|
Advanced Search Options
FEMA - Case Laws
Showing 1 to 20 of 1378 Records
-
2024 (11) TMI 835
Recognition and enforcement of a foreign award - Common petition filed by the Petitioner seeking recognition/enforcement and execution - HELD THAT:- In the wake of the decision in the case of Vedanta Limited [2020 (9) TMI 1178 - SUPREME COURT] where it is clearly pronounced that there is no need to take two separate proceedings i.e. one for deciding the enforceability (recognition) of the award as a deemed decree and then separate proceeding for execution of the deemed decree thereafter, and it is open for the award holder to apply for recognition and execution of a foreign award by common petition. In stage 1, the Court would decide the enforceability of the award as a deemed decree, on satisfying the requirement of Section 47 and 48. Once the Court decides that a foreign award is enforceable as a decree of that Court, it shall proceed to take effective steps for its execution as a deemed decree and then would take recourse to the provision of Order 21 of the Code of Civil Procedure.
The reliefs sought in the present Petition has been bifurcated, as prayer clause (a), seek a declaration that the awards in favour of the petitioner are enforceable under part II of the Act of 1996 and a direction is sought to enforce and execute the awards as decree in its favour and against all the Respondents. Prayer clauses (c) and (d) are the reliefs sought under Order XXI of the Code and needless to state that while these reliefs are to be considered, it is open for the judgment debtors to raise the possible objections permissible, while executing the decree. In any case, the Execution Application which is filed will be decided subsequent to the declaration in the petition in terms of prayer clause (a) thereof, as prayers (b), (c) and (d) will be a part of the execution stage.
In the wake of the above, Issue No.A is answered by holding that a common petition seeking enforcement and execution as a deemed decree is maintainable in the wake of the law laid down in case of Vedanta Limited (supra) and the issue is answered in favour of the Petitioner, by holding that a common petition can be entertained for enforcement and execution of the three awards.
Scope of review u/s 48 of the Arbitration and Conciliation Act, 1996, and whether it is permissible to undertake the review on the merits of the Award - The “pro-enforcement bias” of the New York Convention, which has found its way in Section 48 has cast the burden on the party/parties objecting to the enforcement instead of party seeking enforcement and it is only when the proof is tendered to the effect, that the parties to the agreement being under some incapacity, or the agreement being invalid under the law to which the parties have subjected it, the enforcement can be refused.
The question as to whether a non-parties to the agreement can raise such an objection is also well settled in Gemini Bay Transcription Private Limited (supra). By a bare look at Section 47, which speaks of an arbitral award on differences between “persons” and specifically, since Section 48 (1) (a) refers only to the “parties” to the agreement referred to in Section 44 (a), it is concluded that to include non-parties to the agreement, by introducing the word “person” would run contrary to the express language of Section 48 (1) (a).
It is with this intention that the legislature has conferred the right to object to the enforcement of an award at the instance of the party against whom it is invoked and, since, the grounds on which the objection can be raised, are clearly stipulated by the legislature, and speak of incapacity of parties and the agreement to be invalid under the law to which the parties have subjected it, an attempt to bring non-parties within this ground has been described to be trying to fit a square peg in a round hole.
It is thus well settled, that Section 48, is hedged with pro-enforcement bias and unless the Respondent No. 1 is able to show that its case falls within Section 48 (1) or 48 (2), the foreign award must be enforced.
Arbitration Petition is filed beyond the period of limitation in the wake of the decision of the Apex Court in the case of Government of India Vs. Vedanta Limited [2020 (9) TMI 1178 - SUPREME COURT] - Since the awards, which are sought to be enforced through the present petition are dated 5/04/2006, 24/08/2007 and 27/03/2008, and as per the law laid down in Vedanta Limited (supra) the limitation period to file the petition for enforcement of the foreign award is held to be governed by Article 137 of Schedule to the Limitation Act, the petition filed under Section 48 of the Act of 1996 in March/ April 2018 is hit by the bar of limitation.
Since the period consumed from the day of passing of the last award on 27/03/2008, despite filing of petition under Section 34 of the Act of 1996 in India and since it did not amount to an automatic stay on the enforcement/ execution of the award, it was open to the petitioner to file the enforcement petition within time period of 3 years from the expiry of 28 days from each of the award, as under the English Arbitration Act, 1996, time period to challenge the award is 28 days, and the time to enforce the award began to run on expiry of 28 days from passing of the awards.
As a sequel to the above, the present petition in my view is barred by limitation and the argument of Mr. Seksaria on behalf of Respondent No. 1, and entertaining the petition would also be hit by the public policy of India, being not to entertain the proceedings barred by the law of limitation.
Whether the transaction contemplated under the Master Agreement is violative of public policy of India, making the Awards unenforceable under Section 48 (2) of the Arbitration and Conciliation Act, 1996? - When the admissions coming from the witness of E-City was not controverted by subjecting him to cross-examination, find that the Tribunal derived an inference contrary to what has been deposed by the witness, without affording a chance to explain or clarify the said statement, has definitely resulted into a loss of fair hearing as Mr. Chudasama had unequivocally stated that it was not possible for E-City to have made the remittances without prior approval of Reserve Bank of India, but without going for the cross-examination, the Tribunal has questioned this testimony, expressed doubt and derived at a finding that it was not a mandatory requirement and it was not refused, which definitely has resulted into perversity in its finding.
Award which is in violation of principal of natural justice, on the ground of “fairness”, is contrary to the public policy and hence cannot be enforced.
Whether the Petitioner can raise challenge to the de-merger scheme? - The Petitioner had a knowledge of the demerger of Respondent No. 1 when it approached the Supreme Court of New York as an authenticated true copy of the order passed by the Bombay High Court in Company Petition approving the scheme of demerger between Respondent Nos.1 and 3 was annexed alongwith the proceedings and the certified copy of the same was obtained by the Petitioner on 01/11/2007. Since the Petitioner continued to remain silent despite having knowledge of the demerger scheme from 2008, after a gross delay of 11 years, there cannot be an indirect challenge to the scheme of demerger as the orders have already attained finality.
Necessity of impleading Respondent Nos. 2 to 4 in the petition seeking enforcement and execution of the Arbitral Awards - Since the Respondent Nos. 2 to 4 who are not signatory to the arbitration agreement are sought to be roped into the present proceedings, which is the post arbitration stage, the burden of establishing the necessity to implead them as parties, is on the petitioner and it is an onerous burden, as they are the parties being proceeded in execution and never had the opportunity to make out a case before the Arbitral Tribunal. They had no opportunity to plead/contradict the pleadings, lead evidence, advance arguments, and therefore, impleading them at this stage, on a broad premise that they have participated in the fraud, so as to divest the Respondent No. 1, a party to the award, of its assets, with an intention to avoid its liability under the awards, is very difficult proposition to be accepted.
Respondent Nos. 2 to 4 were never party to the agreement, nor they were part of any transaction, nor they had any opportunity to meet the case against them during the arbitral proceedings. Merely alleging that they had played a fraud is insufficient, as fraud is not to be pleaded and in absence of any evidence tendered to that effect, the bare and unsubstantiated averment cannot be entertained and hence, according to me, no case is made out by the petitioner against the Respondent Nos. 2 to 4, in seeking the relief in the present petition. On the other hand, Chamber Summons taken out by Respondent Nos. 2 to 4 to delete them from the proceedings deserve to be made absolute.
Objection of E-City that IMAX Ltd. had merged into IMAX Corporation in January 2002 and, hence, invocation of arbitration by IMAX Ltd. was invalid under the laws of Singapore - As the subject contract entered between the Petitioner and the Respondent No. 1, was a contract contingent upon the approval of Reserve Bank of India and IMAX had acknowledged this fact and agreed for any reasonable restructuring, as long as it did not negatively impact it in a material fashion. Admittedly, no prior approval of Reserve Bank of India was received and the transaction could not be completed. The ICC has awarded the damages on the premise that RBI’s approval could have come, but the fact remains that it never came. Since, according to me, as held above, the necessity of RBI’s approval was imperative and obtaining such an approval was in tune with the FEMA, in not adhering to its requirement and acting in violation of it’s provision, is a matter of public policy, and since in the wake of the statutory provision u/s 48 (2)(b), the enforcement of the award, which is contrary to the public policy shall be refused by the Court, thus rejecting the relief sought in the Petition by the Petitioner, seeking enforcement of the awards.
