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FEMA - Case Laws
Showing 101 to 120 of 1378 Records
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2023 (7) TMI 1478
Offence under FEMA - Appellants held the Bank Accounts in Geneva without the approval of RBI - penalty imposed - deliberate intent on the part of the Appellants to bypass the Indian Laws - Adjudicating Authority held that the generation of the money from consultancy charges could not be proved by the Appellants in the absence of documentary evidence like invoice etc. and Appellants did not take any reasonable steps to bring back the foreign exchange as their correspondence with the account holder in Dubai did not corroborate such efforts
HELD THAT:- As there is nothing in the Section which can indicate directly or indirectly requirement of mens rea. Words like "willful", "deliberately", "intentionally" etc. are missing. The Hon'ble Supreme Court in the Judgment supra has cited the judgment M.C.T.M. Corpn. (P.) Ltd. [1996 (1) TMI 351 - SUPREME COURT] wherein even for FERA 1947 it was held that the contravention shall be breach of a civil obligation which would attract penalty irrespective of the fact whether the contravention was made with any guilty intention or not. The Judgment supra cited a number of previous judgments wherein it was held that mens rea is not an essential element for imposing penalty for breach of civil obligations.
The appellants have brought back the entire amount of Foreign Exchange worth Rs. 6,14,56,000/- and have paid Rs. 3,05,53,769/- towards Income-tax and Interests, thus inclined to restrict and reduce the penalty amount to the pre-deposits of the penalties already made by the two Appellants.
While it is true that the Foreign Exchange of Rs. 6,14,56,000/- earned and retained abroad has been admittedly been divided between the Appellant No. 1 and the Appellant No. 2 in the ratio of 30 is to 70, I have restricted and reduced the penalties from Rs. 1.5 crore to Rs. 37.5 lakhs for Appellant No. 1 and from Rs. 3.5 crores to Rs. 35 lakhs for Appellant No. 2. This is justified on the grounds that after the initial deposit in Deutsche Bank in Geneva in the names of the two appellants, subsequently the amount was transferred to account in HSBC Bank in Geneva which was in the name of the Appellant No. 1 and his wife. Further the said amount was transferred to an account in HSBC Bank in Dubai in the name of the cousin of the Appellant No. 1. It is also on record that in 2019 the entire amount of remittance from abroad took place into the account of the Appellant No. 1 in the Central Bank of India Mumbai.
Appellant No.1 has been more active in the transfer of the said amount between the accounts abroad. Hence, the pre-deposits of the penalties of the respective amounts of Rs. 37.5 lakhs made by the Appellant No. 1 Shri Kumar Satur Nathani and Rs. 35 lakhs made by the Appellant No. 2 Shri Roop Krishanch and Khemani are to be adjusted as respective penalties for the two appellants.
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2023 (7) TMI 1477
Offence under FEMA 1999 - as alleged that for 12 outward remittances sent abroad, no Exchange Control Copy of the Bills of Entry had been submitted and the said Foreign Currency had not been surrendered to the Authorised Dealer - four individual appellants were charged as Director of the Company for aforementioned contraventions un/s 42(1) of FEMA - HELD THAT:- The contravention of the provisions of Section 10(6) r/w 10 (5) of FEMA further r/w Regulation 6(1) of Foreign Exchange Management (Realization, Repatriation and Surrender of Foreign Exchange) Regulations 2000 by M/s. Akzo Nobel India Ltd. earlier known as M/s. ICI India Ltd. are established.
In so far as the three Directors viz Sarv/Shri Nihal Kaviratne, Amit Jain & Sanjiv Mishra are concerned the Learned Counsel for the Appellants has submitted Form 32 under the Companies Act which clearly show their appointments have been made in 2009 & 2010 that is much after the impugned transactions had occurred. Form 32 in the case of Shri R. Gopalakrishnan shows that he vacated office as an Additional Director and reappointed as a Director w.e.f. 22-7-1999. In the appeal, pleading has been made that Shri R. Gopalakrishnan was non-executive and independent Director who was not involved in the day to day affairs of the Company. The Adjudicating Authority has acknowledged that the Show Cause Notice has failed to spell out clearly the role of the Directors. Therefore, the aforementioned charges established for the Company fail to hold good under section 42 of FEMA 1999 against the aforementioned four Directors of the Company.
While the charges against the Appellant Company stand established, in view of the fact that the Company has been making regular imports of substantial amounts and it is only in miniscule percentage of cases that the Company failed to submit proof of imports against 10 remittances, in the interest of justice the penalty under section 13(1) of FEMA 1999 is reduced to Rs. 5,00,000/- (Rupees Five Lakhs Only). The amount already paid by the Appellant Company as pre-deposit of penalty vide demand draft dated 27-2-2018 is to be fully adjusted against the reduced penalty. Since, the charges under section 42 of FEMA 1999 do not hold good against the four aforementioned Directors of the Appellant Company, the penalty of Rs. 1,00,000/- imposed on each of them under the impugned Adjudication Order dated 30-1-2015 is quashed.
