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FEMA - Case Laws
Showing 41 to 60 of 1378 Records
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2024 (9) TMI 70
Not shipping the Indian Black Tea to the destination as per the Bills of Lading - violation of the RBI Scheme and contravention of the provisions of FERA - Four containers of Indian Black Tea were shipped to Moscow but the importer along with the shipping company designed it to ship the containers of Indian Black Tea to Dubai instead of Moscow
HELD THAT:- Right from issuing the Bills of Lading, the appellants were well aware of the facts that the containers were to be shipped for Dubai and thereby the appellant company facilitated M/s Century International to carry out transactions in violation of the provisions of the Act of 1973 and RBI guidelines. It is necessary to add that Shri Sanjay Agarwal in his statement denied any instructions to the shipping company to divert the consignment
Shipping agent claims that the cargo was diverted at the request of the exporter, while the exporter claimed that the cargo were ultimately delivered to Moscow via Dubai and Bandarabbas and the shipping agent, to evade Income Tax to the Government of India, furnished documents showing disposal of the cargo at Dubai The exporter failed to furnish any documentary evidence to show that the buyer in Moscow received the cargo. However, in spite of non-delivery of the goods the sale proceeds were drawn against the letter of credit from Rupee Credit fund. There appears to be no action by the buyer in Moscow against the exporter or the shipping agent. The dispute between the exporter and shipping agent arose after initiation of enquiry by the Department.
The detailed facts mentioned above shows role of the appellant in shipping the consignment to a destination different than mentioned in the Bills of Lading and other documents. It was in connivance of the exporter and the appellant not only actively participated in the contravention but abetted it and, therefore, we find no reason to cause interference in the impugned order. Accordingly, appeal would fail and is dismissed.
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2024 (9) TMI 69
Penalties imposed for contravention of different provisions of FERA - reliance on retracted statement - case made out by the respondent is that the appellant had transferred a sum of 70000 pounds to purchase a house in UK which was purchased in his name and transfer of money and purchase of the house outside India was in contravention of different provisions of the Act of 1973 - appellant submits that the alleged contravention of different provisions of the Act of 1973 is nothing but an outcome of the information given by his brother-in-law and it was due to dispute with his wife (appellant’s sister) and ongoing court litigation in UK. - HELD THAT:- In the instant case, retraction of the statement was made on the next date of the statement itself thus was without delay. The respondent, however, failed to produce any material to prove transfer of 70000 pounds. It could not have been in reference to the person with whom there was ongoing litigation with the appellant’s sister. The respondent heavily relied upon the statement of the appellant to explain the documents of 4 pages recorded at the time of search to indicate that it was for the purchase of one house property at London from his sister and brother-in-law for 70000 pounds.
The impugned order, however, does not disclose as to what was written on the document seized and explained. It is more so when the appellant had retracted from his statement on the next date. In any case, it was necessary to prove the transfer of the amount which respondent utterly failed because bare statement of brother-in-law for receipt of the amount cannot be taken as a proof when their relations were not cordial.
When the statement of brother-in-law was not specific because he said to have received the amount on few occasions through other parties without naming any one herein. The purchase and even transfer of the property cannot be without execution of documents. The appellant never visited UK thus how transfer of property took place. Even otherwise, the execution of power of attorney for its use in UK was required to be notarized as per the British Law which does not exist in the present matter. It could have been even in India but for its use required through the Embassy which does not exist. The currency of a sum of Rs.36000/- cannot be taken to be a clinching evidence to prove the case. The respondent have even ignored the document executed by the brother-in-law showing the house to be his own property. The document aforesaid was submitted in the High Court of Justice Family Division Princely registered in UK in the case of Ms. Mariam Vs. Mohd. Ibrahim Achhala. The affidavit given by the informant specifically makes a reference of the immovable property to be belonging to him and not of the brother-in-law i.e. appellant.
The statement of appellant’s father has also been relied on though it is not so specific, rather based on hearsay information but it cannot be read as against the affidavit filed by appellant’s brother-in-law. The respondent failed to prove case for contravention of the provisions of the Act of 1973. The penalty could not have been imposed without proof to show contravention of the provisions of the Act. The Special Director failed to appreciate that respondent could not prove transfer of 70000 pounds to U.K and produce valid document to prove purchase of a house by the appellant. Appeal allowed.
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2024 (9) TMI 68
Contravention of Section 8(1) of FERA - Accrued interest as confiscated to the credit of Government of India Account u/s 63 of the Foreign Exchange Regulation Act, 1973 (FERA) - Adjudicating Authority has meticulously analysed the evidence as to hold that the Appellant did not own the funds in the bank accounts in India - report from the Inland Revenue Board, Malaysia clearly shows that the Appellant and her husband failed to report either any income from Singapore and UAE or any remittance made to India - HELD THAT:- The proceedings before the Income Tax authorities were for the purpose of determination of tax liability of a resident abroad, who is the Appellant herein. In no manner such determination can impact the question of acquisition of funds by a resident in India in the name of the Appellant who was resident abroad. There are statements on record u/s 40 of FERA which clearly bring out the deposits being made in the bank in cash. The evidence on which the Appellant chose to rely upon do not corroborate her contention that the source of such fundswere traceable to her.
The paragraphs cited afore bring out that the funds mobilized in the name of R. Susila were for namesake and for the benefit of Smt. N. Sasikala. The discharge which Smt. N. Sasikala got in the prosecution proceedings are independent from the adjudication proceedingsas held by the Hon’ble Supreme Court in the cases of Standard Chartered Bank &Ors. V.s Directorate of Enforcement &Ors [2006 (2) TMI 272 - SUPREME COURT] and Radheshyam Kejriwal vs. State of West Bengal &Anr., [2011 (2) TMI 154 - SUPREME COURT]. The scheme of FERA makes it clear that the adjudication by the concerned authorities and the prosecution are distinct and separate. The Hon’ble Court has held that the two proceedings are independent of each other and the finding on the adjudication is not conclusive on the prosecution under the Act.
In view of the ratios in the two judgements supra coupled with the fact that presently the impugned order which is under challenge has arisen out of the adjudication proceedings, we are unable to persuade ourselves that the outcome of the prosecution proceedings should have a binding effect on the present proceedings.
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2024 (8) TMI 1341
Eligibility of “reason to believe” before effecting seizure - as argued non-consideration of such evidence and tangible material placed on record by the appellant, would by itself, vitiate not only the seizure orders but also the order passed by the Competent Authority.
HELD THAT:- As perused the Seizure Orders and find that the Officer has examined the relevant material before him in great detail and has, apparently after analysing the same, coupled with the statement of the CEO of the appellant, formed his “reasons to believe” before effecting seizures.
