Bombay High Court
Ranjan K. Shroff vs Union Of India on 26 June, 2025
Author: M. S. Sonak
Bench: M.S. Sonak
2025:BHC-AS:25376-DB
FERAAPEAL-57-2006+J-(F).DOCX
Amol
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
[
FERA APPEAL NO. 57 OF 2006
Neha Shroff,
Indian Inhabitant,
R/o. 55, Presidency Society, N. S. Road,
7, JVPD Scheme, Mumbai - 400 049. ... Appellant
Versus
Union of India
Through Enforcement Directorate
FERA, Government of India
Mumbai - 400 001. ... Respondent
AMOL
PREMNATH WITH
JADHAV FERA APPEAL NO. 58 OF 2006
Digitally signed by
AMOL PREMNATH
JADHAV Ranjan K. Shroff,
Date: 2025.06.26
16:47:43 +0530 Indian Inhabitant,
R/o. 55, Presidency Society, N. S. Road,
7, JVPD Scheme, Mumbai - 400 049. ... Appellant
Versus
Union of India
Through Enforcement Directorate
FERA, Government of India
Mumbai - 400 001. ... Respondent
WITH
FERA APPEAL NO. 59 OF 2006
Ranjan K. Shroff,
Indian Inhabitant,
R/o. 55, Presidency Society, N. S. Road,
7, JVPD Scheme, Mumbai - 400 049. ... Appellant
Versus
Union of India
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Through Enforcement Directorate
FERA, Government of India
Mumbai - 400 001. ... Respondent
WITH
FERA APPEAL NO. 60 OF 2006
Sujay Trading Corporation P Limited
a private limited company, having its
office at Mahendra Chambers, 94, Juhu
Tara Road, Juhu, Mumbai - 400 049. ... Appellant
Versus
Union of India
Through Enforcement Directorate
FERA, Government of India
Mumbai - 400 001. ... Respondent
WITH
FERA APPEAL NO. 61 OF 2006
Kiran Shroff
Indian Inhabitant,
R/o. 55, Presidency Society, N. S. Road,
7, JVPD Scheme, Mumbai - 400 049. ... Appellant
Versus
Union of India
Through Enforcement Directorate
FERA, Government of India
Mumbai - 400 001. ... Respondent
WITH
FERA APPEAL NO. 62 OF 2006
Kanan Shroff
Indian Inhabitant,
R/o. 55, Presidency Society, N. S. Road,
7, JVPD Scheme, Mumbai - 400 049. ... Appellant
Versus
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Union of India
Through Enforcement Directorate
FERA, Government of India
Mumbai - 400 001. ... Respondent
______________________________________________________
Mr B. Seshagopalan a/w Ms Lorna Carvalho, for Appellant/s.
Mr Vinit Jain a/w Ms Neeta Masurkar, for the Respondent-UOI
in FERA/57/2006.
Ms Neeta Masurkar for Respondent-UOI in FERA/58/2006
and FERA/59/2006.
Mr Y. R. Mishra a/w Ms Neeta Masurkar, for Respondent-UOI
in FERA/60/2006, FERA/61/2006 and FERA/62/2006.
______________________________________________________
CORAM : M.S. Sonak &
Jitendra Jain, JJ.
RESERVED ON : 11 JUNE 2025
PRONOUNCED ON : 26 JUNE 2025
JUDGMENT:
(Per M. S. Sonak, J.)
1. Heard learned Counsel for the parties.
2. All these Appeals challenge the common order dated 30
October 2000 made by the Special Director, Enforcement
Directorate (ED) and the common order dated 18 November
2005, made by the Appellate Tribunal for foreign exchange
(Tribunal) dismissing the Appeals instituted by the Appellants
herein against the Special Director’s common order dated 30
October 2000. The two orders shall hereafter be referred to as
the impugned orders.