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2023 (7) TMI 1475
Delay in filing of the appeal against the impugned Adjudication Order - stipulated limitation for filing an appeal against an Adjudication Order in Both under the Foreign Exchange Regulation Act 1973 (FERA) & under the Foreign Exchange Management Act 1999 (FEMA) - appeal has been filed after an inordinate delay of 14 years - The appellant pleaded in the Appeal that the said Demand Notice was received by him and for which he on 4-12-2018 conveyed to the respondent that the impugned order was never received by him, hence requested for a copy of the impugned order
HELD THAT:- Appellant has not disputed having received the Show Cause Notice and the Demand Notice at the same address at which the respondent claimed to have served the impugned Adjudication Order. The respondent has produced a copy of the postal Acknowledgment bearing signature with date, as proof of service of the impugned Adjudication Order on the appellant on 13-12-2004.
The authenticity of the said Acknowledgment is not challenged by the appellant, however, he claims that the signature on the Acknowledgment is that of his late father, with whom he did not have amicable relations. The appellant has failed to corroborate his claim that he did not have amicable relation with his late father. Even if such claim by the appellant is accepted for argument sake, there is no explanation as to how and why the subsequent communication of the Demand Notice was received by the appellant.
It is clear from the record that the Demand Notice dated 22-11-2018 was received by the appellant before 4-12-2018 when he sent letter to the Department and his father expired much later on 5-4-2021. It is also clear from the copy of the death certificate that the address of his late father remained the same till his death. In the reply to the Application it is not clarified as to the status of the relationship of the appellant with his father at the time when the Demand Notice was received by him.
The claim made by the appellant that he did not receive the impugned Adjudication Order when it was first delivered on 13-12-2004 at his declared address cannot be accepted in the light of the previous and subsequent communications delivered to the appellant at the same address. These communications were also admittedly responded by him. The postal Acknowledgement of the receipt of the impugned Adjudication Order at the address of the appellant on 13-12-2004 bearing signature cannot be over-looked even if it was signed by the late father of the appellant as the appellant was aware of the proceedings of the Adjudication which were in progress and should have been diligent enough about its culmination. Civil Miscellaneous Application filed by the Respondent is allowed and the appeal is dismissed.
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2023 (7) TMI 1474
Adjudicating Authority taking the lenient view for the imposition of penalty - appeal for enhancement of penalty - contavention to file FC-GPR within 30 days of share issuance as they filed the same with delay of 2 days - Seeking enhancement of penalty under FEMA 1999 for contravention of regulations regarding foreign exchange management - whether the Adjudicating Authority was judicious in taking the lenient view for the imposition of penalty? - HELD THAT:- On reading of Section 13(1) FEMA it is 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 him.
The stand of the State in in State of M.P. v. Bharat Heavy Electricals [1997 (8) TMI 252 - SUPREME COUR] conceded that the assessing authorities are not bound to levy fixed penalty equal to ten times the amount of entry tax. In fact, in the present case the statute (FEMA) itself provides for a penalty up to thrice the sum involved in such contravention and thereby gives explicit scope to the Adjudicating Authority to exercise his discretion, albeit judiciously, for imposition of penalty. The Adjudicating Authority has made a finding in the impugned Adjudication Order that the contraventions are technical in nature and keeping in view the nature of contraventions he has taken the lenient view in imposition of penalties.
The reading of the Adjudication Order reflects judiciousness on the part of the Adjudicating Authority, in not having imposed penalty which is commensurate with the amount of FDI received, particularly so when the contraventions were technical in nature as the substantive provisions of the Regulations have been complied with even though with some delay. The Adjudicating Authority has imposed separate penalty for the respective delays involved in fulfilling each of the three compliances. In the given circumstances where the contraventions are not of substantive provisions the penalties imposed by the Adjudicating Authority meet the ends of justice.
The order of the Adjudicating Authority cannot be interfered with. Therefore, the appeal fails and is dismissed.
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2023 (7) TMI 1126
Validity of proceedings under FERA, 1973 post introduction of FEMA, 1999 - contention of the appellants that the department had invoked the provisions of the repealed Act of 1973 subsequent to the Act of 1999 coming into force requires consideration - appellants contented that since the department did not act in terms of Section 49 of the Act of 1999 in invoking the provisions of FERA within the time period prescribed, therefore, the act of the department is invalid - HELD THAT:- Sub Section (3) of Section 49 of the Act of 1999 casts an embargo upon a Court from taking cognizance of an offence under the Act of 1973 and on the Adjudicating Officer from taking notice of any contravention under Section 51 of the Act of 1973, after the expiry of a period 2 years from the date of commencement of the Act of 1999.
The Act of 1973 has contemplated civil liability for contravention with the power to adjudicate on the same being vested with the Adjudicating Officer under Section 51. Section 56 of the Act of 1973 has provided that, without prejudice to any award of penalty by the Adjudicating Officer, if a person contravenes any of the provisions of the Act of 1973, other than Section 13, 18 (1) (a), 18 A, 19 (1) (a), 44 (2), 57 and 58 or any rule, direction or order made thereunder, such person upon conviction by a Court, be punishable with the quantum of punishment as has been prescribed.