In addition, since there is also violation of fair hearing rule, which is also a part of the fundamental policy of Indian law and the process followed by the Tribunal in arriving at the awards, being in violation of the same, we also express that it is in contravention of the fundamental policy of Indian law. We must clarify that the test for contravention of fundamental policy of Indian law, which is applied by me, in no way has touched the review of the matter on merits of the dispute between the parties.
Petition is barred by limitation, since in light of the law laid down by the Apex Court in Vedanta Ltd.(supra), the enforcement and execution of a foreign award shall be governed by Article 137 of the Limitation Act, 1963, and though it is permissible to condone the delay, but in absence of the Petitioner seeking condonation of delay, and rather assertively staking the claim that the Petition is within limitation, I am left with no option, but to dismiss the Petition.
Similarly,also expressed that the impleadment of Respondent Nos. 2 to 4 in the Petition is unwarranted and specifically when Mr. Chinoy has set out his intention clear and loud, that the Respondent Nos. 2 to 4 are impleaded, based on an assumption that the assets of E-City are diverted through them.
There could be definitely no challenge raised to the demerger schemes, which by this time are settled, with the sanction from the Company Court in the country and they cannot be re-opened.
Though it is sought to be argued on behalf of Respondent No. 1 that there was no valid invocation for the reference to the Arbitral Tribunal and an objection is also raised to the composition of the Tribunal, coupled with non-compliance of ICC rules and the ground that proper authority to file claim was not determined is also pressed into service on behalf of E-City, as some of the points on which, the enforcement of the awards is opposed by it, in the wake of the finding rendered above, I have already formed an opinion that the awards do not deserve enforcement and execution in light of the scheme contained in Part II, Chapter I of the Act of 1996 under the New York Convention awards, I have refrained myself from considering the said issues.
From the awards passed against Respondent No. 1 and in favour of IMAX, a foreign party, who has not even supplied the goods under the agreement, but which is held entitled for a huge sum of money under the awards and the money will be taken out of this country, without the stipulation of the agreement being complied with and since, this shock the conscious of the Court, the enforcement and execution of awards, as prayed by the Petitioner in the Petition, is declined.
-
2024 (11) TMI 834
Penalty for the contravention of Section 3(b) of FEMA, 1999 - under-invoicing to evade customs duty - significance of a statement recorded under Customs Act as relied upon - goods worth Rs. 6,01,82,311 imported as against the declared value of Rs. 1,71,62,087 against 26 Bills of Entry and had paid the differential amount in cash to the supplier in Japan in Indian Rupees in contravention of Sec. 3(b) of FEMA, 1999
Applicability of Customs Act on FEMA Issues - Reliance placed by the respondent Directorate on the proceedings conducted by the DRI under the Customs Act, 1999 - as contended that the intent and purpose of the two enactments are vastly different from each other and the findings of investigation under the first Act cannot be applied to the other - HELD THAT:- Though the case under the FEMA, 1999 may have been based on the findings of the investigations conducted by the DRI under the Customs Act, 1962, having initiated the investigation, the Directorate of Enforcement (ED) has examined the case and concluded enquiries from the point of view of violations under FEMA, 1999, if any.
While the focus of investigation under the Customs Act, 1962 was under-invoicing of imports to evade Customs duty, the focus of investigation under FEMA, 1999 was payment of the differential amount between the invoiced value and actual value through illegal channels. The two are different, though related contraventions under the respective Acts.
The respondent Directorate independently recorded the statements of the appellant under FEMA, 1999 in which he confirmed his earlier statements before the DRI and explained in detail not only the modus operandi adopted by him for under-invoicing, but also payment of the price differential in cash to the representatives of the overseas suppliers. Other verifications were also carried out, including letters sent to and reply received from the Citibank, Surat confirming the remittances made against imports made by the Shree Laxmi Trading Company, though, admittedly, the investigations in this case primarily relied on the statements of the appellant.
No bar on the empowered agency under one Act utilizing the information and findings of the investigations conducted by another law-enforcement agency investigating the case from its own angle under another Act. In fact, it is considered good practice for law enforcement agencies to share information which may be relevance to each other so that appropriate investigation can be undertaken by the other agency on issues undue its domain. As such, no merit in these contentions of the appellant.
Competence of the DRI to conduct investigations under the Customs Act, 1962 - The order under challenge in this appeal is an order arising from proceedings which were initiated and concluded under the FEMA, 1999 and not under the Customs Act 1962. Even if there is any substance in the contention that the DRI was not competent to conduct the said investigation under the Custom Act, 1962, so long as the investigations made out a case of violation of FEMA, 1999, the ED would be well within its rights to initiate appropriate enquiries under FEMA, 1999 take the matter to its logical end. As already pointed out, no doubt the action of the ED under FEMA, 1999 was triggered by the information received from the DRI in respect of proceedings under the Customs Act, 1962. However, proceedings under FEMA 1999 were independent proceedings initiated and concluded under the said Act which did not suffer from any illegality for want of jurisdiction since the ED is the designated authority empowered to implement the provisions of FEMA, 1999. Accordingly, there is no reason for me in the current proceedings to enter into the issue of competence of the DRI to investigate violations under the Customs Act, 1962.
Reliance placed on statements of the appellant before the DRI and the respondent Directorate (ED) - Statements of the appellant under section 37 of the Act were recorded on 04.04.2011 wherein he confirmed the admissions made in his staements before the DRI. As has been pointed out by the learned adjudicating authority, the statements were recorded over a period of 9 months. Furthermore, they were recorded nearly four years after the DRI had recorded his statements and yet the appellant Shri Jariwala, confirmed the facts stated to the officers of the DRI during the investigation under Customs Act.
Adjudicating authority has further pointed out that the statements had not been retracted even upto the time of passing the adjudication order. Keeping in view the time horizon over which the statements were recorded the consistency in the admissions made before the two authorities, allegation of threat and duress are clearly an afterthought on the part of the appellant to escape liability under FEMA, 1999.
Show Cause Notice (SCN) was vague - There was no proposal in the SCN to impose penalty on the appellant under any section of FEMA, 1999 - SCN, the attached Complaint and the documents annexed thereto as “Annexure-A”, when read together as one, convey very specific allegations against the appellant as well as the material being relied upon in support of the said allegations. Nothing vague about the same as alleged by the appellant. Accordingly, reject these contentions of the appellants.
SCN was issued by the Special Director of Enforcement whereas the case was actually adjudicated upon by the Additional Director who is junior in the hierarchy to the Special Director - SCN in this case was issued on 28.12.2011 and the impugned order in pursuance thereof was passed on 30.01.2013. Thus, it is evident that there was a considerable time gap between the date of issue of the notice and the date of passing the adjudication order. As under Section 16 of FEMA, 1999 the Central Government is authorised to appoint as many officers as it may think fit as adjudicating authority. In all likelihood, in the interim period between the date of issue of the notice and the passing of the impugned order, the jurisdiction of the adjudicating authority changed.
Once a notice has been issued and the proceedings have commenced, the same shall not come to an abrupt end upon change of the incumbency in the post of the designated adjudicating officer and the proceedings can be continued by the new incumbent appointed as adjudicating authority and continuation of the proceedings already initiated and ongoing would not necessitate issue of a fresh SCN by the new incumbent. No doubt, in the interest of natural justice, the new incumbent would be expected to provide another opportunity of being heard to the affected person before passing an order based on the material already brought on record by his predecessor. But the law does not mandate that he should issue a fresh SCN and re- initiate the entire process. The process already initiated for adjudication can be continued until the final order is passed regardless of any change in incumbency. Nothing has been brought on record by the appellant to indicate how the passing of order by a different officer than the one who originally issued the SCN has caused any prejudice to the appellant.
