1986 (12) TMI 314 - HC - Companies Law

Issues Involved:
1. Failure of natural justice.
2. Delay in adjudication proceedings.
3. Contravention of Section 10(1)(b) of the Foreign Exchange Regulation Act, 1973.
4. Contravention of Section 12(2)(b) of the Foreign Exchange Regulation Act, 1973.
5. Adequacy of evidence and assumptions made by the authorities.
6. Penal provisions and the degree of proof required.

Detailed Analysis:

1. Failure of Natural Justice:
The appellant contended that there was a failure of the principles of natural justice due to not being given copies of the documents seized, which hindered their ability to effectively mount a defense. However, the court found that the appellant had been given the opportunity to inspect all documents and no application for copies was made. Thus, there was no denial of natural justice on this ground.

2. Delay in Adjudication Proceedings:
The appellant argued that the six-year delay between the receipt of their explanation and the adjudication proceedings constituted a denial of natural justice. The court acknowledged the delay but ruled that mere delay does not amount to a denial of natural justice unless special circumstances are shown, which were not pleaded by the appellant.

3. Contravention of Section 10(1)(b):
The adjudicating authority found clear evidence that the appellant had an understanding with dealers in West European countries, indicating that the goods were knowingly sent to buyers in these regions. This constituted a contravention of Section 10(1)(b), which deals with actions that secure foreign exchange due to cease being receivable by the appellant.

4. Contravention of Section 12(2)(b):
The court scrutinized the contravention under Section 12(2)(b) and found that there was insufficient material to support this charge. The adjudicating authority's order contained only a cursory reference to the failure of repatriation of export proceeds in the prescribed manner, and the Appellate Board did not provide any reasoning on this aspect. The court concluded that the Department failed to demonstrate how the appellant's actions amounted to a contravention of Section 12(2)(b).

5. Adequacy of Evidence and Assumptions:
The court emphasized that for penal provisions, the degree of proof required is akin to that in criminal cases. The conclusion must be the only reasonable one based on the material before the authorities. The court found that the authorities' decisions were based on assumptions without sufficient material evidence, particularly regarding the contravention of Section 12(2)(b).

6. Penal Provisions and Degree of Proof:
Referring to a precedent, the court reiterated that penal provisions require a high degree of proof. The absence of a detailed list of documents relied upon by the adjudicating authority was noted as a procedural lapse. The court stressed that future orders should include a list of documents with adequate descriptions for proper scrutiny.

Conclusion:
The court set aside the penalty for contravention under Section 12(2)(b) due to lack of evidence and upheld the penalty under Section 10(1)(b) as modified by the Appellate Board. The court also provided guidance on procedural requirements for future adjudications. No costs were awarded, and a one-month time frame for payment was granted.

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