R. Mahadevan, J. - (1.)This appeal has been filed challenging the order dated 05.05.2000 made in Appeal No. 51/98 on the file of the Foreign Exchange Regulation Appellate Board, Ministry of Law, Justice and Company Affairs, New Delhi.
(2.)The facts leading to the filing of this appeal are as under:
(i) Originally, a total penalty of Rs.31 Crores has been imposed on the appellant for contraventions of the provisions of Sections 8(1), 9(1)(a) and 14 of the Foreign Exchange Regulation Act, 1973 ("FERA" in short), by way of an adjudication order passed by the Special Director, Enforcement Directorate (Foreign Exchange Regulation Act), New Delhi, the respondent herein, in Order No.SDE(APK)/111/03/98 dated 06.02.1998. This adjudication order was passed following the issue of show-cause notice T-4/26-D/95/(SCN-VIII) dated 29.01.1996. In addition to the imposition of a penalty of Rs.31 crores, the appellant was directed to repatriate to India and offer for sale to an authorised dealer in India, the foreign exchange amounting to USD 62,61,313.00 held by him outside India together with interest and any other income that might have accrued thereon.

(ii) The said show-cause notice was issued on the allegations that a person resident in India other than an authorised dealer in foreign exchange, without the general or special permission of the Reserve Bank of India -

(a) otherwise acquired foreign exchange totalling to USD 1,04,93,313.00 from persons other than authorised dealer in foreign exchange and thereby contravening the provisions of Sec. 8(1) of the FERA;

(b) deposited the said foreign exchange amount of USD.1,04,93,313.00 in the current account No.3001-8937 of M/s.Dipper Investments Ltd., a company incorporated in the British Virgin Islands, with Barclays Bank, Sutton, United Kingdom and thereby lent the said foreign exchange to a person not being authorised dealer, thus violating Sec. 8(1) of the FERA.

(c) made payments totalling to USD 1,04,93,313.00 to the credit of Dipper Investments Limited, a person resident outside India thereby contravening the provisions of Sec. 9(1)(a) of the FERA;

(d) owned the said amount of USD 1,04,93,313.00 but failed to offer it for sale or cause it to be offered for sale to an authorised dealer in foreign exchange in India within three months from the date of his becoming owner thereof, and thereby contravening the provisions of Sec. 14 of the Act r/w Central Government's Notifications dated 15.06.1977 (GSR 839) and 06.07.1978 (GSR 996) as amended;

(e) transferred and also made payments of foreign exchange of Pound Sterling 43,23,557.00 to M/s. Meer, Care and Desai, Pound Sterling 90,000.00 to M/s. Westback Limited and Pound Sterling 23,685.90 to an undisclosed account in the Bank of Ireland thereby contravening the provisions of Sections 8(1) and 9(1)(a) of the FERA.

(iii) The adjudicating authority found the appellant guilty on all counts in respect of the alleged transactions, but the authority reduced the amount involved in the charge, i.e., USD 1,04,93,313.00 to USD 62,61,313.00 and imposed a penalty of Rs.25 crores for the first and second charges, Rs.2.5 crores each for the third and fourth charges respectively, and again a cumulative penalty of Rs.1 crore for the last charge. The reduction of the amount involved in the charge to USD 62,61,313.00 was made for the reason that the material on record does not however, categorically bring out that the other monies included in the enclosure to Barclays Bank's letter dated 04.08.1994 were also credited to Dipper Investment Account.

(iv) Being aggrieved against the order imposing penalties as stated supra, the appellant filed an appeal before the Foreign Exchange Regulation Appellate Board, New Delhi. The appellant also filed a petition for dispensing with pre-deposit of the penalty.