Violation of Sub-rule (1) and (3) of Rule 4 of the said rules which vitiated the entire proceedings - As prior to the issue of SCN, the adjudicating authority had already discussed the factual background of the case and come to a prima facie conclusion that M/s Shree Lakshmi Trading Company had contravened the provisions of FEMA, 1999 for which it prima facie appeared to be liable for penalty under Section 13. Since nothing was heard from the side of the appellant in response to the SCN, no new light was thrown upon the subject from the appellant’s side. Therefore, there was no reason for any change in the opinion formed by the authority and the authority issued notices of hearing in the matter. Considering the above sequence of events, no illegality in the action of the learned adjudicating authority.
Determination of “sum involved” in the contravention which is the basis of imposition of penalty u/s 13 of FEMA, 1999 - A very specific admission was made in the present case by the appellant in his statements that value declared for import $ 5 to $ 8 per kg per metallic prevailing rate of $ 30 -37 per kg for metallic yarn $ 23-25 per kg for metallic film. The above statement was confirmed in subsequent statements before the DRI as well as ED, although, it is now denied by the appellant. The veracity of the statement has already been discussed in para 56-58 above. On the basis of the above differential in the declared rate and the actual rate, it was held that the appellants had actually imported goods of value Rs. 6,01,82,311/- as against the declared value of Rs. 1,71,62,087/- against 26 Bill of Entry. He further admitted in his statement that he had paid the differential which works out to Rs. 4, 30,20,224/- to the representatives of the suppliers in India in cash in Indian Rupees while imposing penalty, the Ld. Adjudicating Authority has held the said amount to be the “sum involved”. Having considered the above facts carefully, I do not find any discrepancies in the same. Nor has the appellant provided any alternate working of the “sum involved” backed by necessary evidence.
DRI received certain invoices showing the current value of goods supplied to that firm. The appellant, in the present case, has admitted that his firm was importing goods at the same prices. DRI also recovered insurance policy document disclosing the current value in respect of another importer. These facts, corroborate the facts stated by the appellant Sh. Jariwala in his statements.
No merit in the contentions of the appellant wherein he has questioned the imposition of the penalty on the ground that the “sum involved” has not been arrived at correctly by the respondent. Appeal dismissed.
-
2024 (11) TMI 799
Condonation of a delay of 138 days in filing an appeal - Order of Adjudicating Authority dropping the charges framed against the notice being Show Cause Notice issued u/s 6 (3)(a) and (h) of FEMA - HELD THAT:- Having heard the learned advocates for the respective parties and having perused the averments made in the application as well as the decisions relied upon, reading the proviso to Section 35 of the FEMA Act and in view of the judgment of the Hon’ble Supreme Court in the case of Singh Enterprises [2007 (12) TMI 11 - SUPREME COURT], this Court would have no jurisdiction to condone the delay in excess of 60 days’. As can be noticed from the averments made in the application, what is sought to be challenged in the present appeal, is the order dated 27.09.2023 passed by the Appellate Authority, which is filed almost after delay of 138 days i.e. beyond the period of outer limit of 60 days.
In view of the aforesaid expressive provision with regard to prescribed period curtailed for condonation of delay in the Act itself, the present application is held to be not maintainable.
-
2024 (11) TMI 798
Failure to utilize the foreign exchange for the purpose for which it was acquired - Contravention for acquisition of foreign exchange and for remittance of the same through various Banks in Mumbai to their overseas suppliers for import of goods but failed to bring any goods into India - It was without any general or special permission of the Reserve Bank of India (RBI). - whether there was negligence on the part of the appellants/banks for opening of the LCs and remittance of the foreign exchange despite non-submission of bills of entry and reminders and a report to the RBI?
HELD THAT:- The facts available on record shows receipt of the foreign currency against fake insurance claims which was never made by the Hamco Group of Companies with the Insurance Companies and was otherwise to be routed through the banks. The default by the appellants was realized and for that reason alone they subsequently wrote letters to insurance companies to find whether claims for insurance have been made. It was then informed that no claim was reported towards the insurance and specific reply of it has been given for Solo Industries Ltd. Al Sagar National Insurance Company, Dubai addressed the facts on 15.03.1999 that there was no claim reported by Solo Industries Ltd. or any of their consignees or settled by the said Company. The insurance company vide its letter dated 17.03.1999 also confirmed that the documents by Hamco Group of Companies were found to be forged and they were never issued by Al Sagar Insurance Company. They categorically denied receipt of claim or any settlement
For the reason that the word ‘abetment’ has not been defined under the Act of 1973, reference of Section 107 of IPC is given though it may not be relevant absolutely and in any case we find ingredients of the provisions are made out in this case. It cannot be pleaded that series of negligence and that too for years together would not lead to abetment.
The appellants have pleaded that they were not under obligation to examine the documents, rather were under obligation to open the LCs and effect remittance. It has already been commented that they were not to act as post office to process documents for remittance but were under obligation to apply the mandate of Manual 1993 and the UCPDC. In the light of the aforesaid, we find that the case against the appellants was rightly taken up by the respondent and it is not only the financial institutions but its employees were found involved and for that penalized leaving others who were not found involved. Thus, we find that proper scrutiny of the facts has been made by the Special Director and we do not find any illegality therein in reference to the abetment of the financial institutions and its employees. In view of the above, this Tribunal may not cause interference in the order.
State Bank of Patiala - The facts on the face of it would show that despite bill of entry not being submitted by Hamco for years together, the appellants continued to open LCs and made remittances and thus cause abetment by negligence in terms of Section 8(3) and Section 8(4) read with Section 64(2) of the Act of 1973. The appellant officers concerned in the process of opening LCs and issuing remittances are liable under Section 8(3) read with Section 64(2) read with section 68 of the Act of 1973.
Canara Bank - The appellant bank has provided further details qua the transactions pertaining to the Hamco group of companies wherein advances against export performances have been adjusted by the bank. Further, the appellant bank in the case of Dravya received an inward remittance of Rs. 35,02,00,000 for which no purpose was explained rather the bank treated it just like an inward remittance without any explanation. In the case of Nariman Point, an inward remittance of Rs. 15610922 was received without any reason assigned to it. Thus, the appellants are liable for abetment and negligence in terms of Section 8(3) and Section 8(4) read with Section 64(2) of the Act of 1973. The appellant officers processed LCs and issued remittances are liable for abetment under Section 8(3) read with Section 64(2) read with section 68 of the Act of 1973.
Vijaya Bank - The appellant bank has opened 24 LCs on behalf of Hamco though bill of entry was not submitted in respect of 21 LCs and remittances involving a total amount of US $ 17605540.45. Thus, despite no bill of entry submitted by the Hamco group of companies and despite non-fulfillment of the mandatory obligation by the Hamco group of companies, the bank continued to open LCs and remitted the amount. Thus, the bank is liable for abetment and negligence in terms of Section 8(3) and Section 8(4) read with Section 64(2) of the Act of 1973. The appellant officers concerned processed LCs and issued remittances are liable under Section 8(3) read with Section 64(2) read with section 68 of the Act of 1973.
United Western Bank - Despite no bill of entry being submitted by the Hamco group of companies and despite non-fulfillment of the mandatory obligation on part of the Hamco group of companies, the bank continued to open LCs and remitted the amount. The appellant bank has also remitted US $ 34809212.77 to various parties against Merchanting Trade transactions. The bank has also opened 7 LCs in respect of Dravya involving 37 remittances totaling US $ 2138730.92. Thus, the bank is liable for abetment and negligence in terms of Section 8(3) and Section 8(4) read with Section 64(2) of the Act of 1973. The appellant officers processed LCs and issued remittances are also liable under Section 8(3) read with Section 64(2) read with section 68 of the Act of 1973.
