2008 (6) TMI 641 - AT - FEMA

Issues Involved:
1. Legality of the Adjudication Order exonerating respondents from contraventions of Section 9(1)(b), 9(1)(d), and 68 of the Foreign Exchange Regulation Act, 1973.
2. Validity of filing revision petitions after a delay.
3. Authorization of the Deputy Legal Adviser to file the revision petitions.
4. Jurisdiction of the Appellate Tribunal for Foreign Exchange to entertain the revision petitions.
5. Ignorance of law versus ignorance of fact as a defense.
6. Determination of penalties for contraventions of the Foreign Exchange Regulation Act, 1973.

Detailed Analysis:

1. Legality of the Adjudication Order:
The revisionist sought the examination of the legality, propriety, and correctness of the Adjudication Order No. ADJ/72-73/DD/SLH/99 dated 24.9.1999, which exonerated the respondents from allegations of contraventions under Sections 9(1)(b), 9(1)(d), and 68 of the Foreign Exchange Regulation Act, 1973. The Tribunal found that the impugned order erroneously exonerated the respondents based on ignorance of law, which is not a valid defense. The respondents were found guilty of making and receiving payments on behalf of non-residents without the permission of the RBI, thus contravening Sections 9(1)(b) and 9(1)(d).

2. Validity of Filing Revision Petitions After a Delay:
The revision petitions were filed after a delay of 1 year, 10 months, and 12 days. The Tribunal acknowledged that while there is no prescribed limitation period under Section 52(4), the revision petitions must be filed within a reasonable time. The Tribunal referred to judicial norms and previous judgments to determine what constitutes a reasonable period. Despite the delay, the Tribunal decided to examine the merits of the case to avoid perpetuation of injustice.

3. Authorization of the Deputy Legal Adviser:
The Tribunal noted that the Deputy Legal Adviser, Dr. Shamsuddin, who filed the revision petitions, was not authorized to do so. However, it was common practice for revision petitions to be filed under the signatures of either the Deputy Legal Adviser or the Assistant Legal Adviser. The Tribunal decided not to dismiss the petitions on this technicality, especially since it also had suo motto powers to examine the legality, propriety, and correctness of the adjudication order.

4. Jurisdiction of the Appellate Tribunal for Foreign Exchange:
The respondents argued that the Tribunal's revisional jurisdiction is narrower than its appellate jurisdiction and should be exercised within reasonable time limits. The Tribunal clarified that it has revisional jurisdiction under Section 52(4) of the Foreign Exchange Regulation Act, 1973, and Section 19(6) of the Foreign Exchange Management Act, 1999. The Tribunal emphasized that its revisional powers are meant to correct serious illegality and ensure that lower authorities remain within the boundaries of law.

5. Ignorance of Law vs. Ignorance of Fact:
The respondents claimed they were unaware that the individuals on whose behalf they made or received payments were non-residents. The Tribunal rejected this defense, stating that ignorance of law is no excuse. The Tribunal found that the respondents had admitted ignorance of law in their replies to the show cause notices but had not pleaded ignorance of fact. The Tribunal concluded that the respondents' actions contravened the provisions of Section 9(1)(b) and 9(1)(d) of the Foreign Exchange Regulation Act, 1973.

6. Determination of Penalties:
The Tribunal determined that Respondent Nos. 1, 2, and 3 contravened Section 9(1)(d) by making payments on behalf of non-residents, while Respondent Nos. 4 and 5 contravened Section 9(1)(b) by receiving such payments. The Tribunal imposed penalties of Rs. 1,00,00,000 each on Respondent Nos. 1, 2, and 3, Rs. 66,00,000 on Respondent No. 4, and Rs. 34,00,000 on Respondent No. 5. The penalties were deemed appropriate given the gravity of the contraventions and the amounts involved.

Conclusion:
The Appellate Tribunal for Foreign Exchange quashed the impugned adjudication order and imposed substantial penalties on the respondents for contraventions of the Foreign Exchange Regulation Act, 1973. The Tribunal emphasized the importance of adhering to legal provisions and the necessity of imposing penalties to deter future violations.

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