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3. These Appeals were admitted by a common order dated
20 September 2006 on the following questions of law: –
“(1) Whether the provisions of Section 9(i)(a) are
attracted only when the person resident in India has made
any payment to or for the credit of any person outside
India provided the same is made in accordance with the
general and special exemption from the provisions of that
Section which may be granted conditionally or
unconditionally by the Reserve Bank of India ?
(2) Whether the penalty imposed was without any basis,
more particularly as it was in absence by the Respondents
to show loss of foreign exchange or any contumacious
conduct of the Appellant ?
(3) Whether illustration (g) under section 114 of the
Evidence Act would be applicable to the case of the
Appellants more particularly in view of the fact that the
complete record of the travel of the Appellants daughters
during the period of the show cause Notice, including the
Visas issued to them by the authorities of the United States
of America were placed before the Appellate Tribunal ?
(4) Whether provisions of section 9(i)(a), 9(i)(e) read
with Section 68(i) of the Foreign Exchange Regulations Act
would be applicable to the person resident in India going
abroad on student visa ?
(5) Whether the terms ‘person resident in India’ ought
to be interpreted as provided for in Clause 1.28(ii) A of
Chapter I of Exchange Control Manual, 1993 ?
(6) Whether Section 114 of the Indian Evidence Act
requires to be invoked whilst going into the question of
principles of construction of Section 2(p) & (q) of the
Foreign Exchange Regulations Act ?”
4. FERA Appeal Nos. 57 of 2006, 61 of 2006, and 62 of
2006 have been instituted by Neha Shroff, Kiran Shroff, and
Kanan Shroff (the Shroff daughters), daughters of the late
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Kishor D. Shroff and his wife, Smt. Ranjan K Shroff. The
impugned orders impose a penalty of Rs. 41 Lakhs on each of
the Shroff daughters.
5. FERA Appeal Nos. 58 of 2006 and 59 of 2006 are
instituted by Smt. Ranjan K Shroff, in her capacity as the legal
representative of late Kishor D Shroff, to challenge the
impugned orders to the extent they impose a penalty of Rs.
25,80,000/- on late Kishor D Shroff.
6. FERA Appeal No. 60 of 2006 is instituted by Sujay
Trading Corporation Pvt Ltd, challenging the impugned orders
to the extent they impose a penalty of Rs. 8,50,000/- upon the
Appellant Company.
7. The common impugned orders, dated 30 October 2000
and 18 November 2005, were also concerned with Ditco
Securities Pvt Ltd, Dharmesh P. Shet, and Bhavesh P. Shah,
who had instituted FERA Appeal Nos. 778 of 2000, 779 of
2000 and 780 of 2000 before the Tribunal. However, there is
no clarity whether these three parties preferred any Appeals
and, if so, the status of such Appeals. For the present,
therefore, we are concerned with the Appeals preferred by the
Shroff daughters, their mother, Smt. Ranjan K Shroff (as legal
representative of Kishor D Shroff) and M/s. Sujay Trading
Corporation Pvt Ltd, of which the parents of the Shroff
daughters, namely the late Kishor and Smt. Ranjan were
directors.
8. The core issue involved in all these Appeals is whether
the Shroff daughters could be regarded as “person resident in
India” as defined under Section 2(p) of the Foreign Exchange
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Regulation Act, 1973 (FERA) as contended by them or
whether they were “person resident outside India” as defined
under Section 2(q) of FERA for the relevant period referred to
in the show cause notices and the impugned orders. The issue
of whether there was a violation of the FERA provisions will
depend on the determination of this core issue.
9. The Special Director, ED and the Tribunal have
concurrently held that the Shroff daughters were not “persons
resident in India” as defined under Section 2(p) of the FERA.
Instead, the Special Director and the Tribunal have
concurrently held that the Shroff daughters were “persons
resident outside India” as defined under Section 2(q) of the
FERA. Accordingly, the Special Director, ED and the Tribunal
have concluded that the financial transactions in which the
Appellants were involved concerning the sale and purchase of
shares of M/s. Ditco Securities Pvt Ltd, an Indian company,
without the prior approval of the Reserve Bank of India (RBI),
constituted a violation of the provisions of the FERA. Based on
such findings and conclusions, the impugned orders have
imposed penalties upon the Appellants in FERA Appeal Nos.
