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FEMA - Case Laws
Showing 241 to 260 of 1378 Records
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2019 (5) TMI 817
Foreign Direct Investments (FDI) - Non-compliance of the condition of minimum capitalization - requirement of prior permission and allowing automatic route for FDI by foreign companies in township development - Guilty of the charge in respect of the transaction of transfer of shares - liability of director - guilty of the provisions of Reg. 3 & Reg. 5(1) r/w Schedule 1 of FEMA 20/2000 - Restriction on issue or transfer of security by a person resident outside India - HELD THAT:- The minimum amount of FDI is required to be brought in “within a period of six months of commencement of business of the company”. It is evident from the Complaint that the respondent had initiated investigation against the appellant company soon after the first installment of USD 2.5 Million, thereby frustrating further compliance with the condition of minimum capitalization by their own action.
The amount of USD 10 Million is required to be brought in within six months from the commencement of the business of the company. Since the business of development and construction of township could not be commenced due to the action of the respondent, the period of compliance with the condition had yet to commence. The allegation is, therefore, premature and, therefore, the question of contravention does not arise.
In the light of above, we are of the considered opinion that the Adjudicating Authority has misapplied the condition of Sl. no. 23 in respect of FDI in township development to NRIs contrary to FDI in township development under Sl. no. 2 of Annexure B which is without any condition whatsoever.
The impugned order is quashed and set-aside as the appellant no.1 is not guilty of alleged contravention.
The penalty imposed was not called for.
As regards Ashok Jain is concerned, he has been held guilty by fastening vicarious liability on him. There is no specifically averment of incriminating acts of commission or omission in his part, as the impugned order holding the company is not guilty of contravention. The order against Ashok Jain is also set-aside, even otherwise he is not liable to be punished for contravention as he has carried out the transaction with due diligence and complied with every formality including the post transaction reporting condition prescribed by RBI. There is no evidence of any disregard or neglect in observing and complying with the provisions of the law. Therefore, the impugned order is set-aside against the appellant no. 2. The appeal filed by the respondent has become infructuous in view of appeals filed by the private parties are allowed on the reasons already given. Hence, the same is dismissed.
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2019 (5) TMI 478
Contravention of Section 3(a) and (b) of FEMA, 1999, contravention of Section 6(3)(g) of FEMA, 1999 and Section 10(6) of FEMA, 1999 - HELD THAT:- There is no statement or document or admission on record to substantiate the said allegations. In this regard, no investigation was done by the department in India or abroad. No show cause notice has been issued for alleged under valuation by the customs authorities and there is no dispute on this aspect. If department wished to prove the aforesaid allegations. As per department they had all information in this regard, which fact is apparent from the impugned complaint however department did not do anything in this regard, who only interpreted the cash book entries and come to the conclusion that these entries were factual and held against the Appellants, without any corroborative evidence available on record.
Pertaining to violation of Section 10(6) of FEMA, the basis of the said allegation is that the Appellant firm had made remittance to its foreign suppliers towards import advance payment of ₹ 3.44 crores through proper banking channel but have made actual import of ₹ 2.49 crores and excess payment of ₹ 95 lacs was made to square off alleged differential value arising on account of alleged under valuation of the imported goods. In this regard the Respondent held that there was no doubt that “advance remittances” for imports are permissible under law, however the Respondent held against the Appellants on this count only on the ground that there was no co-relation between the said advance remittances and imports although Appellants produced different details to establish the said co-relation, accordingly it was held that Appellants were guilty of contravention of section 10(6) of FEMA 1999.
The Respondent did agree that advance remittance is permissible in law against imports. Appellant had produced different evidence / details to establish the co-relation between the advance remittance and imports, however the Respondent was not convinced and only on that ground held Appellants guilty of violation of Section 10(6) of FEMA, 1999.
One is failed to understand why a person would make alleged hawala transactions through banking channel. The business of Appellant firm was on-going business and Appellant had and continued to import electronic components from various suppliers. It is alleged on behalf of the Appellant that they had imported the goods against the aforesaid advance payments so made over period of time. In this regard, along with typed written submissions filed during arguments, Appellant had placed on record chart showing the co-relation between the advance remittances of ₹ 95 lacs, therefore the allegation in regard to alleged undervaluation have been made herein above and the same are reiterated.
The provisions of Section 39 of FEMA, 1999 are not applicable to the fact of the present case and the respondent was merely presuming the cash book as documents for the purpose of investigation under FEMA, 1999. The said cash book was not seized from the custody / control of the Appellants, the same was not seized from the personal computers of either of the partners. The alleged cash books were denied and it was stated that neither of the partners were aware of the contents of the same and that the said alleged cash book was maintained by Shri Pankaj/Shri Dinesh. No statement of either of them was ever recorded by the department. Thus, in the absence thereof, said cash book cannot be held to be substantive evidence to establish alleged violation by the Appellants. Even in a strong matter against the accused parties, it is still the duty of the department to prove the case beyond any doubt for each charge by discharging the burden.
