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FEMA - Case Laws
Showing 161 to 180 of 1378 Records
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2021 (11) TMI 1207
Validity of Adjudication Order passed under FEMA - real owner of confiscated money - petitioner made a submission that the money confiscated belongs to the petitioner and he made a claim for return of property - respondent has categorically stated that an appeal against the adjudicatory order shall lie with the Special Director (Appeals)
HELD THAT:- Perusal of the adjudicatory order reveals that the money was confiscated from the Manager of the petitioner and therefore, opportunity was given to the person from whom, the money was confiscated. Under these circumstances, if at all, the petitioner claims that he is the owner of the money, it is for him to initiate appropriate steps before the authority. Contrarily, this Court cannot issue a direction to provide an opportunity to the writ petitioner in the adjudicatory process, wherein admittedly the money was not confiscated from the petitioner, but from his Manager.
The story narrated by the petitioner in detail requires no merit consideration as all those facts are to be established with reference to the documents and evidences including oral evidences.
The various statements, cases registered and the adjudicatory process would reveal that the facts are to be investigated and a trial is required for the purpose of culling out the truth behind these allegations. However, such an elaborate adjudication cannot be done in a writ proceedings under Article 226 of the Constitution of India and merely based on the affidavit, return of property, which were confiscated by the Enforcement Directorate, cannot be released nor in an adjudicatory process, where the authorities forming an opinion that opportunity is to be given to the person from whom the confiscation is made, should not be interfered with this by this Court in the writ petitions.
Petitioner made a submission that there is a provision for appeal and even in the impugned order, it is stated that the petitioner if aggrieved, may file an appeal. If so, it is for the petitioner to prefer an appeal in a prescribed format and complying with the procedures as contemplated.
However, the relief sought for in the present writ petition cannot be granted and consequently, the writ petition stands dismissed.
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2021 (10) TMI 1131
Pre-deposit requirement qua the petitioner - As petitioner submit that he in no way concerned with the affairs of the company after his resignation on 6-5-2006 much less with the agreement dated 21-6-2006. Further, even the earlier agreement was between the two companies to which the petitioner was not a signatory - HELD THAT:- As in our opinion, for the stand taken by the petitioner, we direct the Appellate Authority to exempt the requirement of pre-deposit as regards this petitioner (M. Umesh), in case he resorts to remedy of appeal in light of the liberty given in terms of this order. In other words, the Appellate Authority shall not insist for pre-deposit requirement qua the petitioner herein, i.e. M. Umesh.
Besides, the appellate authority shall not non-suit the petitioner for having filed the appeal beyond limitation as the petitioner was pursuing remedy before the High Court in the first place and thereafter before this Court, after issuance of show cause notice.
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2021 (10) TMI 1130
Foreign contributions - Prior permission u/s 11 to receive foreign contributions in the form of life saving equipment/articles for COVID-19 insofar as to expedite the relief work in our country - exemption to registered associations, organisations or persons, defined under Section 2(1)(m) of the Foreign Contribution (Regulation) Act, 2010 to receive foreign contributions - HELD THAT:- As exemptions and relaxations under different Statutes are not a matter of right. It is the prerogative power of the Government to exempt or give relaxations with or without stringent conditions. It is not for the Court to direct the Government to exercise the power in a particular manner. It is evident from the pleadings and not denied by the Learned Counsel for the Petitioner during the course of hearing that before filing the present petition, Petitioner has not approached the Competent Authority seeking exemption under the Act.
We therefore direct the Competent Authority under the concerned Ministry to treat the present petition as a representation and decide the issues raised and grievances ventilated by the Petitioner, in accordance with law, relevant rules, regulations and Government policies applicable to the facts of the case, as early as practicable, keeping in mind the nature of relief sought.
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2021 (10) TMI 1129
Search and seizure operation carried out by the officers of FEMA - search and specific seizure of certain gold jewellery which, according to him, was part of the stock-in-trade - Jurisdiction of High court - HELD THAT:- As cause of action has arisen within the State of West Bengal, that is, the search and seizure has taken place in West Bengal and the petitioner company is situated at West Bengal, in my view, there is no impediment in entertaining this writ petition before this High Court.
Clause (2) of Article 226 of the Constitution of India clearly allows this High Court to have jurisdiction in such cases wherein the cause of action has partly arisen notwithstanding the fact that the seat of the authority dealing with the issue is outside the jurisdiction.
Search and seizure of the excess jewellery that has been seized by the Enforcement Directorate - As it is to be noted that in the writ petition, the petitioner has relied on several documents to indicate that this “excess jewellery” was duly accounted for and had been sent for job work. In my view, the Enforcement Directorate should look into the documents filed in the writ petition and pass a reasoned order on whether these goods are stock-in-trade or not.
Enforcement Directorate finds that the same are duly accounted for, the same should be released in favour of the petitioner in accordance with law. The above enquiry and the reasoned order should be passed within a period of eight weeks from date.The authorities are also directed to allow the authorized representative of the petitioner-company to have a lawyer of his choice to be present during the summons at an inaudible distance as per the guidelines laid down by the Supreme Court.