(3.)(i) The Foreign Exchange Regulation Appellate Board ("appellate authority" in short), upon hearing the oral submissions made on both sides, asked the parties to mutually discuss the feasibility of moving the Supreme Court, to obtain an early disposal of the appeal pending in that Court against the judgment of this Court in HCP No.240 of 1996 that had been brought to the notice of the Board by the respondent. A suggestion was also put to them that, in the alternative, they may consider the feasibility of obtaining an appropriate direction from the Supreme Court. This suggestion was made in view of the contentious stand taken by the parties as to the applicability, relevancy and effect of this Court's judgment on the issue whether the appellant, at the relevant point of time, was a person resident in India, which was also a crucial issue before the adjudicating authority. The appellate authority was of the view that the necessity of dealing with that issue has arisen in view of the fact that the findings of the judgment on the said issue have not been referred to in the order passed by the adjudicating authority, though the High Court rendered its judgment much earlier. But no action was taken by the parties as to the suggestions put forth by the appellate authority.
(ii) Before the appellate authority, it was argued on behalf of the appellant herein that all the charges framed against the appellant are 6 based on the premise that the appellant was, during the relevant point of time, a person resident in India. Therefore, it was argued that if he is not found to be a person resident in India during the relevant period, he will have to be exonerated of all the charges and consequently, the order passed by the adjudicating authority would be liable to be set aside. On the other hand, if he is found to be a person resident in India, further examination would be needed as to whether he had acquired the said foreign exchange and thereafter lent the same and also transferred it as alleged, in violation of Sec. 8(1) of the FERA and as to whether he is guilty of the other charges alleged.

(iii) In connection with the question of the above legal status, it is seen from the records that after initiation of the adjudication proceedings by issue of the show-cause notice as stated, the appellant was put under detention under the provisions of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act ("COFEPOSA Act" in short). The detention order was challenged before this Court in HCP No.240 of 1996 and this Court rendered its judgment in March 1996, in which it was held that since the adjudication proceedings had already been initiated, the detaining authority had arrived at the subjective satisfaction. There is no whisper about that observation in the order passed by the adjudicating authority, but it had come to the same conclusion on that issue as arrived at by this Court. It was argued on behalf of the respondent that the Board is bound by the findings given by the High Court in respect of the legal status of the appellant by relying on this Court's judgment as a "judicial precedent". Refuting the said submission, it was argued on behalf of the appellant that the said judgment of this Court does not constitute a bar or preclude the Board from reaching a conclusion on the legal status of the appellant different from the one arrived by this Court, as this Court, in that HCP, has not decided the question as to whether or not the appellant is a non-resident Indian and that the point raised and argued is entirely different in its nature and substance. He further argued that any decision in a proceedings where a preventive detention order has been challenged, cannot be a precedent in any adjudicating proceedings where the issue is to be decided on objective standards after following the procedure similar to that of a trial.

(iv) The appellate authority, in the facts and circumstances of the case, held that the view taken by this Court in HCP No.240 of 1996 in respect of the legal status of the appellant at the relevant point of time, is binding and hence it should not proceed to redetermine that issue. Further, the appellate authority held that the only question that remains to be examined is whether the High Court has expressed its opinion on the question of legal status of the appellant or not. It was finally observed by the Board that in the judgment made by this Court in the HCP, it was concluded by this Court that the appellant was not a non-resident Indian at the relevant point of time. Stating that the Board is bound to go by the opinion of this Court in the HCP, the appellate authority upheld the findings of the adjudicating authority in that respect. With regard to other acts and omissions attributed to the appellant, the appellate authority has examined the provisions of sections 8(1) and 9(1)(a) of the FERA and came to the conclusion that if the allegations emanate from the fact that the appellant had received 21 drafts totalling to USD 1,04,93,313.00, then the reason recorded by the adjudicating authority for reducing the said amount would not be tenable, since the adjudicating authority has not separately considered the evidence and has made no attempt to separately arrive at its findings in respect of every charge. With regard to the grounds taken by the learned counsel for the appellant i.e., judicial bias, denial of due opportunity and non-application of mind, in support of his plea that the order of the adjudicating authority has to be set aside, the appellate authority proceeded to examine the evidences and also the legal position envisaged in the judgment of the Bombay High Court in State of Maharashtra Vs. Dr. Mahesh P. Mehta, reported in 1995 Cr. L.J.453, that in respect of a situation where a person found to be in possession of any foreign exchange fails to prove that the foreign exchange came into his possession lawfully, it has to be concluded that he acquired the foreign exchange in violation of Sec. 8(1). Thereafter, the appellate authority observed that the company, i.e. Dipper Investments Limited was not floated for the purpose of conducting the business as alleged and that it was merely a shell company with no business activity at all.

