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FEMA - Case Laws
Showing 221 to 240 of 1378 Records
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2019 (8) TMI 139
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
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
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
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
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
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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2019 (8) TMI 133
FDI - Automatic route or not - Inward remittances made into India in the year 2008, through normal banking channels (with relevant foreign inward remittance certificates) - bidding of IPL - It is case of appellants that the appellants’ bid in respect of the ‘Rajasthan Royals’ franchise as legitimate and successful, after due scrutiny of all the information and proposed investment structure as furnished along with the bid - contravention of the provisions of Section 3(b), Section 6(2), 6(3)b & Section 42(1) of FEMA, 1999 read with Regulation 5(1) of Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000, Paragraph 8 of schedule of the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulation, 2000, Regulation 5 of the Foreign Exchange Management (Permissible Capital Account Transactions) Regulations, 2000 and Para 9 (1)(A) of schedule 1 to the foreign Exchange Management (Transfer or issue of Security by a person Resident outside India) Regulation, 2000 - imposition of penalties.
HELD THAT:- It is not open to the Respondent to invoke Section 42 (1) of FEMA and impose penalty on individuals on the sole basis that such individuals held the position of directors in the respective companies. It has been consistently held by the Hon’ble Supreme Court and various High Courts that specific findings are required to be recorded against any individual sought to be penalized under the deemed liability provisions such as Section 42 (1) of FEMA, particularly as to their specific role and function in the company. The mere fact that individuals are directors in a company cannot be the sole basis for imposition of penalty upon such individuals under Section 42 (1) of FEMA. Test for determination.
The present case is not a case where it can be concluded or any benefit of doubt is given to the appellants for automatic route. The present case cannot be compared with another case of sport event, as the facts and circumstances were materially different. The real thing is how the appellants as per facts have dealt with the matter at the appropriate time and how many times. From the entire facts and circumstances, it appears to this Tribunal whether it is a bona-fide or not, but violation has occurred. The appellants were trying to obtain the post-facto approval, but were not successful - Therefore, after refusal of approval for two times, the appellants cannot be allowed to take the benefit of automatic route.
In the present case, exorbitant penalty has been imposed upon the individuals arrayed herein without recording any findings on the specific roles of the said individuals. It is also important to highlight that judicial precedents clearly establish that the onus of proving the role of an individual and specifically proving that the said person was in day to day management of the affairs of the company is that of the Respondent Department. It is evident from a perusal of the Impugned Order that the Respondent has completely failed to discharge the said burden of proof. Provisions of Section 42(1) of FEMA have been simply reproduced in the Impugned Order to justify the imposition of penalty - The Supreme Court and various High Courts have consistently held that merely repeating the golden words of the section is not sufficient to create liabilities under the section. It is something more has to be brought on record to show that the person was in-charge and responsible to the functioning of the company and noticee officers have some motive and involved in the abetment for the purpose of benefit from the transaction, in question, by themselves or for the benefit of the company directly or indirectly while imposing the penalties. Similarly, the conduct of good faith, honesty and mens rea cannot be excluded from consideration while quantum of imposing penalties.
In light of the parameters clearly laid down by the Hon’ble Supreme Court and various High Courts regarding the standard and burden of proof required to be discharged for invocation of deemed liability under Section 42 (1) of FEMA, the imposition of penalty on all the individuals arrayed herein is liable to be set aside on account of non-compliance with the said established parameters.
It is evident that the parameters for imposition of penalty in the present quasi criminal proceedings initiated against the Appellants under FEMA have not been complied with by the Respondent while imposing the exorbitant penalty of INR 98.35 Crores vide the Impugned Order - there are contraventions happened due to bona fide or not by the appellants and it is also settled law that the plea of mens rea cannot be accepted if contraventions have happened as it is not a valid ground to ignore the offence of committed. Still there are cases where one can conclude the said contraventions are ex facie technical and venial in nature.
As far as the imposition of penalty is concerned, the appellants have already deposited a sum of ₹ 15 crores with the respondent as consolidated amount on behalf of all the appellants as a pre-deposit - Considering the overall facts and circumstances, the appeals are partly allowed by modifying the order by holding that penalties already deposited by the appellants is reasonable and the same be treated as penalties imposed in the present set of appeals.
Appeal disposed off.
