1996 (4) TMI 433 - HC - Companies Law

Summary

Issues Involved:
1. Contravention of Section 9(1)(c) of the Foreign Exchange Regulation Act, 1973.
2. Contravention of Section 9(1)(a) of the Foreign Exchange Regulation Act, 1973.
3. Contravention of Section 9(1)(d) of the Foreign Exchange Regulation Act, 1973.
4. Burden of proof and presumption under Sections 59, 71, and 72 of the Foreign Exchange Regulation Act, 1973.

Detailed Analysis:

1. Contravention of Section 9(1)(c) of the Foreign Exchange Regulation Act, 1973:
The respondent was accused of contravening Section 9(1)(c) by acknowledging a debt to Anthony, a person alleged to be resident outside India, without the necessary exemption from the Reserve Bank of India. The trial court initially found that the respondent had violated Section 9(1)(c) based on exhibits P-3 and P-5. However, it acquitted the respondent on the grounds that the prosecution failed to independently prove that Anthony was a resident outside India, as required by the Supreme Court decision in Smt. Priya Bala Ghosh v. Suresh Chandra Ghosh.

2. Contravention of Section 9(1)(a) of the Foreign Exchange Regulation Act, 1973:
The respondent was accused of making payments to Anthony and his wife, both allegedly residents outside India, without the required exemption from the Reserve Bank of India. The trial court found that the prosecution did not prove that Anthony was a resident outside India, leading to the respondent's acquittal.

3. Contravention of Section 9(1)(d) of the Foreign Exchange Regulation Act, 1973:
The respondent was accused of making payments to various individuals on behalf of Anthony, without the required exemption from the Reserve Bank of India. Again, the trial court acquitted the respondent based on the failure of the prosecution to prove that Anthony was a resident outside India.

4. Burden of Proof and Presumption under Sections 59, 71, and 72 of the Foreign Exchange Regulation Act, 1973:
The appellate court emphasized the significance of Sections 59, 71, and 72 of the Act, which shift the burden of proof to the accused to disprove the presumption of culpable mental state and the contents of the documents seized. The court noted that the trial court overlooked these provisions, leading to a miscarriage of justice. The appellate court found that the contents of exhibit P-3, coupled with exhibit P-5, were sufficient to establish that Anthony was a resident outside India, and the respondent failed to disprove this presumption.

Conclusion:
The appellate court set aside the acquittal, finding the respondent guilty of the charges under Sections 9(1)(c), 9(1)(a), and 9(1)(d) punishable under Section 56 of the Act. The court imposed a fine of Rs. 500 in each case, with a default sentence of one month rigorous imprisonment.