57 of 2006, 60 of 2006, 61 of 2006, and 62 of 2006, and
Kishor Shroff, upon whose demise, his wife, Ranjan Shroff,
has instituted FERA Appeal Nos. 58 of 2006 and 59 of 2006.
10. As such, learned Counsel for the parties agreed that
substantially common issues of law and fact arise in all these
Appeals and therefore, they could be disposed of by a
common judgment and order. Even otherwise, these Appeals
are directed against the impugned common orders dated 30
October 2000 and 18 November 2005 made by the Special
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Director, ED and the Tribunal. Since the core issue in all these
Appeals is the same, the learned Counsel for the parties
agreed that FERA Appeal No. 57 of 2006 instituted by one of
the Shroff daughters, i.e., Neha Shroff, may be treated as the
lead Appeal. Incidentally, considering the substantially
common issues of law and fact, the Coordinate Bench of this
Court admitted all these Appeals by a common order dated 20
September 2006. Thus, even the questions of law formulated
in all these Appeals are the same.
11. In FERA Appeal No. 57 of 2006, the allegation in the
show cause notice dated 18 November 1999 was that in the
year 1995, the Appellant who was alleged to be a person
resident outside India purchased 5,62,600 shares of M/s Ditco
Securities Pvt Ltd, a company based in Mumbai at the rate of
Rs. 30/- per share for a total amount of Rs. 1,68,78,000/-
without obtaining any permission from the Reserve Bank of
India (RBI) thereby contravening the provisions of the FERA.
Similar allegations were made in the show-cause notices
issued to the other two Shroff daughters, namely Kiran Shroff
and Kanan Shroff.
12. The Shroff daughters denied the allegations in the show
cause notices. They contended that they were not persons
resident outside India but were students pursuing their higher
studies in the United States of America (USA). The Appellants
pointed out that they were in the USA on a visitor or student
visa. Therefore, there was no necessity to obtain permission
from the RBI for the purchase of shares in an Indian company.
Primarily based on this defence, the Appellants submitted that
there was no violation of any of the provisions of FERA.
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13. The Appellants also referred to the founding of the
“Kanan Trust” in or around 1975. They pointed out that the
beneficiaries of this trust were the Shroff sisters, i.e. Neha,
Kanan and Kiran. They pointed out that the investments in
this trust were funded through the sale of shares and/or other
assets and/or the withdrawal of sums from the three sisters’
accounts. In the event of any shortfall or an emergent
situation, funds were transferred through temporary loans by
one of the parents, Kishor Shroff (now deceased) or Ranjan
Shroff. During the relevant period referred to in the show
cause notice, the Appellants submitted that there was a
shortage of funds; therefore, their parents advanced
temporary loans through a private limited company, M/S
Sujay Trading Co., in which the parents were directors.
Investigations were conducted, which involved searching the
residential and business premises of the Appellants’ parents
and their chartered accountant, as well as the business
premises of certain other individuals, including employees of
M/S Sujay Trading Corporation Pvt Ltd. Their statements
were recorded under the provisions of the FERA. The
adjudication proceedings followed.
14. The Special Director, ED and the Tribunal, by the
impugned common orders, concurrently rejected the
Appellants’ contentions. Hence, these Appeals, on the
questions of law referred to above.
15. Mr. B Seshagopalan, the learned counsel for the
Appellants, submitted that the Special Director and the
Tribunal had misconstrued the provisions of Section 2(p) and
2(q) of the FERA. Also, he submitted that the provisions of
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which contravention was alleged have also been
misconstrued. Accordingly, he submitted that the impugned
orders warrant interference.