It is the admitted position that the department chose not to record statement of Shri Pankaj or Shri Dinesh Gaud. The department has also not called upon the Appellants to produce Shri Pankaj and/or Shri Dinesh. It is submitted on behalf of the appellant that the failure of the department to summon there who were authors of the alleged entries made in the cash book.
Entire basis of the case of the department is that the Appellants had made alleged violations in order to square off the alleged difference in value of the imported goods / components viz. under valuing the same and paying the alleged difference in value to its overseas supplier through non-banking channels. There no evidence on record to substantiate the said allegations. There is no statement or document or admission on record to substantiate the said allegations. No independent investigation was done by the department in India or abroad. No show cause notice has been issued in this regard viz. for under valuation by the Customs Authorities.
The department at least should have recorded statement of Shri Pankaj and Dinesh Goud to this effect from the sellers of the Appellant or other persons in India or abroad who were allegedly paid money being alleged differential value on behalf of overseas suppliers of Appellant. The Respondent only read and interpreted the cash book entries and it was the violation of various provisions against the appellant without there being any corroborative evidence available on record. Either said witnesses would have been summoned after obtaining the address or the appellants should have been directed to produce them. There is no evidence on record to show that any exercise is done.
Adjudicating Authority erred holding that the Appellants should have produced Shri Pankaj/Shri Dinesh for recording their statement rather than finding fault with the department for not interrogating that the said two persons.
As stated above Shri Pankaj and Shri Dinesh had left the firm during investigation by DGCEI and it is not the case of department that Appellants had any role in that regard, rather Shri Pankaj was the person who got the case registered against the Appellants as alleged and it was duty of department to prove its case. Department has therefore was unable to discharge the said onus. In the light of above, the appeals are allowed and the impugned order is set aside. All the appeals are disposed of.
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2019 (5) TMI 477
Stay petition - Offence under FEMA - amount imposed towards penalty against the appellants - HELD THAT:- The appellant has no case on merit, however, it is admitted by the counsel for the respondent that in para-9 of the impugned order, the findings are beyond the charge made in the show cause notice.
A perusal of para 9 of impugned order under heading ORDER shows that the penalties on the appellants have been imposed without referring to the provisions of sub paras of para 4 of Schedule 1 of which the appellants have been held guilty of contravention of the provisions of each and every sub paras of para 4 of Schedule 1 to Regulation 5(1) in violation of principles of natural justice even if the appellant has no case of merit in this regard.
The amount imposed towards penalty against the appellants are not commensurate with the contravention alleged against the appellants whereas the contraventions are technical in nature warranting a lesser penalty of ₹ 2 lakhs.
While deciding the stay application, the appellants were directed to deposit ₹ 4 lakhs with the respondent as a penalty amount and the said amount has already been deposited by the appellants.
The impugned order is passed contrary to the provision of section 13(1) of the Act and thus it is modified. The penalty already deposited under the said provision be appropriated by the respondent (as counsel for the appellant is agreeable for the same). The Revision Petition filed by the respondent is become infractuous.
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2019 (4) TMI 1355
Offence under FEMA - writ petition in the High Court against the Union of India and sought therein a writ of mandamus claiming refund of the pre-deposit amount - High Court allowed the appeals, set aside the order of the Tribunal and restored the order of the Adjudicating Authority - Whether the High Court was justified in allowing the appeals filed by the Union of India.
HELD THAT:- High Court did not examine the case of the parties in the context of material placed by the appellants, though the Tribunal in Para 29 of its order has considered the said material.
High Court should have taken into consideration the said material with a view to decide as to whether it was relevant or/and sufficient, and whether it could justify the appellants’ case as contemplated under Section 8 of FEMA.
High Court seemed to have proceeded on wrong assumption that since the appellants did not file any material, a case was made out against them. This observation of the High Court, in our view, was contrary to the record of the case and hence, interference in the impugned order is called for.
The proper course in such a case would be to remand the case to the High Court and request the High Court to decide the appeal afresh on merits in accordance with law.
Appeals succeed and are accordingly allowed. The impugned order is set aside. The case is remanded to the High Court for deciding the appeals afresh on merits in accordance with law keeping in view the observations made above.
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2019 (4) TMI 1088
Cancellation of the Passport - investigation being conducted under FEMA - Request for an alternate mode of examination by video conferencing - HELD THAT:- In the present case, the petitioner is a non-resident Indian and contends that the provisions of FEMA are inapplicable. Notwithstanding the aforesaid contention, Mr. Tripathi, learned Senior Counsel for the petitioner had made a statement before this Court on 14.08.2018 that the petitioner would provide all documents as required by the respondents even though, according to the petitioner, the same are not required to be disclosed.
