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“  REPORTABLE”   

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 5773 OF 2009

A. Tajudeen …. Appellant

versus

Union of India …. Respondent

J U D G M E N T

Jagdish Singh Khehar, J.

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:-

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“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  

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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.

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“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 2  nd   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 3  rd   week or  4  th   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  

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to visit his relatives.  He is aged 45 years and of the height of about  5½ 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.”

(emphasis is ours)

(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  

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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.”

(emphasis is ours)

(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.

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4. In response to the memorandum dated 12.3.1990, the appellant filed  

a reply (which is available on the record of the present case as Annexure  

P-9).  In his reply, he denied having made any statement on 20.4.1989.  

He asserted, that a copy of the aforesaid statement dated 20.4.1989 had  

never  been  furnished  to  him,  nor  had  been  relied  upon  in  the  

memorandum dated 12.3.1990.  He also denied the factual contents of the  

statements dated 25.10.1989 and 26.10.1989.  He denied having ever met  

Abdul Hameed.  He also denied, that there was any occasion for him to  

ask  for  any  loan  from  the  said  Abdul  Hameed.   He  denied  any  

acquaintanceship with the said Abdul Hameed.  Insofar as the statements  

recorded  on  25.10.1989  and  26.10.1989  are  concerned,  his  specific  

assertion  in  his  reply  was,  that  he  was  compelled  to  make  the  above  

statements at the dictation of the officers of the Enforcement Directorate.  

He also asserted, that the said statements had been made under threat,  

coercion and undue influence.  He highlighted the fact, that on the very day  

of  his  release from detention,  i.e.,  on 27.10.1989,  he had addressed a  

letter  to  the  Enforcement  Directorate,  repudiating  the  factual  position  

indicated in the statements made by him on 25.10.1989 and 26.10.1989.  

He also asserted, that a similar course of action had been adopted by his  

wife T. Sahira Banu, inasmuch as, she too had repudiated the statement  

recorded by her on 26.10.1989 at the office of the Enforcement Directorate  

through  a  separate  communication  dated  27.10.1989.   Insofar  as  the  

currency recovered from his residence is concerned, his explanation was,  

that  he had an established business under  the trade name of  Seemati  

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Silks, which had an annual turnover of Rs.25 to 30 lacs.  He also asserted,  

that his wife T. Sahira Banu had also business establishments including  

Seemati  Matchings  and  Banu  Jewellers,  from  which  she  was  earning  

income.   Besides  the  aforesaid  business  establishments,  it  was  the  

contention  of  the  appellant  -  A.  Tajudeen,  that  he  had  several  other  

business projects, from which he was also earning independent income.  

In addition to his  financial  status reflected hereinabove,  it  was also the  

case of the appellant, that he had taken hand loans.  The amount which  

was  recovered  by  the  officers  of  the  Enforcement  Directorate  from his  

residence on 25.10.1989,  was comprised of  all  the above sources.   He  

clearly and expressly denied, having received the aforesaid currency (Rs.  

8,24,900/-) from a person resident in India, at the behest of a person not  

resident in India.

5. Having  examined  the  response  of  the  appellant,  the  Additional  

Director  of  Enforcement,  Southern  Zone,  Madras,  by  an  order  dated  

22.4.1991,  arrived  at  the  conclusion,  that  the  appellant  was  guilty  of  

violating Section 9(1)(b) of the 1973 Act.  Having so concluded, the seized  

amount of Rs.8,24,900/- was ordered to be confiscated.  In addition, the  

appellant  was  imposed  a  penalty  of  Rs.1,00,000/-  for  contravening  the  

provisions of Section 9(1)(b) of the 1973 Act.  Dissatisfied with the order  

dated  22.4.1991  passed  by  the  Additional  Director  of  Enforcement,  

Southern  Zone,  Madras,  the  appellant  preferred  an  appeal  before  the  

Foreign Exchange Regulation Appellate Board (hereinafter referred to as,  

the Appellate Board).  The aforesaid appeal bearing number 316 of 1991  

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was allowed by an order dated 31.12.1993.  While allowing the appeal, the  

Appellate Board directed the refund of penalty of Rs.1,00,000/- imposed on  

the appellant.  The Appellate board also quashed the direction pertaining  

to  the  confiscation  of  Rs.8,24,900/-  seized  from  the  residence  of  the  

appellant.