16. Mr. Seshagopalan submitted that the record shows that
the Shroff daughters were citizens of India and were in the
USA either on a student visa or a visitor’s visa. The evidence
regarding their educational pursuits was presented to the
authorities. Income Tax and Wealth Tax were filed in India. B-
1/B-2 Visas held by the Shroff daughters did not permit them
to settle permanently in the USA. This crucial aspect was
ignored. In short, Mr. B Seshagopalan submitted that the
material on record established that the Shroff daughters were
persons resident in India, and therefore, there was no
question of even alleging any contravention of FERA. Mr.
Seshagopalan relied on RBI vs. Jacqueline Chandani1 to
support his arguments.
17. Mr. Seshagopalan submitted that the presumptions
under Section 114 of the Evidence Act were not drawn or
appreciated by the Special Director and the Tribunal. He
submitted that unnecessarily, there was a reversal of the
burden of proof. Based on these contentions, he submitted
that there was clear perversity in the record findings that the
Shroff daughters were not persons resident in India, as
defined under Section 2(p) of the FERA.
18. Without prejudice, Mr. Seshagopalan submitted that the
provisions of Sections 9, 19, 29 or 68 of the FERA were not at
all attracted in the context of the transactions alleged. He
submitted that none of the ingredients of these provisions
1
(1996) 86 Com.Cas. 231 (Kar.)
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were fulfilled, and therefore, the imposition of penalties for
the alleged contravention of these provisions was uncalled for.
He submitted that the impugned orders warrant interference
on these grounds as well.
19. Mr. Seshagopalan, without further prejudice, submitted
that this was not a case where there was any loss of any
foreign exchange or that the conduct of any of the Appellants
was recalcitrant or contumacious. He submitted that in the
absence of any such findings, no penalties should have been
imposed. In any event, the fines imposed are grossly
disproportionate.
20. For all the above reasons, Mr. Seshagopalan submitted
that the impugned orders may be quashed and set aside.
21. Mr. Vinit Jain, Ms. Neeta Masurkar and Mr. Y.R.Mishra,
the learned counsel for the Respondents, defended the
impugned orders based on the reasoning contained therein.
They submitted that these were the matters where the Special
Director and the Tribunal, upon detailed evaluation of the
material/evidence on record, had reached concurrent findings
of fact. They submitted that there was no perversity in
reaching such conclusions. Therefore, such findings of fact
may not be interfered with in these Appeals, which are
restricted only to questions of law as provided under Section
54 of the FERA.
22. The learned counsel for the Respondents pointed out
that even the provisions of Section 2(p) and 2(q) of the FERA
were quite clear and admitted of no ambiguities. They
submitted that these provisions were applied to the facts on
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record, and the finding was reached that the Shroff daughters
were not persons resident in India. Such a situation gives rise
to no question of law, and therefore, these Appeals deserve to
be dismissed.
23. The learned counsel for the Respondents referred to
voluminous material on record, which the Special Director
and the Tribunal considered. They submitted that given this
material, the conclusion about the Shroff daughters being
persons not resident in India was correctly reached, and such
a conclusion warrants no interference.
24. The learned counsel for the Respondents submitted that
there is no question of disproportionality involved, and such a
question was not even formulated at the time of admission of
these Appeals. They submitted that the Appellants were
involved in economic offences and the penalties imposed are
not excessive but proportionate. They pointed out that the
Appellants had raised patently false defenses and had
contravened the provisions of FERA with impunity. Therefore,
considering all these aspects, there was no disproportionality
involved in the penalties imposed on the Appellants.
25. The learned counsel for the Respondents also relied
upon certain decisions which shall be considered during this
judgment and order. Based upon the above submissions, the
learned counsel for the Respondents urged the dismissal of all
these Appeals.
26. The rival contentions now fall for our determination.
27. As noted earlier, even though several questions of law
were formulated at the time of admission of these Appeals,
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the core question in these Appeals is whether the Shroff
daughters, at the relevant time, could be regarded as persons
resident in India as defined under Section 2(p) of the FERA or,
whether they were persons resident outside India as defined
under Section 2(q) of the FERA.