The Act of 1973 has therefore contemplated both civil and criminal liability for contraventions of the provisions of the Act of 1973 to be scenario specific. Some contraventions are purely civil in nature while others entail both civil and criminal liability. Therefore, the Act of 1973 does not contemplate that in respect of a particular case, there must be simultaneous taking of notice of contravention by an Adjudicating Officer and cognizance of the same by the Court. The functions of the two Adjudicating authorities have been prescribed to be disjoint. In such circumstances, it would be appropriate to construe the word ‘and’ used in Section 49 (3) of the Act of 1999 as ‘or’. Any other construction would militate against the scheme of the Act of 1973 and would do violence thereto.
Appellants in the first appeal had sold foreign currency on sponsoring of fictitious firms who in turn sponsored fake names between the period April 1, 2000 and May 6, 2000. The records produced in court have established that, Manas Kumar Moitra and Mrs Rooma Maitra had formed some fictitious firms/companies who gave certain names or sponsored persons for purchase of foreign currency projecting their impending foreign business tour but all such persons were not traceable. These persons had been sponsored repeatedly within a short period of time.
Similar is the case in the next two appeals where Manas Kumar Maitra along with 4 others had been involved in creating fake firms/companies for sponsoring persons for alleged business travel within a short period of time.
In both the set of cases, both at the level of the Adjudicating Officer as also at the level of the Appellant Authority, there is a concurrent finding that, the appellants had acted without due care and in violation of the guidelines of the Reserve Bank of India in selling foreign currency to those persons. It has been concurrently held that, the appellants had failed to discharge their duty of reasonable care in selling foreign currencies to those persons involved when such currencies were sought for within such a short period of time with same dates of travel.
In all the three appeals, there have been on current finding on facts. The adjudicating officer in all the proceedings had found violations of the guidelines of the Reserve Bank of India by the appellants, in their dealings with the sale of foreign currency to the delinquents. The findings returned by the adjudicating officer and by the appellate authority on such factual aspects have not been established to be perverse in these appeals.
Thus the appeals FEA 5 of 2008, FEA 22 of 2009, FEA 23 of 2009 being without any merit are dismissed without any order as to cost.
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2023 (7) TMI 1125
Offence under FERA - sum received by petitioner from person outside India and the Petitioner was to make payment to various persons in India on behalf of the person outside India - contravention of the provisions of Section 9(1)(b) and 9(1)(d) of the FERA - HELD THAT:- As after being unsuccessful in the first round, the E.D. had issued a second Show Cause Notice. The E.D. department had not recorded statement of any person who according to them had received any benefit from the said amount - There was no evidence to prove the petitioner guilty as regards proposed distribution.
Petitioner had officially received these amounts and had shown the same in the Income tax returns. In fact, in the Order of the CIT (Appeals), it has been quoted that the assigning officer in his remand report dated 17th June, 2004 had admitted that seized cash seems to be cash on hand on the firm.
There is nothing on record to prove that the Petitioner had committed an offence under Section 9 (1) (d) of the FERA Act. No case is made out for holding the Petitioner guilty for violation of Section 9(1)(d) r/w Section 64(2) of the Customs Act. The seized documents do not corroborate the fact of receipt and distribution of said amount by the Petitioner.
This is a clear case where the Petitioner appears to have been deprived of his amount of Rs. 1,48,000/- without authority of law on a totally untenable basis. The Petitioner could have utilized the said amount, the value of which at the relevant time was substantial. Considered from all angles, the Respondents could not have retained the said amount depriving the Petitioner from his legitimate entitlement. We would, hence be justified in allowing interest to the Petitioner in allowing this Writ Petition.
An amount of Rs. 1,48,000/- shall be refunded by the respondent to the petitioner within a period of four weeks from today with simple interest at the rate of 6% per annum from 12 May 1988.
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2023 (7) TMI 829
Acquittal of the charge u/s 56 of FERA - trial Court held that there was no other evidence against the respondent except his statements [Ex.CW2/A and Ex.CW2/B] and no material was available on record to connect the appellant with the commission of the alleged crime and the prosecution had miserably failed to prove the case against him - HELD THAT:- As prosecution could not place on record any orders/notice asking the respondent to appear and make the statements. This fact alone proves that the statements made by the respondent were not voluntarily. Apart from that, the learned trial Court has correctly recorded that there is no evidence against the respondent/accused except his own statements Ex.CW2/A and Ex.CW2/B.
Even the prosecution could not lead any evidence to connect the respondent with the alleged chits Ex.C2 to Ex.C14 and the findings recorded by the learned trial Court are liable to be upheld. Apart from that, even the complaint was premature as the same was launched on the strength of the orders Ex.CW2/C and the appeal preferred by the respondent against the said order was stated to be pending before the Appellate Tribunal. Thus, it is apparent that the very basis i.e the order Ex.CW2/C had not even attained finality and the complaint was preferred in a tearing hurry without any valid explanation.
Thus instant appeal is wholly misconceived, bereft of merits and without any substance; thus, it must fail. No case for interference has been made out.
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2023 (7) TMI 636
Maintainability of appeal against an order passed by the Appellate Tribunal for Foreign Exchange - Period of limitation - Appellate Tribunal dismissing the appeal on the ground of provisions of Section 52 of the Foreign Exchange Management Act, 1999 - HELD THAT:- Non-entertainment of the appeal by the Appellate Tribunal on the ground of Section 52(2) of the Act of 1973 was erroneous in view of the ratio laid down in Thirumalai Chemicals Ltd. [2011 (4) TMI 489 - SUPREME COURT]
However, we find from the materials produced on record that, the appellant was served with the order-in-original dated January 21, 2000 by registered post which was dispatched on March 13, 2000. The appellant is unable to show any reasonable cause as to why, the appellant did not file the appeal within the time prescribed under the Act of 1973. No explanation is put forward under the Act of 1999 for condonation of delay in preferring the appeal.