6. Aggrieved by the order passed by the Appellate Board, the Union of  

India  through  the  Director  of  Enforcement  preferred  an  appeal  under  

Section 54 of the 1973 Act, before the High Court.  The High Court allowed  

the above appeal being C.M.A. NPD no. 1282 of 1994 by an order dated  

28.9.2006.   While allowing the aforesaid appeal,  the High Court  placed  

reliance on the statement made by the appellant, before the officers of the  

Enforcement  Directorate  on  20.4.1989.   The  aforesaid  statement  was  

referred to, as having been voluntarily made by the appellant.  The High  

Court expressed the view, that the statements recorded by the appellant  

on 25.10.1989 and 26.10.1989 were voluntarily made by him, and as such,  

the retraction of the said statements, was not accepted.  Likewise, the High  

Court accepted the statement of T. Sahira Banu made at the office of the  

Enforcement  Directorate  at  Madras  on  26.10.1989,  as  voluntary.   Her  

retraction of the said statement was also not accepted by the High Court.  

The High Court placed reliance on the fact, that the appellant had been  

produced  before  the  Additional  Chief  Metropolitan  Magistrate,  Madras,  

during  the  course  of  his  detention,  but  he  had  not  indicated  to  the  

Magistrate during his production, that he and his wife were compelled to  

make  the  above  statements,   by  the  officers  of  the  Enforcement  

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Directorate.  This was the primary reason for the High Court, in rejecting  

the retractions made by the appellant and his wife.

7. Insofar  as the veracity  of  name and identity  of  Abdul  Hameed is  

concerned, the High Court expressed the view, that the name and identity  

of  the  person  who  had  dispatched  the  money  in  question,  was  in  the  

personal knowledge of the appellant alone, and therefore, his disclosure  

about  the  name  and  identity  of  Abdul  Hameed  could  not  be  doubted.  

Insofar  as  the  different  addresses  of  Abdul  Hameed  indicated  in  the  

statements  dated  20.4.1989 and 25.10.1989/26.10.1989 are concerned,  

the High Court was of the view, that the appellant had himself disclosed  

the  address  of  the  above  mentioned  Abdul  Hameed,  and  as  such,  he  

cannot be permitted to use the said statements to his own benefit.  The  

High Court was also of the view, that merely because the statements had  

been recorded at the time of the raid at the residence of the appellant, and  

whilst he was under detention, it could not be inferred, that the same were  

not voluntary.

8. During the course of hearing, the first contention advanced at the  

hands of the learned counsel for the appellant was, that it was not open to  

the  Enforcement  Directorate  to  rely  on  the  alleged  statement  dated  

20.4.1989, which the appellant is stated to have made before the officers  

of the Enforcement Directorate.  Insofar as the instant aspect of the matter  

is concerned, it was the vehement contention of the learned counsel for  

the appellant, that no reference was made to the  above statement dated  

20.4.1989 in the memorandum dated 12.3.1990.  It was further submitted,  

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that  a  copy  of  the  aforesaid  statement  dated  20.4.1989  was  never  

furnished to the appellant.  In fact it was the vehement contention of the  

learned counsel for the appellant, that no such statement was ever made  

by  the  appellant  -  A.  Tajudeen,  to  the  officers  of  the  Enforcement  

Directorate.  Learned counsel for the appellant, in fact emphatically invited  

our attention to the fact, that the High Court in para 16 of the impugned  

judgment had inter alia, observed as under:-

“16. …..  Referring to the explanation given by the officer that they  had no record of the statement made on 20.4.1989 at the time  when  the  statement  was  made  by  Tajudeen  on  26.10.1989…..”

It was also submitted, that if the appellant had made any such statement  

on  20.4.1989,  as  was  now  being  relied  upon  by  the  Enforcement  

Directorate,  he  would  have most  definitely  been  proceeded  against  for  

violation of the provisions of Section 9(1)(b) of the 1973 Act.  The very fact  

that he was not proceeded against, shows that no such earlier statement  

may have been recorded by the appellant on 20.4.1989.

9. We have given our thoughtful  consideration to the first contention  

advanced at the hands of the learned counsel for the appellant.  There is  

no doubt  whatsoever,  that  no reliance has been placed on the alleged  

statement made by the appellant on 20.4.1989 before the officers of the  

Enforcement Directorate, in the memorandum dated 12.3.1990.  Per se,  

therefore,  it  was  not  open  to  the  authorities  to  place  reliance  on  the  

aforesaid  statement,  while  proceeding  to  take  penal  action  against  the  

appellant, in furtherance of the aforesaid memorandum dated 12.3.1990.  