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2019 (8) TMI 132
Imposition of penalties - alleged violation of Section 8(1) of FERA - main case of the Appellants is that the respondent has planted the unsigned plain paper purported fax message being Page 31 of File marked – ‘D’ out of 2425 seized documents from the Delhi office of the Appellant No. 1 on March 13, 1995, which was inadmissible in evidence under the law - HELD THAT:- In the impugned judgement dated 20.05.2005 passed by the Special Director of Enforcement, the Special Director erroneously shifted the initial burden of proof from the Directorate to the Appellants under Section 71 of the FERA, 1973 - Further records reveal that the statements of Mr. Rajesh Verma has also been not relied upon in the SCN. As such, the provisions of Sections 71 and 72 of FERA 1973 are not attracted and cannot be invoked.
The Special Director had also erroneously presumed the facts without proper authentication and corroboration from independent witnesses under Section 72 of the FERA, 1973, the charges against the Appellant No. 1 have not been proved as the respondent has failed to discharge its burden. The Appellant Nos. 2 to 4, the Directors herein as such are not liable under Section 68 of FERA 1973.
The orders and/or directions for production of the said file and inspection of the said original Fax message and the arrest memo of Mr. Rajneesh Verma by the Respondent became final and absolute and non-production thereof by the Respondent led to Adverse Inference being drawn under the Illustration (g) of Section 114 of the Indian Evidence Act, 1872 against the respondent even as per settled law - the impugned order dated 20th May, 2005 passed by the Special Director, Enforcement Directorate, New Delhi is not sustainable - appeal allowed.
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2019 (7) TMI 1878
Proceedings under FEMA - effect of the adjudication order made during the pendency of the writ appeals - ad-interim relief - Merely because the adjudicating authority has passed an order during the pendency of the writ appeals, it cannot be said that the writ appeals have become infructuous - whether writ appeals should be entertained? - HELD THAT:- As appellants were fully aware about the date fixed for hearing before the adjudicating authority. There is a default on the part of the appellants as they did not appear before the adjudicating authority and they did not move this Court for grant of appropriate interim relief. Knowing fully well that the adjudicating authority is proceeding with the hearing, the appellants took no steps and allowed the adjudicating authority to pass an order. It is not as if immediately after the impugned order was passed, that the adjudicating authority fixed the matter for hearing. The date for hearing was fixed nearly one year after the present appeals were filed.
As observed earlier, one of the arguments canvassed on behalf of the respondents that the appeals have become infructuous, cannot be accepted. However, these appeals are continuation of writ proceedings before the learned Single Judge under Article 226 of the Constitution of India. A remedy under Article 226 of the Constitution of India is always discretionary and equitable. The impugned order of the learned Single Judge was passed on 6th October 2017. The present appeals were pending from 17th November 2017. The adjudicating authority granted enough time to the appellants to seek interim relief in these appeals. The hearing was fixed one year after the impugned order of the learned Single Judge.
The appellants took the risk of not attending before the adjudicating authority knowing fully well that the appellants were not armed with any ad-interim order of stay of this Court. Thus, due to their own conduct, the appellants allowed the adjudicating authority to pass orders of adjudication. It is not the case of the appellants that they did not receive legal advice. They are represented by Senior Advocates.
As pointed out earlier, an efficacious remedy of filing an appeal under Section 19(1) of FEMA is available to the appellants. It cannot be said that the remedy is not efficacious as there is a power vested in the appellate Tribunal to waive the requirement of the deposit of the penalty. Moreover, all contentions which are raised in the appeals can be gone into by the appellate authority.
The issues raised by the appellants have not been finally concluded and notwithstanding the observations made by the learned Single Judge, all issues remain open which can be agitated by the appellants in the statutory appeals. It is for the reasons which are recorded above that we are not inclined to entertain the writ appeals and interfere with the proceedings under FEMA. Accordingly, appeals and also pending interlocutory applications are dismissed.
We direct that the ad-interim order in terms of paragraph 5 of the order dated 28th March 2019 will continue to operate for a period of one month from today.
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2019 (6) TMI 1027
Offence under FEMA - unauthorized dealing of foreign exchange - recovery of US $ 3,30,400 at Aizwal Airport on 27.10.2006 from a person by name Shri Thlabik and subsequent recording of statement of Shri Thlabik, who had taken the name of the appellant in his statement - HELD THAT:- From the record, it is evident that there is no clear and cogent evidence against the appellant that he had been dealing in illegal foreign exchange trade or if he had dealt with foreign exchange without the permission of the RBI. No doubt, there are allegation against him that he had received a sum of ₹ 35,00,000/- (Rupee Thirty five lakhs only) from Shri Thlabik (the amount recovered at the time of search of the premises). His case is that it was the money representing the payment was owned by two purchasers of Jewellery at Mizoram. It is not in dispute that the department has allowed him to cross examination of main witness (accused) Shri Thlabik, however, the said witness was not produced for the said purpose. When verified, it was informed that he was absconding, therefore, could not be produced for cross-examination.
