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FEMA - Case Laws
Showing 121 to 140 of 857 Records
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2019 (9) TMI 180 - DELHI HIGH COURT
Fastening liability on a director of a company for contravention of the FERA - Offences by companies - ‘Opportunity Notice’ - HELD THAT:- The adjudication proceedings are being pursued by the ED on the basis that each of the present Appellants was at the relevant time, “in charge of”, and “responsible to” NIL for the conduct of its business. There can be no doubt that the above standard for fastening liability on a director of a company for contravention of the FERA, applies to both criminal proceedings that would result following an ‘Opportunity Notice’ as well as the adjudication proceedings that would follow an SCN/MFA issued under Section 51 FERA.
The foundational fact that requires to be shown to exist for proceeding against a person under Section 51 of the FERA read with Section 68 (1) thereof is that such a person was at the relevant time, when the contravention occurred, “in-charge of” and “responsible to” NIL for the conduct of its business. A perusal of the adjudication notice in the present case reveals that the allegations in this regard are of a broad general nature without specifically indicating whether in fact the person was in-charge of and responsible to the company for the conduct of its business at the relevant time and was, therefore, liable for such contravention.
Both the Opportunity Notice as well as the SCN are identical in this respect. While ED decided not to proceed against these Appellants on criminal side, pursuant to the Opportunity Notice issued to them, thereby implicitly accepting their explanation that they fell outside the scope of Section 68 (1) of the FERA, it seemingly adopted a different standard as far as the adjudication proceedings are concerned. The Court sees no justification for applying a different standard for fastening liability on the Appellants whether the criminal liability consequent upon the Opportunity Notice or civil liability following the SCN. There appears to be no scope for adopting a different yardstick in this regard. Judgments of the learned Single Judge are unsustainable in law.
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2019 (9) TMI 162 - DELHI HIGH COURT
CBI investigation for violation of provisions of FCRA - Cancellation of registration under FCRA - diversion of the funds for personal benefit of the office bearers or any other individuals - Constitutional validity of Section 43 of the Foreign Contribution (Regulation) Act, 2010 (‘FCRA’) and Rule 22 of Foreign Contribution (Regulation) Rules, 2011 (FCRR) - whether they are arbitrary, unreasonable, ultra vires and violative of Articles 14 and 21 of the Constitution of India?
HELD THAT:- It is equally well settled principle of law that laws are not to be declared unconstitutional on the fanciful theory that power would be exercised in an unrealistic fashion or in a vacuum or on the ground that there is a remote possibility of abuse of power. In fact, it must be presumed, unless the contrary is proved, that administration and application of a particular law would be done “not with an evil eye and unequal hand”.
There is a principle and/or policy for guidance of exercise of discretion by the Government in the matter of selection of an investigative agency and there is no arbitrary, vague and uncontrolled power with the Government so as to enable it to discriminate between persons or things similarly situated. Accordingly, this Court is of the view that Petitioner’s reliance upon State of Punjab vs. Khan Chand [1973 (12) TMI 91 - SUPREME COURT] is misconceived.
Also as the Notification dated 27th October, 2011 is neither an interpretation nor an understanding of Section 43 of FCRA but a convention/practice/policy to be followed by the Union of India while implementing Section 43, this Court is of the view that judgment of the Apex Court Bhuwalka Steel Industries Ltd. vs. Bombay Iron and Steel Labour Board & Anr. [2009 (12) TMI 697 - SUPREME COURT] is inapplicable to the present case.
Consequently, the Notification dated 27th October, 2011 as well as the consistent practice followed by the Central Government lay down a principle and/or policy in the matter of appointment/selection of an investigative agency under Section 43 of FCRA and saves it from attack on the ground that it violates Articles 14 and 21 of the Constitution.
Just because out of thirteen thousand NGOs, whose licences had been cancelled under FCRA, only thirty two had been referred to CBI for investigation, this Court is of the view that the petitioner cannot claim negative equality and that too without disclosing the nature of violations by the thirteen thousand NGOs.
Authorisation letter dated 07th February, 2017 issued under Section 23 of FCRA, the officer appointed in the present cases had been authorised to exercise power under Sections 23 to 26 and 42 of FCRA only. No power to investigate offences under Section 43 had been conferred upon the said officer.
Just because the inspecting authority has been empowered to seize the account or record and produce the same before the Court, does not mean that it has to mandatorily carry out investigation under Section 43 of FCRA also.
Additionally, the proceedings under Chapter V of FCRA cannot be termed as “investigation” as the provisions under the said Chapter pertain to inspection and seizure of accounts/records only. Under Chapter V of FCRA, no procedure for filing of a complaint/charge-sheet has been mentioned.