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2021 (9) TMI 730
Extension of tenure of Director of Enforcement - extension of tenure granted to persons holding the post of Director of Enforcement after attaining the age of superannuation - fixing the tenure for a minimum period of two years - procedure prescribed under Section 25 of the Central Vigilance Commission Act, 2003 (‘CVC Act’) - Whether there can be extension of tenure of a person who has been appointed as a Director of Enforcement for a period of two years and who has attained the age of superannuation in the interregnum i.e. before the expiry of two years? - HELD THAT:- Government servant shall retire on attaining the age of 60 years. Posts for which there can be extension beyond 60 years have been specifically mentioned in the Rule and there is no dispute that the post of Director of Enforcement is not mentioned in the Rule for which extension of service can be given.
There is no ambiguity in Section 25 (d) of CVC Act and the words ‘not less than two years’ simply mean a minimum of two years. There is no scope for reading the words to mean not more than two years. Reading such a restriction would be contrary to the recommendations of the Independent Review Committee and the judgment of this Court in Vineet Narain.[1997 (12) TMI 615 - SUPREME COURT] - Curtailment of the tenure of a Director Enforcement would be detrimental to the interests of officers who are appointed to the post and have service of more than two years before they attain the age of superannuation. Therefore, we hold that a Director of Enforcement can be appointed for a period of more than two years by following the procedure prescribed under Section 25 of the CVC Act.
As held that the initial appointment of the second Respondent cannot be termed to be illegal and that he had a right to continue till 18.11.2020 by virtue of his appointment for a period of two years. For all practical purposes, he should be treated as the Director of Enforcement till that particular date he was holding an office which is not below the rank of an Additional Secretary to the Government of India. Therefore, he was eligible for extension of tenure.
The material on record indicates that the extension of service of the second Respondent was pursuant to the recommendations made by the Committee constituted under Section 25 (a) of the CVC Act. One of the conditions of Section 21 is that the power has to be exercised in the like manner and subject to like sanction. Amendment was made to the earlier order of appointment by the Committee after complying with the conditions in Section 21 of the General Clauses Act.
Justification given by the Union of India for extension of the tenure of second Respondent is that important investigations are at a crucial stage in trans-border crimes. The decision to extend the tenure of the second Respondent is pursuant to the recommendation made by the high-powered committee. Though we have upheld the power of the Union of India to extend the tenure of Director of Enforcement beyond the period of two years, we should make it clear that extension of tenure granted to officers who have attained the age of superannuation should be done only in rare and exceptional cases. Reasonable period of extension can be granted to facilitate the completion of ongoing investigations only after reasons are recorded by the Committee constituted under Section 25 (a) of the CVC Act.
We do not intend to interfere with the extension of tenure of the second Respondent in the instant case for the reason that his tenure is coming to an end in November, 2021. We make it clear that no further extension shall be granted to the second Respondent.
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2021 (7) TMI 1436
Requirement of pre-deposit - Availability of statutory remedy - petitioner would submit that the petitioner was in no way concerned with the affairs of the company after his resignation on 06.05.2006 much less with the agreement dated 21.06.2006. Further, even the earlier agreement was between the two companies to which the petitioner was not a signatory.
As argued Petitioner has had no causal connection with the affairs of the company at the relevant time, which is allegedly involved in the commission of FEMA violations. If that is so, the petitioner cannot be compelled to pay pre-deposit amount even if he is driven to file the statutory appeal.
HELD THAT:- Considering the arguments on both sides, in our opinion, for the stand taken by the petitioner, we direct the Appellate Authority to exempt the requirement of pre-deposit as regards this petitioner (M. Umesh), in case he resorts to remedy of appeal in light of the liberty given in terms of this order. In other words, the Appellate Authority shall not insist for pre-deposit requirement qua the petitioner herein, i.e. M. Umesh.
Besides, the appellate authority shall not non-suit the petitioner for having filed the appeal beyond limitation as the petitioner was pursuing remedy before the High Court in the first place and thereafter before this court, after issuance of show cause notice.
The petitioner through counsel assures to file the appeal within three weeks from today. If the appeal is filed beyond three weeks, the limited relief regarding limitation, in terms of this order, shall not apply and the entire limitation period be reckoned by the Appellate Authority.
The Special Leave Petition is disposed of accordingly.
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2021 (7) TMI 523
Intimation by recipients of foreign contributions - Foreign Contribution Regulation Act, 2010 (“FCRA”) - peculiarities in the FC-4 Form, whereunder returns, regarding contributions received by beneficiaries under the Foreign Contribution Regulation Act, 2010 (“FCRA”) are required to be filed - petitioners’ accounts wherein foreign contributions were received were not in the SBI, till 7th October, 2020. As a result, the petitioners submit that it has become impossible for them to submit the return under FC-4 Form for the year 2019-2020.HELD THAT:- To a query from the Court as to how this situation could be remedied, Mr. Farman Ali, learned Counsel for the respondent, seeks a short adjournment in order to enable him to obtain instructions specifically on this aspect. However, he submits that no stay ought to be granted, as the petitioners can submit their return even after 30th June, 2021, with appropriate penalty.
This submission does not commend itself to acceptance at all.
