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FEMA - Case Laws
Showing 281 to 300 of 1378 Records
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2018 (9) TMI 933
Charge under Regulations 8, 9 & 13 of the Foreign Exchange Management (Export of Goods and Services) Regulations, 2000 and Regulations 3(1) and 3(2) of Foreign Exchange Management (Manner of Receipt and Payment) Regulations, 2000 read with Section 42 of FEMA, 1999 - Bill of Lading (B/L) relevancy - Held that:- Two sets of documents available for the same shipment under the same B/L nos. While the appellants have claimed one to be genuine, the respondents have claimed the other to be genuine. From the impugned order no investigation done even to establish which was the correct B/L. The adjudication order does not even deal with the Indian High Commission or EFCC, Nigeria’s letter even though it was mentioned before him during the personal hearing.
Enquiries from the Steamer Agent M/s. Arebee Star Maritime Agencies Pvt. Ltd. was also done and the Branch Manager was summoned to appear before the Assistant Director, Enforcement Directorate, Chennai, wherein he stated that they were making enquiries with regard to discharge of shipments at Lagos when it was destined for Russia, and that as soon as they get any evidence regarding the same he would furnish it. However, in the entire order there is no further mention of the result of enquiry.
It a case to be remanded back to the adjudicating authority to go into all the issues including the veracity of the B/L and pass a speaking order after affording an opportunity to the appellants.
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2018 (9) TMI 932
Contravention of the provisions of the FERA Act - accepting interest free security deposit of 65 lacs from the branch office of M/s DNV located in Mumbai, as the Regional Manager of M/s DNV had taken up the flat bearing no. No.24 on 20th floor, Kanchanjunga Mumbai for 36 months which belonged to Appellant's brother and sister-in-law and who had signed a Power of Attorney dated 21.05.1987 in favor of Appellant - Held that:- It appears from the reading of agreement and fact and circumstances, it was merely a care taker agreement for 3 years. From the very wordings that the lease could be granted means that the transaction of the lease would be totally exempted from the general or special permission of RBI. The agreement had no provision for any forfeiture of the said amount or part thereof. The benefit of doubt goes in favour of the appellant because as per facts of the present case, it would be that any security deposit taken for fulfillment of the terms and conditions would not attract any general or special permission of RBI to be taken.
The impugned order is not sustainable as the said caretaker agreement to be a lease agreement and likewise as security deposit as consideration, as the terms „receipts and payments‟ visualized in section 9 (1) (b) & (d) of the FERA Act means consideration.
It is merely in the case of lease agreement that vested right is created in favor of lessee but in the present case no vested right is created as the said caretaker agreement is only a leave and license agreement and thus the Appellant had temporary lien over the said security deposit. The appellant had no relation with the accused person to whom the appellant has only allowed to use the property of the owner/landlord. The appellant has no criminal record for any offence or have any link and nexus with the (then tenant) directly or indirectly to criminal activities. The money paid by him never transferred outside India. Thus, there is no contravention of any provision committed by the appellant.
It is stated on behalf of the respondent during hearing that payment of monthly compensation was payable at the rate of ₹ 9000/- per month but the same was not a subject matter of Memorandum.
Therefore, there was no contravention of the provisions of the FERA Act. And also of the Section 9(1) (b) which stipulates in the explanation to the Section that the money has to come from outside India.