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Additionally, it is apparent from the reply (Annexure P-9) furnished by the  

appellant to the memorandum dated 12.3.1990, that the appellant clearly  

and expressly  refuted having executed any statement  on 20.4.1989.   It  

was,  therefore,  imperative  for  the  Enforcement  Directorate,  to  establish  

through  cogent  evidence,  that  the  appellant  had  indeed  made  such  a  

statement on 20.4.1989.  It also cannot be overlooked, that no action was  

initiated  against  the  appellant  on  the  basis  of  the  aforesaid  statement  

dated 20.4.1989.  A perusal of the aforesaid statement, in the terms as are  

apparent from the pleadings of the case, leaves no room for any doubt,  

that if the appellant had made any such statement, he would have been  

proceeded against under Section 9(1)(b) of the 1973 Act.  The mere fact  

that he was not proceeded against, prima facie establishes, in the absence  

of any evidence to the contrary, that the assertion made by the appellant to  

the effect that he never made such statement, had remained unrefuted.  

The  reason  depicted  in  the  paragraph  16  of  the  impugned  judgment  

passed by the High Court extracted in the foregoing paragraph is clearly a  

lame excuse.  Even though the aforesaid excuse may have been valid, if  

the allegation was, that the record of the statement made on 20.4.1989,  

was not available with the officers of Enforcement Department at the time  

of the raid on 25.10.1989, yet to state that the aforesaid record was not  

available  when  the  second  statement  was  made  on  26.10.1989  at  the  

office  of  the  Enforcement  Directorate,  is  quite  ununderstandable.   It  is  

pertinent to mention, that the second statement was recorded by the Chief  

Enforcement Officer when the appellant – A. Tajudeen was in custody of  

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the Enforcement Directorate.  At that juncture if the record, as alleged, was  

not available with the authorities, it must  lead to the inevitable inference,  

that  the  record  was  not  available  at  all.   For  the  reasons  recorded  

hereinabove, we are satisfied in holding, firstly, that the statement dated  

20.4.1989  could  not  be  relied  upon  by  the  Enforcement  Directorate  to  

establish  the  allegations  levelled  against  the  appellant  through  the  

memorandum dated 12.3.1990.  And secondly, in the absence of having  

established  through  cogent  evidence,  that  the  appellant  had  made  the  

above  statement  dated  20.4.1989,  it  was not  open to  the  Enforcement  

Directorate  to place reliance on the same,  for  establishing  the charges  

levelled against the appellant in  memorandum dated 12.3.1990.

10. With reference to the statement of the appellant dated 20.4.1989, it  

is also necessary to record, that we had an impression during the course  

of  hearing,  that  the  above  statement  would  lead  us  to  a  clearer  

understanding of the truth of the matter.  After the hearing concluded on  

6.6.2014, we required the learned counsel for the respondent to hand over  

to us the record of the case.  We had clearly indicated to learned counsel,  

that  the  purpose  for  this  was,  that  we  wished  to  examine  the  alleged  

statement  of  the  appellant  dated  20.4.1989,  along  with  the  record  

connected therewith.  In compliance, the summoned record was presented  

at  the residential  office of  one of  us  (J.S.  Khehar,  J.)  on 7.6.2014.   A  

perusal  of  the  record  revealed,  that  the  same did  not  comprise  of  the  

appellant’s  alleged statement  dated 20.4.1989,  or  the record connected  

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therewith.  The said record was therefore returned forthwith (on 7.6.2014  

itself), by making the following remarks:

“Mr.  A.B.  Ravvi,  Assistant  Legal  Advisor,  Directorate  of  Enforcement,  Ministry  of  Finance,  Government  of  India,  Chennai  office,  alongwith  Mr.  B.  Naveen  Kumar,  Assistant  Legal  Advisor,  Directorate  of   Enforcement,  Ministry  of  Finance,  Government  of  India, Headquarters at New Delhi, have visited the Residential office  of Hon’ble Mr. Justice Jagdish Singh Khehar, Judge, Supreme Court  of  India,  6,  Moti  Lal  Nehru Marg,  New Delhi  – 110011,  today on  7th June, 2014 at about 1.30 pm to deliver a file containing original  papers in the matter – Civil Appeal no. 5773 of 2009 (A. Tajudden  vs. Union of India).  Since the file does not contain document dated  20.4.1989 (statement of the appellant in the matter), for which the  same was summoned, the file is being returned herewith, as per the  directions of the Hon’ble Judge.