We find no merit in the present appeal.
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2023 (6) TMI 1058
Contravention of Section 8(1) and 9(1)(a) of FERA by the Company - petitioner and other individuals working for the Company were made vicariously liable for the alleged contravention by the Company by virtue of Section 68 of the Act - HELD THAT:- As in view of order of the Special Director, ED, the court quashed the proceedings in respect of the company alone, (the sole petitioner before it).
As considering the status of the present case, which has been dropped by the complainant in respect of all the accused persons, the proceedings in Case pending before the Learned Metropolitan Magistrate, 11th Court, Calcutta under Sections 56 and 68 of the Foreign Exchange Regulation Act, 1973 is liable to be also quashed in respect of all the petitioners therein including the petitioner in this revision.
Revisional application is allowed.
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2023 (6) TMI 546
Non-realization export proceedings of goods - convertible foreign exchange - Reasonable steps u/s 18(3) of FERA - Suit for recovery of the balance of the price of the goods sold and delivered in respect of an export in any court in India - All Reasonable steps to receive or recover the payment for the goods as envisaged u/s 18(3) of the Act of 1973 - whether, filing of the suit by the appellants before the Hon’ble High Court at Calcutta and obtaining a decree thereon for realisation of the balance of the price of goods sold and delivered to the importer would constitute “reasonable steps to receive or recover the payment for the goods” ?
HELD THAT:- In the facts of the present case, the exporter company exported goods of the invoice value of US$ 8,37,200 and received payment of a portion thereof leaving a sum of US$ 6,37,200 outstanding. The exports took place in 1996. Suit was filed for recovery and a decree with regard thereto was obtained. The decree could not be executed in India due to lack of assets of the importer in India. The appellants claimed that, execution of the decree in the foreign country where the importer was situated was not cost effective and feasible. In the facts of the present case, the explanation offered by the appellants with regard to inability to execute the decree obtained is plausible.
The appellants adequately explained the steps taken by them to receive or recover the payment of the goods exported. The steps taken by the appellants in filing a suit and obtaining a decree thereon within the extended period is a reasonable step taken to receive and recover the payment of the goods exported within the meaning of Section 18(3) of the Act of 1973. Such facts rebut the statutory presumptions of Section 18(3) of the Act of 1973.
The impugned show cause notice, the adjudication order passed thereon and the impugned order of the appellate authority are set aside.
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2023 (6) TMI 250
Constitutional validity of Section 37A of FEMA Act - order of the Competent Authority affirming seizure by the Authorised Officer - Seeking consequential prayers of quashment of seizure order u/s 37A(1) and confirmation order of such seizure under Section 37A(3) of the Act - reason for seizure was on the ground that the respondent/Directorate of Enforcement found during the course of investigation that no agreement or legal basis was available for remitting the money by the petitioner. Royalty was not a part of the product cost. No work order or purchase order was placed. No intellectual property rights were received. Based upon the impugned seizure, seizure order was passed on 29th April 2022 invoking Section 37A(1) of the Act.
Whether the writ petition would be maintainable on the prayer that is sought i.e., to hold Section 37A of the Act to be unconstitutional on the ground that it is manifestly arbitrary and violative of Article 14 of the Constitution of India? - HELD THAT:- Article 19 would not be available to any person, who is not a citizen of this country. Same goes with the Division Bench judgment of Allahabad High Court where at para-14 it is clearly held that Article 19(1)(d) and (e) are unavailable to foreigners because these rights are conferred only on the citizens. Rights under Article 19 are withheld expressly to foreigners. The Division Bench also holds that it is of the opinion that foreigners enjoy some fundamental rights of this country but the same are confined to Article 21 of the Constitution of India which deals with life and liberty and does not include the rights guaranteed under Article 19 of the Constitution. The question therein was right to free trade under Article 19(1)(g) and, therefore, held that it was available only to Indian citizens and not to foreigners.
On a coalesce of the judgments rendered by the Apex Court and that of different constitutional Courts what would unmistakably emerge is that Articles 14 and 21 of the Constitution of India, the nation’s Grundnorm would be available to every person and they are not restricted to the citizens of the country only. However, Articles 15, 16 and 19 are restricted only to citizens of this country.
The challenge in the case at hand is on the ground that the provision is unreasonable or manifestly arbitrary, both of which would come within the ambit of Article 14 of the Constitution of India and the petition challenging the constitutional validity on the ground that it is manifestly arbitrary and violative of Article 14 or unreasonable, again being violative of Article 14, are all maintainable contentions before the constitutional Courts of the country as they are ‘person centric’ and not ‘citizen centric’. Therefore the first issue that has arisen for consideration qua maintainability is answered in favour of the petitioner holding the petition to be maintainable qua the challenge.