There is also nothing to suggest either in the FCRA or in the letter dated 7th February, 2017 that investigation under Chapter VIII of FCRA had to be carried out by the Inquiry Officer.
Even in the letter dated 04th August, 2017 while referring the matter for investigation to CBI, the Ministry of Home Affairs had opined that its inquiry had ‘prima facie’ and not ‘conclusively’ revealed violation of various provisions of FCRA.
Since the officer authorized under Section 23 FCRA did not have any power to investigate offences under Chapter VIII, the judgment in Directorate of Enforcement vs. Deepak Mahajan & Anr. [1994 (1) TMI 87 - SUPREME COURT] does not apply to the present cases.
The officer authorised to carry out inspection of records and accounts under Section 23 of FCRA in the present cases was authorised and had carried out inspection and enquiry only under Chapter V of FCRA.
Departmental inquiry report concluding that an officer has committed malfeasance or violations to benefit himself personally can lead to subsequent criminal investigation and prosecution by the police. Similarly a sexual harassment committee report can lead to subsequent investigation by police into allegation of rape or outraging modesty of a woman.
Even under FCRA for instance, it is possible that an inspection ordered by Central Government may reveal that foreign funds received by an organisation certified by the Central Government had been used to fund terror activities in the country and in such circumstances, no one can say that investigation under Chapter VIII offences as well as IPC and other terror acts cannot be transferred to specialised agencies like CBI ‘midstream’. In fact, the officer appointed by the Central Government under Section 23 of FCRA would neither have the wherewithal nor the expertise to carry out such an investigation.
Consequently, to submit that once the Central Government has chosen the route of empowering and authorising a particular officer/authority to conduct inquiry under Sections 23 to 26 and 42 of the FCRA, then it is only that authority which can investigate and file a criminal complaint, if so warranted, is untenable in law.
The argument that the power of arrest has been given to officers under Customs Act, Central Excise Act, PMLA etc. and not under FCRA is fallacious as in Customs Act, Central Excise Act, PMLA Acts, the power is given to the officer conducting investigation in the said Acts who is not a police officer. In the present cases, the power to investigate has been given to the CBI which has all the powers which an officer in charge of a police station has while making an investigation into a cognizable offence. This Court has no doubt that the investigative agency and the Trial Courts shall keep in mind the maxim that ‘bail is the rule and jail is an exception’.
In any event, absence of power to arrest, if any, cannot be a ground either for seeking declaration that Section 43 of FCRA is ultra vires or for quashing of the impugned FIR.
In the present cases, all the offences which are mentioned in the RC 36/2017 are not non-cognizable by virtue of Part-II of First Schedule of Cr.P.C, as contended by the learned counsel for the petitioners, because as per Schedule II of Cr.P.C., if any offence is punishable with imprisonment for less than three years or with fine, then only it shall be classified as non-cognizable. In the present cases, the impugned RC 36/2017 had been registered even under Section 35 of FCRA which provides for imprisonment upto five years or fine or both.
Further not all offences punishable with imprisonment or with fine or both are non-cognizable. For instance, Section 429 IPC which prescribes imprisonment for five years or fine or both is cognizable.
In any event, as this Court is of the opinion that Section 43 of FCRA is constitutionally valid, the offences punishable under FCRA will have to be investigated as cognizable offences irrespective of anything contained in the Cr.P.C.
The argument of the petitioners that Sections 33, 35 and 37 of FCRA encompass and imbibe the substance and spirit of penal provisions and hence, external penal provisions like Sections 199, 468, 471 and 511 IPC cannot be invoked is untenable in law. This Court is of the view that offences mentioned in FCRA essentially relate to mis-utilisation of the Foreign Contribution and giving false information, whereas the offences in IPC like Section 468 relate to forging of the documents for purpose of cheating. Consequently, IPC offences are not subsumed in offences under FCRA.
Even if it is assumed that some of the IPC offences mentioned in the FIR overlap with the offences under FCRA, yet the same will not render the registration of the impugned FIR illegal. In any event, the said plea will have to be decided after the investigation is over and that too by the appropriate court. Further, this cannot be a ground to challenge the constitutional validity of the provisions of FCRA.
Upon perusal of RC 9/2013, ECIR 10/2017 and RC 36/2017, this Court is of the opinion that while RC 9/2013 and ECIR 10/2017 have been registered in relation to undue pecuniary advantage given to Airbus Industry which has caused corresponding loss to the Government, impugned RC 36/2017 relates to violation of FCRA provisions as well as the offences committed under IPC in the process of committing violations under FCRA by the petitioners. In fact, the primary allegation in RC 9/2013 and ECIR 10/2017 is that the concessions obtained by the Empowered Group of Ministers (for short ‘EGOM’) regarding setting up of training centre for US$ 75 million and creation of Maintenance, Repair and Overall facility (for short ‘MRO’) for US$ 100 million were deliberately not made part of the final agreement signed by Indian Airlines with Airbus Industries. Accordingly, RC 36/2017 has nothing to do with pecuniary advantage given to Airbus Industry by the public servants by abusing their official positions. This Court is of the view that present batch of writ petitions are without any merit.