In the present case, the main accused as per respondent is Thlabik who is absconding. It was the duty of the respondent to trace him out. Despite of prayer of the appellant for cross-examination allowed, the witness was not produced for cross examination. Thus, merely on the basis of presumption, the inference can be drawn against the appellant without clinching evidence.
The benefit of doubt under these circumstances goes in his favour. The submission of the respondent does not help the case in view of peculiar facts and circumstances of the matter.
In the light of the above, the appeal is allowed. The impugned order against the appellant is set aside.
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2019 (6) TMI 964
Stay of demand - waiver of pre-deposit - Tribunal dismissing the appeals for non-prosecution - HELD THAT:- The appeals filed before the Tribunal could not have been dismissed for non-prosecution. Yet, we may point out that the conduct of the appellants in not appearing for several hearings also cannot be appreciated. We have to necessarily interfere with the common order passed by the Tribunal dated 14-9-2018, which was communicated to the appellants on 25-9-2018.
So far as the conditional order passed by the Tribunal is concerned, considering the financial position pleaded by the appellants and their case that they are unable to realize export production in spite of their diligent efforts, we are of the considered view that the appellants have made out a prima facie case. However, this observation is made only for the purpose of imposing a condition on the appellants, so that the appeals before the Tribunal can be heard and disposed of on merits.
Accordingly, CMA disposed of by slightly modifying the common order passed by the Tribunal by directing the appellants to deposit with the first respondent namely the Special Director, Enforcement Directorate, Government of India, 50% each of the penalty amounts imposed individually and furnish a bond for the balance 50% each and keep the bond alive till the appeals are heard and disposed of on merits by the Tribunal. No costs. Consequently, the connected CMPs are closed.
The common order passed by the Tribunal dismissing the appeals for non-prosecution are set aside and the appeals are restored to the file of the Tribunal. The appellants are granted eight weeks’ time from the date of receipt of a copy of this judgment to deposit 50% each as directed above. Subject to the deposit of 50% each by the appellants within the time prescribed, the Tribunal shall fix a date for hearing of the appeals and pass orders on merits
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2019 (6) TMI 863
Violation of FERA - penalty imposed against dead person - both alleged accused and abettor have already expired long ago - HELD THAT:- Rendering the order against Sh. Bharat Hansraj Thakkar without any valid findings pertaining to penalties is not sustainable in law. As far as Hansraj Thakkar is concerned, the penalty was imposed against the dead party despite of having the knowledge about his death.
Appeal is allowed in the case of Sh. Bharat Hansraj Thakkar of a penalty of ₹ 5.00 crores and the impugned order against him is quashed as there is no reasoning in the Adjudication Order.
The show cause notice seeks to hold the Sh. Bharat Hansraj Thakkar liable on account of “abetment” in terms of Section 64 of FERA, sine repealed. Once the order passed against Sh. Hansraj Thakkar, the main offender, is a nullity, being passed against a dead person “abettor” cannot be held guilty in the absence of guilt adjudged against main offender. The matter is 32 years old. Both alleged accused and abettor have already expired long ago. Against the accused, when the order was passed he was no more and against abettor there are no discussion and reasons for imposing the penalties.
The order of penalty or conviction passed against a dead person leads to acquittal of deceased person with consequence of acquittal as presumption of innocence continues till finding of guilt on account of death of main offender, the proceedings get “abated” and “abettor” cannot be thus held guilty. The order against Sh. Bharat Hansraj Thakkar is liable to also be set aside on this ground also.