Whether Section 37A of the Act gives uncanalised and unguided power on it suffering from absence of safeguards ? - On a coalesce of the judgments relied on by the petitioner and others that are quoted hereinabove, as also the reasons rendered by this Court, what would unmistakably emerge is that Section 37A of the Act does not suffer from any manifest arbitrariness for this Court to strike it down on any of the grounds urged by the petitioner. The purpose behind the amendment is already quoted, and checks and balances available, under Section 37A are also quoted and analysed. Therefore, the second point that arose for consideration is answered against the petitioner.
Whether the order passed by the authorized officer suffers from non-application of mind? - The only reason that is projected by the petitioners to knock at the doors of this Court despite the remedy of filing an appeal before the Appellate Tribunal being appealable under subsection (5) of Section 37A of the Act is that the order of the Competent Authority affirming seizure by the Authorised Officer does not bear application of mind. It is trite law that application of mind is discernible from any order, if the order contains reasons for passing one, it would have been an altogether different circumstance if there were no reasons recorded in writing by the Competent Authority for this Court to hold that the order suffered from non-application of mind. The order is neither cryptic nor perfunctory. It is in great detail. It runs into more than 250 pages.
It is not the number of pages that matters, but the content in those pages which clearly indicate application of mind. We decline to accept the submission that the order suffers from non-application of mind on perusal of the entire content in the order. Every submission of the petitioner is noted, considered threadbare and answered by the Competent Authority.
The Competent Authority has not left any wood on the tree. Therefore, the order does not suffer from nonapplication of mind, as is sought to be projected and contended by the petitioner. Therefore, the only circumstance which the petitioner projects apart from challenging the constitutional validity for entertainment of the subject writ petition tumbles down, as the order of the Competent Authority does bear the stamp of application of mind through the order. Therefore, it is for the petitioner to avail of the remedy of filing an appeal before the Appellate Tribunal.
SUMMARY:
(i) The challenge to the constitutional validity of Section 37A of the Act by the petitioner is held to be maintainable and entertainable, on the fulcrum of the allegation that it is violative of Article 14 of the Constitution of India, as Article 14 is person centric, whereas fundamental rights under Articles 15, 16, 19 and 25 are citizen centric. Wherefore, a non-citizen can challenge certain laws of the nation on the ground that it is violative of Article 14 of the Constitution of India and the challenge would be restrictable only to the tenets of Article 14 of the Constitution of India.
(ii) The challenge to the constitutional validity of Section 37A of the Act is rejected, as Section 37A does not suffer from any manifest arbitrariness on any ground whatsoever.
(iii) The petitioner is at liberty to avail of the statutory remedy of filing an appeal before the Tribunal under sub-section (5) of Section 37A of the FEMA.
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2023 (6) TMI 249
Offence under FEMA - Investigation initiated under FEMA Act initiated - maintainability of the present writ petitions - complainant and Adjudicating Authority being officers of the same rank - As alleged that the Petitioners received foreign direct investment from three foreign companies and one Non-Resident Indian as consideration for issuance of shares in exchange for such investment in M/s Teleonto Tecnologies Pvt. Ltd. - HELD THAT:- Supreme Court has time and again reiterated that a writ petition is not maintainable when an efficacious alternative remedy is available. It is only in certain limited circumstances that a writ petition can be entertained, despite there being an alternative remedy.
Petitioners have raised only two issues which need consideration by this Court to decide the maintainability of the writ petition. It was contended that the impugned order is violative of principles of natural justice as the same authority which filed the complaint also passed the impugned order. Therefore, the principle of no one can be a judge in his own case is violated.
Whether the impugned order was passed in violation of principles of natural justice on account of the complainant and Adjudicating Authority being officers of the same rank/designation? - The maxim ‘nemo judex in causa sua’ states that a person who has interest either personal or pecuniary in an outcome of a particular lis, he/she shall not act as an adjudicator in the said lis. In other words, a person authorized to decide a dispute between the parties shall refuse decide such dispute, if he/she is connected to any of the party to such dispute either professionally, personally or monetarily. The connection should give rise to strong probable apprehension of bias in favour of one party.
Whether the maxim ‘nemo judex in causa sua’ is violated in the present case merely because the complainant and the Adjudicating Authority happen to be the same ranked officials/authority? - Merely because an officer is also the complainant, he/she will not be barred from performing other duties as prescribed under a statute. Bias cannot be presumed and a party alleging or attributing bias shall establish reasonable grounds for apprehension for such bias.
In the present case, merely because the complaint was lodged by an officer of the rank of Deputy Director of Enforcement and subsequently the impugned order was also passed by the same rank officer, bias cannot be presumed in the absence of any material attributing such bias to the officer.
As stated above, though of the same rank, both the officers i.e., one who filed the complaint and one who passed the impugned order were different. Therefore, the maxim ‘nemo judex in causa sua’ does not apply in cases where the designation/rank of the authority is the same but members heading them are different. Therefore, Issue No.1 is decided by holding that the impugned order was not passed in violation of principles of natural justice.
Whether the Deputy Director of Enforcement had jurisdiction to pass the impugned order in light of the contention that the case before the Adjudicating Authority involved an amount more than Rs. 10,00,00,000/-? - A case involving an amount between Rs. 10,00,00,000/- and Rs. 25,00,00,000/- can only be decided by an Additional Director of Enforcement. Further, cases involving an amount between Rs. 2,00,00,000/- and Rs. 5,00,00,000/- have to be decided by the Deputy Director of Enforcement.