The citizen cannot be penalised for a discrepancy in the form prescribed by the respondent which has resulted in the form being unable to be submitted even in the case of a law abiding citizen.
In view thereof, till the next date of hearing, the respondent is restrained from taking any coercive action against the petitioner for failure to file the requisite return under the FC-4 Form before 30th June, 2021.
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2021 (5) TMI 1061
Offence under FEMA - direction to the Respondent Bank to de-freeze the account - HELD THAT:- Evident it is from the communication that it is because of the forgery of passport and initiation of an investigation by the Enforcement Directorate has resulted in freezing of the account. The petitioner for the reason best known to him has not disclosed these facts in the petition rather concealed these facts.
We are not inclined to entertain the petition where the petitioner has not come to the court with clean hands. consequently, petition fails and is dismissed.
In the present case, we refrain from imposing the cost on the petitioner and expect that the petitioner in future while filing a petition under Article 226 of the Constitution shall disclose all the relevant facts.
As we have held that the petition is not entertainable for the reason supra, we decline the prayer of the petitioner for withdrawal of petition and filing of fresh petition.
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2021 (5) TMI 929
Offence under FEMA - Distinction between the two stages of the adjudication process - eligible reasons by the respondent no. 1 for the formation of opinion to proceed with the inquiry against the petitioner - HELD THAT:- The Adjudicating Authority, under the Scheme of the FEMA, performs a quasi-judicial function as opposed to a purely administrative function. The requirement of giving reasons therefore cannot be undermined and must be insisted upon from the Adjudicating Authority. The reasons to be given for its opinion under Rule 4(3) of the Adjudication Rules to proceed with the inquiry though need not be as elaborate as in a Court decision or let’s say an order passed by the Adjudicating Authority under Rule 4(8) of the Adjudication Rules, but have to be adequate, proper and intelligible, sufficiently clear and explicit. They must reasonably deal with the substantial points raised in the matter and show that they were taken into consideration. However, the extent and nature of reasons depend upon specific facts and circumstances of each case.
The Impugned Opinion/Order dated 05.06.2020, does not satisfy the test of giving reasons by the respondent no. 1 for the formation of opinion to proceed with the inquiry against the petitioner.
The reasons are the bridge between the material on record and the final decision. Therefore, after considering the judgment of the Supreme Court, the Complaint and the reply of the petitioner to show cause, that is the material on record, the Adjudicating Authority is to give reasons, howsoever brief, at least showing that he is alive to the contentions raised in the reply to the Show Cause Notice and why he is of the opinion that inquiry must still be held. In the present case, this bridge is missing.
It is also to be seen as to whether the inquiry deserves to be set aside only for the above violation. In the present case, as noted herein above, the Supreme Court has passed a detailed judgment finding various acts of violation of the FEMA and the Rules/Regulations framed there-under inter alia against the JP Morgan group of companies, may not be specifically by name against the petitioner. The present inquiry has been initiated on the direction of the Supreme Court in the said judgment. The allegations against the petitioner also cannot be said to be such that do not warrant any inquiry given the above factual background. The role of the petitioner and its employees and the capacity in which they acted in the transactions in question need a detailed inquiry as such allegations form part of a larger whole which is being inquired into.
Considering that at the stage of Rule 4(3) of the Adjudication Rules, the Adjudicating Authority was merely to form an opinion whether to proceed with the inquiry; and as held by the Supreme Court in Natwar Singh [2010 (10) TMI 156 - SUPREME COURT] it is only thereafter that the “real and substantial inquiry into allegations of contravention begins”; and that unlike the final order imposing penalty, “the opinion formed by the Adjudicating Authority whether an inquiry should be held into the allegations made in the complaint are not fraught with such grave consequences”, and as held by the High Court of Bombay in Shashank Vyankatesh Manohar [2013 (8) TMI 435 - BOMBAY HIGH COURT] that “in case the objections are such as would require detailed consideration, the authority concerned can dispose of the objections by stating that the same would require detailed consideration, which would be done at the disposal of the notice by the final order”, it is held that there was enough reason for the respondent no. 1 to form an opinion to proceed with the inquiry against the petitioner and no useful purpose would be served by quashing the impugned Opinion and insisting on the reasons to be first recorded. Exercise of powers under Article 226 being discretionary in nature, this court, in the peculiar facts of the present petitions, does not find it fit to exercise the same.
Even though the Impugned Opinion of the Adjudicating Authority does not record any reasons for the same, the same is sustained. This shall, however, not be considered as an affirmation of this Court to the manner in which such opinion is to be recorded. It is also made clear that this Court has not expressed any opinion on the merit of the allegations made against the petitioner in the Show Cause Notice or the inquiry.
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2021 (5) TMI 198
Applicant in respect of Section 31(1) of FERA - time-limit for cognizance of any offence under FERA - suit for specific performance for dismissal of the suit and rejection of the plaint under Order VII Rule 11 of The Code of Civil Procedure, 1908 (CPC) on the ground that the suit is barred by law - HELD THAT:- The statement in the plaint has been made with reference to the letter dated 14th December, 1989 from the lawyers of the plaintiff to Helen Wilson which reveals that Helen Wilson was a foreign national and hence came within the statutory requirement of Section 31(1) of FERA. This letter also reveals that Helen Wilson may not have had the permission of the RBI or communicated such permission to the plaintiff as on 14th December, 1989 which would be corroborated by the letter of 8th October, 1993 of the RBI granting permission to Helen Wilson under Section 31(1) of FERA.