Sd/- (Deepak Guglani)

Court Master 7.6.2014

File received by:- Sd/-

[Mr. A.B. Ravvi]”

Needless to mention, that despite the above remarks no further record was  

ever  brought  to  our  notice.   This  is  a  seriously  unfortunate  attitudinal  

display, leaving us with no other option but to conclude, that the alleged  

statement made by the appellant  on 20.4.1989,  may well  be a fictitious  

creation of the Enforcement Directorate.  In such circumstances, reliance  

on the appellant’s alleged statement dated 20.4.1989, just does not arise.

11. Having arrived at the aforesaid conclusion, we shall now examine  

the  veracity  of  the  remaining  evidence  available  with  the  Enforcement  

Directorate,  for substantiating the charges levelled against  the appellant  

through memorandum dated 12.3.1990.  Having discarded the statement  

dated  20.4.1989,  what  remains is,  the statements  of  the appellant  -  A.  

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Tajudeen recorded on 25.10.1989 and 26.10.1989, as also, the statement  

of his wife T. Sahira Banu recorded on 26.10.1989.  Besides the aforesaid  

statements, the remaining evidence against the appellant is, in the nature  

of  a  “mahazar”  prepared  on  25.10.1989,  which  was  signed  by  two  

independent witnesses, namely, R.M. Subramanian and Hayad Basha.  In  

addition to the above,  the Enforcement  Directorate also relied upon the  

newspaper  sheets  of  the Hindu and Jansatha,  in  which the bundles of  

notes  recovered  from  the  residence  of  the  appellant,  were  wrapped.  

Insofar as the Hindu newspaper sheets are concerned, they were of the  

Delhi  and Bombay editions  dated  19.2.1989,  14.4.1989,  23.7.1989  and  

4.10.1989.  The sheets of the Jansatha newspaper also pertain to its Delhi  

and Bombay editions of February, 1989 and 23.10.1989.

12. Insofar as the aforesaid remaining evidence is concerned, it was the  

vehement  contention  of  the  learned  counsel  for  the  appellant,  that  the  

same  was  not  sufficient  to  discharge  the  onerous  responsibility  of  the  

Enforcement  Directorate,  to  establish  the  charge  levelled  against  the  

appellant.  It was the submission of the learned counsel for the appellant,  

that reliance could not be placed on the statements made by the appellant,  

as also, his wife (on 25.10.1989 and 26.10.1989).  In this behalf, it was  

sought  to be cautioned, that if  this manner of establishing charges was  

affirmed, the officers of the Enforcement Directorate, could easily compel  

individuals  through  coercion,  threat  and  undue  influence,  as  they  had  

allegedly  done  in  this  case,  and  then  proceed  to  punish  them,  on  the  

strength of their own statements.  It was submitted, that in the facts and  

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circumstances of this case, there was ample opportunity available with the  

Enforcement Directorate, to establish the veracity of the statements made  

by the appellant - A. Tajudeen and his wife T. Sahira Banu.  In this behalf it  

was  pointed  out,  that  the  appellant  has  allegedly  indicated,  that  Abdul  

Hameed,  the  dispatcher  of  the  funds,  was  originally  from  his  Village  

Pudhumadam in District Ramanathapuram.  He also stated, that the said  

Abdul  Hameed  was  related  to  him  from  his  paternal  side.   In  the  

statements relied upon by the Enforcement Directorate, the appellant had  

allegedly also disclosed, that Abdul Hameed had contacted him over the  

telephone from Singapore.  It was submitted, that all the above facts were  

verifiable.  It was submitted, that it could not be believed, that officers of  

the Enforcement Directorate did not verify the authenticity of the factual  

position in respect of Abdul Hameed.  It was further submitted, that the  

appellant  in  the  statement  dated  20.4.1989  had  mentioned,  that  the  

appellant, on the instructions of Abdul Hameed of Singapore, dispatched a  

sum of  Rs.  60,000/-  (out  of  total  amount  of  Rs.  1,40,000/-)  to  Shahul  

Hameed at Pudhumadam through his shop boy - Shahib.  According to the  

learned counsel,  the Enforcement  Directorate  could have confirmed the  

aforesaid  factual  position  through  Shahib.  It  is  apparent,  according  to  

learned  counsel,  that  the  aforesaid  factual  position  was  found  to  be  

incorrect,  and  therefore,  no  further  statements  were  recorded  by  the  

Enforcement Directorate, in connection therewith.  It was also submitted,  

that  the  appellant  had  produced  before  the  Assistant  Director  of  

Enforcement,  a  communication  from  the  Revenue  Department  of  

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Singapore, dated 2.9.1990 stating that, there was no such address at no.  