We have also examined the orderof the Competent Authority under the FEMA and find that the same is based on tangible material which was analysed and consequently the seizure orders were confirmed.
At that stage a Constitutional Court is not to interdict the investigations or probe the evidentiary value of such material gathered. It is trite that Courts exercising powers of judicial review would consider as to whether there was objective and tangible material available with the authorities before any action of effecting seizure was contemplated. A Court exercising writ jurisdiction is not sitting as an appellate court or authority. Thus, we are satisfied that the learned single Judge has exercised the jurisdiction vested, correctly.
As urged many facts which cannot be evaluated or considered by a writ Court since the same would require evidence and the evaluation thereof - The issue as to what constitutes “capital account transaction” and “current account transaction” and as to how the appellant has transacted its business and by what mode etc. and whether the appellant is connected to the Opera Group and other entities like Mobimagic and HK Fintango, with whom and through whom, it is alleged that financial transactions were made which are alleged to be in violation of the provisions of FEMA, in our considered opinion, are highly disputed questions of fact. Having regard to the fact that the records indicate that there exists an absolutely diametrically opposite and contrary set of disputed facts, it is apparent that the Court exercising powers of judicial review under Article 226 of the Constitution of India, does not have the necessary wherewithal to render its opinion thereon.
Impugned order relegating the appellant to the proceedings before the Adjudicating Authority without deciding the matter on merits itself - We find that the ld' Single Judge has noted that the respondents have already filed a statutory complaint before the Adjudicating Authority and substantial hearings have already taken place before it.
We have found that the learned Single Judge has already examined the issue on merits and passed the impugned judgment. Having regard to the fact that the Adjudicating Authority while deciding the complaint shall obviously also decide the sanctity of the seizure as also the validity of the Confirmation Order dated 04th February, 2022 passed by the Competent Authority, we too find no reasons to interfere with the observations rendered by the learned Single Judge in the impugned judgment.
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2024 (8) TMI 1056
Applicability of FERA - Suit filed seeking recovery by the plaintiff against the defendant bank - defendant bank unauthorizedly and without permission of the plaintiffs misappropriated an amount of Rs. 2 crores towards the liability of M/s Asian Wire Ropes Ltd. - plaintiffs are Non-Resident Indians (‘NRIs’) carrying the business of Import and Export who came to India for exploring business opportunities. The plaintiff no. 2 is the wife of plaintiff no. 1, who subsequently is said to have obtained a status of Resident Indian - plaintiffs opened a Savings Bank Account with the defendant bank/NRE Account -
As stated that in the absence of plaintiff No. 1 from Delhi, plaintiff no. 2 on 23.04.1990 received a note from the then Branch Manager of defendant no. 2 requesting a blank cheque (only bearing signature of plaintiff no. 2) on urgent basis.On the return of the plaintiff no. 1, the plaintiff no. 1 learnt that a sum of Rs. 2,00,00,000/- has been transferred from his NRE Account to the defendant’s Hyderabad Branch - as alleged officials of defendant no. 2 had obtained a blank cheque from the plaintiff no. 2 and in a clandestine manner, filled entries in the cheque and added detailed instructions on the back of the cheque without any such directions by the plaintiffs
Whether the suit is within time? - Admittedly, the suit is based on the fact that on 23.04.1990 money was illegally transferred from plaintiffs account by the defendant bank. The suit was filed on 22.04.1993, i.e. within three years from the date of cause of action. Therefore, the suit as filed was within the limitation period of three years.
The Court fees of Rs. 2,70,000/- was filed along with the suit and since the court fee of Rs. 3,672 was not available on the said date, it was purchased and deposited on 07.05.1993. All objections were duly removed and the matter was re-filed on 17.05.1993. It is settled proposition that the deficiency in court fee is not fatal and the payment of deficit court fee is a curable defect.
Under section 149 of CPC, the courts have been granted the discretion to permit receiving the deficit court fee at any stage, even in the absence of an application praying for the same, subject to the said discretion being exercised equitably.
The plaintiff has cured the defect of deficit court fee within 30 days of the objections. A minor delay in payment of balance court fee cannot act as an impediment in entertaining the suit filed by the plaintiff.Hence, the present suit is held maintainable and within the period of limitation.
When did plaintiff No. 2 change her status from non-resident Indian to resident Indian and whether an intimation thereof was given to the bank? If so, on which date? - There is no evidence on record to prove that on 17.04.1990, the plaintiff No. 2 ceased to be an NRI. There is no evidence on record to show that the defendant bank was duly informed by the plaintiff no. 2.The NRE Account Opening Form, i.e. PW1/D44, clearly casts an obligation upon the plaintiffs the duty to inform the defendant bank a change in their residential status.
Even if it is assumed that there had been a change, the plaintiff no. 2 continued to issue cheques from the same account, i.e. (Ex. PW1/D58) cheque dated 07.05.1990 for Rs. 1,00,00,000/- issued from NRE Account No. 6523 to create a Fixed Deposit with the Defence colony branch, i.e.(Ex PW1/D68). The said transaction shows that the plaintiff no. 2 continued to issue cheques in the capacity of a joint account holder and continued to sign from the NRE account.
Therefore, in the absence of any material evidence being on record to show that there was a change in residential status of plaintiff No. 2 and that the same was duly informed to defendant bank, the Issue no. III is decided against the plaintiff and in favour of the defendant bank.
Discharge the onus of proof on the plaintiffs - There is no doubt that a bank cannot be callous or deal with its customers in a causal manner. The defendant bank does not have a Specimen Signature Card for Saving Bank Account bearing No. 6524, wherein as per the plaintiff no. 2 she signed as “R Murti”. The defendant bank has two Specimen Signature Cards for NRE Account No. 6523 alongwith multiple photocopies of the Specimen Signature Card NRE Account no. 6523 for absolutely no reason or explanation. The defendant bank may have personal equations with clients but they are bound to follow the procedure and mandate of law. If a Specimen Signature Card is missing (which is a mandatory requirement for clearing of cheques and bank operations) the bank is required to take action, including but not limited to conducting an inquiry and registering of an FIR. The defendant bank cannot be accepted to say that a Specimen Signature Card of an individual is lost and the defendant bank did nothing about it.
The party which comes to the court and seeks the courts adjudication on issues in its favour has to discharge the onus of proof.
The plaintiffs have failed to prove that the instructions written on the reverse side of the cheque were not given by the plaintiff no. 2 but written by the defendant bank. The plaintiffs have failed to prove that the act of encashing the cheque in question, i.e. Ex. PW1/D31, is improper especially since the defendant bank has sufficiently proved that the plaintiff no. 2 would continually sign cheques both signed as “R. Murti” and “R. Shandilya” in the NRE Account no. 6523. Thus the plaintiffs have not been able to discharge the onus of proof.