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2019 (9) TMI 161 - ATFEMA
Guilty of contravention of the provisions of Section 26(7)(i)(ii) of FERA 1973 - Penalty imposed on directors - dealing between a FERA Company and ‘a Person resident in India’ (which could only be an individual) - arrangement between two bodies corporate - whether amount given by LIL to HLL can neither be treated as a ‘loan’ or ‘deposit’? - HELD THAT:- Scope of “person resident in India”, it cannot be held that the amount given by LIL to HLL in the aforesaid circumstances was not ‘bonafide’ and that the Company did not act under an ‘honest and genuine belief’ that it was permissible to do so. Nor can it be said that the company ‘acted deliberately in defiance of law’ or were ‘guilty of conduct contumacious or dishonest’ or ‘acted in conscious disregard of its obligation’. Assuming without admitting that there is a technical or venial breach, there is no justification for imposition of Penalty.
Apart from the bonafide belief of the Appellant that in the facts and circumstances of the case and on proper appreciation of the aforesaid entry read with the explanatory note and the letter dated 13.2.1987 sent by LIL to the Dy. Director, ED, as well as the interpretation of Section 2(p) of FERA dealing with ‘person resident in India’, the Appellant also sought opinion from Shri M. Hidayatullah (Hon'ble Chief Justice of India- Retd.) annexed to the Additional Affidavit dated 29.3.2010 as Annexure D. At pg. 81 onwards, it is opined that in the facts and circumstances of the case referred to therein, the amount given by LIL to HLL can neither be treated as a ‘loan’ or ‘deposit’.
As such, Section 26(7) cannot be invoked and where it is opined that since the arrangement in the present case is between two bodies corporate and the two clauses of sub-section (7) of Section 26 contemplates dealing between a FERA Company and ‘a Person resident in India’ (which could only be an individual), the said sub-section would not apply.
The impugned order is also not sustainable with regard to the penalty imposed on directors as it is settled law that in order to invoke Section 68 to proceed vicariously against the Directors of the Company for an offence committed by the Company, it is not enough to merely allege & set out the contents of Section 68 in the Show Cause Notice /Memorandum. It is necessary to make specific factual averments against the particular director as to how he is alleged to be incharge of and responsible to the Company for the conduct of business of the Company. In the absence of any such factual averments, no action can be taken with reference to Section 68 against any Director. In the present case, apart from merely repeating the language of Section 68, no factual averment is made against any director as to how he is incharge of and was responsible to the Company for the conduct of its export business and was responsible for the recovery of the export proceeds in question. In the absence of any such factual averments, the Show Cause Notice /Memorandum is bad and the proceedings stand vitiated.
One of the Directors Mr. N. Vaghul joined the Board of Directors of the Appellant Company only in 1987 and prior thereto he was working with ICICI. Since the entry relating to the amount given by LIL to HLL, on the basis of which proceedings were initiated in the present case relates to the year 1985-86 before he joined the Appellant Company, in any event he cannot be held vicariously liable under Section 68 in respect of the alleged contravention by the Appellant Company.
Dr. A.S Ganguly, who was the Chairman of the Board of Directors was in any event not concerned with the day-to-day functioning of the Appellant Company and was not concerned with the transaction in question and as such he could not be held vicariously responsible under Section 68.
All other Directors were ‘Non-executive Directors’ and not ‘Whole-time Directors’ and as such were not responsible or concerned with the day-to-day functioning of the Appellant Company and as such Section 68 could, in any event, not be invoked in respect of such Non-executive Directors. The penalty imposed against all the Directors is liable to be set aside.
The view of an eminent Jurist also establishes the bonafide of the Appellant. Keeping in view the principles laid down in the aforesaid decision of Hindustan Steels, there could be no case for imposition of penalty.
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2019 (8) TMI 971 - DELHI HIGH COURT
Non-compliance with the direction for pre-deposit - Offence under FEMA - HELD THAT:- The learned counsel for the respondent had earlier taken exception to the maintainability of these appeals at the outset, his submissions having been recorded in the proceedings on 11.07.2019 to the effect that the appellants are belated with reference to the order dated 15.11.2018 which, even otherwise, had not been challenged, the orders sought to be impugned by these appeals being only consequential.