Oman International Bank - The appellant bank remitted US $ 22496721.85 on behalf of Hamco and US $ 896135 on behalf of Dravya to various parties against Merchanting Trade transactions without following the mandate of the Manual of 1993 and direction of UCPDC. Thus, the bank is liable for abetment and negligence in terms of Section 8(3) and Section 8(4) read with Section 64(2) of the Act of 1973. The appellant officers processed the LCs and issued remittances are liable under Section 8(3) read with Section 64(2) read with section 68 of the Act of 1973.
Indusind Bank Ltd. - No bill of entry was submitted by the Hamco group of companies in continuity and despite therein fulfillment of the mandatory obligation on part of the Hamco group of companies, the bank continued to open LCs and remitted amount by way of collection bills. Thus, the bank is liable for abetment and negligence in terms of Section 8(3) and Section 8(4) read with Section 64(2) of the Act of 1973. The appellant officers concerned in the process of opening LCs and issuing remittances are liable under Section 8(3) read with Section 64(2) read with section 68 of the Act of 1973.
Federal Bank Ltd. - The appellant bank has opened 30 LCs on behalf of Hamco however, the bill of entry was not submitted in respect of 27 LCs and 66 remittances involving a total amount of US $ 20390900.42. Thus, despite non-submission of bill of entry by the Hamco group of companies in continuity and absence of fulfillment of the mandatory obligation under the Manual of 1993 and direction of UCPDC on the part of the Hamco group of companies, the bank continued to open LCs and remitted the amount. Thus, the bank is liable for abetment and negligence in terms of Section 8(3) and Section 8(4) read with Section 64(2) of the Act of 1973. The appellant officers concerned processed LCs and issued remittances are liable under Section 8(3) read with Section 64(2) read with section 68 of the Act of 1973.
SBI Commercial and International Bank - The appellant bank has opened 4 LCs on behalf of Hamcothough bill of entry was not submitted in respect of 3 LCs and 4 remittances involving a total amount of US $ 2033770/-. Thus, despite that no bill of entry was submitted by the Hamco group of companies and absence of fulfillment of the mandatory obligation given under the Manual of 1993 and UCPDC on part of the Hamco group of companies, the bank continued to open LCs and remitted the amount. Thus, the bank is liable for abetment and negligence in terms of Section 8(3) and Section 8(4) read with Section 64(2) of the Act of 1973. The officers concerned in the process of opening LCs and issuing remittances are liable under Section 8(3) read with Section 64(2) read with section 68 of the Act of 1973.
-
2024 (11) TMI 797
Penalty on directors for contravening Export regulations under FEMA - non-realization of export proceeds - no documentary evidence in support of their contention of having made efforts to realize the export proceeds - Tribunal disposed of the applications for waiver of the pre-deposit of the penalty amounts with direction to deposit 10% of the amount of penalty imposed against each of them with Bank Guarantee for rest of the ninety per cent of the penalty within 30 days of the receipt of the Order - on legal advice they withdrew their suits before the Mumbai High Court and fresh legal suits were filed in the High Court of Justice, London.
HELD THAT:- We find that with respect to these appeals the Company M/s Mrugank Investments Limited failed to realize the export proceeds in respect of G.R.No.AU701578 dated 10.08.2000 for US$ 9,03,000/- negotiated through the Global Trust Bank Limited. It is also a matter of record that the RBI had refused further extension of time to realize the proceeds and had put the Company under the caution list restricting its right to make further exports. There is nothing on record to show that a suit was filed in the London Court. In fact, the Appellants have failed to produce any evidence to corroborate any direction from the London Court to their buyers to pay pending export proceeds.
The conduct of the Appellants in filing Writ Petition before the Hon’ble Bombay High Court and thereafter having yet withdrawn does not reflect the same as reasonable step taken by the Appellants for realization of the pending export proceeds. The Appellants have also failed to show their correspondence with the High Commission of India in London, in-spite of directions to this effect by the RBI. We also find that the two appellants before us were the Directors of the Company who were responsible for the conduct of affairs of the Company at the relevant point in time.
It is documented to the Show Cause Notice that the Appellant Shri Rais Ahmed was Director from 20.07.1993 to 29.03.2004 and the Appellant Shri Abdul Sagir Khan was Director from 01.06.2000 to 10.04.2001. This information was provided by Shri Rais Ahmed in his statement dated 03.08.2005. There is nothing to the contrary on record. We do take note of their efforts to keep the RBI informed and also to the fact that the buyers had to face global recession during the relevant time.
No reason to intervene with the Impugned Order insofar as its findings that the two Appellant Directors have contravened Section 8 of the Foreign Exchange Management Act, 1999 r/w Regulation 9 & 13 of the Foreign Exchange Management (Export of Goods and Services) Regulation 2000 r/w Section 42 of FEMA 1999. However, the ends of justice will be met on reduction of the penalty amount on the two Appellant Directors to Rs. 2,00,000/- each.
-
2024 (11) TMI 796
Penalty imposed under FEMA - contravention on the part of the Respondent company was the non-compliance to the provisions of Paragraph 9(1)(B) of the Schedule 1 to FEMA Regulations, 2000 - HELD THAT:- Reading of Section 13 of FEMA,1999 which is a Section under which penalty is imposed for contravention of any of the provisions of the Act or any Rule, Regulation, Notification, Direction, Order or any condition subject to which an authorization is issued by the RBI makes it obvious that the language of the Section does not require intention for penalizing of contravention.
On reading of Section 13 (1) FEMA, 1999, it is also obvious that the maximum amount of penalty which can be imposed under the Section is three times the amount of contravention involved.
From the language of the Section, it is clear that the Section has not prescribed either a fixed amount of penalty or minimum amount of penalty. it therefore, follows that the amount of the penalty which is to be imposed by the Adjudicating Authority is a matter of discretion which, of course, is necessarily required to be exercised judiciously after taking into account the facts of the case and the evidence placed before it.
While the Respondents have met with the compliances required under Paragraph 9(1)(A), they have failed to meet with the compliances required under Paragraph 9(1)(B). It does appear that the failure to comply with the requirements of Paragraph 9(1)(B) was due to unawareness of such requirements. However, the satisfaction of the conditionalities imposed under Paragraph 9(1)(A) did bring the fact of inflow of foreign remittance for issuance of share by the Appellant Company, to the knowledge of the RBI. Failure to report in Form FC-GPR deprived the RBI of the information about the compliances required to be met while issuing the shares by the Company. It is also noted that there is no dispute about the Appellant individual being the Director of the Company at the relevant time, who was responsible for its day to day operations.
Thus, penalties imposed by the Ld. Adjudicating Authority on the two Appellants deserves to be enhanced and made to Rs. 20 lakhs and Rs. 10 lakhs respectively. The Appeal is accordingly disposed of.
-
2024 (11) TMI 795
Condonation of delay in filing appeal under FEMA - allegation against the Respondent No.1 was regarding his support to the accused involved in Bombay Blast Case and for which a case was registered under TADA - case for contravention of Section 9(1) (b) and (d) of Foreign Exchange Regulation Act, 1973 - prayer is made to dismiss the appeal filed beyond the period of limitation without proper explanation of delay of more than 800 days.
HELD THAT:- In the instant case, the appellant Directorate have failed to show that there was receipt of payment from any person resident outside India and that Tiger Memon was resident out of India or for that any other person with whom alleged Hawala Transaction took place. In the light of the aforesaid, the appellant Directorate have failed to satisfy the ingredients of Section 9(1)(b)(d) to pass the order against the Respondent No.1.
Further issue is in reference to the order of the Apex Court under TADA where Respondent No.1 has been extended benefit. It is mainly on the ground that his statements were recorded under coercion and with duress thus cannot be relied. The appellant Directorate have relied on the same statement despite being discarded by the Apex Court. In the light of the aforesaid, the appellant Directorate was required to show other material to prove the case. It is also when other statements were also discarded and in any case if the pleadings of the appeal are taken into consideration, the appellant Directorate have not pleaded that Tiger Memon was a resident out of India. What has been stated is that Tiger Memon has shifted his Mumbai base to Dubai after Bombay blast case.
