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2014 (1) TMI 1223 - HC - FEMA


Issues Involved:
1. Alleged contravention of Sections 8(3) and 8(4) read with Section 50 of the Foreign Exchange Regulation Act (FERA), 1973.
2. Imposition of penalties by the Special Director in the Enforcement Directorate.
3. Dismissal of the appeal by the Appellate Tribunal for Foreign Exchange due to limitation period.
4. Dismissal of the writ petition by the High Court.
5. Determination of whether the appeals before the High Court are barred by limitation under Section 35 of the Foreign Exchange Management Act (FEMA), 1999.
6. Application of Section 14 of the Limitation Act, 1963.
7. Applicability of procedural laws under FERA or FEMA for appeals.

Detailed Analysis:

1. Alleged Contravention of FERA:
The appellant company, M/s Raj Solvex Pvt. Limited, was required to furnish the Exchange Control Copy of the Bill of Entry within three months from the date of remittance of foreign exchange. The respondent alleged that the appellant failed to submit this document to the State Bank of Hyderabad, thereby contravening Sections 8(3) and 8(4) read with Section 50 of FERA, 1973.

2. Imposition of Penalties:
The Special Director in the Enforcement Directorate issued a Memorandum on 21.5.2002 to the appellant company and its directors, requiring them to show cause for the alleged contraventions. Subsequently, a penalty of Rs. 3.00 crore was imposed on the company, and personal penalties of Rs. 75.00 lakh each on its directors, due to the failure to provide evidence of submission of the Bill of Entry to the bank.

3. Dismissal of Appeal by Appellate Tribunal:
The appellants filed an appeal before the Appellate Tribunal for Foreign Exchange on 29.4.2005, along with an application for condonation of delay. The Tribunal dismissed the appeal on 5.2.2007 solely on the grounds of limitation, as the appeal was filed beyond the permissible period of 90 days.

4. Dismissal of Writ Petition by High Court:
The appellants then filed a writ petition (WP (C) No.3353/2008) which was dismissed on 8.9.2010, based on the Supreme Court's decision in Rajkumar Shivhari Vs. Assistant Collector, Directorate of Enforcement, which held that an order by the Appellate Tribunal could only be challenged by way of an appeal under Section 35 of FEMA, not through a writ petition under Article 226 of the Constitution.

5. Limitation under Section 35 of FEMA:
The High Court considered whether the appeals were barred by limitation under Section 35 of FEMA, which prescribes a 60-day period for filing an appeal, extendable by another 60 days if sufficient cause is shown. The respondent contended that the appeals, filed more than three years after the Tribunal's order, were time-barred.

6. Application of Section 14 of the Limitation Act:
The appellants argued that if the benefit of Section 14 of the Limitation Act, which allows exclusion of time spent in bona fide legal proceedings, was extended to them, the appeal would be within the limitation period. They claimed the order was received on 11.4.2008, and the writ petition was filed within 17 days thereafter, with the appeals filed 30 days after the writ petition's dismissal.

7. Applicability of Procedural Laws:
The Supreme Court's decision in Thirumalia Chemicals Limited Vs. Union of India clarified that appeals against orders passed under FERA, after FEMA came into force, should be governed by FEMA's procedural laws. Thus, the Appellate Tribunal should have considered the application for condonation of delay on merits under Section 19 of FEMA, which does not cap the delay period that can be condoned.

Conclusion:
The High Court set aside the Appellate Tribunal's order dated 5.2.2007 and remanded the matter back to the Tribunal to decide the application for condonation of delay on merit. If the delay is condoned, the Tribunal should also decide the appeals on merit. The parties were directed to appear before the Appellate Tribunal on 30.01.2014. The appeals were disposed of accordingly, with a copy of the order to be sent to the Appellate Tribunal within a week.

 

 

 

 

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