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2015 (8) TMI 1381 - AT - FEMAContravention of Sections 18(2) and 18(3) of FERA, 1973 r/w notifications of Central Government dated 1-1-1974 - Held that - Adjudicating Authority was at liberty to appreciate the evidence on record in accordance with law according to its wisdom independently. However, as a principle of law it cannot be said that judgments in all criminal appeals will ipso facto result in quashing the adjudication proceedings under FERA alike disciplinary proceedings in matter in which the accused (employee) is honourably acquitted. There cannot be any jacket cast formula in this respect. However, we are of the view that findings of the Hon ble High Court even in a criminal matter on the same set of facts as involved in adjudication proceedings cannot be ignored or overlooked and brushed aside causally and will carry weight and in the eventuality of the Hon ble High Court recording either clean acquittal in appeal or quashing of the complaint/proceedings on the ground of insufficiency of evidence or failure to establish the contraventions, the findings of the Hon ble High Court shall prevail over the findings of Adjudicating Authority unless a distinction on some factual and legal grounds can be made to show that the findings of the Hon ble High Court are not applicable and have no effect at all, in other words our interpretation is that the order of the Hon ble High Court will have definite persuasive and binding effect in the matter of interpreting the findings of adjudicating proceedings based exactly on the same set of facts subject to being clearly not being distinguished on facts or law. In view of the above, we are of the view that no contravention of Sections 18(2) and 18(3) of FERA, 1973 r/w notifications of Central Government dated 1-1-1974 is made out against the appellants and since the appellants appear to have taken all reasonable steps to receive or recover the payments for goods and they cannot be presumed to have contravened the said provisions r/w Central Government notifications.
Issues Involved:
1. Non-realization of export proceeds. 2. Adequacy of steps taken for recovery of export proceeds. 3. Applicability of FERA provisions post-repeal. 4. Effect of criminal proceedings on adjudication under FERA. 5. Doctrine of estoppel and binding nature of High Court judgments on adjudication proceedings. Issue-wise Detailed Analysis: 1. Non-realization of export proceeds: The appellant company, M/s. Rare Creations Ltd., failed to realize export proceeds amounting to Rs. 2,00,15,984 for 32 GR forms, leading to the issuance of a Show Cause Notice (SCN) for contravention of Section 18(2) read with Central Government Notification No. F-1/67/EC/73-1 & 3, dated 1-1-1974, and Section 18(3) of FERA, 1973. Despite the company's efforts, including legal actions and engaging recovery agents, a significant portion of the export proceeds remained unrealized. 2. Adequacy of steps taken for recovery of export proceeds: The appellant company claimed to have taken all reasonable steps to recover the export proceeds, including filing suits against foreign buyers and engaging recovery agents. The company also applied to the RBI for extensions and write-offs. The Adjudicating Authority, however, found these efforts inadequate and imposed penalties. The Tribunal, referencing the Hon'ble Delhi High Court's judgment, concluded that the company had taken all reasonable steps and that the test of adequacy of steps, not the number of steps, was met. 3. Applicability of FERA provisions post-repeal: The appellants argued that proceedings under FERA were not maintainable as FERA, 1973 had been repealed. They contended that their applications for waiver and write-off were under active consideration by the RBI under FEMA, 1999. The Tribunal noted that the criminal complaint under Section 56 of FERA, 1973 had been quashed by the Hon'ble Delhi High Court, which found that the appellants had taken all reasonable steps for recovery. 4. Effect of criminal proceedings on adjudication under FERA: The Tribunal considered the Hon'ble Delhi High Court's judgment, which quashed the criminal complaint against the appellants based on the same facts. The Tribunal highlighted that the findings of the High Court, which acquitted the appellants honorably, should have a persuasive and binding effect on the adjudication proceedings. The Tribunal emphasized that the standard of proof in criminal proceedings is higher than in adjudication proceedings, and the High Court's findings should prevail unless distinguished on factual or legal grounds. 5. Doctrine of estoppel and binding nature of High Court judgments on adjudication proceedings: The Tribunal referred to various judgments, including Gopaldas Udavdas Aliuja and Anr. v. Union of India and Others, and Radhey Shyam Kejriwal v. State of West Bengal and Anr., which established that findings in criminal proceedings could influence adjudication proceedings. The Tribunal concluded that the Hon'ble High Court's judgment, which found that the appellants had taken all reasonable steps to recover the export proceeds, should be binding on the adjudication proceedings under FERA. Conclusion: The Tribunal allowed the appeals, set aside the adjudication order dated 13-10-2006, and concluded that no contravention of Sections 18(2) and 18(3) of FERA, 1973 read with Central Government notifications was made out against the appellants. The Tribunal found that the appellants had taken all reasonable steps to recover the export proceeds and could not be presumed to have contravened the said provisions.
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