The letter of 8th October, 1993 has been brought on record by the applicant defendant no.3 as a part of the application for dismissal of the suit. Order VII Rule 11(d) applies where the plaint, on the face of it, is barred by law and the contravention of the law must be clear and unambiguous from the plaint itself. A Court which is called upon to decide the issue cannot engage with the alleged statutory violation or the fact to be determined beyond the limits of what the plaint discloses. The letter dated 14th December, 1989 would have served the objective of the defendant no.3 of having the suit dismissed if by such letter the Court could have come to an indisputable conclusion that Helen Wilson, a foreign national, had alienated the property by way of sale or gift or otherwise in favour of the plaintiff without first obtaining the permission from the Reserve Bank of India under Section 31(1) of FERA.
This is obviously not the case since the plaintiff was constrained to file a suit on 18th July, 1990 precisely because the agreement had not been executed hence necessitating a direction on the original defendant to execute and register the deed of conveyance in terms of the agreement for sale dated 2nd January, 1989.
The contention of the applicant in respect of Section 31(1) of FERA, subject to Section 49(3) of FEMA setting the time-limit for cognizance of any offence under FERA, would have also been acceptable had Helen Wilson attempted to set the property in motion from herself to the plaintiff without first complying with the statutory requirement as existed on the date of sale of the property. Since this is not the factual position, this Court is not persuaded to dismiss the suit or reject the plaint for contravention of any law which existed on the date when the suit was filed.
The prayers must hence be rejected and the application for dismissal of the suit is accordingly dismissed without any order as to costs. The suit shall be listed for hearing after the summer holidays.
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2021 (5) TMI 190
Search and seizure operation carried out by the officers of the Enforcement Directorate under FEMA - excess jewellery seized - HELD THAT:- With regard to the search and seizure of the excess jewellery that has been seized by the Enforcement Directorate, it is to be noted that in the writ petition, the petitioner has relied on several documents to indicate that this “excess jewellery” was duly accounted for and had been sent for job work. In my view, the Enforcement Directorate should look into the documents filed in the writ petition and pass a reasoned order on whether these goods are stock-in-trade or not.
In the event, the Enforcement Directorate finds that the same are duly accounted for, the same should be released in favour of the petitioner in accordance with law. The above enquiry and the reasoned order should be passed within a period of eight weeks from date.
The authorities are also directed to allow the authorized representative of the petitioner-company to have a lawyer of his choice to be present during the summons at an inaudible distance as per the guidelines laid down by the Supreme Court.
The petitioner shall cooperate with the authorities. We further hasten to clarify that I have not gone into the merits of this case.With these above observations and directions, this writ petition stands disposed of
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2021 (4) TMI 1293
Offence under COFEPOSA ACT - detention order - respondents desired to unlock the mobile phone instrument of the petitioner to retrieve the materials/ documents therefrom but petitioner did not co-operate in the opening/ unlocking of his mobile phone instrument - HC held preventive detention of the petitioner in the assessment of the Detaining Authority, the Respondents had to collect evidence against the present petitioner, including recovering the relevant data from his mobile phone instrument, which took considerable time for reasons attributable primarily to the petitioner himself. No merit in the assertions of the petitioner - HELD THAT:- We are not inclined to entertain the Special Leave Petition under Article 136 of the Constitution of India.
Special Leave Petition is accordingly dismissed.
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2021 (4) TMI 82
Rejection of permission to remit foreign exchange - FEMA ODI Regulations - approval on the basis of the reservations expressed by ED - as the wholly owned subsidiary of the respondent has already taken the credit of foreign exchange from various lenders and the foreign exchange has already come to the country. It is only this foreign currency which is now being repaid by the respondent - Writ of Mandamus, directing Respondent to permit Petitioner to make additional commitments and payments of USD 300 Million to its wholly owned subsidiary namely Jindal Steel and Power (Mauritius) Limited by way of equity subscription or loan or corporate guarantee or bank guarantee or through other permitted mode from Indian Bank for meeting its debt obligations - HELD THAT:- We are of the view that the order of denial of permission dated 30.12.2019 based upon Regulation 9(3) of FEMA ODI Regulations gives no reason for rejecting the application of the respondent. Assuming for the sake of arguments that the reasons are contained in the e-mail of 30.12.2019 as well as in the letter of 03.12.2019, we are also required to see that the reasons so mentioned are not arbitrary, whimsical and in accordance with the scheme of the FEMA. The reasons for rejection must be considered and also must relate to the dominant purpose of the FEMA Regulations which is conservation of Foreign Exchange.