Whether, the transfer of Rs. 2 crores is hit by the provisions of Foreign Exchange Regulation Act? If so, to what extent? - FERA is a special legislation, containing exhaustive provisions of investigation, inquiry, trial and appeal. It is a self-contained code, including statutory functionaries specifically and specially constituted to inquire and adjudicate upon any contraventions, as alleged. The provisions under FERA empowers the Directorate of Enforcement and its officers to search, recover, arrest, hold trial for offences and impose punishment for offence under the Act.
The proceedings under FERA are quasi-criminal in nature. The courts have held that the power to adjudge any contravention alleged under the act would lie with Directorate of Enforcement in the first instance.
As no complaint has been filed to FERA. The plaintiffs have also failed to show how the provisions under FERA will be applicable against the defendant bank. Plaintiffs are not entitled for recovery of any amount.
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2024 (8) TMI 793
Adjudicating Authority to proceed with the adjudication u/s 16(1) of FEMA during pendency of the appeal against an order passed u/s 37A(1) - Authorised Officer passed the seizer order and sent the same to the competent authority, who in turn rejected the order of the Authorised Officer and Appeal has been preferred by the respondents before the Tribunal, which is pending - HELD THAT:- Special provision under Section 37A is all about an interim seizer value equivalent situated within in India of such foreign exchange, foreign security or immovable property. In the event of seizer during the pendency of the adjudication proceedings, the procedures to be followed by the authority are enumerated under Sub Section (6) of Section 37A of FEMA.
Therefore, the very purpose and object of inserting Section 37A is to seize value equivalent situated within India of such foreign exchange, foreign security or immovable property during pendency of the adjudication proceedings and such seizer proceedings initiated under Section 37A, undoubtedly cannot stand as a bar to proceed with the adjudication proceedings under Section 16 of the FEMA by the Adjudicating Authority. As noted under the definition, the functions of the Adjudication Authority, Authorised Officer and Competent Authority are distinguishable and each Authority is conferred with powers under the Act to carry out certain actions. Therefore, the contention on behalf of the appellants that the Authorised Officer is below the Competent Authority has no relevance as far as Section 37A of FEMA is concerned.
In fine, we could arrive at an irresistible conclusion that a writ against a show cause notice is not entertainable. The adjudication proceedings have completed and the final order is about to be passed by the Adjudicating Authority. Regarding an interim seizer under Section 37A is concerned, it may not have any implication in respect of the final order to be passed by the Adjudicating Authority and it would be appropriate on his part to deal with the effect of seizer order passed by the Authorised Officer under Section 37A of FEMA, while passing final order under Section 16 of FEMA.
The above position has been amply made clear in Sub Section (4) to Section 37A of the Act, wherein, it is contemplated that the Adjudicating Authority shall pass appropriate directions in the adjudication order with regard to further actions as regards to seizer made under Sub Section (1) to Section 37A and in this case, the Adjudicating Authority is directed to take note of said provision and take an appropriate decision with reference to the order passed by the Authorised Officer under Section 37A(1) of the FEMA.
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2024 (8) TMI 726
Property forfeited under SAFEMA - Properties were also subject matter of TADA proceedings - HELD THAT:- The perusal of Section 8 reveals it to be distinct than the provision of SAFEMA and thereby the judgment of the Apex Court Amina Ahmed Dossa [2001 (1) TMI 1028 - SUPREME COURT] in reference to different statute cannot be applied. It is more so when even the facts giving rise to the case are different. If the Appellant and his relatives have filed declaratory suits before the Bombay High Court, it would have no bearing on the present proceedings but can be under TADA. Therefore, the first issue raised by the Appellant to challenge the impugned order is not made out. The forfeiture of property under TADA is to be dealt with as per the provision of TADA and would have no effect on the action taken as per the provision of SAFEMA.
Validity of Notice under Section 6 of SAFEMA - obligation to first establish nexus between the income of the Detenue and the property in question - HELD THAT:- As per plain reading of Section 6 of the Act we do not find that the Competent Authority should have issued Show Cause Notice after showing link or nexus with the income of Detenue and property sought to be forfeited. If the argument is accepted, we would be virtually rewriting the provision, which is not permissible. The second issue raised by the Appellant is accordingly rejected.
Violation of Principles of Natural Justice - principles of nature justice have not been followed because proceeding remain pending before many officers but decided by one posted on the date of hearing - HELD THAT:- In the instant case the final hearing was made by the Competent Authority on 23rd May, 2005 said to be for few minutes without any proof has resulted in pronouncement of order. It was by the same Authority. The written arguments itself show that the Appellant remain present on the date of hearing though said to be only of 10 to 15 minutes. It is however a fact that the order has been passed by the same Authority. Thus, arguments in reference to the principle of natural justice is not made out and therefore rejected summarily.
Forfeiture of property - Flat No. 604 on 6th Floor of the building known as Bagh-e- Rehmat (Rajput Villa) Society, Agripada, in Bombay - Appellant has disclosed the source of acquisition of Flat No. 604 on 6th Floor. It may be that it was originally acquired by the detenue but having settled in favour of the Appellant pursuance to a decree, the forfeiture would nullify the decree of the Court. It cannot be said to be under collusion as the decree was made 10 years prior to detention. Thus, we do not find forfeiture of Flat no. 604 to be legally substantially and accordingly we make interference in the order for property aforesaid.
Forfeiture of the property being protected by the realm of the provisions of the Rent Act and who can be affected by the forfeiture is the owner of the property and not the tenant -Provision for forfeiture of property under two different statutes are distinct and separate and the basis of forfeiture is also distinct and different. Section 21 of SAFEMA otherwise makes it clear that finding under other laws not to be conclusive proceedings under this Act. The judgment of the Apex Court in the case of Amina Ahmed Dossa v/s. State of Maharashtra [2001 (1) TMI 1028 - SUPREME COURT] is already clarified and in any case if the Appellant is only the tenant and not the owner of the property should not get affected by the forfeiture of the property and according to the Appellant, he has already handed over the Flat No. 2B and Flat No. 12 for redevelopment of the said building.
It could not be clarified how the Appellant is affected by the forfeiture when he is only a tenant. The allotment of Flat No. 502-503 by the developer shows that Appellant was in fact enjoying all the benefit in the property and therefore only the forfeiture of the property has been challenged, otherwise tenant would not be affected by change of the hands of the ownership. It may remain with the builder or with the Government. The Appellant has failed to disclose the source of acquisition of property with all the rights referred above. Thus, the arguments are not worth acceptance and thereby summarily rejected.