28. Section 2(p) of the FERA reads as follows:-
(p) “person resident in India” means−
(i) a citizen of India, who has, at any time after
the 25th day of March, 1947, been staying in
India, but does not include a citizen of India who
has gone out of, or stays outside, India, in either
case−
(a) for or on taking up employment outside India,
or
(b) for carrying on outside India a business or
vocation outside India, or
(c) for any other purpose, in such circumstances
as would indicate his intention to stay outside
India for an uncertain period;
(ii) a citizen of India, who having ceased by
virtue of paragraph (a) or paragraph (b) or
paragraph (c) of sub-clause (i) to be resident in
India, returns to, or stays in, India, in either case−
(a) for on taking up employment in India, or
(b) for carrying on in India a business or vocation
in India, or
(c) for any other purpose, in such circumstances
as would indicate his intention to stay in India for
an uncertain period;
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(iii) a person, not being a citizen of India, who has
come to, or stays in, India, in either case−
(a) for or on taking up employment in India; or
(b) for carrying on in India a business or vocation
in India, or
(c) for staying with his or her spouse, such spouse
being a person resident in India, or
(d) for any other purpose, in such circumstances
as would indicate his intention to stay in India for
an uncertain period;
(iv) a citizen of India, who, not having stayed in
India at any time after the 25th day of March,
1947, comes to India for any of the purpose
referred to in paragraphs (a), (b) and (c) of sub-
clause (iii) or for the purpose and in the
circumstances referred to in paragraph (d) of that
sub-clause or having come to India stays in India
for any such purpose and in such circumstances.
Explanation.−A person, who has, by reason
only of paragraph (a) or paragraph (b) or
paragraph (d) of sub-clause (iii), been resident in
India, shall, during any period in which he is
outside India, be deemed to be not resident in
India;
29. Section 2(q) of the FERA reads as follows:-
(q) “person resident outside India” means a
person who is not resident in India;”
30. Thus, it is necessary to determine whether at the
relevant time, the Shroff daughters were persons resident in
India as defined under Section 2(p) of the FERA. If the
evidence on record is sufficient to hold that the Shroff’s
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daughters were persons resident in India at the relevant time,
then, automatically, they would be excluded from the
definition of “person resident outside India” under Section
2(q) of the FERA.
31. Ordinarily, one of the crucial tests for determining the
question of residence is whether the Appellants had an
animus manendi, or an intention to stay for an indefinite
period at one place. If the person had such an intention, he
could be said to reside there. ( K. N. Mehta V. The Director of
Enforcement2). This position is reflected in Section 2 (p) of
FERA, which defines “person resident in India” to mean a
citizen of India, who has, at any time after the 25 th day of
March 1947, been staying in India, but does not include a
citizen of India who has gone out of, or stays outside, India, in
either case for or on taking up of employment outside, or
India, or for carrying on outside India a business or vocation
outside India, or for any other purpose, in such circumstances
as would indicate his intention to stay outside India for an
uncertain period.
32. The Shroff daughters contend that they were, at the
relevant time, citizens of India and their residence in the USA
was not for any employment or business purposes. They
further contend that they were in the USA only for
educational purposes on a student/tourist visa, and therefore,
no circumstances existed as would indicate their intention to
stay outside India for an uncertain period. Accordingly, the
Shroff daughters contended that they were persons resident in
India as defined under Section 2(p) of FERA. They contend
2
1982 Cri. L.J. 1916
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that if this were so, there was no question of any violation of
the provisions of the FERA.
33. At the relevant time, there is no dispute that the Shroff
daughters were residing in the USA. There is no clear
evidence suggesting that they were living in the USA for
employment, business, or vocational purposes. Therefore, the
question that arises for determination is whether the Shroff
daughters were residing in the USA for any other purpose, in
circumstances that would indicate their intention to stay
outside India for an uncertain period.