The reason contained in the e-mail of 30.12.2019 namely “reservation expressed by DOE/on-going investigations” and in the letter of 03.12.2019 namely “conducting investigations against M/s Jindal Steel Power under FEMA in four cases” and “conducting investigations under PMLA in three cases,” cannot be a ground for denial of permission. The appellant cannot deny approval merely on the premise of pending investigation. It is not the case of the RBI, in the appeal, counter affidavit in the writ petition or argued before us that the remittances made in the past by the respondent have been misused. Till date pursuant to the permission of the RBI the respondent has remitted a total amount of 241.14 million USD (USD 90 million+ USD 54.99 million+ USD 96.15 million). Hence, we hold that even if we look at the reasons for rejection contained in the order dated 30.12.2019, the reasons are arbitrary, whimsical and do not further the scheme of Foreign Exchange Management Act.
The reliance on word “inter alia” under Regulation 9(3) - Regulation 9(3) the word “inter alia” of FEMA ODI Regulations must take its colour from the scheme, drift and tenor of the Act as well as Regulations. The FEMA ODI Regulations do not contemplate any role of the third party or the agency for approval or for prior approval, least of all investigating agency. The only mention of pending investigation is under Regulation 6(2) (iii) ie. If the Indian Party is under RBI caution list/lists of defaulters or under investigation by an investigation/enforcement agency or by a regulatory body. The very fact that Regulation 9(3) makes a conscious omission of pending investigations, by an investigation/ enforcement agency, further strengthens our opinion that merely an on-going enquiry /pending investigations cannot be a ground for rejection of permission to remit Foreign Exchange. It will be relevant to point out that all permissions given by the appellant have categorically stated “each permission is without prejudice to any action that may be taken by any investigative agency on account of contravention”.
We also note with approval that even after “so-called reservation” indicated by the DOE, the appellant has granted permission to the respondent on 09.09.2020 indicating “no objection from the FEMA 1999 angle.” The counter affidavit of the appellant has reiterated that the conditions imposed in the letter of 09.09.2020 are in line with FEMA ODI Regulations. Hence, we hold that the denial of permission dated 30.12.2019 based upon Regulation 9(3) of FEMA ODI Regulations is wrong.
Learned Single Judge has not adverted to the preliminary objections raised in the counter affidavit.
No finding against ED could have been given without ED being a party - We are unable to agree with this contention of the appellant as there is no finding given against the ED by the learned Single Judge. The learned Single Judge in Para 38 of the impugned order and judgment dated 04.12.2020 has observed merely that there is nothing on record of the writ court which shows that any demand appears to have been raised by the ED on the respondent. The learned Single Judge has further held that DOE has enough power under various statutory regimes to attach properties and assets of the defaulter individual.
The appellant has rejected the application of the respondent at the behest of ED - We have already, while adverting to the arguments of the learned Sr. Counsel for the appellant in ground (A) held that the reasons for rejection have been merely the apprehension expressed by the ED. The said apprehension of the ED is neither in spirit of the scheme of FEMA nor Regulation 9(3). The reliance of RBI on the apprehensions expressed by ED in its e-mail of 30.12.2019 and the letter of 03.09.2020 itself has been held by us to be incorrect and hence, the rejection by the appellant dated 30.12.2019 is incorrect. In view of the above, the reliance placed on the judgment State of Bihar v. Asis Kumar Mukherjee (Dr) [1974 (12) TMI 74 - SUPREME COURT] is misplaced.
The appellant taking u-turn by taking permission - During the course of arguments the learned Sr. Counsel for the respondent has categorically made the statement that they would give a Board Resolution to deposit equivalent amount of the said financial commitment amounting to USD 241.5 million and an undertaking that it had unencumbered assets worth USD 241.5 million but the same was not acceptable to the respondent. Be that as it may, it is clear that the letter of 09.09.2020 was issued by the respondent after the so-called Panama/Mauritius Leaks and there is no justification or satisfactory explanation as to why the permission was granted even as late as 09.09.2020.
Moreover, the learned Sr. Counsel for the appellant had relied on the Judgment M/s. Mahabir Jute Mills LTD., Gorakhpore Vs. Shri Shibban Lal Saxena and Ors [1975 (7) TMI 148 - SUPREME COURT] to urge that the very fact that the appellant chose not to challenge the order and in fact comply with the same cannot be held against them. The said judgment need not detain us as we are of the opinion that the order dated 30.12.2019 is itself flawed.
Application filed under Order I Rule 10 read with Section 151 of CPC by the Directorate of Enforcement seeking impleadment as a respondent in the present appeal - HELD THAT:- A proper party is a person whose presence would enable the court who completely, effectively and properly adjudicate upon all matters and issues, though he may not be the person in favour of or against whom a decree is to be made for the reasons we have elaborated in our judgment dated 26.03.2021.
We feel that DOE is neither a proper nor a necessary party to the present proceedings as no relief is claimed against DOE
ii. The disputes in question can be effectively, completely and properly be adjudicated in the absence of applicant.
We are also persuaded by the fact that there is no averment in the application as to why DOE chose not to file a similar application for impleadment in the original writ proceedings and has only come up for the first time in the present appeal. The application is totally silent on the said ground. In this view of the matter we find no merit in the application and the same is dismissed.
