and marked ‘A’ contained the accounts and names in codes were written by Deepak Debnath as per his instructions. I find that the said seized documents contained few names in code which were decoded by Nitya Majumdar in his the said statements and he disclosed the full names and addresses with telephone numbers and modus-operandi of his hawala transactions. I find that the said noticee no. 2 admitted that he was engaged in receiving and making payments in India as per the instructions of his counte part in Bangladesh namely Debashish Majumdar and he also disclosed that during the period, i.e., in March and April, 1994 he received huge amounts from S/Shri Uma Shankar Karel, (noticee no. 10), Ganesh Prasad Soni (Noticee No. 9), Lava Mishra (Noticee No. 8), Zamanul Haque (Noticee No. 11) and Ashoke Kumar Jalan (Noticee No. 5) as per the instructions of the said Debashish Majumdar of Bangladesh. I find that the said Nitya Majumdar also disclosed that after receipt of such payments he used to make payments to certain person in India and also to one Bijay Kr. Jain, a person not authorized to deal in foreign exchange and such person after receipt of payments used to convert such Indian currency received into foreign exchange namely BD Taka at Indo Bangladesh border and after conversion, such Bangladesh taka was deposited in the bank account no. STD21,22 maintained by the said Debashish Majumdar in pseudo name being Kamal Hussain and thereafter by mode of telegraphic transfer the foreign exchange from such depository account was transferred to one Narayan Saha, a person resident of Singapore having his telephone no. 3314044 and one Gaffar Sahani, a person resident of Singapore having telephone no. 330333 and that the said Narayan Saha and Gaffar Sahani were their agents abroad.
I find that during the course of investigation searches were conducted at the office of Tea Packs Speciality and M/s. Anup India Ltd. on 04.10.1994 and certain documents were seized. Investigation revealed that one Bijay Kr. Agarwal, 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 Tea Packs Speciality under secret arrangement and understanding and in collusion with their buyer M/s. Ambee Internatinal Pte. Ltd., Singapore and that the said Bijay Kr. Agarwal used to transfer the difference of such over invoiced amounts to Singapore through hawala channel. I also find that as per the arrangement made by Shri Bijoy Kumar Agarwal, exports of tea were made by M/s. Tea Packs Speciality and also made through other third parties on account of M/s. Tea Packs Speciality to M/s. Ambee Internatinal Pte. Ltd., Singapore and to other buyers in Moscow / Egypt against orders/letter of credit secured to the said M/s. Ambee International Pte. Ltd. Singapore at a much higher price than the price of tea exported to other buyers by M/s. Tea Packs Speciality.
I find that the modus-operandi adopted was that Shri Bijoy Kumar Agarwal used to make payments to Shri Uma Shankar Karel through his agent Mahesh Bajaj who used to handover such amounts to Shri Uma Shankar Karel and Shri Karel used to handover the sums to Shri Nitya Majumdar who used to transfer the amount to Singapore en-route Bangladesh by order of Shri Narayan Saha, Singapore under arrangements through Shri Debashish Majumdar of Dhaka, Bangladesh without any general or special exemption from the Reserve Bank Of India.”
5. Ld. Counsel for the Respondent further cited the following finding against the Appellant in the Impugned Order:
“Shri Satya alias Subendu Majumdar has contravened provisions of Section 9(1)(b) and 9(1)(d) read with Section 64(ii) of FERA, 1973 for aiding and abetting the transactions of Shri Nitya Majumdar and for receiving on 14.04.1994 a total sum of Rs. 2.50 lacs from Nitya Majumdar and making payment of the said amount to Bijai Kumar Jain on the same date under instruction from a person resident outside India.”
Ld. Counsel prayed to dismiss the Appeal.
6. We have considered the rival submissions and the material on On scrutiny of the Impugned Order, we do not find that any discussion on the evidence against the Appellant. The only finding made against the Appellant in the Impugned Order is what is quoted in the preceding paragraph of this Order. However, this finding has not been justified on the basis of any discussions about the evidence which stands against the Appellant.
7. In view of the aforementioned observations, the Appeal No. FPA-FE-23/KOL/2016 filed by Shri Satya @ Subendy Majumdar is allowed and the Impugned Order qua the Appellant is set aside. Applications pending, if any, are disposed of accordingly.
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