It is not disputed that in compliance with the aforesaid order, the petitioner has supplied all documents that were called for by the ED. This Court had, during the course of proceedings, also pointedly asked Mr. Amit Mahajan, learned counsel for the respondents that whether there was any other document that was required by the ED. Although, he did not dispute that all documents had been provided, he nonetheless submitted that the petitioner was required to be confronted with certain documents and, therefore, his presence was necessary.
The petitioner had voluntarily agreed to appear by teleconferencing and also make all arrangements for the same, however, that was not accepted. In this regard, the Division Bench of this Court in Lalit Kumar Modi [2014 (10) TMI 527 - DELHI HIGH COURT] had observed that FEMA did not entail custodial interrogation and, therefore, a request for an alternate mode of examination by video conferencing ought not to be shrugged aside
This Court is of the view that the controversy involved in the present petition is covered by the decision of the Division Bench in Lalit Kumar Modi [2014 (10) TMI 527 - DELHI HIGH COURT] and the petitioner’s passport could not be suspended in public interest.
In terms of Section 10(1)(e) of the Passports Act, a passport can be cancelled in cases where offence alleged to have been committed by the holder of passport is pending before a criminal court in India. Further, in terms of Section 10(3)(h) of the Passports Act, a passport can be cancelled if a warrant or summons for the appearance, or a warrant for the arrest, of the holder of the passport has been issued by a Court under any law for the time being in force.
Criminal prosecution as contemplated under Section 13(1C) of FEMA can be commenced by filing a criminal complaint. Plainly, if such a complaint is filed and summons are issued by a competent court, the passport facilities provided to the accused could be withdrawn by virtue of Section 10(3)(h) of the Passports Act.
Impugned order suspending the petitioner’s passport is set aside. However, it is clarified that respondent no.3/ED is not precluded from initiating any other proceedings as permissible in law.
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2019 (4) TMI 592
Detention orders u/s 3 read with Section 12A of COFEPOSA - orders made during the period of Emergency proclaimed under Article 352(1) of the Constitution of India - grounds of detention were not communicated to the detenu in a language known to him - notice under Section 6(1) of SAFEMA to show cause why properties be not declared to be illegally acquired properties and forfeited to the Central Government under the provisions of SAFEMA - HELD THAT:- In the present case the order of detention under COFEPOSA was passed on 19.12.1974 and the petition challenging the detention was filed on 29.04.1975 i.e. before the proclamation of emergency was issued on 25.06.1975. The detenu was released after the lifting of the emergency. All through, the Writ Petition was alive and pending in High Court and it was disposed of as having become infructuous on the statement made by the counsel for the Writ Petitioner on 24.02.1978. The instant case is thus covered by para 41 of the decision of this Court in Amratla [1994 (5) TMI 235 - SUPREME COURT]. However, since the matter was remitted by this Court on 24.02.2004, to be disposed of on merits, we now proceed to consider whether merits were rightly considered.
The order of detention in this case was not revoked under any of the postulates of the proviso nor was it set aside by any competent court and as such the provisions of SAFEMA must apply. The High Court was right in observing that the detention “had run right through the duration or continuance of the emergency”. Though the petition was pending during the length of this time and was taken up for hearing after the lifting of the emergency, no attempts were made to have the petition disposed of on merits. Pertinently, the notices under SAFEMA were issued to Roshan Lal and his wife Sheelawati while the possibility that the SAFEMA proceedings could be premised on the validity of the detention order was very much alive and yet, the matter was chosen not to be agitated on merits. The criticism of Mr. Bagai, learned Advocate that the High Court had overruled the order dated 24.02.2004 passed by this Court, is totally incorrect. Nonetheless, we proceed to consider the submissions raised by Mr. Bagai, learned Advocate regarding challenge on merits.
In the present case, the representation dated 17.01.1975 was considered by the State on 11.02.1975 and the rejection was communicated to the detenu. Moreover, at no stage, any grievance was raised that the grounds of detention were not communicated to him in a language known to him. Similarly, the submission that the grounds of detention were identical, is also without any merit. Insofar as the order of detention under COFEPOSA was concerned, the grounds dealt with instances where the detenu had indulged in smuggling of goods, on the basis of which subjective satisfaction was arrived at as regards his propensity to deal in smuggled goods. Having considered the factual aspects of the matter, the grounds raised by Mr. Bagai, learned Advocate are without any substance and merit. We, therefore, affirm the view taken by the High Court and dismiss said submission.