At the hearing, the counsel for the appellants was asked if they are now willing to make the pre-deposits as was directed by the appellate tribunal by its order dated 15.11.2018. The counsel answered in the negative taking the position that the appeals at hand raise questions of law.
The order dated 15.11.2018 having attained finality, the appellate tribunal had no option left but to dismiss the appeals on account of non-compliance with the condition of pre-deposit. The impugned order dated 08.05.2019 does not give rise to any question of law.
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2019 (8) TMI 683 - ATFEMA
Hawala transactions - Contravention of provisions of Section 3(b) and Section 3(c) of FEMA, 1999 - allegation based on statement of various persons - submission of the appellant was that the appellant has been wrongly implicated in the case and nothing was seized or recovered from his possession - HELD THAT:- The impugned order has alleged that he received money (Indian currencies) from some other people some of whose name are Poonam, Getha, Raja Ram, Devidoss, Jaloor etc. who in turn has arranged this money from people from abroad. Thus, it appears that the impugned order has not established the appellant receiving the money directly from abroad. Moreover, there is no restriction on circulation of Indian money within the country, at least under FEMA - the department has not investigated those people who are Indians and who have delivered the money to him in India although the details of some of them like their mobile numbers etc. was available to the investigating authority. Moreover, the analysis of phone calls has also not been done in a complete manner as it does not show the details of the conversations.
It is appropriate to remand the case back to the original authority to do a thorough investigation both on the issues raised above as well as any other issues which they may like to investigate and pass a speaking order establishing the link as required under Section 3(b) and 3(c) of FEMA, 1999 - appeal allowed by way of remand.
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2019 (8) TMI 682 - ATFEMA
Acquiring and transferring foreign exchange equivalent to ₹ 208 crores without the prior general or special permission of the RBI - Section 8(1) of FERA, 1973 - allegation is made that M/s. THL have not provided any documents to prove the source of funds which they have invested/remitted to M/s. Sterlite Industries (India) Limited etc. in India and because some of the Directors are common to both the companies, it has been held that this money has actually been funded by M/s. Sterlite Industries (India) Limited to M/s. THL and then back to M/s. Sterlite Industries (India) Limited.
HELD THAT:- There is no prima facie evidence, documentary or otherwise on which the adjudicating authority has relied upon to conclusively prove the above charges. Whether there is a round tripping of funds, the interests of the common Directors in each of these companies, the actual source of funds, are matters of detail which will be gone into at the final hearing stage. Prima facie, it is found that the appellants have a strong case on merits and accordingly stay the pre-deposit. They have not pleaded for any undue hardship and hence no orders are passed on the same.
List the matter for final hearing on 14th October, 2019.
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2019 (8) TMI 681 - ATFEMA
Restoration of appeal - appeal was dismissed on time limitation as well as for non-compliance with the pre-deposit - HELD THAT:- That Delhi High Court’s order, clearly mentions only two appeals i.e. 475 and 543 of 2004 of having being remanded to the AT. There is no such order with regard to the other two appeals i.e. 473 and 488 of 2003 and hence it was legally required for the appellants to have filed, if they so desired, a proper restoration of appeal applications with valid grounds and reasons. As discussed above, they have failed to do so either in their applications or during the hearing - the restoration of appeals applications in appeal No. 473 & 488 of 2003 is dismissed as rejected as is without any grounds and substance.
Other two appeals i.e. 475 & 543 of 2004 which has been remanded by the Hon’ble Delhi High Court - HELD THAT:- The final hearing was commenced on 11.04.2019, adjourned and treated as part heard to 11.07.2019 at the request of one of the appellants and again adjourned and treated as part heard to 26.07.2019 at the request of the other appellant. However, again on 26.07.2019, there was a request for adjournment by one of the appellants - appeals were released from part heard and is now listed to be heard afresh on 25th October, 2019.
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2019 (8) TMI 266 - ATFEMA
Imposition of penalty by Special Director - contravention of Sections 8(1) & 9(1)(a) of FERA, 1973 and Sections 9(1)(f)(i), 8(1) & 9(1)(a) of FERA, 1973 - unlawful detention - initiation of adjudication proceedings as contemplated under Section 51 FERA, 1973.
HELD THAT:- The Adjudicating Authority has not been taken into account in the Impugned Order that prior to the Notification dated 31.07.1995, the position was that foreign currency could be deposited in NRE Accounts by power of attorney holders of NRIs. That being the case the necessary ingredients to make out the violations under Sections 8(1), 9(1)(a) and 9(1)(f) of FERA are not made out - It is rightly stated that in the Impugned Order proceeds on the erroneous premise that the foreign exchange deposited in the NRE Accounts of Mr. V.D. Jaiswal were deposited by the Appellant, whereas in fact the deposits of foreign exchange in the said Accounts were made by Mr. V.D. Jaiswal from his earnings abroad.