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2021 (3) TMI 1303
Search and seizure operation carried out by officers of FEMA - seizure of certain gold jewellery - maintainability of appeal - As argued bullion or jewellery being stock-in-trade of the business cannot be seized by the authorities - HELD THAT:- With regard to the maintainability point, as part of the cause of action has arisen within the State of West Bengal, that is, the search and seizure has taken place in West Bengal and the petitioner is residing at West Bengal, in my view, there is no impediment in entertaining this writ petition before this High Court.
Clause (2) of Article 226 of the Constitution of India clearly allows this High Court to have jurisdiction in such cases wherein the cause of action has partly arisen notwithstanding the fact that the seat of the authority dealing with the issue is outside the jurisdiction.
Search and seizure of the excess jewellery that has been seized by the Enforcement Directorate, it is to be noted that in the writ petition, the petitioner has relied on several documents to indicate that this “excess jewellery” was duly accounted for and had been sent for job work. In my view, the Enforcement Directorate should look into the documents filed in the writ petition and pass a reasoned order on whether these goods are stock-in-trade or not.
Enforcement Directorate finds that the same are duly accounted for, the same should be released in favour of the petitioner in accordance with law. The above enquiry and the reasoned order should be passed within a period of eight weeks from date.The authorities are also directed to allow the petitioner to have a lawyer of his choice to be present during the summons at an inaudible distance as per the guidelines laid down by the Supreme Court.
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2021 (3) TMI 92
Transaction entered into by a foreign citizen of “Indian origin”, to deal with real estate in India on certain conditions - transaction (specified in Section 31 of the 1973 Act) entered into in contravention of that provision is void or is only voidable and it can be voided at whose instance - Mandation to get general or special permission of the RBI for transfer or disposal of immovable property situated in India by sale or mortgage by a person, who is not a citizen of India - HELD THAT:- Foreigners should not be permitted/allowed to deal with real estate in India; the peremptory condition of seeking previous permission of the RBI before engaging in transactions specified in Section 31 of the 1973 Act and the consequences of penalty in case of contravention, the transfer of immovable property situated in India by a person, who is not a citizen of India, without previous permission of the RBI must be regarded as unenforceable and by implication a prohibited act. That can be avoided by the RBI and also by anyone who is affected directly or indirectly by such a transaction.
There is no reason to deny remedy to a person, who is directly or indirectly affected by such a transaction. He can set up challenge thereto by direct action or even by way of collateral or indirect challenge.
Until permission is accorded by the RBI, it would not be a lawful contract or agreement within the meaning of Section 10 read with Section 23 of the Contract Act. For, it remains a forbidden transaction unless permission is obtained from the RBI. The fact that the transaction can be taken forward after grant of permission by the RBI does not make the transaction any less forbidden at the time it is entered into. It would nevertheless be a case of transaction opposed to public policy and, thus, unlawful. In this view of the matter, the appellant must succeed and would be entitled for the reliefs claimed in O.S. No. 10079 of 1984 for declaration that the gift deed dated 11.03.1977 and supplementary deed dated 19.04.1980 in favour of respondent No.1 are invalid, unenforceable and not binding on the plaintiff.
A fortiori, the plaintiff is entitled for possession of the suit property from respondent no.1 and persons claiming through him, admeasuring 12,306 square feet and also mesne profits for the relevant period for which a separate inquiry needs to be initiated under Order 20 Rule 12 of the Code of Civil Procedure, 1908.
In the present case, the land was owned by a foreign citizen. For which reason, the rigours of Section 31 must apply with full force. Additionally, it must be kept in mind that the stated notification was issued in 1993, around which time a change in policy regarding the investment opportunities for non-resident Indians and foreigners had been crystallised, by opening up of economy in India. In the present case, we are dealing with the transaction effected close to the coming into force of the 1973 Act i.e., in the year 1977 when considerations were different and governed by different policy manifested in the form of enactment of Section 31 of the 1973 Act, spoken to by the then Finance Minister in the Lok Sabha, forbidding foreigners from dealing with real estate in India.
The condition predicated in Section 31 of the 1973 Act of obtaining “previous” general or special permission of the RBI for transfer or disposal of immovable property situated in India by sale or mortgage by a person, who is not a citizen of India, is mandatory. Until such permission is accorded, in law, the transfer cannot be given effect to; and for contravening with that requirement, the concerned person may be visited with penalty under Section 50 and other consequences provided for in the 1973 Act. Hence, the Trial Court as well as the High Court committed manifest error in dismissing the suit filed by the plaintiff for a declaration in respect of suit property admeasuring 12,306 square feet and for consequential reliefs referred to therein.
A priori, we conclude that the decisions of concerned High Courts taking the view that Section 31 of the 1973 Act is not mandatory and the transaction in contravention thereof is not void or unenforceable, is not a good law. However, transactions which have already become final including by virtue of the decision of the court of competent jurisdiction, need not be reopened or disturbed in any manner because of this pronouncement. This declaration/direction is being issued in exercise of our plenary power under Article 142 of the Constitution of India. For, there has been a paradigm shift in the general policy of investment by foreigners in India and more particularly, the 1973 Act itself stands repealed. Accordingly, we deem it appropriate to overrule the decisions of the High Courts, taking contrary view, albeit, prospectively.