The challenge to order of detention dated 19.12.1974 passed under the provisions of COFEPOSA in respect of Roshan Lal must fail. The Competent Authority and the Appellate Tribunal constituted under the provisions of SAFEMA had, after issuance of due notice and granting every opportunity to the noticees, arrived at findings that the properties mentioned in the schedules to the notices were illegally acquired and that they stood forfeited to the Central Government free from all encumbrances. All the prayers made in Civil Writ Petition being meritless said Writ Petition deserved to be rejected and was rightly dismissed by the High Court. No reason to take a different view in the matter and this Criminal Appeal is dismissed.
Detention under Section 3(1) of COFEPOSA - HELD THAT:- The detention order was sought to be assailed before the High Court inter alia on the grounds of non-supply of documents; delay in passing the order of detention and supply of illegible documents. Those grounds were found to be without any substance by the High Court and the challenge so raised was negated. Having gone through the record, we do not find any error in the view taken by the High Court. We, therefore, dismiss this Appeal.
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2019 (4) TMI 332
Guilty pf provisions of section 8 and section 40 of FERA - diaries relied upon by the prosecution as an evidence - HELD THAT:- The present proceedings are an offshoot of the "Jain Hawala Diaries‟ case [2013 (8) TMI 400 - DELHI HIGH COURT] which ended in quashing of the criminal proceedings as a result of the judgment of the Hon‟ble High Court in L.K. Advani vs. CBI [1997 (4) TMI 524 - DELHI HIGH COURT] wherein, it was held that the diaries relied upon by the prosecution are inadmissible in evidence and cannot be called books of accounts.
On the basis of the entries of the dairy M-207/93 two criminal complaints bearing CC No. 61/1/91 and 107/1/96 were filed before the ACMM. After the recording of the pre-charge evidence the Trial Court has discharged the present Appellant and the same has been upheld by the appellate court on the ground that the said entries are inadmissible in evidence as no case is made out based on the same. The same was decided on merit. The said order of discharge has not been set-aside as of today.
It is a settled law that the rulings of the Supreme Court are binding under Article 141 of the Constitution of India, wherein a higher court has rendered a particular decision, said decision must be followed by a subordinate or a lower court unless it is distinguished or over-ruled or set aside.
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2019 (4) TMI 138
Contravention of the provisions of Section 18(2) & 18(3) of FERA, 1973 - failure to realize the export proceeds - HELD THAT:- Appellant neither has the finances to carry on a protracted litigation in Doha, Qatar. (Additional affidavit in this regard has also been filed).
The Appellant has addressed numerous letters to its Advocate Ahmed Ali Morafi to enquire about the current status of the matter but unfortunately had not received any written response from him. The Appellant has also tried to contact the said advocate on his phone number mentioned in his letter head but is unable to reach him on the same.
It has come on record that even after taking all reasonable steps, it is quite evident that the export proceeds could not be realized for reasons /due to circumstances which were beyond the control of the Appellant. Department has not been able to prove that certain acts on part of the Appellant resulted in the non-realization of the export proceeds.
As submitted on behalf of appellant that the total number of Appellant during the period during the period during the financial year 1992-93 to 1995-96 was ₹ 5.61 crores. There is no outstanding bills of the Appellant with their Banker for the financial years 1997-98, 1998-99, 1999-2000) and the said fact has been certified by Global Trust Bank Ltd. The unrealized amount of ₹ 17,85,835/- does not constitute even 5% of the total turnover. The Appellant is entitled for write-off of the unrealized export proceeds as per RBI Circular No.88 dated 12.03.2013.
Under these circumstances and in the light of above, it is evident that it is held that the Appellant has taken all sufficient, reasonable and timely steps which are legally permissible within their limited means and to realize the unpaid export value.
The Appellant has discharged the burden cast upon him under Section 18(2) r.w. 18(3) of FERA, 1973. In this context the appellant seeks to rely upon the decisions of the Hon‟ble Delhi High Court in Ganesh Polytex Ltd. and Ors. Vs. Union of India (UOI) and Ors. [2010 (9) TMI 463 - DELHI HIGH COURT]
The appeal is allowed, the benefit is given to the appellant who should not be penalized for non-repatriation of the full export value within the prescribed period, the appellant is exonerated from the allegations made in the SCN dated 29.06.2001. The impugned order is set-aside.
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2019 (3) TMI 2023
Offence under FEMA - Department has already registered and initiated investigation under the provisions of FEMA - HELD THAT:- The issues raised in this petition are under investigation as stated in para 5 of the counter affidavit filed by the respondent no.1, which reads as follows:
“5. I humbly submit that Respondent No.1 Department has already registered and initiated investigation under the provisions of FEMA, 1999 against the Respondent No.2 and Respondent No.3 to ascertain that whether the Respondent no.2 and Respondent no.3 have been contravening any provisions of FEMA, 1999 or contravening any Rule, Regulations, Notification, Direction or order issued in exercise of the powers under FEMA, 1999 or contravening any condition subject to which an authorisation issued by the Reserve Bank of India etc. for which the investigation under FEMA, 1999 is under progress.”