The Impugned Order all the material facts were not taken into account the fact that the Adjudicating Authority has in 52 cases against the Appellant, quashed penalty imposed against him and the same have till date not been challenged by the Respondent before the Appellate authorities. The present proceedings, which are based on factually parallel route, atleast all the said orders and facts ought to have been considered in the impugned at the time of passing the order.
In the present case, it is the case of the appellant that apart from the retracted confessional statement of the Appellant, there is no independent evidence on record to corroborate the retracted confessional statement of the Appellant - the said statement cannot be relied upon to impose any penalty upon the Appellant.
Appeal allowed - decided in favor of appellant.
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2019 (8) TMI 265 - ATFEMA
Maintainability of the appeal - Section 19 of the Foreign Exchange Management Act, 1999 - appeals were fixed for orders when there is a difference of opinion - HELD THAT:- There is no dispute that the impugned orders are interlocutory orders and these orders are passed during the course of inquiry proceedings as provided under the Act and Rules thereto. The object of Section 19 (1) is to give a right to appeal to a party aggrieved by an order which affects the party’s right or liability. If the present type of orders are allowed to be agitated than there will be no end to litigation and the very purpose of the relevant provisions and intention of the legislature would be defeated.
The scope of the words “an order” of Adjudicating Authority is not as wide as “any order” or “every decision or order” in the context of Sections 19 (1), 19 (6) & Section 35 respectively of FEMA, 1999 - As held by Hon’ble Supreme Court, in many judgments, only those orders which affect the rights and liabilities of the parties can only be appealable.
After considering the materials on record, oral and written submissions of learned counsels and the relevant judgments in the present appeals, I do not find any materials to support that the present impugned orders in any way affects the rights and liabilities of the parties, hence in view of the discussions made in the preceding paras, it is held that these impugned orders are not covered within the scope of the words “an order” occurring in Section 19 (1) of FEMA, 1999 for the purpose of filing an appeal as required under the said section. Therefore, these appeals are not maintainable.
Appeal not maintainable.
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2019 (8) TMI 247 - SC ORDER
The appellants has not filed affidavit with proof of dasti service upon sole respondent - HELD THAT:- Two weeks time is granted to learned counsel for the appellants to file affidavit with proof of dasti service.
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2019 (8) TMI 216 - BOMBAY HIGH COURT
Remedy of instituting an appeal to the Special Director (Appeals) - impugned order was served upon Petitioners by pasting on the premises sometime on 23rd February, 2019 and this Petition was lodged in the first week of May, 2019 - time limitation - HELD THAT:- If any issue of limitation arises, we are sure that the Appellate Authority will give due regard to all these circumstances. However, since the Petitioners haves alternate and efficacious remedy available under the FEMA itself, we are not inclined to entertain this Writ Petition.
This Petition is disposed of by granting liberty to the Petitioners to institute an appeal against the impugned order, in case the Petitioners so choose. All contentions of the Petitioners are expressly kept open, since we have not examined the merits of the matter.
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2019 (8) TMI 215 - BOMBAY HIGH COURT
Maintainability of petition - Petition by a person who refuses to subject himself to Indian Laws - whether the Writ Court should exercise its jurisdiction in case of a Petitioner who has been issued a non-bailable warrant by the Special Court under the Prevention of Money Laundering Act, 2002 (PMLA) - HELD THAT;- This Court by its [2018 (2) TMI 762 - BOMBAY HIGH COURT] rejected the above contention and entertained the Petition by this very petitioner. We are informed that the status and condition of the Petitioner viz-a-viz Indian Law continues to remain what it was on 30th January, 2018 i.e. no red corner notice has yet been issued in respect of the Petitioner. These facts are not disputed and distinguished by the Revenue. Thus, this issue having already been considered by a coordinate bench of this Court and no new facts have thereafter have been brought to our notice which would warrant a different view.
Rejection of Petitioner's application for copy of the reply filed by BCCI - permission for joint hearing of all the noticee - denial of cross-examination - HELD THAT:- The compliant/ show cause notice relies upon the statement of persons of whose cross examination is sought. Thus, the basic rules of natural justice would require grant of the same, in case, the statements are being relied upon by the Respondent No.1 - the Respondent No.1 would grant cross examination of the five persons in case it seeks to rely upon the same.
Permission for joint hearing of all the noticee - HELD THAT:- It gives no reason for refusing the same. It rejects the requirement only by stating that it would cause prejudice. Therefore, the aforesaid directions in the impugned communication dated 8th January, 2018 is set aside and the Respondent No.1 would deal with the above request afresh and dispose of the same in accordance with law.