Petitioner’s reliance of the alleged value of shares worth Rs. 8,46,90,000/- to calculate the monetary limit cannot be accepted for the simple reason that the said transfer was done in lieu of a loan arrangement worth Rs. 2,70,00,000/- The alleged amount violative of the pricing guidelines is Rs. 2,70,00,000/-
Therefore, the amount involved in the case is the sum of Rs. 1,32,38,364/, Rs. 85,45,184/- and Rs. 2,70,00,000/- which comes down to Rs. 4,87,83,548/-. Therefore, Issue No.2 is decided by holding that the Deputy Director of Enforcement was competent to pass the impugned order as the amount involved in the case was Rs. 4,87,83,548/-.
Maintainability of appeal - This Court holds that the present writ petitions are not maintainable as the impugned order dated 05.09.2022 was passed in compliance with the principles of natural justice and within the jurisdiction prescribed under the Act, 1999.
Petitioners have raised other contentions regarding forged and fabricated documents, the issue of delay in filing the complaint and the issue of quantum of penalty. This Court being bound by the decision in M/S COMMERCIAL STEEL LIMITED [2021 (9) TMI 480 - SUPREME COURT] holds that the said issues cannot be decided by this Court in view of an efficacious alternative remedy available under Section 17(2) of the Act, 1999.
Present writ petitions are liable to be dismissed and are accordingly dismissed. Liberty is granted to the Petitioners in both the writ petitions to raise all their grounds in appeal under Section 17(2) of the Act, 1999, if any preferred.
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2023 (5) TMI 1384
Penalty imposed on contravention under FEMA provisions - outward remittances in 39 tranches abroad in the guise of advance for imports - quantum of penalty imposed under FEMA 1999 as unreasonable - HELD THAT:-On reading of Section 13(1) FEMA it is 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 him. The appellant has failed to place any reason in the pleadings as to show that the discretion has not been exercised judiciously by the Adjudicating Authority.
The question as to when a penalty is to be regarded as either low or high is at best answered subjectively.
In this case Adjudicating Authority has complied with the provisions of the Section by imposing penalty for contravention of section 10(6) FEMA r/w Regulation 6(1) of Foreign Exchange Management (Realisation, Repatriation and Surrender of Foreign Exchange) Regulations 2000 and as well as imposing penalty for contravention of section 3(b) of FEMA. For contravention of each of these Sections he has chosen to impose penalty slightly over fifty percent thus totaling a penalty of over hundred percent. Any insistence to impose higher penalty for contraventions of each of the Section arising from the same set of transactions may introduce element of subjectivity. In any case, there is no such requirement under the statute as long as each contravention has been examined and if found established has attracted penalty. The reading of the Adjudication Order, therefore, reflects objectivity and judiciousness on the part of the Adjudicating Authority.
In the present case the statute (FEMA) itself provides for a penalty up to thrice the sum involved in such contravention and thereby gives explicit scope to the Adjudicating Authority to exercise his discretion, albeit judiciously, for imposition of penalty.
In view of the appeal having failed to bring out the reasons that why the penalty imposed is low and as to how the Adjudicating Authority has not exercised his discretion judiciously, I observe that the order of the Adjudicating Authority cannot be interfered with.
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2023 (5) TMI 610
FCRA registration - Delay of opening of an “FCRA bank account” with the State Bank of India - Petitioner faced difficulties in uploading the FCRA annual return under Form FC-4 under Rule 17 of the Foreign Contribution (Regulation) Rules, 2011 for F.Y 2019-2020, due to the fact that the bank account details were being sought as of 31st March, 2020 - HELD THAT:- Admittedly, in the present case, the FCRA account in the SBI was opened by the Petitioner only on 4th October, 2021, which was much beyond the deadline fixed initially i.e. 31st March 2021, and even after the expiry of the extended period till 30th June 2021 vide notification dated 18th May 2021.
Petitioner has now opened the said FCRA bank account in SBI Sansad Marg Branch, Parliament Street-New Delhi, and has deposited the penalty and also uploaded the annual return for the F.Y 2019-2020, the relief sought for in this petition has become infructuous.
Moreover, none of the cases which have been decided by this Court including WNS Cares Foundation v. Union of India [2023 (1) TMI 944 - DELHI HIGH COURT] and Shree Swaminaryan Mandir v. Union of India [2023 (4) TMI 974 - DELHI HIGH COURT] would be applicable in the facts of the present case.
In the facts of the present case, there was a delay in the opening of the said FCRA bank account and the delay has not been convincingly explained by the Petitioner. Further, the penalty amount has been deposited with Respondent No. 1-MHA, therefore the prayer for refund is not tenable and is accordingly rejected. FCRA FC-4 annual return for the F.Y 2019-2020 which has been uploaded, shall be taken as valid without any payment of further penalties by the Petitioner.
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2023 (4) TMI 1360
Offence u/s 9(1)(c) of FERA - amount received from the NRIs by the Noticees (the Appellants here-in), as share application money, no share was allotted to them and the said amount continued under the head Share Application Money in the records of the Noticee Company - as pleaded that shares were issued to the NRIs who were family friends of the promotee. He could not produce the documents with regard to allotment of shares to the NRIs because of fire in his office and lock-out of his factory.