Forfeiture of rented property - So far as Flat No. 611-C, of Meena Apartment is concerned, the source said to have been disclosed but we do not find any material on record to accept the contention. It is contented by the Appellant that he was having income out of gifts and further received Rs. 11,70,000/- under the Foreign Exchange Immunity Scheme, 1991 during the year ended 31st March 1992. The remittance under FEIS is only a mode of transfer and not evidence for receipt of genuine money by the Appellant.
Further, the sum of Rs. 2 Lakh said to have been taken as loan from Ms. Hadia Haroon Merchant but no document for it has been submitted. It could have been Income Tax Return and loan agreement but no such document has been submitted.
As regards Shop No. 1, on the Ground Floor of Ruksana Palace, Plot No. 57/54A, Mohd. Ali Road, Mumbai, the Appellant is stated to be on monthly rent. No pagdi or premium said to been paid by the Appellant. If that is so than there is no reason for tenant challenge forfeiture of property.
We find failure of the Appellant to substantiate the arguments and failure to disclose the sources of property therefore we are unable to cause interferences of the impugned order of the forfeiture.
Change of ownership would not affect the tenant - Appellant started a business in the name and style of “Sana Communication Centre” in 1992 however, it stood closed in 1995. It has been stated by the Counsel that the Appellant had income from interest on saving deposits but no source of such savings has been disclosed. Further, the appellant had purchased equipment for running Sana Communication Centre and income out of it has been received by way of FEIS, 1991 but no documentary evidence has been produced before this Tribunal to support the contentions, as aforesaid. Therefore, we do not find any substance in challenge to the forfeiture of the property in the hands of the Appellant.
Property acquired by the Appellant from his natural guardian by a Conveyance Deed - The building has been given on lease and many tenants are said to be residing. It is stated that share of each Appellant is to the extent of 1/5th portion on the property and the source has been disclosed in the Income Tax Return. It is further stated that the property has been acquired by the appellants by way of gifts, but we do not find any material on record to substantiate the arguments and accordingly unable to accept the case of the Appellant against the forfeiture of the property.
Property is in the ownership of Seth Ismailji Abdoolally Machiswala Religious and Charitable Trust and was originally let out to Municipal Corporation of Greater Bombay, however it ceased to use the premises - On a bare reading of the terms of the rent agreement relied upon by the appellants, it would show that the appellants are virtually owning the property. However, the appellants have failed to show any source for acquiring the said properties. The bank statement only shows entries but from the amount was sourced has not been proved. Thus for the reason given above and when Appellant is not claiming ownership of the property thus, we do not find any ground to cause interference in the impugned order.
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2024 (8) TMI 667
Appellants discharged from the predicate offence - orders to retain incriminating documents/digital evidences/material/Indian currency recovered/seized vide Panchnamas from the office premises of the appellants - HELD THAT:- We have considered the rival submissions and find that pursuant to the order of the learned Magistrate in reference to predicate offence and subsequent order passed by Special Court to discharge the appellants even from the offence of money laundering under the Act of 2002, the order of provisional attachment and its confirmation cannot survive. Our view is supported by the judgment of the Apex Court in the case of Vijay Madanlal Choudhary [2022 (7) TMI 1316 - SUPREME COURT]
In the light of the aforesaid, the impugned orders are set aside and the appeals are allowed.
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2024 (8) TMI 666
Property forfeited under SAFEMA - Properties were also subject matter of TADA proceedings - HELD THAT:- The perusal of Section 8 reveals it to be distinct than the provision of SAFEMA and thereby the judgment of the Apex Court Amina Ahmed Dossa [2001 (1) TMI 1028 - SUPREME COURT] in reference to different statute cannot be applied. It is more so when even the facts giving rise to the case are different. If the Appellant and his relatives have filed declaratory suits before the Bombay High Court, it would have no bearing on the present proceedings but can be under TADA. Therefore, the first issue raised by the Appellant to challenge the impugned order is not made out. The forfeiture of property under TADA is to be dealt with as per the provision of TADA and would have no effect on the action taken as per the provision of SAFEMA.
Validity of Notice under Section 6 of SAFEMA - obligation to first establish nexus between the income of the Detenue and the property in question - HELD THAT:- As per plain reading of Section 6 of the Act we do not find that the Competent Authority should have issued Show Cause Notice after showing link or nexus with the income of Detenue and property sought to be forfeited. If the argument is accepted, we would be virtually rewriting the provision, which is not permissible. The second issue raised by the Appellant is accordingly rejected.
Violation of Principles of Natural Justice - principles of nature justice have not been followed because proceeding remain pending before many officers but decided by one posted on the date of hearing - HELD THAT:- In the instant case the final hearing was made by the Competent Authority on 23rd May, 2005 said to be for few minutes without any proof has resulted in pronouncement of order. It was by the same Authority. The written arguments itself show that the Appellant remain present on the date of hearing though said to be only of 10 to 15 minutes. It is however a fact that the order has been passed by the same Authority. Thus, arguments in reference to the principle of natural justice is not made out and therefore rejected summarily.
Property in question - The property forfeited is a building known as Aqdas Mahal, Motlibai Street, Agripada, Mumbai-400001. The property has been acquired by natural guardian of the appellant by Indenture dated 28.09.1992 for the total consideration of Rs. 6,50,000/-. The entire transaction has occurred in a structured manner wherein consideration for the property was paid from the money advanced by way of loans to children. In absence of any loan agreement or documents to support the contentions of the Appellant, it remain unsubstantiated.
Appellant has otherwise failed to refer to any material produce before the Competent Authority to disclose source for acquisition of property thus arguments in reference to the property cannot be accepted. Appeal dismissed.
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2024 (8) TMI 665
Validity of document received from Income Tax Department as evidence for the proceedings under FERA - determine the nature of the two receipts from abroad as to whether the receipts are in contravention of the provisions of FERA - HELD THAT:- In view of the statutory provision for allowing the use of the documents recovered during the proceedings under any other law, the objection against the use of the documents in the present case since these were recovered during the proceedings under the Income Tax Act, cannot be accepted. In this regard, the Hon’ble Supreme Court in the case of KTMS Mohd. & Anr. v/s Union of India [1992 (4) TMI 6 - SUPREME COURT] held that the statements recorded under FERA could not be used for the proceedings under the Income Tax Act and not the other way round as is provided u/s 72 of FERA. The focus of the Hon’ble Supreme Court in the case supra was on the necessity to examine the statements so as to determine whether it was tendered voluntarily or not. In the present case, the Respondent Directorate has undertaken investigations under FERA, after the initial reference from the Income Tax Department.
Also decided in Standard Chartered Bank & Ors. [2006 (2) TMI 272 - SUPREME COURT] the two proceedings are independent of each other and the finding on the adjudication is not conclusive on the prosecution under the Act. Thus, we are unable to persuade ourselves that the outcome of the prosecution proceedings should have a binding effect in the present proceedings.