Rejection of the request for a copy of the reply filed by BCCI by only stating it would cause prejudice - HELD THAT:- No reasons in support thereof are indicated therein. Thus, the above communication dated 21st August, 2017 is set aside to the above extent and restored to Respondent No.1 for fresh decision.
Petition disposed off.
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2019 (8) TMI 214 - KARNATAKA HIGH COURT
Maintainability of petition - initiation of proceedings u/s 7(3) of the Foreign Exchange Management Act, 1999 - availability of alternative and efficacious remedy of appeal - HELD THAT:- It is not in dispute that the proceedings are initiated by the Adjudicating Authority under Section 7(3) of the FEMA and the impugned order passed by the Adjudicating Authority on 31.8.2017 exercising the powers under Section 13(1) of the FEMA. Therefore, the petitioners have got an alternative and efficacious remedy of appeal before the Appellate Authority under Section 17 of the FEMA - Section 17(4) clearly depicts that on receipt of an appeal under sub-section (1), the Special Director (Appeals) may after giving the parties to the appeal an opportunity of being heard, pass such order thereon as he thinks fit, confirming, modifying or setting aside the order appealed against.
The contention of the learned counsel for the petitioners that the Appellate Authority cannot expunge the adverse remarks passed by the Adjudicating Authority, cannot be accepted. The Appellate Authority has got every right to confirm, modify or set aside the order appealed against.
The writ petitions are disposed of as not maintainable with liberty to the petitioners to avail the alternative remedy of appeal under the provisions of Section 17 of the FEMA within a period of three weeks from the date of receipt of copy of the order.
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2019 (8) TMI 213 - ATFEMA
Imposition of penalty by Special Director - contravention of Sections 6(4), 6(5), 49, 73(3) of FERA, 1973 r/w NRE Account Rules 1970 - initiation of adjudication proceedings as contemplated under Section 51 FERA, 1973 within 30 days - HELD THAT:- In the Impugned Order the factum of prior to the Notification dated 31.07.1995, the position was that foreign currency could be deposited in NRE Accounts by power of attorney holders of NRIs. The same was requisite requirement to make out the violations under Sections 8(1), 9(1)(a) and 9(1)(f) of FERA are not made out - In the Impugned Order, the Adjudicating Authority has not taken into account the fact that the Adjudicating Authority has in 52 cases against the Appellant, quashed penalty imposed against him and the same have till date not been challenged by the Respondent before the Appellate authorities. The present proceedings, which are based on factually parallel route, atleast all the said orders and facts ought to have been considered in the impugned at the time of passing the order.
Repatriation of statement after two days - HELD THAT:- It is well settled law that a retracted confession can never be the basis of any penalty to be imposed upon a person, unless substantially corroborated by independent sources.
In the present case, apart from the retracted confessional statement of the Appellant, there is no independent evidence on record to corroborate the retracted confessional statement of the Appellant - Therefore, the said statement cannot be relied upon to impose any penalty upon the Appellant.
Appeal allowed.
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2019 (8) TMI 139 - SUPREME COURT
Hawala transactions - Detention order - smuggling of foreign origin gold by a syndicate of persons from UAE to India - the sale proceeds of the smuggled gold were siphoned off to Dubai through hawala. - Offences punishable under Section 135 of the Customs Act, 1962.
Whether the orders of detention were vitiated on the ground that relied upon documents were not served along with the orders of detention and grounds of detention? - Whether there was sufficient compliance of the provisions of Article 22(5) of the Constitution of India and Section 3(3) of the COFEPOSA Act?
Whether the High Court was right in quashing the detention orders merely on the ground that the detaining authority has not expressly satisfied itself about the imminent possibility of the detenues being released on bail?
HELD THAT:- It is well settled that the order of detention can be validly passed against a person in custody and for that purpose, it is necessary that the grounds of detention must show that the detaining authority was aware of the fact that the detenu was already in custody. The detaining authority must be further satisfied that the detenu is likely to be released from custody and the nature of activities of the detenu indicate that if he is released, he is likely to indulge in such prejudicial activities and therefore, it is necessary to detain him in order to prevent him from engaging in such activities.
Whether a person in jail can be detained under the detention law has been the subject matter for consideration before this Court time and again. In HUIDROM KONUNGJAO SINGH VERSUS STATE OF MANIPUR & ORS. [2012 (5) TMI 732 - SUPREME COURT], the Supreme Court referred to earlier decisions including Dharmendra Suganchand Chelawat v. Union of India DHARMENDRA SUGANCHAND CHELAWAT VERSUS UNION OF INDIA [1990 (2) TMI 154 - SUPREME COURT] and reiterated that if the detaining authority is satisfied that taking into account the nature of the antecedent activities of the detenu, it is likely that after his release from custody he would indulge in prejudicial activities and it is necessary to detain him in order to prevent him from engaging in such activities.