HELD THAT:- As there is nothing to show that the Appellant made an admission either during the investigation or subsequently of existence of a debt and of a jural relationship of creditor and debtor between the Company and the NRIs. To acknowledge a debt, the Company/ Promoter should have issued an acknowledgement admitting in writing that there is a debt owed by the Appellant. It is important to note that section 9(1)(c) FERA requires draw, issue or negotiate any bill of exchange or promissory note or acknowledge of debt. Reading of the Judgment Supra and these wordings of the section it is inescapable not to infer that even acknowledge of debt requires an instrument.
Even if for argument sake if it is taken that no "instrument" is required for acknowledging a debt the position is clarified by the Judgment which cites Swaminathan Odayar v. Subbarama Aiyar [1926 (9) TMI 2 - MADRAS HIGH COURT] in which as held that an acknowledgment need not be express but may be implied from facts and circumstances under which a statement in a deposition was made but it cannot be implied as a matter of law.
In the present case there is no mention of a deposition by the Appellants of acknowledging a debt. In fact right from the beginning they have denied owing a debt to the NRIs from where there was in-flow of share capital money. They have all through maintained the inflow of funds was for share capital. It also does not imply that since the Appellants could not produce documents for issuance of shares the money received by them becomes debt either as a matter of implication or that of Law. The Respondents have also failed to produce any evidence documentary or otherwise to show how "acknowledge of debt" got created.
The appeals are allowed and the impugned Adjudication Order is set aside. The pre-deposit of penalty amount made by the two Appellants are to be refunded to them by the Respondent on expiry of the period of appeal against this Order
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2023 (4) TMI 1136
Maintainability of WP against Violation of the Foreign Exchange Management Act, 1999 - proceedings initiated u/s 6(3) of the Act, 1999 - The provision has been omitted - saving clause - Scope of alternative remedy - Petitioners challenge the impugned order, inter alia, on the ground that they were charged under Section 6(3)(b) of the Act, 1999 which was subsequently omitted from the Act, 1999, w.e.f. 15.10.2019 - whether present writ petition is not maintainable as the Petitioners have an efficacious and alternative remedy under Section 19 of the Act, 1999? - HELD THAT:- Section 6 of the Act, 1897 is applicable to omission of a provision by the legislature. Section 6 of the Act, 1897 saves all the pending proceedings under a provision that was subsequently omitted. Now coming to the facts of the case, it is not in dispute that the proceedings for violations of Section 6(3)(b) of the Act, 1999 were initiated in the year 2017. When the proceedings were initiated against the Petitioners, Section 6(3) of the Act, 1999 was still in force. Therefore, by virtue of Section 6 of the Act, 1897 the proceedings against the Petitioners are saved and cannot be disturbed merely because Section 6(3) of the Act, 1999 was subsequently omitted.
According to this Court, Respondent No. 1 was well within his jurisdiction to pass the impugned order dated 04.01.2023. As the Petitioner, has an effective alternative remedy in the form of an appeal under Section 19 of the Act, 1999, this Court, in light of the decision in Assistant Commissioner of State Tax (supra) holds that the present writ petition is not maintainable. Therefore, the present writ petition is liable to be dismissed.
Writ petition is dismissed. However, the Petitioners are at liberty to raise all the contentions before the Appellate Tribunal.
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2023 (4) TMI 974
Foreign Contribution Regulation - Non-filing of the returns - annual returns for the years 2019-2020 were to be uploaded in Form FC-4 for which SBI account as of 31st March, 2020 was needed, the details of the SBI bank account could not be given - Petitioner seeking directions to the Respondent – Ministry of Home Affairs, Union of India to allow the Petitioners to fill and upload Form FC-4 on the Respondent’s portal in order to enable them to file the annual returns for the financial year 2019-2020 - whether the SBI bank account could have been sought for as of 31st March 2020, when the amendment itself came into effect later i.e., in September 2020? - HELD THAT:- In view of the reasoning given in the said order in WNS Cares Foundation [2023 (1) TMI 944 - DELHI HIGH COURT] as held receipt of foreign contribution “as on 31st March of the year ending” has to be provided and the bank account has to be in the SBI, Sansad Marg branch. Since the Petitioner No.1 opened its account in August, 2021 and in any case, as on 31st March, 2020, the Foreign Contribution Regulation (Amendment) Act, 2020, had not come into effect, there appears to be some justification in the Petitioners’ case.Petitioner No.1 having opened its FCRA account in August, 2021 is, accordingly, permitted to fill up the said details of its FCRA account in serial no.7 of the Form FC – 4 and submit the same.
In this case the Petitioners also having already opened their bank accounts with SBI Sansad Marg Branch, the Petitioners are permitted to upload their annual returns for the year 2019-2020 by specifying the SBI account number of the account which was subsequently opened by them.
