Case Note & Summary
The appellant, Hiralal Jain, challenged an order of adjudication passed under the Foreign Exchange Regulation Act, 1973 read with the Foreign Exchange Regulation Act, 1947, which confiscated foreign exchange found in his premises and imposed a penalty of Rs.6,370/-. The facts revealed that on 6th January 1972, officers of the Enforcement Directorate raided the appellant's premises and seized foreign exchange consisting of pound 104 and 231.91 from a cavity made behind bathroom tiles. At the time of seizure, the appellant was not present; his manager and nephew, Devilal Jain, were present. A show cause notice was issued, and adjudication proceedings were initiated. The appellant's defence was that the cavity was not made by him and he was unaware of the storage of foreign exchange. The adjudicating officer rejected this defence and ordered confiscation and penalty. The High Court, hearing the appeal, noted that the department failed to prove that the appellant was in conscious possession of the foreign exchange. There was no evidence to link the appellant to the cavity or the storage. The court held that the burden of proof was on the department, which was not discharged. Consequently, the order of confiscation and penalty could not be sustained. The appeal was allowed, and the impugned order was set aside.
Headnote
A) Foreign Exchange Law - Possession and Knowledge - Burden of Proof - Sections 8(1) and 23(1) of Foreign Exchange Regulation Act, 1947 - The appellant's premises were raided and foreign exchange was seized from a cavity behind bathroom tiles. The appellant was not present at the time of seizure and denied knowledge of the cavity or the foreign exchange. The court held that the prosecution failed to prove that the appellant was in conscious possession of the foreign exchange, as there was no evidence linking him to the cavity or the storage. The burden of proof was on the department to establish possession and knowledge, which was not discharged. (Paras 4-6) B) Foreign Exchange Law - Confiscation and Penalty - Validity - Sections 8(1) and 23(1) of Foreign Exchange Regulation Act, 1947 - The adjudicating officer ordered confiscation of the foreign exchange and imposed a penalty of Rs.6,370/-. The court held that without proof of conscious possession, the order of confiscation and penalty could not be sustained. The appeal was allowed, and the order was set aside. (Paras 6-7)
Issue of Consideration
Whether the appellant was in conscious possession of the foreign exchange found in a cavity behind bathroom tiles in his premises, and whether the confiscation and penalty were justified under the Foreign Exchange Regulation Act, 1947.
Final Decision
The appeal is allowed. The impugned order of adjudication confiscating the foreign exchange and imposing penalty is set aside.
Law Points
- Burden of proof
- Possession
- Knowledge
- Mens rea
- Confiscation
- Penalty
- Foreign Exchange Regulation Act
- 1947
- 1973