34. The Special Director in the impugned order dated 30
October 2000, has inter alia referred to certain statements
recorded under Section 40 of the FERA. Kishore Shroff, the
father of the Shroff daughters (now deceased), in his
statement recorded on 17 December 1997, admitted that all
three of his daughters, namely Kanan, Neha and Kiran, are
staying in the USA; that Kanan and Neha are married, and the
younger daughter Kiran is studying in the USA. He admitted
that Neha was married to Sanjay Bagai, a practising Chartered
Accountant having his own consultancy firm in USA known as
ZEIGRST Corporation Inc., San Francisco, USA.
35. In the replies filed to the show cause notice, it was
admitted that Neha left for the USA in or about 1986 and was
residing in the USA in 1996-1997 when the show cause notice
alleged violation of the provisions of FERA. There was no
assertion on behalf of Neha that she, at any time, returned to
India or was staying in India. The occasional visits to India
evidenced by the entries in passports show no intention to
return and stay in India. The material on record thus
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establishes that Neha was married to Sanjay, who was an
established Chartered Accountant in the USA, and that she
was staying with her husband, Sanjay, from 1986 onwards. No
material was produced by or on behalf of Neha that would
indicate that she never intended to stay outside India for any
uncertain period.
36. The position concerning Kanan is also not substantially
different. The statements and the replies on record that have
been considered by the Special Director also indicate that
Kanan and her husband Vijay Jaychandran did enter USA as
students in Architecture in or about 1994, but continued to
stay without any intention of returning for an uncertain
period. No material was produced by Kanan or on her behalf
about her return to India along with her husband. Similarly,
the statements and the replies which are considered by
Special Director indicate that Kiran left for USA to pursue
studies in or about 1992. No record is available concerning
her return to India or her marital status. Instead, even the
circumstances indicate that Kiran continued to stay in the USA
for an uncertain period.
37. Mr.Shesagopalan tried to contend that the evidence or
material on record was far from conclusive, and since
penalties were imposed on the Appellants, the aspect of the
Shroff daughters not being persons resident in India had to be
proved by the Respondents beyond a reasonable doubt. He
submitted that the burden was on the Respondents, and such
burden has to be discharged by establishing beyond a
reasonable doubt that the Shroff daughters were persons not
resident in India at the relevant time. He submitted that it
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was for the Respondents to establish beyond a reasonable
doubt that the Shroff daughters’ residence in the USA was in
circumstances as would indicate their intention to stay outside
India for an uncertain period.
38. The above contentions cannot be accepted inter alia
because we are not dealing with the criminal prosecution of
the Appellants. In any event, Section 59 of the FERA provided
that in any prosecution for any offence under FERA which
requires a culpable mental state on the part of the accused,
the Court shall presume the existence of such mental state.
Still, it shall be a defence for the accused to prove the fact that
he had no such mental state with respect to the act charged as
an offence in that prosecution. The Explanation to Section 59
(1) provides that “culpable mental state” includes intention,
motive, knowledge of a fact and belief in, or reason to believe,
a fact.
39. Thus, even in the context of prosecution, there is a
presumption of a culpable mental state. This is a rebuttable
presumption; however, the onus would be on the accused to
rebut it.
40. Therefore, where the circumstances indicated the Shroff
daughter’s intention to stay outside India for an uncertain
period, it was for the Appellants to have produced some
proper material based upon which such circumstances could
have been explained, and it could have been established that
the Shroff daughters had no intention whatsoever to stay
outside India for an uncertain period. The circumstances
surrounding their stay in the USA, the length of the stay, their
marriage to persons settled in the USA, and the lack of details
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about their return or any proposed return to India indicate an
intention to stay outside India for an uncertain period. Section
71 of the FERA also provides that where any person is
prosecuted or proceeded against for contravening any of the
provisions of FERA or of any rule, direction or order made
thereunder which prohibits him from doing an act without
permission, the burden of proving that he had the requisite
permission shall be on him.