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2018 (9) TMI 669
Jurisdiction under FEMA v/s FERA - appeal lies to the Special Director (Appeals) or Deputy Director - appellant stated that as the appeal was filed under FERA before FEMA came into existence, the appeal should be heard by the Tribunal as under FERA there was no such provision for appeals going to the Special Director (Appeals) - Held that:- As decided in the case of Premier Limited vs. Union of India [2006 (7) TMI 326 - HIGH COURT OF BOMBAY].in Section 49(5)(a) of FEMA the legislature has provided that notwithstanding the repeal, actions taken under FERA shall be deemed to have been taken under the corresponding provisions of FEMA. In Section 49(5)(b) the legislature has provided that the appeals pending before the Appellate Board shall be transferred to the Appellate Tribunal constituted under FEMA. Reading Sub-section (a) and (b) of Section 49(5) of FEMA together, it is evident that unless specifically provided, all actions taken under FERA shall be deemed to have been taken under the corresponding provisions of FEMA. In this view of the matter, the adjudication orders passed by the Assistant Director/Deputy Director of Enforcement under FERA are deemed to be the adjudication orders passed under FEMA and accordingly the appeals against the orders passed by the Assistant Director/Deputy Director of Enforcement under FERA would be maintainable before the Special Director (Appeals)
Hence appeals are to be filed/heard by the Special Director (Appeals). Accordingly, dismiss the appeal with liberty to the appellant to file the same before the Special Director (Appeals)
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2018 (9) TMI 193
Penalty u/s 50 of erstwhile FERA, 1973 for violation of the provisions - non service of the show cause notice upon the appellant prior to 1st June, 2002 under FEMA, 1999 - Held that:- The Adjudicating Officer was obliged to examine the steps taken by the respondent before concluding that the appellant did not comply with the obligation of producing exchange control copies. He ought to have appreciated that a show cause notice or letter of enquiry would have been issued to the appellant by the Enforcement Directorate and if only he had called for examined the record, the non-compliance alleged by the Enforcement Directorate would have been found to be incorrect.
Since there was no service of the show cause notice upon the appellant prior to 1st June, 2002 under FEMA, 1999, the entire proceedings based on the show cause notice against the appellant is null and void and ab-initio. Therefore, the penalty imposed by the impugned order dated 8.9.2004 is untenable. Under these circumstances, the appeal filed by the appellant is allowed by setting aside, the impugned order dated 8.9.2004.
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2018 (9) TMI 192
Guilty of contravention of Section 16(1) of the Foreign Exchange Regulation Act, 1973 - failure to realize amount receivable by them from M/s. Erman Electro Echnik (M/s. EEE) during the period 1990-91? - Held that:- Dy. Director, Enforcement Directorate failed to appreciate that such statement ought not to be relied upon, unless there is independent corroboration of certain material aspect of the said statement, through independent sources is present. There is no evidence with respect to the alleged transaction which was ever produced by Shri Vinod Kumar and or relied upon by the Respondent. Such statement made by Late Shri Ashok Kumar ought not to be relied upon by the Respondent during the adjudication proceedings in the absence of back-up evidence to some extent. Merely on the complaint by the rival party, no penalty can be imposed unless the admission based on some evidences as it is the practice that accuse always alleged that admissions are obtained under threat and pressure. In such situation, proper investigation is required in order to prove guilt of accused party.
The statements of Shri Vinod Kumar are contradictory and self-defeating. Shri Vinod Kumar in his statement dated 09.04.2002 before the Respondent states that he does not have any role to play in the affairs of Appellant No.1, whereas before the Company Law Board, at para 2 of the Judgement dated 18- 04-1999, he takes a completely contrary stand.
The benefit of doubt goes in favour of the appellant. The adjudication Order is not sustainable for the lack of evidences. There is no clear and cogent evidence available on record to show that Shri Ashok Kumar has received any payment pertaining to the transaction in question.
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2018 (8) TMI 1693
Tribunal wholly misdirected itself in failing to follow the settled law in relation to the imposition of penalty by ignoring the settled principle - Held that:- At the hearing of these Notices of Motion, both sides agree that the order of the Tribunal impugned in these appeals suffers from non-consideration of crucial and vital materials. The matter would have to be decided in accordance with law and particularly in the light of what has been observed by this Court on 21st January, 2015, in a detailed order passed in the FEMA Appeals.
Hence, without assigning any reasons, but by keeping all contentions open, the orders impugned in these appeals are quashed and set aside. The appeals are restored to the file of the Tribunal for a decision afresh on merits and in accordance with law. The decision be rendered, uninfluenced by any earlier observations, findings and conclusions. We keep open all contentions and clarify that no opinion is expressed thereon.