Nothing further survives in this petition for adjudication. Dismissed.
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2019 (3) TMI 1988
FEMA - Offences committed under the repealed Act - HELD THAT:- Section 49 of the FEMA deals with repeal and saving of the Act and the Appellate Board constituted under the Act was dissolved. Sub-section (4) of Section 49 of FEMA made a provision as to how offence committed under the repealed Act shall be governed by and in clause (b) of sub-section (5) of Section 49 a provision is made as to who would be competent to dispose of the appeals pending before the Appellate Board constituted under the Act and the pending appeals were ordered to be transferred for disposal to the Appellate Tribunal constituted under FEMA. There is no provision under Section 49 that if a person feels aggrieved by an order passed in respect of offence committed under the repealed Act, he would be entitle to file an appeal before the Appellate Tribunal constituted under FEMA. That being so, the mere fact that the Adjudicating Authority in order dated 30-3-2017 has prescribed that an appeal shall lie to the Appellate Tribunal for Foreign Exchange or an interim order has been passed by the said Tribunal staying recovery of penalty subject to payment/deposit of 20% of the amount would not enure to benefit of the appellants to assert their claim that the appeal is maintainable before the Appellate Tribunal under SAFEMA, FEMA, PMLA, NDPS, PBPT Act.
We do not find an error much less illegality in the order impugned dated 6-2-2019. So far as challenge to the order dated 30-3-2017 passed by the Deputy Director, Directorate of Enforcement Jalandhar is concerned, the same cannot be challenged before this Court by filing an appeal against first order.
In view of what has been discussed hereinbefore, finding no merit, the appeal fails and is accordingly dismissed in limine. However, nothing stated hereinbefore shall cause prejudice to the appellants to avail appropriate remedy, in accordance with law. In case the appellants prefer an appeal before a Competent Authority/Fora and law prescribes limitation for preferring such an appeal, the appellants would always be at liberty to raise a plea that as they had been pursuing their remedy before the Appellate Tribunal, delay in filing the appeal may be condoned.
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2019 (3) TMI 1518
Offence u/s 3(a) of FEMA - domestic supply of goods in India against amount received in foreign exchange from the overseas buyer - no general or special permission of Reserve Bank dealt in receipt of foreign exchange - Proof of compilation of conditions prescribed under Regulation 12 - HELD THAT:- It is the obligation of the Authorised Dealer to ensure compliance of all conditions before acceptance of documents for negotiations. It is a matter of fact that Letter of credit opened by the overseas buyer was negotiated by the Authorised Dealer against Shipping Bill No. 1862349 dated 30.07.2002, therefore presumption must be that all conditions prescribed under Regulation 12 has been duly complied including the condition with respect to SDF. In absence of any evidence, it cannot be assumed that Authorised Dealer has accepted the shipping documents without SDF. And even no action was taken against the Authorised Dealer if there was no compliance of about SDF.
Once the said stand is taken, the onus is on the on the Directorate that Padmaja was allowed export without filing of SDF, and also documents were negotiated by the Authorised Dealer without SDF.
In the present case, export proceeds to the full extent of value of shipping bill were realised and repatriated and even penalty amount of ₹ 23 Lakhs has been deposited on behalf of Padmaja in case of any breach.
It is a settled principle of law that the procedures have been prescribed to facilitate verification of substantive requirement, as long as a fundamental requirement is met other procedural deviation can be condoned.
As far as the Appellant No. 2 is concerned, Appellant No. 2 guilty although there is no evidence against him. As the burden of proof to show contravention of a particular statutory provision is on the Respondent and not the Appellants. In the impugned order, the understanding between the two set of parties and evidence produced have not been dealt properly.
On August 2018, the Hon‟ble Tribunal desired to know as to whether Shri Gangadharan Manari, proprietor of M/s Padamja Impex has deposited the penalty amount of ₹ 23,00,000 (Rupees Twenty Three Lakhs Only) or not.
Appeals filed by the appellants are allowed. The impugned order against the appellants is set-aside.
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2019 (3) TMI 1517
Violation of S.18 of the FERA - non-recovery of the export proceeds relating to various items of exports made to Iraq, USSR etc. - waiver applications pending - penalty imposed on the Appellant Company for the alleged violation - personal penalty on directors - Held that:- No penalty could be imposed in respect of outstanding recovery from Iraq for which extension of time had already been granted and the extended time was not yet over. No penalty could also have been imposed for outstanding amounts from other 5 countries in respect of which waiver application was pending.
