2012 (6) TMI 78 - HC - FEMA

FEMA Penalty for contravention of Sections 6(4) & 6(5) read with Section 13A-10 of Exchange Control Manual - granting of loan to the petitioner, a Non-Resident Indian (NRI) and relending of the same to the respondent No.5 M/s. Prime Petro Products Ltd. through its Chairman and Managing Director Sh. R.K. Mishra impleaded as respondent No. 6 Held that - Bank had at the time of granting loan to the petitioner obtained her undertaking that she was not taking the loan for further committing loan transaction and had also complied with the other instructions issued by the Reserve Bank of India in this regard. It was thus held that the Bank and its official could not be said to be privy to or in the know of the illegality committed and no case for imposition of penalty against them was made out petitioner unable to explain as to how the petitioner is affected by the order so as to have a locus to challenge the same. petition dismissed.

Summary

Issues:
Challenge to order of Appellate Tribunal for Foreign Exchange regarding penalty under FERA for loan transactions involving Non-Resident Indian (NRI) and M/s. Prime Petro Products Ltd. Appeal against penalties imposed on Bank of Baroda and its Senior Manager. Petitioner not made a party in the appeal before the Appellate Tribunal. Grievance of petitioner regarding lack of knowledge and hearing in the case. Lack of legal provision entitling petitioner to be a party in the appeal. Prejudice suffered by petitioner from Appellate Tribunal's order. Seizure of petitioner's account with the Bank. Remedies available to petitioner for challenging the seizure. Appealability of Appellate Tribunal's order to High Court.

Analysis:
The case involves a challenge to the order of the Appellate Tribunal for Foreign Exchange, which allowed the appeals of respondent No.7, a Senior Manager at Bank of Baroda, and respondent No.4, Bank of Baroda, against penalties imposed under FERA for loan transactions involving a Non-Resident Indian (NRI) and M/s. Prime Petro Products Ltd. The penalties were imposed for contravention of statutory provisions related to loan transactions. The Appellate Tribunal found that the Bank and its official had exercised due diligence and were not aware of any illegality, thus ruling out the imposition of penalties.

The petitioner, who was not made a party in the appeal before the Appellate Tribunal, raised concerns about lack of knowledge and hearing in the case. However, the court noted that there was no legal provision entitling the petitioner to be a party in such appeals. The petitioner's argument that being affected by the order due to the seizure of her account with the Bank was also dismissed, as the orders did not address the account seizure, and any grievances related to it should be pursued through separate remedies.

Furthermore, the Enforcement Directorate pointed out that the order of the Appellate Tribunal was appealable to the High Court, suggesting that the petitioner had remedies available through such an appeal rather than a writ petition. The court ultimately found no merit in the petition and dismissed it, highlighting that the petitioner's grievances did not warrant challenging the Appellate Tribunal's order through a writ petition.