The facts have been otherwise controverted by the Respondent No.1 to show that a case was registered against Tiger Memon for Bombay Blast case where his passport was seized showing him to be the resident of India. Appellant Directorate could not make out a case to cause interference in the impugned order passed by the Adjudicating Authority not only in reference to the order of the Apex Court but on the facts of this case also.
Finding no merit, we would now come to the application for condonation of delay. Delay in filing of the appeal is of more than 800 days i.e. nearly more than two years. The cogent reasons to condone the delay have not been given. At times delay occurs in taking a decision for filing the appeal where the Government or its machinery is involved. However, it would not mean that even if there is unexplained delay, it has to be condoned. We do not find a case on merit and even for condonation of delay.
-
2024 (11) TMI 476
Ex post facto approval granted to the respondent for foreign investment - order passed by a public authority - investment in a new company, alleging it violated the FDI policy - ex post facto approval can be given to the proposal of the respondent no. 5 subject to conditions and compounding by the Reserve Bank of India.
HELD THAT:- In the present case a committee was constituted vide letter dated 16.02.2010 issued by DEA then the petitioners and the respondent no. 5 were called to present their respective case before committee. As further stated that once the committee gave its report then no need was felt to call the parties again before FIPB.
The said Committee accorded ex post facto approval to the respondent no 5.
It is not stand of the respondents no. 1 and 2 that the petitioners no. 2 and 3 and the respondent no. 5 were called for personal hearing or accorded personal hearing on 04.08.2010 which reflects that reconstituted Committee accorded approval to the respondent no. 5 on its proposal for investment made in the respondent no. 6 only on basis of submissions oral and documentary and documents already submitted to Committee prior to reconstitution till 17.03.2010.
The reconstituted Committee under chairmanship of Sh. Bimal Julka should have afforded or given a fresh personal hearing to the petitioners no. 2 and 3 and the respondent no. 5 before according ex post facto approval to the respondent no 5. Although four members were common in Committees on 17.03.2010 and 04.08.2010 but on both occasions, Chairpersons of the Committee were different and reconstituted Committee without affording fresh opportunity to the parties and despite fact that personal hearing was given by the earlier Committee has accorded the approval to the respondent no. 5 which was in gross violation of the right to personal hearing and in turn Principles of Natural Justice.
The approval to the respondent no. 5 either should have been granted by the Committee which was chaired by Ms. L. M. Vas or a fresh personal hearing must have given by the reconstituted Committed under chairmanship of Sh. Bimal Julka and failure to do so was gross violation of Principles of Natural Justice.
Any authority when conferred with a discretionary power must exercise that power after applying its mind to the facts and circumstances of the case. The authority should not act mechanically in exercise of discretion.
Supreme Court in East Coast Railway V Mahadev Appa Rao [2010 (7) TMI 967 - SUPREME COURT] observed that every order passed by a public authority must disclose due and proper application of mind by the person making the order.
Even at risk of repetition, it is stated that the petitioner no. 1 was incorporated due to execution of Joint Venture Agreement between the petitioners no. 2 and 3 and the respondent no. 5. The respondent no. 5 set up the respondent no. 6 on or about 14.06.2005 and made foreign investment therein.
The petitioners made complaints to the respondents no. 1 to 3 for violation of Press Notes No. 1 & 3. The respondent no. 1 passed an order dated 02.04.2007 holding that the respondent no. 5 had violated FDI Policy in setting the respondent no. 6. The respondent no. 5 vide order dated 11.08.2009 passed in LPA bearing no 387 of 2008. LPA was permitted to approach FIPB for appropriate relief.
Thereafter the respondent no. 5 filed an application/proposal on 6.10.2009 for grant of ex post facto approval under Press Note No. 1 (2005 Series) for investment made in the respondent no. 6. FIPB in its meeting held on 18.01.2010 directed for constitution of a committee to examine rival contentions of the petitioners and the respondent no. 5 and said Committee was set up under Chairmanship of Ms. L. M. Vas. The Committee gave a hearing to the petitioners no. 2 and 3 and the respondent no. 5 on 17.03.2010 and written submissions were also submitted by them. The Committee was reconstituted under chairmanship of Sh. Bimal Julka and said reconstituted committee made recommendation on 04.08.2010 for grant of ex post facto approval and said recommendation was considered by FIPB in its meeting held on 10.09.2010 and thereafter the respondent no. 2 granted ex post facto approval to the respondent no. 5.
The perusal of Approval dated 29.09.2010 reflects that the Department of Economic Affairs, FIPB (FC SECTION), Ministry of Finance conveyed to the respondent no. 5 about grant of ex post facto approval by the Government of India subject to certain terms and conditions. The clause 10 of said Approval detailed about circumstances which were necessary for grant of approval to the respondent no. 5. The ex post facto approval dated 29.09.2010 was result of deliberations made in FIPB on the basis of recommendation made by Committee constituted by FIPB to examine rival contentions of the petitioners no. 2 and 3 and the respondent no. 5 about foreign investment made by the respondent no. 5 in the respondent no. 6.
The petitioners no. 2 and 3 were given personal hearing by the Committee and written submissions were also submitted by the petitioners no. 2 and 3. It cannot be said that ex post facto Approval dated 29.09.2010 was granted without any reason although those reasons may not be specifically mentioned in Approval dated 29.09.2010. The argument advanced by the learned Senior Counsel for the petitioners that Approval dated 29.09.2010 was without any reason or passed without reasons does not have legal force. The contrary arguments advanced by the learned Senior Counsel for the respondents no. 5 and 6 carry legal force.
In view of the fact that reconstituted Committee which recommended grant of approval to the respondent no. 5 on 04.08.2010 was not the Committee comprising same Chairperson/members which heard the petitioners no. 2 and 3 and the respondent no. 5 on 17.03.2010.
Accordingly grant of approval on 29.09.2010 by the respondent no. 2 to the respondent no. 5 needs fresh reconsideration again by the Committee which shall be hearing the petitioners no. 2 and 3 and the respondent no. 5 on the proposal of the respondent no. 5 and shall be taking decision on the proposal made by the respondent no. 5. Accordingly, the respondent no. 2/Ministry of Finance/FIPB is directed to constitute fresh/new Committee to hear afresh on proposal of the respondent no. 5 stated to have been made on 06.10.2009 vide application bearing Ref. No. 210/2009-FC.1 within six weeks from date of this judgment and said Committee shall hear the petitioners no. 2 and 3 and the respondent no. 5 on proposal of the respondent no. 5 and thereafter same committee shall take appropriate decision on the proposal of the respondent no. 5. It is made clear that there shall not be any change in composition of the Committee or reconstitution of the Committee in any circumstance.
The new Committee shall afford opportunity of being heard to the petitioners and the respondent no. 5 which shall also include filing of written submissions if any by the petitioners no. 2 and 3 and the respondent no. 5.
-
2024 (10) TMI 397
Contravention of Section 3(a) of FEMA, 1999 - Appellant acquired and sold various foreign currencies to various persons resident in India - validity of the search and seizure conducted by the Respondent Directorate - Reliance on recorded statements with the independent corroborative evidence in the form of seized documents recovered from the residential premises of the Appellant
HELD THAT:- The Appellant has not furnished any evidence to the contrary so as to disprove the statements recorded under oath under Section 37 of FEMA, 1999. The recorded statements with the independent corroborative evidence in the form of seized documents recovered from the residential premises of the Appellant make him liable for the contravention of the provision of FEMA, 1999 for operating unauthorised business of selling/buying foreign exchange without the general/special permission of the RBI.
The plea taken by the Appellant that cross-examination was denied since Shri Ramchandra Khedekar, the other Panch witness and the handwriting expert were not examined on oath by the Respondent Directorate as material witnesses. However, we note that the plea to conduct the cross-examination is not dependent on examination on oath of witnesses. It is not on record that the Appellant asked for such cross-examination during the course of the adjudication proceedings. In any case, denial of such cross examination does not appear to have caused prejudice to the interest of the Appellant in view of independent corroborative evidence.