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2019 (6) TMI 637
Maintainability of petition - Petitioner's alternate and efficacious remedy against the impugned order made by the Enforcement Directorate, to the Appellate Tribunal for Foreign Exchange, Ministry of Law, Justice and Company Affairs, Government of India - violation of principles of natural justice as certain statements made by some buyers and these statements have been acted upon without afford of any opportunity or cross examination to the Petitioners - HELD THAT:- In the present case, after the show cause notice dated 6th September, 2017 was served upon the Petitioners, the Petitioners chose to file reply through their Chartered Accountant. Neither in the reply nor at any stage of the proceedings before the impugned order came to be made, the Petitioners objected to taking into consideration the statements of the buyers on the ground that the same were not tested in the cross examination. There was no request made for examination of such buyers in the presence of the Petitioners or their legal representatives and thereafter for opportunity to cross examination of such buyers
In any case, all the contentions including the contention with regard to the alleged breach of principles of natural justice can always be raised before the Appellate Authority. Accordingly, we uphold the preliminary objection raised and dismiss the present petition. However, we leave it open to the Petitioners to avail alternate remedy available under the statute.
None of the observations in this order should be used to foreclose any contentions which any of the parties may have, in case the Petitioners, choose to avail of an alternate remedy available under the statute.
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2019 (6) TMI 636
Non-realization/short of foreign exchange received - Failure to realize export proceeds on exported goods - FEMA v/s FERA proceedings - contravention of provisions of section 7 & 8 of FEMA, 1999 read with regulation Nos. 8,9 & 13 of Foreign Exchange Management (Export o Goods and Services) Regulations, 2002 - Penalty imposed - HELD THAT:- Foreign Exchange Management Act, 1999 (‘FEMA’) was brought in to keep pace with the changing dynamics of the Indian economic polity repealed the Foreign Exchange Regulation Act, 1973 (‘FERA’) and came into force on 1-6-2000. Apart from removing criminal prosecution for non-compliance of foreign exchange norms, FEMA also introduced a sunset clause for taking notice of contraventions under FEMA.
FEMA provides that no adjudicating authority shall take notice of any contravention under FERA two years after the coming into force of FEMA. In other words, it provided a window up to 31-05-2002 for the authorities under FEMA to take notice of contraventions under FERA.
The export of goods had been made on 29h May, 2000 under GR No. 366158. The subject export was governed by the Foreign Exchange Regulation Act, 1973 and no proceedings under section 8 of the FEMA 1999 which came into force on 1st June 2000 could be applicable for the GR No. 366158 dated 29.05.2000.
In BHUPENDRA V. SHAH VERSUS UNION OF INDIA & ORS. [2010 (3) TMI 20 - DELHI HIGH COURT] held show cause notice (SCN) issued after the sunset clause period of 31-05-2002 for alleged contravention of Section 7 & 8 of FEMA by an exporter in not realizing proceeds of export made in 1997- 98(pertaining to the FERA period.
In order to invoke section 7 of FEMA, the ED will have to show that the party reached the time limits specified in FEM EGS Regulations.
At the relevant point of time, FEMA was not a force and hence there could be no question of contravening the provisions of FEMA and if at all there was any contravention, it would only under FERA and the same had to be shown to have continued beyond the two year sunset period - the legislative intent was very clear in having a limited continuation of two years for contraventions under FERA - on reading of Section 49(4) [which is subject of section 49 (3)] the contravention under FERA had to be governed by the Provisions of FERA. Therefore the alleged contravention was one under FERA and by virtue of the sunset clause so there was no question of the contravention continuing after 31-5-2000.
Decision under FERA but still valid under FEMA- In LIC VS Escorts Ltd.[1985 (12) TMI 289 - SUPREME COURT] wherein it has been held that RBI is empowered to grant ex-post permission under Section 18(2). Thus, mere non-realisation of export proceeds will not amount to contravention of Section 18(2) of FERA, unless RBI refused permission to write off the receivables or to extend the period.
It is rightly submitted on behalf of appellants that according to the decision of Hon’ble Apex Court LIFE INSURANCE CORPN. OF INDIA VERSUS ESCORTS LTD. [1985 (12) TMI 289 - SUPREME COURT] initiation of enquiry against the noticee company by the Directorate of Enforcement for same and identical matter pending before their banker for last 8 years is a long delay. No doubt, there is no prescribed period stipulated but at the same time, it is settled law that if the party has a reasonable case on merit, the issue of delay cannot be considered while deciding the matter.
In the light of above and for the reasons stated, the appeals are allowed by setting–aside the impugned order. All appeals and pending application are disposed of.
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2019 (6) TMI 418
Review petition - HELD THAT:- There is no provision in law to file review petitions again and again and again against review orders. Review petitions can be filed against an order only for errors apparent on the face of it. This is not the case here. The review order dated 24.06.2015 has attained finality in as much as it has not been challenged in any High Court by these appellants.