Contravention of Section 9(1)(c) of FERA - Nature of the transfer of amount US $ 5 Lakhs from Shri J L Kothari to the Appellant Company - The nationality of Shri J. L. Kothari as US citizen has not been challenged by the Appellants. We also fail to appreciate that how issuance of shares, if any, by M/s Neptune Estate Pvt. Ltd. can fulfill and substitute the obligation of the Appellant Company to issue shares against the receipt of funds from Shri J L Kothari. While the aforementioned Form 2 claims to have issued shares on 27.06.1996 by M/s Neptune Estate Pvt. Ltd. of which Shri Vikram Singh was a Director yet in his statement recorded subsequently on 18.02.1997 there is not even a whisper about the claimed issuance of shares. Therefore, we cannot agree with the contention that the said remittance of US $ 5 Lakhs was an investment into the Appellant Company.
The receipt of US $ 5 Lakhs into the accounts of the Appellant Company for a few days could only have been a temporary loan and that too from a US citizen, resident in Bangkok. The Appellant Company transferred the funds to another company within a short period on the instructions of the person who remitted the funds from abroad. Such transfer jeopardized the MoU dated 05.12.1995, yet it was made which corroborates the absolute control on the funds by its remitter.
It is therefore implied that the remitted funds could have only been in the nature of temporary loan to the Appellant Company by a foreign citizen resident abroad, without any general or special exemption of the RBI.
The company to which the funds were moved was wherein Shri Vikram Singh was a Director. Thus, the Appellant Company became a temporary parking place for the remitted funds. An arrangement which was willingly entered into and therefore indulged in accepting and acknowledging a debt. We therefore find that the Appellant Company has indulged in the contravention of Section 9(1)(c) of FERA, for an amount of US $ 5 lakhs.
Shri R C Jain was the Director of the Appellant Company at the relevant time and was responsible for the conduct of its affairs as is obvious from his signature on the said MoU. From the statement of Shri Vikram Singh recorded u/s 40 of FERA, it is obvious that Shri Vikram Singh was the person who knew Shri J L Kothari since 1993. He was also aware of remittance of US $ 5 lakh and of US $ 1 lakh received by the Appellant Company. In view of remittance of funds to the Appellant Company and thereafter to M/s Neptune Estate Pvt. Ltd., his role in the transactions cannot be denied. Therefore, the contraventions of Section 9(1)(c) read with Section 68(1) of FERA against the two individual Appellants stand proved.
Contravention of Section 8(1) of FERA by Shri Vikram Singh - Shri Vikram Singh has also been charged for the contravention of Section 8(1) as US $ 1 lakh was said to have been remitted by Shri Rakesh Saxena of M/s Real Fact Enterprises, Hong Kong. During the course of overseas enquiries, the Counsel General of India, Hong Kong informed that at the given address of M/s Real Fact Enterprises at 901-903, K.Centre, 88, Queens Road, Central Hong Kong, no such company was functioning and the premises was occupied by M/s Yuen Chow Group of Companies and there was no person by name Shri Rakesh Saxena in the said company/ premises. In view of the aforementioned findings, the Ld. Adjudicating Authority has inferred that the remittance was arranged by Shri Vikram Singh himself. While dropping the charge of Section 9(1)(c) of FERA against the Appellant Company for the said remittance of US $ 1 lakh, the Ld. Adjudicating Authority has held the charge of contravention of Section 8(1) of FERA proved against the individual Appellant, Shri Vikram Singh.
We have not found anything contrary produced by the Appellant to refute the findings made in the overseas enquiry. Hence, we hold contravention of Section 8(1) by the individual Appellant Shri Vikram Singh. The Ld. Adjudicating Authority has also confiscated US $ 1 lakh under Section 63 of FERA since the amount remained unexplained and tainted.
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2024 (8) TMI 664
Offence u/s 5 of FEMA - foreign exchange totaling US$ 50,000/- in Travelers Cheques [TCs] found for the so called business travel to Sri Lanka without the necessary permissions - HELD THAT: Admittedly, the proposal for seven days business promotion trip to Sri Lanka by appellant Faiyaz Shamim was planned at the instance of Dinesh C. Rawat. Mr. Faiyaz Shamim was working as Export Executive and Sanjay Mukherjee was working as Finance Manager in M/s Dinmay Exim Avenue Pvt Ltd.
It is also an admitted fact that appellant Faiyaz Shamim was not instrumental in applying for foreign exchange, as the said work was managed by Miss Roshni Rawat and Shri Dinesh Chandra Rawat Directors of the company, who issued the application for US $ 25,000 each on company’s pad in favour of Mr. Faiyaz Shamim to two different authorized money changers namely M/s VKC Credit & Forex Pvt Ltd. and M/s RR Sen & Bros. Pvt Ltd. Shri D. C. Rawat and his daughter Miss Roshni Rawat jointly signed the cheque no. 345852 & 345853 dated 13. 09. 2003 in the favour of said two authorized money changers respectively.
Even if it is presumed that Shri Faiyaz Shamim was not aware of this fact that foreign exchange is being procured by his company, without obtaining prior permission of RBI, even then, he is not entitled to any benefit, as he was not carrying any permission of RBI at the time of his travelling to Sri Lanka when he was intercepted by Custom Authorities at the Airport. He may be ignorant of the factual position, but ignorance of law is no excuse, since he was not carrying any permission of RBI for carrying additional US $ 25,000. It was the duty on the part of appellant Faiyaz Shamim to verify this fact before obtaining the additional US $ of 25,000 and to request for RBI permission before carrying the same.
Miss Roshni Rawat and Shri Dinesh Chandra Rawat have already admitted their fault for committing this technical violation by not obtaining the prior permission of RBI.
Case of appellant Sanjay Mukherjee, who was working as Finance Manger in the said company - Being Finance Manager, it cannot be presumed that he was not aware about the drawl of additional US $ 25,000 from another FFMC namely M/s RR Sen &Bros (P) Ltd. It is apparent that he intentionally not associated himself for drawing the additional US $ 25,000, as he was conscious of the fact for contravention of the provisions of FEMA without permission of RBI to hand over the same to Faiyaz Shamim. Even otherwise, being Finance Manager of M/s Dinmay Exim Avenue Pvt Ltd. , he is vicariously liable for the contravention as above. Therefore, both the appeals are liable to be dismissed being devoid of any merits. However, seeing the fact that the penalty of Rs. 10,00,000/- imposed upon the Manging Director, Dinesh C. Rawat is reduced to Rs. 2,00,000/-, the penalty imposed upon the present appellants also needs to be reduced, seeing their minor role and being the employees in the said company. Accordingly, in the interest of justice, the penalty of Rs. 1,00,000/- imposed upon the present appellants is reduced to Rs. 50,000/-.