The appeals are allowed accordingly. In the light of this order, nothing survives in the Notices of Motion and they are all disposed of.
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2018 (8) TMI 365
Adjustment of penalty from the frozen amount and FDR - review petition - Held that:- At no point of time, did the Enforcement Directorate either seize them or confiscate them so that they could be forfeited to the Central Government. The adjudicating authority has released these amounts from being frozen, by not confiscating them.
This money belongs to the appellant/his son, and while directions for freezing was only a temporary measure, the adjudicating authority should have passed appropriate order of either releasing them or confiscating them. But he has mentioned that he is not confiscating them, meaning thereby that he is releasing them. Once no confiscation order has been passed it is not clear under which provisions of law the said amount was appropriated towards the penalty amount. Without going into the maintainability of the review petition under Section 19 (6), any merit in the review petition wherein they have prayed that the review petition may be allowed by modifying the impugned order to the extent that the principal amount should be confiscated (interest accrued has been appropriated to the Central Government by the impugned order).
No merits in the appeal that this is a blatantly illegal order in as much as appropriation has been ordered of the money which has been released/not confiscated by the adjudicating authority himself. Once the principal amount is released, the question of allowing the “interest accrued on the blocked amount and FDR be credited to the Central Government” (to use the language in the impugned order) does not arise.
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2018 (7) TMI 1976
Status of BCCI as a ‘company’ - Application of Section 42 of the Foreign Exchange Management Act for the alleged violations during the conduct of IPL-2 in South Africa - whether BCCI is a society registered under the provisions of the Tamil Nadu Societies Registration Act, 1975 and as such it is an unincorporated body of associations not falling under the definition of 'company' used in Section 42 of the Foreign Exchange Management Act and that it does not extend to all persons covered by the definition of the 'person' used by Section 2(u) of the Foreign Exchange Management Act? - invocation of the vicarious liability clause framed against the noticees under Section 42(1) and (2) - HELD THAT:- As the issue raised in the present writ petition is no longer res integra, as it has been already settled by the Division Bench of the Bombay High Court in Shashank Vyankatesah Manohar v. Union of India and another [2013 (8) TMI 435 - BOMBAY HIGH COURT] holding that the definition of 'person' in Section 2(u) of the Foreign Exchange Management Act, 1999 is inclusive one and therefore the BCCI as well as the Governing Council of IPL are the persons within the definition of Section 2(u) of the Act, which judgment has also been confirmed by the Supreme Court, the petitioner, who was the Secretary of BCCI during the relevant period, cannot once again agitate the same issue before this Court. Therefore, this Court, being bound by the judgments, finding no merits whatsoever in the writ petition, is not inclined to interfere with the impugned proceedings. Accordingly, this writ petition stands dismissed.
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2018 (7) TMI 1224
Allegation against the appellant Jaswinder Singh as contravened Sections 9 (1) (d) of FERA - payments of ₹ 2.85 Crore to persons in India on behalf of persons residing outside India - Held that:- In any event, the case of the department is improbable on the face of it as the allegation of the department that the appellant indulged in hawala business is falsified from the fact that the said diary allegedly contains the details of the payment made by the appellant Jaswinder Singh for the period of January 1998 onwards to various persons named therein while he was not in India. There was no recovery from the appellant. Counsel for the appellant says that due to long passing of time and harassment, the appellant has compounded his offence and he was accordingly discharge by imposing costs and the same was deposited.
With regard to Disclosure statement of the appellant Jaswinder Singh before Police. The statement of appellant and the co-accused before police is not admissible in evidence and as such no reliance can be placed on this inadmissible piece of evidence.
The other important issue is that dispute contravention facts which are contrary to the evidence available on record such as pass-port entries as well as entries made in diary with one pen, he was also denied permission to cross examine witnesses notwithstanding a specific request in writing in this regard. It is submitted that the statements made by the co-accused or the officers of the ED cannot be taken as corroboration.
The statements should be corroborated from the independent facts and statements are not reliable till their veracity and genuineness is not tested by cross examination.
