2008 (8) TMI 1031 - AT - FEMA

Summary

Issues Involved:
1. Contravention of provisions of section 9(1)(a), 9(1)(c), and 9(1)(e) of the Foreign Exchange Regulation Act, 1973.
2. Admissibility and relevance of evidence and documents.
3. Burden of proof regarding the non-residential status of N.C. Rangesh.
4. Alleged procedural lapses and fairness of the adjudication process.
5. Quantum of penalty imposed.

Issue-wise Detailed Analysis:

1. Contravention of Provisions of Section 9(1)(a), 9(1)(c), and 9(1)(e) of FERA, 1973:
The appellants were charged with acknowledging a debt, placing a sum of Rs. 12,00,000 to the credit of N.C. Rangesh, a person resident outside India, and making payments of Rs. 1,26,000 and Rs. 90,000 towards interest without any general or special exemption from the Reserve Bank of India. The judgment confirms that the appellants took a loan of Rs. 12,00,000 from N.C. Rangesh and repaid it, acknowledging the debt and making payments to a person resident outside India, thus violating section 9(1)(a), 9(1)(c), and 9(1)(e).

2. Admissibility and Relevance of Evidence and Documents:
The appellants argued that the documents recovered from M/s. Micam Leather Exports Ltd. were not admissible as they were not jointly proceeded against for the same cause of action. However, the tribunal found that the documents and statements from third parties were admissible and relevant, as they established the non-residential status of N.C. Rangesh and the association between the appellants and N.C. Rangesh.

3. Burden of Proof Regarding the Non-Residential Status of N.C. Rangesh:
The tribunal emphasized that the burden of proving the non-residential status of N.C. Rangesh was on the respondent, which was adequately discharged through various documents and statements. The appellants' contention that they were unaware of N.C. Rangesh's non-residential status was not accepted, given their long association and the evidence on record.

4. Alleged Procedural Lapses and Fairness of the Adjudication Process:
The appellants claimed that the adjudication process was unfair, as they were not allowed to cross-examine third parties, and the show-cause notice was vague. The tribunal dismissed these claims, stating that the appellants were given full opportunity to appear before the Enforcement Directorate but deliberately avoided it. The show-cause notice was found to be specific, detailing the violations and charges against the appellants.

5. Quantum of Penalty Imposed:
The tribunal upheld the penalties imposed on M/s. Associated Builders and Developers and H. Ameer, finding them commensurate with the gravity of the offense. However, the penalty against K.M. Riyasuddin was reduced to 50% of the original amount, considering his role as an agent of the other appellants. The appeals of M/s. Associated Builders and Developers and H. Ameer were dismissed, while the appeal of K.M. Riyasuddin was partly allowed.

Conclusion:
The tribunal confirmed the contraventions of section 9(1)(a), 9(1)(c), and 9(1)(e) of FERA, 1973, by the appellants, upheld the penalties imposed on M/s. Associated Builders and Developers and H. Ameer, and reduced the penalty on K.M. Riyasuddin. The pre-deposited amount was ordered to be appropriated towards the penalty.