The appeal filed in the appellant-Hindustan Lever Ltd. is allowed in the light of above said facts.
Personal penalty on directors - As mentioned a penalty of ₹ 25 Lakhs was also imposed in respect of each of the 3 Directors - NO PENALTY COULD BE IMPOSED ON THE DIRECTORS The penalty of ₹ 25 Lakhs each imposed in respect of the 3 Directors are also liable to be set aside.
Firstly, the appellants have filed an affidavit in this regard. In para 5 of the said Affidavit, at pg. 4 it is clarified that the 3 Directors were not in-charge of Exports. Mr. Buckle the 3rd Director was not even a Director during the relevant period. (He took charge of the office with effect from 1.1.93 when the exports are within the period 1982 to 1991.) (See para 3(i) at pg. 2 of the said affidavit). The details regarding the other two Directors are also set out in the said Affidavit.
In the Show Cause Notice dated 25.11.1993 only the names of the aforesaid 3 Directors are mentioned. Their names are included only on account they being Directors. No further allegation or statement is made as to ‘how’ they were in-charge and were responsible to the Company for the conduct of business of the Company in relation to such exports and the recovery of the amounts in relation thereto, as contemplated under Section 68.
It is settled law that mere repetition of the language of the Section in the Show Cause Notice is not enough. Unless it is specifically stated as to how the said Directors are responsible and in-charge of, as contemplated in Section 68. In the light of settled law, the impugned order with regard to penalty imposed to three directors is also set-aside. Appeal allowed.
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2019 (3) TMI 824
Offence under FEMA - appellant had without any general or special permission of RBI, received amounts ₹ 2,47,99,350/- in India, otherwise than through an authorised person, by order or on behalf of his friend Madan, a person resident outside India - penalty imposed - HELD THAT:- From the documents/statements the Investigating Officer became aware of the identity of various persons from whom Shri Harish Kumar had been receiving payments in India, under instructions of his friend Madan, residing in USA, who was earlier residing in Mohali. In view of other certain searches were conducted and a number of persons examined and their statements recorded under FEMA, which brought out corroboratory evidence viz-a-viz the facts as stated by Shri Harish Kumar in his afore-mentioned statements.
Shri Harish Kumar later on sought to retract from his abovementioned statements, by way of a letter sent during the course of investigations, besides by way of submissions made during the course of personal haring including in the form of Affidavits, both his as also of one other person, in which Affidavit, it is claimed that amount totaling to ₹ 26,25,000/- was received by Shri Harish Kumar from the said person (Harchand Singh) on interest for using the same in his business of Goldsmith.
It is correctly found in the impugned order that from the seized material and the above-mentioned statements, and find that the said statements, when read with in conjunction with the seized documents/material, brings out the facts that the contention of the Noticee that he was forced to make inculpatory statements is not correct.
Not only that these statements are in the form of explanation to the seized documents, it is also a matter of records that the said statements were recorded by Shri B.C. Mahey, Assistant Director and not by Shri Balwinder Singh (the then Chief Enforcement Officer), as alleged by the Noticee.
Therefore, as agreeing with the finding arrived in the impugned order that it is established beyond a reasonable doubt that during the years 2002 and 2003, the said Shri Harish Kumar @ Rinku without any general or special permission of Reserve Bank, received amounts totaling to ₹ 2,47,99,350/-, in India, otherwise then through an authorized person, by order or on behalf of his friend Madan, a person resident outside India, and thereby he has contravened the provisions of Section 3 (c ) of the Foreign Exchange Management Act, 1999 - the seized amount of ₹ 21,75,000/- was the amount involved in afore-mentioned contraventions of the provisions of FEMA. It is also a matter record that the appellant had retracted his admission after the expiry of almost more than four years. The said period is long period of time. It is after thought thus has no value in the eyes of law.
With regard to the penalty of ₹ 25,00,000/- is concerned, it has come on record that appellant is not in a position to deposit the said amount. The appellant is suffering from undue hardship. The financial condition of the appellant is very weak. He has been residing in House in Punjab, on rent from the last many years. On the perusal of the affidavit and a copy of the deed of conveyance filed therewith makes it abundantly clear that the father of the appellant Late Shri Kanwar Bhan had been residing in the aforesaid rented house and after the death of his father the appellant has been residing in that house. He is an unemployed person living with the generosity of the Management of the nearby Gurudwara where he and his family are having their daily meals in return of his help to the distribution of free meal to the devotees. He does not have any income who is not an income tax payee and does not have any other financial resources to make the pre-deposit of the penalty.