Therefore, under the established principles of natural justice, the appellant requested before the Adjudication Authority for permission to cross examine the witnesses so as to enable them to establish his innocence and to state and/or explain his case.
The cross examination of the officers who recorded his statement dated 08.09.1998 (in jail) and that of the IO is imperative in order to arrive at the truth of the matter, it was a perfect case where the crossexamined should have been allowed.
Thus ED has failed to prove its case even by way of preponderance of probability and the allegations made by the ED are improbable that no prudent person can ever reach a just conclusion that there is sufficient ground for proceeding against the appellant. The finding of the Adjudicating Authority was wholly perversed, contrary and those suffer many infirmities.
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2018 (7) TMI 447
Arguable case - Deposit 10% of the penalty amount imposed by the Adjudicating Authority alongwith reliable guarantee for balance 90% for the purposes of entertaining Appellant's appeals on merits - Held that:- In the facts of this case after having come to conclusion that the Appellants have an arguable case, the deposit of 10% of the penalty amount in each of the Appeals would meet the ends of justice. This further requirement of furnishing reliable guarantee for balance 90% is not called for in the facts of the present case. This is particularly so as the impugned order finds that the affidavit filed pleading financial hardship was uncontroverted.
We vary the impugned order dated 25.6.2015 and direct the Appellants to deposit 10% of the penalty amount as directed by the Tribunal within a period of four weeks from today, with the Tribunal. The requirement of providing reliable guarantee is done away with. In case the Appellants fail to deposit 10% of the penalty amount as directed by the impugned order of the Tribunal within a period of four weeks from today, the Tribunal would be at liberty to dismiss the appeals for non-deposit of penalty amount (excluding the reliable guarantee) as directed by impugned order dated 29.6.2015.
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2018 (7) TMI 446
Validity of show cause notice - Held that:- It appears from the provisions of the Act of 1999 that, the authorities can invoke the provisions of Section 16 for contravention of Section 13 of the Act of 1999, independent of exercise of powers under Section 37 of such Act. Apparently, the authorities have invoked Section 16 for the alleged contravention of Section 13 of the Act of 1999. At this stage, it would be premature for the writ Court to arrive at a finding that, the authorities have no material before it to invoke such provisions assuming that, the exercise of powers under Section 37 of the Act of 1999 remains inconclusive and that, such exercise did not bring forth any materials in support of the case of the authorities. It is for the adjudicating authority envisaged under Section 16 of the Act of 1999 to arrive at such a finding.
The petitioners have replied to the impugned show cause notice. It has dealt with the show cause notice in detail. Therefore, it would be premature on my part to arrive at a finding that, the petitioners are not aware of the charges made against it. In any event, it would be open for the petitioners to contend such ground before the adjudicating authority.
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2018 (6) TMI 1492
Powers of investigation in relation to the contraventions of the FEMA - Power to compound contravention - Power of Reserve Bank to compound contravention - Held that:- we are in agreement with the petitioner that if the Enforcement Directorate is of the view that the compounding proceedings relate to a serious contravention suspected of money laundering as in this case, then, this court is not prevented from seeking appropriate clarifications from the Enforcement Directorate with regard to presence or availability of material in its possession before it forms the view. In our opinion, the use of the word 'view' hardly makes any difference. Eventually, whether a view can be equated with an opinion or not in the light of the far reaching consequences, the Enforcement Directorate would have to satisfy this court that there is some material available with it, based on which, it communicated to the RBI its view as in this case of serious contravention suspected of money laundering. Thus, there is a broad agreement that this court, in exercise of its powers of judicial review, can seek such answers and clarifications from the Enforcement Directorate.
Course adopted by the RBI and its remittance of the proceedings straight away to the adjudicating authority can be questioned by the applicant seeking compounding of the contravention under the FEMA, by making an application to the RBI. Thus, the applicant invoking the RBI's power of compounding can then approach a court of law and challenge both, the refusal or reluctance on the part of RBI to proceed further as also the Enforcement Directorate's communication or view to the aforesaid effect. If that is the constitutional safeguard and protection ensured to every aggrieved applicant, then, it is not necessary to declare the proviso unconstitutional.