The review order dated 24.06.2015 is a speaking order which also has reflected as to how the appellants have tried to mislead the Bench. As discussed in the brief facts, the sequence of this case only points towards the appellants trying to take the Bench for granted and make a mockery of the entire system. I cannot allow such travesty of justice.
The review application alongwith the condonation of delay for which no cogent reason has been given, is therefore dismissed as rejected.
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2019 (5) TMI 1574
Release of property seized - Proceedings instituted pursuant to a complaint u/s 16(3) of the Foreign Exchange Management Act, 1999 (FEMA) - as alleged show cause notice issued by the concerned officer alleging contravention of the provisions of Section 3(b) of FEMA, read with Regulation 5(2)(c) of the Foreign Exchange Management (Manner of Receipt and Payment) Regulation, 2000 - HELD THAT:- Insofar as Indian currency is concerned, the same was transferred to the Income Tax Authority.
Silver and silver articles, which were seized by the respondent. The petitioner claims that he has submitted all the requisite details as called upon to do so by respondent no.2, and has repeatedly requested the respondent to release the said goods. However, the petitioner’s request has not been acceded to, as yet. He submits that the show cause notice issued on 03.01.2018 and the proceedings are illegal and the goods seized do no fall within the scope of FEMA.
As stated that the petitioner had replied to the show cause notice on 25.01.2018; however, no further proceedings have taken place, thereafter. In view of the above, this Court is not inclined to entertain the present petition at this stage, as the show cause notice issued to the petitioner is yet to be adjudicated. The pending application is also disposed of.
Given the facts of the present case, this Court directs the Adjudicating Authority to take a final decision as expeditiously as possible, and in any event within a period of six weeks from today after affording the petitioner a reasonable opportunity of hearing.
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2019 (5) TMI 1573
Stay petition - whether the appellants have been able to make out a prima facie case in their favour? - claim taken up with RBI for compounding - received inward foreign remittances from M/s. Infinity Financial Limited, Mauritius but failed to either intimate the Reserve Bank of India within 30 days of the inward remittance, or failed to issue shares to the foreign investors within the stipulated 180 days of the inward remittances - HELD THAT:- In this case, the appellants have not denied that they did not inform the RBI within the stipulated period as mandated by RBI, nor did they issue shares to the foreign investor within 180 days as again mandated by the RBI. Instead the money was diverted to buy properties and land in their name which was not the purpose of the inward remittance. In fact, in the stay petition the appellant at para 5 have accepted their liability which was not discharged. Their claim that they had taken up with RBI for compounding also does not strengthen their argument in as much as the RBI had returned their compounding application vide their letter dated 22.08.2012 but the appellants never considered filing an appeal or representation against the said letter of RBI. They, therefore, way back in 2012 had accepted the non-compounding by the RBI.
They have pleaded financial hardship but have not submitted any document in support of the same.
Thus find that the appellants have been able to make a prima facie case in their favour and hence the stay petition is rejected. Since their financial hardship plea is not backed by any documentary evidence, the same cannot be accepted. However, feel that the interests of justice would be served if the appellants are directed to predeposit 50% of the penalty levied within a period of two months from today.
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2019 (5) TMI 1467
Monetary limit for prosecution of FERA issues - Petitioner on trial for the offences under Section 18(2) r/w Section 18(3) of Foreign Exchange Regulation Act, 1973 and under Section 56 of Foreign Exchange Regulation Act, 1973 - Quashing of revisional court’s order - pleas urged in this petition are that in view of the Circular of 5th July, 2001 issued under Section 56 of FERA, there can be no prosecution if the amount involved is less than ₹2 crores - HELD THAT:- Since evidence of three witnesses out of six, has been already recorded and the case is now fixed in this month before the trial court for recording of the remaining evidence, therefore, the legality of the impugned order is not required to be tested, as the trial of the case has fairly progressed and existence of Circular of 5th July, 2001 is yet to be established. Moreover, the submissions advanced on behalf of petitioner are required to be considered, after the evidence is led in this case.
Accordingly, this petition and the application are disposed of with liberty to petitioner to urge the pleas taken herein before the trial court at the stage of final arguments. It is made clear that this Court has not expressed any opinion on the merits of the case, lest it may prejudice either side before trial court.