24, Sarangoon Road, Singapore, and as such, the very foundational basis  

of the statements made by the appellant on 25.10.1989 and 26.10.1989  

were rendered meaningless.  It was also submitted, that an Advocate had  

enclosed a copy of the certificate issued by the Controller of Property Tax,  

Singapore, depicting that no such address was there at Sarangoon Road,  

where the said Abdul Hameed was alleged to be running his business.

13. In order to contend that the statements made by the appellant – A.  

Tajudeen and his wife T.  Sahira Banu could not be relied upon in law,  

learned counsel for the appellant, placed reliance on K.T.M.S. Mohd. v.  

Union  of  India,  (1992)  3  SCC  178  and  invited  our  attention  to  the  

observations made in paragraph 34.  The same is extracted hereunder:

34. We think it is not necessary to recapitulate and recite all the  decisions on this legal aspect. But suffice to say that the core of all  the decisions of this Court is to the effect that the voluntary nature of  any  statement  made  either  before  the  Custom Authorities  or  the  officers  of  Enforcement  under  the  relevant  provisions  of  the  respective Acts is a sine quo non to act on it for any purpose and if  the statement appears to have been obtained by any inducement,  threat, coercion or by any improper means that statement must be  rejected brevi manu. At the same time, it is to be noted that merely  because  a  statement  is  retracted,  it  cannot  be  recorded  as  involuntary  or  unlawfully  obtained. It  is  only  for  the maker  of  the  statement who alleges inducement, threat, promise etc. to establish  that such improper means has been adopted. However, even if the  maker  of  the  statement  fails  to  establish  his  allegations  of  inducement,  threat  etc.  against  the  officer  who  recorded  the  statement, the authority while acting on the inculpatory statement of  the maker is not completely  relieved of  his obligations in at  least  subjectively applying its mind to the subsequent retraction to hold  that the inculpatory statement was not extorted. It thus boils down  that the authority or any Court intending to act upon the inculpatory  statement as a voluntary one should apply its mind to the retraction  and reject the same in writing. It is only on this principle of law, this  Court in     several decisions has ruled that even in passing a detention    

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order on the basis of an inculpatory statement of a detenu who has  violated  the provisions  of  the FERA or  the Customs Act  etc.  the  detaining authority  should  consider  the subsequent  retraction and  record its opinion before accepting the inculpatory statement lest the  order will be vitiated. Reference may be made to a decision of the  full  Bench  of  the  Madras  High  Court  in  Roshan  Beevi  v.  Joint  Secretary to the Govt. of T.N., Public Deptt., [1983] LW (Crl.) 289, to  which one of us (S. Ratnavel Pandian, J.) was a party.

(emphasis is ours) In order to supplement the legal position expressed in the above extracted  

judgment, learned counsel for the appellant also placed reliance on Vinod  

Solanki v. Union of India, (2008) 16 SCC 537, by inviting our attention to  

the following conclusion recorded therein:-

“36. A person accused of commission of an offence is not expected  to prove to the hilt that confession had been obtained from him by  any  inducement,  threat  or  promise  by a  person in  authority.  The  burden is on the prosecution to show that the confession is voluntary  in nature and not obtained as an outcome of threat, etc. if the same  is to be relied upon solely for the purpose of securing a conviction.

37. With  a  view to arrive at  a  finding  as regards  the voluntary  nature of statement or otherwise of a confession which has since  been  retracted,  the  court  must  bear  in  mind  the  attending  circumstances which would include the time of retraction, the nature  thereof,  the manner  in which such retraction has been made     and    other relevant  factors. Law does not say that the accused has to  prove  that  retraction  of  confession  made by him was because of  threat, coercion, etc. but the requirement is that it may appear to the  court as such.

38.  In the instant  case, the investigating officers did not examine  themselves. The authorities under the Act as also the Tribunal did  not arrive at a finding upon application of their mind to the retraction  and  rejected  the  same upon  assigning  cogent  and valid  reasons  18herefore.  Whereas mere retraction of  a confession may not  be  sufficient  to  make  the  confessional  statement  irrelevant  for  the  purpose of a proceeding in a criminal case or a quasi criminal case  but there cannot be any doubt whatsoever that the court is obligated  to take into consideration the pros and cons of both the confession  and retraction made by the accused.  It is one thing to say that a  retracted confession is used as a corroborative piece of evidence to  record a finding of  guilt  but  it  is another thing to say that such a  

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finding is arrived at only on the basis of such confession although  retracted at a later stage.