We agree with Mr. Dwarkadas that no interpretation which totally takes away the power to compound contravention vesting in the RBI be placed on the proviso. We must, on a harmonious and complete reading of the statutory scheme, together with the rules, hold as above and that would ensure that the contravention can be compounded by resort to section 15 and the requisite rules by the RBI. It is only when a situation of the above nature is faced, then, the applicant seeking compounding of the contravention may invoke the powers of judicial review to strike down the actions of the statutory authorities.
In no case, the RBI can probe or question the sufficiency or adequacy of the materials regarding the view of the Enforcement Directorate, but must leave the matter to the applicant seeking compounding to workout his/her remedies. That is how we can ensure that the proviso does not become a weapon or tool of unbridled harassment nor will it allow the misuse of the power conferred in the Enforcement Directorate. It is precisely to rule out such exercise of power that we have allowed the view of the Enforcement Directorate to be tested in exercise of our powers of judicial review.
It is a right at best to make an application seeking compounding of the contravention, but beyond that, the applicant cannot insist on an order of compounding contravention, as prayed by him, to be passed. The matter is left to the Compounding Authority's discretion and if that discretion is not exercised reasonably, the applicant has a legal remedy available to him/her to approach a court of competent jurisdiction questioning that action of the RBI. Hence, if the exercise of the right to seek compounding of the contravention is controlled and regulated by the statute, then, we cannot agree with Mr. Dwarkadas that the intervention as envisaged by the proviso is unconstitutional or ultra vires the parent Act.
While upholding the constitutional validity and legality of the proviso, particularly by reading it in the manner noted above, we are in agreement with Mr.Dwarkadas that in the facts of this case, the RBI was not bound to put an end to the compounding proceedings. We are of the opinion that the compounding proceedings initiated vide the compounding applications of the petitioner and pending before the RBI should proceed, but strictly in accordance with law.
Thus, the above discussion concludes this judgment. Rule is made absolute by quashing and setting aside the communication dated 1st December, 2017 and further directing the RBI to consider the compounding applications in accordance with law uninfluenced by the communication of the Enforcement Directorate dated 1st December, 2017 or any prior letters/communications, which are quashed and set aside by this judgment
We also proceed to direct the RBI to render the necessary guidance to the petitioner in the matter of compounding of the contraventions under the FEMA. Since it was clearly stated before us by the RBI that it is presently inhibited in considering the compounding applications or proceeding to decide the same in view of the communication/letter of the Enforcement Directorate, then, as a result of quashing of the same, the RBI is free to proceed and decide the same.
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2018 (6) TMI 1491
Offence under FEMA - Person deemed to be guilty of contravention alleged against AEL. - Sh. Rajesh S. Adani resposibility for the conduct of business of AEL - Held that:- Letters and conduct goes to show that Sh. Rajesh S. Adani is covered u/s 42 of FEMA, 1999 being responsible for day to day affairs\business activities of AEL as Managing Director. All the aforesaid actions of Sh. Rajesh S. Adani justified the findings in the impugned order therefore it is held that the Adjudicating Authority is correct in holding that Sh. Rajesh S. Adani is the person incharge and responsible for the conduct of business of AEL and shall be deemed to be guilty of contravention alleged against AEL.
Question of retrospective operation of section 13 of FEMA, 1999. Admittedly the present proceeding has been initiated after coming into force of FEMA, 1999 and various regulations there under. If the violations are proved then penal provisions have been provided under section 13 of FEMA, 1999. Therefore, question of retrospective operation of section 13 of FEMA, 1999 does not arise. Hence, we do not subscribe to the said contention of the appellants. Accordingly, this contention of the appellants are not legally valid hence rejected.
