2001 (4) TMI 257 - HC - FEMA

Summary

Issues Involved:
1. Maintainability of the appeal by the Enforcement Directorate.
2. Interpretation of Section 9(3) of the Foreign Exchange Regulation Act, 1973.
3. Evaluation of evidence regarding the remittance of money from abroad to India.

Detailed Analysis:

1. Maintainability of the Appeal by the Enforcement Directorate:

The respondent's counsel raised a preliminary objection regarding the maintainability of the appeal by the Enforcement Directorate, arguing that only the Union of India or the Central Government could be the aggrieved party. The court, however, rejected this objection, stating that the Enforcement Directorate, being an instrumentality of the government, is authorized to file the appeal. The court referenced Sections 3 and 4 of the Foreign Exchange Regulation Act, 1973, which empower officers of the Enforcement Directorate to exercise powers and discharge duties under the Act. The court disagreed with the Madras High Court and Punjab and Haryana High Court decisions that held otherwise, asserting that the Enforcement Directorate can act on behalf of the government.

2. Interpretation of Section 9(3) of the Foreign Exchange Regulation Act, 1973:

The appellant's counsel argued that the Foreign Exchange Regulation Appellate Board erred in interpreting Section 9(3) to require proof of the actual physical movement of money from abroad to India. The court examined the definitions and modern economic practices, concluding that "remit or cause to remit" includes sending money through various means, not necessarily involving physical movement of currency. The court emphasized that remittance could involve instructions to agents in India to distribute funds collected abroad, thus constituting a violation of Section 9(3) if not done through authorized dealers.

3. Evaluation of Evidence Regarding Remittance of Money:

The court scrutinized the evidence, including statements from the respondent and other involved parties, which indicated that the respondent collected money in Dirhams in Abu Dhabi and arranged for its distribution in India through agents. The court found that the adjudicating authority had correctly established the charge against the respondent based on this evidence. The Appellate Board's requirement for proof of physical movement of money was deemed a misinterpretation of the law. The court highlighted that the statements and documents seized corroborated the illegal remittance activities, thus supporting the adjudicating authority's findings.

Conclusion:

The court allowed the appeal filed by the Special Director, Enforcement Directorate, setting aside the order of the Foreign Exchange Regulation Appellate Board. The court restored and confirmed the adjudicating authority's order, which imposed penalties on the respondent for violating Section 9(3) of the Foreign Exchange Regulation Act, 1973. The judgment emphasized that modern methods of remittance do not necessitate physical movement of currency and that the evidence sufficiently proved the respondent's illegal activities.