(v) Finally, it was held that the appellant did acquire the foreign exchange of the draft for his own benefit as owner thereof thereby violating Sec. 8(1) of the FERA and that he temporarily lent the said foreign exchange to Barclays Bank by depositing the said amount with them thereby contravening Sec. 8(1); that he assumed the ownership of the said amount again by instructing the bank to transfer the entire amount lying to the credit of that account, in different amounts, to M/s. Meer, Care & Desai, M/s. Westback Ltd and to the Bank of Ireland, thereby contravening Sec. 8(1). It was further held that all these acts have been committed by the appellant only in his individual capacity as owner of the foreign exchange, though he used the name of the company, i.e., Dipper Investments Limited. Thus, it was held that the appellant did acquire the foreign exchange aggregating to USD 62,61,313.00 in violation of Sec. 8(1). The appellate authority held that the said foreign exchange amounting to USD 62,61,313.00 is adequately established by the evidence on record and the findings of the adjudicating authority.

(vi) As regards the charge of lending the said foreign exchange to Barclays Bank in violation of Sec. 8(1), the appellate authority has held that the documentary evidence with regard to opening of the account and crediting the said amount by way of 13 drafts, substantiates the said charge.

(vii) With regard to the charge of contravention of Sec. 8(1) on the allegation that he transferred the said foreign exchange, it was held that since there is no factual allegation in the show-cause notice in that regard to show any independent transaction, the said charge has not been made out.

(viii) Further, having considered the legal position of Sec. 9(1)(a), it was held that the charge of contravention of Sec. 9(1) on the allegation of making payment of the said foreign exchange to the credit of Dipper Investments Limited, is totally misconceived and hence the findings of contravention of Sec. 9(1) on the part of the appellant were set aside.

(ix) It was also held that since the appellant did acquire the foreign exchange of USD 62,61,313.00 in violation of Sec. 8(1), the contravention of Sec. 14 on the part of the appellant stands proved as it was not disputed that the said foreign exchange was not brought into India as required by the notification referred to in the show cause notice.

(x) As regards the charge of contravention of Sec. 8(1) on the allegation that the appellant transferred a total amount of Pound Sterling 44,37,242.90, in view of the evidence of the two letters written by the appellant on 15.08.1994 and 16.08.1994 instructing the bank to transfer the said amount and it is also corroborated by the further evidence of transcript of bank accounts which shows that the said foreign exchange was in fact transferred as per the instruction of the appellant and the account was closed, the said charge was upheld.

(xi) Further, while examining the findings on the similar charge in respect of the amount of USD 62,61,313.00, the finding of contravention of Sec. 9(1) in respect of the amount of Pound Sterling 44,37,242.90 was set aside.

(xii) Thus the appeal was dismissed, except as regards the findings of contravention of Sec. 9(1)(a) and the penalties imposed therefor. The findings in respect of contraventions of Sections 8(1) and 14 in respect of the amount of USD 62,61,313.00 were upheld and so the penalties imposed therefor. The finding of contravention of Sec. 9(1)(a) in respect of the said amount of USD 62,61,313.00 and the penalty imposed therefor were set aside. The finding of contravention of Sec. 8(1) in respect of the total amount of Pound Sterling 44,37,242.90 was upheld, but the finding of contravention of Sec. 9(1)(a) in respect of the said amount was set aside. Accordingly, the penalty to the extent of Rs.50 lakhs only for contravention of Sec. 8(1) in respect of the amount of Pound Sterling 44,37,242.90 was upheld, while the penalty of the remaining amount of Rs.50 lakhs apportioned for contravention of Sec. 9(1)(a) was set aside. Accordingly, the order of the adjudicating authority was upheld with the modification only to the effect that the appellant is exonerated of the charges of contraventions of Sec. 9(1)(a) and the consequent reduction to the extent of Rs.3 crores in the total amount of penalty imposed under the order made by the adjudicating authority.

(xiii) The appellant was directed to pay the total penalty amount of Rs.28,00,00,000.00 (Rupees Twenty Eight Crores Only) within a period of 45 days from the date of receipt of the order, in the manner indicated in the order passed by the adjudicating authority, failing which the respondent was given liberty to recover the same in accordance with law.

(xiv) Challenging the said judgment, the present appeal has been filed by the appellant.