The present appeals are hereby partly allowed, and thereby, the impugned review orders dated 08. 03. 2018; Order dated 13. 01. 2017 passed in Appeal by Ld. Special Director (Appeals); are hereby modified to the extent that both the appellants are liable to pay penalty of Rs. 50,000/- each.
Perusal of record reveals that both the appellants have already pre-deposited the penalty of Rs. 50,000/- each before admission of this appeal at the time of allowing their applications for waive of pre-deposit of application.
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2024 (8) TMI 663
Offence under FEMA - Involvement of the Respondents in the conduct of the business of the company - liability of director in a company for contravention of provisions - HELD THAT:- We observe that the liability u/s 42(1) depends on the role one plays in the affairs of the company, and not on mere designation. It cannot be that all Directors irrespective of their role and responsibilities shall be deemed to be guilty of the contravention.
From the record, it is obvious that Shri S.R. Subba was the main person in-charge of the affairs of the company and was responsible to the company for the conduct of its business. Moreover, Shri S.R. Subba has clearly stated before the Enforcement Directorate, that he was looking after the affairs of the company including its day-to-day activities during the relevant period and the respondents were not actively involved in the affairs of the company. Shri S.R. Subba vide his letter dated 09.10.2006 addressed to the Ld. Adjudicatory Authority, reiterated that he was looking after the affairs of the Company including its day to day activities during the relevant period. The other noticees were not actively involved in the affairs of the company.
Also obvious from the record that Shri M.K. Subba, the retired Director, was directly involved in the opening and maintenance of the accounts in the foreign banks, and fully responsible for the conduct of the Company.
Respondents were Directors they were not actively involved in the policy and decision making activities of the Company. The respondents were neither in-charge of the affairs of the company nor responsible for its conduct. There are no statements recorded by the Enforcement Directorate with respect to the Respondents as to their role in the company. Revisionists have failed to produce any evidence, which shows as to how and in what manner the Respondents were responsible for the conduct of the business of the Company. In the Revision Petition as well as in the pleadings nothing has been put forth as to lead us to draw conclusions otherwise.
Thus, no merit in the Revision Petition and do not interfere with the impugned order.
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2024 (8) TMI 404
Adjudication Order imposing penalties under FEMA - Writ of Mandamus directing the respondent to foreclose the fixed deposit opened by the first respondent out of the money of the petitioners and direct the second respondent Bank, to release the money in favour of the petitioners - HELD THAT:- At the time when the proceedings were pending against the petitioners before the Adjudicating Authority under Section 3 of the Foreign Exchange Management Act, 1999, the Accounts of the petitioners, in which, Fixed Deposit were made by them, were ordered to be freezed by the first respondent and the amounts were transferred to the account of the first respondent.
Since the proceedings against the petitioners have been dropped vide the aforesaid Adjudication Order, we see no impediment in allowing this Writ Petition. The respondents are directed to take steps to release the amount in the Fixed Deposits to the petitioners, in accordance with the aforementioned Adjudication Order, as expeditiously as possible. WP allowed.
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2024 (7) TMI 1461
Priority of debts due to any secured creditor - priority of SARFAESI Act versus FEMA - HELD THAT:- Debts due to any secured creditor shall be paid in priority over all other debts, dues and all revenues, taxes, cesses and other rates payable to the Central Government or State Government or other local authority; it follows therefrom that the provisions of the SARFAESI Act would prevail over the provisions of other earlier enactments, under which, amounts are allegedly due to the Central Government; it is well settled that if there are two special Acts / enactments, it is the later enactment that shall prevail; in the instant case, it cannot be gainsaid that the FEMA (a special law / Act) is an earlier enactment, while the SARFAESI Act (a special law / Act) is a later / subsequent enactment which would prevail over FEMA in the light of the principles laid down by the Apex Court in several judgments including Solidaire India’s case [2001 (2) TMI 968 - SUPREME COURT]
So also, in SBICAP’s case [2023 (3) TMI 1509 - BOMBAY HIGH COURT] held that the provisions of the Prevention of Money Laundering Act, 2002 (for short ‘the PMLA’) would be subservient to the rights of a secured creditor under the SARFAESI Act which would prevail and override the provisions of the PMLA.
In the instant case, in the light of the undisputed fact that the SARFAESI Act, 2002 is a later Act / law, the same would prevail over the earlier Act / law, i.e., FEMA, 1999 and having regard to the language employed in Section 26E of the SARFAESI Act, the provisions contained therein would have a overriding effect over the provisions of the FEMA and the SARFAESI Act would prevail over FEMA; as a natural corollary, the dues payable in favour of the petitioner – Bank which is a secured creditor would prevail over the dues allegedly payable to the respondents 1 and 2 by the 3rd respondent under FEMA and consequently, the impugned order purporting to seize / attach the schedule property for alleged dues under FEMA are clearly without jurisdiction or authority of law, inasmuch as since the schedule property had already been mortgaged in favour of the petitioner – Bank by the 3rd respondent, prior to the impugned order, the 2nd respondent was neither entitled to nor empowered to pass the impugned order of seizure / attachment of the property which had already stood mortgaged in favour of the petitioner prior to the impugned order.
Section 37A, under which the impugned order has been passed by the 2nd respondent being prospective in nature and operation, the said provision could not have been invoked by the 2nd respondent for the purpose of passing the impugned order of seizure / attachment in relation to the schedule property which had undisputedly stood mortgaged in favour of the petitioner – Bank prior to Section 37A coming into force and consequently, the said provision was not applicable to the schedule property and the 2nd respondent did not have jurisdiction or authority of law to invoke or apply Section 37A of the FEMA for the purpose of passing the impugned order which deserves to be quashed on this ground also.
Priority of secured creditors under Section 31B of the RDBI Act - A perusal of Section 31B of the RDBI Act and the principles laid down by the Full Bench of the Madras High Court supra, is sufficient to come to the conclusion that in the proceedings sought to be initiated by the petitioner–Bank under SARFAESI Act, which would be governed by the procedure prescribed under the RDBI Act, the petitioner –Bank being a secured creditor would have priority and the claim of the petitioner would prevail over the alleged dues payable under the FEMA as directed in the impugned order in the light of the overriding effect of the RDBI Act over the FEMA and consequently, viewed from this angle also, it is of the view that the impugned order deserves to be quashed.
Insofar as the contention urged by the respondents that the dues payable to them under FEMA are not specifically covered by either Section 26E of the SARFAESI Act or by Section 31B of the RDBI Act is concerned, in the light of the express language employed in both the provisions which contemplate debts, government dues, revenues, taxes, cesses and rates due to the Central Government etc., the alleged dues under FEMA being payable to the respondents 1 and 2 who represent the Central Government, the same are covered by the aforesaid provisions and as such, the said contention urged by the respondents 1 and 2 cannot be accepted.