Thus we agree with the finding that the Appellant acquired and sold various foreign currencies to various persons resident in India during the period from 09.07.2002 to 24.07.2002 in contravention of the provisions of Section 3(a) of FEMA, 1999. The Appellant has taken the plea to reduce the penalty since he made all out efforts to keep the licensed money changer business M/s Griffin Forex Pvt. Ltd. clean of any illegality which is evident from nothing incriminatory having been recovered from the search of his business premises. We therefore reduce the penalty to Rs. 8,50,000/- on the Appellant which will meet the ends of justice.
-
2024 (10) TMI 396
Imposition of penalty finding Contravention of Section 18(2) of FERA - export only against 06 GR by M/s. Universal Traders and 05 GR by Zen Series though in both cases 10 GR were issued by the Custom Department - HELD THAT:- GRs are issued by the Customs Department when export has to commence and thereby the export material is brought in the bonded area. It results in exports other than in the case of withdrawal of the export so is GR but there is nothing on record to prove it. The Adjudicating Authority has referred to the statement of KVS Ram Mohan, Manager of the Bank recorded on 30.04.2002.
As per his statement M/s. Universal Traders failed to realize export proceeds to the tune of Rs. 4,09,90,925/- while in the case of M/s. Zen Series, it was Rs. 3,15,50,668/-. He was asked to confirm physical exports against all the GR to which it was replied that he cannot confirm the same being not the relevant person. The fact remains that the Customs Department has endorsed for issuance of 10 GR each for both the firms and there is nothing on record to prove withdrawal of export from bounded area.
Appellant has failed to prove the case in his favour. It is also a fact that the Appellant even failed to make recovery of the export proceeds against the export admitted by him other than 05 GR exports of M/s. Universal Traders. No material is placed on record to show his reasonable efforts to make recovery and therefore we do not find any error in the impugned order for recording the Contravention of Section 18(2) of the Act, 1973 in the hands of the Appellant. We are unable to accept the arguments raised by the Appellant. The Appeal accordingly fails and is dismissed.
-
2024 (10) TMI 395
Offence under FEMA - Allegation of illegal purchase and sell of foreign currency - Confiscation of seized foreign exchange and Indian currency - Penalty imposed - HELD THAT:- The two Respondents were indulging in illegal business of buying foreign exchange from the local market so as to sell the same to the passengers who were travelling abroad. These passengers would not only buy the tickets from them but also the foreign exchange against Indian currency. It was well organized network since these passengers used to be identified by Shri T. Abdulla under whose instructions the foreign currency used to be handed over to them. Moreover, Shri Mohd. Salim had made arrangement with one Shri Birbal for purchase of required foreign currency. It has also come out during the investigation that the seized Indian currency of Rs. 10,57,000/-was sale proceed arising from foreign exchange transactions.
Adjudicating Authority while imposing penalty of Rs. 24,00,000/- on Shri Abbas Mohd. Poyyail and Rs. 12,00,000/- on Shri Shaikh Mohd. Salim, ordered the confiscation of the seized foreign exchange of US$. 6, 370, US$. TCs 100/0, Euro 280. Stg. €. 160, Qatar Rls. 300, UAE Dhm. 2300, BD 40, OR 154, O. Baisa 200, SR 2571 and KD 1619.50 recovered from the premises of M/s. Safar International Tour and Travels, Mumbai and Shri Shaikh Mohamed Salim under section 13 (2) of FEMA. He further ordered that since no direct evidence was found to link between the seized Indian Currency of Rs. 10,57,000/- with the contraventions, he refrained from passing any order of confiscation for the same.
We intervene with the impugned order with respect to the seized Indian currency of Rs. 10,57,000/-. We order the confiscation of the said Indian currency of Rs. 10,57,000/- under section 13(2) of FEMA.
-
2024 (10) TMI 394
Contravention of Section 3(c) of FEMA - allegations have been made against the appellant for receipt of the payments from various persons as per the instruction of one Abdulla of Abu Dhabi, a person residing outside India without general or special permission of RBI - main argument of the appellant is in reference to the retracted statement relied by the Adjudicating Authority in passing the order - HELD THAT:- We do not find that the impugned order has been passed solely based on the retraced statement. The printout of the mobile owned by the appellant was corroborative evidence to show that appellant was not only having relation with Abdulla but was having frequent conversation with him. It was also that no books of accounts of gold business were found during the search thus the statement of the appellant about his gold business remained without substance.
Finding overall evidence on the record, the Special Director (Appeals), while maintaining the finding on contravention of section 3(c) of FEMA, the amount of penalty was reduced from Rs. 7,00,000/- to Rs. 5,00,000/-.
After going through the record, we find, evidence to prove contravention of Section 3(c) of FEMA. The appellant could not prove his gold business and reason to call Abdulla of Abu Dhabi frequently and other material however we intend to reduce the amount of penalty from Rs. 5,00,000/-to Rs. 1,50,000/-. The appellant has already deposited Rs. 1,00,000/- towards pre deposit and Rs. 50,000/- are still lying with the ED after the confiscation of sum Rs. 4,00,000/-out of Rs. 4,50,000/-thus the amount lying with the ED should be taken towards the deposition of penalty amount and with the aforesaid appeal is partly allowed.
-
2024 (10) TMI 393
Forfeiture of property under the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act - Ownership and tenancy rights over the disputed property - alleged that the property in question was acquired out of the illegal earning by Dawood Ibrahim Sheikh - appellant, submitted that the property in question is a rented premises in her hands thus not liable to be forfeited.
HELD THAT:- The assessment order reflects as to how the property was occupied by Dawood Ibrahim Sheikh and thereupon huge amount was invested on it. They could not disclose the sources to invest huge amount of Rs.80 lakhs and in absence of which the Income Tax Department added entire investment in the hands of Dawood Ibrahim Sheikh and accordingly seizure of the property was ordered.
The appellant has shown the property to be under the ownership of K.M. Pardawala. Even if it is assumed for the sake of argument that the property belongs to him, he or his legal heirs could have challenged the order of forfeiture of property. However, neither he nor his legal heirs ever challenged the seizure of property, rather challenge is made by the deceased appellant who claims herself to be not the owner but the tenant.
The logical consequence of the above would be that while the alleged owner has not challenged the order of forfeiture of the property, the person having no ownership right is challenging it despite the fact that the property is rented out and the forfeiture may not affect because the tenant can be evicted by the means of law. The property in question was acquired by Dawood Ibrahim Sheikh by taking possession somewhere in the year 1990 and thereupon given to his sister and Rs.80 lakhs were invested on the property. Dawood Ibrahim Sheikh was subjected to assessment by the Income Tax Department and the amount spent on the property was added. Thus, argument of the appellant cannot be accepted.
We have otherwise analysed the rent receipts recently submitted by the appellant to show regular payment of rent to K.M. Pardawala and now his legal heirs. The payments therein are not through cheques but seems to be in cash. The rent receipts further shows that at many places the receiver has not signed the receipt and even the signature of landlord differs.
We are not commenting the way the receipts have been generated. The prayer was made by the respondents to allow them to lodge the prosecution against the appellant and now the legal heirs for production of receipts which are not trustworthy. The permission was sought to lodge the criminal case against them. Since certain receipts were produced even at the final stage of arguments, we would not preclude the respondents to take up the matter in reference to those receipts produced before the Tribunal. The Registry is directed to preserve the receipts produced by the respondents and if it is called upon for the investigation, if a criminal case is lodged by the respondents, then give it to the police.
The conduct of the party should be such where one can depose confidence and not where the platform of Court/Tribunal is misused. We are not precluding the respondents to take the action in reference to the rent receipts produced before us at the time of hearing. We would not comment on the conduct of the legal heirs who produced the rent receipts but we are unable to depose our confidence therein.