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2023 (4) TMI 875
Offence u/s 57 of the FERA - Non Complaint filed in compliance of the provisions of section 61 (2)(ii) of the FERA - HELD THAT:- As in this case where an offence under Section 57 of the Foreign Exchange Regulation Act, 1973 has been alleged against the accused person, the law provides that either the Enforcement Director or an officer authorised in writing on behalf of the Director or the Central Government or an authorised officer of Reserve Bank, shall be eligible to institute a complaint. The Magistrate has also emphasized that the appellant would not have the locus standi to initiate prosecution in absence of any authorization, without however considering or taking judicial note of his evidence and Exhibit-A (i.e., authorization certificate dated (22.12.2005).
The Magistrate could not ignore the ocular and documentary evidence before it, more so, when all these were uncontroverted. By virtue of holding officer at the particular period of time and having been authorized vide ‘Exhibit-A’ there was no impediment for the appellant to institute prosecution, which the Magistrate has not considered and such non-application of mind has rendered his findings not tenable in the eyes of law.
The Magistrate was duty bound to take note of the same, more particularly, in terms of Section 57(7) of the Evidence Act. It was a mandate of law. The notification dated 24th September, 1993 read with the direct evidence of the appellant before the Trial Court would unfailingly point out to the fact of the appellant to be competent officer under law, to institute prosecution on behalf of the Enforcement Directorate. By not considering all these factual and legal aspects, the Trial Court has committed gross error. The impugned judgment suffers from non-application of mind and illegality.
Thus unable to place occurrence with the finding of the Court in the impugned judgment that provisions of Section 61 (2) (ii) of the Foreign Exchange Regulation Act, 1973 has not been complied with by the complainant in order to institute a case punishable under Section 57, as it is in this particular proceeding. In my considered opinion, the impugned judgment of the Trial Court suffers for non-application of mind and wrong appreciation of the fact situation as well as the settled provisions of law. Accordingly, the same would not be maintainable and liable to be set aside, being not inconfirmity with the laws. The impugned judgment is set aside - Appeal allowed.
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2023 (4) TMI 830
FEMA (Foreign Exchange Management Act, 1999) case pending since 2020-21 pursuant to the blocking of the petitioner's two bank - Seeking Defreezing of accounts blocked by the bank since the year 2020 - HELD THAT:- We find that the petitioner has filed the present writ petition seeking, in effect, the same relief that was sought in the previous writ petition but, it is clothed in representations which is a masquerade. A second writ petition for the same cause of action is anyway not maintainable. No liberty was granted to the petitioner to file a fresh petition. In the present petition we also find that relevant facts have been concealed by the petitioner inasmuch as the learned counsel for the petitioner has not been able to point out any details of proceedings and the stage at which they are pending before the authorities concerned.
For the reasons aforesaid and given the observations in the previous judgment dated 04.05.2021 passed by this Court [2021 (5) TMI 1061 - ALLAHABAD HIGH COURT] this writ petition is dismissed with cost of Rs. 25,000/- which shall be payable by the petitioner within one month.
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2023 (4) TMI 718
Adjudication proceedings as contemplated u/s 13(1) of the FEMA - whether the supply of documents relied upon by an Adjudicating Authority in framing an opinion to proceed against the notice is a mandatory requirement? - whether a person has contravened any provision of FEMA, the Adjudicating Authority has to adjudge the matter? - HELD THAT:- It is clear that for the purpose of adjudication under Section 13 of FEMA, the Adjudicating Authority has to hold an enquiry after giving the person alleged to have committed contravention under Section 13 a reasonable opportunity of being heard. The Adjudicating Authority has to hold an enquiry upon a complaint in writing made by any the authorized officer and the person, against whom allegations of contravention are made, has a right to appear in person or to have legal assistance before the Adjudicating Authority. As per the said provision, the powers of civil court have been vested to an Adjudicating Authority.
The record, which contains these documents, goes on to confirm this fact. Therefore, even the respondents are not in possession of legible copies of the aforesaid documents, as such, there was no occasion or possibility for the respondents to provide legible copies of these documents to the petitioners when they were not themselves in possession of the legible record. Though the respondents were obliged to provide legible copies of the documents relied upon by them but when they themselves were not in possession of the legible copies of the documents mentioned above, it was impossible for them to provide the same to the petitioners. The rules of natural justice do not operate in vacuum. Therefore, when the respondents themselves incapable of furnishing legible copies of certain documents, it cannot be stated that by non-furnishing of these documents to the petitioners, the principles of natural stand violated.
A perusal of the reply to the show cause notice filed by the petitioners clearly indicates that they have effectively replied each and every allegation made in the show cause notice and they have also responded to the allegations relating to confessional statements of petitioners No.1 and 2 and their statements recorded before the Chief Judicial Magistrate, Srinagar, which are stated to be not legible. Therefore, no prejudice has been caused to the petitioners by non-supply of legible copies of these two documents which, in any case, are not available with the respondents themselves.
In the present case, if the respondents are insisted upon to provide legible copies of those documents which are not even in their possession, it will amount to stretching the principles of natural justice too far, particularly at a stage when only the adjudication proceedings have been initiated and the parties are yet to produce their respective evidences/material before the Adjudicating Authority, whereafter the matter is required to be considered finally by the said Authority.
We do not find that non-furnishing of legible copies of the documents by the respondents to the petitioner has infringed the principles of fairness. Thus, the impugned communication issued by the Adjudicating Authority does not call for any interference from this Court.
For what has been discussed hereinbefore, the petition is dismissed.
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