There is no material on record on behalf of the respondent to show that the appellant is not suffering from the undue hardship. It appears from the record, there is no contrary evidence available. The appellant is exempted to deposit the penalty amount. The same is waived in view of the peculiar facts of the present case. The impupgned order is modified only to this extent of penalty component.
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2019 (3) TMI 823
Offence under FEMA - transaction in foreign exchange undertaken by the Varanasi branch with another company holding no license from the RBI to conduct the said business of money exchange - penalty imposed - separate license to companies and all its branches - HELD THAT:- Considering that the RBI grants license to the company as well as its branches separately, a fact which was reiterated by the learned counsel for the appellant, RMEL, Varanasi cannot take shelter under the main RMEL company located at Mumbai.
From the emails it is clear that the consignment was sent from Varanasi. It belies common sense that if the transaction had been undertaken by the Lucknow branch as the appellants have tried to argue at one stage then why should the money/consignment/package be not transferred from Lucknow to Cochin their hub and why carry it to Varanasi and then send it to Cochin. Even the statement of Shri Sandeep Kumar Srivastava, State Head, Uttar Pradesh who reported to the zonal manager confirms that the consignment was transferred from Varanasi directly through Jet Airways via AWB 58979725306 to Cochin.
In the present case, the Varanasi branch was not authorised for such dealings but nevertheless they undertook the same. Section 10(4) are the duties prescribed for the authorized person which in this case is not relevant as Varanasi branch is not an authorized person. To that extent, the RMEL, Varanasi branch has contravened the provisions of Section 3(a) of FEMA, 1999.
With regard to the zonal manager, Mr. Dasgupta, the emails which have not been denied by him shows his involvement and culpability. He was very much in the knowledge about the whole transaction and the way it has been undertaken. Under the provisions of Section 42(2) of FEMA, he will be therefore deemed to be guilty of the contravention.
The appellants in the present two appeals are liable to penalty under Section 13 of FEMA, 1999. But onsidering the case in its totality and the contraventions, hold that the penalty levied has been on a higher side. Reduce the same to ₹ 10,00,000/-(Ten lakhs only) for RMEL Varanasi, and ₹ 1,00,000/-(One Lakh only) for Shri Souvik Dasgupta.
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2019 (3) TMI 550
Refund of amount deposited - FERA - Grievance of the applicant is that the department has not returned the seized cash of ₹ 6,000/, nor refunded ₹ 20,000/deposited by her as per interim directions of FERA Board not release her original title deeds - Held that:- Learned counsel for the department stated under instructions that the department has already initiated steps for refunding such amounts.
This application is disposed of with certain directions.
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2019 (2) TMI 2017
Validity of SCN as being time barred having been issued after more than 14 years from the date of last export and realization of export proceeds - HELD THAT:- A perusal of the writ petition show that the petitioners have not even submitted any reply to the aforesaid show cause notice. After hearing learned counsel for the petitioners, without going into the merits of the controversy at this stage, we dispose of the present writ petition by relegating the petitioners to file a detailed and comprehensive representation raising all the pleas as raised in the present writ petition before respondent No.2 by way of reply to the show cause notice dated 15.06.2018 (C) within a period of one month.
As directed that in the event of a representation being filed by the petitioners within a period of one month from the date of receipt of the certified copy of the order, the same shall be decided by respondent No.2 in accordance with law, by passing a speaking order and after affording an opportunity of hearing to the petitioners within a period of next one month from the date of receipt of the representation.
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2019 (2) TMI 1799
Offence under FERA - violation of provisions of Section 9(1)(b) of FERA - seizure of currency office premises - violation of provisions of FERA solely on the basis of the statement of Ashish Jain recorded on 4.10.1995? - penalty imposed - HELD THAT:- In the present case, neither the Adjudicating Authority (Deputy Director, Enforcement Directorate) nor the appellate authority (Special Director, Appeals) had applied their minds on the question whether the statement made by Ashish Jain was voluntary in view of its retraction on the very next day. In fact, the Tribunal had proceeded on the basis that it was accepted by the Appellate Authority (Special Director, Appeals) that the statement of Ashish Jain had no evidentiary value.
This Court is of the view that the statement of Sh. Ashish Jain could not be relied upon as, first of all, it was retracted on the very next day. And, secondly, the statement was very vague and bereft of any particulars, inasmuch as, it did not name or describe any person from whom funds had been received and whom the said funds had been distributed to. As noticed above, neither the adjudicating authority nor any of the appellate authorities, including the Tribunal, had applied their minds as to whether the said statement was voluntary or not. Thus, the question whether the appellant could be held guilty for violation of provisions of Section 9(1)(b) of FERA, on the sole basis of the statement of Sh. Ashish Jain, must be answered in the negative.