-
2024 (10) TMI 392
Violation of Section 6(3)(b) of FEMA and Regulation 5(1) of Regulation of 2000 - delay of 24 days occurred in reporting FDI remittance - Penalty imposed on the appellant company and on the Director individually - HELD THAT:- It is not in dispute that the appellant company failed to make a report of the receipt of the amount of USD 3,09,00,000 within a period of 30 days thereby committed violation of the provisions of FEMA and Regulations.
As we refer to the facts of the case pertaining to the amendment in the Act and the excuse taken by the appellant for the delay. It was submitted that online reporting was made effective since 08.02.2016 by RBI and otherwise reporting of FDI on the forms (ARF) was to be made manually. The appellant said to have faced teething problem in making report online. The respondents have demonstrated that online system for reporting was introduced on 12.02.2015 itself though with liberty to make reporting manually.
In view of the above, we are unable to accept the excuse taken by the appellant in reference to teething problems. Teething problem, if substantiated, may remain initially but not in deplorable form under operation for a year before making it compulsory. Thus, the lame excuse taken by the appellant cannot be accepted to justify the delay. It is more so when there is no material placed on record to prove any teething problem in reporting. The appellant had not placed on record that even other Company also faced the difficulties which the appellant faced to substantiate their plea/excuse.
The appellants no doubt have made reference of the letter sent to the RBI to seek excuse for delay in reporting and issuance of UIN. The RBI is not the authority to take up the matter of delay rather if reporting is made even with delay, UIN can be issued. It is not that for delayed reporting, UIN cannot be issued by the RBI. Thus, the letters sent to the RBI cannot fill the gap and prove the case in favour of the appellant which otherwise has not substantiated with material. In view of the above, we are unable to accept the case of the appellant on facts to find justification in delay in making report of the FDI. It is more so when appellant Company committed default in reporting in previous years also and for that an application for compounding was filed and for it learned counsel for the respondent has submitted documents to show an application by the appellant for compounding for the delay caused in reporting of FDI. It was not that for the first time but on several occasions, appellant caused delay in making report of FDI. The facts are relevant to analyse the bonafide of the appellant company and even in reference to justification for imposition of the penalty of the nature imposed herein.
Whether delay in reporting should be considered only as a technical default so that no penalty be imposed? - If the plea raised by the appellant is accepted and no penalty on delay in making report is imposed, then there would be no sanctity to mandate for reporting of FDI within a period of 30 days and to make compliance of the provisions. Nobody would make a report within time or comply the mandate of law if the penalty for the delay in making report cannot be imposed on the pretext of technical delay. In fact, technical delay needs to be defined properly and in a given case technical delay may not require imposition of penalty but when it is not offending any statutory provision. If any provisions of law have not been complied, then violation may result in penal consequences, if provided. In view of the above, we are not in a position to subscribe the argument of the appellant to give immunity from imposition of penalty taking it to be a technical delay and to cause interference in the impugned order.
Reference to the provisions of Section 6(3)(b) and Regulation of 2000 superseded by the Regulation of 2017 followed by the Regulation of 2019 - repeal or express omission and substitution of any provision unless a different intention appears, the repeal/omission shall not affect the continuance of such enactment by the enactment so repealed and in operation at the time of such repeal. The detailed discussion on the issue has been made to show that words "repeal" and "omission" are interchangeable and even there is express omission of the provision it would remain in operation in a given case detailed out by the Apex Court in the case of Fibre Boards Pvt. Ltd. [2015 (8) TMI 482 - SUPREME COURT]
It is necessary to clarify that so far as the regulations are concerned, it has not been framed by the Central Government and thereby the Regulations framed by the RBI remain in operation pursuant to Section 47(3) of the Act of 1999 as amended and when it was in continuity, the appellant cannot take excuse regarding repeal/omission of the provision in the light of operation of Section 6 and 6A of the General Clauses Act read with Section 24. The issue is squarely covered by the judgment in the case of Fibre Boards Pvt. Ltd. [2015 (8) TMI 482 - SUPREME COURT]. In the light of the discussion made above, we do not find even any legal ground to assail the order of the Adjudicating Authority.
Quantum of penalty imposed on the appellant - We find reasons to interfere in the amount of penalty. It is true that the FDI for a sum of more than Rs. 204 crores was received by the appellant and it was required to be reported within a period of 30 days. The delay is of 24 days but for it the penalty of Rs. 20 crores on the Company and Rs. 5 crores on the Director is excessive in our opinion.
Reasonableness in imposition of penalty needs to be shown and accordingly we cause interference in the quantum of penalty and substitute it by imposition of penalty of Rs. 2 cores on the Company while on Director it would be of Rs. 5 lakhs. With the substitution of the penalty, we cause interference in the impugned order to that extent while maintaining it on the legal and factual issues dealt with by the Adjudicating Authority and elaborately discussed by us on all the issues raised before the Tribunal.
-
2024 (10) TMI 391
Validity of proceedings under FERA - Violation of Section 9(1)(f)(i) of FERA 1973 - failure to permit the Appellant to cross-examine - HELD THAT:- Suffice it to say that there is sufficient evidence on record for the Ld. Adjudicating Authority to hold that the Appellant was indeed guilty of violating Section 9(1)(f)(i) of FERA 1973 that called for imposition of penalty on him.
Adjudicating Authority has recorded a finding that clinching evidence is there to impose penalty on Shri Keshav Bangur and the Appellant. He observed that corroboratory statements of the version of Shri Keshav Bangur were available in the depositions of the Appellant and of Shri Prakash Khaitan. Ld. Adjudicating Authority has further observed that while the Appellant stayed away from giving a clean statement he did admit making payment to Shri Keshav Bangur for payment of duties in his statements dated 19.02.1998 and 20.02.1998. Hence, Ld. Adjudicating Authority could not absolve the Appellant on the basis of his denial about the fact of arranging foreign exchange transaction overseas yet having admitted other transactions. He found that the whole case was based on seized documents and its explanation offered by the concerned persons and contemporaneous evidences.
The plea of the Appellant that in his statement u/s 40 of FERA 1973, he did not admit arranging for foreign exchange transaction on payment of Indian Rupees by Shri Keshav Bangur does not cut much ice in face of seizure of crucial documents from the residence of Shri Bangur and his explanation thereof which have been corroborated by the statements of Shri Prakash Khaitan and Shri AK Jain on certain material facts. The findings of the Ld. Adjudicating Authority in the impugned Order cannot be disturbed.
Appellant expired on 28.03.2008 and his widow has substituted the Appellant as legal heir. We further note that 20% of the amount of penalty has been pre-deposited. The Appeal was filed on 28.01.2005 and has remained pending for almost 19 years even though having been reserved for orders thrice on 08.10.2014, 13.08.2015 and 21.04.2016. In view of these attenuating factors and in the interest of justice the penalty amount is reduced to Rs. 10,00,000/- which is the pre-deposit already made by the Appellant.
-
2024 (10) TMI 291
Contravention of FEMA - unauthorized direct investment outside India - direct investment in an overseas JV which was not engaged in a bona fide business activity - Contravention of the provisions of Section 6(3) (a) of FEMA read with Regulation 6(2)(ii) of the Foreign Exchange Management (Transfer or Issue of Any Foreign Security) Regulations, 2004 - as submitted that in the instant case, the appellants adopted the third accepted mode of investment, namely purchase of existing shares of a foreign entity, although on "deferred payment basis"
HELD THAT:- The appellants have raised several pertinent issues during their arguments that the learned adjudicating authority has not at all considered the third mode of "Direct investment outside India" as defined under Regulation 2(e) of FEMA 120/2004, namely, investment by way of purchase of existing shares of a foreign entity.