Insofar as the contention as regards availability of equally efficacious and alternative remedy by way of an appeal under Section 37A (5) of the FEMA is concerned, in the light of the findings recorded by me hereinbefore that the impugned order is without jurisdiction or authority of law and the same is not only illegal and arbitrary but also contrary to the provisions contained in the SARFAESI Act and RDBI Act and consequently, mere availability of a remedy by way of an appeal cannot be construed or treated as denuding this Court of its jurisdiction under Article 226 of the Constitution of India and the said contention of the respondents 1 and 2 in this regard cannot be accepted.
Petition is hereby allowed. The impugned order at Annexure-A dated 31.03.2022 passed by the 2nd respondent insofar as it relates to the schedule property mortgaged by the 3rd respondent in favour of petitioner – Bank is hereby quashed.The 2nd respondent is hereby directed to release the schedule property mortgaged to the petitioner
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2024 (7) TMI 1407
Non-affording of personal hearing to the petitioner - Suspension of registration under the Foreign Contribution (Regulation) Act, 2010 - allegation that there has been mis-management of funds of foreign contributors - whether the petitioner should have been afforded a personal hearing in terms of sub-section (2) of Section 14 of the Act prior to passing of the order dated 04-09-2023?
HELD THAT:- The words “reasonable opportunity of being heard” cannot be read in isolation. They have to be read along with sub-section (3) of Section 14 of the Act, the consequences of passing of an order of cancellation.
Sub-section (2) of Section 14 of the Act permits cancellation of registration. The consequence thereof is found in sub-section (3) which permits no registration under the Act for an entity which suffered cancellation for a period of three years. This is the dire civil and economic consequence that would ensue. Therefore, it cannot be said that sub-(2) of Section 14 of the Act is restricted only to hearing, hearing would mean only issuance of a show cause notice. Therefore, the contention of the learned Central Government Counsel is to be repelled and is accordingly repelled. I am in respectful agreement with what the learned single Judge of the High Court of Madhya Pradesh has held, interpreting sub-section (2) of Section 14 of the Act. Principles of natural justice, is trite cannot be stretched to unlimited extent. But, it is equally trite that when consequences thereof are grave, it should be complied with in its entirety even stretching in a little further.
Therefore, the words depicted in the Act ‘reasonable opportunity of being heard’ cannot be restricted to issuance of a show cause notice but a personal hearing in the peculiar facts of the case owing to the peculiarity of sub-section (3) of Section 14 of the Act must have been afforded to the petitioner. Non-affording of personal hearing to the petitioner has rendered the order unsustainable and the unsustainability of it, would lead to its obliteration. Let there be no confusion that there can always be a fusion between hearing and personal hearing.
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2024 (7) TMI 1360
Validity of the notice of hearing - Adherence to Rule 4(3) of the Foreign Exchange Management (Adjudication Proceedings and Appeal) Rules, 2000 - HELD THAT:- The adjudicating authority is duty bound to explain to the person proceeded against or his legal practitioners about the contraventions alleged to have been committed. Communicating the formation of opinion and the reasons will be informed to the person or his legal representative by the adjudicating authority under Rule 4(4) of the Rule. On receipt of such materials from the adjudicating authority on the hearing date the person concerned is at liberty to defend their case by following the procedures as contemplated under Rule 4(5) to 4(12) of the Rules.
When Rule 4(4) unambiguously contemplates that the reason for proceeding with the adjudication must be informed to the persons or to the legal practitioners or to the Chartered Accountants, and the such information should be provided along with the allegations and the provisions of the Act and Rules. The said rules contemplates providing of information to the persons and therefore, Rule 4(3) cannot be construed as violating the Rules of Natural Justice or contravening any of the provisions of law.
Rule 4(3) and Rule 4(4) should be read constructively so as to understand that a fair opportunity has been provided. Communicating the opinion of the adjudicating authority under Rule 4(3) may not be required since the adjudicating authority is bound to provide all such information along with the provisions under Rule 4(4) of the Rules. Therefore, Rule 4(3) cannot be read in isolation and it is to be read along with Rule 4(4) for constructively interpreting the procedures so as ensure that fair opportunity has been provided under the Rules and the Rules of Natural Justice has been complied with.
Though this Court had an opportunity to consider the Bombay High Court Judgement, relied on by the Delhi High Court and the Kolkata High Court, the later judgement of the Division Bench of the Madras High Court is more relevant with reference to the spirit of Rule 4 in entirety including Rule 4(3). The scope of rules/procedures cannot be expanded by the High Court in exercise of the powers of the judicial review under Article 226 of the Constitution of India. The procedures, as contemplated under the Rules, are to be read as it is and any expansion providing additional opportunity, would undoubtedly cause prejudice to any one of the parties and would provide further cause for the purpose of prolonging and protracting the proceedings.
The practice of prolonging and protracting the enquiry proceedings by approaching the High Court at each stage cannot be appreciated. Once the proceedings are commenced, the adjudicating authorities are expected to follow the procedures scrupulously and the persons concerned are bound to cooperate and defend their case by availing the opportunities to be provided in accordance with the Rules in force.
In view of the fact that the judgement of the Division Bench of the Madras High Court, in the case of India Cements Limited [2018 (6) TMI 389 - MADRAS HIGH COURT] is the latest judgement wherein the interpretation of Rule 4(3) offered by the Bombay High Court was considered, this Court is bound by the decision of the Division Bench of High Court of Madras. WP dismissed.
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2024 (7) TMI 1319
Violations committed under FEMA Act - Personal hearing notice issued by the Assistant Director (SRO), directing the petitioner to appear before the adjudicating authority, i.e., the Additional Director, Directorate of Enforcement - Jurisdictional authority of the Additional Director of Enforcement - enhancement of pecuniary jurisdiction by way of notification dated 27.09.2018 to obstruct the proceedings already instituted by the Special Director (adjudicating authority) under the FEMA - HELD THAT:- Once the power to appoint an adjudicating authority is conferred on the Central Government and the Central Government, in exercise of power, issued a notification, no doubt the said notification is to be effected with prospective effect. While giving prospective effect, the cases which all are pending before the other authorities must be transferred to the appropriate authority with prospective effect for the purpose of continuance of further adjudication in the manner known to law. In the present case, such a transfer was effected from the file of the Special Director to the Additional Director of Enforcement.