Whether there was awareness in the mind of the detaining authority that detenu is in custody and he had reason to believe that detenu is likely to be released on bail and if so released, he would continue to indulge in prejudicial activities - HELD THAT:- In the present case, the detention orders dated 17.05.2019 record the awareness of the detaining authority:- (i) that the detenu is in custody; (ii) that the bail application filed by the detenues have been rejected by the Court. Of course, in the detention orders, the detaining authority has not specifically recorded that the “detenu is likely to be released”. It cannot be said that the detaining authority has not applied its mind merely on the ground that in the detention orders, it is not expressly stated as to the “detenue’s likelihood of being released on bail” and “if so released, he is likely to indulge in the same prejudicial activities”. But the detaining authority has clearly recorded the antecedent of the detenues and its satisfaction that detenues Happy Dhakad and Nisar Aliyar have the high propensity to commit such offences in future - The satisfaction of the detaining authority that the detenu is already in custody and he is likely to be released on bail and on being released, he is likely to indulge in the same prejudicial activities is the subjective satisfaction of the detaining authority.
The satisfaction of the detaining authority that the detenu may be released on bail cannot be ipse dixit of the detaining authority. On the facts and circumstances of the present case, the subjective satisfaction of the detaining authority that the detenu is likely to be released on bail is based on the materials. A reading of the grounds of detention clearly indicates that detenu Nisar Aliyar has been indulging in smuggling gold and operating syndicate in coordination with others and habitually committing the same unmindful of the revenue loss and the impact on the economy of the nation. Likewise, the detention order qua detenu Happy Dhakad refers to the role played by him in receiving the gold and disposing of the foreign origin smuggled gold through his multiple jewellery outlets and his relatives - The High Court erred in quashing the detention orders merely on the ground that the detaining authority has not expressly recorded the finding that there was real possibility of the detenues being released on bail.
The court must be conscious that the satisfaction of the detaining authority is “subjective” in nature and the court cannot substitute its opinion for the subjective satisfaction of the detaining authority and interfere with the order of detention. It does not mean that the subjective satisfaction of the detaining authority is immune from judicial reviewability - By various decisions, the Supreme Court has carved out areas within which the validity of subjective satisfaction can be tested.
In the present case, huge volume of gold had been smuggled into the country unabatedly for the last three years and about 3396 kgs of the gold has been brought into India during the period from July 2018 to March, 2019 camouflaging it with brass metal scrap. The detaining authority recorded finding that this has serious impact on the economy of the nation. Detaining authority also satisfied that the detenues have propensity to indulge in the same act of smuggling and passed the order of preventive detention, which is a preventive measure. Based on the documents and the materials placed before the detaining authority and considering the individual role of the detenues, the detaining authority satisfied itself as to the detenues’ continued propensity and their inclination to indulge in acts of smuggling in a planned manner to the detriment of the economic security of the country that there is a need to prevent the detenues from smuggling goods - The High Court erred in interfering with the satisfaction of the detaining authority and the impugned judgment cannot be sustained and is liable to be set aside.
The appeals preferred by the detenues shall stand dismissed.
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2019 (8) TMI 138 - BOMBAY HIGH COURT
Permission for withdrawal of petition - Time limitation of Adjudication proceedings under section 13 of FEMA Act - HELD THAT:- It is the Petitioner's contention that the proceedings which are being contemplated against the Petitioner relate to issues which are over 10 to 12 years prior to the issue of the notice. Thus, causing it prejudice. We trust that the submissions made by the Petitioner would be duly considered by the Adjudicating Authority while taking a decision thereon.
Petition disposed of as withdrawn with liberty to file a further representation/reply to the impugned notice dated 15th April, 2019 within two weeks from today.
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2019 (8) TMI 137 - ATFEMA
Non-realisation of exports proceeds - guilty of contravention of Section 18(2) and 18(3) of FERA, 1973 - It was the case of the respondent that the appellants have failed to take reasonable steps to realize the export proceeds the RBI had not granted any permission to the appellants for extension of time or for writing off the same - HELD THAT:- It is noticed by the Hon’ble High Court in para-5 of the order that on perusal of the impugned orders passed by the Appellate Tribunal, it is seen that the Tribunal has not considered the Bank Certificates furnished by the petitioner, which prime facie suggest that the export proceeds have been realized by the appellants. Since the Tribunal has not considered the said Bank Certificates, in our opinion, it is just and proper to set aside the impugned orders of the Appellate Tribunal and direct the Tribunal to pass fresh order on the waiver applications filed by the appellants.
It has come on record that the export proceeds have been realized by the appellants. The documents have been filed. No contrary submissions have been made, nor evidence is produced.
