1995 (3) TMI 395 - HC - Companies Law

Summary

Issues:
Interpretation of section 16 of the Foreign Exchange Regulation Act, 1973 regarding the requirement of "general or special permission" from the Reserve Bank.
Determining whether the permission from the Reserve Bank must precede the prohibited acts under section 16(1)(a) and (b).
Adjudication of charges under section 16(1)(b) for refraining from taking action without obtaining permission from the Reserve Bank.
Appeal challenging the decision of the Foreign Exchange Regulation Appeal Board based on the interpretation of relevant legal provisions and precedents.

Analysis:
The judgment involves the interpretation of section 16 of the Foreign Exchange Regulation Act, 1973, focusing on the requirement of "general or special permission" from the Reserve Bank. The central issue is whether this permission must precede the actions prohibited under section 16(1)(a) and (b). The case pertains to two appeals where the appellants were charged with violating section 16(1)(b) by refraining from taking action without obtaining the necessary permission from the Reserve Bank. The factual background includes a contractual dispute between the appellants and a Malaysian concern, leading to a request for remittance that was denied by the Reserve Bank.

The appellants contended that the permission under the Act could be granted ex post facto based on legal precedents, including a Supreme Court decision. They argued that the adjudication proceedings were premature as the Reserve Bank's permission was pending. The Foreign Exchange Regulation Appeal Board rejected this argument, stating that the absence of Reserve Bank permission rendered the actions in violation of the Act. The appellants appealed to the High Court, citing various legal judgments to support their position.

The High Court analyzed the Supreme Court's decision and concluded that permission under section 16 could be sought at any time, even after the prohibited acts. The Court emphasized that the offense under section 16(1)(a) and (b) is not complete without Reserve Bank permission. The Court found that the Board's decision was contrary to legal principles and previous judgments, leading to the success of the appeals. The Court remanded the matters to the Board for reconsideration after the Reserve Bank's decision on the permission application, emphasizing the need for expeditious resolution.

The judgment highlights the importance of Reserve Bank permission under section 16 of the Act and clarifies that the offense is not established until such permission is granted or refused. The Court's decision aligns with legal precedents and ensures a fair consideration of the appellants' case based on the correct interpretation of the law.