39. The appellant is said to have been arrested on 27.10.1994; he  was produced before the learned Chief Metropolitan Magistrate on  28.10.1994. He retracted his confession and categorically stated the  manner  in  which  such  confession  was  purported  to  have  been  obtained. According to him, he had no connection with any alleged  import  transactions,  opening  of  bank  accounts,  or  floating  of  company  by  name of  M/s  Sun Enterprises,  export  control,  bill  of  entry and other documents or alleged remittances.  He stated that  confessions were not only untrue but also involuntary.

40. The allegation that he was detained in the Office of Enforcement  Department for two days and two nights had not been refuted. No  attempt  has  been  made  to  controvert  the  statements  made  by  appellant in his application filed on 28.10.1994 before the learned  Chief Metropolitan Magistrate. Furthermore, the Tribunal as also the  authorities misdirected themselves in law insofar  as they failed to  pose unto themselves a correct question. The Tribunal proceeded  on  the  basis  that  issuance  and  services  of  a  show-cause  notice  subserves the requirements of law only because by reason thereof  an  opportunity  was  afforded  to  the  proceedee  to  submit  its  explanation.  The  Tribunal  ought  to  have  based  its  decision  on  applying the correct principles of law.

41. The statement made by the appellant before the learned Chief  Metropolitan  Magistrate  was  not  a  bald  statement.  The  inference  that burden of proof that he had made those statements under threat  and coercion was solely on the proceedee does not rest on any legal  principle.  The question  of  the  appellant’s  failure  to  discharge  the  burden would arise only when the burden was on him. If the burden  was on the     Revenue, it was for it to prove the said fact. The Tribunal    on its independent examination of the factual matrix placed before it  did not arrive at any finding that the confession being free from any  threat,  inducement  or  force  could  not  attract  the  provisions  of  Section 24 of the Indian Evidence Act.”

(emphasis is ours)

14. The aforesaid submissions were sought to be refuted by the learned  

counsel representing the Union of India, by placing reliance on the findings  

recorded by the High Court, in the impugned judgment.

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15. First and foremost, we shall endeavour to examine the veracity of  

the statements made by the appellant – A. Tajudeen and his wife T. Sahira  

Banu on 25.10.1989 and 26.10.1989 to the officers of  the Enforcement  

Directorate.  Before proceeding with the factual controversy, it is essential  

to record, that from the view we have taken in the ultimate analysis, the  

innocence or guilt of the appellant will have to be determined on the basis  

of the statements made by the appellant and his wife (on 25.10.1989 and  

26.10.1989) to the officers of the Enforcement Directorate.  Therefore, for  

the  case  in  hand,  the  above  statements  are  not  to  be  referred  to  as  

corroborative pieces of evidence, but as primary evidence to establish the  

guilt of the appellant.  It is in this background, that we shall endeavour to  

apply the legal position declared by this Court, to determine the veracity  

and reliability to the statements, which later came to be retracted by the  

appellant  and  also  by  his  wife.   Insofar  as  the  above  statements  are  

concerned, there is no doubt whatsoever, that they were all made either at  

the  time  of  the  raid,  which  was  carried  out  by  the  officers  of  the  

Enforcement  Directorate at  the residence of the appellant,  or  whilst the  

appellant  was  in  custody  of  the  Enforcement  Directorate.   Immediately  

after  the  appellant  was  released  on  bail  by  the  Additional  Chief  

Metropolitan Magistrate,  Madras on 27.10.1989, on the same day itself,  

both the appellant – A. Tajudeen and his wife T. Sahira Banu addressed  

communications  to  the  Director,  Enforcement  Directorate,  New  Delhi  

resiling  from the above statements,  by  clearly  asserting  that  they  were  

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recorded under coercion and undue influence, and would not be binding on  

them.