The appeal is allowed. The impugned judgment and decree of the Trial Court, as confirmed by the High Court, is set aside.
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2021 (3) TMI 34
Offence under FEMA - Review Petition - Correction of clerical errors - respondent Sakunthala had received payment unauthorisedly in her residential premises - respondent Sakunthala that her husband Muthupal Chettiar was a partner in Kumaran and Co in Malaysia - The Appellate Board had found that there was a accidental slip and held in paragraph No.7 that ''After giving careful thought to the contentions of the parties, I find this to be a fit case where benefit of doubt should be given to the appellant at S.No.1 and 2 and therefore, hold that the charge against her have not been established'' -
HELD THAT:- Appellate Board upon satisfying that the accidental slip had occurred in the order attributable to an over-sight that the non-receipt of ₹ 75,000/- by the appellant at S.No.2 in the order conflicting with the conclusion reached in Appeal No.110 of 1984. Thus giving the benefit of doubt to the appellant at S.No.2, the Appellate Board has set aside the earlier order passed imposing punishment of fine. The said order is now under challenge in the present Civil Miscellaneous Appeal by the Enforcement Directorate contending that the Appellate Board has no power to review its onw order, as it is not a clerical or arithmetical error.
Clerical or arithmetical mistakes in any decision or order passed by the Appellate Board or the adjudicating officer under this Act, or errors arising therein from any accidental slip or omission may, at anytime, be corrected by the Appellate Board or the adjudicating officer or his successor in office, as the case may be. But the order in the review was passed only after hearing the authorities also.
The appellant is also not able to say what had happened after filing of the appeal. Whether the amounts are paid and whether the Petitioner is alive or not? Though the vakalath has been filed on behalf of the respondent, there is nobody appearing on behalf of her either in person or through counsel despite more than three chances have been given. Other than the above order, there is no other papers in the bundle. Therefore, we are constrained to confirm the order passed by the Appellate Board while dismissing the above Civil Miscellaneous Appeal
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2021 (2) TMI 1313
Validity of adjudication proceeding as contemplated in Section 13 of FEMA - limitation for initiation of the adjudicatory proceeding for imposition of penalty - proceedings are against a company - default had been in the knowledge of the prosecuting agency - manner as provided in Rule 4 of the Foreign Exchange Management (Adjudication Proceedings and Appeal) Rules, 2000 (as amended), read with rules and regulations made thereunder - HELD THAT:- In the instant case, information was sought from the petitioner in the year 2017 and when, despite letters, information was not provided and a prima facie case with regard to contravention of the provisions of FEMA, 1999 was made out, a complaint was filed in the year 2020 on which the impugned notice has been issued. The facts of the present case are therefore totally distinguishable from those which were there before the Bombay High Court in the case of Sanghvi Reconditioners Pvt. Ltd.[2017 (12) TMI 906 - BOMBAY HIGH COURT]
In the instant case, as we have already noticed, the information in respect of default by the petitioner company cannot be deemed to be with the Directorate of Enforcement, that is the prosecuting agency, therefore, the reasonable period to commence the adjudicatory proceeding would be counted from the date when that information was received by the prosecuting agency. As this is a pure question of fact and it is not shown to us that the default had been in the knowledge of the prosecuting agency far in excess of the reasonable period, the issue whether there had been an unreasonable delay in drawing adjudicatory proceeding would have to be raised and dealt with at the appropriate stage of the adjudicatory proceeding and not at this stage, while addressing a challenge to the show-cause notice because the show-cause notice, by disclosing the institution of the complaint and specifying the contravention of the provisions of FEMA, discloses all the necessary requirements to warrant initiation of adjudicatory proceeding against the petitioner.
As we find that the complaint discloses all the necessary ingredients to make out a prima facie case with regard to contravention of the provisions of FEMA, the impugned show-cause notice issued for adjudication of that complaint does not suffer from any legal infirmity which may justify its quashing, as has been prayed for. The petition is dismissed.
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2021 (2) TMI 915
Offence under COFEPOSA ACT - detention order - respondents desired to unlock the mobile phone instrument of the petitioner to retrieve the materials/ documents therefrom but petitioner did not co-operate in the opening/ unlocking of his mobile phone instrument - HELD THAT:- As timeline satisfactorily explains and justifies the time taken by the Respondents in undertaking investigation, which finally culminated in passing of the impugned Detention Order. The initial proposal sent by the Sponsoring Authority in February, 2019 was not found sufficient to justify the petitioner’s detention under Section 3 of the COFEPOSA Act. The Sponsoring Authority, therefore, continued with its efforts to conduct further investigation and, for that purpose, retrieval of the contents of the mobile phone of the petitioner was crucial. Vide his letter dated 23.04.19, the petitioner desired that the forensic examination of his phone be done in his presence.