The Adjudicating Authority in exercise of power u/s 13 of FEMA, 1999 has imposed consolidated penalty of ₹ 4, 00,00,000/- (Rupees Four Crore only) on AEL and a penalty of Rs, 1,00,00,000/- ( Rupees One Crore only) on Sh. Rajesh S. Adani in respect of the contraventions of the provisions section 6(3)(a) r/w the relevant Regulations. Further A sum of ₹ 10,00,000/- (Rs. Ten Lakhs only) has been imposed on AEL and a Penalty of ₹ 2, 50,000/- (Two Lakh Fifty thousand only) on Sh. Rajesh S. Adani for violation of provisions of Section 8 of FEMA,1999 r/w with relevant Regulations for non- repatriation of USD 2,71,293/-. Adjudicating Authority has imposed consolidated penalty on the ground stated in second para of the last but one page of the impugned order.
The impugned judgment of the Securities appellate Tribunal has set a serious wrong precedent and the powers of the SENBI to impose penalty under Chapter VIA are severely curtailed against the plain language of the statute which mandatorily imposes penalties on the contravention of the Act/Regulations without any requirement of the contravention having been deliberated or contumacious. The impugned order sets the stage for various market players to violate statutory regulations with impunity and subsequently plead ignorance of law or lack of mens-rea to escape the imposition of penalty. The imputing mens rea into the provisions of Chapter VI A is against the plain language of the statute and frustrates entire purpose and object of introducing Chapter VI A to give teeth to the SEBI to secure strict compliance of the Act and the Regulation.’
The materials placed before us are very much clear that the AEL started the setting up of AGL, Mauritius, WOS of AEL with the permission of the RBI to carry on trading business in marine products, Agro based products, Plastics, PVC goods, Shoe polish etc. by virtue of RBI approval dt. 07.08.1996. The WOS at Mauritius started its operation in 1997 but instead of doing trading business as aforesaid it started investment by way of setting up of step down subsidiaries at Dubai and Singapore and in setting up a Joint Venture Company. The AEL had mis-declared about the non-pendency of investigation in the ODA form and also has not repatriated a sum of USD 2,71,293/- accrued to its WOS, Mauritius on liquidation of joint venture company namely Adani-Wilmar (Singapore) Pvt. Ltd. The intention of AEL was clear and deliberate leading to contravention of various provisions of law under FEMA,1999 and Regulations their under as held in earlier paragraphs.
Taking into consideration the amount involved in the contravention, the consolidated penalties imposed on the appellants are confirmed even though it is on the lower side as there is no appeal filed by the ED challenging the quantum of penalties.
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2018 (6) TMI 677
Contravention of the RBI instructions - remittance for the one share of Mr. Leonid Beyzer had not come in as a foreign direct investment nor had it been made as a debit from his NRE/FCNR account maintained with an authorised dealer/authorised bank - Held that:- The appellants are not disputing the charge but have stated that Mr. Leonid Beyzer had transferred the above remittances from his personal account to the account of the company i.e. M/s. True Axiz Resorts Pvt. Ltd. during the period 19.03.2005 to 02.12.2005. Legal requirement of the payment being made from the NRE/FCNR account has been flouted. The NRO account is a Non Resident Ordinary Rupee account while the NRE is a Non Resident External Rupee account. Similarly the FCNR is a Foreign Currency Non Resident Account, and hence they are principally different types of account and if there is a stipulation for payment from only one type of account, not adhering to the same would tantamount to the breach of the legal requirements. Hence, the adjudicating authority’s order is correct and is upheld.
Not complied with the RBI notification requiring them to file the report within the stipulated period of 30 days - Held that:- There is a foot note in the letter which states from RBI that “this acknowledgment shall not be deemed or construed in any way as approval by the Reserve Bank for investment in the company, nor does it certify the correctness or completeness of Form FC GPR from the company. This acknowledgment is only for the purpose of having received Form FC GPR from the company. Reserve Bank reserves its rights to call for any further detail from the company including any documents it may deem fit as well as to return the Form FC GPR to the company in view of any discrepancies found therein”. The appellants have not been able to produce any final decision in this regard so far. It is therefore apparent that the RBI has still not given them the clearance/permission. Accordingly, the charge against the appellants stands
Mr. Leonid Beyzer had not taken prior approval of the Government of India inspite of having investment in another company in the same sector - Held that:- In the present case, it has not been alleged that Mr. Leonid Beyzer is either a collaborator or proposes to acquire the entire shareholding of M/s. True Axiz Resorts Pvt. Ltd. It is an admitted fact that he only has one share in the company the rest being entirely held Mr. Valiulin Rashid. Hence, find the appeal on this ground a valid appeal and reject the impugned order to this extent.