41. The Special Director has evaluated the material on
record in great detail and concluded that the Shroff daughters
were not persons resident in India at the relevant time. The
Tribunal has also independently evaluated the
material/evidence on record and confirmed the findings of
fact recorded by the Special Director. Upon our independent
evaluation of the material on record, we see no reason to
interfere with these findings of fact. As noted earlier, the
evidence on record sufficiently establishes circumstances as
would indicate the intention of the Shroff daughters to stay in
the USA for an uncertain period.
42. The decision in Jacqueline Chandani (supra) relied upon
by Mr. Seshagopalan does not assist the case of the
Appellants. The facts in the said case are not even remotely
comparable to the facts in the present case. In fact, several
observations in the said decision are contrary to the
Appellants’ case. This decision holds that FERA applies even
to those citizens of India who are staying outside India for any
purpose in such circumstances as would indicate their
intention to stay outside India for an uncertain period. This
was in the specific context of interpreting the provisions in
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Section 2(p) of the FERA. The decision holds that what is
contemplated under Section 2(p) of the FERA is the element
of residence or staying, but not the concept of domicile.
43. In Jacqueline Chandani (supra), one of the arguments
raised on behalf of the Respondents was that the Petitioner
was staying in India for a considerable length of time with her
Indian spouse, and this was a factor sufficient to bring her
within the ambit of FERA. However, the Karnataka High
Court held that since the Petitioner was not a citizen of India,
the provisions of the FERA would not apply to her. As noted
earlier, the decision also holds that the FERA would apply to a
citizen of India who has gone out of or stays outside India, in
such circumstances as would indicate an intention to stay
outside India for an uncertain period.
44. One of the questions of law formulated at the time of
admission of this Appeal was whether the provisions of
Section 9 read with Section 68 of the FERA would apply to a
person resident in India going abroad on a student visa. Now
that we have held that the Shroff daughters were not persons
resident in India, this question of law will have to be
answered against the Appellants. No arguments were
advanced based upon clause 1.28 of the Exchange Control
Manual, 1993. In any event, even if some aid could be taken
from these provisions, the question will have to be determined
in the light of the statutory definitions contained in the FERA.
This is precisely what the Special Director and the Tribunal
have done.
45. The Appeals have raised questions of law referring to
Section 114 of the Evidence Act. The Tribunal has also
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referred to Section 114 of the Evidence Act. The Tribunal has
presumed the existence of certain facts which it thought are
likely to have happened, having regard to the common course
of natural events, human conduct, public and private
business, in their relation to the facts of the particular case.
The Tribunal has also drawn an adverse inference by
reference to illustrations (g) below Section 114 of the
Evidence Act.
46. Even without any reference to Section 114 of the
Evidence Act, we find no error in the findings of fact reached
by the Special Director and the Tribunal. However, the
Tribunal cannot be faulted for referring to Section 114 of the
Evidence Act in the context of evaluating the evidence on
record. The travel records of the Shroff daughters does not
rebut the circumstances as would indicate their intention to
stay outside India for an uncertain period.
47. There is documentary evidence that establishes beyond
doubt the contravention of Sections 9, 19 and 29 read with
Section 68 of the FERA. The defences were raised not about
there being no contravention but that some of the Appellants
before the Tribunal had no knowledge about the Shroff
daughters being persons resident outside India. The
Appellants carried out the transactions of sale and purchase of
shares without obtaining the prior permission of the RBI.
Considering the magnitude of the transactions and the
circumstances in which the same were carried out, there is no
substance in the argument based on any alleged
disproportionality in the penalty amounts. Accordingly, even
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the first and second questions of law are required to be
answered against the Appellants.
48. The impugned orders made by the Special Director and
the Tribunal considered in detail the materials on record,
which include the statements recorded during the proceedings
and the documentary evidence concerning the transactions.
Both authorities have correctly applied relevant legal
provisions. As this is an Appeal, we have also reevaluated the
material on record, even though an Appeal under Section 54
of the FERA lies only with questions of law.
49. For all the above reasons, we find no merit in these
Appeals and consequently dismiss the same without any order
as to costs.
50. The interim orders, if any, are hereby vacated.
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