- (1.)Through memorandum dated 12.3.1990 it was alleged, that the appellant herein A. Tajudeen, without any general or special exemption from the Reserve Bank of India, had received an amount of Rs.8,24,900/- in two installments, at the behest of Abdul Hameed, a person resident in Singapore. The first installment was allegedly received on 23.10.1989 which comprised of Rs.4,00,000/-. The remaining amount was allegedly received in the second installment on 25.10.1989. As per the memorandum the aforesaid amounts had been received from a local person, who was not an authorised dealer in foreign exchange.
(2.)Based on the factual position noticed hereinabove, the allegation against the appellant was, that he had violated Section 9(1)(b) of the Foreign Exchange Regulation Act, 1973 (hereinafter referred to as, the 1973 Act). Section 9(1)(b) aforementioned, is being extracted hereunder:-
"9. Restrictions on payments (1) Save as may be provided in, and in accordance with any general or special exemption from the provisions of this sub-section which may be granted conditionally or unconditionally by the Reserve Bank, no person in, or resident in, India shall

(a) xxx xxx xxx

(b) receive, otherwise than through an authorized dealer, any payment by order or on behalf of any person resident outside India;

Explanation For the purposes of this clause, where any person in, or resident in, India receives any payment by order or on behalf of any person resident outside India through any other person (including an authorized dealer) without a corresponding inward remittance from any place outside India, then, such person shall be deemed to have received such payment otherwise than through an authorized dealer;"

Based on the aforesaid statutory provision, and the factual position noticed hereinabove, the Enforcement Directorate initiated proceedings against the appellant under Section 50 of the 1973 Act.

(3.)Before adjudicating upon the merits of the controversy, it is essential to narrate the factual position leading to the issuance of the aforesaid memorandum dated 12.3.1990. The facts as they emerge from the pleadings, and the various orders leading to the passing of the impugned judgment rendered by the High Court of Judicature at Madras (hereinafter referred to as, the High Court) on 28.9.2006, are being chronologically narrated hereunder:-
(i) The appellant A. Tajudeen is alleged to have made a statement to the Enforcement Directorate on 20.4.1989, wherein he acknowledged, that he had received a sum of Rs.1,40,000/- from Abdul Hameed. Out of the above amount, he paid a sum of Rs.60,000/- through his shop boy Shahib, to Shahul Hameed (a relative of Abdul Hameed) of Village Pudhumadam. A further amount of Rs.20,000/- was paid to some friends of Abdul Hameed at Keelakarai, and remaining amount was retained by appellant himself. In the statement made on 20.4.1989, it was allegedly acknowledged by the appellant that Abdul Hameed was a resident of Singapore, and was running a shop located at Market Street, Singapore.

(ii) On 25.10.1989, the officers of the Enforcement Directorate raided the residential premises of the appellant, namely, no. 6, Dr. Muniappa Road, Kilpauk, Madras. At the time of the raid, which commenced at 1.00 pm, his wife T. Sahira Banu was at the residence. The appellant - A. Tajudeen, also reached his residence at 1.30 pm, whilst the officers of the Enforcement Directorate were still conducting the raid. During the course of the raid, a sum of Rs.8,24,900/- in Indian currency was recovered from under a mattress from a bedroom of the appellant's residence.

(iii) A mahazar was prepared on 25.10.1989, depicting the details of the currency recovered from the raid. The said mahazar was prepared in the presence of two independent witnesses, namely, R.M. Subramanian and Hayad Basha. The above independent witnesses also affixed their signatures on the mahazar.

(iv) At the time of the raid itself, the statement of the appellant - A. Tajudeen was recorded (on 25.10.1989). The relevant extract of the aforesaid statement of the appellant is being reproduced hereunder. It needs to be expressly noticed, that the appellant now allegedly disclosed the address of Abdul Hameed, as no. 24, Sarangoon Road, Singapore. "Today your officers searched my aforesaid house and seized a sum of Rs.8,24,900/- as set out in the Mahazar. I wanted to establish a jewellery shop in Madras. I commenced a jewellery shop in the name and style of "M/s. Banu Jewellers" on 19.10.1989 at No. 12, Ranganathan Road, Nungambakkam, Madras-34. It is a partnership business wherein my wife T. Sahira Banu is a partner. For that I sold my wife's gold jewels and also taken hand loans from my friends. The said business was started with a capital of Rs.2,20,000/- in my wife's name. The other partner Mr. S. Muthuswamy of No. 20, Indira Nagar, Adyar (I do not remember his address) has contributed to the capital a sum of Rs.30,000/-.

For expanding the said shop and for improving the business, I required about Rs.9,00,000/-. My relatives are working in Singapore and Malaysia. One Abdul Hameed from my native place is carrying on business for the past 15 years at no. 24, Sarangoon Road, Singapore. He is dealing in clothes, VCRs etc. He came down to Madras about 2 months back. At that time, he met me at my residence. I told him that a jewellery business to be commenced and that I require about Rs.9,00,000/- for the said business and to discharge certain small loans. Further I requested him to help me by providing the said money assuring to repay the same in 2 or 3 years' time with small interest during his visit to India.