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2019 (5) TMI 1466
Status of BCCI as a ‘company’ - Adjudication proceedings against BCCI - Transactions done in violations of the provisions of FEMA 1999 - illegal funds were transferred between BCCI and CSA - HELD THAT:- BCCI was neither a Body Corporate nor a firm nor an association of individuals, but only an Association of Associations, registered as a society under the Tamil Nadu Societies Registration Act and therefore, BCCI could not be qualified to be treated as’ company’ as per the explanation for a company provided under section 42 of FEMA 1999.
BCCI is not a company as admitted by all parties, but only an Association registered as a Society. Prima facie, there is force in the submission of learned counsel appearing on behalf of appellant nos. 2 to 11 and it appears that at this stage, being an important legal issue, the same is left for argument at the final hearing of appeals.
BCCI is included as a person within the meaning of Section-42 of the Act and if contravention provisions of the Act. At the best, at present BCCI may be asked to pre-deposit the penalties on their behalf at this stage without prejudice till the said important legal issue is finally decided.
Whether the funds transferred by BCCI to the CSA account was in the nature of Capital Accounts Transaction or Current Account ? - HELD THAT:- It is not the case of the respondent or of the “Adjudicating Authority” that any of the remittances or transactions made by BCCI to CSA were prohibited or restricted by “The Foreign Exchange Management (Current Account Transactions) Rules 2000”. As urgued on behalf of appellants that none of the remittances were prohibited by the above said rules and the remittances made by BCCI to CSA were permissible current account transactions. Counsel for respondent does not dispute that if the transactions fall under current account, the permission of RBI is not necessary. This issue at this stage cannot be finally concluded at this interim stage, however, prima facie, find force in argument of the appellant.
Prima facie, at this stage the penalties imposed by the Adjudication Authorities, they are dispensed with to deposit the same with the respondent in the light of important issue to be argued at the final hearing of the appeals.
As submitted by all the appellants that the remittances made by BCCI to CSA were not “Capital Account Transaction”, but, “Current Account Transaction”. The erroneous reasonings are given in the impugned order while coming to the conclusion that the remittances made by the BCCI to CSA were “Capital Account Transactions” wherein the “Adjudicating Authority” holds that the remittances made by the BCCI to CSA were contingent liability.
In para 17.13 of the impugned order concludes that BCCI by making remittances to the CSA had created a contingent liability and therefore the transactions were not “Current Account Transactions” prima facie but “Capital Account Transactions”. Thus, the finding of the Adjudicating Authority prima facie cannot be accepted at this stage as holding of the IPL – 2 was a certain event, as per the agreement dated 30/03/2009 the arrangement between BCCI and CSA was cost plus fees arrangement.
It is true that the respondent has made many allegations of malpractices. But the cases are not decided on the basis of allegation. In the final order, the matters are to be decided on the basis of fact, evidence and legal issues on record. The assumption, presumption and perception have no place in the statute, particularly, when the statute is a Special Act. Without expressing any final conclusion on the issues raised by the appellants, as mentioned above and without prejudice, this Tribunal is of the view that the stay applications filed by the appellants are disposed of with the following directions:-
i) Without prejudice, BCCI is directed to deposit ₹ 10 crores against total penalty amount imposed with the respondent by way of Bank Guarantee on its behalf as well as on behalf of appellant nos. 2 to 9 within four weeks from today.
ii) As far as appellant nos. 2 to 9 are concerned, the issue of individual penalty imposed by the Adjudicating Authority will be considered at the time of final hearing of appeal. The prayer made by appellant nos. 10 and 11 of their interim applications is allowed without any condition in view of the grounds made in their appeals.
iii) The BG shall be furnished to the satisfaction of respondent initially for a period of six months as this Tribunal is hopeful that all the appeals will be decided by the said time, otherwise the same shall be renewed for a further period of six months after the expiry date.
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2019 (5) TMI 818
Maintainability of appeal - alternative statutory remedy - Penalty for contravention of Section 7 (1)(a) of the FEM 1999 read with Regulation 16(1) (i) & (iii) of Foreign Exchange Management (Exports of Goods and Services) Regulations, 2000 - HELD THAT:- An appeal against the order impugned herein is maintainable before the Special Director (Appeals), O/o the Commissioner of Income Tax (Appeals), Aayakar Bhawan, Delhi.
In view of the above, we are not inclined to entertain the present writ petition and dispose of the same by relegating the petitioner to avail alternative statutory remedy in accordance with law.
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