Lands acquired were all agricultural land and hence were not eligible for investment under the automatic route of foreign direct investment - Held that:- Referring to List of activities or items for which automatic route of Reserve Bank for investment from persons resident outside India is not available what is prohibited is the activity of ‘agriculture’. It nowhere specifies any stipulation or condition relating to agricultural or non- agricultural land. That the appellants were licensed/permitted to undertake activities relating to tourism has not been disputed. It has not also been alleged that they are seeking to indulge in the activity of agriculture. Hence, stretching this stipulation to hold them liable for violation as they possess agricultural land is not within the scope of the Notification 20/2000 dated 03.05.2000. To that extent, I do not find any contravention with regard to the properties in question in so far as it relates to this particular Notification. Accordingly, I hold so.
Levy of penalty confirmed - confiscation of the properties itself is too harsh and therefore set it aside
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2018 (6) TMI 389
Validity of proceedings - non-recording of reasons and its non-communication - whether the adjudicating Authority is bound to record his reasons for formation of an opinion under sub-Rule 3 of Rule 4 of the Foreign Exchange Management (Adjudication Proceedings and Appeal) Rules, 2000 in writing and also communicate the same to the noticee if required by the noticee before proceeding with an enquiry?
Held that:- The adjudicating Authority is not under any statutory obligation to communicate his reasons for forming an opinion to conduct an enquiry under sub-Rule 3 of Rule 4 of Foreign Exchange Management (Adjudication Proceedings and Appeal) Rules, 2000. We may draw an analogy with the provisions of the Prevention of Money-Laundering Act, 2002.
Whenever a statute requires a particular thing to be done in a particular manner, it is a trite position of law that it should be done in that manner alone and not otherwise. The provisions of sub-Rule 3 of Rule 4 in contra distinction to the provisions of the Section 5(1) of the Prevention of Money-Laundering Act, 2002, do not require the reasons to be recorded in writing. If we are to read into the provision, such a requirement, the same in our considered opinion would lead to disastrous results, where notices under various enactments which provide for enquiry on the basis of a subjective satisfaction of the adjudicating Authority or the enquiry officer or the Disciplinary Authority would take a stand that those Authorities should also record their reasons for forming an opinion and communicate the same.
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2018 (5) TMI 1841
Proceeding under FERA - contravention of Section 8(1) of FERA read with Sections 64(2) and 51 - Penalty imposed - non specification of charge for violation of the provisions of FERA - Held that:- The prejudices that a charged person suffers by reason of undue long pendency of a proceeding against him are many fold as noted in some of the decisions discussed above. In the facts of the present case by no stretch of imagination it can be said that the delay that has been caused in the adjudication process is reasonable and absolutely no explanation has been furnished for such delay. The charges against the petitioner are of a quasi-criminal nature and the right of the petitioner to have a speedy disposal of the adjudication proceeding has been infringed by the respondents in the facts of this case. On this ground alone the impugned show cause notice is liable to be quashed.
The show cause notice also does not give sufficient details on the basis of which the charge of violation of the provisions of FERA has been brought against the petitioner. No doubt economic offences are offences against the society at large and should be curbed. However, if the respondents had sufficient incriminating materials against the petitioner they would have surely supplied copies thereof to the petitioner in compliance with the principles of natural justice and would have proceeded with the adjudication process. The very conduct of the respondents raises a strong suspicion in mind that the respondents have no such material which would establish the charge levelled against the petitioner. This is one of the reasons why I am of the opinion that it will not be to the detriment of public interest or contrary to the interest of justice if the impugned show cause notice is quashed. ‘Justice delayed is justice denied’ is not a cliché.
