9911796707
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Issues:
- Penalty imposed for contravention of Section 9(1)(e) FER Act - Acceptance of fixed deposits from NRIs - Compliance with RBI guidelines - Delay in adjudication proceedings - Violation of principles of natural justice - Confiscation of deposited amount - Registration requirement for non-banking finance company - Role of power of attorney holder in making deposits - Legality of impugned order Analysis: 1. Penalty Imposed for Contravention of Section 9(1)(e) FER Act: The judgment involves appeals against a penalty imposed by the Enforcement Directorate for contravention of Section 9(1)(e) of the Foreign Exchange Regulation Act (FER Act) on the basis of fixed deposits accepted from NRIs. 2. Acceptance of Fixed Deposits from NRIs: The appellant firm accepted fixed deposits totaling Rs. 1,05,70,000 from 7 NRIs, leading to allegations of placing sums to the credit of non-resident persons in violation of the FER Act. The Enforcement Directorate contended that the deposits were arranged by individuals holding Power of Attorney on behalf of NRIs. 3. Compliance with RBI Guidelines: The appellants argued that they operated within the guidelines of the RBI, as deposits from NRIs with maturity periods not exceeding 3 years were permissible. They also highlighted a request made to the RBI seeking permission for 5-year deposits, which was responded to with a 3-year limit on non-repatriation basis. 4. Delay in Adjudication Proceedings and Natural Justice Violation: The appellants raised concerns regarding the excessive delay in adjudication proceedings, spanning about 7 years, and the failure to provide relied-upon documents despite repeated requests. They argued that the impugned order was tainted by these delays and procedural violations. 5. Confiscation of Deposited Amount and Registration Requirement: The Enforcement Directorate contended that the appellant firm, being a non-banking finance company, could only accept deposits from NRIs after obtaining registration with the RBI. They argued that the general permission under RBI guidelines did not apply without such registration. 6. Role of Power of Attorney Holder and Legality of Impugned Order: The Tribunal considered whether a Power of Attorney holder could make fixed deposits on behalf of NRIs or if the depositors themselves had to make the deposits. It was concluded that the impugned order did not withstand legal scrutiny, as there was no restriction in the FER Act against activities performed through a Power of Attorney holder. 7. Conclusion and Decision: Based on the analysis, the Tribunal found merit in the appeals and quashed the impugned order, directing the return of the confiscated amount and the pre-deposit amount of Rs. 6 lakhs to the appellant firm within 2 weeks. The judgment emphasized the legality of activities conducted through a Power of Attorney holder and the need for compliance with RBI guidelines for accepting deposits from NRIs.
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