The present case has been transferred from Special Director to the Additional Director in view of the enhancement of pecuniary jurisdiction by the Ministry of Finance, Department of Revenue, vide notification dated 27.09.2018. Thus, this Court do not find any jurisdictional error or otherwise in the matter of continuation of further proceedings under the FEMA Act, by the Additional Director of Enforcement who is empowered to deal with the cases involving amount up to Rupees Twenty Five Crores, but not less than Rupees Ten Crores. In the case of the petitioner, the allegation is for a sum of Rs.11.27 Crores (Rupees Eleven Crores Twenty Sevel Lakhs) and therefore, the transfer of the case from the Special Director to the Additional Director of Enforcement is well within the provisions of the FEMA Act and the grounds raised by the petitioner fails.
No writ against a Show Cause Notice is entertainable. A writ against a Show Cause Notice can be entertained only if the notice has been issued by an incompetent authority having no jurisdiction or allegations of malafides are raised. In the present case, the learned Senior Counsel made an attempt to establish that there is a jurisdictional error which would disentitle the Additional Director (adjudicating authority) to continue the adjudication. This Court is of the opinion that the ground raised is untenable and respondents have transferred the case to the Additional Director of Enforcement in view of the notification issued by the Government of India in exercise of the powers under Section 16(1) of the FEMA Act and thus, this Court has come to an irresistible conclusion that the petitioners are not entitled to the relief as such sought for in the present writ petitions.
Writ petitions stand dismissed.
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2024 (7) TMI 1259
Maintainability of the writ petition - Contravention of the FEMA laws - Declaring Petitioner guilty of contravention of the provisions u/s 10(6) of the Foreign Exchange Management Act - penalty imposed - HELD THAT:- In respect of preliminary objection as to the maintainability of the writ petition, the learned Senior Panel Counsel appearing for the first respondent relied upon the judgment of the Hon'ble Supreme Court of India reported in the case of Raj Kumar Shivhare Vs. Assistant Director [2010 (4) TMI 432 - SUPREME COURT] - Therefore, the writ petition itself is not maintainable since, there is alternative remedy provided u/s 16(1), 19(1) and 35 of the FEMA.
That apart, the petitioner was not granted any immunity from the adjudication proceedings initiated under the provisions of FEMA. Whereas as per the order passed by the NCLT, the company had immunity from regulatory or administrative proceedings but not adjudicating proceedings as per Section 43 of FEMA. Further the proceedings arising in relation to the provisions of Section 13 of FEMA shall not abate by the reason of insolvency of the person liable under that Section. Further, the adjudication proceedings were initiated by way of issuing show cause notice dated 31.03.2017. It is much before the corporate insolvency resolution process.
Though the learned Senior Counsel appearing for the petitioner relied upon the judgment of M/s. Commercial Steel Limited [2021 (9) TMI 480 - SUPREME COURT] in respect of maintainability of the writ petition, which held that when the existence of an alternate remedy is not an absolute bar to the maintainability of a writ petition under Article 226 of the Constitution of India. But the writ petition can be entertained in exceptional circumstances where there is a breach of fundamental rights, a violation of principles of natural justice, an excess of jurisdiction or a challenge to the vires of the statute of delegated legislation. But none of the exceptions as stated above is applicable to the petitioner herein, since there is no breach of fundamental right and the petitioner was duly served with show cause notice and given opportunity of hearing. Further the first respondent has power to impose the penalty.
Second respondent submitted that the recovery of penalty amount by the proceeding dated 28.02.2020 was challenged before this Court in [2024 (1) TMI 1305 - MADRAS HIGHT COURT]. Subsequently, the recovery of penalty proceeding was withdrawn and therefore, the writ petition was also dismissed as withdrawn by this Court, by an order. However, insofar as the penalty imposed on the petitioner has not been withdrawn so far. Therefore, this Court finds no infirmity or illegality in the order passed by the first respondent. This writ petition is devoid of merits and liable to be dismissed. WP dismissed.
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2024 (7) TMI 1118
Claim of interest on refund of Amount deposited - Penalty was Imposed under FEMA - refund of confiscated amount - Interest accrued on deposited amount by the respondents in the Nationalized Bank - legitimate right of the petitioner to receive interest on the amount that were lying with the Department for almost for 21 years - HELD THAT:- As there is no justification in the stand of the respondents in denying the interest, as Section 42 of the Foreign Exchange Regulation Act, 1973, makes it clear that in all other cases, such proceeds shall be paid to such person as may appear to other cases, such proceeds shall be paid to such person as may appear to the officer or the Court, who or which made the direction under subsection (1) to be entitled thereto in such currency and in such manner as he or it deems just together with interest at the rate of six per cent. per annum from the date on which such draft, cheque (including traveller's cheque) or other instrument came into his or its custody till the date of payment.
By confiscating the amount, the respondents have made no favour to the petitioner. By returning the amount belatedly pursuant to the directions of this Court, the respondents have done no favour to the petitioner. The petitioner cannot be rubbed of the interest, which the petitioner would have earned, had the petitioner invested the amount in Fixed Deposit. All that the respondents have done is to comply with the order by refunding the amount that was illegally confiscated from the petitioner. There has to be a restitution and therefore, the interest is to be paid to the petitioner.
Writ Petition is disposed of by directing the respondents to pay the interest to the petitioner on the confiscated amount from the date of confiscation up to the date of refund at the prevailing bank interest within a period of 3 months from the date of receipt of a copy of this order. No costs.
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2024 (7) TMI 867
Offence under FERA - contravention of section 18(2) and 18(3) read with section 64(2) of FERA, 1973 - company failed to recover the amount of export dues - investigation in the matter was conducted where it was revealed that without the permission of RBI or an extension order for recovering of the export dues, the noticee firm failed to recover the amount and even did not seek further extension for its recovery - appellant has virtually admitted his failure for contravention of 18(3) but it is only in reference to one consignment therefore questions the imposition of heavy penalty of Rs 50 lacs while on the main defaulter Smt Venita, it is only 45 lacs.
HELD THAT:- We find contravention of section 18(2) and 18(3) of FERA, 1973 because Shri V.K. Singh and Shri Dilip Nihalani colluded and were instrumental in making the exports and they received incentive from the custom authorities in respect of the shipment.
The appellant had admitted for preparation of the documents though attended only one shipment. Taking into consideration the overall circumstances and while we find a case for contravention of section 18(2) and 18(3) read with section 64(2) of FERA, find penalty of Rs. 50 lacs to be disproportionate. The penalty of Rs. 45 lacs has been imposed on Smt Venita, proprietrix of M/s Sai International while Rs 50 lacs on the appellant who said to have received Rs. 14 lacs towards work and out of drawback. Thus, to make the penalty rational, we reduce it to Rs. 14 lacs and out of which Rs. 6 lacs have already been deposited to satisfy the condition of pre-deposit. We partly allow the appeal while finding a case for contravention of section 18(2) and 18(3) of FERA, 1973, but penalty of Rs. 50 lac is reduced to Rs. 14 lacs and with the aforesaid, the appeal is disposed of.
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