The impugned show cause notice dated 14 January, 1991 is quashed along with the notices of hearing. The adjudication proceeding stands dropped against the petitioner.
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2018 (5) TMI 1531
Violation of Section 3(a), FEMA - Penalty - Burden of Proof - Prevention of Money Laundering Act, 2002 - amount received in foreign currency from unknown persons and same was spent when in India - Held that: - It is settled legal principle that onus of proof, in both civil and criminal law, is on the person who wishes to prove a particular fact - There is no statutory provision in FEMA imposing reverse evidentiary burden upon an accused person, as is the case under PMLA.
The Special Director, ED failed to appreciate the fact that with respect to the Appellant‟s travel to Middle-East, the major expenses were for Air Travel which was purchased in Indian Rupees and other expenses were taken care of by his friends - The Special Director, ED has erroneously held that the aforesaid Affidavits cannot be considered as the Appellant did not mention the names of these persons and the respective countries in his written submissions - The Special Director, ED has incorrectly ignored the affidavit of Mr. Saikumar by holding that the Consulate General of India, Dubai takes “No responsibility” for the correctness of the statements made in the above affidavit and has thus proceeded on an incorrect understanding of law.
Penalty - Held that: - the present case is not fit for imposition of Penalty because liability to pay penalty does not arise merely upon the proof of contravention of a provision. Being an quasi-criminal proceeding, imposing penalty for contravention of a statutory obligation ought not ordinarily be imposed unless the accused/ defendant acted deliberately in defence of law or was guilty of contumacious or dishonest conduct or acted in conscious disregard of the obligation.
Appeal allowed - decided in favor of appellant.
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2018 (5) TMI 1530
Identity of the offender - appeal filed mainly on the ground that ED had booked a case against them on a wrong presumption and was a case of mistaken identity - Held that: - it is clear that ED has not been able to prove that the appellant and Shri Farooque Memon, who seems to be the offender, are one and the same person. This is strengthened by the order of the Additional Chief Metropolitan Magistrate at Ahmedabad in the bail application.
All evidences on record point that Shri Farooque Mithawala and Shri Farooque Memon are two different people - Shri Farooque Mithawala the appellant has been wrongly implicated.
Appeal allowed.
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2018 (5) TMI 730
Proof of goods purchased by remitting the foreign exchange brought into India - offence under FEMA - Held that:- The two consignments have been auctioned by the Customs/CWC as the appellant failed to clear the goods within the bond period and the authorities have recovered the customs duty and other charges payable on the two consignments. In these circumstances, it cannot be said that the appellant has failed to prove that the goods purchased by remitting the foreign exchange have been brought into India.
The photocopy of the Bill of Entry provided by the appellant carries the signature and endorsement of the relevant customs officer, clearly evidencing that the relevant import has taken place.
It is well settled in the case of Hindustan Steel Ltd v State of Orissa (1969 (8) TMI 31 - SUPREME Court) that a penalty will not be imposed for a mere technical breach or even because it is lawful to do so unless the party on whom the penalty is imposed, acts in deliberate defiance or the law or is guilty of contumacious or dishonest conduct or acts in conscious disregard of the law, none of which are present in the present case. On the contrary there is no violation of section 10(6) or any other provisions of FEMA or regulations thereunder and the current management of the appellant (which has taken over the affairs of the appellant 12 years after the alleged contravention in 2000), has all along acted in a bona fide manner and is not guilty of any contravention or any dishonest conduct.
By Order dated 02.02.2018, the interim application of the appellant was allowed and thereafter the present appeal was heard. For the above such facts and reasons, the order passed by the Adjudicating Authority is not sustainable in law.
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2018 (5) TMI 729
Offence under FERA - Whether appellant had any knowledge or role in distribution of foreign exchange? - Held that:- There is no allegation in the Show Cause Notice or the Adjudicating Order that Appellant either made any payment of any such foreign exchange or was aware about any such payment. In any case, a person who had done the whole transaction has been let off and the same Adjudicating Order against him has been quashed, the order against the Appellant can be sustained even on parity.
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