16. Having given our thoughtful consideration to the aforesaid issue, we  

are of the view that the statements dated 25.10.1989 and 26.10.1989 can  

under no circumstances constitute the sole basis for recording the finding  

of guilt against the appellant.  If findings could be returned by exclusively  

relying on such oral  statements,  such statements could easily be thrust  

upon the persons who were being proceeded against on account of their  

actions in conflict with the provisions of the 1973 Act.  Such statements  

ought  not  to  be  readily  believable,  unless  there  is  independent  

corroboration of certain material aspects of the said statements, through  

independent  sources.   The  nature  of  the  corroboration  required,  would  

depend on the facts of each case.  In the present case, it is apparent that  

the  appellant  –  A.  Tajudeen  and  his  wife  T.  Sahira  Banu  at  the  first  

opportunity resiled from the statements which are now sought to be relied  

upon by the Enforcement Directorate, to substantiate the charges levelled  

against the appellant.  We shall now endeavour to examine whether there  

is  any  independent  corroborative  evidence  to  support  the  above  

statements.

17. According to the learned counsel representing the appellant, there  

was an effective opportunity to the officers of the Enforcement Directorate  

to  produce  evidence  with  reference  to  a  number  of  important  facts,  

disclosed by the appellant while making the aforesaid statements, yet the  

officers of the Enforcement Directorate chose not to substantiate the same  

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through  independent  evidence.   He  cited  a  few  instances  where  such  

evidence  could  have  been  easily  gathered  by  the  officers  of  the  

Enforcement Directorate.  In the absence of any corroboration whatsoever,  

it  was submitted,  that  retracted statements made by the appellant  – A.  

Tajudeen and his wife T. Sahira Banu, could not be used to record findings  

against the appellant.

18. We have no doubt, that evidence could be gathered to substantiate  

that  Abdul  Hameed,  the person who is  alleged to have dispatched the  

money from Singapore, was a resident of Village Pudhumadam in District  

Ramanathapuram, to which the appellant also belongs. Material could also  

have been gathered to show, whether he was related to the appellant from  

his paternal side.  Furthermore, the Enforcement Directorate could have  

easily  substantiated  whether  or  not,  as  asserted  by  the  appellant,  the  

aforesaid  Abdul  Hameed  had  contacted  him  over  telephone  from  

Singapore, to inform him about the delivery of the amount recovered from  

his  residence on 25.10.1989.   Additionally,  the Enforcement  Directorate  

could have led evidence to establish that the aforesaid Abdul Hameed with  

reference  to  whom  the  appellant  made  statements  on  20.4.1989,  

25.10.1989 and 26.10.1989, was actually resident of Singapore, and was  

running businesses there, at the location(s) indicated by the appellant.  Still  

further, the officers of the Enforcement Directorate could have ascertained  

the truthfulness of the factual position from Shahib, the shop boy of the  

appellant – A. Tajudeen, whom he allegedly sent to hand over a sum of  

Rs. 60,000/- to Shahul Hameed (a relative of Abdul Hameed) of Village  

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Pudhumadam.  Had the statements  of  the appellant  and his  wife been  

corroborated  by  independent  evidence  of  the  nature  indicated  

hereinabove, there could have been room for accepting the veracity of the  

statements made by the appellant – A. Tajudeen and his wife T. Sahira  

Banu to  the officers  of  the Enforcement  Directorate.   Unfortunately,  no  

effort was made by the Enforcement Directorate to gather any independent  

evidence to establish the veracity of the allegations levelled against the  

appellant,  through  the  memorandum  dated  12.3.1990.   We are  of  the  

considered  view,  that  the  officers  of  the  Enforcement  Directorate  were  

seriously negligent in gathering independent evidence of a corroborative  

nature.  We have therefore no hesitation in concluding that the retracted  

statements made by the appellant  and his wife could not constitute the  

exclusive basis to determine the culpability of the appellant.

19. We shall now deal with the other independent evidence which was  

sought to be relied upon by the Enforcement Directorate to establish the  

charges  levelled  against  the  appellant.   And  based  thereon,  we  shall  

determine whether the same is sufficient on its own, or in conjunction to  

the  retracted  statements  referred  to  above,  in  deciding  the  present  

controversy, one way or the other.  First and foremost, reliance was placed  

on “mahazar” executed (at the time of the recovery, from the residence of  

the appellant) on 25.10.1989.  It would be pertinent to mention, that the  

appellant  in  his  response  to  the  memorandum  dated  12.3.1990  had  

expressly  refuted  the  authenticity  of  the  “mahazar”  executed  on  

25.10.1989.   Merely  because  the  “mahazar”  was  attested  by  two  

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independent  witnesses,  namely,  R.M.  Subramanian  and  Hayad  Basha,  

would not led credibility to the same.  Such credibility would attach to the  

“mahazar” only if the said two independent witnesses were produced as  

witnesses, and the appellant was afforded an opportunity to cross-examine  

them.  The aforesaid procedure was unfortunately not adopted in this case.  