He assured to contact me over phone, House telephone no. 666611 on reaching Singapore. The said Abdul Hameed, about 2 months back, called me over phone from Singapore and told me that as I requested to him, he had made arrangements for sending the sum of Rs.9,00,000/- and that he will inform me about the mode of transmitting the same. Thereafter during the 2nd week of this month, the said Abdul Hameed contacted me over phone. At that time he told me that he would send Rs.8,25,000/- in two installments being Rs.4,00,000/- and Rs.4,25,000/- and that the said money would be delivered at my house in the 3rd week or 4th week of this month through unknown person. Pursuant thereto, on 23.10.1989 around 9.00 pm an unknown person came to my house inquiring about me and gave me Rs.4,00,000/- stating that he is delivering the same on the instruction of Abdul Hameed of Singapore. Similarly another unknown person came to my house at 8.00 am on 24.10.1989 and delivered to me Rs.4,25,000/- claiming to be on the instructions of the said Singapore Abdul Hameed. I was keeping the said Rs.4,00,000/- and Rs.4,25,000/-, totaling to Rs.8,25,000/-, in my house which was received on the instruction of Abdul Hameed.

The Enforcement Officer who searched the house seized the sum of Rs.8,24,900/- which I got in the aforesaid manner. The said Abdul Hameed who is residing at Singapore is my distant relative on the paternal side. He is living with his family at Singapore. He used to come down to my native lace, Pudhumadam Village, once in a year to visit his relatives. He is aged 45 years and of the height of about 51/2 feet, fair complexion and medium built.

The person who delivered the sum of Rs.4,00,000/- on the instructions of said Abdul Hameed did not disclose his name and address. He was about 35 years old and with medium height and medium built. He was wearing pants and shirt. He left within few minutes on delivering the sum of Rs.4,00,000/- to me and hence I could not notice other identifiable marks. Similarly the other person who came on 24.10.1989 and delivered the sum of Rs.4,25,000/- on the instructions of said Abdul Hameed also did not disclose his name and address. He must be around 40 years old. He is also medium built and also medium height. Since both of them left my house within a few minutes on delivering the said sums, I could not notice their identifiable marks. I was making arrangements to export readymade garments. In respect thereof, I required the place apart from my house to meet my customers. For that I have taken on rent room no. 402, in Ganpat Hotel, Nungambakkam High Road about 4-5 months back from its owner one M.R. Prabhakaran. I am using the telephone no. 477409 in the said shop, A/C machine and fridge available in the said room. Since Export business did not suit me, I left it. The said room is in my possession."

(v) During the course of the raid conducted on 25.10.1989, the appellant - A. Tajudeen, was detained by the officers of the Enforcement Directorate. His statement was again recorded on 26.10.1989 by the Chief Enforcement Officer, whilst he was in custody. Relevant portion of his above mentioned statement is being extracted hereunder:-

"I have earlier given statement before you on 25.10.1989. In that I have disclosed that by searching my house on 25.10.1989 your officers have seized a sum of Rs.8,24,900/- which I received from unknown persons on 23.10.1989 and 25.10.1989 on the instructions of Abdul Hameed of Singapore.

This is true. On 25.10.1989, the said officers searched the jewellery shop "Banu Jewellers" in which my wife is a partner. At that time I was also there. In the said search no documents were seized. The other partner Mr. Muthusamy who is looking after the seized sum of Rs.8,24,900/- is not related to the said business. As stated by him, there is no connection between the said business and the sums seized. Today your officers searched my room at No. 402, Ganpat Hotel, Nungapakkam High Road, Madras-34 which I have taken on rent. I was there during the search. Since I have lost the key it was opened by a lock repairer. Pursuant to the said search a quotation from A.L. Textiles Mills dated 15.4.1989 was seized.

Hereinbefore, in April last, I appeared before the officers and gave a statement. Today I was shown the statement which I have given before the officers on 20.4.1989. I have stated about the receipt of a sum of Rs.1,40,000/- through my shop boy, Shahib, on the instructions of said Abdul Hameed of Singapore and out of the same, I have disbursed Rs.60,000/- on the instructions of the said Abdul Hameed to Shahul Hameed at Pudhumadam and the payment of Rs.20,000/- to a friend in Keelakarai through my shop manager, Hasan. The said Shahul Hameed mentioned in the statement dated 20.4.1989 and Abdul Hameed disclosed in the statement dated 25.10.1989 is one and the same person. In the said statement dated 24.10.1989 I have stated that Abdul Hameed is running a fancy store in Market Street in Singapore. In the statement dated 25.10.1989, I have stated that Abdul Hameed is running a shop at Sarangoon Road, Singapore. Few months back, he has shifted his business from the Market Street to Sarangoon Road. In the statement dated 20.4.1989, I have stated that I am running a textile shop "Seemati Silks" at Periyakadai Veethi, Ramanathapuram. In the statement dated 25.10.1989 I have stated that I am the proprietor of "Seemati Silks" at Salai Street. Periyakadai Veethi is used to be called as Salai Street. All that I stated in this statement are true."

(vi) Whilst the appellant - A. Tajudeen was under detention of the Enforcement Directorate, the statement of his wife T. Sahira Banu was also recorded on 26.10.1989. The same was allegedly scribed by M.J. Jaffer Sadiq, a nephew, and then signed by T. Sahira Banu. In the above statement, T. Sahira Banu, the wife of A. Tajudeen admitted the recovery of Rs.8,24,900/- by the officers of the Enforcement Directorate, from the residence of the appellant i.e., no. 6, Dr. Muniappa Road, Kilpauk, Madras. (vii) On 27.10.1989, A. Tajudeen and T. Sahira Banu retracted their earlier statement(s), alleging that the same had been recorded against their will and under the threat and compulsion of the officers of the Enforcement Directorate.