Vide summons dated 21.05.19, he was asked to appear on 30.05.19. He did not appear. Another summons dated 06.06.19 was issued on 12.06.19. He appeared on 12.06.19. However, the petitioner did not cooperate. He did not provide the code to unlock his mobile phone on his own. He feigned ignorance and loss of memory with respect to the password/ code that left the respondents with no other option but to look for avenues to unlock the mobile phone even without the petitioner providing the password/ code. The respondents have stated that, ultimately, it was found that the mobile phone of the petitioner could be unlocked at the Cyber Laboratory of DRI, Mumbai. The respondents have stated that DRI, Mumbai is not a part of Air Customs. Thus, the submission that the respondents ought to have been aware of the existence of its facility at DRI, Mumbai to unlock the mobile phone of the petitioner, cannot be accepted on the basis of assumptions that the petitioner would like us to draw. The petitioner was sent a letter dated 20.11.2019 – informing that Forensic Examination of his mobile phone would be conducted at DRI, Mumbai on 25.11.2019. That letter could not be served on the petitioner, since he was not found residing on the given address. The fact that the petitioner did not intimate the change of his address or his definite address where he could be found, itself shows that the conduct of the petitioner was evasive. The petitioner was sent another letter dated 17.01.2020 at his new address in Ramesh Nagar informing him that forensic examination of his mobile phone would be undertaken at DRI, Mumbai on 20.01.2020. He was put to notice that, in case, he did not appear, either himself, or through his authorized representative, the forensic examination of his mobile phone would be conducted in the presence of other witnesses. Despite receipt of this notice, the petitioner failed to appear in the office of the DRI, Mumbai and, therefore, the forensic examination got conducted in the presence of other witnesses on 20.01.2020
In case, the petitioner was really interested in participating in the forensic examination, he should have appeared at DRI, Mumbai on 20.01.2020. His non-appearance on that day, and non-appearance of even his authorized representative shows that the endeavor of the petitioner was merely to drag the matter and delay the forensic examination of his mobile phone for as long as it could be done. Thus, the delay in the forensic examination of the petitioner’s mobile phone is primarily attributable to the petitioner, and not to the respondents. We, therefore, reject the submission of the petitioner that there was any unexplained delay on the part of the respondents in the forensic examination of his mobile phone between 1-2.02.2019 and 20.01.2020.
We are also of the view that in the facts and circumstances of this case, it cannot be concluded that the livelink between the prejudicial activity in which the petitioner was found involved on 1-2.02.2019 and the purpose and object of detention, when the detention order was passed on 05.06.2020, was broken. Mere passage of time between the date of the prejudicial activity and the date on which the detention order came to be passed – when the said passage of time has been sufficiently explained by the respondents, cannot lead to the definite conclusion with regard to the snapping of the nexus between the two.
The petitioner also cannot take shelter of the argument regarding the time lapse between the detention order passed against his brother Mr. Gaganjot Singh, and the detention order passed against himself. The brother of the petitioner is purported to be the kingpin of the smuggling ring which allegedly caused immense economic loss to the country. The CSC and the Detaining Authority found the evidence against him to be sufficient to proceed against him in 2019 itself, which resulted in the passing of the Detention Order dated 11.03.19 against him. To justify the preventive detention of the petitioner in the assessment of the Detaining Authority, the Respondents had to collect evidence against the present petitioner, including recovering the relevant data from his mobile phone instrument, which took considerable time for reasons attributable primarily to the petitioner himself. No merit in the assertions of the petitioner. We, accordingly, dismiss the petition
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2021 (2) TMI 904
Offences under FEMA Act - whether show cause notice has been issued without considering the amendments made in various regulations framed under FEMA Act, 1999? - HELD THAT:- There is no dispute that there are transactions in foreign exchange either as derivatives or in the form of currency futures. The issue in this matter is as to whether the transactions have been made in accordance with Foreign Exchange Management (Foreign Exchange Derivative Contracts) Regulations, 2000 or not. The issue can be sorted out only after all the relevant documents are placed before the authorities. Thus, not entering into the merits of the case.
Considering the pandemic situation, the authorities are requested to allow the petitioners to submit their record within 8 (eight) weeks from today. The oral submissions of the petitioners be recorded by way of video conference. This exercise should be concluded within a period of 4 (four) months from date and it is expected that the authorities will conclude the proceeding within 6 (six) months.
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2020 (12) TMI 486
Interest liability u/s 42(3) of FERA - main ground on which the Petitioner claims interest is that Section 42(3) of FERA stipulates that interest is payable at 6% p.a. in all cases other than cases relating to confiscation either under Section 63 of FERA or under the Customs Act, 1962 - HELD THAT:- In present writ petition claiming interest was filed on or about 28.08.2009. It is clear that the writ petition was filed more than 9 years after receiving the rupee equivalent of UK Pounds 1800. Upon perusal of the affidavit, find that the Petitioner stated that she and her counsel visited the office of the 1st Respondent to request for the payment of interest and that she was constrained to file the writ petition on account of non-payment thereof. Apart from this statement, no explanation is offered for the delay and no written reminders are on record. If the Petitioner had filed a suit to recover interest, such suit would have been rejected in limine on the ground of limitation.
A public law remedy is discretionary and, in the overall facts and circumstances, including the complete failure to provide a reasonable explanation for the delay not inclined to exercise discretion in favour of the Petitioner who has approached the Court rather belatedly. Thus, writ petition is liable to be rejected solely on the ground of laches. In addition, as stated earlier, the Petitioner did not seek a modification of or challenge the order so as to claim interest.
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