Impugned order set aside - appeal allowed.
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2019 (8) TMI 136 - ATFEMA
Jurisdiction - power of Single Member Bench to decide appeals under the provisions of FERA and FEMA - appellants’ contention is that Section 52 of the FERA does not allow any Single Member to hear and decide the appeals where the order imposing a penalty exceeds ₹ 2,50,000 was a provision under the FERA, 1973 - HELD THAT:- As per Section 12 (6A) of SAFEMA, the Chairman of the Appellate Tribunal may constitute a Bench with one or two Members and a Bench so constituted may exercise and discharge the powers and functions of the Appellate Tribunal. Even the erstwhile Section 20 of FEMA (rescinded vide Finance Act 2017) had provisions to constitute Bench with one or more Members - while the Appellate Board of FERA has been dissolved with the coming into effect of FEMA on 01.06.2000, the Appellate Tribunal set up under SAFEMA will be the Appellate Tribunal for the purposes of FEMA also. The provisions under SAFEMA provide for both a Single Member Bench and a Division Bench to be constituted by the Chairman. It is a fact that the Chairman has notified in July 2018 distribution of cases/appeals to all the existing Benches including both the Single Benches of the undersigned and the Chairman functioning as a Member. As per section 2(s) of FEMA, “Member means a Member of the Appellate Tribunal and includes the Chairperson thereof”.
There is no merit in the miscellaneous petitions on the question of limitation of jurisdiction of the Single Member Bench as per the legal provisions - petition dismissed.
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2019 (8) TMI 135 - ATFEMA
Hawala transactions - Receiving payments under the instructions of persons resident outside India - contravention of Section 3(c) of FEMA, 1999 - distribution of payments under the instructions of persons resident outside India - contravention of Section 3(b) of FEMA, 1999 - imposition of penalties - relaibility on retracted statements - opportunity of cross-examination - principles of natural justice.
HELD THAT:- The appellants’ contention that they had retracted the statement is a little difficult to accept. The retraction was purportedly done by sending a letter to the Directorate of Enforcement on 15.09.2011 by Shri Shamsher Singh and 04.08.2011by Shri Dimple Thakur. In the case of Shamsher Singh it was done after 43 days from his first statement and after recording eight statements on different dates. Moreover, the appellant has given no proof that the retraction letter was actually sent since the adjudicating authority has clearly mentioned in the order that no such letters had been received - he statements of number of people taken during various points of time that they have been receiving money from Shamsher Singh various points of time on instructions from abroad cannot be brushed aside especially when the appellant has given no evidence to prove that those statements were wrong. Both the appellants’ statements as well as the appellants of at least 26 others and the CFSL report conclusively proves that there were illicit transactions.
Opportunity to cross-examine - HELD THAT:- Cross-examination is not a part of natural justice. The underlying principle of natural justice is of hearing the appellant and providing adequate opportunity to place their case before the adjudicating authority which has been fulfilled in this case - there is no reason to interfere in the impugned order on this ground.
The appellant has accepted in his statement that this money was kept as a part of hawala proceedings gets proven by their own statements, by the statements of independent 26 others, by the CFSL report, and by the contradictory affidavit all of which are on record - in a case like the present one, it is not possible or necessary to prove the culpability to the last penny.
Appeal dismissed.
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2019 (8) TMI 134 - ATFEMA
Receipt of payments under the instructions of a person resident outside India - delay in issuance of SCN - Validity of confession - HELD THAT:- The statement recorded from the appellant does not contain any admission/confession and instead contains clear denial of any involvement in the case. The issuance of the show cause notice and the findings of guilt solely basing on the discrepancy in the travel details of the appellant is unsustainable.
The appellant was in India as per pass-port details produced by the respondent. The appellant has also failed to produce his pass-port when his counsel was asked who only stated now that the same is not traceable. Therefore, presumption is that he may be the same person as alleged by the respondent - It is stated that he is a poor old man and suffering from Parkinson Diseases and showing symptoms of Alzheimer‟s Diseases. He has also loss memory. The delay in issuing the show cause notice running into ten years without any valid reason for modification of order.
The said long delay is unexplained in issuing the show cause notice. No explaination is given during the course of hearing - The customs authorities did not initiate any proceedings against the appellant after the receipt of a reply submitted by the appellant. It is also a matter of fact that the Customs as well as the Enforcement had searched his residential premises, nothing was seized therefrom.
The appeal is disposed of with the direction that the 25% of the penalty amount already deposited by order dated 31.07.2017 i.e. a sum of ₹ 5 Lakhs shall appropriated by the respondent and a full and final penalty amount in view critical condition and bad health of the appellant - appeal disposed off.
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