Whether there is any material on record to establish that the appellant was guilty of violation of provisions of Section 9(1)(b) of FERA if the statement of Sh. Ashish Jain ? - Clearly, the answer to the above question must also be in the negative as there is no material whatsoever on record to establish the same. None of the orders of the authorities below, namely, the Adjudicating Authority, the Appellate Authority or the Tribunal refer to any cogent material to substantiate the allegation of the commission of an offence under Section 9(1)(b) of FERA.
This Court is of the view that confiscation of the amount of ₹ 7,95,000/- from the office of the appellant is unsustainable. Consequently, the present appeal must be allowed. The order dated 17.02.2014 passed by the Adjudicating Authority (Deputy Director, Enforcement Directorate); the order dated 24.09.2014 passed by the Appellate Authority (Special Director, Appeals); and the impugned order passed by the Tribunal are unsustainable and are, accordingly, set aside.
The amount seized from the premises of the appellant are liable to be returned to the appellant.
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2019 (2) TMI 1039
Offence under FEMA - Penalty imposed in exercise of the powers conferred u/s 13(1) of the Foreign Exchange Management Act, 1999 - HELD THAT:- The term “bona fide” would be used in contradistinction with “mala fide”; i.e., where an activity is not “mala fide”, it would be “bona fide”. A business activity would be “mala fide” if the business activity itself is “fraudulent” and conducted with a fraudulent intent as in the present case, RLL was engaged in bona fide business activity for exploring opportunities in steel and other specified sectors globally including India.
The appellants have made out a strong prima-facie case. There are many issues which have not been decided strictly as per law and facts of the matter in the impugned order. The appellants have raised many important legal issues which have to be gone into.
The balance of convenience is also in favour of the appellants. The issue of penalty (being totally disproportionate) as raised by the appellant i.e. grossly arbitrary has also resulted in causing irreparable harm loss and injury to the appellants are to be considered at the time of hearing the appeal on merit. The appeals are pending for the last more than 4 years so as the stay applications. The same have been adjourned one on reason or the other. The appeals could not be decided on merit as the respondent was insisting that before deciding the appeals, the pending application under the provisions of section be decided at the first in stance.
Even otherwise the earlier tribunal is merged with the present tribunal in July, 2017 and many files were not transferred on time.
In order to strike out the balance between the parties at this stage, direct that without prejudice, the appellants shall deposit ₹ 2 Crores lump-sum with the respondent within eight weeks from today. The hearing of the appeal is expediated. The appeals are listed on 1st July, 2019. All pending applications are disposed of accordingly.
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2019 (2) TMI 963
Grant of stay - pre-deposit - interim order granted by the Appellate Tribunal for SAFEMA, FEMA, PMLA, NDPS, PEPT, New Delhi-3 - Tribunal failed to consider the income tax returns of the appellant for the year 2018-19, but only noted the income tax returns filed for the years from 1999-2000 to 2002-2003 - Held that:- Without going into the controversy as to whether the appellant had produced the current income tax returns or not, we deem it appropriate that the appellant shall be given one more opportunity to place all the records before the Tribunal, so that the Tribunal can take a decision as to whether the interests of the Revenue stand sufficiently safeguarded on account of the attachment over the immovable property of the appellant, which is stated to be worth of ₹ 3 Crores and as to whether the appellant's financial condition precludes from making a predeposit.
For such a reason alone, we allow this appeal, set aside the order of the Tribunal and remand the matter to the Tribunal for a fresh consideration.
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2019 (2) TMI 884
Contravention of provisions of Section 9(3) of the FERA Act - violation of FERA - petitioner having not been made aware of the show cause notice, the impugned order passed thereon is exparte and caused grave and serious prejudice to him - Held that:- Various foreign exchange resources of the country and the proper utilization thereof in the interests of the economic development of the country. This Act is now repealed by virtue of a new law namely, the Foreign Exchange Management Act, 1999, but even though repealed, the proceedings under FERA Act can continue. The provisions of the Act enable to carry out searches and confers powers to arrest as well. The violation of FERA is, thus a grave and serious issue.
Its strict and stringent provisions enable the authorities to adjudicate into the breaches of the law, and thereafter, if proved, impose penalties. That is how the impugned order proceeds. The impugned order does not show that the petitioner was duly served, but deliberately did not appear or avoided to appear. Having received the show cause notice and related papers, he did not file any reply. He avoided even the service of the proceedings. The above is not the position emerging from the order itself. Rather the order is passed after observing that certain attempts to serve the petitioner were made but having not found him at the premises of one Hasmukh Shah, the order was passed in his absence. Once the factual position as stated in the Writ Petition is undisputed, then, this Writ Petition must succeed.
We allow the Petition by quashing and setting aside the impugned order.
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