Secondly, as submitted on behalf of the appellants that since the above-mentioned mode of investment was a valid mode under the Regulation, no specific permission from the RBI was necessitated as the investment was covered under automatic route. It is contended that neither the host country laws nor even the laws in India prohibit subscription to shares on deferred-payment basis - also submitted that the term "bona fide business activity" not having been defined either under the FEMA, 1999 or the relevant Regulations framed thereunder, it could not be said that credit facilities amounting to USD 52 million from ICICI Bank UK PLC to RLL Cyprus was not for any „bona fide business activity‟, especially in view of the fact that the very purpose of setting up the JV, RLL Cyprus was to explore global opportunities in steel and textile sectors and M/s Welspun Power & Steel Ltd. was an established company with a presence in the steel sector both in India and abroad.
Thus we find the impugned order does not throw clear light on the above aspects which were relevant to arriving at a reasoned decision as regards contravention, if any, of FEMA, 1999 and the relevant Regulations framed thereunder and the culpability of the appellants herein, thus in the interest of justice the matters deserve to be remanded back for fresh adjudication.
Accordingly, the impugned order is hereby set a side, and the matters are remanded back to the learned adjudicating authority for fresh adjudication and passing of a reasoned order.
-
2024 (10) TMI 229
Priority of secured creditors under SARFAESI Act - attachment by virtue of Section 26 (E) of the SARFAESI Act - respondent No. 3 had mortgaged the subject property in favour of the petitioner in the year 2013-14 much prior to the search conducted by the respondent Nos. 1 & 2 under Section 132 of the Income Tax Act - HELD THAT:- The claim of the petitioner as against the subject property mortgaged by respondent No. 3 in favour of the petitioner is as long back as in year 2013 would have an over riding effect in respect of all subsequent claims including the alleged claims of respondent Nos. 1 & 2 which was only in the year 2017 as held by the Madras High Court in the case of State Bank of India Vs. Tax Recovery Officer [2022 (12) TMI 557 - MADRAS HIGH COURT]
The orders of attachment passed by the Tax Recovery Officer/Income Tax Department were subsequent to the mortgage created in favour of the secured creditors and hence, the same will have no legs to stand.
Debts due to any secured creditor shall be paid in priority over all other debts, dues and all revenues, taxes, cesses and other rates payable to the Central Government or State Government or other local authority; it follows therefrom that the provisions of the SARFAESI Act would prevail over the provisions of other earlier enactments, under which, amounts are allegedly due to the Central Government; it is well settled that if there are two special Acts / enactments, it is the later enactment that shall prevail; in the instant case, it cannot be gainsaid that the FEMA (a special law / Act) is an earlier enactment, while the SARFAESI Act (a special law / Act) is a later / subsequent enactment which would prevail over FEMA in the light of the principles laid down by the Apex Court in several judgments including Solidaire India’s case [2001 (2) TMI 968 - SUPREME COURT]
Also, in SBICAP’s case [2023 (3) TMI 1509 - BOMBAY HIGH COURT] Division Bench of the Bombay High Court held that the provisions of the Prevention of Money Laundering Act, 2002 (for short ‘the PMLA’) would be subservient to the rights of a secured creditor under the SARFAESI Act which would prevail and override the provisions of the PMLA.
Thus by virtue of the provisions contained in Section 26E of the SARFAESI Act, coupled with the undisputed fact that mortgage of the subject property by the respondent No. 3 in favour of the petitioner in 2013 was earlier/prior in point of time to the search conducted by respondents No. 1 & 2 in the year 2017, I am of the considered opinion that the mortgage in favour of the petitioner over ride and prevail over the proceedings initiated by respondents No. 1 & 2 and consequently, the impugned order of attachment deserves to be quashed.
-
2024 (9) TMI 1552
Depositing 50% amount, as a pre-condition for entertaining the Application for Condonation of Delay - scope of of statutory provisions under the Maharashtra Co-operative Societies Act and the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.
HELD THAT:- The main proceedings before the DRT u/s 17 would have been registered and the DRT would have then commenced the hearing on the merits of the application filed u/s 17. DRAT only had to consider whether the order of the DRT can be construed to be perverse and erroneous so as to cause interference.
In view thereof and considering the law as is settled by this Court in Dilawar Hakim [2005 (10) TMI 617 - BOMBAY HIGH COURT] DRAT could not have directed the Petitioner to deposit 50% of the amount due from him keeping in view that an auction sale had already occurred and the DRT had not determined any amount to be recovered from the Petitioner. Moreover, the Petitioner has deposited Rs. 50,00,000/- with the DRAT.
We, therefore, conclude that in the matters of condonation of delay, unless the delay is condoned, the main proceedings would not be taken up for hearing. Hence the stage of depositing the amount as may be prescribed / engrafted in any statute as a pre-condition for entertaining a substantive proceeding, would not be applicable for dealing with applications for condonation of delay.
Writ Petition is allowed. The impugned order of the learned DRAT dated 17.10.2022, to the extent of directing the Petitioners to deposit 50% of the amount, stands quashed and set aside. The proceedings are remitted to the learned DRAT.
DRAT would consider whether the impugned order of the DRT, refusing to condone delay, is sustainable or not. All contentions to this extent, are kept open.
-
2024 (9) TMI 1036
Violation of the provisions of the FEMA - petitioner is a citizen of United States of America and Overseas Citizen of India [‘OCI’] Cardholder, and evidently, he purchased vast tracks of agricultural property located in India without RBI permission violating FEMA regulations - compounding proceedings were initiated - Penalty Computation - petitioner has urged that the respondent/RBI failed to appreciate that the petitioner bonafidely purchased the said agricultural property and despite complying with the directions of the respondent/RBI thereby selling the properties an Indian Citizen, the petitioner has been levied an exorbitant penalty without any basis.
HELD THAT:- It appears that the computation method has not been shared with the petitioner as such, however the gist of the same is exemplified in the impugned order dated 19.08.2024.
The bottom line is that the computation has been done in accordance with the prescribed Master Directions. There is nothing pointed out by learned counsel for the petitioner so as to challenge the manner in which the computation has been done.
As a matter of fact, considering the cash component of the sale consideration in contravention of the provisions of FEMA,1999, unhesitatingly the petitioner has been dealt with quite fairly and has been imposed with a fine not exceeding 300% of the amount of contravention. There is no denial that before passing the impugned order, an opportunity of hearing was afforded but not availed. Thus, the decision by the respondent cannot be faulted on any legally sustained grounds.
The present writ petition is dismissed. The pending application also stands disposed of.
-
2024 (9) TMI 1035
Contravention of Sections 9(1)(b) & 9(1)(d) - receiving payments from persons resident in India by order of person resident outside India and by making payments to persons resident in India by order of person resident outside India, without the general or special exemption of RBI - Alleged breach of principles of natural justice in the adjudication process.
HELD THAT:- Adjudicating Authority has considered the subsequent retraction and recorded its opinion before accepting the statements. We also find that the confessional statements have been corroborated by other independent and cogent evidence as have been brought out in the paragraphs from the impugned Order which have been cited afore while dealing with the arguments of the Ld. Counsel for the Respondent.
After service of the Show Cause Notice and having furnished the relied upon documents, even so during the proceedings of adjudication, there does not appear to be any prejudice caused to the interest of the Appellants by the denial of cross examination. A number of hearings were given to the Appellants during the course of the Adjudication proceedings. In the Appeals before us we find that the Ld. Adjudicating Authority has taken note of the statements of persons who were named in the seized documents and diaries as well as of documents recovered from them
Contraventions by the two Appellants are established. Ld. Counsel for the Appellants has pleaded for reduction in penalties due to economic status of the two Appellants.
In the order dated 01.08.2008, this Tribunal reduced the pre deposit to 10% of the penalty which have already been deposited by the two Appellants in 2011 and 2012. We find that the ends of justice will be met if the penalties are reduced to the amounts of pre deposit made. Therefore, the penalty on the Appellant Shri Mustaq Mohd. Patel is reduced to Rs. 13,50,000/- and the penalty on the Appellant Shri Mohammed Rafiq Ali Patel is reduced to Rs. 1,35,000/-.
........
|
9911796707