But  then,  would  the  preparation  of  the  “mahazar”  and  the  factum  of  

recovery of a sum of Rs. 8,24,900/-  establish the guilt  of the appellant,  

insofar as the violation of Section 9(1)(b) of the 1973 Act is concerned?  In  

our  considered  view,  even  if  the  “mahazar”  is  accepted  as  valid  and  

genuine,  the  same  is  wholly  insufficient  to  establish,  that  the  amount  

recovered from the residence of the appellant was dispatched by Abdul  

Hameed,  a  resident  of  Singapore,  through  a  person  who  is  not  an  

authorised  dealer  in  foreign  exchange.   Even,  in  response  to  the  

memorandum  dated  12.3.1990,  the  appellant  had  acknowledged  the  

recovery of Rs. 8,24,900/-  from his residence, but that acknowledgment  

would not establish the violation of Section 9(1)(b) of the 1973 Act.  In the  

above view of the matter, we are of the opinion that the execution of the  

“mahazar” on 25.10.1989, is inconsequential for the determination of the  

guilt of the appellant in this case.

20. The  only  other  independent  evidence  relied  upon  by  the  

Enforcement  Directorate  is  of  pages  from the  Hindu  and  the  Jansatha  

newspapers,  in  which  the  bundles  of  money  were  wrapped,  when  the  

recovery was effected on 25.10.1989.  In view of the position expressed in  

the  foregoing  paragraph,  we  are  satisfied  that  the  charge  against  the  

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appellant under Section 9(1)(b) of the 1973 Act, cannot be established on  

the basis of newspaper sheets, in which the money was wrapped.  The  

newspaper  sheets  relied  upon,  would  not  establish  that  the  amount  

recovered  from  the  residence  of  the  appellant  –  A.  Tajudeen  was  

dispatched by Abdul Hameed from Singapore, through a person who was  

not an authorized dealer.

21. Based  on  the  above  determination,  and  the  various  conclusions  

recorded  hereinabove,  we  are  satisfied,  that  the  impugned  judgment  

passed  by  the  High  Court  deserves  to  be  set  aside.   The  same  is  

accordingly hereby set aside.  Resultantly, the entire action taken by the  

Enforcement  Directorate  against  the  appellant  in  furtherance  of  the  

memorandum dated 12.3.1990, is also set aside.  As a consequence of the  

above,  the  Enforcement  Directorate  is  directed  to  forthwith  refund  the  

confiscated sum of Rs.8,24,900/-, to the appellant, as also, to return the  

amount of Rs.1,00,000/-, which was deposited by the appellant as penalty.

22. The instant appeal is, accordingly, allowed in the abovesaid terms.

…………………………….J. (Jagdish Singh Khehar)

…………………………….J. (C. Nagappan)

New Delhi; October 10, 2014.

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ITEM NO.1B             COURT NO.6               SECTION XII                S U P R E M E  C O U R T  O F  I N D I A                        RECORD OF PROCEEDINGS Civil Appeal  No(s).  5773/2009 A.TAJUDEEN                                     Appellant(s)                                 VERSUS UNION OF INDIA                                 Respondent(s) [HEARD  BY  HON'BLE  JAGDISH  SINGH  KHEHAR  AND  HON'BLE  C.  NAGAPPAN, JJ.]  Date : 10/10/2014 This appeal was called on for judgment  

  today. For Appellant(s) Mr. R. Nedumaran,Adv.                       For Respondent(s) Mr. B. V. Balaram Das,Adv.(Not present)                      

Hon'ble  Mr.  Justice  Jagdish  Singh  Khehar  pronounced the judgment of the Bench comprising His Lordship  and Hon'ble Mr. Justice C. Nagappan.  

For  the  reasons  recorded  in  the  Reportable  judgment,  which  is  placed  on  the  file,  the  appeal  is  allowed. As a consequence, the Enforcement Directorate is  directed  to  forthwith  refund  the  confiscated  sum  of  Rs.8,24,900/-  to  the  appellant,  as  also,  to  return  the  amount  of  Rs.1,00,000/-,  which  was  deposited  by  the  appellant as penalty.

(Parveen Kr. Chawla) (Phoolan Wati Arora)   Court Master  Assistant Registrar

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